Document:

EXHIBIT 4.3
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                         THE WILLIAMS COMPANIES, INC.

                                      and

                             JPMorgan Chase Bank,

                          as Purchase Contract Agent

                          PURCHASE CONTRACT AGREEMENT

                         Dated as of January 14, 2002

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<TABLE>

ARTICLE 1
<S>     <C>                                                                                                      <C>
         DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATIONS

         SECTION 1.01.  Definitions...............................................................................1
                                                                                                                  -
         SECTION 1.03.  Form of Documents Delivered to Purchase Contract Agent...................................14

         SECTION 1.04.  Acts of Holders; Record Dates............................................................14

         SECTION 1.05.  Notices..................................................................................15

         SECTION 1.06.  Notice to Holders; Waiver................................................................17

         SECTION 1.07.  Effect of Headings and Table of Contents.................................................17

         SECTION 1.08.  Successors and Assigns...................................................................17

         SECTION 1.09.  Separability Clause......................................................................17

         SECTION 1.10.  Benefits of Agreement....................................................................17

         SECTION 1.11.  Governing Law............................................................................18

         SECTION 1.12.  Legal Holidays...........................................................................18

         SECTION 1.13.  Counterparts.............................................................................18

         SECTION 1.14.  Inspection of Agreement..................................................................18

         SECTION 1.15.  Appointment of Financial Institution as Agent for the Company............................18

         SECTION 1.16.  No Waiver................................................................................18

ARTICLE 2

         CERTIFICATE FORMS

         SECTION 2.01.  Forms of Certificates Generally..........................................................19

         SECTION 2.02.  Form of Purchase Contract Agent's Certificate of Authentication..........................20

ARTICLE 3

         THE SECURITIES

         SECTION 3.01.  Amount; Form and Denominations...........................................................20

         SECTION 3.02.  Rights and Obligations Evidenced by the Certificates.....................................20

         SECTION 3.03.  Execution, Authentication, Delivery and Dating...........................................21

         SECTION 3.04.  Temporary Certificates...................................................................22

         SECTION 3.05.  Registration; Registration of Transfer and Exchange......................................22

         SECTION 3.06.  Book-Entry Interests.....................................................................24

         SECTION 3.07.  Notices to Holders.......................................................................24

         SECTION 3.08.  Appointment of Successor Depositary......................................................24

         SECTION 3.09.  Definitive Certificates..................................................................25

         SECTION 3.10.  Mutilated, Destroyed, Lost and Stolen Certificates.......................................25

         SECTION 3.11.  Persons Deemed Owners....................................................................26

         SECTION 3.12.  Cancellation.............................................................................27

         SECTION 3.13.  Creation of Growth PACS by Substitution of Treasury Securities...........................27

         SECTION 3.14.  Reestablishment of Income PACS...........................................................29

         SECTION 3.15.  Transfer of Collateral upon Occurrence of Termination Event..............................31

         SECTION 3.16.  No Consent to Assumption.................................................................31

ARTICLE 4

         THE NOTES AND APPLICABLE OWNERSHIP INTEREST OF THE TREASURY PORTFOLIO

         SECTION 4.01.  Interest Payments; Rights to Interest Payments Preserved.................................32

         SECTION 4.02.  Notice and Voting........................................................................32

         SECTION 4.03.  Tax Event Redemption.....................................................................33

ARTICLE 5

         THE PURCHASE CONTRACTS

         SECTION 5.01.  Purchase of Shares of Common Stock.......................................................34

         SECTION 5.02.  Initial Remarketing; Payment of Purchase Price...........................................36

         SECTION 5.03.  Issuance of Shares of Common Stock.......................................................43

         SECTION 5.04.  Adjustment of Settlement Rate............................................................43

         SECTION 5.05.  Notice of Adjustments and Certain Other Events...........................................50

         SECTION 5.06.  Termination Event; Notice................................................................51

         SECTION 5.07.  Intentionally Omitted....................................................................51

         SECTION 5.08.  Intentionally Omitted....................................................................51

         SECTION 5.09.  No Fractional Shares.....................................................................51

         SECTION 5.10.  Charges and Taxes........................................................................52

         SECTION 5.11.  Purchase Contract Payments...............................................................52

         SECTION 5.12.  Deferral of Purchase Contract Payments...................................................57

ARTICLE 6

         REMEDIES

         SECTION 6.01.  Unconditional Right of Holders to Receive Purchase Contract Payments
                  and to Purchase Shares of Common Stock.........................................................59

         SECTION 6.02.  Restoration of Rights and Remedies.......................................................59

         SECTION 6.03.  Rights and Remedies Cumulative...........................................................59

         SECTION 6.04.  Delay or Omission Not Waiver.............................................................59

         SECTION 6.05.  Undertaking for Costs....................................................................59

         SECTION 6.06.  Waiver of Stay or Extension Laws.........................................................60

ARTICLE 7

         THE PURCHASE CONTRACT AGENT

         SECTION 7.01.  Certain Duties and Responsibilities......................................................60

         SECTION 7.02.  Notice of Default........................................................................61

         SECTION 7.03.  Certain Rights of Purchase Contract Agent................................................62

         SECTION 7.04.  Not Responsible for Recitals or Issuance of Securities...................................63

         SECTION 7.05.  May Hold Securities......................................................................64

         SECTION 7.06.  Money Held in Custody....................................................................64

         SECTION 7.07.  Compensation and Reimbursement...........................................................64

         SECTION 7.08.  Corporate Purchase Contract Agent Required;   Eligibility................................65

         SECTION 7.09.  Resignation and Removal; Appointment of Successor........................................65

         SECTION 7.10.  Acceptance of Appointment by Successor...................................................66

         SECTION 7.11.  Merger, Conversion, Consolidation or Succession to Business..............................67

         SECTION 7.12.  Preservation of Information; Communications to Holders...................................67

         SECTION 7.13.  No Obligations of Purchase Contract Agent................................................68

         SECTION 7.14.  Tax Compliance...........................................................................68

ARTICLE 8

         SUPPLEMENTAL AGREEMENTS

         SECTION 8.01.  Supplemental Agreements Without Consent of Holders.......................................69

         SECTION 8.02.  Supplemental Agreements with Consent of Holders..........................................69

         SECTION 8.03.  Execution of Supplemental Agreements.....................................................70

         SECTION 8.04.  Effect of Supplemental Agreements........................................................71

         SECTION 8.05.  Reference to Supplemental Agreements.....................................................71

ARTICLE 9

         CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

         SECTION 9.01.  Covenant Not to Consolidate, Merge, Convey, Transfer or Lease Property
                  Except under Certain Conditions................................................................71

         SECTION 9.02.  Rights and Duties of Successor Corporation...............................................72

         SECTION 9.03.  Officers' Certificate and Opinion of Counsel Given to Purchase Contract
                  Agent
                   ..............................................................................................72

ARTICLE 10

         COVENANTS

         SECTION 10.01.  Performance under Purchase Contracts....................................................73

         SECTION 10.02.  Maintenance of Office or Agency.........................................................73

         SECTION 10.03.  Company to Reserve Common Stock.........................................................73

         SECTION 10.04.  Covenants as to Common Stock............................................................74

         SECTION 10.05.  Statements of Officers of the Company as to Default.....................................74

         SECTION 10.06.  ERISA...................................................................................74

         SECTION 10.07.  Tax Treatment...........................................................................74

</TABLE>

         PURCHASE CONTRACT AGREEMENT, dated as of January 14, 2002, between
THE WILLIAMS COMPANIES, INC., a Delaware corporation (the "Company"), and
JPMORGAN CHASE BANK, a New York banking corporation, acting as purchase
contract agent for the Holders of Securities (as defined herein) from time to
time (the "Purchase Contract Agent").

                                   RECITALS

         The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.

         All things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Purchase Contract Agent, as provided in
this Agreement, the valid obligations of the Company, and to constitute these
presents a valid agreement of the Company, in accordance with its terms, have
been done. For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:

                                   ARTICLE 1

           DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATIONS

         SECTION 1.01.  Definitions.

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

          (a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular, and nouns
and pronouns of the masculine gender include the feminine and neuter genders;

          (b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States;

          (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, Exhibit or other subdivision; and

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

         "Act" has the meaning, with respect to any Holder, set forth in
Section 1.04.

         "Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

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

         "Applicable Market Value" has the meaning set forth in Section 5.01.

         "Applicable Ownership Interest" shall mean, with respect to an Income
PACS that includes the Treasury Portfolio, (A) a 2.5% undivided beneficial
ownership interest in a $1,000 face amount of a principal or interest strip in
a U.S. treasury security included in such Treasury Portfolio that matures on
or prior to February 15, 2005 and (B) for the scheduled interest payment date
on the Notes that occurs on February 16, 2005, in the case of a Successful
Initial Remarketing, or in the case of a Tax Event Redemption, for each
scheduled interest payment on the Notes that occurs after the Tax Event
Redemption Date and on or before the Purchase Contract Settlement Date, a
0.0406%, undivided beneficial ownership interest in a $1,000 face amount of a
principal or interest strip in a U.S. treasury security included in such
Treasury Portfolio that matures prior to such date.

         "Applicable Principal Amount" means the aggregate principal amount of
the Notes that are components of Income PACS on the Initial Remarketing Date.

         "Applicants" has the meaning set forth in Section 7.12(b).

         "Appreciation Cap Price" has the meaning set forth in Section 5.01.

         "Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform
system of bankruptcy laws.

         "Beneficial Owner" means, with respect to a Book-Entry Interest, a
Person who is the beneficial owner of such Book-Entry Interest as reflected on
the books of the Depositary or on the books of a Person maintaining an account
with such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).

         "Board of Directors" means the board of directors of the Company or a
duly authorized committee of that board.

         "Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company, to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification and
delivered to the Purchase Contract Agent.

         "Book-Entry Interest" means a beneficial interest in a Global
Certificate, registered in the name of a Depositary or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Depositary as described in Section 3.06.

         "Business Day" or "business day" means any day other than a Saturday
or Sunday or a day on which banking institutions in New York City, New York,
or Chicago, Illinois are authorized or required by law or executive order to
remain closed or a day on which the Indenture Trustee is closed for business;
provided that for purposes of the second paragraph of Section 1.12 only, the
term "Business Day" shall also be deemed to exclude any day on which trading
on the New York Stock Exchange, Inc. is closed or suspended.

         "Cash Merger" has the meaning set forth in Section 5.04(b)(2).

         "Cash Settlement" has the meaning set forth in Section 5.02(b)(i).

         "Certificate" means an Income PACS Certificate or a Growth PACS
Certificate.

         "Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Securities and in whose name, or in the name of a nominee
of that organization, shall be registered a Global Certificate and which shall
undertake to effect book-entry transfers and pledges of the Securities.

         "Closing Price" has the meaning set forth in Section 5.01.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Collateral" has the meaning set forth in Section 1.01(e) of the
Pledge Agreement.

         "Collateral Account" has the meaning set forth in Section 1.01(e) of
the Pledge Agreement.

         "Collateral Agent" means JPMorgan Chase Bank, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have
become such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.

         "Collateral Substitution" has the meaning set forth in Section 3.13.

         "Common Stock" means the common stock, par value $1.00, of the
Company.

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

         "Constituent Person" has the meaning set forth in Section 5.04(b).

         "Corporate Trust Office" means the office of the Purchase Contract
Agent at which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof is located at 450
West 33rd Street, New York, New York 10001, Attention: Institutional Trust
Services.

         "Coupon Rate" means the percentage rate per annum at which each Note
will bear interest initially.

         "Current Market Price" has the meaning set forth in Section
5.04(a)(8).

         "Depositary" means a clearing agency registered under the Exchange
Act that is designated to act as Depositary for the Securities as contemplated
by Sections 3.06, 3.07, 3.08 and 3.09.

         "Depositary Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the
Depositary effects book entry transfers and pledges of securities deposited
with the Depositary.

         "DTC" means The Depository Trust Company.

         "Early Settlement" means an early settlement of a Purchase Contract
pursuant to Section 5.04(b)(2).

         "Early Settlement Date" has the meaning set forth in Section
5.04(b)(2).

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.

         "Expiration Date" has the meaning set forth in Section 1.04(e).

         "Expiration Time" has the meaning set forth in Section 5.04(a)(6).

         "Failed Initial Remarketing" has the meaning set forth in Section
5.02(a).

         "Failed Secondary Remarketing" has the meaning set forth in Section
5.02(c).

         "Global Certificate" means a Certificate that evidences all or part
of the Securities and is registered in the name of a Clearing Agency or a
nominee thereof.

         "Growth PACS" means, following the substitution of Treasury
Securities for Notes as collateral to secure a Holder's obligations under the
Purchase Contract, the collective rights and obligations of a Holder of a
Growth PACS Certificate in respect of such Treasury Securities, subject to the
Pledge thereof, and the related Purchase Contract.

         "Growth PACS Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Growth PACS specified
on such certificate.

         "Holder" means, with respect to a Security, the Person in whose name
the Security evidenced by a Certificate is registered in the Security
Register; provided, however, that in determining whether the Holders of the
requisite number of Securities have voted on any matter, then for the purpose
of such determination only (and not for any other purpose hereunder), if the
Security remains in the form of one or more Global Certificates and if the
Depositary that is the registered holder of such Global Certificate has sent
an omnibus proxy assigning voting rights to the Depositary Participants to
whose accounts the Securities are credited on the record date, the term
"Holder" shall mean such Depositary Participant acting at the direction of the
Beneficial Owners.

         "Income PACS" means the collective rights and obligations of a Holder
of an Income PACS Certificate in respect of the Notes or an appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
subject in each case to the Pledge thereof, and the related Purchase Contract;
provided that the appropriate Applicable Ownership Interest (as specified in
clause (B) of the definition of such term) of the Treasury Portfolio shall not
be subject to the Pledge.

         "Income PACS Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Income PACS specified
on such certificate.

         "Indenture" means the Indenture, dated as of November 10, 1997,
between the Company and the Indenture Trustee (including any provisions of the
TIA that are deemed incorporated therein), as amended and supplemented as of
the date hereof, pursuant to which the Notes will be issued.

         "Indenture Trustee" means Bank One Trust Company, N.A., as trustee
under the Indenture, or any successor thereto.

         "Initial Remarketing" has the meaning set forth in Section 5.02(a).

         "Initial Remarketing Date" means the third Business Day immediately
preceding November 16, 2004.

         "Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, its President
or one of its Vice Presidents, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the

Purchase Contract Agent.

         "non-electing share" has the meaning set forth in Section 5.04(b).

         "Notes" means the series of Notes designated the senior notes due
February 16, 2007 to be issued by the Company under the Indenture as of the
date hereof.

         "NYSE" has the meaning set forth in Section 5.01.

         "Officers' Certificate" means a certificate signed by the Chairman of
the Board of the Company, its President, one of its Vice Presidents, its
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Purchase Contract Agent. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Agreement (other than the Officers' Certificate provided
for in Section 10.05) shall include:

          (i) a statement that each officer signing the Officers' Certificate
         has read the covenant or condition and the definitions relating
         thereto;

          (ii) a brief statement of the nature and scope of the examination or
         investigation undertaken by each officer in rendering the Officers'
         Certificate;

          (iii) a statement that, in the opinion of each such officer, each
         such officer has made such examination or investigation as is
         necessary to enable such officer to express an informed opinion as to
         whether or not such covenant or condition has been complied with; and

          (iv) a statement as to whether, in the opinion of each such officer,
         such condition or covenant has been complied with.

         "Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Company (and who may be an employee of the Company), and who
shall be reasonably acceptable to the Purchase Contract Agent. An opinion of
counsel may rely on certificates as to matters of fact.

         "Outstanding Securities" means, with respect to any Security and as
of the date of determination, all Securities evidenced by Certificates
theretofore authenticated, executed and delivered under this Agreement,
except:

          (i) If a Termination Event has occurred, (i) Growth PACS and (ii)
         Income PACS for which the underlying Notes or Applicable Ownership
         Interests in the Treasury Portfolio have been theretofore deposited
         with the Purchase Contract Agent in trust for the Holders of such
         Income PACS;

          (ii) Securities evidenced by Certificates theretofore cancelled by
         the Purchase Contract Agent or delivered to the Purchase Contract
         Agent for cancellation or deemed cancelled pursuant to the provisions
         of this Agreement; and

          (iii) Securities evidenced by Certificates in exchange for or in
         lieu of which other Certificates have been authenticated, executed on
         behalf of the Holder and delivered pursuant to this Agreement, other
         than any such Certificate in respect of which there shall have been
         presented to the Purchase Contract Agent proof satisfactory to it
         that such Certificate is held by a protected purchaser in whose hands
         the Securities evidenced by such Certificate are valid obligations of
         the Company;

provided, however, that in determining whether the Holders of the requisite
number of the Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the
Company or any Affiliate of the Company shall be disregarded and deemed not to
be Outstanding Securities, except that, in determining whether the Purchase
Contract Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Purchase Contract Agent actually knows to be so
owned shall be so disregarded. Securities so owned that have been pledged in
good faith may be regarded as Outstanding Securities if the pledgee
establishes to the satisfaction of the Purchase Contract Agent the pledgee's
right so to act with respect to such Securities and that the pledgee is not
the Company or any Affiliate of the Company.

         "Payment Date" means each February 16, May 16, August 16 and November
16, commencing May 16, 2002.

         "Permitted Investments" has the meaning set forth in the Pledge
Agreement.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity of whatever
nature.

         "Plan" means an employee benefit plan that is subject to ERISA, a
plan or individual retirement account that is subject to Section 4975 of the
Code or any entity whose assets are considered assets of any such plan.

         "Pledge" means the pledge under the Pledge Agreement of the Notes,
the Treasury Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, in each case constituting a part of the Securities.

         "Pledge Agreement" means the Pledge Agreement, dated as of January
14, 2002, among the Company, the Collateral Agent, the Securities Intermediary
and the Purchase Contract Agent, on its own behalf and as attorney-in-fact for
the Holders from time to time of the Securities.

         "Pledged Notes" has the meaning set forth in Section 1.01(e) of the
Pledge Agreement.

         "Predecessor Certificate" means a Predecessor Income PACS Certificate
or a Predecessor Growth PACS Certificate.

         "Predecessor Income PACS Certificate" of any particular Income PACS
Certificate means every previous Income PACS Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Income PACS evidenced thereby; and, for the purposes of this definition, any
Income PACS Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Income PACS
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Income PACS
Certificate.

         "Predecessor Growth PACS Certificate" of any particular Growth PACS
Certificate means every previous Growth PACS Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Growth PACS evidenced thereby; and, for the purposes of this definition, any
Growth PACS Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Growth PACS
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Growth PACS
Certificate.

         "Primary Treasury Dealer" shall mean a primary U.S. government
securities dealer in New York City.

         "Proceeds" has the meaning set forth in Section 1.01(e) of the Pledge
Agreement.

         "Pro Rata" shall mean pro rata to each Holder according to the
aggregate Stated Amount of the Securities held by such Holder in relation to
the aggregate Stated Amount of all Securities outstanding.

         "Prospectus" means the prospectus relating to the delivery of shares
of any securities in connection with an Early Settlement of Purchase Contracts
pursuant to Section 5.04(b)(2), in the form in which first filed, or
transmitted for filing, with the Commission after the effective date of the
Registration Statement pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein as of the date of
such Prospectus.

         "Purchase Contract" means, with respect to any Security, the contract
forming a part of such Security and obligating the Company to (i) sell, and
the Holder of such Security to purchase, shares of Common Stock and (ii) pay
the Holder thereof Purchase Contract Payments, in each case on the terms and
subject to the conditions set forth in Article Five hereof.

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

         "Purchase Contract Agent" shall mean such Person or any subsequent
successor who is appointed pursuant to this Agreement.

         "Purchase Contract Payments" means the payments payable by the
Company on the Payment Dates in respect of each Purchase Contract, at a rate
per year of 2.5% of the Stated Amount per Purchase Contract.

         "Purchase Contract Settlement Date" means February 16, 2005.

         "Purchase Contract Settlement Fund" has the meaning set forth in
Section 5.03.

         "Purchase Price" has the meaning set forth in Section 5.01.

         "Purchased Shares" has the meaning set forth in Section 5.04(a)(6).

         "Quotation Agent" means (i) Merrill Lynch Government Securities Inc.
and its respective successors or (ii) any other Primary Treasury Dealer
selected by the Company.

         "Record Date" for any distribution and Purchase Contract Payment
payable on any Payment Date means, as to any Global Certificate, the first day
of each month in which the relevant Payment Date falls, and as to any other
Certificate, the date selected by the Company, which shall be more than one
Business Day but less than sixty Business Days prior to such Payment Date.

         "Redemption Amount" shall mean, for each Note, the product of the
principal amount of such Note and a fraction, the numerator of which shall be
the Treasury Portfolio Purchase Price and the denominator of which shall be
the principal amount of such Note.

         "Reference Dealer" means a dealer engaged in trading of convertible
securities.

         "Reference Price" has the meaning set forth in Section 5.01.

         "Registration Statement" means a registration statement under the
Securities Act prepared by the Company covering, inter alia, the delivery by
the Company of any securities in connection with an Early Settlement of
Purchase Contracts on the Early Settlement Date under Section 5.04(b)(2),
including all exhibits thereto and the documents incorporated by reference in
the prospectus contained in such registration statement, and any
post-effective amendments thereto.

         "Remarketing" means the remarketing of the Notes by the Remarketing
Agent pursuant to the Remarketing Agreement.

         "Remarketing Agent" has the meaning set forth in Section 5.02(a).

         "Remarketing Agreement" means the Remarketing Agreement, dated as of
January 14, 2002, among the Company, the Remarketing Agent and the Purchase
Contract Agent.

         "Remarketing Fee" has the meaning set forth in Section 5.02(a).

         "Remarketing Per Note Price" means the Treasury Portfolio Purchase
Price divided by the number of Notes held as components of Income PACS and
remarketed in the Initial Remarketing.

         "Reorganization Event" has the meaning set forth in Section 5.04(b).

         "Reset Rate" means the interest rate per year determined by the
Remarketing Agent as necessary for a successful completion of the Remarketing.

         "Responsible Officer" means, with respect to the Purchase Contract
Agent, any officer of the Purchase Contract Agent assigned by the Purchase
Contract Agent to administer this Purchase Contract Agreement.

         "Secondary Remarketing" has the meaning set forth in Section 5.02(c).

         "Secondary Remarketing Date" means the third Business Day immediately
preceding the Purchase Contract Settlement Date.

         "Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time, and the rules
and regulations promulgated thereunder.

         "Securities Intermediary" means JPMorgan Chase Bank, as Securities
Intermediary under the Pledge Agreement until a successor Securities
Intermediary shall have become such pursuant to the applicable provisions of
the Pledge Agreement, and thereafter "Securities Intermediary" shall mean such
successor or any subsequent successor who is appointed pursuant to the Pledge
Agreement.

         "Security" means an Income PACS or a Growth PACS, as the case may be.

         "Security Register" and "Securities Registrar" have the respective
meanings set forth in Section 3.05.

         "Senior Indebtedness" means indebtedness of any kind of the Company
unless the instrument under which such indebtedness is incurred expressly
provides that it is on a parity in right of payment with or subordinate in
right of payment to the Purchase Contract Payments.

         "Separate Notes" means Notes that are no longer a component of Income
PACS.

         "Separate Notes Purchase Price" means the amount in cash equal to the
product of the Remarketing Per Note Price multiplied by the number of Separate
Notes remarketed in the Initial Remarketing.

         "Settlement Rate" has the meaning set forth in Section 5.01.

         "Sixth Supplemental Indenture" means the Sixth Supplemental Indenture
to the Indenture, entered into between the Company and the Indenture Trustee
on the date hereof.

         "Stated Amount" means $25.

         "Successful Initial Remarketing" has the meaning set forth in Section
5.02(a).

         "Successful Secondary Remarketing" has the meaning set forth in
Section 5.02(c).

         "Tax Event" shall mean the receipt by the Company of an opinion of
independent counsel, rendered by a law firm having a recognized national tax
practice, to the effect that, as a result of any amendment to, or change,
including any announced prospective change in, the laws or any regulations of
the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, any amendment to or change in an interpretation or
application of these laws or regulations by any legislative body, court,
governmental agency or regulatory authority or any interpretation or
pronouncement that provides for a position with respect to any such laws or
regulations that differs from the generally accepted position on January 7,
2002, which amendment, change or proposed change is effective or which
interpretation or pronouncement is announced on or after January 7, 2002,
there is more than an insubstantial increase in the risk that interest or
original issue discount on the Notes would not be deductible by the Company,
in whole or in part, for United States federal income tax purposes.

         "Tax Event Redemption" shall mean that a Tax Event has occurred and
is continuing and the Notes have been called for redemption pursuant to the
Indenture.

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

         "Tax Event Redemption Principal Amount" means either (i) if the Tax
Event Redemption Date occurs prior to November 16, 2004 or, in the event of a
Failed Initial Remarketing, prior to the Purchase Contract Settlement Date,
the aggregate principal amount of the Notes that are components of Income PACS
on the Tax Event Redemption Date or (ii) if the Tax Event Redemption Date
occurs on or after November 16, 2004 or, in the event of a Failed Initial
Remarketing, on or after the Purchase Contract Settlement Date, the aggregate
principal amount of the Notes outstanding on such Tax Event Redemption Date.

         "Termination Date" means the date, if any, on which a Termination
Event occurs.

         "Termination Event" means the occurrence of any of the following
events:

          (i) at any time on or prior to the Purchase Contract Settlement
         Date, a judgment, decree or court order shall have been entered
         granting relief under the Bankruptcy Code, adjudicating the Company
         to be insolvent, or approving as properly filed a petition seeking
         reorganization or liquidation of the Company or any other similar
         applicable Federal or State law, and, unless such judgment, decree or
         order shall have been entered within 60 days prior to the Purchase
         Contract Settlement Date, such decree or order shall have continued
         undischarged and unstayed for a period of 60 days;

          (ii) at any time on or prior to the Purchase Contract Settlement
         Date, a judgment, decree or court order for the appointment of a
         receiver or liquidator or trustee or assignee in bankruptcy or
         insolvency of the Company or of its property, or for the termination
         or liquidation of its affairs, shall have been entered, and, unless
         such judgment, decree or order shall have been entered within 60 days
         prior to the Purchase Contract Settlement Date, such judgment, decree
         or order shall have continued undischarged and unstayed for a period
         of 60 days; or

          (iii) at any time on or prior to the Purchase Contract Settlement
         Date, the Company shall file a petition for relief under the
         Bankruptcy Code, or shall consent to the filing of a bankruptcy
         proceeding against it, or shall file a petition or answer or consent
         seeking reorganization or liquidation under the Bankruptcy Code or
         any other similar applicable Federal or State law, or shall consent
         to the filing of any such petition, or shall consent to the
         appointment of a receiver or liquidator or trustee or assignee in
         bankruptcy or insolvency of it or of its property, or shall make an
         assignment for the benefit of creditors, or shall admit in writing
         its inability to pay its debts generally as they become due.

         "TIA" means the Trust Indenture Act of 1939, as amended from time to
time, or any successor legislation.

         "Trading Day" has the meaning set forth in Section 5.01.

         "Treasury Portfolio" means (1) in connection with the Initial
Remarketing, a portfolio of zero-coupon U.S. treasury securities consisting of
(a) principal or interest strips of U.S. Treasury Securities that mature prior
to the Purchase Contract Settlement Date, in an aggregate amount equal to the
Applicable Principal Amount and (b) with respect to the scheduled interest
payment date on the Notes that occurs on the Purchase Contract Settlement
Date, principal or interest strips of U.S. treasury securities that mature
prior to such date in an aggregate amount equal to the aggregate interest
payment that would be due on the Applicable Principal Amount on such date if
the applicable Coupon Rate on the Notes were not reset to the Reset Rate as
described in Section 5.02 and (2) in connection with a Tax Event Redemption,
(a) if the Tax Event Redemption Date occurs prior to November 16, 2004 or, in
the event of a Failed Initial Remarketing, prior to the Purchase Contract
Settlement Date, a portfolio of zero-coupon U.S. treasury securities
consisting of (i) principal or interest strips of U.S. treasury securities
that mature on or prior to February 15, 2005 in an aggregate amount equal to
the applicable Tax Event Redemption Principal Amount and (ii) with respect to
each scheduled interest payment date on the Notes that occurs after the Tax
Event Redemption Date and on or before the Purchase Contract Settlement Date,
principal or interest strips of U.S. treasury securities that mature on or
prior to such date in an aggregate amount equal to the aggregate interest
payment that would be due on the applicable Tax Event Redemption Principal
Amount of the Notes on such date, and (b) if the Tax Event Redemption Date
occurs on or after November 16, 2004 or, in the event of a Failed Initial
Remarketing, on or after the Purchase Contract Settlement Date, a portfolio of
zero-coupon U.S. treasury securities consisting of (i) principal or interest
strips of U.S. Treasury Securities which mature on or prior to February 15,
2007 in an aggregate amount equal to the applicable Tax Event Redemption
Principal Amount and (ii) with respect to each scheduled interest payment date
on the Notes that occurs after the Tax Event Redemption Date, principal or
interest strips of such U.S. treasury securities that mature prior to such
date in an aggregate amount equal to the aggregate interest payment that would
be due on the applicable Tax Event Redemption Principal Amount of the Notes on
such date if the interest rate of the Notes was not reset on the Initial
Remarketing Date or the Secondary Remarketing Date.

         "Treasury Portfolio Purchase Price" means the lowest aggregate price
quoted by the Primary Treasury Dealer to the Quotation Agent (a) in the case
of a Tax Event Redemption, on the third Business Day immediately preceding the
Tax Event Redemption Date for the purchase of the applicable Treasury
Portfolio for settlement on the Tax Event Redemption Date and (b) in the case
of the Initial Remarketing, on the Initial Remarketing Date for the purchase
of the applicable Treasury Portfolio for settlement on November 16, 2004.

         "Treasury Securities" means zero-coupon U.S. Treasury Securities
(CUSIP No. 912820BM8) that mature on February 15, 2005.

         "Underwriting Agreement" means the Underwriting Agreement, dated as
of January 7, 2002, between the Company and the Underwriters identified in
Schedule A thereto.

         "Vice President" means any vice president, whether or not designated
by a number or a word or words added before or after the title "vice
president."

         SECTION 1.02.  Compliance Certificates and Opinions.

         Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Purchase Contract Agent to take
any action in accordance with any provision of this Agreement, the Company
shall furnish to the Purchase Contract Agent an Officers' Certificate stating
that all conditions precedent, if any, provided for in this Agreement relating
to the proposed action have been complied with and, if requested by the
Purchase Contract Agent, an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.

         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than the Officers'
Certificate provided for in Section 10.05) shall include:

          (i) a statement that each individual signing such certificate or
         opinion has read such covenant or condition and the definitions
         herein relating thereto;

          (ii) a brief statement as to the nature and scope of the examination
         or investigation upon which the statements or opinions contained in
         such certificate or opinion are based;

          (iii) a statement that, in the opinion of each such individual, he
         or she has made such examination or investigation as is necessary to
         enable such individual to express an informed opinion as to whether
         or not such covenant or condition has been complied with; and

          (iv) a statement as to whether, in the opinion of each such
         individual, such condition or covenant has been complied with.

         SECTION 1.03.  Form of Documents Delivered to Purchase Contract Agent.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents. Any
certificate or opinion of an officer of the Company may be based, insofar as
it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.

         SECTION 1.04.  Acts of Holders; Record Dates.

          (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Purchase Contract Agent and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and (subject to Section
7.01) conclusive in favor of the Purchase Contract Agent and the Company, if
made in the manner provided in this Section.

          (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Purchase Contract
Agent deems sufficient.

          (c) The ownership of Securities shall be proved by the Security
Register.

          (d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Certificate evidencing
such Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered
to be done by the Purchase Contract Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such Certificate.

          (e) The Company may set any date as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be given, made or
taken by Holders of Securities. If any record date is set pursuant to this
paragraph, the Holders of the Outstanding Income PACS and the Outstanding
Growth PACS, as the case may be, on such record date, and no other Holders,
shall be entitled to take the relevant action with respect to the Income PACS
or the Growth PACS, as the case may be, whether or not such Holders remain
Holders after such record date; provided that no such action shall be
effective hereunder unless taken prior to or on the applicable Expiration Date
by Holders of the requisite number of Outstanding Securities on such record
date. Nothing contained in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be
cancelled and be of no effect), and nothing contained in this paragraph shall
be construed to render ineffective any action taken by Holders of the
requisite number of Outstanding Securities on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Company,
at its own expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the
Purchase Contract Agent in writing and to each Holder of Securities in the
manner set forth in Section 1.06.

         With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration
Date is given to the Purchase Contract Agent in writing, and to each Holder of
Securities in the manner set forth in Section 1.06, prior to or on the
existing Expiration Date. If an Expiration Date is not designated with respect
to any record date set pursuant to this Section, the Company shall be deemed
to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing,
no Expiration Date shall be later than the 180th day after the applicable
record date.

         SECTION 1.05.  Notices.

         Any notice or communication is duly given if in writing and delivered
in Person or mailed by first-class mail (registered or certified, return
receipt requested), telecopier (with receipt confirmed) or overnight air
courier guaranteeing next day delivery, to the others' address; provided that
notice shall be deemed given to the Purchase Contract Agent only upon receipt
thereof:

         If to the Purchase Contract Agent:

                  JPMorgan Chase Bank
                  450 West 33rd Street
                  New York, New York 10001
                  Telecopier No.: (212) 946-8154
                  Attention: Institutional Trust Services

         If to the Company:
                  The Williams Companies, Inc.
                  One Williams Center, Suite 5000
                  Tulsa, Oklahoma 74172
                  Telecopier No.: (918) 573-2065
                  Attention: Treasurer

         with a copy to:
                  The Williams Companies, Inc.
                  One Williams Center, Suite 5000
                  Tulsa, Oklahoma 74172
                  Telecopier No.: (918) 573-4503
                  Attention: General Counsel

         and a copy to:
                  Skadden, Arps, Slate, Meagher & Flom LLP
                  Four Times Square
                  New York, New York 10036
                  Telecopier No.: (212) 735-2000
                  Attention:  John Osborn, Esq.

         If to the Collateral Agent:
                  JPMorgan Chase Bank
                  450 West 33rd Street
                  New York, New York 10001
                  Telecopier No.: (212) 946-8154
                  Attention: Institutional Trust Services

         If to the Indenture Trustee:
                  Bank One Corporation
                  Global Trust Services
                  1 Bank One Plaza, Suite IL1-0823
                  Chicago, Illinois  60670
                  Telecopier No.: (312) 336-8840
                  Attention: Benita Pointer

         The Purchase Contract Agent shall sent to the Indenture Trustee at
the telecopier number set forth above a copy of any notices in the form of
Exhibits C, D, E or F it sends or receives.

         SECTION 1.06.  Notice to Holders; Waiver.

         Where this Agreement provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at its address as it appears in the Security
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Agreement
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Purchase Contract Agent, but such filing shall
not be a condition precedent to the validity of any action taken in reliance
upon such waiver.

         In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Purchase Contract Agent shall constitute a sufficient notification for every
purpose hereunder.

         SECTION 1.07.  Effect of Headings and Table of Contents.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

         SECTION 1.08.  Successors and Assigns.

         All covenants and agreements in this Agreement by the Company and the
Purchase Contract Agent shall bind their respective successors and assigns,
whether so expressed or not.

         SECTION 1.09.  Separability Clause.

         In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions hereof and thereof shall not in any way be
affected or impaired thereby.

         SECTION 1.10.  Benefits of Agreement.

         Nothing contained in this Agreement or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and, to the extent provided hereby, the Holders, any
benefits or any legal or equitable right, remedy or claim under this
Agreement. The Holders from time to time shall be beneficiaries of this
Agreement and shall be bound by all of the terms and conditions hereof and of
the Securities evidenced by their Certificates by their acceptance of delivery
of such Certificates.

         SECTION 1.11.  Governing Law.

         This Agreement and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to any
conflicts of law provision that would require the application of the law of
any other jurisdiction.

         SECTION 1.12.  Legal Holidays.

         In any case where any Payment Date shall not be a Business Day
(notwithstanding any other provision of this Agreement or the Securities),
Purchase Contract Payments or other distributions shall not be paid on such
date, but Purchase Contract Payments or such other distributions shall be paid
on the next succeeding Business Day with the same force and effect as if made
on such Payment Date, provided that no interest shall accrue or be payable by
the Company or to any Holder for the period from and after any such Payment
Date.

         In any case where any Purchase Contract Settlement Date or Early
Settlement Date shall not be a Business Day (notwithstanding any other
provision of this Agreement or the Securities) Purchase Contracts shall not be
performed and Early Settlement shall not be effected on such date, but
Purchase Contracts shall be performed or Early Settlement effected, as
applicable, on the next succeeding Business Day with the same force and effect
as if made on such Purchase Contract Settlement Date or Early Settlement Date,
as applicable.

         SECTION 1.13.  Counterparts.

         This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument.

         SECTION 1.14.  Inspection of Agreement.

         A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by
any Holder or Beneficial Owner.

         SECTION 1.15.  Appointment of Financial Institution as Agent for
the Company.

         The Company may appoint a financial institution (which may be the
Collateral Agent) to act as its agent in performing its obligations and in
accepting and enforcing performance of the obligations of the Purchase
Contract Agent and the Holders, under this Agreement and the Purchase
Contracts, by giving notice of such appointment in the manner provided in
Section 1.05 hereof. Any such appointment shall not relieve the Company in any
way from its obligations hereunder.

         SECTION 1.16. No Waiver. No failure on the part of the Company, the
Purchase Contract Agent, the Collateral Agent, the Securities Intermediary or
any of their respective agents to exercise, and no course of dealing with
respect to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise by
the Company, the Collateral Agent, the Securities Intermediary or any of their
respective agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of any
remedies provided by law.

                                   ARTICLE 2
                               CERTIFICATE FORMS

         SECTION 2.01.  Forms of Certificates Generally.

         The Certificates (including the form of Purchase Contract forming
part of each Security evidenced thereby) shall be in substantially the form
set forth in Exhibit A hereto (in the case of Certificates evidencing Income
PACS) or Exhibit B hereto (in the case of Certificates evidencing Growth
PACS), with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which
the Securities are listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of the Company executing such
Certificates, as evidenced by their execution of the Certificates.

         The definitive Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing the Securities
evidenced by such Certificates, consistent with the provisions of this
Agreement, as evidenced by their execution thereof.

         Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:

         "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
         PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED
         IN THE NAME OF CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST
         COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), THE DEPOSITARY OR
         ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE
         FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
         DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
         IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS
         CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY
         THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
         DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY)
         MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
         OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
         AND ANY CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR
         SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
         OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
         OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
         HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

         SECTION 2.02. Form of Purchase Contract Agent's Certificate of
Authentication.

         The form of the Purchase Contract Agent's certificate of
authentication of the Securities shall be in substantially the form set forth
on the form of the applicable Certificates.

                                   ARTICLE 3
                                THE SECURITIES

         SECTION 3.01.  Amount; Form and Denominations.

         The aggregate number of Securities evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 40,000,000 (46,000,000 if the over- allotment option granted in the
Underwriting Agreement is exercised in full), except for Certificates
authenticated, executed and delivered upon registration of transfer of, in
exchange for, or in lieu of, other Certificates pursuant to Sections 3.04,
3.05, 3.10, 3.13, 3.14 or 8.05.

         The Certificates shall be issuable only in registered form and only
in denominations of a single Income PACS or Growth PACS and any integral
multiple thereof.

         SECTION 3.02.  Rights and Obligations Evidenced by the Certificates.

         Each Income PACS Certificate shall evidence the number of Income PACS
specified therein, with each such Income PACS representing (1) the ownership
by the Holder thereof of a beneficial interest in a Note or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, subject to
the Pledge of such Note or the Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, by such Holder pursuant to the Pledge Agreement, and (2) the
rights and obligations of the Holder thereof and the Company under one
Purchase Contract. The Purchase Contract Agent, as attorney-in-fact for, and
on behalf of, the Holder of each Income PACS shall pledge, pursuant to the
Pledge Agreement, the Note or the Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio, as
the case may be, forming a part of such Income PACS, to the Collateral Agent
and grant to the Collateral Agent a security interest in the right, title and
interest of such Holder in such Note or the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, for the benefit of the Company, to secure the
obligation of the Holder under each Purchase Contract to purchase shares of
Common Stock.

         Upon the formation of a Growth PACS pursuant to Section 3.13, each
Growth PACS Certificate shall evidence the number of Growth PACS specified
therein, with each such Growth PACS representing (1) the ownership by the
Holder thereof of a 1/40 undivided beneficial interest in a Treasury Security
with a principal amount equal to $1,000, subject to the Pledge of such
Treasury Security by such Holder pursuant to the Pledge Agreement, and (2) the
rights and obligations of the Holder thereof and the Company under one
Purchase Contract.

         Prior to the purchase of shares of Common Stock under each Purchase
Contract, such Purchase Contracts shall not entitle the Holder of a Security
to any of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or to
consent or to receive notice as a shareholder in respect of the meetings of
shareholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as a shareholder of the Company.

         SECTION 3.03.  Execution, Authentication, Delivery and Dating.

         Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to
time thereafter, the Company may deliver Certificates executed by the Company
to the Purchase Contract Agent for authentication, execution on behalf of the
Holders and delivery, together with its Issuer Order for authentication of
such Certificates, and the Purchase Contract Agent in accordance with such
Issuer Order shall authenticate, execute on behalf of the Holders and deliver
such Certificates.

         The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Treasurer or one of its Vice
Presidents. The signature of any of these officers on the Certificates may be
manual or facsimile.

         Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates.

         No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized officer of the Purchase Contract Agent, as such
Holder's attorney-in-fact. Such signature by an authorized officer of the
Purchase Contract Agent shall be conclusive evidence that the Holder of such
Certificate has entered into the Purchase Contracts evidenced by such
Certificate.

         Each Certificate shall be dated the date of its authentication.

         No Certificate shall be entitled to any benefit under this Agreement
or be valid or obligatory for any purpose unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by an authorized officer of the Purchase Contract Agent by
manual signature, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder.

         SECTION 3.04.  Temporary Certificates.

         Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall authenticate, execute on behalf of the Holders, and deliver, in
lieu of such definitive Certificates, temporary Certificates which are in
substantially the form set forth in Exhibit A or Exhibit B hereto, as the case
may be, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which
the Income PACS or Growth PACS, as the case may be, are listed, or as may,
consistently herewith, be determined by the officers of the Company executing
such Certificates, as evidenced by their execution of the Certificates.

         If temporary Certificates are issued, the Company will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the Corporate Trust Office, at the expense of the Company and
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Certificates, the Company shall execute and deliver to the
Purchase Contract Agent, and the Purchase Contract Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, one or more
definitive Certificates of like tenor and denominations and evidencing a like
number of Securities as the temporary Certificate or Certificates so
surrendered. Until so exchanged, the temporary Certificates shall in all
respects evidence the same benefits and the same obligations with respect to
the Securities, evidenced thereby as definitive Certificates.

         SECTION 3.05.  Registration; Registration of Transfer and Exchange.

         The Purchase Contract Agent shall keep at the Corporate Trust Office
a register (the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Purchase Contract Agent shall provide for
the registration of Certificates and of transfers of Certificates (the
Purchase Contract Agent, in such capacity, the "Security Registrar"). The
Security Registrar shall record separately the registration and transfer of
the Certificates evidencing Income PACS and Growth PACS.

         Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the designated transferee or transferees, and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of
any authorized denominations, like tenor, and evidencing a like number of
Income PACS or Growth PACS, as the case may be.

         At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Income PACS or Growth PACS, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver the Certificates
which the Holder making the exchange is entitled to receive.

         All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Income
PACS or Growth PACS, as the case may be, and be entitled to the same benefits
and subject to the same obligations, under this Agreement as the Income PACS
or Growth PACS, as the case may be, evidenced by the Certificate surrendered
upon such registration of transfer or exchange.

         Every Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Purchase Contract Agent) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Purchase Contract Agent duly executed, by
the Holder thereof or its attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Purchase Contract Agent may
require payment from the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates, other than any exchanges pursuant to
Sections 3.06 and 8.05 not involving any transfer.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder
and deliver any Certificate in exchange for any other Certificate presented or
surrendered for registration of transfer or for exchange on or after the
Business Day immediately preceding the earliest of any Early Settlement Date
for such Certificate, the Purchase Contract Settlement Date or the Termination
Date. In lieu of delivery of a new Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the
Purchase Contract Agent shall:

          (i) if the Purchase Contract Settlement Date or an Early Settlement
         Date with respect to such other Certificate has occurred, deliver the
         shares of Common Stock issuable in respect of the Purchase Contracts
         forming a part of the Securities evidenced by such other Certificate;
         or

          (ii) if a Cash Settlement or an Early Settlement Date with respect
         to such other Certificate shall have occurred, or if a Termination
         Event shall have occurred prior to the Purchase Contract Settlement
         Date, transfer the Notes, the Treasury Securities, or the appropriate
         Applicable Ownership Interest of the Treasury Portfolio, as the case
         may be, evidenced thereby, in each case subject to the applicable
         conditions and in accordance with the applicable provisions of
         Section 3.15 and Article Five hereof.

         SECTION 3.06.  Book-Entry Interests.

         The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary or its custodian by, or on behalf of, the Company. The Company
hereby designates DTC as the initial Depositary. Such Global Certificates
shall initially be registered on the books and records of the Company in the
name of Cede & Co., the nominee of the Depositary, and no Beneficial Owner
will receive a definitive Certificate representing such Beneficial Owner's
interest in such Global Certificate, except as provided in Section 3.09. The
Purchase Contract Agent shall enter into an agreement with the Depositary if
so requested by the Company. Unless and until definitive, fully registered
Certificates have been issued to Beneficial Owners pursuant to Section 3.09:

          (i) the provisions of this Section 3.06 shall be in full force and
         effect;

          (ii) the Company shall be entitled to deal with the Depositary for
         all purposes of this Agreement (including, without limitation, making
         Purchase Contract Payments and receiving approvals, votes or consents
         hereunder) as the Holder of the Securities and the sole holder of the
         Global Certificates and shall have no obligation to the Beneficial
         Owners;

          (iii) to the extent that the provisions of this Section 3.06
         conflict with any other provisions of this Agreement, the provisions
         of this Section 3.06 shall control; and

          (iv) the rights of the Beneficial Owners shall be exercised only
         through the Depositary and shall be limited to those established by
         law and agreements between such Beneficial Owners and the Depositary
         or the Depositary Participants.

         SECTION 3.07.  Notices to Holders.

         Whenever a notice or other communication to the Holders is required
to be given under this Agreement, the Company or the Company's agent shall
give such notices and communications to the Holders and, with respect to any
Securities registered in the name of the Depositary or the nominee of the
Depositary, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.

         SECTION 3.08.  Appointment of Successor Depositary.

         If the Depositary elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Depositary with respect to the Securities.

         SECTION 3.09.  Definitive Certificates.

         If:

          (i) the Depositary elects to discontinue its services as securities
         depositary with respect to the Securities and a successor Depositary
         is not appointed pursuant to Section 3.08 within 90 days after such
         discontinuance; or

          (ii) the Company elects, after consultation with the Purchase
         Contract Agent, to terminate the book-entry system for the
         Securities,

then (x) definitive Certificates shall be prepared by the Company with respect
to such Securities and delivered to the Purchase Contract Agent and (y) upon
surrender of the Global Certificates representing the Securities by the
Depositary, accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in accordance
with the instructions of the Depositary. The Company and the Purchase Contract
Agent shall not be liable for any delay in delivery of such instructions and
may conclusively rely on and shall be protected in relying on, such
instructions. Each definitive Certificate so delivered shall evidence
Securities of the same kind and tenor as the Global Certificate so surrendered
in respect thereof.

         SECTION 3.10.  Mutilated, Destroyed, Lost and Stolen Certificates.

         If any mutilated Certificate is surrendered to the Purchase Contract
Agent, the Company shall execute and deliver to the Purchase Contract Agent,
and the Purchase Contract Agent shall authenticate, execute on behalf of the
Holder, and deliver in exchange therefor, a new Certificate, evidencing the
same number of Income PACS or Growth PACS, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.

         If there shall be delivered to the Company and the Purchase Contract
Agent (i) evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) such security or indemnity as may be required by
them to hold each of them and any agent of any of them harmless, then, in the
absence of notice to the Company or the Purchase Contract Agent that such
Certificate has been acquired by a protected purchaser, the Company shall
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall authenticate, execute on behalf of the Holder, and deliver to the
Holder, in lieu of any such destroyed, lost or stolen Certificate, a new
Certificate, evidencing the same number of Income PACS or Growth PACS, as the
case may be, and bearing a Certificate number not contemporaneously
outstanding.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder,
and deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earliest of any Early Settlement Date for such lost
or mutilated Certificate, the Purchase Contract Settlement Date or the
Termination Date. In lieu of delivery of a new Certificate, upon satisfaction
of the applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the
Purchase Contract Agent shall:

          (i) if the Purchase Contract Settlement Date or an Early Settlement
         Date with respect to such lost, stolen, destroyed or mutilated
         Certificate has occurred, deliver the shares of Common Stock issuable
         in respect of the Purchase Contracts forming a part of the Securities
         evidenced by such Certificate; or

          (ii) if a Cash Settlement with respect to such lost or mutilated
         Certificate shall have occurred or if a Termination Event shall have
         occurred prior to the Purchase Contract Settlement Date, transfer the
         Notes, the Treasury Securities or the appropriate Applicable
         Ownership Interest (as specified in clause (A) of the definition of
         such term) of the Treasury Portfolio, as the case may be, evidenced
         thereby, in each case subject to the applicable conditions and in
         accordance with the applicable provisions of Section 3.15 and Article
         Five hereof.

         Upon the issuance of any new Certificate under this Section, the
Company and the Purchase Contract Agent may require the payment by the Holder
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other fees and expenses (including ,
without limitation, the fees and expenses of the Purchase Contract Agent)
connected therewith.

         Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be
subject to all the obligations of this Agreement equally and proportionately
with any and all other Certificates delivered hereunder.

         The provisions of this Section are exclusive and shall preclude, to
the extent lawful, all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.

         SECTION 3.11.  Persons Deemed Owners.

         Prior to due presentment of a Certificate for registration of
transfer, the Company and the Purchase Contract Agent, and any agent of the
Company or the Purchase Contract Agent, may treat the Person in whose name
such Certificate is registered as the owner of the Security evidenced thereby,
for the purpose of (subject to any applicable record date) receiving
distributions on the Treasury Securities, the Notes, or on the maturing
quarterly interest strips of the Treasury Portfolio, as applicable, receiving
Purchase Contract Payments, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not any distributions on the Treasury
Securities, the Notes, or Treasury Portfolio, as applicable, or Purchase
Contract Payments payable on the Purchase Contracts, each constituting a part
of the Security evidenced thereby shall be overdue and notwithstanding any
notice to the contrary, and neither the Company nor the Purchase Contract
Agent, nor any agent of the Company or the Purchase Contract Agent, shall be
affected by notice to the contrary.

         Notwithstanding the foregoing, with respect to any Global
Certificate, nothing contained herein shall prevent the Company, the Purchase
Contract Agent or any agent of the Company or the Purchase Contract Agent,
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary (or its nominee), as a Holder, with respect to
such Global Certificate or impair, as between such Depositary and the related
Beneficial Owner, the operation of customary practices governing the exercise
of rights of the Depositary (or its nominee) as Holder of such Global
Certificate. None of the Company, the Purchase Contract Agent nor any agent of
the Company or the Purchase Contract Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Certificate or
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.

         SECTION 3.12.  Cancellation.

         All Certificates surrendered for delivery of shares of Common Stock
on or after the Purchase Contract Settlement Date or upon the transfer of
Notes, or for delivery of the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of that term) of the Treasury
Portfolio or Treasury Securities, as the case may be, after the occurrence of
a Termination Event or pursuant to an Early Settlement, or upon the
registration of transfer or exchange of a Security, or a Collateral
Substitution or the reestablishment of Income PACS shall, if surrendered to
any Person other than the Purchase Contract Agent, be delivered to the
Purchase Contract Agent and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the Purchase Contract
Agent for cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon an Issuer Order, be
promptly cancelled by the Purchase Contract Agent. No Certificates shall be
authenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Certificates cancelled as provided in this Section, except as
expressly permitted by this Agreement. All cancelled Certificates held by the
Purchase Contract Agent shall be disposed of in accordance with its customary
practices.

         If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Purchase
Contract Agent cancelled or for cancellation.

         SECTION 3.13. Creation of Growth PACS by Substitution of Treasury
Securities.

         Subject to the conditions set forth in this Agreement, a Holder may
separate the Notes or Applicable Ownership Interests of the Treasury
Portfolio, as applicable, from the related Purchase Contracts in respect of
such Holder's Income PACS by substituting for such Notes or Applicable
Ownership Interests of the Treasury Portfolio, as applicable, Treasury
Securities in an aggregate principal amount equal to the aggregate principal
amount of such Notes or the principal amount of such Applicable Ownership
Interests (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as applicable (a "Collateral Substitution"), at any time
from and after the date of this Agreement and prior to or on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date. To
effect such substitution, the Holder must:

          (1)   deposit with the Securities Intermediary Treasury Securities
                having an aggregate principal amount at maturity equal to the
                aggregate principal amount of the Notes or the Applicable
                Ownership Interests (as specified in clause (A) of the
                definition of such term) of the Treasury Portfolio comprising
                part of such Income PACS, as the case may be; and

          (2)   transfer the related Income PACS to the Purchase Contract
                Agent accompanied by a notice to the Purchase Contract Agent,
                substantially in the form of Exhibit C hereto, (i) stating
                that the Holder has transferred the relevant amount of
                Treasury Securities to the Securities Intermediary and (ii)
                requesting that the Purchase Contract Agent instruct the
                Collateral Agent to release the Notes or the Applicable
                Ownership Interests of the Treasury Portfolio, as the case may
                be, underlying such Income PACS, whereupon the Purchase
                Contract Agent shall promptly provide an instruction to such
                effect to the Collateral Agent, substantially in the form of
                Exhibit A to the Pledge Agreement.

         Upon receipt of the Treasury Securities described in clause (1) above
and the instruction described in clause (2) above, in accordance with the
terms of the Pledge Agreement, the Collateral Agent will cause the Securities
Intermediary to effect the release of such Notes or Applicable Ownership
Interests of the Treasury Portfolio, as the case may be, from the Pledge, free
and clear of the Company's security interest therein, and the transfer of such
Notes or Applicable Ownership Interests of the Treasury Portfolio, as the case
may be, to the Purchase Contract Agent on behalf of the Holder. Upon receipt
thereof, the Purchase Contract Agent shall promptly:

          (i) cancel the related Income PACS;

          (ii) transfer the Notes or Applicable Ownership Interests of the
         Treasury Portfolio, as the case may be, to the Holder; and

          (iii) authenticate, execute on behalf of such Holder and deliver a
         Growth PACS Certificate executed by the Company in accordance with
         Section 3.03 evidencing the same number of Purchase Contracts as were
         evidenced by the cancelled Income PACS.

         Holders who elect to separate the Notes or Applicable Ownership
Interests of the Treasury Portfolio, as the case may be, from the related
Purchase Contracts and to substitute Treasury Securities for such Notes or
Applicable Ownership Interests of the Treasury Portfolio, as the case may be,
shall be responsible for any fees or expenses (including, without limitation,
fees and 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.

         Holders may make Collateral Substitutions only in integral multiples
of 40 Income PACS; provided that if the Treasury Portfolio has replaced the
Notes as a component of the Income PACS as a result of a Successful Initial
Remarketing or a Tax Event Redemption, Holders may make Collateral
Substitutions at any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, but only in integral
multiples of 32,000 Income PACS.

         In the event a Holder making a Collateral Substitution pursuant to
this Section 3.13 fails to effect a book-entry transfer of the Income PACS or
fails to deliver Income PACS Certificates to the Purchase Contract Agent after
depositing Treasury Securities with the Collateral Agent, any distributions on
the Notes or Applicable Ownership Interests of the Treasury Portfolio, as the
case may be, constituting a part of such Income PACS shall be held in the name
of the Purchase Contract Agent or its nominee in trust for the benefit of such
Holder, until such Income PACS are so transferred or the Income PACS
Certificate is so delivered, as the case may be, or, such Holder provides
evidence satisfactory to the Company and the Purchase Contract Agent that such
Income PACS Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Purchase Contract Agent and the Company.

         Except as described in this Section 3.13 or in connection with a Cash
Settlement, for so long as the Purchase Contract underlying an Income PACS
remains in effect, such Income PACS shall not be separable into its
constituent parts, and the rights and obligations of the Holder in respect of
the Notes or Applicable Ownership Interests of the Treasury Portfolio, as the
case may be, and the Purchase Contract comprising such Income PACS may be
acquired, and may be transferred and exchanged, only as an Income PACS.

         SECTION 3.14.  Reestablishment of Income PACS.

         Subject to the conditions set forth in this Agreement, a Holder of
Growth PACS may reestablish Income PACS at any time prior to or on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, by:

          (1)   depositing with the Securities Intermediary Notes or
                Applicable Ownership Interests of the Treasury Portfolio, as
                the case may be, (i) in the case of Notes, having an aggregate
                principal amount equal to the aggregate principal amount at
                maturity of the Treasury Securities comprising part of the
                Growth PACS and (ii) in the case of Applicable Ownership
                Interests, such that the portion of such Applicable Ownership
                Interests described in clause (A) of the definition of such
                term represents an undivided beneficial ownership interest in
                principal or interest strips of U.S. treasury securities
                having an aggregate face amount equal to the aggregate
                principal amount at maturity of the Treasury Securities
                comprising part of the Growth PACS; and

          (2)   transferring the related Growth PACS to the Purchase Contract
                Agent accompanied by a notice to the Purchase Contract Agent,
                substantially in the form of Exhibit C hereto, (i) stating
                that the Holder has transferred the relevant amount of Notes
                or Applicable Ownership Interests of the Treasury Portfolio,
                as the case may be, to the Securities Intermediary and (ii)
                requesting that the Purchase Contract Agent instruct the
                Collateral Agent to release the Treasury Securities underlying
                such Growth PACS, whereupon the Purchase Contract Agent shall
                promptly provide an instruction to such effect to the
                Collateral Agent, substantially in the form of Exhibit C to
                the Pledge Agreement.

Upon receipt of the Notes or Applicable Ownership Interests of the Treasury
Portfolio, as the case may be, described in clause (1) above and the
instruction described in clause (2) above, in accordance with the terms of the
Pledge Agreement, the Collateral Agent will cause the Securities Intermediary
to effect the release of the Treasury Securities having a corresponding
aggregate principal amount at maturity from the Pledge, free and clear of the
Company's security interest therein, and the transfer thereof to the Purchase
Contract Agent on behalf of the Holder. Upon receipt thereof, the Purchase
Contract Agent shall promptly:

          (i) cancel the related Growth PACS;

          (ii) transfer the Treasury Securities to the Holder; and

          (iii) authenticate, execute on behalf of such Holder and deliver an
         Income PACS Certificate executed by the Company in accordance with
         Section 3.03 evidencing the same number of Purchase Contracts as were
         evidenced by the cancelled Growth PACS.

         Holders who elect to reestablish Income PACS shall be responsible for
any fees or expenses (including, without limitation, fees and expenses payable
to the Collateral Agent for its services as Collateral Agent) in respect of
the reestablishment, and the Company shall not be responsible for any such
fees or expenses.

         Holders of Growth PACS may only reestablish Income PACS in integral
multiples of 40 Growth PACS; provided that if the Treasury Portfolio has
replaced the Notes as a component of the Income PACS as a result of a
Successful Remarketing or a Tax Event Redemption, Holders may convert their
Growth PACS into Income PACS by substituting Applicable Ownership Interests of
the Treasury Portfolio for Treasury Securities at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement
Date, but only in multiples of 32,000 Growth PACS.

         Except as provided in this Section 3.14 or in connection with a Cash
Settlement, for so long as the Purchase Contract underlying a Growth PACS
remains in effect, such Growth PACS shall not be separable into its
constituent parts and the rights and obligations of the Holder of such Growth
PACS in respect of the 1/40 of a Treasury Security and the Purchase Contract
comprising such Growth PACS may be acquired, and may be transferred and
exchanged, only as a Growth PACS.

         SECTION 3.15. Transfer of Collateral upon Occurrence of Termination
Event.

         Upon the occurrence of a Termination Event and the transfer to the
Purchase Contract Agent of the Notes, the appropriate Applicable Ownership
Interest of the Treasury Portfolio or the Treasury Securities, as the case may
be, underlying the Income PACS and the Growth PACS, as the case may be,
pursuant to the terms of the Pledge Agreement, the Purchase Contract Agent
shall request transfer instructions with respect to such Notes, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or
Treasury Securities, as the case may be, from each Holder by written request,
substantially in the form of Exhibit D hereto, mailed to such Holder at its
address as it appears in the Security Register.

         Upon book-entry transfer of the Income PACS or the Growth PACS or
delivery of an Income PACS Certificate or Growth PACS Certificate to the
Purchase Contract Agent with such transfer instructions, the Purchase Contract
Agent shall transfer the Notes, the appropriate Applicable Ownership Interest
of the Treasury Portfolio or Treasury Securities, as the case may be,
underlying such Income PACS or Growth PACS, as the case may be, to such Holder
by book-entry transfer, or other appropriate procedures, in accordance with
such instructions. In the event a Holder of Income PACS or Growth PACS fails
to effect such transfer or delivery, the Notes, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or Treasury Securities, as the
case may be, underlying such Income PACS or Growth PACS, as the case may be,
and any distributions thereon, shall be held in the name of the Purchase
Contract Agent or its nominee in trust for the benefit of such Holder, until
the earlier to occur of:

          (i) the transfer of such Income PACS or Growth PACS or surrender of
         the Income PACS Certificate or Growth PACS Certificate or receipt by
         the Company and the Purchase Contract Agent from such Holder of
         satisfactory evidence that such Income PACS Certificate or Growth
         PACS Certificate has been destroyed, lost or stolen, together with
         any indemnity that may be required by the Purchase Contract Agent and
         the Company; and

          (ii) the expiration of the time period specified in the abandoned
         property laws of the relevant State in which the Purchase Contract
         Agent holds such property.

         SECTION 3.16.  No Consent to Assumption.

         Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or
its trustee, receiver, liquidator or a person or entity performing similar
functions in the event that the Company becomes the debtor under the
Bankruptcy Code or subject to other similar state or Federal law providing for
reorganization or liquidation.

                                   ARTICLE 4
     THE NOTES AND APPLICABLE OWNERSHIP INTEREST OF THE TREASURY PORTFOLIO

         SECTION 4.01. Interest Payments; Rights to Interest Payments
Preserved.

         Any distribution on any Note or on the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition thereof) of
the Treasury Portfolio, as the case may be, which is paid on any Payment Date
shall, subject to receipt thereof by the Purchase Contract Agent from the
Collateral Agent as provided by the terms of the Pledge Agreement, be paid to
the Person in whose name the Income PACS Certificate (or one or more
Predecessor Income PACS Certificates) of which such Note or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
forms a part is registered at the close of business on the Record Date for
such Payment Date.

         Each Income PACS Certificate evidencing Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio delivered under this
Agreement upon registration of transfer of or in exchange for or in lieu of
any other Income PACS Certificate shall carry the right to accrued and unpaid
interest or distributions, and to accrue interest or distributions, which were
carried by the Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio underlying such other Income PACS Certificate.

         In the case of any Income PACS with respect to which Cash Settlement
of the underlying Purchase Contract is properly effected pursuant to Section
5.02 hereof, or with respect to which Early Settlement of the underlying
Purchase Contract is properly effected pursuant to Section 5.04(b)(2) hereof,
or with respect to which a Collateral Substitution is effected, in each case
on a date that is after any Record Date and prior to or on the next succeeding
Payment Date, interest on the Notes or distributions on the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
underlying such Income PACS otherwise payable on such Payment Date shall be
payable on such Payment Date notwithstanding such Cash Settlement or Early
Settlement or Collateral Substitution, and such distributions shall, subject
to receipt thereof by the Purchase Contract Agent, be payable to the Person in
whose name the Income PACS Certificate (or one or more Predecessor Income PACS
Certificates) was registered at the close of business on the Record Date.
Except as otherwise expressly provided in the immediately preceding sentence,
in the case of any Income PACS with respect to which Cash Settlement or Early
Settlement of the underlying Purchase Contract is properly effected, or with
respect to which a Collateral Substitution has been effected, distributions on
the related Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that would otherwise be payable after
the Purchase Contract Settlement Date, Early Settlement Date or the date of
the Collateral Substitution, as the case may be, shall not be payable
hereunder to the Holder of such Income PACS; provided, however, that to the
extent that such Holder continues to hold separated Notes that formerly
comprised a part of such Holder's Income PACS, such Holder shall be entitled
to receive interest on such separated Notes.

         SECTION 4.02.  Notice and Voting.

         Under the terms of the Pledge Agreement, the Purchase Contract Agent
will be entitled to exercise the voting and any other consensual rights
pertaining to the Pledged Notes, but only to the extent instructed in writing
by the Holders as described below. Upon receipt of notice of any meeting at
which holders of Notes are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Notes, the Purchase Contract Agent
shall, as soon as practicable thereafter, mail, first class, postage pre-paid,
to the Holders of Income PACS a notice:

          (i) containing such information as is contained in the notice or
         solicitation;

          (ii) stating that each Holder on the record date set by the Purchase
         Contract Agent therefor (which, to the extent possible, shall be the
         same date as the record date for determining the holders of Notes, as
         the case may be, entitled to vote) shall be entitled to instruct the
         Purchase Contract Agent as to the exercise of the voting rights
         pertaining to such Notes underlying their Income PACS; and

          (iii) stating the manner in which such instructions may be given.

Upon the written request of the Holders of Income PACS on such record date
received by the Purchase Contract Agent at least six days prior to such
meeting, the Purchase Contract Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in
such requests, the maximum number of Notes, as the case may be, as to which
any particular voting instructions are received. In the absence of specific
instructions from the Holder of an Income PACS, the Purchase Contract Agent
shall abstain from voting the Notes underlying such Income PACS. The Company
hereby agrees, if applicable, to solicit Holders of Income PACS to timely
instruct the Purchase Contract Agent in order to enable the Purchase Contract
Agent to vote such Notes.

         SECTION 4.03.  Tax Event Redemption.

          (a) Upon the occurrence of a Tax Event Redemption prior to November
16, 2004, or in the event of a Failed Initial Remarketing, prior to the
Purchase Contract Settlement Date, an amount equal to the Redemption Amount,
plus any accrued and unpaid interest, payable on the Tax Event Redemption Date
with respect to the principal amount of Notes that are components of Income
PACS shall be deposited in the Collateral Account in exchange for the Pledged
Notes. Thereafter, pursuant to the terms of the Pledge Agreement, the
Collateral Agent shall cause the Securities Intermediary to apply an amount
equal to the Redemption Amount of such funds to purchase on behalf of the
Holders of Income PACS the Treasury Portfolio and promptly remit the remaining
portion of such funds to the Purchase Contract Agent for payment to the
Holders of such Income PACS.

          (b) Upon the occurrence of a Tax Event Redemption, the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio will be substituted as Collateral for the Pledged
Notes and will be held by the Collateral Agent in accordance with the terms of
the Pledge Agreement to secure the obligation of each Holder of an Income PACS
to purchase the Common Stock of the Company under the Purchase Contract
constituting a part of such Income PACS. Following the occurrence of a Tax
Event Redemption prior to the Purchase Contract Settlement Date, the Holders
of Income PACS and the Collateral Agent shall have such security interest
rights and obligations with respect to the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio as the Holders of Income PACS and the Collateral Agent had in
respect of the Notes, as the case may be, subject to the Pledge thereof as
provided in the Pledge Agreement, and any reference herein to the Notes shall
be deemed to be a reference to such Applicable Ownership Interests (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio. The Company may cause to be made in any Income PACS Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the substitution of the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio for Notes as Collateral.

                                   ARTICLE 5
                            THE PURCHASE CONTRACTS

         SECTION 5.01.  Purchase of Shares of Common Stock.

          (a) Each Purchase Contract shall obligate the Holder of the related
Security to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "Purchase Price"),
a number of newly issued shares of Common Stock (subject to Section 5.09)
equal to the Settlement Rate unless an Early Settlement has occurred in
accordance with Section 5.04(b)(2) hereof or, prior to or on the Purchase
Contract Settlement Date, there shall have occurred a Termination Event with
respect to the Security of which such Purchase Contract is a part. The
"Settlement Rate" is equal to:

          (i) if the Applicable Market Value (as defined below) is greater
         than $41.25 (the "Appreciation Cap Price"), the number of shares of
         Common Stock per Purchase Contract having a value, based on the
         Applicable Market Value, equal to 1.0000 multiplied by the quotient
         of the Appreciation Cap Price divided by the Applicable Market Value;
         and

          (ii) if the Applicable Market Value is less than or equal to the
         Appreciation Cap Price, 1.0000 share of Common Stock per Purchase
         Contract;

in each case subject to adjustment as provided in Section 5.04 (and in each
case rounded upward or downward to the nearest 1/10,000th of a share).

         The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date.

         The "Closing Price" per share of Common Stock on any date of
determination means:

          (i) the closing sale price as of the 4:15 p.m. close of the
         principal trading session (or, if no closing price is reported, the
         last reported sale price) per share on the New York Stock Exchange,
         Inc. (the "NYSE") on such date;

          (ii) if the Common Stock is not listed for trading on the NYSE on
         any such date, the closing sale price per share as reported in the
         composite transactions for the principal United States securities
         exchange on which the Common Stock is so listed;

          (iii) if the Common Stock is not so listed on a United States
         national or regional securities exchange, the closing sale price per
         share as reported by The Nasdaq Stock Market;

          (iv) if the Common Stock is not so reported, the last quoted bid
         price for the Common Stock in the over-the-counter market as reported
         by the National Quotation Bureau or similar organization; or

          (v) the market value of Common Stock on such date as determined by a
         nationally recognized independent investment banking firm retained
         for this purpose by the Company.

         A "Trading Day" means a day on which the Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.

          (b) Each Holder of an Income PACS or a Growth PACS, by its
acceptance thereof:

          (i) irrevocably authorizes the Purchase Contract Agent to enter into
         and perform the related Purchase Contract on its behalf as its
         attorney-in-fact (including, without limitation, the execution of
         Certificates on behalf of such Holder);

          (ii) agrees to be bound by the terms and provisions thereof;

          (iii) covenants and agrees to perform its obligations under such
         Purchase Contract;

          (iv) consents to the provisions hereof;

          (v) irrevocably authorizes the Purchase Contract Agent to enter into
         and perform this Agreement and the Pledge Agreement on its behalf as
         its attorney-in-fact;

          (vi) consents to, and agrees to be bound by, the Pledge of such
         Holder's right, title and interest in and to the Collateral Account,
         including the Notes and the Applicable Ownership Interest (as
         specified in clause (A) of the definition of such term) of the
         Treasury Portfolio or the Treasury Securities pursuant to the Pledge
         Agreement; and

          (vii) agrees to treat itself as the owner, for United States federal
         income tax purposes of the applicable interest in the Collateral
         Account, including the Notes and the Applicable Ownership Interest of
         the Treasury Portfolio or the Treasury Securities,

provided that upon a Termination Event, the rights of the Holder of such
Security under the Purchase Contract may be enforced without regard to any
other rights or obligations.

          (c) Each Holder of an Income PACS or a Growth PACS, by its
acceptance thereof, further covenants and agrees, that to the extent and in
the manner provided in Section 5.02 and the Pledge Agreement, but subject to
the terms thereof, Proceeds of the Notes, the Treasury Securities or the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as applicable, on the Purchase Contract
Settlement Date, shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and
such Holder shall acquire no right, title or interest in such Proceeds.

          (d) Upon registration of transfer of a Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee) by the terms of this Agreement, the Purchase Contracts underlying
such Certificate and the Pledge Agreement and the transferor shall be released
from the obligations under this Agreement, the Purchase Contracts underlying
the Certificate so transferred and the Pledge Agreement. The Company covenants
and agrees, and each Holder of a Certificate, by its acceptance thereof,
likewise covenants and agrees, to be bound by the provisions of this
paragraph.

         SECTION 5.02.  Initial Remarketing; Payment of Purchase Price.

          (a) (i) Unless a Tax Event Redemption has occurred, the Company
shall engage Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Remarketing Agent (the "Remarketing Agent") pursuant to the Remarketing
Agreement (and subject to removal as provided in the Remarketing Agreement) to
sell the Notes (the "Initial Remarketing") on the third Business Day
immediately preceding November 16, 2004 (the "Initial Remarketing Date"). In
order to facilitate the Initial Remarketing, the Purchase Contract Agent or
the Custodial Agent shall notify, by 11:00 a.m. (New York City time), on the
Business Day immediately preceding the Initial Remarketing Date, the
Remarketing Agent of the aggregate principal amount of Notes that are part of
Income PACS, or aggregate principal amount of Separate Notes that are to be
remarketed pursuant to clause (ii) below, as the case may be, that are to be
remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, or the Custodial Agent, pursuant to clause (ii) below, will
present for Remarketing such Notes to the Remarketing Agent. Upon receipt of
such notice from the Purchase Contract Agent or Custodial Agent and such Notes
from the Collateral Agent or Custodial Agent, the Remarketing Agent will, on
the Initial Remarketing Date, use its reasonable efforts to remarket such
Notes on such date at a price of approximately 100.5% (but not less than 100%)
of the sum of the Treasury Portfolio Purchase Price plus the Separate Notes
Purchase Price. If the Remarketing Agent is able to remarket the Notes at a
price equal to or greater than 100% of the Treasury Portfolio Purchase Price
plus the Separate Notes Purchase Price (a "Successful Initial Remarketing"),
the portion of the proceeds from such Successful Initial Remarketing equal to
the Treasury Portfolio Purchase Price will be applied to purchase the Treasury
Portfolio. In addition, the Remarketing Agent may deduct as a remarketing fee
(the "Remarketing Fee") an amount equal to 25 basis points (0.25%) of the sum
of the Treasury Portfolio Purchase Price plus the Separate Notes Purchase
Price from any amount of such proceeds in excess of the sum of the Treasury
Portfolio Purchase Price plus the Separate Notes Purchase Price. With respect
to Separate Notes, any proceeds of the Initial Remarketing in excess of the
Remarketing Fee attributable to the Separate Notes will be remitted to the
Custodial Agent for payment to the holders of Separate Notes. With respect to
Notes that are part of Income PACS, any proceeds of the Initial Remarketing in
excess of the sum of the Treasury Portfolio Purchase Price plus the
Remarketing Fee with respect to such Notes will be remitted to the Purchase
Contract Agent for payment to the Holders of the related Income PACS. Neither
the Company nor any Income PACS Holders whose Notes are so remarketed will
otherwise be responsible for the payment of any Remarketing Fee in connection
therewith. The Treasury Portfolio will be substituted for the Notes of Holders
of Income PACS and the Applicable Ownership Interests (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio will be pledged
to the Collateral Agent to secure the Income PACS Holders' obligation to pay
the Purchase Price for the Common Stock under the related Purchase Contracts
on the Purchase Contract Settlement Date. Following the occurrence of a
Successful Initial Remarketing, the Holders of Income PACS and the Collateral
Agent shall have such security interests, rights and obligations with respect
to the Applicable Ownership Interests (as specified in clause (A) of the
definition of such term) in the Treasury Portfolio as the Holder of Income
PACS and the Collateral Agent had in respect of the Notes, subject to the
Pledge thereof as provided in the Pledge Agreement, and any reference herein
or in the Certificates to the Notes shall be deemed to be a reference to such
Applicable Ownership Interests in the Treasury Portfolio and any reference
herein or in the Certificates to interest on the Notes shall be deemed to be a
reference to corresponding distributions on such Applicable Ownership
Interests in the Treasury Portfolio. The Company may cause to be made in any
Income PACS Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect the
substitution of such Applicable Ownership Interests in the Treasury Portfolio
for Notes as Collateral.

         If, in spite of using its reasonable efforts, the Remarketing Agent
cannot remarket the related Notes in the Initial Remarketing (other than to
the Company) at a price not less than 100% of the sum of the Treasury
Portfolio Purchase Price plus the Separate Notes Purchase Price or a condition
precedent set forth in the Remarketing Agreement is not fulfilled, the
Remarketing will be deemed to have failed (a "Failed Initial Remarketing").
The Company will cause a notice of a Failed Initial Remarketing to be
published on the second Business Day immediately preceding November 16, 2004
in a daily newspaper in the English language of general circulation in The
City of New York, which is expected to be The Wall Street Journal.

          (ii) A holder of a Note that is no longer part of an Income PACS may
         elect to have such Note remarketed in the Initial Remarketing. A
         holder making such an election must notify the Custodial Agent and
         deliver such Notes to the Custodial Agent prior to 11:00 a.m. (New
         York City time) on the second Business Day immediately preceding the
         Initial Remarketing Date, of the aggregate principal amount of Notes
         that are not part of Income PACS to be remarketed. Any such notice
         will be irrevocable and may not be conditioned upon the level at
         which the Reset Rate is established in the Remarketing. By 11:00 a.m.
         (New York City time) on the Business Day immediately preceding the
         Initial Remarketing Date, the Custodial Agent shall cause such Notes
         to be presented to the Remarketing Agent for Remarketing.

          (iii) Not later than 7 calendar days nor more than 15 calendar days
         prior to the Initial Remarketing Date, the Company shall request the
         Depositary to notify the Beneficial Owners or Depositary Participants
         holding Securities of the procedures to be followed in the Initial
         Remarketing.

          (iv) If required by applicable law, the Company agrees to endeavor
         to ensure that a registration statement with regard to the full
         amount of the Notes to be remarketed in the Initial Remarketing shall
         be effective with the Securities Exchange Commission in a form that
         will enable the Remarketing Agent to rely on it in connection with
         the Initial Remarketing.

          (b) (i) Unless a Tax Event Redemption, Successful Initial
Remarketing, Termination Event or Early Settlement has occurred, each Holder
who intends to pay in cash to satisfy such Holder's obligations under the
Purchase Contract on the Purchase Contract Settlement Date shall notify the
Purchase Contract Agent by use of a notice in substantially the form of
Exhibit E hereto of his intention to pay in cash ("Cash Settlement") the
Purchase Price for the shares of Common Stock to be purchased pursuant to the
related Purchase Contract. Such notice shall be given prior to 5:00 p.m. (New
York City time) on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date. Prior to 11:00 a.m. (New York City time) on the next
succeeding Business Day, the Purchase Contract Agent shall notify the
Collateral Agent and the Indenture Trustee of the receipt of such notices from
Holders intending to make a Cash Settlement.

          (ii) A Holder of an Income PACS who has so notified the Purchase
         Contract Agent of his intention to effect a Cash Settlement in
         accordance with paragraph 5.02(b)(i) above shall pay the Purchase
         Price to the Securities Intermediary for deposit in the Collateral
         Account prior to 11:00 a.m. (New York City time) on the Business Day
         immediately preceding the Purchase Contract Settlement Date, in
         lawful money of the United States by certified or cashiers' check or
         wire transfer, in each case in immediately available funds payable to
         or upon the order of the Securities Intermediary. Any cash received
         by the Collateral Agent shall be invested promptly by the Securities
         Intermediary in Permitted Investments and paid to the Company on the
         Purchase Contract Settlement Date in settlement of the Purchase
         Contracts in accordance with the terms of this Agreement and the
         Pledge Agreement. Any funds received by the Securities Intermediary
         in respect of the investment earnings from such Permitted Investments
         in excess of the Purchase Price for the shares of Common Stock to be
         purchased by such Holder shall be distributed to the Purchase
         Contract Agent when received for payment to the Holder.

          (iii) If a Holder of an Income PACS fails to notify the Purchase
         Contract Agent of his intention to make a Cash Settlement in
         accordance with paragraph 5.02(b)(i) above, such Holder shall be
         deemed to have consented to the disposition of the Pledged Notes
         pursuant to the Secondary Remarketing as described in paragraph
         5.02(c) below.

          (iv) Promptly after 11:00 a.m. (New York City time) on the fourth
         Business Day preceding the Purchase Contract Settlement Date, the
         Purchase Contract Agent, based on notices received by the Purchase
         Contract Agent pursuant to Section 5.02(b) hereof, shall notify the
         Collateral Agent and the Indenture Trustee of the aggregate principal
         amount of Notes to be tendered for purchase in the Remarketing in a
         notice substantially in the form of Exhibit F hereto.

          (v) Not later than 7 calendar days nor more than 15 calendar days
         prior to the Secondary Remarketing Date, the Company shall request
         the Depositary to notify the Beneficial Owners or Depositary
         Participants holding Securities of the procedures to be followed in
         the Secondary Remarketing.

          (vi) If required by applicable law, the Company agrees to endeavor
         to ensure that a registration statement with regard to the full
         amount of the Notes to be remarketed in the Secondary Remarketing
         shall be effective with the Securities Exchange Commission in a form
         that will enable the Remarketing Agent to rely on it in connection
         with the Secondary Remarketing.

          (c) (i) Unless a Tax Event Redemption or a Successful Initial
Remarketing has occurred, the Notes of Income PACS Holders who have not
notified the Purchase Contract Agent of their intention to effect a Cash
Settlement as provided in paragraph 5.02(b)(i) above, will be sold by the
Remarketing Agent (the "Secondary Remarketing") on the third Business Day
immediately preceding the Purchase Contract Settlement Date (the "Secondary
Remarketing Date"). In order to facilitate the Secondary Remarketing, the
Purchase Contract Agent, based on the notices specified in Section
5.02(b)(iv), or the Custodial Agent, based on the notices specified in Section
5.02(c)(ii), shall notify the Remarketing Agent, by 11:00 a.m. (New York City
time) on the Business Day immediately preceding the Secondary Remarketing
Date, of the aggregate principal amount of Notes that are part of Income PACS
or aggregate principal amount of Notes that are no longer part of Income PACS
that are to be remarketed pursuant to clause (ii) below, as the case may be,
to be remarketed. Concurrently, the Collateral Agent, pursuant to the terms of
the Pledge Agreement, shall cause such Notes to be presented to the
Remarketing Agent for Remarketing.

          (ii) A holder of a Note that is no longer part of an Income PACS may
         elect to have such Note remarketed. A holder making such an election
         must notify the Custodial Agent and deliver such Notes to the
         Custodial Agent prior to 11:00 a.m. (New York City time) on the fifth
         Business Day immediately preceding the Purchase Contract Settlement
         Date, of the aggregate number of Notes that are not part of Income
         PACS to be remarketed. Any such notice will be irrevocable and may
         not be conditioned upon the level at which the Reset Rate is
         established in the Remarketing. By 11:00 a.m. (New York City time) on
         the Business Day immediately preceding the Secondary Remarketing
         Date, the Custodial Agent shall cause such Notes to be presented to
         the Remarketing Agent for Remarketing.

          (iii) Upon receipt of such notice from the Purchase Contract Agent
         or the Custodial Agent and such Notes from the Collateral Agent or
         Custodial Agent, as set forth in clauses (i) and (ii) above, the
         Remarketing Agent shall, on the Secondary Remarketing Date, use
         reasonable efforts to remarket such Notes on such date at a price
         equal to 100.5% (but not less than 100%) of the aggregate principal
         amount of such Notes, as provided in the Remarketing Agreement. If
         the Remarketing Agent is able to remarket the Notes at a price equal
         to or greater than 100% of the aggregate principal amount of Notes (a
         "Successful Secondary Remarketing"), the Remarketing Agent will remit
         the proceeds from such Successful Secondary Remarketing to the
         Collateral Agent; provided that the Remarketing Agent may deduct as
         the Remarketing Fee an amount equal to 25 basis points (0.25%) of the
         aggregate principal amount of the remarketed Notes from any amount of
         the proceeds of a Successful Secondary Remarketing in excess of the
         aggregate principal amount of the remarketed Notes. The proceeds from
         the Remarketing remitted to the Collateral Agent shall be invested by
         the Collateral Agent in Permitted Investments, in accordance with the
         Pledge Agreement, and then applied to satisfy in full such Income
         PACS Holders' obligations to pay the Purchase Price for the shares of
         Common Stock under the related Purchase Contracts on the Purchase
         Contract Settlement Date. Any proceeds in excess of those required to
         pay the Purchase Price and the Remarketing Fee will be remitted to
         the Purchase Contract Agent for payment to the Holders of the related
         Income PACS. Income PACS Holders whose Notes are so remarketed will
         not otherwise be responsible for the payment of any Remarketing Fee
         in connection therewith.

          (iv) If, in spite of using its reasonable efforts, the Remarketing
         Agent cannot remarket the related Notes of such Holders of Income
         PACS at a price not less than 100.0% of the Stated Amount or a
         condition precedent set forth in the Remarketing Agreement is not
         fulfilled, the remarketing will be deemed to have failed (a "Failed
         Secondary Remarketing"), an event of default shall be deemed to have
         occurred under this Agreement and the Pledge Agreement and in
         accordance with the terms of the Pledge Agreement, the Collateral
         Agent, for the benefit of the Company, shall exercise its rights as a
         secured party with respect to such Notes, including, without
         limitation, those actions specified in paragraph 5.02(d) below;
         provided, that if upon a Failed Remarketing the Collateral Agent
         exercises such rights for the benefit of the Company with respect to
         such Notes, any accrued and unpaid interest on such Notes shall
         become payable by the Company to the Purchase Contract Agent for
         payment to the Beneficial Owner of the Income PACS to which such
         Notes relate. The Company shall cause a notice of such Failed
         Remarketing to be published on the second Business Day immediately
         preceding the Purchase Contract Settlement Date in a daily newspaper
         in the English language of general circulation in the City of New
         York, which is expected to be The Wall Street Journal and such notice
         shall include the procedures that must be followed if a Holder of
         Notes (whether or not as a component of Income PACS) wishes to
         exercise its right to put the Notes to the Company following a Failed
         Secondary Remarketing, as set forth in the Sixth Supplemental
         Indenture.

          (d) With respect to (i) any Notes which are subject to a Failed
Secondary Remarketing or (ii) any Notes which are components of Income PACS
with respect to which the Holder notified the Purchase Contract Agent as
provided in Section 5.02(b)(i) of his intention to pay the Purchase Price in
cash, but failed to make such payment as required by Section 5.02(b)(ii), in
each case resulting in an event of default under this Agreement, the
Collateral Agent for the benefit of the Company reserves all of its rights as
a secured party with respect thereto and, subject to applicable law and
paragraph 5.02(h) below, shall, in full satisfaction of the Holders'
obligations under the Purchase Contracts among other things, (i) retain the
Notes, (ii) sell the Notes in one or more public or private sales or (iii)
take, or choose not to take, any other action with respect to the Notes, which
in every case specified in (i), (ii) and (iii) shall constitute payment in
full for the aggregate Purchase Price for the shares of Common Stock to be
purchased under the Purchase Contracts.

          (e) (i) Unless a Holder of a Growth PACS or Income PACS (if a Tax
Event Redemption or a Successful Initial Remarketing has occurred) effects an
Early Settlement of the underlying Purchase Contract through the early
delivery of cash to the Purchase Contract Agent in the manner described in
Section 5.04(b)(2), each Holder of a Growth PACS or Income PACS (if a Tax
Event Redemption or a Successful Initial Remarketing has occurred) who intends
to pay in cash shall notify the Purchase Contract Agent by use of a notice in
substantially the form of Exhibit E hereto of his intention to pay in cash the
Purchase Price for the shares of Common Stock to be purchased pursuant to the
related Purchase Contract. Such notice shall be given prior to 5:00 p.m. (New
York City time) on the second Business Day immediately preceding the Purchase
Contract Settlement Date. Prior to 11:00 a.m. (New York City time) on the next
succeeding Business Day, the Purchase Contract Agent shall notify the
Collateral Agent of the receipt of such notices from such Holders intending to
make a Cash Settlement. Growth PACS holders may make Cash Settlements only in
integral multiples of 40 Growth PACS.

          (ii) A Holder of a Growth PACS or Income PACS (if a Tax Event
         Redemption or a Successful Initial Remarketing has occurred) who has
         so notified the Purchase Contract Agent of his intention to make a
         Cash Settlement in accordance with paragraph 5.02(e)(i) above shall
         pay the Purchase Price to the Securities Intermediary for deposit in
         the Collateral Account prior to 11:00 a.m. (New York City time) on
         the Business Day immediately preceding the Purchase Contract
         Settlement Date, in lawful money of the United States by certified or
         cashiers' check or wire transfer, in each case in immediately
         available funds payable to or upon the order of the Securities
         Intermediary. Any cash received by the Collateral Agent shall be
         invested promptly by the Securities Intermediary in Permitted
         Investments and paid to the Company on the Purchase Contract
         Settlement Date in settlement of the Purchase Contract in accordance
         with the terms of this Agreement and the Pledge Agreement. Any funds
         received by the Securities Intermediary in respect of the investment
         earnings from the investment in such Permitted Investments in excess
         of the Purchase Price for the shares of Common Stock to be purchased
         by such Holder shall be distributed to the Purchase Contract Agent
         when received for payment to the Holder.

          (iii) If a Holder of a Growth PACS or Holder of an Income PACS (if a
         Tax Event Redemption or a Successful Initial Remarketing has
         occurred) fails to notify the Purchase Contract Agent of his
         intention to make a Cash Settlement in accordance with paragraph
         5.02(e)(i) above, or does notify the Purchase Contract Agent as
         provided in paragraph 5.02(e)(i) above of his intention to pay the
         Purchase Price in cash, but fails to make such payment as required by
         paragraph 5.02(e)(ii) above, then upon the maturity of the Pledged
         Treasury Securities or the appropriate Applicable Ownership Interest
         (as specified in clause (A) of the definition of such term) of the
         Treasury Portfolio held by the Securities Intermediary on the
         Business Day immediately preceding the Purchase Contract Settlement
         Date, the principal amount of the Treasury Securities or the
         appropriate Applicable Ownership Interest (as specified in clause (A)
         of the definition of such term) of the Treasury Portfolio received by
         the Securities Intermediary shall be invested promptly in Permitted
         Investments. On the Purchase Contract Settlement Date, an amount
         equal to the Purchase Price shall be remitted to the Company as
         payment thereof without receiving any instructions from the Holder.
         In the event the sum of the proceeds from the related Pledged
         Treasury Securities or the appropriate Applicable Ownership Interest
         (as specified in clause (A) of the definition of such term) of the
         Treasury Portfolio and the investment earnings earned from such
         investments is in excess of the aggregate Purchase Price of the
         Purchase Contracts being settled thereby, the Collateral Agent shall
         cause the Securities Intermediary to distribute such excess to the
         Purchase Contract Agent for the benefit of the Holder of the related
         Growth PACS or Income PACS when received.

          (f) Any distribution to Holders of any payments described above
shall be payable at the office of the Purchase Contract Agent in New York City
maintained for that purpose or, at the option of the Holder, by check mailed
to the address of the Person entitled thereto at such address as it appears on
the Security Register.

          (g) Upon Cash Settlement of any Purchase Contract:

          (i) the Collateral Agent will in accordance with the terms of the
         Pledge Agreement cause the Pledged Notes, the appropriate Applicable
         Ownership Interest (as specified in clause (A) of the definition of
         such term) of the Treasury Portfolio or the Pledged Treasury
         Securities, as the case may be, underlying the relevant Security to
         be released from the Pledge, free and clear of any security interest
         of the Company, and transferred to the Purchase Contract Agent for
         delivery to the Holder thereof or its designee as soon as
         practicable; and

          (ii) subject to the receipt thereof, the Purchase Contract Agent
         shall, by book-entry transfer or other appropriate procedures, in
         accordance with written instructions provided by the Holder thereof,
         transfer such Notes, or the appropriate Applicable Ownership Interest
         (as specified in clause (A) of the definition of such term) of the
         Treasury Portfolio or such Treasury Securities, as the case may be
         (or, if no such instructions are given to the Purchase Contract Agent
         by the Holder, the Purchase Contract Agent shall hold such Notes, or
         the appropriate Applicable Ownership Interest (as specified in clause
         (A) of the definition of such term) of the Treasury Portfolio or such
         Treasury Securities, as the case may be, and any interest payment
         thereon, in the name of the Purchase Contract Agent or its nominee in
         trust for the benefit of such Holder until the expiration of the time
         period specified in the abandoned property laws of the relevant state
         where such property is held).

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

          (i) The Company shall not be obligated to issue any shares of Common
Stock in respect of a Purchase Contract or deliver any certificates thereof to
the Holder of the related Security unless the Company shall have received
payment in full for the aggregate Purchase Price for the Common Stock to be
purchased thereunder in the manner herein set forth.

         SECTION 5.03.  Issuance of Shares of Common Stock.

         Unless a Termination Event or an Early Settlement shall have
occurred, subject to Section 5.04(b), on the Purchase Contract Settlement Date
upon receipt of the aggregate Purchase Price payable on all Outstanding
Securities, the Company shall issue and deposit with the Purchase Contract
Agent, for the benefit of the Holders of the Outstanding Securities, one or
more certificates representing newly issued shares of Common Stock registered
in the name of the Purchase Contract Agent (or its nominee) as custodian for
the Holders (such certificates for shares of Common Stock, together with any
dividends or distributions for which a record date and payment date for such
dividend or distribution has occurred after the Purchase Contract Settlement
Date, being hereinafter referred to as the "Purchase Contract Settlement
Fund") to which the Holders are entitled hereunder.

         Subject to the foregoing, upon surrender of a Certificate to the
Purchase Contract Agent on or after the Purchase Contract Settlement Date or
Early Settlement Date, as the case may be, together with settlement
instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive forthwith in exchange therefor a
certificate representing that number of newly issued whole shares of Common
Stock which such Holder is entitled to receive pursuant to the provisions of
this Article Five (after taking into account all Securities then held by such
Holder), together with cash in lieu of fractional shares as provided in
Section 5.09 and any dividends or distributions with respect to such shares
constituting part of the Purchase Contract Settlement Fund, but without any
interest thereon, and the Certificate so surrendered shall forthwith be
cancelled. Such shares shall be registered in the name of the Holder or the
Holder's designee as specified in the settlement instructions provided by the
Holder to the Purchase Contract Agent. If any shares of Common Stock issued in
respect of a Purchase Contract are to be registered to a Person other than the
Person in whose name the Certificate evidencing such Purchase Contract is
registered, no such registration shall be made unless the Person requesting
such registration has paid any transfer and other taxes required by reason of
such registration in a name other than that of the registered Holder of the
Certificate evidencing such Purchase Contract or has established to the
satisfaction of the Company that such tax either has been paid or is not
payable.

         SECTION 5.04.  Adjustment of Settlement Rate.

          (a)   Adjustments for Dividends, Distributions, Stock Splits, Etc.

           (1) In case the Company shall pay or make a dividend or other
distribution on Common Stock in Common Stock, the Settlement Rate in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which:

          (i) the numerator shall be the number of shares of Common Stock
         outstanding at the close of business on the date fixed for such
         determination; and

          (ii) the denominator shall be the sum of such number of shares and
         the total number of shares constituting such dividend or other
         distribution,

such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include any shares issuable in respect of any scrip certificates issued
in lieu of fractions of shares of Common Stock. The Company agrees that it
shall not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.

           (2) In case the Company shall issue rights, warrants or options,
other than pursuant to any dividend reinvestment plans or share purchase
plans, to all holders of its Common Stock (not being available on an
equivalent basis to Holders of the Securities upon settlement of the Purchase
Contracts underlying such Securities) entitling them, for a period expiring
within 45 days after the record date for the determination of shareholders
entitled to receive such rights, warrants or options, to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price per share of Common Stock on the date of announcement of such
issuance, the Settlement Rate in effect at the opening of business on the
Business Day following the date of such announcement shall be increased by
dividing such Settlement Rate by a fraction of which:

          (i) the numerator shall be the number of shares of Common Stock
         outstanding at the close of business on the date fixed for such
         determination plus the number of shares of Common Stock which the
         aggregate of the offering price of the total number of shares of
         Common Stock so offered for subscription or purchase would purchase
         at such Current Market Price; and

         (ii) the denominator shall be the number of shares of Common Stock
         outstanding at the close of business on the date fixed for such
         determination plus the number of shares of Common Stock so offered
         for subscription or purchase,

such increase to become effective immediately after the opening of business on
the Business Day following the date of such announcement. The Company agrees
that it shall notify the Purchase Contract Agent if any issuance of such
rights, warrants or options is cancelled or not completed following the
announcement thereof and the Settlement Rate shall thereupon be readjusted to
the Settlement Rate in effect immediately prior to the date of such
announcement. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in respect of
any scrip certificates issued in lieu of fractions of shares of Common Stock.
The Company agrees that it shall not issue any such rights, warrants or
options in respect of shares of Common Stock held in the treasury of the
Company.

           (3) In case outstanding shares of Common Stock shall be subdivided
or split into a greater number of shares of Common Stock, the Settlement Rate
in effect at the opening of business on the day following the day upon which
such subdivision or split becomes effective shall be proportionately
increased, and, conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock, the
Settlement Rate in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
reduced, such increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision, split or combination becomes effective.

           (4) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights, warrants or options referred
to in paragraph (2) of this Section 5.04(a), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section 5.04(a)), the Settlement Rate shall be adjusted so that
the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution by a
fraction of which:

          (i) the numerator shall be the Current Market Price per share of
         Common Stock on the date fixed for such determination less the then
         fair market value (as reasonably determined by the Board of
         Directors, whose determination shall be conclusive and the basis for
         which shall be described in a Board Resolution) of the portion of the
         assets or evidences of indebtedness so distributed applicable to one
         share of Common Stock; and

          (ii) the denominator shall be such Current Market Price per share of
         Common Stock,

such adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such distribution. In any case in which this
paragraph (4) is applicable, paragraph (2) of this Section 5.04(a) shall not
be applicable. In the event that such dividend or distribution is not so paid
or made, the Settlement Rate shall again be adjusted to be the Settlement Rate
which would then be in effect if such dividend or distribution had not been
declared.

           (5) In case the Company shall, (I) by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that is
distributed in a Reorganization Event to which Section 5.04(b) applies or as
part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (II) the aggregate amount of any
other distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made and (III) the aggregate amount of
any cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution)
of consideration payable in respect of any tender or exchange offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of the
distribution described in clause (I) above and in respect of which no
adjustment pursuant to this paragraph (5) or paragraph (6) of this Section has
been made, exceeds 15% of the product of the Current Market Price per share of
the Common Stock on the date for the determination of holders of shares of
Common Stock entitled to receive such distribution multiplied by the number of
shares of Common Stock outstanding on such date, then, in such case, the
Settlement Rate shall be increased so that the same shall equal the rate
determined by dividing the Settlement Rate in effect immediately prior to the
close of business on such record date by a fraction of which:

          (i) the numerator shall be the Current Market Price of Common Stock
         on the record date less the amount of cash so distributed (and not
         excluded as provided above) applicable to one share of Common Stock;
         and

          (ii) the denominator shall be the Current Market Price of Common
         Stock,

such increase to be effective immediately prior to the opening of business on
the day following the record date; provided, however, that in the event the
portion of cash so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price per share of Common Stock on
the record date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each holder of a Security shall have the right to receive upon
settlement of the Securities the amount of cash such Holder would have
received had such Holder settled each Security on the record date. In the
event that such dividend or distribution is not so paid or made, the
Settlement Rate shall again be adjusted to be the Settlement Rate which would
then be in effect if such dividend or distribution had not been declared.

           (6) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of Common Stock shall expire
and such tender or exchange offer (as amended upon the expiration thereof)
shall require the payment to shareholders (based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of Purchased
Shares (as herein defined) of (I) an aggregate consideration having a fair
market value (as reasonably determined by the Board of Directors, whose
determination shall be conclusive and the basis for which shall be described
in a Board Resolution) that combined together with the aggregate of the cash
plus the fair market value (as reasonably determined by the Board of
Directors, whose determination shall be conclusive and the basis for which
shall be described in a Board Resolution), as of the expiration of such tender
or exchange offer, of consideration payable in respect of any other tender or
exchange offer, by the Company or any subsidiary of the Company for all or any
portion of Common Stock expiring within the 12 months preceding the expiration
of such tender or exchange offer and in respect of which no adjustment
pursuant to this paragraph (6) has been made, and (II) the aggregate amount of
any distributions to all holders of Common Stock made exclusively in cash
within the 12 months preceding the expiration of such tender or exchange offer
and in respect of which no adjustment pursuant to paragraph (6) has been made,
exceeds 15% of the product of the Current Market Price per share of Common
Stock as of the last time (the "Expiration Time") tenders could have been made
pursuant to such tender or exchange offer (as it may be amended) times the
number of shares of Common Stock outstanding (including any tendered shares)
on the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Settlement Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Settlement Rate immediately prior to the close of
business on the date of the Expiration Time by a fraction:

          (i) the numerator of which shall be equal to (A) the product of (I)
         the Current Market Price per share of Common Stock on the date of the
         Expiration Time and (II) the number of shares of Common Stock
         outstanding (including any tendered shares) on the date of the
         Expiration Time less (B) the amount of cash plus the fair market
         value (determined as aforesaid) of the aggregate consideration
         payable to shareholders based on the transactions described in
         clauses (I) and (II) above (assuming in the case of clause (I) the
         acceptance, up to any maximum specified in the terms of the tender or
         exchange offer, of Purchased Shares); and

          (ii) the denominator of which shall be equal to the product of (A)
         the Current Market Price per share of Common Stock as of the
         Expiration Time and (B) the number of shares of Common Stock
         outstanding (including any tendered shares) as of the Expiration Time
         less the number of all shares validly tendered and not withdrawn as
         of the Expiration Time (the shares deemed so accepted, up to any such
         maximum, being referred to as the "Purchased Shares").

           (7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.04(b) applies) shall be deemed to
involve:

          (i) a distribution of such securities other than Common Stock to all
         holders of Common Stock (and the effective date of such
         reclassification shall be deemed to be "the date fixed for the
         determination of shareholders entitled to receive such distribution"
         and the "date fixed for such determination" within the meaning of
         paragraph (4) of this Section); and

         (ii) a subdivision, split or combination, as the case may be, of the
         number of shares of Common Stock outstanding immediately prior to
         such reclassification into the number of shares of Common Stock
         outstanding immediately thereafter (and the effective date of such
         reclassification shall be deemed to be "the day upon which such
         subdivision or split becomes effective" or "the day upon which such
         combination becomes effective", as the case may be, and "the day upon
         which such subdivision, split or combination becomes effective"
         within the meaning of paragraph (3) of this Section).

           (8) The "Current Market Price" per share of Common Stock on any
date of determination means the average of the daily Closing Prices for the
ten consecutive Trading Days ending not later than the earlier of such date of
determination and the day before the "ex date" with respect to the issuance or
distribution requiring such computation. For purposes of this paragraph, the
term "ex date," when used with respect to any issuance or distribution, shall
mean the first date on which Common Stock trades regular way on such exchange
or in such market without the right to receive such issuance or distribution.

           (9) All adjustments to the Settlement Rate shall be calculated to
the nearest 1/10,000th of a share of Common Stock (or if there is not a
nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No
adjustment in the Settlement Rate shall be required unless such adjustment
would require an increase or decrease of at least one percent thereof;
provided, however, that any adjustments which by reason of this subparagraph
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. If an adjustment is made to the Settlement Rate
pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this
Section 5.04(a), an adjustment shall also be made to the Applicable Market
Value solely to determine which of clauses (i) or (ii) of the definition of
Settlement Rate in Section 5.01 will apply on the Purchase Contract Settlement
Date. Such adjustment shall be made by multiplying the Applicable Market Value
by a fraction of which the numerator shall be the Settlement Rate immediately
after such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7)
or (10) of this Section 5.04(a) and the denominator shall be the Settlement
Rate immediately prior to such adjustment; provided, however, that if such
adjustment to the Settlement Rate is required to be made pursuant to the
occurrence of any of the events contemplated by paragraph (1), (2), (3), (4),
(5), (6), (7) or (10) of this Section 5.04(a) during the period taken into
consideration for determining the Applicable Market Value, appropriate and
customary adjustments shall be made to the Settlement Rate.

          (10) The Company may, but shall not be required to, make such
increases in the Settlement Rate, in addition to those required by this
Section, as it considers to be advisable in order to avoid or diminish any
income tax to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such for income
tax purposes or for any other reason.

          (b) Adjustment for Consolidation, Merger or Other Reorganization
Event.

           (1) In the event of:

          (i) any consolidation or merger of the Company with or into another
         Person (other than a merger or consolidation in which the Company is
         the continuing corporation and in which the shares of Common Stock
         outstanding immediately prior to the merger or consolidation are not
         exchanged for cash, securities or other property of the Company or
         another corporation);

          (ii) any sale, transfer, lease or conveyance to another Person of
         the property of the Company as an entirety or substantially as an
         entirety;

          (iii) any statutory share exchange of the Company with another
         Person (other than in connection with a merger or acquisition); or

          (iv) any liquidation, dissolution or termination of the Company
         other than as a result of or after the occurrence of a Termination
         Event (any such event, a "Reorganization Event"),

the Settlement Rate will be adjusted to provide that each Holder of Securities
will receive on the Purchase Contract Settlement Date with respect to each
Purchase Contract forming a part thereof, the kind and amount of securities,
cash and other property receivable upon such Reorganization Event (without any
interest thereon, and without any right to dividends or distribution thereon
which have a record date that is prior to the Purchase Contract Settlement
Date) by a Holder of the number of shares of Common Stock issuable on account
of each Purchase Contract if the Purchase Contract Settlement Date had
occurred immediately prior to such Reorganization Event, assuming such Holder
of Common Stock is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which such
sale or transfer was made, as the case may be (any such Person, a "Constituent
Person"), or an Affiliate of a Constituent Person to the extent such
Reorganization Event provides for different treatment of Common Stock held by
Affiliates of the Company and non-affiliates and such Holder failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such Reorganization Event
(provided that if the kind or amount of securities, cash and other property
receivable upon such Reorganization Event is not the same for each share of
Common Stock held immediately prior to such Reorganization Event by other than
a Constituent Person or an Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing share"), then
for the purpose of this Section the kind and amount of securities, cash and
other property receivable upon such Reorganization Event by each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares).

         In the event of such a Reorganization Event, the Person formed by
such consolidation, merger or exchange or the Person which acquires the assets
of the Company or, in the event of a liquidation, dissolution or termination
of the Company, the Company or a liquidating trust created in connection
therewith, shall execute and deliver to the Purchase Contract Agent an
agreement supplemental hereto providing that each Holder of an Outstanding
Security shall have the rights provided by this Section 5.04(b). Such
supplemental agreement shall provide for adjustments which, for events
subsequent to the effective date of such supplemental agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Section 5.04. The above provisions of this Section 5.04 shall similarly
apply to successive Reorganization Events.

           (2) In the event of a consolidation or merger of the Company with
or into another Person, any merger of another Person into the Company (other
than a merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) in which 30%
or more of the total consideration paid to the Company's shareholders consists
of cash or cash equivalents (a "Cash Merger"), then a Holder of a Security may
settle his Purchase Contract for cash as described in Section 5.02(b)(i) or
5.02(e)(i) hereof, as applicable, on or after the date of such Cash Merger, at
the applicable Settlement Rate. Within five Business Days of the completion of
a Cash Merger, the Company shall provide written notice to Holders of
Securities of such completion of a Cash Merger, which shall specify the
deadline for submitting a notice of Early Settlement pursuant to this Section
5.04(b)(2), the date on which such Early Settlement shall occur (the "Early
Settlement Date"), the applicable Settlement Rate and the amount (per share of
common stock) of cash, securities and other consideration receivable by the
Holder upon settlement. For the purposes of this Section 5.04(b)(2), the date
of the closing of the merger or consolidation shall be deemed to be the
Purchase Contract Settlement Date for the purpose of determining the
Applicable Market Value and the deadline for submitting the notice to settle
early and the related cash payment shall be 5:00 p.m. (New York City time) on
the tenth Business Day after the date the notice relating to a Cash Merger is
provided to the Holders by the Company. Growth PACS Holders may only effect
Early Settlement pursuant to this Section 5.04(b)(2) in integral multiples of
40 Purchase Contracts. If a Tax Event Redemption or a Successful Initial
Remarketing has occurred, Income PACS Holders may only effect Early Settlement
pursuant to this Section 5.04(b)(2) in multiples of 32,000 Purchase Contracts.
Other than the provisions relating to timing of notice and settlement, which
shall be as set forth above, the provisions of Section 5.01(a) shall apply
with respect to an Early Settlement following a Cash Merger pursuant to this
Section 5.04(b)(2). Notwithstanding the foregoing, no Early Settlement will be
permitted pursuant to this Section 5.04(b)(2) unless, at the time such Early
Settlement is effected, there is an effective Registration Statement with
respect to any securities to be issued and delivered in connection with such
Early Settlement, if such a Registration Statement is required (in the view of
counsel, which need not be in the form of a written opinion, for the Company)
under the Securities Act. If such a Registration Statement is so required, the
Company covenants and agrees to use its best efforts to (A) have in effect a
Registration Statement covering any securities to be delivered in respect of
the Purchase Contracts being settled and (B) provide a Prospectus in
connection therewith, in each case in a form that may be used in connection
with such Early Settlement.

          (c) All calculations and determinations pursuant to this Section
5.04 shall be made by the Company or its agent and the Purchase Contract Agent
shall have no responsibility with respect thereto.

         SECTION 5.05.  Notice of Adjustments and Certain Other Events.

          (a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:

          (i) forthwith compute the adjusted Settlement Rate in accordance
         with Section 5.04 and prepare and transmit to the Purchase Contract
         Agent an Officers' Certificate setting forth the Settlement Rate, the
         method of calculation thereof in reasonable detail, and the facts
         requiring such adjustment and upon which such adjustment is based;
         and

          (ii) within 10 Business Days following the occurrence of an event
         that requires an adjustment to the Settlement Rate pursuant to
         Section 5.04 (or if the Company is not aware of such occurrence, as
         soon as practicable after becoming so aware), provide a written
         notice to the Holders of the Securities of the occurrence of such
         event and a statement in reasonable detail setting forth the method
         by which the adjustment to the Settlement Rate was determined and
         setting forth the adjusted Settlement Rate.

          (b) The Purchase Contract Agent shall not at any time be under any
duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Settlement Rate, or with
respect to the nature or extent or calculation of any such adjustment when
made, or with respect to the method employed in making the same. The Purchase
Contract Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at the time be issued or delivered with respect to any
Purchase Contract; and the Purchase Contract Agent makes no representation
with respect thereto. The Purchase Contract Agent shall not be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock pursuant to a Purchase Contract or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.

         SECTION 5.06.  Termination Event; Notice.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Purchase
Contract Payments (including any deferred or accrued and unpaid Purchase
Contract Payments), if the Company shall have such obligation, and the rights
and obligations of Holders to purchase Common Stock, shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Purchase Contract Agent or the Company, if, prior to or on the
Purchase Contract Settlement Date, a Termination Event shall have occurred.

         Upon and after the occurrence of a Termination Event, the Securities
shall thereafter represent the right to receive the Notes, the Treasury
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, forming part of such Securities, in accordance
with the provisions of Section 5.04 of the Pledge Agreement. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Purchase
Contract Agent, the Collateral Agent and the Holders, at their addresses as
they appear in the Security Register.

         SECTION 5.07.  Intentionally Omitted.

         SECTION 5.08.  Intentionally Omitted.

         SECTION 5.09.  No Fractional Shares.

         No fractional shares or scrip representing fractional shares of
Common Stock shall be issued or delivered upon settlement on the Purchase
Contract Settlement Date or upon Early Settlement of any Purchase Contracts.
If Certificates evidencing more than one Purchase Contract shall be
surrendered for settlement at one time by the same Holder, the number of full
shares of Common Stock which shall be delivered upon settlement shall be
computed on the basis of the aggregate number of Purchase Contracts evidenced
by the Certificates so surrendered. Instead of any fractional share of Common
Stock which would otherwise be deliverable upon settlement of any Purchase
Contracts on the Purchase Contract Settlement Date or upon Early Settlement,
the Company, through the Purchase Contract Agent, shall make a cash payment in
respect of such fractional interest in an amount equal to the value of such
fractional shares times the Applicable Market Value. The Company shall provide
the Purchase Contract Agent from time to time with sufficient funds to permit
the Purchase Contract Agent to make all cash payments required by this Section
5.09 in a timely manner.

         SECTION 5.10.  Charges and Taxes.

         The Company will pay all stock transfer and similar taxes
attributable to the initial issuance and delivery of the shares of Common
Stock pursuant to the Purchase Contracts; provided, however, that the Company
shall not be required to pay any such tax or taxes which may be payable in
respect of any exchange of or substitution for a Certificate evidencing a
Security or any issuance of a share of Common Stock in a name other than that
of the registered Holder of a Certificate surrendered in respect of the
Securities evidenced thereby, other than in the name of the Purchase Contract
Agent, as custodian for such Holder, and the Company shall not be required to
issue or deliver such share certificates or Certificates unless or until the
Person or Persons requesting the transfer or issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.

         SECTION 5.11.  Purchase Contract Payments.

          (a) Subject to Section 5.12, the Company shall pay, on each Payment
Date, the Purchase Contract Payments payable in respect of each Purchase
Contract to the Person in whose name a Certificate is registered at the close
of business on the Record Date next preceding such Payment Date. The Purchase
Contract Payments will be payable at the office of the Purchase Contract Agent
in New York City maintained for that purpose or, at the option of the Holder,
by check mailed to the address of the Person entitled thereto at such Person's
address as it appears on the Security Register. If any date on which Purchase
Contract Payments are to be made is not a Business Day, then payment of the
Purchase Contract Payments payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest in respect of
any such delay). Purchase Contract Payments payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.

          (b) Upon the occurrence of a Termination Event, the Company's
obligation to pay future Purchase Contract Payments (including any accrued or
deferred Purchase Contract Payments) shall cease.

         (c) Each Certificate delivered under this Agreement upon registration
of transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the reestablishment of Income PACS) any other
Certificate shall carry the right to accrued or deferred and unpaid Purchase
Contract Payments and the right to accrue Purchase Contract Payments, which
rights were carried by the Purchase Contracts underlying such other
Certificates.

          (d) Subject to Section 5.04(b)(2), in the case of any Security with
respect to which Early Settlement of the underlying Purchase Contract is
effected on a date that is after any Record Date and prior to or on the next
succeeding Payment Date, Purchase Contract Payments otherwise payable on such
Payment Date shall be payable on such Payment Date notwithstanding such Early
Settlement, and such Purchase Contract Payments shall be paid to the Person in
whose name the Certificate evidencing such Security is registered at the close
of business on such Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security with respect to
which Early Settlement of the underlying Purchase Contract is effected,
Purchase Contract Payments that would otherwise be payable after the Early
Settlement Date with respect to such Purchase Contract shall not be payable.

          (e) The Company's obligations with respect to Purchase Contract
Payments, if any, will be subordinated and junior in right of payment to the
Company's obligations under any Senior Indebtedness.

          (f) In the event (x) of any payment by, or distribution of assets
of, the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution, winding-up, liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, or (y) subject to
the provisions of Section 5.11(h) below, that (i) a default shall have
occurred and be continuing with respect to the payment of principal, interest
or any other monetary amounts due and payable on any Senior Indebtedness and
such default shall have continued beyond the period of grace, if any,
specified in the instrument evidencing such Senior Indebtedness (and the
Purchase Contract Agent shall have received written notice thereof from the
Company or one or more holders of Senior Indebtedness or their representative
or representatives or the trustee or trustees under any indenture pursuant to
which any such Senior Indebtedness may have been issued), or (ii) the maturity
of any Senior Indebtedness shall have been accelerated because of a default in
respect of such Senior Indebtedness (and the Purchase Contract Agent shall
have received written notice thereof from the Company or one or more holders
of Senior Indebtedness or their representative or representatives or the
trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued), then:

          (i) the holders of all Senior Indebtedness shall first be entitled
         to receive, in the case of clause (x) above, payment of all amounts
         due or to become due upon all Senior Indebtedness and, in the case of
         subclauses (i) and (ii) of clause (y) above, payment of all amounts
         due thereon, or provision shall be made for such payment in money or
         money's worth, before the Holders of any of the Securities are
         entitled to receive any Purchase Contract Payments on the Purchase
         Contracts underlying the Securities;

          (ii) any payment by, or distribution of assets of, the Company of
         any kind or character, whether in cash, property or securities, to
         which the Holders of any of the Securities would be entitled except
         for the provisions of Section 5.11(e) through (q), including any such
         payment or distribution which may be payable or deliverable by reason
         of the payment of any other indebtedness of the Company being
         subordinated to the payment of such Purchase Contract Payments on the
         Purchase Contracts underlying the Securities, shall be paid or
         delivered by the Person making such payment or distribution, whether
         a trustee in bankruptcy, a receiver or liquidating trustee or
         otherwise, directly to the holders of such Senior Indebtedness or
         their representative or representatives or to the trustee or trustees
         under any indenture under which any instruments evidencing any of
         such Senior Indebtedness may have been issued, ratably according to
         the aggregate amounts remaining unpaid on account of such Senior
         Indebtedness held or represented by each, to the extent necessary to
         make payment in full of all Senior Indebtedness remaining unpaid
         after giving effect to any concurrent payment or distribution (or
         provision therefor) to the holders of such Senior Indebtedness,
         before any payment or distribution is made of such Purchase Contract
         Payments to the Holders of such Securities; and

          (iii) in the event that, notwithstanding the foregoing, any payment
         by, or distribution of assets of, the Company of any kind or
         character, whether in cash, property or securities, including any
         such payment or distribution which may be payable or deliverable by
         reason of the payment of any other indebtedness of the Company being
         subordinated to the payment of Purchase Contract Payments on the
         Purchase Contracts underlying the Securities, shall be received by
         the Purchase Contract Agent or the Holders of any of the Securities
         when such payment or distribution is prohibited pursuant to Section
         5.11(e) through (q), such payment or distribution shall be paid over
         to the holders of such Senior Indebtedness or their representative or
         representatives or to the trustee or trustees under any indenture
         pursuant to which any instruments evidencing any such Senior
         Indebtedness may have been issued, ratably as aforesaid, for
         application to the payment of all Senior Indebtedness remaining
         unpaid until all such Senior Indebtedness shall have been paid in
         full, after giving effect to any concurrent payment or distribution
         (or provision therefor) to the holders of such Senior Indebtedness.

          (g) For purposes of Section 5.11(e) through (q), the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any
other Person provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in Section
5.11(e) through (q) with respect to such Purchase Contract Payments on the
Securities to the payment of all Senior Indebtedness which may at the time be
outstanding; provided that (i) the indebtedness or guarantee of indebtedness,
as the case may be, that constitutes Senior Indebtedness is assumed by the
Person, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of the Senior Indebtedness are not, without the
consent of each such holder adversely affected thereby, altered by such
reorganization or readjustment;

          (h) Any failure by the Company to make any payment on or perform any
other obligation under Senior Indebtedness, other than any indebtedness
incurred by the Company or assumed or guaranteed, directly or indirectly, by
the Company for money borrowed (or any deferral, renewal, extension or
refunding thereof) or any indebtedness or obligation as to which the
provisions of Section 5.11(e) through (g) shall have been waived by the
Company in the instrument or instruments by which the Company incurred,
assumed, guaranteed or otherwise created such indebtedness or obligation,
shall not be deemed a default or event of default if (i) the Company shall be
disputing its obligation to make such payment or perform such obligation and
(ii) either (A) no final judgment relating to such dispute shall have been
issued against the Company which is in full force and effect and is not
subject to further review, including a judgment that has become final by
reason of the expiration of the time within which a party may seek further
appeal or review, and (B) in the event a judgment that is subject to further
review or appeal has been issued, the Company shall in good faith be
prosecuting an appeal or other proceeding for review and a stay of execution
shall have been obtained pending such appeal or review.

          (i) Subject to the payment in full of all Senior Indebtedness, the
Holders of the Securities shall be subrogated (equally and ratably with the
holders of all obligations of the Company which by their express terms are
subordinated to Senior Indebtedness of the Company to the same extent as
payment of the Purchase Contract Payments in respect of the Purchase Contracts
underlying the Securities is subordinated and which are entitled to like
rights of subrogation) to the rights of the holders of Senior Indebtedness to
receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until all such Purchase Contract
Payments owing on the Securities shall be paid in full, and as between the
Company, its creditors other than holders of such Senior Indebtedness and the
Holders, no such payment or distribution made to the holders of Senior
Indebtedness by virtue of Section 5.11(e) through (q) that otherwise would
have been made to the Holders shall be deemed to be a payment by the Company
on account of such Senior Indebtedness, it being understood that the
provisions of Section 5.11(e) through (q) are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and
the holders of Senior Indebtedness, on the other hand.

          (j) Nothing contained in Section 5.11(e) through (q) or elsewhere in
this Agreement or in the Securities is intended to or shall impair, as among
the Company, its creditors other than the holders of Senior Indebtedness and
the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders such Purchase Contract Payments on the
Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Purchase
Contract Agent or any Holder from exercising all remedies otherwise permitted
by applicable law upon default under this Agreement, subject to the rights, if
any, under Section 5.11(e) through (q), of the holders of Senior Indebtedness
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.

          (k) Upon payment or distribution of assets of the Company referred
to in Section 5.11(e) through (q), the Purchase Contract Agent and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any such dissolution, winding up, liquidation
or reorganization proceeding affecting the affairs of the Company is pending
or upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or Purchase Contract Agent or other
person making any payment or distribution, delivered to the Purchase Contract
Agent or to the Holders, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to these Section 5.11(e) through (q).

          (l) The Purchase Contract Agent shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a trustee or representative on behalf of
such holder) to establish that such notice has been given by a holder of
Senior Indebtedness or a trustee or representative on behalf of any such
holder or holders. In the event that the Purchase Contract Agent determines in
good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to Section 5.11(e) through (q), the Purchase Contract
Agent may request such Person to furnish evidence to the reasonable
satisfaction of the Purchase Contract Agent as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent
to the rights of such Person under Section 5.11(e) through (q), and, if such
evidence is not furnished, the Purchase Contract Agent may defer payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.

          (m) Nothing contained in Section 5.11(e) through (q) shall affect
the obligations of the Company to make, or prevent the Company from making,
payment of the Purchase Contract Payments, except as otherwise provided in
these Section 5.11(e) through (q).

          (n) Each Holder of Securities, by his acceptance thereof, authorizes
and directs the Purchase Contract Agent on his, her or its behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in Section 5.11 (e) through (q) and appoints the Purchase Contract
Agent his, her or its attorney-in-fact, as the case may be, for any and all
such purposes.

          (o) The Company shall give prompt written notice to the Purchase
Contract Agent of any fact known to the Company that would prohibit the making
of any payment of moneys to or by the Purchase Contract Agent in respect of
the Securities pursuant to the provisions of this Section. Notwithstanding the
provisions of Section 5.11(e) through (q) or any other provisions of this
Agreement, the Purchase Contract Agent shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
moneys to or by the Purchase Contract Agent, or the taking of any other action
by the Purchase Contract Agent, unless and until the Purchase Contract Agent
shall have received written notice thereof mailed or delivered to the Purchase
Contract Agent at its Institutional Trust Services department from the
Company, any Holder, or the holder or representative of any Senior
Indebtedness; provided that if at least two Business Days prior to the date
upon which by the terms hereof any such moneys may become payable for any
purpose, the Purchase Contract Agent shall not have received with respect to
such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Purchase Contract Agent shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received and shall not be affected by any
notice to the contrary that may be received by it within two Business Days
prior to or on or after such date.

          (p) The Purchase Contract Agent in its individual capacity shall be
entitled to all the rights set forth in this Section with respect to any
Senior Indebtedness at the time held by it, to the same extent as any other
holder of Senior Indebtedness and nothing in this Agreement shall deprive the
Purchase Contract Agent of any of its rights as such holder.

          (q) No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein shall at any time or in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.

          (r) Nothing in this Section 5.11 shall apply to claims of, or
payments to, the Purchase Contract Agent under or pursuant to Section 7.07.

          (s) With respect to the holders of Senior Indebtedness, (i) the
duties and obligations of the Purchase Contract Agent shall be determined
solely by the express provisions of this Agreement; (ii) the Purchase Contract
Agent shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement; (iii) no implied
covenants or obligations shall be read into this Agreement against the
Purchase Contract Agent; and (iv) the Purchase Contract Agent shall not be
deemed to be a fiduciary as to such holders.

         SECTION 5.12.  Deferral of Purchase Contract Payments.

          (a) The Company has the right to defer payment of all or part of the
Purchase Contract Payments in respect of each Purchase Contract until no later
than the Purchase Contract Settlement Date, but only if the Company shall give
the Holders and the Purchase Contract Agent written notice of its election to
defer such payment (specifying the amount to be deferred) at least ten
Business Days prior to the earlier of (i) the next succeeding Payment Date or
(ii) the date the Company is required to give notice of the Record Date or
Payment Date with respect to payment of such Purchase Contract Payments to the
NYSE or other applicable self-regulatory organization or to Holders of the
Securities, but in any event not less than one Business Day prior to such
Record Date. If the Company so elects to defer Purchase Contract Payments, the
Company shall pay additional Purchase Contract Payments on such deferred
installments of Purchase Contract Payments at a rate equal to 9.00% per annum,
compounding quarterly, until such deferred installments are paid in full.
Deferred Purchase Contract Payments shall be due on the next succeeding
Payment Date except to the extent that payment is deferred pursuant to this
Section. No deferral period may end on a date other than a Payment Date.
Except as otherwise provided in Section 5.11(d), in the case of any Security
with respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date, the Holder will have no right to receive
any accrued or deferred Purchase Contract Payments.

          (b) In the event the Company elects to defer the payment of Purchase
Contract Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date the aggregate amount of accrued and unpaid Purchase Contract Payments.
The Company shall pay such amounts on the Purchase Contract Settlement Date in
the manner described in Section 5.02(f).

          (c) In the event the Company exercises its option to defer the
payment of Purchase Contract Payments, then, until all deferred Purchase
Contract Payments have been paid, the Company shall not, and shall not permit
any of its subsidiaries to (a) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities that
rank junior to the Notes in the right of payment issued by the Company or any
subsidiary of the Company, or (b) make any guarantee payments with respect to
any guarantee by the Company of any securities of any of its subsidiaries if
such guarantee ranks junior to the Notes in the right of payment, (c) declare
or pay any dividends or distributions on any of the Company's capital stock or
(d) redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock. Notwithstanding the foregoing, the Company
may (1) purchase or acquire its capital stock in connection with the
satisfaction by it of its obligations under any employee benefit plans or
pursuant to any contract or security outstanding on the first day of any such
event requiring it to purchase its capital stock; (2) reclassify its capital
stock or exchange or convert one class or series of its capital stock for
another class or series of its capital stock; (3) purchase fractional
interests in shares of its capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged; (4) declare dividends or distributions in its capital stock; and
(5) redeem or repurchase any rights pursuant to a rights agreement.

                                   ARTICLE 6
                                   REMEDIES

         SECTION 6.01. Unconditional Right of Holders to Receive Purchase
Contract Payments and to Purchase Shares of Common Stock.

         Each Holder of a Security shall have the right, which is absolute and
unconditional, (i) subject to the right of the Company to defer such payments
in accordance with Section 5.12, to receive each Purchase Contract Payment
with respect to the Purchase Contract comprising part of such Security on the
respective Payment Date for such Security and (ii) except upon and following a
Termination Event, to purchase shares of Common Stock pursuant to such
Purchase Contract and, in each such case, to institute suit for the
enforcement of any such right to receive Purchase Contract Payments and the
right to purchase shares of Common Stock, and such rights shall not be
impaired without the consent of such Holder.

         SECTION 6.02.  Restoration of Rights and Remedies.

         If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company and such Holder shall be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of
such Holder shall continue as though no such proceeding had been instituted.

         SECTION 6.03.  Rights and Remedies Cumulative.

         Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates in the last
paragraph of Section 3.10, no right or remedy herein conferred upon or
reserved to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

         SECTION 6.04.  Delay or Omission Not Waiver.

         No delay or omission of any Holder to exercise any right upon a
default or remedy upon a default shall impair any such right or remedy or
constitute a waiver of any such right. Every right and remedy given by this
Article or by law to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by such Holders.

         SECTION 6.05.  Undertaking for Costs.

         All parties to this Agreement agree, and each Holder of a Security,
by its acceptance of such Security shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Agreement, or in any suit against the Purchase
Contract Agent for any action taken, suffered or omitted by it as Purchase
Contract Agent, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
costs against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; provided
that the provisions of this Section shall not apply to any suit instituted by
the Purchase Contract Agent, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of interest on any
Notes or Purchase Contract Payments on or after the respective Payment Date
therefor in respect of any Security held by such Holder, or for enforcement of
the right to purchase shares of Common Stock under the Purchase Contracts
constituting part of any Security held by such Holder.

         SECTION 6.06.  Waiver of Stay or Extension Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Agreement; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Purchase Contract Agent or the Holders, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

                                   ARTICLE 7
                          THE PURCHASE CONTRACT AGENT

         SECTION 7.01.  Certain Duties and Responsibilities.

          (a)   The Purchase Contract Agent:

           (1) undertakes to perform, with respect to the Securities, such
duties and only such duties as are specifically set forth in this Agreement
and the Pledge Agreement, and no implied covenants or obligations shall be
read into this Agreement or the Pledge Agreement against the Purchase Contract
Agent; and

           (2) in the absence of bad faith or gross negligence on its part,
may, with respect to the Securities, conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Purchase Contract Agent and
conforming to the requirements of this Agreement or the Pledge Agreement or
the Remarketing Agreement, as applicable, but in the case of any certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Purchase Contract Agent, the Purchase Contract Agent shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Agreement or the Pledge Agreement, as applicable (but
need not confirm or investigate the accuracy of the mathematical calculations
or other facts stated therein).

          (b) No provision of this Agreement or the Pledge Agreement shall be
construed to relieve the Purchase Contract Agent from liability for its own
grossly negligent action, its own grossly negligent failure to act, or its own
willful misconduct, except that:

           (1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;

           (2) the Purchase Contract Agent shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Purchase Contract Agent was negligent in ascertaining the
pertinent facts;

           (3) no provision of this Agreement or the Pledge Agreement or the
Remarketing Agreement shall require the Purchase Contract Agent to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if indemnity satisfactory to the Purchase Contract Agent is
not provided to it; and

          (4) the Purchase Contract Agent shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of the
Outstanding Securities.

          (c) Whether or not therein expressly so provided, every provision of
this Agreement, the Pledge Agreement and the Remarketing Agreement relating to
the conduct or affecting the liability of or affording protection to the
Purchase Contract Agent shall be subject to the provisions of this Section.

          (d) The Purchase Contract Agent is authorized to execute and deliver
the Pledge Agreement and the Remarketing Agreement in its capacity as Purchase
Contract Agent.

         SECTION 7.02.  Notice of Default.

         Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Purchase Contract Agent has
actual knowledge, the Purchase Contract Agent shall transmit by mail to the
Company and the Holders of Securities, as their names and addresses appear in
the Security Register, notice of such default hereunder, unless such default
shall have been cured or waived.

         SECTION 7.03.  Certain Rights of Purchase Contract Agent.

         Subject to the provisions of Section 7.01:

           (1) the Purchase Contract Agent may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, Note, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;

           (2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;

           (3) whenever in the administration of this Agreement or the Pledge
Agreement or the Remarketing Agreement the Purchase Contract Agent shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Purchase Contract Agent (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, conclusively rely upon an Officers' Certificate of the Company;

           (4) the Purchase Contract Agent may consult with counsel of its
selection appointed with due care by it hereunder and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;

           (5) the Purchase Contract Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Purchase Contract Agent, in its discretion, and at the
expense of the Company, may make reasonable further inquiry or investigation
into such facts or matters related to the execution, delivery and performance
of the Purchase Contracts as it may see fit, and, if the Purchase Contract
Agent shall determine to make such further inquiry or investigation, it shall
be given a reasonable opportunity to examine the relevant books, records and
premises of the Company, personally or by agent or attorney and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation;

           (6) the Purchase Contract Agent may execute any of the powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or an Affiliate and the Purchase Contract Agent shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney or an Affiliate appointed with due care by it hereunder;

           (7) the Purchase Contract Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at the
request or direction of any of the Holders pursuant to this Agreement, unless
such Holders shall have offered to the Purchase Contract Agent security or
indemnity satisfactory to the Purchase Contract Agent against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

           (8) the Purchase Contract Agent shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;

           (9) the Purchase Contract Agent shall not be deemed to have notice
of any default hereunder unless a Responsible Officer of the Purchase Contract
Agent has actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by the Purchase Contract Agent at the
Corporate Trust Office of the Purchase Contract Agent, and such notice
references the Securities and this Agreement;

          (10) the Purchase Contract Agent may request that the Company
deliver an Officers' Certificate setting forth the names of individuals and/or
titles of officers authorized at such time to take specified actions pursuant
to this Agreement, which Officers' Certificate may be signed by any person
authorized to sign an Officers' Certificate, including any person specified as
so authorized in any such certificate previously delivered and not superseded;

          (11) the rights, privileges, protections, immunities and benefits
given to the Purchase Contract Agent, including, without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the Purchase
Contract Agent in each of its capacities hereunder, and to each agent,
custodian and other Person employed to act hereunder; and

          (12) The Purchase Contract Agent shall not be required to initiate
or conduct any litigation or collection proceedings hereunder and shall have
no responsibilities with respect to any default hereunder except as expressly
set forth herein.

         SECTION 7.04.  Not Responsible for Recitals or Issuance of Securities.

         The recitals contained herein and in the Certificates shall be taken
as the statements of the Company, and the Purchase Contract Agent assumes no
responsibility for their accuracy. The Purchase Contract Agent makes no
representations as to the validity or sufficiency of either this Agreement or
of the Securities, or of the Pledge Agreement or the Pledge or the Collateral
and shall have no responsibility for perfecting or maintaining the perfection
of any security interest in the Collateral. The Purchase Contract Agent shall
not be accountable for the use or application by the Company of the proceeds
in respect of the Purchase Contracts.

         SECTION 7.05.  May Hold Securities.

         Any Security Registrar or any other agent of the Company, or the
Purchase Contract Agent and its Affiliates, in their individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, the Collateral Agent or any other Person with the same
rights it would have if it were not Security Registrar or such other agent, or
the Purchase Contract Agent. The Company may become the owner or pledgee of
Securities.

         SECTION 7.06.  Money Held in Custody.

         Money held by the Purchase Contract Agent in custody hereunder need
not be segregated from the other funds except to the extent required by law or
provided herein. The Purchase Contract Agent shall be under no obligation to
invest or pay interest on any money received by it hereunder except as
otherwise provided hereunder or agreed in writing with the Company.

         SECTION 7.07.  Compensation and Reimbursement.

         The Company agrees:

           (1) to pay to the Purchase Contract Agent compensation for all
services rendered by it hereunder, under the Pledge Agreement and under the
Remarketing Agreement as the Company and the Purchase Contract Agent shall
from time to time agree in writing;

           (2) except as otherwise expressly provided for herein, to reimburse
the Purchase Contract Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Purchase Contract Agent in
accordance with any provision of this Agreement, the Pledge Agreement and the
Remarketing Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its gross negligence,
willful misconduct or bad faith; and

           (3) to indemnify the Purchase Contract Agent and any predecessor
Purchase Contract Agent for, and to hold it harmless against, any loss,
liability or expense incurred without gross negligence, willful misconduct or
bad faith on its part, arising out of or in connection with the acceptance or
administration of its duties hereunder and under the Pledge Agreement and the
Remarketing Agreement, including the costs and expenses of defending itself
against any claim (whether asserted by the Company, a Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder or thereunder.

         The provisions of this Section shall survive the resignation and
removal of the Purchase Contract Agent and the termination of this Agreement.

         SECTION 7.08.  Corporate Purchase Contract Agent Required;
Eligibility.

         There shall at all times be a Purchase Contract Agent hereunder which
shall be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having (or
being a member of a bank holding company having) a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
Federal or State authority and having a corporate trust office in the Borough
of Manhattan, New York City, if there be such a corporation in the Borough of
Manhattan, New York City, qualified and eligible under this Article and
willing to act on reasonable terms. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Purchase Contract Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.

         SECTION 7.09.  Resignation and Removal; Appointment of Successor.

          (a) No resignation or removal of the Purchase Contract Agent and no
appointment of a successor Purchase Contract Agent pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Purchase Contract Agent in accordance with the applicable requirements of
Section 7.10.

          (b) The Purchase Contract Agent may resign at any time by giving
written notice thereof to the Company 60 days prior to the effective date of
such resignation. If the instrument of acceptance by a successor Purchase
Contract Agent required by Section 7.10 shall not have been delivered to the
Purchase Contract Agent within 30 days after the giving of such notice of
resignation, the resigning Purchase Contract Agent may petition, at the
expense of the Company, any court of competent jurisdiction for the
appointment of a successor Purchase Contract Agent.

          (c) The Purchase Contract Agent may be removed at any time by Act of
the Holders of a majority in number of the Outstanding Securities delivered to
the Purchase Contract Agent and the Company. If the instrument of acceptance
by a successor Purchase Contract Agent required by Section 7.10 shall not have
been delivered to the Purchase Contract Agent within 30 days after such Act,
the Purchase Contract Agent being removed may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a
successor Purchase Contract Agent.

          (d)   If at any time:

           (1) the Purchase Contract Agent fails to comply with Section 310(b)
         of the TIA, as if the Purchase Contract Agent were an indenture
         trustee under an indenture qualified under the TIA, after written
         request therefor by the Company or by any Holder who has been a bona
         fide Holder of a Security for at least six months;

           (2) the Purchase Contract Agent shall cease to be eligible under
         Section 7.08 and shall fail to resign after written request therefor
         by the Company or by any such Holder; or

           (3) the Purchase Contract Agent shall become incapable of acting or
         shall be adjudged a bankrupt or insolvent or a receiver of the
         Purchase Contract Agent or of its property shall be appointed or any
         public officer shall take charge or control of the Purchase Contract
         Agent or of its property or affairs for the purpose of
         rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Purchase Contract Agent, or (ii) any Holder who has been a bona fide Holder of
a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Purchase Contract Agent and the appointment of a successor
Purchase Contract Agent.

          (e) If the Purchase Contract Agent shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office of
Purchase Contract Agent for any cause, the Company, by a Board Resolution,
shall promptly appoint a successor Purchase Contract Agent and shall comply
with the applicable requirements of Section 7.10. If no successor Purchase
Contract Agent shall have been so appointed by the Company and accepted
appointment in the manner required by Section 7.10, any Holder who has been a
bona fide Holder of a Security for at least six months, on behalf of itself
and all others similarly situated, or the Purchase Contract Agent may petition
at the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Purchase Contract Agent.

          (f) The Company shall give, or shall cause such successor Purchase
Contract Agent to give, notice of each resignation and each removal of the
Purchase Contract Agent and each appointment of a successor Purchase Contract
Agent by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the applicable
Security Register. Each notice shall include the name of the successor
Purchase Contract Agent and the address of its Corporate Trust Office.

         SECTION 7.10.  Acceptance of Appointment by Successor.

          (a) In case of the appointment hereunder of a successor Purchase
Contract Agent, every such successor Purchase Contract Agent so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Purchase Contract Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Purchase Contract Agent
shall become effective and such successor Purchase Contract Agent, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, agencies and duties of the retiring Purchase Contract Agent; but, on
the request of the Company or the successor Purchase Contract Agent, such
retiring Purchase Contract Agent shall, upon payment of its charges, execute
and deliver an instrument transferring to such successor Purchase Contract
Agent all the rights, powers and trusts of the retiring Purchase Contract
Agent and duly assign, transfer and deliver to such successor Purchase
Contract Agent all property and money held by such retiring Purchase Contract
Agent hereunder.

          (b) Upon request of any such successor Purchase Contract Agent, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Purchase Contract Agent all such
rights, powers and agencies referred to in paragraph 7.10(a) of this Section.

          (c) No successor Purchase Contract Agent shall accept its
appointment unless at the time of such acceptance such successor Purchase
Contract Agent shall be qualified and eligible under this Article.

         SECTION 7.11.  Merger, Conversion, Consolidation or Succession to
Business.

         Any corporation into which the Purchase Contract Agent 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 Purchase
Contract Agent shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Purchase Contract Agent,
shall be the successor of the Purchase Contract Agent hereunder, provided that
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Purchase Contract Agent then in office, any successor by merger, conversion or
consolidation to such Purchase Contract Agent may adopt such authentication
and execution and deliver the Certificates so authenticated and executed with
the same effect as if such successor Purchase Contract Agent had itself
authenticated and executed such Securities.

         SECTION 7.12.  Preservation of Information; Communications to Holders.

          (a) The Purchase Contract Agent shall preserve, in as current a form
as is reasonably practicable, the names and addresses of Holders received by
the Purchase Contract Agent in its capacity as Security Registrar.

          (b) If three or more Holders (herein referred to as "Applicants")
apply in writing to the Purchase Contract Agent, and furnish to the Purchase
Contract Agent reasonable proof that each such applicant has owned a Security
for a period of at least six months preceding the date of such application,
and such application states that the applicants desire to communicate with
other Holders with respect to their rights under this Agreement or under the
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Purchase
Contract Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Purchase Contract Agent of the materials to
be mailed and of payment, or provision for the payment, of the reasonable
expenses of such mailing.

         SECTION 7.13.  No Obligations of Purchase Contract Agent.

         Except to the extent otherwise expressly provided in this Agreement,
the Purchase Contract Agent assumes no obligations and shall not be subject to
any liability under this Agreement, the Pledge Agreement or any Purchase
Contract in respect of the obligations of the Holder of any Security
thereunder. The Company agrees, and each Holder of a Certificate, by his or
her acceptance thereof, shall be deemed to have agreed, that the Purchase
Contract Agent's execution of the Certificates on behalf of the Holders shall
be solely as agent and attorney-in-fact for the Holders, and that the Purchase
Contract Agent shall have no obligation to perform such Purchase Contracts on
behalf of the Holders, except to the extent expressly provided in Article Five
hereof. Anything contained in this Agreement to the contrary notwithstanding,
in no event shall the Purchase Contract Agent or its officers, employees or
agents be liable under this Agreement to any third party for indirect,
special, punitive, or consequential loss or damage of any kind whatsoever,
including lost profits, whether or not the likelihood of such loss or damage
was known to the Purchase Contract Agent and regardless of the form of action.

         SECTION 7.14.  Tax Compliance.

          (a) The Company and the Purchase Contract Agent will comply with all
applicable certification, information reporting and withholding (including
"backup" withholding) requirements imposed by applicable tax laws, regulations
or administrative practice with respect to (i) in the case of the Company and
the Purchase Contract Agent, any payments made with respect to the Securities
or (ii) in the case of the Company, the issuance, delivery, holding, transfer,
redemption or exercise of rights under the Securities. Such compliance shall
include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.

          (b) The Purchase Contract Agent shall comply in accordance with the
terms hereof with any written direction received from the Company with respect
to the execution or certification of any required documentation and the
application of such requirements to particular payments or Holders or in other
particular circumstances, and may for purposes of this Agreement conclusively
rely on any such direction in accordance with the provisions of Section
7.01(a)(2) hereof.

          (c) The Purchase Contract Agent shall maintain all appropriate
records documenting compliance with such requirements, and shall make such
records available, on written request, to the Company or its authorized
representative within a reasonable period of time after receipt of such
request.

                                   ARTICLE 8
                            SUPPLEMENTAL AGREEMENTS

         SECTION 8.01.  Supplemental Agreements Without Consent of Holders.

         Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Purchase Contract Agent, at any time and from time
to time, may enter into one or more agreements supplemental hereto, in form
satisfactory to the Company and the Purchase Contract Agent, to:

           (1) evidence the succession of another Person to the Company, and
         the assumption by any such successor of the covenants of the Company
         herein and in the Certificates;

           (2) evidence and provide for the acceptance of appointment
         hereunder by a successor Purchase Contract Agent;

           (3) add to the covenants of the Company for the benefit of the
         Holders, or surrender any right or power herein conferred upon the
         Company;

           (4) make provision with respect to the rights of Holders pursuant
         to the requirements of Section 5.04(b); or

           (5) except as provided for in Section 5.04, cure any ambiguity,
         correct or supplement any provisions herein which may be inconsistent
         with any other provisions herein, or make any other provisions with
         respect to such matters or questions arising under this Agreement,
         provided that such action shall not adversely affect the interests of
         the Holders in any material respect.

         SECTION 8.02.  Supplemental Agreements with Consent of Holders.

         With the consent of the Holders of not less than a majority of the
outstanding Securities voting together as one class, by Act of said Holders
delivered to the Company and the Purchase Contract Agent, the Company, when
authorized by a Board Resolution, and the Purchase Contract Agent may enter
into an agreement or agreements supplemental hereto for the purpose of
modifying in any manner the terms of the Purchase Contracts, or the provisions
of this Agreement or the rights of the Holders in respect of the Securities;
provided, however, that, except as contemplated herein, no such supplemental
agreement shall, without the unanimous consent of the Holders of each
outstanding Purchase Contract affected thereby,

           (1)  change any Payment Date;

           (2) change the amount or the type of Collateral required to be
         Pledged to secure a Holder's obligations under the Purchase Contract,
         impair the right of the Holder of any Purchase Contract to receive
         distributions on the related Collateral or otherwise adversely affect
         the Holder's rights in or to such Collateral or adversely alter the
         rights in or to such Collateral;

           (3) impair the right to institute suit for the enforcement of any
         Purchase Contract, any Purchase Contract Payments or any deferred
         Purchase Contract Payments;

           (4) reduce the number of shares of Common Stock or the amount of
         any other property to be purchased pursuant to any Purchase Contract,
         increase the price to purchase shares of Common Stock or any other
         property upon settlement of any Purchase Contract or change the
         Purchase Contract Settlement Date or the right to Early Settlement
         following a Cash Merger or otherwise adversely affect the Holder's
         rights under the Purchase Contract;

           (5) reduce any Purchase Contract Payments or deferred Purchase
         Contract Payments or change any place where, or the coin or currency
         in which, any Purchase Contract Payment is payable; or

           (6) reduce the percentage of the outstanding Purchase Contracts the
         consent of whose Holders is required for any modification or
         amendment to the provisions of this Agreement, the Purchase Contracts
         or the Pledge Agreement;

provided that if any amendment or proposal referred to above would adversely
affect only the Income PACS or the Growth PACS, then only the affected class
of Holders as of the record date for the Holders entitled to vote thereon will
be entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the consent of Holders of not less
than a majority of such class; and provided, further, that the unanimous
consent of the Holders of each outstanding Purchase Contract of such class
affected thereby shall be required to approve any amendment or proposal
specified in clauses (1) through (6) above.

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

         SECTION 8.03.  Execution of Supplemental Agreements.

         In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby
of the agencies created by this Agreement, the Purchase Contract Agent shall
be provided, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement and that any and all conditions precedent to the execution and
delivery of such supplemental agreement have been satisfied. The Purchase
Contract Agent may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Purchase Contract Agent's own rights,
duties or immunities under this Agreement or otherwise.

         SECTION 8.04.  Effect of Supplemental Agreements.

         Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such
supplemental agreement 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 hereunder, shall be bound
thereby.

         SECTION 8.05.  Reference to Supplemental Agreements.

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

                                   ARTICLE 9
             CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

         SECTION 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or
Lease Property Except under Certain Conditions.

         The Company covenants that it will not consolidate with or merge into
any other corporation or convey, transfer or lease all or substantially all of
its properties and assets to any Person, unless:

          (i) either the Company shall be the continuing corporation, or the
         successor (if other than the Company) shall be a corporation
         organized and existing under the laws of the United States of America
         or a State thereof or the District of Columbia and such corporation
         shall expressly assume all the obligations of the Company under the
         Purchase Contracts, this Agreement, the Pledge Agreement, the
         Indenture (including any supplement thereto) and the Remarketing
         Agreement by one or more supplemental agreements in form reasonably
         satisfactory to the Purchase Contract Agent and the Collateral Agent,
         executed and delivered to the Purchase Contract Agent and the
         Collateral Agent by such corporation; and

          (ii) the Company or such successor corporation, as the case may be,
         shall not, immediately after such consolidation, merger, conveyance,
         transfer or lease, be in default in the performance of any covenant
         or condition hereunder, under any of the Securities or under the
         Pledge Agreement or this Agreement.

         SECTION 9.02.  Rights and Duties of Successor Corporation.

         In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor corporation in accordance with Section 9.01, such successor
corporation shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the Company. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of The Williams Companies, Inc., any or all of the
Certificates evidencing Securities issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Purchase Contract
Agent; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Agreement prescribed, the Purchase Contract Agent shall authenticate and
execute on behalf of the Holders and deliver any Certificates which previously
shall have been signed and delivered by the officers of the Company to the
Purchase Contract Agent for authentication and execution, and any Certificate
evidencing Securities which such successor corporation thereafter shall cause
to be signed and delivered to the Purchase Contract Agent for that purpose.
All the Certificates issued shall in all respects have the same legal rank and
benefit under this Agreement as the Certificates theretofore or thereafter
issued in accordance with the terms of this Agreement as though all of such
Certificates had been issued at the date of the execution hereof.

         In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing Securities
thereafter to be issued as may be appropriate.

         SECTION 9.03. Officers' Certificate and Opinion of Counsel Given to
Purchase Contract Agent.

         The Purchase Contract Agent, subject to Sections 7.01 and 7.03, shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance have been met.

                                  ARTICLE 10
                                   COVENANTS

         SECTION 10.01.  Performance under Purchase Contracts.

         The Company covenants and agrees for the benefit of the Holders from
time to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.

         SECTION 10.02.  Maintenance of Office or Agency.

         The Company will maintain in the Borough of Manhattan, New York City
an office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase
Contracts on the Purchase Contract Settlement Date or Early Settlement and for
transfer of Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or exchange, for
a Collateral Substitution or reestablishment of Income PACS and where notices
and demands to or upon the Company in respect of the Securities and this
Agreement may be served. The Company will give prompt written notice to the
Purchase Contract Agent of the location, and any change in the location, of
such office or agency. The Company initially designates the Corporate Trust
Office of the Purchase Contract Agent as such office of the Company. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Purchase Contract Agent with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Company hereby appoints the Purchase
Contract Agent as its agent to receive all such presentations, surrenders,
notices and demands.

         The Company may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, New York City for such purposes. The Company will give
prompt written notice to the Purchase Contract Agent of any such designation
or rescission and of any change in the location of any such other office or
agency. The Company hereby designates as the place of payment for the
Securities the Corporate Trust Office and appoints the Purchase Contract Agent
at its Corporate Trust Office as paying agent in such city.

         SECTION 10.03.  Company to Reserve Common Stock.

         The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock the full number of shares of
Common Stock issuable against tender of payment in respect of all Purchase
Contracts constituting a part of the Securities evidenced by Outstanding
Certificates.

         SECTION 10.04.  Covenants as to Common Stock.

         The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable.

         SECTION 10.05.  Statements of Officers of the Company as to Default.

         The Company will deliver to the Purchase Contract Agent, within 120
days after the end of each fiscal year of the Company (which as of the date
hereof is December 31) ending after the date hereof, an Officers' Certificate
(one of the signers of which shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company),
stating whether or not to the knowledge of the signers thereof the Company is
in default in the performance and observance of any of the terms, provisions
and conditions hereof, and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge.

         SECTION 10.06.  ERISA.

         Each Holder from time to time of the Securities that is a Plan or who
used assets of a Plan to purchase Securities hereby represents that its
acquisition of the Income PACS and the holding of the same satisfies the
applicable fiduciary requirements of ERISA and that it is entitled to
exemption relief from the prohibited transaction provisions of ERISA and the
Code in accordance with one or more prohibited transaction exemptions or
otherwise will not result in a nonexempt prohibited transaction.

         SECTION 10.07. Tax Treatment. The Company covenants and agrees to
treat each Holder as the owner, for United States federal income tax purposes,
of the applicable interest in the Collateral Account, including the Notes and
Applicable Ownership Interest of the Treasury Portfolio or the Treasury
Securities.

                      [SIGNATURES ON THE FOLLOWING PAGE]

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

                                         THE WILLIAMS COMPANIES, INC.

                                         By:  /s/James G. Ivey
                                              --------------------------------
                                              Name: James G. Ivey
                                              Title:   Treasurer

                                         JPMORGAN CHASE BANK,
                                         as Purchase Contract Agent

                                         By:  /s/Joanne Adamis
                                              --------------------------------
                                              Name: Joanne Adamis
                                              Title:   Vice President

                                                                   EXHIBIT A

                   (FORM OF FACE OF Income PACS CERTIFICATE)

         [For inclusion in Global Certificates only - THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS THE
NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY"), THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS
CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF
THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT
IN LIMITED CIRCUMSTANCES.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]

No. ____                                               CUSIP No._____________
Number of Income PACS:______________

                         THE WILLIAMS COMPANIES, INC.
                                  Income PACS

         This Income PACS Certificate certifies that _______. is the
registered Holder of the number of Income PACS set forth above [For inclusion
in Global Certificates only - or such other number of Income PACS reflected in
the Schedule of Increases or Decreases in Global Certificate attached hereto].
Each Income PACS consists of (i) either (a) the beneficial ownership by the
Holder of $25 principal amount of 6.50% Senior Notes due 2007 (the "Notes") of
The Williams Companies, Inc., a Delaware corporation (the "Company"), subject
to the Pledge of such Note by such Holder pursuant to the Pledge Agreement, or
(b) upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date or a Successful Initial Remarketing, the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio by such Holder pursuant to the Pledge
Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with the Company. All capitalized terms used herein which
are defined in the Purchase Contract Agreement (as defined on the reverse
hereof) have the meaning set forth therein.

         Pursuant to the Pledge Agreement, the Notes or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, constituting part of
each Income PACS evidenced hereby have been pledged to the Collateral Agent,
for the benefit of the Company, to secure the obligations of the Holder under
the Purchase Contract comprising part of such Income PACS.

         The Pledge Agreement provides that all payments of the principal
amount with respect to any of the Pledged Notes or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, or interest on any Pledged
Notes (as defined in the Pledge Agreement) or the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, constituting part of the Income
PACS received by the Securities Intermediary shall be paid by wire transfer in
same day funds (i) in the case of (A) interest on Pledged Notes or cash
distributions with respect to the appropriate Applicable Ownership Interest
(as specified in clause (B) of the definition of such term) of the Treasury
Portfolio, as the case may be, and (B) any payments of the principal amount of
any Notes or liquidation amount with respect to the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, that have been released from
the Pledge pursuant to the Pledge Agreement, to the Purchase Contract Agent to
the account designated by the Purchase Contract Agent, no later than 2:00
p.m., New York City time, on the Business Day such payment is received by the
Securities Intermediary (provided that in the event such payment is received
by the Securities Intermediary 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) and (ii) in the case of payments of the principal amount of the
Notes or the liquidation amount with respect to the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, to the Company on the Purchase Contract Settlement
Date (as described herein) in accordance with the terms of the Pledge
Agreement, in full satisfaction of the respective obligations of the Holders
of the Income PACS of which such Pledged Notes or the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, are a part under the Purchase
Contracts forming a part of such Income PACS. Interest on the Notes and
distributions on the appropriate Applicable Ownership Interest (as specified
in clause (B) of the definition of such term) of the Treasury Portfolio, as
the case may be, forming part of an Income PACS evidenced hereby, which are
payable quarterly in arrears on February 16, May 16, August 16, and November
16 of each year, commencing May 16, 2002 (a "Payment Date"), shall, subject to
receipt thereof by the Purchase Contract Agent from the Securities
Intermediary, be paid to the Person in whose name this Income PACS Certificate
(or a Predecessor Income PACS Certificate) is registered at the close of
business on the Record Date for such Payment Date.

         Each Purchase Contract evidenced hereby obligates the Holder of this
Income PACS Certificate to purchase, and the Company to sell, on February 16,
2005 (the "Purchase Contract Settlement Date"), at a price equal to $25 (the
"Stated Amount"), a number of newly issued shares of Common Stock, par value
$1.00 ("Common Stock"), of the Company, equal to the Settlement Rate, unless
on or prior to the Purchase Contract Settlement Date there shall have occurred
a Termination Event or an Early Settlement with respect to the Income PACS of
which such Purchase Contract is a part, all as provided in the Purchase
Contract Agreement and more fully described on the reverse hereof. The
purchase price (the "Purchase Price") for the shares of Common Stock purchased
pursuant to each Purchase Contract evidenced hereby, if not paid earlier,
shall be paid on the Purchase Contract Settlement Date by application of
payment received in respect of the principal amount with respect to any
Pledged Notes pursuant to the Remarketing or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, pledged to secure the
obligations under such Purchase Contract of the Holder of the Income PACS of
which such Purchase Contract is a part.

         The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of an Income PACS evidenced hereby, an amount
(the "Purchase Contract Payments") equal to 2.5% per year of the Stated
Amount. Such Purchase Contract Payments shall be payable to the Person in
whose name this Income PACS Certificate is registered at the close of business
on the Record Date for such Payment Date. The Company may, at its option,
defer such Purchase Contract Payments.

         Interest on the Notes and distributions on the Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) and the
Purchase Contract Payments will be payable at the office of the Purchase
Contract Agent in New York City or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address appears
on the Security Register.

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

         Unless the certificate of authentication hereon has been executed by
the Purchase Contract Agent by manual signature, this Income PACS Certificate
shall not be entitled to any benefit under the Pledge Agreement or the
Purchase Contract Agreement or be valid or obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                         THE WILLIAMS COMPANIES, INC.

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

                                         HOLDER SPECIFIED ABOVE (as to
                                         obligations of such Holder under the
                                         Purchase Contracts)

                                         By:  JPMorgan Chase Bank,
                                              not individually but solely as
                                              Attorney-in-Fact of such Holder

                                         By:
                                              ---------------------------------
                                              Authorized Officer

DATED:__________________

                         CERTIFICATE OF AUTHENTICATION
                          OF PURCHASE CONTRACT AGENT

         This is one of the Income PACS Certificates referred to in the within
mentioned Purchase Contract Agreement.

                                         By:  JPMorgan Chase Bank,
                                              as Purchase Contract Agent

                                         By:
                                              ---------------------------------
                                                          Authorized Officer
Dated: ____________________

                 (FORM OF REVERSE OF Income PACS CERTIFICATE)

         Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of January 14, 2002 (as may be supplemented from
time to time, the "Purchase Contract Agreement"), between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent (including its successors
hereunder, the "Purchase Contract Agent"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Purchase Contract Agent, the Company,
and the Holders and of the terms upon which the Income PACS Certificates are,
and are to be, executed and delivered.

         Unless a Cash Settlement or an Early Settlement has occurred, each
Purchase Contract evidenced hereby obligates the Holder of this Income PACS
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "Purchase Price"),
a number of shares of Common Stock equal to the Settlement Rate, unless, prior
to or on the Purchase Contract Settlement Date, there shall have occurred a
Termination Event with respect to the Security of which such Purchase Contract
is a part or an Early Settlement shall have occurred. The "Settlement Rate" is
equal to:

           (1) if the Applicable Market Value (as defined below) is greater
         than $41.25 (the "Appreciation Cap Price"), the number of newly
         issued shares of Common Stock per Purchase Contract having a value,
         based on the Applicable Market Value, equal to 1.0000 multiplied by
         the quotient of the Appreciation Cap Price divided by the Applicable
         Market Value; and

           (2) if the Applicable Market Value is less than or equal to the
         Appreciation Cap Price, 1.0000 share of Common Stock per Purchase
         Contract,

in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest
1/10,000th of a share).

         No fractional shares of Common Stock will be issued upon settlement
of Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.

         Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Income PACS to purchase at the Purchase Price, and the Company to
sell, a number of newly issued shares of Common Stock equal to the Settlement
Rate.

         The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date.

         The "Closing Price" per share of Common Stock on any date of
determination means:

           (1) the closing sale price as of the close of the principal trading
         session (or, if no closing price is reported, the last reported sale
         price) per share on the New York Stock Exchange, Inc. (the "NYSE") on
         such date;

           (2) if Common Stock is not listed for trading on the NYSE on any
         such date, the closing sale price per share as reported in the
         composite transactions for the principal United States securities
         exchange on which Common Stock is so listed;

           (3) if Common Stock is not so listed on a United States national or
         regional securities exchange, the closing sale price per share as
         reported by The Nasdaq Stock Market;

           (4) if Common Stock is not so reported, the last quoted bid price
         for Common Stock in the over-the-counter market as reported by the
         National Quotation Bureau or similar organization; or

           (5) if such bid price is not available, the market value of Common
         Stock on such date as determined by a nationally recognized
         independent investment banking firm retained for this purpose by the
         Company.

         A "Trading Day" means a day on which Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of Common Stock.

         In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Income PACS Certificate may pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement or an Early Settlement following a Cash
Merger or from the proceeds of the Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio or a
Remarketing of the related Pledged Notes. Unless a Tax Event Redemption or a
Successful Initial Remarketing has occurred, a Holder of Income PACS who does
not (1) on or prior to 11:00 a.m. (New York City time) on the fifth Business
Day immediately preceding the Purchase Contract Settlement Date, notify the
Purchase Contract Agent of its intention to effect a Cash Settlement, (2) on
or prior to 5:00 p.m. (New York City time) on the fifth Business Day prior to
the Purchase Contract Settlement Date, make an effective Early Settlement
following a Cash Merger, shall pay the Purchase Price for the shares of Common
Stock to be delivered under the related Purchase Contract from the proceeds of
the sale of the related Pledged Notes held by the Collateral Agent. Unless a
Tax Event Redemption or a Successful Initial Remarketing has occurred, such
sale will be made by the Remarketing Agent pursuant to the terms of the
Remarketing Agreement on the third Business Day prior to the Purchase Contract
Settlement Date. If a Tax Event Redemption or a Successful Initial Remarketing
has occurred, a Holder of Income PACS who does not notify the Purchase
Contract Agent, on or prior to 11:00 a.m. (New York City time) on the second
Business Day immediately preceding the Purchase Contract Settlement Date, of
its intention to effect a Cash Settlement or an Early Settlement following a
Cash Merger, shall pay the Purchase Price for the shares of Common Stock to be
delivered under the related Purchase Contract from the proceeds at maturity of
the Applicable Ownership Interests (as defined in clause (A) of the definition
of such term) of the Treasury Portfolio.

         If, as provided in the Purchase Contract Agreement, (i) upon the
occurrence of a Failed Secondary Remarketing or (ii) if a Holder notifies the
Purchase Contract Agent of its intention to effect a Cash Settlement but fails
to deliver the purchase price in cash on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date, the Collateral
Agent, for the benefit of the Company, exercises its rights as a secured
creditor with respect to the Pledged Notes related to this Income PACS
certificate, any accrued and unpaid interest on such Pledged Notes will become
payable by the Company to the holder of this Income PACS Certificate in the
manner provided for in the Purchase Contract Agreement.

         The Company shall not be obligated to issue any shares of Common
Stock in respect of a Purchase Contract or deliver any certificates therefor
to the Holder unless it shall have received payment of the aggregate Purchase
Price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.

         Each Purchase Contract evidenced hereby and all obligations and
rights of the Company and the Holder thereunder shall terminate if a
Termination Event shall occur. Upon the occurrence of a Termination Event, the
Company shall give written notice to the Purchase Contract Agent and to the
Holders, at their addresses as they appear in the Security Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent shall
release the Pledged Notes or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio forming a part of each Income PACS from the Pledge. An Income PACS
shall thereafter represent the right to receive the Note or the appropriate
Applicable Ownership Interest of the Treasury Portfolio forming a part of such
Income PACS in accordance with the terms of the Purchase Contract Agreement
and the Pledge Agreement.

         Under the terms of the Pledge Agreement, the Purchase Contract Agent
will be entitled to exercise the voting and any other consensual rights
pertaining to the Pledged Notes. Upon receipt of notice of any meeting at
which holders of Notes are entitled to vote or upon the solicitation of
consents, waivers or proxies of holders of Notes, the Purchase Contract Agent
shall, as soon as practicable thereafter, mail to the Income PACS Holders a
notice:

           (1) containing such information as is contained in the notice or
         solicitation;

           (2) stating that each Income PACS Holder on the record date set by
         the Purchase Contract Agent therefor (which, to the extent possible,
         shall be the same date as the record date for determining the holders
         of Notes entitled to vote) shall be entitled to instruct the Purchase
         Contract Agent as to the exercise of the voting rights pertaining to
         the Notes constituting a part of such Holder's Income PACS; and

           (3) stating the manner in which such instructions may be given.

Upon the written request of the Income PACS Holders on such record date, the
Purchase Contract Agent shall endeavor insofar as practicable to vote or cause
to be voted, in accordance with the instructions set forth in such requests,
the maximum aggregate principal amount of Notes as to which any particular
voting instructions are received. In the absence of specific instructions from
the Holder of an Income PACS, the Purchase Contract Agent shall abstain from
voting the Note evidenced by such Income PACS.

         Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, an amount equal to the Redemption Amount plus any
accumulated and unpaid interest payable on the Tax Event Redemption Date with
respect to the principal amount of the Notes that are components of the Income
PACS shall be deposited in the Collateral Account in exchange for the Pledged
Notes. Thereafter, pursuant to the terms of the Pledge Agreement, the
Collateral Agent shall cause the Securities Intermediary to apply an amount
equal to the Redemption Amount of such funds to purchase on behalf of the
Holders of Income PACS, the Treasury Portfolio and promptly (a) transfer the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio to the Collateral Account to secure the
obligations of each Holder of Income PACS to purchase shares of Common Stock
under the Purchase Contracts constituting a part of such Income PACS, (b)
transfer the Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio to the Purchase Contract
Agent for the benefit of the Holders of such Income PACS and (C) remit the
remaining portion of such funds to the Purchase Contract Agent for payment to
the Holders of such Income PACS.

         Upon the occurrence of a Successful Initial Remarketing, pursuant to
the terms of the Remarketing Agreement, the Remarketing Agent will apply an
amount equal to the Treasury Portfolio Purchase Price to purchase on behalf of
the Holders of Income PACS, the Treasury Portfolio, and, after deducting the
Remarketing Fee to the extent permitted under the terms of the Remarketing
Agreement, promptly remit the remaining portion of such proceeds of the
Successful Initial Remarketing to the Purchase Contract Agent for payment to
the Holders of such Income PACS.

         Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, or following a Successful Initial
Remarketing, the Holders of Income PACS and the Collateral Agent shall have
such security interest rights and obligations with respect to the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio as the Holder of Income PACS and the Collateral
Agent had in respect of the Notes, as the case may be, subject to the Pledge
thereof as provided in the Pledge Agreement and any reference herein to the
Notes shall be deemed to be a reference to such Treasury Portfolio.

         The Income PACS Certificates are issuable only in registered form and
only in denominations of a single Income PACS and any integral multiple
thereof. The transfer of any Income PACS Certificate will be registered and
Income PACS Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Security Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Purchase
Contract Agent may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. A Holder who elects
to substitute a Treasury Security for a Note, thereby creating Growth PACS,
shall be responsible for any fees or expenses payable in connection therewith.
Except as provided in the Purchase Contract Agreement, for so long as the
Purchase Contract underlying an Income PACS remains in effect, such Income
PACS shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such Income PACS in respect of the Notes and
Purchase Contract constituting such Income PACS may be transferred and
exchanged only as an Income PACS.

         The Holder of Income PACS may substitute for the Pledged Notes
securing such Holder's obligations under the related Purchase Contracts
Treasury Securities in an aggregate principal amount equal to the aggregate
principal amount of the Pledged Notes in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement. From and after such
Collateral Substitution, each Security for which such Pledged Treasury
Securities secures the Holder's obligation under the Purchase Contract shall
be referred to as a "Growth PACS". A Holder may make such Collateral
Substitution only in integral multiples of 40 Income PACS for 40 Growth PACS.

         If the Treasury Portfolio has replaced the Notes as a component of
the Income PACS as a result of a Tax Event Redemption or a Successful Initial
Remarketing, an Income PACS Holder may make such Collateral Substitutions only
in integral multiples of 32,000 Income PACS.

         A Holder of Growth PACS may recreate Income PACS by delivering to the
Securities Intermediary Notes with an aggregate principal amount equal to the
aggregate principal amount at maturity of the Pledged Treasury Securities in
exchange for the release of such Pledged Treasury Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement. A
Holder may recreate Income PACS only in integral multiples of 40 Growth PACS
for 40 Income PACS.

         If the Treasury Portfolio has replaced the Notes as a component of
the Income PACS as a result of a Tax Event Redemption or a Successful Initial
Remarketing, a Growth PACS Holder may recreate Income PACS only in integral
multiples of 32,000 Growth PACS.

         The Company shall pay, on each Payment Date, the Purchase Contract
Payments payable in respect of each Purchase Contract to the Person in whose
name the Income PACS Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Purchase Contract Payments will be payable at the office of the Purchase
Contract Agent in New York City or, at the option of the Holder, by check
mailed to the address of the Person entitled thereto at such address as it
appears on the Security Register.

         The Company has the right to defer payment of all or part of the
Purchase Contract Payments in respect of each Purchase Contract until no later
than the Purchase Contract Settlement Date. If the Company so elects to defer
Purchase Contract Payments, the Company shall pay additional Purchase Contract
Payments on such deferred installments of Purchase Contract Payments at a rate
equal to 9.00% per annum, compounding quarterly, until such deferred
installments are paid. In the event that the Company elects to defer the
payment of Purchase Contract Payments on the Purchase Contracts until the
Purchase Contract Settlement Date, each Holder will receive on the Purchase
Contract Settlement Date the aggregate amount of accrued and unpaid Purchase
Contract Payments.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Purchase
Contract Payments, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Purchase Contract Agent
or the Company, if, on or prior to the Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon the occurrence of a Termination
Event, the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Purchase Contract Agent, the Collateral
Agent and the Holders, at their addresses as they appear in the Security
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Notes or the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, from the Pledge in accordance with the
provisions of the Pledge Agreement.

         Upon the occurrence of a Cash Merger, a Holder of Income PACS may
effect Early Settlement of the Purchase Contract underlying such Income PACS
pursuant to the terms of Section 5.04(b)(2) of the Purchase Contract
Agreement. Upon Early Settlement of Purchase Contracts by a Holder of the
related Income PACS, the Pledged Notes or Pledged Applicable Ownership
Interests (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio underlying such Income PACS shall be released from the
Pledge as provided in the Pledge Agreement.

         Upon registration of transfer of this Income PACS Certificate, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee, except as may be required by the Purchase Contract
Agent pursuant to the Purchase Contract Agreement), under the terms of the
Purchase Contract Agreement and the Purchase Contracts evidenced hereby and
the transferor shall be released from the obligations under the Purchase
Contracts evidenced by this Income PACS Certificate. The Company covenants and
agrees, and the Holder, by its acceptance hereof, likewise covenants and
agrees, to be bound by the provisions of this paragraph.

         The Holder of this Income PACS Certificate, by its acceptance hereof,
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of the Income PACS evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Notes or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, underlying this Income PACS
Certificate pursuant to the Pledge Agreement. The Holder further covenants and
agrees that, to the extent and in the manner provided in the Purchase Contract
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect to the aggregate principal amount of the Pledged Notes or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, on the
Purchase Contract Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.

         Subject to certain exceptions, the provisions of the Purchase
Contract Agreement may be amended with the consent of the Holders of a
majority of the Purchase Contracts.

         The Purchase Contracts shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to
conflicts of laws principles thereof.

         Prior to due presentment of this Certificate for registration of
transfer, the Company, the Purchase Contract Agent and its Affiliates and any
agent of the Company or the Purchase Contract Agent may treat the Person in
whose name this Income PACS Certificate is registered as the owner of the
Income PACS evidenced hereby for the purpose of receiving payments of interest
payable on the Notes, receiving payments of Purchase Contract Payments
(subject to any applicable record date), performance of the Purchase Contracts
and for all other purposes whatsoever, whether or not any payments in respect
thereof be overdue and notwithstanding any notice to the contrary, and neither
the Company, the Purchase Contract Agent nor any such agent shall be affected
by notice to the contrary.

         The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.

         A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Purchase Contract Agent.

                                 ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM:         as tenants in common
UNIF GIFT        ___________________ Custodian ___________________
MIN ACT:               (cust)                        (minor)
                 Under Uniform Gifts to Minors Act of  __________

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

TENANT:          as tenants by the entireties

JT TEN:          as joint tenants with right of survivorship and not as tenants
                 in common

Additional abbreviations may also be used though not in the above list.

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

 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

  (Please insert Social Security or Taxpayer I.D. or other Identifying Number
                                 of Assignee)

 (Please Print or Type Name and Address Including Postal Zip Code of Assignee)

the within Income PACS Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney __________________, to
transfer said Income PACS Certificates on the books of The Williams Companies,
Inc., with full power of substitution in the premises.

Dated:                          Signature
       -----------------------            -----------------------------------

                                                          NOTICE: The
                                                          signature to this
                                                          assignment must
                                                          correspond with the
                                                          name as it appears
                                                          upon the face of the
                                                          within Income PACS
                                                          Certificates in
                                                          every particular,
                                                          without alteration
                                                          or enlargement or
                                                          any change
                                                          whatsoever.

         Signature Guarantee:
                               ----------------------------------------------

                            SETTLEMENT INSTRUCTIONS

         The undersigned Holder directs that a certificate for shares of
Common Stock deliverable upon settlement on or after the Purchase Contract
Settlement Date of the Purchase Contracts underlying the number of Income PACS
evidenced by this Income PACS Certificate be registered in the name of, and
delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.

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

If shares are to be registered in the name of and delivered to a Person other
than the Holder, please (i) print such Person's name and address and (ii)
provide a guarantee of your signature:

Name

Address

Social Security or other
Taxpayer Identification
Number, if any

Signature
Signature Guarantee:
                     -------------------------------
(if assigned to another person)

REGISTERED HOLDER

Please print name and address of Registered Holder:

Name

Address

                           ELECTION TO SETTLE EARLY

         The undersigned Holder of this Income PACS Certificate hereby
irrevocably exercises the option to effect Early Settlement following a Cash
Merger in accordance with the terms of the Purchase Contract Agreement with
respect to the Purchase Contracts underlying the number of Income PACS
evidenced by this Income PACS Certificate specified below. The undersigned
Holder directs that a certificate for shares of Common Stock or other
securities deliverable upon such Early Settlement be registered in the name
of, and delivered, together with a check in payment for any fractional share
and any Income PACS Certificate representing any Income PACS evidenced hereby
as to which Early Settlement of the related Purchase Contracts is not
effected, to the undersigned at the address indicated below unless a different
name and address have been indicated below. Pledged Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
deliverable upon such Early Settlement will be transferred in accordance with
the transfer instructions set forth below. If shares are to be registered in
the name of a Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.

Dated:
        --------------------------              -------------------------------
                                                Signature

Signature Guarantee:
                      ------------------------------------

         Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:

If shares of Common Stock or Income PACS Certificates are to be registered in
the name of and delivered to and Pledged Notes or the Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, are to be transferred
to a Person other than the Holder, please print such Person's name and
address:

Name

Address

Social Security or other
Taxpayer Identification

Number, if any
REGISTERED HOLDER

Please print name and address of Registered Holder:

Name

Address

Transfer Instructions for Pledged Notes or the Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, transferable upon Early
Settlement or a Termination Event:

                    [TO BE ATTACHED TO GLOBAL CERTIFICATES]

           SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

The following increases or decreases in this Global Certificate have been
made:

<TABLE>
<CAPTION>

                                                                           Number of Income
                         Amount of increase in   Amount of decrease in     PACS evidenced by    Signature of authorized
                           Number of Income        Number of Income     this Global Certificate signatory of Purchase
                           PACS evidenced by       PACS evidenced by        following such      Contract Agent or
Date                    the Global Certificate  the Global Certificate   decrease or increase   Securities Custodian

<S>                     <C>                     <C>                     <C>                     <C>
----------------------- ----------------------- ----------------------- ----------------------- -----------------------

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</TABLE>

                                                                    EXHIBIT B

                   (FORM OF FACE OF GROWTH PACS CERTIFICATE)

         [For inclusion in Global Certificate only - THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO.,
AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY"), THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS
CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF
THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT
IN LIMITED CIRCUMSTANCES.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.]

No. ____                                               CUSIP No._____________
Number of Growth PACS:___________

                         THE WILLIAMS COMPANIES, INC.
                                  Growth PACS

         This Growth PACS Certificate certifies that __________________ is the
registered Holder of the number of Growth PACS set forth above [For inclusion
in Global Certificates only - or such other number of Growth PACS reflected in
the Schedule of Increases or Decreases in Global Certificate attached hereto].
Each Growth PACS consists of (i) a 1/40 undivided beneficial ownership
interest of a Treasury Security having a principal amount at maturity equal to
$1,000, subject to the Pledge of such Treasury Security by such Holder
pursuant to the Pledge Agreement, and (ii) the rights and obligations of the
Holder under one Purchase Contract with The Williams Companies, Inc., a
Delaware corporation (the "Company"). All capitalized terms used herein which
are defined in the Purchase Contract Agreement (as defined on the reverse
hereof) have the meaning set forth therein.

         Pursuant to the Pledge Agreement, the Treasury Securities
constituting part of each Growth PACS evidenced hereby have been pledged to
the Collateral Agent, for the benefit of the Company, to secure the
obligations of the Holder under the Purchase Contract comprising part of such
Growth PACS. Each Purchase Contract evidenced hereby obligates the Holder of
this Growth PACS Certificate to purchase, and the Company, to sell, on
February 16, 2005 (the "Purchase Contract Settlement Date"), at a price equal
to $25 (the "Stated Amount"), a number of newly issued shares of Common Stock,
par value $1.00 ("Common Stock"), of the Company, equal to the Settlement
Rate, unless prior to or on the Purchase Contract Settlement Date there shall
have occurred a Termination Event or an Early Settlement with respect to the
Growth PACS of which such Purchase Contract is a part, all as provided in the
Purchase Contract Agreement and more fully described on the reverse hereof.
The purchase price (the "Purchase Price") for the shares of Common Stock
purchased pursuant to each Purchase Contract evidenced hereby, if not paid
earlier, shall be paid on the Purchase Contract Settlement Date by application
of the proceeds from the Treasury Securities at maturity pledged to secure the
obligations of the Holder under such Purchase Contract of the Growth PACS of
which such Purchase Contract is a part.

         The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Growth PACS evidenced hereby, an amount
(the "Purchase Contract Payments") equal to 2.50% per year of the Stated
Amount. Such Purchase Contract Payments shall be payable to the Person in
whose name this Growth PACS Certificate is registered at the close of business
on the Record Date for such Payment Date. The Company may, at its option,
defer such Purchase Contract Payments.

         The Purchase Contract Payments will be payable at the office of the
Purchase Contract Agent in New York City or, at the option of the Company, by
check mailed to the address of the Person entitled thereto as such address
appears on the Security Register.

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

         Unless the certificate of authentication hereon has been executed by
the Purchase Contract Agent by manual signature, this Growth PACS Certificate
shall not be entitled to any benefit under the Pledge Agreement or the
Purchase Contract Agreement or be valid or obligatory for any purpose.

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                         THE WILLIAMS COMPANIES, INC.

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

                                         HOLDER SPECIFIED ABOVE (as to
                                         obligations of such Holder under the
                                         Purchase Contracts)

                                         By:  JPMorgan Chase Bank,
                                              not individually but solely as
                                              Attorney-in-Fact of such Holder

                                         By:
                                            ---------------------------------
                                             Authorized Officer

Dated:_____________________

                       CERTIFICATE OF AUTHENTICATION OF
                            PURCHASE CONTRACT AGENT

         This is one of the Growth PACS referred to in the within-mentioned
Purchase Contract Agreement.

                                              By:  JPMorgan Chase Bank,
                                                   as Purchase Contract Agent

                                                  By:
                                                        -----------------------
                                                        Authorized Officer
Dated:_________________

                     (REVERSE OF Growth PACS CERTIFICATE)

         Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of January 14, 2002 (as may be supplemented from
time to time, the "Purchase Contract Agreement") between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent (including its successors
thereunder, herein called the "Purchase Contract Agent"), to which the
Purchase Contract Agreement and supplemental agreements thereto reference is
hereby made for a description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Purchase Contract Agent,
the Company and the Holders and of the terms upon which the Growth PACS
Certificates are, and are to be, executed and delivered.

         Unless a Cash Settlement or an Early Settlement has occurred, each
Purchase Contract evidenced hereby obligates the Holder of this Growth PACS
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "Purchase Price") a
number of newly issued shares of Common Stock equal to the Settlement Rate,
unless prior to the Purchase Contract Settlement Date, there shall have
occurred a Termination Event with respect to the Security of which such
Purchase Contract is a part or an Early Settlement shall have occurred. The
"Settlement Rate" is equal to:

           (1) if the Applicable Market Value (as defined below) is greater
         than $41.25 (the "Appreciation Cap Price"), the number of shares of
         Common Stock per Purchase Contract having a value, based on the
         Applicable Market Value, equal to 1.0000 multiplied by the quotient
         of the Appreciation Cap Price divided by the Applicable Market Value;
         and

          (2) if the Applicable Market Value is less than or equal to the
         Appreciation Cap Price 1.0000 share of Common Stock per Purchase
         Contract,

         in each case subject to adjustment as provided in the Purchase
Contract Agreement (and in each case rounded upward or downward to the nearest
1/10,000th of a share).

         No fractional shares of Common Stock will be issued upon settlement
of Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.

         Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Growth PACS to purchase at the Purchase Price for cash, and the
Company to sell, a number of newly issued shares of Common Stock equal to the
Settlement Rate.

         The "Applicable Market Value" means the average of the Closing Prices
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date.

         The "Closing Price" per share of Common Stock on any date of
determination means the:

           (1) closing sale price as of the close of the principal trading
         session (or, if no closing price is reported, the last reported sale
         price) per share on the New York Stock Exchange, Inc. (the "NYSE") on
         such date;

           (2) if the Common Stock is not listed for trading on the NYSE on
         any such date, the closing sale price per share as reported in the
         composite transactions for the principal United States securities
         exchange on which the Common Stock is so listed;

           (3) if the Common Stock is not so listed on a United States
         national or regional securities exchange, the closing sale price per
         share as reported by The Nasdaq Stock Market;

           (4) if the Common Stock is not so reported, the last quoted bid
         price for the Common Stock in the over-the-counter market as reported
         by the National Quotation Bureau or similar organization; or

           (5) if such bid price is not available, the market value of the
         Common Stock on such date as determined by a nationally recognized
         independent investment banking firm retained for this purpose by the
         Company.

         A "Trading Day" means a day on which the Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.

         In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Growth PACS shall pay the Purchase Price for the shares of the
Common Stock purchased pursuant to each Purchase Contract evidenced hereby
either by effecting a Cash Settlement or an Early Settlement of each such
Purchase Contract or by applying a principal amount of the Pledged Treasury
Securities underlying such Holder's Growth PACS equal to the Stated Amount of
such Purchase Contract to the purchase of the Common Stock. A Holder of Growth
PACS who does not, (1) on or prior to 5:00 p.m. (New York City time) on the
second Business Day immediately preceding the Purchase Contract Settlement
Date, notify the Purchase Contract Agent of its intention to effect a Cash
Settlement, (2) on or prior to 11:00 a.m. (New York City time) on the second
Business Day immediately preceding the Purchase Contract Settlement Date, make
an effective Early Settlement following a Cash Merger or (3) deliver the
Purchase Price in cash on the Business Day immediately preceding the Purchase
Contract Settlement Date after notifying the Purchase Contract Agent of its
intention to effect a Cash Settlement, shall pay the Purchase Price for the
shares of Common Stock to be issued under the related Purchase Contract from
the proceeds of the Pledged Treasury Securities.

         The Company shall not be obligated to issue any shares of Common
Stock in respect of a Purchase Contract or deliver any certificates therefor
to the Holder unless it shall have received payment of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.

         Each Purchase Contract evidenced hereby and all obligations and
rights of the Company and the Holder thereunder shall terminate if a
Termination Event shall occur. Upon the occurrence of a Termination Event, the
Company shall give written notice to the Purchase Contract Agent and to the
Holders, at their addresses as they appear in the Security Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent shall
release the Pledged Treasury Securities (as defined in the Pledge Agreement)
forming a part of each Growth PACS. A Growth PACS shall thereafter represent
the right to receive the Proceeds of the Treasury Security forming a part of
such Growth PACS, in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement.

         The Growth PACS Certificates are issuable only in registered form and
only in denominations of a single Growth PACS and any integral multiple
thereof. The transfer of any Growth PACS Certificate will be registered and
Growth PACS Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Security Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Purchase
Contract Agent may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. A Holder who elects
to substitute Notes, for Treasury Securities, thereby recreating Income PACS,
shall be responsible for any fees or expenses associated therewith. Except as
provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying a Growth PACS remains in effect, such Growth PACS shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Growth PACS in respect of the Treasury Security and the
Purchase Contract constituting such Growth PACS may be transferred and
exchanged only as a Growth PACS.

         A Holder of Growth PACS may recreate Income PACS by delivering to the
Securities Intermediary Notes or the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, with an aggregate principal amount, equal to
the aggregate principal amount at maturity of the Pledged Treasury Securities
in exchange for the release of such Pledged Treasury Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement.
From and after such substitution, the Holder's Security shall be referred to
as a "Income PACS". Any such creation of Income PACS may be effected only in
multiples of 40 Growth PACS for 40 Income PACS. If the Treasury Portfolio has
replaced the Notes as a component of the Income PACS as a result of a Tax
Event Redemption or a Successful Initial Remarketing, a Growth PACS Holder may
recreate Income PACS only in integral multiples of 32,000 Growth PACS.

         A Holder of Income PACS may recreate Growth PACS by delivering to the
Securities Intermediary Treasury Securities in an aggregate principal amount
equal to the aggregate principal amount at maturity of the Pledged Notes or
the Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.

Any such recreation of Growth PACS may be effected only in multiples of 40
Income PACS for 40 Growth PACS. If the Treasury Portfolio has replaced the
Notes as a component of the Income PACS as a result of a Tax Event Redemption
or a Successful Initial Remarketing, an Income PACS Holder may recreate Growth
PACS only in integral multiples of 32,000 Income PACS.

         The Company shall pay, on each Payment Date, the Purchase Contract
Payments payable in respect of each Purchase Contract to the Person in whose
name the Growth PACS Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Purchase Contract Payments will be payable at the office of the Purchase
Contract Agent in New York City or, at the option of the Holder, by check
mailed to the address of the Person entitled thereto at such address as it
appears on the Security Register.

         The Company has the right to defer payment of all or part of the
Purchase Contract Payments in respect of each Purchase Contract until no later
than the Purchase Contract Settlement Date. If the Company so elects to defer
Purchase Contract Payments, the Company shall pay additional Purchase Contract
Payments on such deferred installments of Purchase Contract Payments at a rate
equal to 9.00% per annum, compounding quarterly, until such deferred
installments are paid. In the event that the Company elects to defer the
payment of Purchase Contract Payments on the Purchase Contracts until the
Purchase Contract Settlement Date, each Holder will receive on the Purchase
Contract Settlement Date the aggregate amount of accrued and unpaid Purchase
Contract Payments.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Purchase
Contract Payments, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Purchase Contract Agent
or the Company, if, on or prior to the Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon the occurrence of a Termination
Event, the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Purchase Contract Agent, the Collateral
Agent and the Holders, at their addresses as they appear in the Security
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Treasury Securities from the Pledge in accordance with
the provisions of the Pledge Agreement. A Growth PACS shall thereafter
represent the right to receive the interest in the Treasury Security forming a
part of such Growth PACS, in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement.

         Upon the occurrence of a Cash Merger, a Holder of Growth PACS may
effect Early Settlement of the Purchase Contract underlying such Growth PACS
pursuant to the terms of Section 5.04(b)(2) of the Purchase Contract
Agreement. Upon Early Settlement of Purchase Contracts by a Holder of the
related Growth PACS, the Pledged Treasury Securities underlying such Growth
PACS shall be released from the Pledge as provided in the Pledge Agreement.

         Upon registration of transfer of this Growth PACS Certificate, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee, except as may be required by the Purchase Contract
Agent pursuant to the Purchase Contract Agreement), under the terms of the
Purchase Contract Agreement and the Purchase Contracts evidenced hereby and
the transferor shall be released from the obligations under the Purchase
Contracts evidenced by this Growth PACS Certificate. The Company covenants and
agrees, and the Holder, by its acceptance hereof, likewise covenants and
agrees, to be bound by the provisions of this paragraph.

         The Holder of this Growth PACS Certificate, by its acceptance hereof,
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of the Growth PACS evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Treasury Securities underlying this Growth PACS
Certificate pursuant to the Pledge Agreement. The Holder further covenants and
agrees, that, to the extent and in the manner provided in the Purchase
Contract Agreement and the Pledge Agreement, but subject to the terms thereof,
payments in respect to the aggregate principal amount of the Pledged Treasury
Securities on the Purchase Contract Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.

         Subject to certain exceptions, the provisions of the Purchase
Contract Agreement may be amended with the consent of the Holders of a
majority of the Purchase Contracts.

         The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles thereof.

         Prior to due presentment of this Certificate for registration or
transfer, the Company, the Purchase Contract Agent and its Affiliates and any
agent of the Company or the Purchase Contract Agent may treat the Person in
whose name this Growth PACS Certificate is registered as the owner of the
Growth PACS evidenced hereby for the purpose of receiving payments of interest
on the Treasury Securities, receiving payments of Purchase Contract Payments
(subject to any applicable record date), performance of the Purchase Contracts
and for all other purposes whatsoever, whether or not any payments in respect
thereof be overdue and notwithstanding any notice to the contrary, and neither
the Company, the Purchase Contract Agent nor any such agent shall be affected
by notice to the contrary.

         The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.

         A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Purchase Contract Agent.

                                 ABBREVIATIONS

         The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM:            as tenants in common

UNIF GIFT           ___________________ Custodian ___________________
MIN ACT:                   (cust)                       (minor)
                    Under Uniform Gifts to Minors Act of
                                                         ----------------------

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

TENANT:             as tenants by the entireties

JT TEN:             as joint tenants with right of survivorship and not as
                    tenants in common

Additional abbreviations may also be used though not in the above list.

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

 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

 (Please insert Social Security or Taxpayer I.D. or other Identifying Number
                                 of Assignee)

 (Please Print or Type Name and Address Including Postal Zip Code of Assignee)

the within Growth PACS Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney to transfer said Growth PACS
Certificates on the books of The Williams Companies, Inc., with full power of
substitution in the premises.

Dated:
        -----------------------    -------------------------------------------
                                   Signature

                                                       NOTICE: The signature
                                                       to this assignment must
                                                       correspond with the
                                                       name as it appears upon
                                                       the face of the within
                                                       Growth PACS
                                                       Certificates in every
                                                       particular, without
                                                       alteration or
                                                       enlargement or any
                                                       change whatsoever.

         Signature Guarantee:
                               -----------------------------------

                            SETTLEMENT INSTRUCTIONS

         The undersigned Holder directs that a certificate for shares of
Common Stock deliverable upon settlement on or after the Purchase Contract
Settlement Date of the Purchase Contracts underlying the number of Growth PACS
evidenced by this Growth PACS Certificate be registered in the name of, and
delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.

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

If shares are to be registered in the name of and delivered to a Person other
than the Holder, please (i) print such Person's name and address and (ii)
provide a guarantee of your signature:

Name

Address

Social Security or other
Taxpayer Identification

Number, if any

Signature
Signature Guarantee:
                      -----------------------------------------------------
(if assigned to another person)

REGISTERED HOLDER

Please print name and address of Registered Holder:

Name

Address

                           ELECTION TO SETTLE EARLY

         The undersigned Holder of this Growth PACS Certificate hereby
irrevocably exercises the option to effect Early Settlement following a Cash
Merger in accordance with the terms of the Purchase Contract Agreement with
respect to the Purchase Contracts underlying the number of Growth PACS
evidenced by this Growth PACS Certificate specified below. The option to
effect Early Settlement following a Cash Merger may be exercised only with
respect to Purchase Contracts underlying Growth PACS with an aggregate Stated
Amount equal to $1,000 or an integral multiple thereof. The undersigned Holder
directs that a certificate for shares of Common Stock or other securities
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Growth PACS Certificate representing any Growth PACS evidenced hereby as to
which Early Settlement of the related Purchase Contracts is not effected, to
the undersigned at the address indicated below unless a different name and
address have been indicated below. Pledged Treasury Securities deliverable
upon such Early Settlement will be transferred in accordance with the transfer
instructions set forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.

Dated:
        ----------------------------        ----------------------------------
                                            Signature

Signature Guarantee:
                      ------------------------------------

         Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:

If shares of Common Stock or Growth PACS Certificates are to be registered in
the name of and delivered to and Pledged Treasury Securities are to be
transferred to a Person other than the Holder, please print such Person's name
and address:

Name

Address

Social Security or other
Taxpayer Identification

Number, if any
REGISTERED HOLDER

Please print name and address of Registered Holder:

Name

Address

         Transfer Instructions for Pledged Treasury Securities Transferable
Upon or Early Settlement or a Termination Event:

                    [TO BE ATTACHED TO GLOBAL CERTIFICATES]

           SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

The following increases or decreases in this Global Certificate have been
made:

<TABLE>
<CAPTION>

                                                                           Number of Growth
                         Amount of increase in   Amount of decrease in     PACS evidenced by    Signature of authorized
                           Number of Growth        Number of Growth     this Global Certificate signatory of Purchase
                           PACS evidenced by       PACS evidenced by        following such      Contract Agent or
Date                    the Global Certificate  the Global Certificate   decrease or increase   Securities Custodian

<S>                     <C>                     <C>                     <C>                     <C>
----------------------- ----------------------- ----------------------- ----------------------- -----------------------

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

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

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

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

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</TABLE>

                                                                   EXHIBIT C

                    INSTRUCTION TO PURCHASE CONTRACT AGENT

JPMorgan Chase Bank
450 West 33rd Street
New York, New York 10001
Attention: Institutional Trust Services

         Re:      [_______ Income PACS] [_______ Growth PACS] of
The Williams Companies, Inc., a Delaware corporation  (the "Company").

         The undersigned Holder hereby notifies you that it has Transferred to
[                            ], as Securities Intermediary, for credit to the
Collateral Account, $______ aggregate principal amount of [Notes] [Applicable
Ownership Interests (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio] [Treasury Securities] in exchange for the [Pledged
Notes] [Pledged Applicable Ownership Interests] [Pledged Treasury Securities]
held in the Collateral Account, in accordance with the Pledge Agreement, dated
as of January 14, 2002 (the "Pledge Agreement"; unless otherwise defined herein,
terms defined in the Pledge Agreement are used herein as defined therein),
between you, the Company, the Collateral Agent and the Securities
Intermediary. The undersigned Holder has paid all applicable fees and expenses
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Notes] [Pledged Applicable Ownership Interests] [Pledged
Treasury Securities] related to such [Income PACS] [Growth PACS].

Date:
       -------------------------         -----------------------------------
                                         Signature

                          Signature Guarantee:
                                                ----------------------------

Please print name and address of Registered Holder:

Name                                   Social Security or other Taxpayer
                                       Identification Number, if any

Address

                                                                    EXHIBIT D

                      NOTICE FROM PURCHASE CONTRACT AGENT
                                  TO HOLDERS

        (Transfer of Collateral upon Occurrence of a Termination Event)

[HOLDER]

Attention:
Telecopy: __________

         Re:      [__________ Income PACS] [______ Growth PACS] of The Williams
                  Companies, Inc., a Delaware corporation (the "Company")

         Please refer to the Purchase Contract Agreement, dated as of January
14, 2002 (the "Purchase Contract Agreement"; unless otherwise defined herein,
terms defined in the Purchase Contract Agreement are used herein as defined
therein), between the Company and the undersigned, as Purchase Contract Agent
and as attorney-in-fact for the holders of Income PACS and Growth PACS from
time to time.

         We hereby notify you that a Termination Event has occurred and that
[the Notes] [Applicable Ownership Interests (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio] [the Treasury Securities]
underlying your ownership interest in _____ [Income PACS] [Growth PACS] have
been released and are being held by us for your account pending receipt of
transfer instructions with respect to such [Notes][Treasury Securities] (the
"Released Securities").

         Pursuant to Section 3.15 of the Purchase Contract Agreement, we
hereby request written transfer instructions with respect to the Released
Securities. Upon receipt of your instructions and upon transfer to us of your
[Income PACS][Growth PACS] effected through book-entry or by delivery to us of
your [Income PACS Certificate][Growth PACS Certificate], we shall transfer the
Released Securities by book-entry transfer or other appropriate procedures, in
accordance with your instructions. In the event you fail to effect such
transfer or delivery, the Released Securities and any distributions thereon,
shall be held in our name, or a nominee in trust for your benefit, until such
time as such [Income PACS][Growth PACS] are transferred or your [Income PACS
Certificate] [Growth PACS Certificate] is surrendered or satisfactory evidence
is provided that such [Income PACS Certificate][Growth PACS Certificate] has
been destroyed, lost or stolen, together with any indemnification that we or
the Company may require.

Date:                                By: [                                  ]

                                     Name:
                                     Title:  Authorized Signatory

                                                                    EXHIBIT E

                           NOTICE TO SETTLE BY CASH

JPMorgan Chase Bank
450 West 33rd Street
New York, New York 10001
Attention: Institutional Trust Services

            Re:  [_______ Income PACS] [Growth PACS] of The Williams Companies,
                 Inc., a Delaware corporation (the "Company")

         The undersigned Holder hereby irrevocably notifies you in accordance
with Section 5.02 of the Purchase Contract Agreement, dated as of January 14,
2002 (the "Purchase Contract Agreement"; unless otherwise defined herein,
terms defined in the Purchase Contract Agreement are used herein as defined
therein), between the Company and you, as Purchase Contract Agent and as
Attorney-in-Fact for the Holders of the Purchase Contracts, that such Holder
has elected to pay to the Securities Intermediary for deposit in the
Collateral Account, prior to or on 11:00 a.m. (New York City time) on the
Business Day immediately preceding the Purchase Contract Settlement Date (in
lawful money of the United States by certified or cashiers' check or wire
transfer, in immediately available funds), $______ as the Purchase Price for
the shares of Common Stock issuable to such Holder by the Company under the
related Purchase Contracts on the Purchase Contract Settlement Date. The
undersigned Holder hereby instructs you to notify promptly the Collateral
Agent of the undersigned Holders' election to make such cash settlement with
respect to the Purchase Contracts related to such Holder's [Income PACS]
[Growth PACS].

Date:
       -------------------------        ------------------------------------
                                        Signature

                           Signature Guarantee:
                                                ----------------------------

Please print name and address of Registered Holder:

                                                                    EXHIBIT F

                      NOTICE FROM PURCHASE CONTRACT AGENT
                              TO COLLATERAL AGENT

             (Settlement of Purchase Contract through Remarketing)

JPMorgan Chase Bank
450 West 33rd Street
New York, New York 10001
Attention: Institutional Trust Services
Telecopy: (212) 946-8154

                  Re:      __________ Income PACS of The Williams Companies,
                           Inc., a Delaware corporation (the "Company")

         Please refer to the Purchase Contract Agreement, dated as of January
14, 2002 (the "Purchase Contract Agreement"; unless otherwise defined herein,
terms defined in the Purchase Contract Agreement are used herein as defined
therein), between the Company and the undersigned, as Purchase Contract Agent
and as attorney-in-fact for the Holders of Income PACS from time to time.

         In accordance with Section 5.02 of the Purchase Contract Agreement
and, based on notices of Cash Settlements received from Holders of Income PACS
as of 11:00 a.m. (New York City time), on the Business Day immediately
preceding the [Initial Remarketing Date] [Secondary Remarketing Date], we
hereby notify you that ______ Notes are to be tendered for purchase in the
Remarketing.

Date:                         By:  [                                 ]

                              Name:
                              Title:  Authorized SignatoryEXHIBIT 4.5

                        THE WILLIAMS COMPANIES, INC.

                                    and

  JPMorgan Chase Bank, as Collateral Agent, Custodial Agent and Securities
                                Intermediary

                                    and

              JPMorgan Chase Bank, as Purchase Contract Agent

                              PLEDGE AGREEMENT

                        Dated as of January 14, 2002

<TABLE>
<CAPTION>

                                         TABLE OF CONTENTS

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

                                                                                             PAGE

<S>                                                                                            <C>
ARTICLE 1
         DEFINITIONS
         SECTION 1.01.  Definitions.............................................................2

ARTICLE 2
         PLEDGE
         SECTION 2.01.  Pledge..................................................................7
         SECTION 2.02.  Control; Financing Statement............................................7
         SECTION 2.03.  Termination.............................................................7

ARTICLE 3
         DISTRIBUTIONS ON PLEDGED COLLATERAL
         SECTION 3.01.  Income Distributions....................................................8
         SECTION 3.02.  Principal Payments Following Termination Event..........................8
         SECTION 3.03.  Principal Payments Prior to or on Purchase Contract
                          Settlement Date.......................................................8
         SECTION 3.04.  Payments to Purchase Contract Agent.....................................9
         SECTION 3.05.  Assets Not Properly Released............................................9

ARTICLE 4
         CONTROL
         SECTION 4.01.  Establishment of Collateral Account.....................................9
         SECTION 4.02.  Treatment as Financial Assets..........................................10
         SECTION 4.03.  Sole Control by Collateral Agent.......................................10
         SECTION 4.04.  Securities Intermediary's Location.....................................10
         SECTION 4.05.  No Other Claims........................................................11
         SECTION 4.06.  Investment and Release.................................................11
         SECTION 4.07.  Statements and Confirmations...........................................11
         SECTION 4.08.  Tax Allocations........................................................11
         SECTION 4.09.  No Other Agreements....................................................11
         SECTION 4.10.  Powers Coupled with an Interest........................................11

ARTICLE 5
         INITIAL DEPOSIT; ESTABLISHMENT OF GROWTH PACS AND
         REESTABLISHMENT OF INCOME PACS
         SECTION 5.01.  Initial Deposit of Notes...............................................12
         SECTION 5.02.  Establishment of Growth PACS...........................................12
         SECTION 5.03.  Reestablishment of Income PACS.........................................14
         SECTION 5.04.  Termination Event......................................................15
         SECTION 5.05.  Cash Settlement........................................................17
         SECTION 5.06.  Early Settlement upon a Cash Merger....................................19
         SECTION 5.07.  Application of Proceeds in Settlement of Purchase
                          Contracts............................................................19
         SECTION 5.08.  Tax Event Redemption...................................................22

ARTICLE 6
         VOTING RIGHTS - PLEDGED NOTES
         SECTION 6.01.  Voting Rights..........................................................22

ARTICLE 7
         RIGHTS AND REMEDIES
         SECTION 7.01.  Rights and Remedies of the Collateral Agent............................23
         SECTION 7.02.  Tax Event Redemption...................................................24
         SECTION 7.03.  Initial Remarketing....................................................25
         SECTION 7.04.  Substitutions..........................................................25

ARTICLE 8
         REPRESENTATIONS AND WARRANTIES; COVENANTS
         SECTION 8.01.  Representations and Warranties.........................................25
         SECTION 8.02.  Covenants..............................................................26

ARTICLE 9
         THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES
         INTERMEDIARY
         SECTION 9.01.  Appointment, Powers and Immunities.....................................27
         SECTION 9.02.  Instructions of the Company............................................28
         SECTION 9.03.  Reliance by Collateral Agent and Securities Intermediary...............28
         SECTION 9.04.  Rights in Other Capacities.............................................29
         SECTION 9.05.  Non-Reliance on Collateral Agent, the Custodial Agent
                          and Securities Intermediary..........................................29
         SECTION 9.06.  Compensation and Indemnity.............................................29
         SECTION 9.07.  Failure to Act.........................................................30
         SECTION 9.08.  Resignation of Collateral Agent, the Custodial Agent and
                          Securities Intermediary..............................................31
         SECTION 9.09.  Right to Appoint Agent or Advisor......................................32
         SECTION 9.10.  Survival...............................................................33
         SECTION 9.11.  Exculpation............................................................33

ARTICLE 10
         AMENDMENT
         SECTION 10.01.  Amendment Without Consent of Holders..................................33
         SECTION 10.02.  Amendment with Consent of Holders.....................................34
         SECTION 10.03.  Execution of Amendments...............................................35
         SECTION 10.04.  Effect of Amendments..................................................35
         SECTION 10.05.  Reference of Amendments...............................................35

ARTICLE 11
         MISCELLANEOUS
         SECTION 11.01.  No Waiver.............................................................35
         SECTION 11.02.  Governing Law; Submission to Jurisdiction.............................36
         SECTION 11.03.  Notices...............................................................36
         SECTION 11.04.  Successors and Assigns................................................36
         SECTION 11.05.  Counterparts..........................................................37
         SECTION 11.06.  Severability..........................................................37
         SECTION 11.07.  Expenses, Etc.........................................................37
         SECTION 11.08.  Security Interest Absolute............................................38
         SECTION 11.09.  Notice of Tax Event, Tax Event Redemption and
                           Termination Event...................................................38

Exhibit A -        Instruction from Purchase Contract Agent to Collateral Agent
                     (Establishment of Growth PACS)
Exhibit B -       Instruction from Collateral Agent to Securities Intermediary
                    (Establishment of Growth PACS)
Exhibit C -       Instruction from Purchase Contract Agent to Collateral Agent
                    (Reestablishment of Income PACS)
Exhibit D -       Instruction from Collateral Agent to Securities Intermediary
                    (Reestablishment of Income PACS)
Exhibit E -       Notice of Cash Settlement from Securities Intermediary to
                  Purchase Contract Agent (Cash Settlement Amounts)

</TABLE>

                              PLEDGE AGREEMENT

         PLEDGE AGREEMENT, dated as of January 14, 2002, among THE WILLIAMS
COMPANIES, INC., a Delaware corporation (the "Company"), JPMorgan Chase
Bank, a New York banking corporation, as collateral agent (in such
capacity, together with its successors in such capacity, the "Collateral
Agent"), as custodial agent (in such capacity, together with its successors
in such capacity, the "Custodial Agent"), as securities intermediary with
respect to the Collateral Account (in such capacity, together with its
successors in such capacity, the "Securities Intermediary"), and JPMorgan
Chase Bank, a New York banking corporation, as purchase contract agent and
as attorney-in-fact of the Holders from time to time of the Securities (as
defined in the Purchase Contract Agreement) (in such capacity, together
with its successors in such capacity, the "Purchase Contract Agent") under
the Purchase Contract Agreement.

                                  RECITALS

         The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which 40,000,000 Income PACS (as defined herein)
will be issued (46,000,000 Income PACS if the over-allotment option granted
in the Underwriting Agreement (as defined herein) is exercised in full).

         Each Income PACS, at issuance, consists of a unit comprised of (a)
a stock purchase contract (a "Purchase Contract") under which the Holder
will purchase from the Company on the Purchase Contract Settlement Date,
for an amount equal to $25 (the "Stated Amount"), a number of shares of The
Williams Companies, Inc. common stock, par value $1.00 ("Common Stock"),
equal to the Settlement Rate and (b) either beneficial ownership of a Note
(as defined below) or an Applicable Ownership Interest in the Treasury
Portfolio (as defined below).

         Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders of the Securities have irrevocably
authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on
behalf of such Holders and to grant the pledge provided herein of the
Collateral (as defined herein) to secure the Obligations (as defined
herein).

         Accordingly, 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
Securities, agree as follows:

                                 ARTICLE 1
                                DEFINITIONS

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

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

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

         (c) the following terms which are defined in the UCC shall have
the meanings set forth therein: "certificated security," "control,"
"financial asset," "entitlement order," "securities account" and "security
entitlement";

         (d) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: "Act", "Affiliate", "Applicable Ownership
Interest", "Bankruptcy Code", "Board Resolution", "Business Day", "Cash
Merger", "Cash Settlement", "Certificate", "Early Settlement", "Early
Settlement Date", "Failed Initial Remarketing", "Failed Secondary
Remarketing","Growth PACS", "Holder", "Income PACS", "Initial Remarketing",
"Initial Remarketing Date", " Notes", "Officers' Certificate", "Opinion of
Counsel", "Outstanding Securities", "Purchase Contract", "Purchase Contract
Settlement Date", "Purchase Price", "Quotation Agent", "Redemption Amount",
"Remarketing Agent", "Remarketing Agreement", "Remarketing Fee", "Secondary
Remarketing", "Security", "Settlement Rate", "Successful Initial
Remarketing", "Tax Event", "Tax Event Redemption", "Tax Event Redemption
Date", "Termination Event", "Treasury Portfolio", "Treasury Portfolio
Purchase Price" and "Underwriting Agreement"; and

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

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

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

         "Collateral" means the collective reference to:

          (i) all investment property and other financial assets from time
         to time credited to the Collateral Account, including, without
         limitation, (A) the Notes and security entitlements relating
         thereto that are a component of the Income PACS from time to time,
         (B) the Applicable Ownership Interests (as specified in Clause (A)
         of the definition of such term) of the Holders with respect to the
         Treasury Portfolio which are a component of the Income PACS from
         time to time; (C) any Treasury Securities and security
         entitlements relating thereto delivered from time to time upon
         establishment of Growth PACS in accordance with Section 5.02
         hereof and (E) payments made by Holders pursuant to Section 5.05
         hereof;

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

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

         "Collateral Account" means the securities account of JPMorgan
Chase Bank, as Collateral Agent, maintained by the Securities Intermediary
and designated "JPMorgan Chase Bank, as Collateral Agent of The Williams
Companies, Inc., as pledgee of JPMorgan Chase Bank, as the Purchase
Contract Agent on behalf of and as attorney-in-fact for the Holders".

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

         "Growth PACS" means, following the substitution of Treasury
Securities for Notes as collateral to secure a Holder's obligations under
the Purchase Contract, the collective rights and obligations of a Holder of
a Growth PACS Certificate in respect of such Treasury Securities, subject
to the Pledge thereof, and the related Purchase Contract.

         "Growth PACS Certificate" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Growth PACS
specified on such certificate.

         "Income PACS" means the collective rights and obligations of a
Holder of an Income PACS Certificate in respect of a Note or an appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, subject in each case to the Pledge thereof, and the related Purchase
Contract; provided that the appropriate Applicable Ownership Interest (as
specified in clause (B) of the definition of such term) of the Treasury
Portfolio shall not be subject to the Pledge.

         "Income PACS Certificate " means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Income PACS
specified on such certificate.

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

         "Permitted Investments" means any one of the following which shall
mature not later than the next succeeding Business Day:

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

                  (2) deposits, certificates of deposit or acceptances with
         an original maturity of 365 days or less of any institution which
         is a member of the Federal Reserve System having combined capital
         and surplus and undivided profits of not less than $200.0 million
         at the time of deposit (and which may include the Collateral
         Agent);

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

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

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

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

         "Person" means any legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

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

         "Pledged Applicable Ownership Interests" means the Applicable
Ownership Interests (as specified in clause (A) of the definition thereof)
of the Holders with respect to the Treasury Portfolio from time to time
credited to the Collateral Account and not then released from the Pledge.

         "Pledged Notes" means Notes and security entitlements with respect
thereto from time to time credited to the Collateral Account and not then
released from the Pledge.

         "Pledged Securities" means the Pledged Notes, the Pledged
Applicable Ownership Interest or the Pledged Treasury Securities,
collectively.

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

         "Proceeds" has the meaning ascribed thereto in the UCC and
includes, without limitation, all interest, dividends, cash, instruments,
securities, financial assets (as defined in ss.8-102(a)(9) of the UCC) and
other property received, receivable or otherwise distributed upon the sale,
exchange, collection or disposition of any financial assets from time to
time held in the Collateral Account.

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

         "Separate Notes" means Notes which are not components of Income
PACS.

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

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

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

         "Treasury Securities" means zero-coupon U.S. treasury securities
(CUSIP No. 912820BM8) which mature on February 15, 2005.

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

         "Value" means, with respect to any item of Collateral on any date,
as to (1) Cash, the face amount thereof, (2) Treasury Securities or Notes,
the aggregate principal amount thereof at maturity and (3) Applicable
Ownership Interest, the appropriate percentage (as specified in clause (A)
of the definition of such term) of the aggregate principal amount at
maturity of the Treasury Portfolio.

                                 ARTICLE 2
                                   PLEDGE

         SECTION 2.01. Pledge. Each Holder, acting through the Purchase
Contract Agent as such Holder's attorney-in-fact, and the Purchase Contract
Agent, acting as such attorney-in-fact, hereby pledges and grants to the
Collateral Agent, as agent of and for the benefit of the Company, a
continuing first priority security interest in and to, and a lien upon and
right of set-off against, all of such Person's right, title and interest in
and to the Collateral to secure the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations. The Collateral Agent shall have all of the
rights, remedies and recourses with respect to the Collateral afforded a
secured party by the UCC, in addition to, and not in limitation of, the
other rights, remedies and recourses afforded to the Collateral Agent by
this Agreement.

         SECTION 2.02. Control; Financing Statement.

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

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

         SECTION 2.03. Termination. As to each Holder, this Agreement and
the Pledge created hereby shall terminate upon the satisfaction of such
Holder's Obligations. Upon such termination, the Collateral Agent shall
Transfer such Holder's portion of the Collateral to the Purchase Contract
Agent for distribution to such Holder in accordance with his interest, free
and clear of any lien, pledge or security interest created hereby.

                                 ARTICLE 3
                    DISTRIBUTIONS ON PLEDGED COLLATERAL

         SECTION 3.01. Income Distributions. All income distributions
received by the Collateral Agent on account of the Pledged Notes, the
Pledged Applicable Ownership Interests (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio or Permitted Investments
from time to time held in the Collateral Account shall be distributed to
the Purchase Contract Agent (ABA No. 021000021, A/C No. 161352.1, Re: The
Williams Companies, Inc.) for the benefit of the applicable Holders as
provided in the Purchase Contracts or Purchase Contract Agreement.

         SECTION 3.02. Principal Payments Following Termination Event. All
payments received by the Collateral Agent following a Termination Event of
(1) the aggregate principal amount of the Pledged Notes or securities
entitlements thereto, or (2) the Applicable Ownership Interests (as
specified in clause (A) of the definition thereof) of the aggregate
principal amount of the Treasury Portfolio, or (3) the principal amount of
the Pledged Treasury Securities, shall be distributed to the Purchase
Contract Agent for the benefit of the applicable Holders for distribution
to such Holders in accordance with their respective interests.

         SECTION 3.03. Principal Payments Prior to or on Purchase Contract
Settlement Date.

         (a) Subject to the provisions of Sections 5.06, 5.08 and 7.03, and
except as provided in clause 3.03(b) below, if no Termination Event shall
have occurred, all payments received by the Collateral Agent of (1) the
aggregate principal amount with respect to the Pledged Notes or security
entitlements with respect thereto, (2) the Applicable Ownership Interests
(as specified in clause (A) of the definition thereof) of the aggregate
principal amount of the Treasury Portfolio or (3) the principal amount of
Pledged Treasury Securities, shall be held and invested in Permitted
Investments until the Purchase Contract Settlement Date and on the Purchase
Contract Settlement Date distributed to the Company as provided in Section
5.07 hereof. Any balance remaining in the Collateral Account shall be
distributed to the Purchase Contract Agent for the benefit of the
applicable Holders for distribution to such Holders in accordance with
their respective interests. The Company shall instruct the Collateral Agent
as to the type of Permitted Investments in which any payments made under
this Section shall be invested, provided, however, that if the Company
fails to deliver such instructions by 10:30 a.m. (New York City time), the
Collateral Agent shall invest such payments in the Permitted Investments
described in clause (6) of the definition of Permitted Investments.

         (b) All payments received by the Collateral Agent of (1) the
aggregate principal amount with respect to the Pledged Notes or security
entitlements with respect thereto, (2) the aggregate principal amount of
the Applicable Ownership Interests (as specified in clause (A) of the
definition thereof) of the Treasury Portfolio, or (3) the principal amount
of Treasury Securities or security entitlements with respect thereto, that,
in each case, have been released from the Pledge shall be distributed to
the Purchase Contract Agent for the benefit of the applicable Holders for
distribution to such Holders in accordance with their respective interests.

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

         SECTION 3.05. Assets Not Properly Released. If the Purchase
Contract Agent or any Holder shall receive any principal payments on
account of financial assets credited to the Collateral Account and not
released therefrom in accordance with this Agreement, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for
the benefit of the Company and, upon receipt of an Officers' Certificate of
the Company so directing, promptly deliver the same to the Collateral Agent
for credit to the Collateral Account or to the Company for application to
the Obligations of the Holders, and the Purchase Contract Agent and Holders
shall acquire no right, title or interest in any such payments of principal
amounts so received.

                                 ARTICLE 4
                                  CONTROL

         SECTION 4.01. Establishment of Collateral Account. The Securities
Intermediary hereby confirms that:

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

         (b) the Collateral Account is a securities account;

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

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

         (e) all securities or other property underlying any financial
assets credited to the Collateral Account shall be registered in the name
of the Purchase Contract Agent and indorsed to the Collateral Agent or in
blank, registered in the name of the Collateral Agent or credited to
another securities account maintained in the name of the Collateral
Account.

         SECTION 4.02. Treatment as Financial Assets. Each item of property
(whether investment property, financial asset, security, instrument or
cash) credited to the Collateral Account shall be treated as a financial
asset.

         SECTION 4.03. Sole Control by Collateral Agent. Except as provided
in Section 6.01, at all times prior to the termination of the Pledge, the
Collateral Agent shall have sole control of the Collateral Account, and the
Securities Intermediary shall take instructions and directions with respect
to the Collateral Account solely from the Collateral Agent. If at any time
the Securities Intermediary shall receive an entitlement order issued by
the Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further
consent by the Purchase Contract Agent or any Holder or any other Person.
Until termination of the Pledge, the Securities Intermediary will not
comply with any entitlement orders issued by the Purchase Contract Agent or
any Holder.

         SECTION 4.04. Securities Intermediary's Location. The Collateral
Account, and the rights and obligations of the Securities Intermediary, the
Collateral Agent, the Purchase Contract Agent and the Holders with respect
thereto, shall be governed by the laws of the State of New York. Regardless
of any provision in any other agreement, for purposes of the UCC, New York
shall be deemed to be the Securities Intermediary's location.

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

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

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

         SECTION 4.08. Tax Allocations. The Purchase Contract Agent shall
file with the 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 received by the Holders. Neither the Securities
Intermediary nor the Collateral Agent shall have any tax reporting duties
hereunder.

         SECTION 4.09. No Other Agreements. The Securities Intermediary has
not entered into, and prior to the termination of the Pledge will not enter
into, any agreement with any other Person relating to the Collateral
Account or any financial assets credited thereto, including, without
limitation, any agreement to comply with entitlement orders of any Person
other than the Collateral Agent.

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

                                 ARTICLE 5
    INITIAL DEPOSIT; ESTABLISHMENT OF GROWTH PACS AND REESTABLISHMENT OF
                                INCOME PACS

         SECTION 5.01. Initial Deposit of Notes. (a) Prior to or
concurrently with the execution and delivery of this Agreement, the
Purchase Contract Agent, on behalf of the initial Holders of the Income
PACS, shall Transfer to the Collateral Agent, for credit to the Collateral
Account, the Notes or security entitlements relating thereto, and, in the
case of security entitlements, the Securities Intermediary shall indicate
by book-entry that a securities entitlement to such Notes has been credited
to the Collateral Account.

         (b) Prior to any Event of Default, the Collateral Agent agrees to
hold any Notes or security interests relating thereto, constituting a
portion of the Collateral registered in the name of the Purchase Contract
Agent with appropriate indorsement in the form delivered to it and shall
not re-register such Notes or security interests relating thereto prior to
an Event of Default.

         SECTION 5.02. Establishment of Growth PACS.

         (a) So long as the Treasury Portfolio has not replaced the Notes
as a component of the Income PACS as a result of a Successful Initial
Remarketing or a Tax Event Redemption, at any time prior to or on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Income PACS shall have the right to establish or reestablish
Growth PACS by substitution of Treasury Securities or security entitlements
with respect thereto for the Pledged Notes comprising a part of such
Holder's Income PACS in integral multiples of 40 Income PACS by:

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

                  (ii) delivering the related Income PACS to the Purchase
         Contract Agent.

         Upon receipt of such notice and confirmation that Treasury
Securities or security entitlements with respect thereto have been credited
to the Collateral Account as described in such notice, the Collateral Agent
shall instruct the Securities Intermediary by a notice, substantially in
the form of Exhibit B hereto, to release such Pledged Notes from the Pledge
by Transfer to the Purchase Contract Agent for distribution to such Holder,
free and clear of any lien, pledge or security interest created hereby.

         (b) If the Treasury Portfolio has replaced the Notes as a
component of the Income PACS as a result of a Successful Initial
Remarketing or a Tax Event Redemption, at any time prior to or on the
second Business Day immediately preceding the Purchase Contract Settlement
Date, a Holder of Income PACS shall have the right to establish or
reestablish Growth PACS by substitution of Treasury Securities or security
entitlements with respect thereto for the Applicable Ownership Interests
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio comprising a part of such Holder's Income PACS in integral
multiples of 32,000 Income PACS by:

                  (i) Transferring to the Collateral Agent for credit to
         the Collateral Account Treasury Securities or security
         entitlements with respect thereto having a Value equal to the
         Value of the Applicable Ownership Interests (as specified in
         clause (A) of the definition of such term) of the Treasury
         Portfolio to be released, accompanied by a notice, substantially
         in the form of Exhibit C to the Purchase Contract Agreement,
         whereupon the Purchase Contract Agent shall deliver to the
         Collateral Agent a notice, substantially in the form of Exhibit A
         hereto, (A) stating that such Holder has Transferred Treasury
         Securities or security entitlements with respect thereto to the
         Collateral Agent for credit to the Collateral Account, (B) stating
         the Value of the Treasury Securities or security entitlements with
         respect thereto Transferred by such Holder and (C) requesting that
         the Collateral Agent release from the Pledge the Pledged
         Applicable Ownership Interests that are a component of such Income
         PACS; and

                  (ii) delivering the related Income PACS to the Purchase
         Contract Agent.

         Upon receipt of such notice and confirmation that Treasury
Securities or security entitlements with respect thereto have been credited
to the Collateral Account as described in such notice, the Collateral Agent
shall instruct the Securities Intermediary by a notice, substantially in
the form of Exhibit B hereto, to release such Pledged Applicable Ownership
Interests from the Pledge by Transfer to the Purchase Contract Agent for
distribution to such Holder, free and clear of any lien, pledge or security
interest created hereby.

         (c) Upon credit to the Collateral Account of Treasury Securities
or security entitlements with respect thereto delivered by a Holder of
Income PACS and receipt of the related instruction from the Collateral
Agent, the Securities Intermediary shall release such Pledged Applicable
Ownership Interests and shall promptly transfer the same to the Purchase
Contract Agent for distribution to such Holder, free and clear of any lien,
pledge or security interest created hereby.

         SECTION 5.03. Reestablishment of Income PACS.

         (a) So long as the Treasury Portfolio has not replaced the Notes
as a component of the Income PACS as a result of a Successful Initial
Remarketing or a Tax Event Redemption, at any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Growth PACS shall have the right to reestablish Income PACS by
substitution of Notes or security entitlements with respect thereto for
Pledged Treasury Securities in integral multiples of 40 Growth PACS by:

                  (i) Transferring to the Collateral Agent for credit to
         the Collateral Account Notes or security entitlements with respect
         thereto having a principal amount equal to the Value of the
         Pledged Treasury Securities to be released, accompanied by a
         notice, substantially in the form of Exhibit C to the Purchase
         Contract Agreement, whereupon the Purchase Contract Agent shall
         deliver to the Collateral Agent a notice, substantially in the
         form of Exhibit C hereto, stating that such Holder has Transferred
         the Notes or security entitlements with respect thereto to the
         Collateral Account for credit to the Collateral Account and
         requesting that the Collateral Agent release from the Pledge the
         Pledged Treasury Securities related to such Growth PACS; and

                  (ii) delivering the related Growth PACS to the Purchase
         Contract Agent.

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

         (b) If the Treasury Portfolio has replaced the Notes as a
component of the Income PACS as a result of a Successful Initial
Remarketing or a Tax Event Redemption, at any time prior to or on the
second Business Day immediately preceding the Purchase Contract Settlement
Date, a holder of a Growth PACS shall have the right to reestablish an
Income PACS by substitution of Treasury Securities or security entitlements
with respect thereto for the Applicable Ownership Interests (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio
comprising a part of such Holder's Growth PACS in integral multiples of
32,000 Growth PACS by:

         (i) Transferring to the Collateral Agent for credit to the
Collateral Account Applicable Ownership Interests (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio having a
Value equal to the Treasury Securities or security entitlements with
respect thereto to be released, accompanied by a notice, substantially in
the form of Exhibit C to the Purchase Contract Agreement, whereupon the
Purchase Contract Agent shall deliver to the Collateral Agent a notice,
substantially in the form of Exhibit C hereto, (A) stating that such Holder
has Transferred Applicable Ownership Interests (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio to the Collateral
Agent for credit to the Collateral Account, (B) stating the Value of the
Applicable Ownership Interests (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio Transferred by such
Holder and (C) requesting that the Collateral Agent release from the Pledge
the Treasury Securities or security entitlements with respect thereto that
are a component of such Growth PACS; and

         (ii) delivering the related Growth PACS to the Purchase Contract
Agent.

         Upon receipt of such notice and confirmation that the Applicable
Ownership Interests (as specified in clause (A) of the definition of such
term) of the Treasury Portfolio have been credited to the Collateral
Account as described in such notice, the Collateral Agent shall instruct
the Securities Intermediary by a notice, substantially in the form of
Exhibit D hereto, to release the Treasury Securities or security
entitlements with respect thereto from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder, free and clear of
any lien, pledge or security interest created hereby.

         SECTION 5.04. Termination Event.

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

                  (i) any Pledged Notes or security entitlements with
         respect thereto or Pledged Applicable Ownership Interests (if the
         Treasury Portfolio has become a component of the Income PACS as a
         result of a Successful Initial Remarketing or a Tax Event
         Redemption);

                  (ii) any Pledged Treasury Securities, and

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

to the Purchase Contract Agent for the benefit of the Holders for
distribution to such Holders in accordance with their respective interests,
free and clear of any lien, pledge or security interest or other interest
created hereby; provided, however, if any Holder shall be entitled to
receive less than $1,000 with respect to his interest in the Applicable
Ownership Interests (as specified in clause (A) of the definition of such
term) of the Treasury Portfolio, the Purchase Contract Agent shall have the
right to dispose of such interest for cash and deliver to such Holder cash
in lieu of delivering the Applicable Ownership Interests (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio.

          (b) If such Termination Event shall result from the Company's
becoming a debtor under the Bankruptcy Code, and if the Collateral Agent
shall for any reason fail promptly to effectuate the release and Transfer
of all Pledged Notes, the Applicable Ownership Interests (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, the
Pledged Treasury Securities or payments by Holders (or the Permitted
Investments of such payments) pursuant to Section 5.05 hereof, as the case
may be, as provided by this Section 5.04, the Purchase Contract Agent
shall:

                  (i) use its best efforts to obtain an opinion of a
         nationally recognized law firm reasonably acceptable to the
         Collateral Agent to the effect that, as a result of the Company's
         being the debtor in such a bankruptcy case, the Collateral Agent
         will not be prohibited from releasing or Transferring the
         Collateral as provided in this Section 5.04, and shall deliver
         such opinion to the Collateral Agent within ten days after the
         occurrence of such Termination Event, and if (A) the Purchase
         Contract Agent shall be unable to obtain such opinion within ten
         days after the occurrence of such Termination Event or (B) the
         Collateral Agent shall continue, after delivery of such opinion,
         to refuse to effectuate the release and Transfer of all Pledged
         Notes, Applicable Ownership Interests (as specified in clause (A)
         of the definition of such term) of the Treasury Portfolio, the
         Pledged Treasury Securities, the payments by Holders (or the
         Permitted Investments of such payments) pursuant to Section 5.05
         hereof or the Proceeds of any of the foregoing, as the case may
         be, as provided in this Section 5.04, then the Purchase Contract
         Agent shall within fifteen days after the occurrence of such
         Termination Event commence an action or proceeding in the court
         having jurisdiction of the Company's case under the Bankruptcy
         Code seeking an order requiring the Collateral Agent to effectuate
         the release and transfer of all Pledged Notes, Applicable
         Ownership Interests (as specified in clause (A) of the definition
         of such term) of the Treasury Portfolio, the Pledged Treasury
         Securities, or the payments by Holders (or the Permitted
         Investments of such payments) pursuant to Section 5.05 hereof, or
         as the case may be, as provided by this Section 5.04; or

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

         SECTION 5.05. Cash Settlement.

         (a) Upon receipt by the Collateral Agent of (1) a notice from the
Purchase Contract Agent promptly after the receipt by the Purchase Contract
Agent of a notice from a Holder of Income PACS or Growth PACS that such
Holder has elected, in accordance with the procedures specified in Section
5.02(b)(i) or (e)(i) of the Purchase Contract Agreement, respectively, to
effect a Cash Settlement and (2) payment by such Holder of Income PACS or
Growth PACS by deposit in the Collateral Account prior to 11:00 a.m. (New
York City time) on the Business Day immediately preceding the Purchase
Contract Settlement Date of the Purchase Price in lawful money of the
United States by certified or cashier's check or wire transfer of
immediately available funds payable to or upon the order of the Securities
Intermediary, then the Collateral Agent shall:

                  (i) instruct the Securities Intermediary promptly to
         invest any such Cash in Permitted Investments;

                  (ii) instruct the Securities Intermediary to release from
         the Pledge the Income PACS holder's or the Growth PACS holder's
         related Pledged Notes, Pledged Applicable Ownership Interests, or
         Pledged Treasury Securities, as applicable, as to which such
         Holder has effected a Cash Settlement pursuant to this Section
         5.05(a); and

                  (iii) instruct the Securities Intermediary to Transfer
         all such Pledged Notes, Pledged Applicable Ownership Interests, or
         the Pledged Treasury Securities, as the case may be, to the
         Purchase Contract Agent for the benefit of such Holder, in each
         case free and clear of the Pledge created hereby, for distribution
         to such Holder.

         The Company shall instruct the Collateral Agent in writing as to
the type of Permitted Investments in which any such Cash shall be invested;
provided, however, that if the Company fails to deliver such written
instructions by 10:30 a.m. (New York City time), the Collateral Agent shall
invest such Cash in the Permitted Investments described in clause (6) of
the definition of Permitted Investments.

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

         (b) If a Holder of Income PACS (unless a Tax Event Redemption or a
Successful Initial Remarketing shall have occurred) (i) fails to notify the
Purchase Contract Agent of its intention to make a Cash Settlement as
provided in paragraph 5.02(b)(i) of the Purchase Contract Agreement, such
Holder shall be deemed to have consented to the disposition of such
Holder's Pledged Notes in accordance with paragraph 5.02(b)(iii) of the
Purchase Contract Agreement or (ii) does notify the Purchase Contract Agent
of its intention to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph 5.02(b)(ii) of the Purchase Contract
Agreement, such Holder shall be deemed to have consented to the disposition
of such Holder's Pledged Notes in accordance with paragraph 5.02(d) of the
Purchase Contract Agreement.

         (c) If a Holder of a Growth PACS or a Holder of Income PACS (if a
Tax Event Redemption or a Successful Initial Remarketing shall have
occurred) (i) fails to notify the Purchase Contract Agent of its intention
to make a Cash Settlement as provided in paragraph 5.02(e)(i) of the
Purchase Contract Agreement or (ii) does notify the Purchase Contract Agent
as provided in paragraph 5.02(e)(ii) of the Purchase Contract Agreement of
its intention to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph 5.02(e)(ii) of the Purchase Contract
Agreement, such Holder shall be deemed to have elected to pay the Purchase
Price in accordance with paragraph 5.02(e)(iii) of the Purchase Contract
Agreement.

         (d) As soon as practicable after 11:00 a.m. (New York City time)
on the Business Day immediately preceding the Purchase Contract Settlement
Date, the Collateral Agent shall deliver to the Purchase Contract Agent a
notice, substantially in the form of Exhibit E hereto, stating (i) the
amount of cash that it has received with respect to the Cash Settlement of
Income PACS and (ii) the amount of Cash that it has received with respect
to the Cash Settlement of Growth PACS.

         SECTION 5.06. Early Settlement upon a Cash Merger. Upon receipt by
the Collateral Agent of a notice from the Purchase Contract Agent that a
Holder of Securities has elected to effect Early Settlement of its
obligations under the Purchase Contracts forming a part of such Securities
in accordance with the terms of the Purchase Contracts and Section
5.04(b)(2) of the Purchase Contract Agreement (which notice shall set forth
the number of such Purchase Contracts as to which such Holder has elected
to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holder, and paid to the Company as confirmed in writing
by the Company, the related Purchase Price pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all
conditions to such Early Settlement have been satisfied, then the
Collateral Agent shall release from the Pledge, (1) Pledged Notes or the
appropriate Applicable Ownership Interests (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio in the case of a
Holder of Income PACS or (2) Pledged Treasury Securities, in the case of a
Holder of Growth PACS, in each case with a Value equal to the product of
(x) the Stated Amount times (y) the number of Purchase Contracts as to
which such Holder has elected to effect Early Settlement, and shall
instruct the Securities Intermediary to Transfer all such Pledged
Applicable Ownership Interests or Pledged Notes or Pledged Treasury
Securities, as the case may be, to the Purchase Contract Agent for the
benefit of such Holder, in each case free and clear of the Pledge created
hereby, for distribution to such Holder. A Growth PACS holder may settle
early only in integral multiples of 40 Purchase Contracts and an Income
PACS holder, if a Tax Event Redemption or a Successful Initial Remarketing
has occurred, may settle early only in integral multiples of 32,000
Purchase Contracts.

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

         (a) If a Holder of Income PACS (unless a Successful Initial
Remarketing or a Tax Event Redemption has occurred) has not elected to make
an effective Cash Settlement by notifying the Purchase Contract Agent in
the manner provided for in Section 5.02(b)(i) of the Purchase Contract
Agreement, such Holder shall be deemed to have elected to pay for the
shares of Common Stock to be issued under such Purchase Contracts from the
Proceeds of the remarketing of the related Pledged Notes. Upon written
notice of such event from the Purchase Contract Agent, the Collateral Agent
shall instruct the Securities Intermediary to Transfer the related Pledged
Notes to the Remarketing Agent for remarketing. Upon receiving such Pledged
Notes, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement, will use reasonable efforts to remarket such Pledged Notes. The
Remarketing Agent will deposit the Proceeds of such Secondary Remarketing
(less, to the extent permitted by the Remarketing Agreement, the
Remarketing Fee) in the Collateral Account, and the Collateral Agent shall
invest the Proceeds of the remarketing in Permitted Investments set forth
in clause (6) of the definition of Permitted Investments. On the Purchase
Contract Settlement Date, the Purchase Contract Agent shall give written
direction to the Collateral Agent specifying the instruction the Collateral
Agent shall give to the Securities Intermediary in order to apply a portion
of the Proceeds from such remarketing equal to the aggregate principal
amount of such Pledged Notes to satisfy in full such Holder's obligations
to pay the Purchase Price to purchase the shares of Common Stock under the
related Purchase Contracts and the balance of the Proceeds from the
remarketing, if any, that shall be transferred to the Purchase Contract
Agent for the benefit of such Holder for distribution to such Holder.

         If (i) the Remarketing Agent advises the Collateral Agent in
writing that there has been a Failed Secondary Remarketing or (ii) a Holder
of Income PACS has given notice of its intention to make a Cash Settlement
in the manner provided for in Section 5.02(b)(i) of the Purchase Contract
Agreement, but failed to deliver the required cash prior to 11:00 a.m. (New
York City time) on the Business Day immediately preceding the Purchase
Contract Settlement Date, thus, in each case, resulting in an event of
default under the Purchase Contract Agreement and hereunder, the Collateral
Agent, for the benefit of the Company shall, at the written direction of
the Company, exercise its rights as a secured party with respect to the
Pledged Notes and use commercially reasonable efforts to dispose of the
Pledged Notes in accordance with applicable law and apply the proceeds from
such disposition in full satisfaction of such Holder's obligations to pay
the Purchase Price for the shares of Common Stock.

         (b) If a Holder of a Growth PACS or a Holder of Income PACS (if a
Tax Event Redemption or a Successful Initial Remarketing has occurred) has
not elected to make an effective Cash Settlement by notifying the Purchase
Contract Agent in the manner provided for in Section 5.02(e)(i) of the
Purchase Contract Agreement, or has given such notice but failed to make
such payment in the manner required by Section 5.02(e)(ii) of the Purchase
Contract Agreement, such Holder shall be deemed to have elected to pay for
the shares of Common Stock to be issued under such Purchase Contracts from
the Proceeds of the related Pledged Treasury Securities or Pledged
Applicable Ownership Interests, as the case may be. Promptly, after 11:00
a.m. (New York City time) on the Business Day immediately prior to the
Purchase Contract Settlement Date, the Collateral Agent shall invest the
Cash Proceeds of the maturing Pledged Treasury Securities or Pledged
Applicable Ownership Interests, as the case may be, in Permitted
Investments set forth in clause 6 of the definition of Permitted
Investments, unless prior to 10:30 a.m. (New York City time), the Company
shall otherwise instruct the Collateral Agent as to the type of Permitted
Investments in which any such Cash Proceeds shall be invested. Without
receiving any instruction from any such Holder, the Collateral Agent shall
apply the Proceeds of the related Pledged Treasury Securities or Pledged
Applicable Ownership Interests, as the case may be, to the settlement of
such Purchase Contracts on the Purchase Contract Settlement Date. In the
event the sum of the Proceeds from the related Pledged Treasury Securities
or Pledged Applicable Ownership Interests, as the case may be, and the
investment earnings from the investment in Permitted Investments exceeds
the aggregate Purchase Price of the Purchase Contracts being settled
thereby, the Collateral Agent shall instruct the Securities Intermediary to
distribute such excess, when received, to the Purchase Contract Agent for
the benefit of such Holder for distribution to such Holder.

         (c) Under the Remarketing Agreement and subject to the terms of
any supplemental remarketing agreement, on or prior to 11:00 a.m. (New York
City time) on the second Business Day immediately preceding the Initial
Remarketing Date or the Secondary Remarketing Date, as applicable, but no
earlier than the Payment Date immediately preceding the date, Holders of
Separate Notes may elect to have their Separate Notes remarketed by
delivering their Separate Notes, along with a notice of such election,
substantially in the form of Exhibit F hereto, to the Custodial Agent. The
Custodial Agent shall hold Separate Notes in an account separate from the
Collateral Account in which the Pledged Securities shall be held. Holders
of Notes electing to have their Separate Notes remarketed will also have
the right to withdraw that election by written notice to the Custodial
Agent, substantially in the form of Exhibit G hereto, on or prior to the
second Business Day immediately preceding the Initial Remarketing Date or
the Secondary Remarketing Date, as applicable, upon which notice the
Custodial Agent shall return such Separate Notes to such Holder.

         On the Business Day immediately preceding Initial Remarketing Date
or the Secondary Remarketing Date, as applicable, the Custodial Agent shall
notify the Remarketing Agent of the aggregate principal amount of the
Separate Notes to be remarketed and will deliver to the Remarketing Agent
for remarketing all Separate Notes delivered to the Custodial Agent
pursuant to this Section 5.07(c) and not withdrawn pursuant to the terms
hereof prior to such date. After deducting the Remarketing Fee to the
extent permitted under the terms of the Remarketing Agreement, the
Remarketing Agent will remit to the Custodial Agent the remaining portion
of the proceeds of such Remarketing for the benefit of such Holders. In the
event of a Failed Initial Remarketing or a Failed Secondary Remarketing,
the Remarketing Agent will promptly return such Separate Notes to the
Custodial Agent for redelivery to such Holders.

         SECTION 5.08. Tax Event Redemption. If the Collateral Agent
receives written notice that a Tax Event Redemption has occurred while
Notes are still credited to the Collateral Account, the Collateral Agent
shall apply the Redemption Amount to purchase the Treasury Portfolio and
the Collateral Agent shall credit the Applicable Ownership Interests (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio to the Collateral Account and shall transfer the Applicable
Ownership Interest (as specified in clause (B) of the definition of such
term) of the Treasury Portfolio to the Purchase Contract Agent for the
benefit of the Holders of the Income PACS. Upon credit to the Collateral
Account of the Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio having a Value equal
to the aggregate principal amount of the Pledged Notes, the Collateral
Agent shall cause the Securities Intermediary to release the Pledged Notes
from the Collateral Account and shall promptly transfer the Pledged Notes
to the Company.

                                 ARTICLE 6
                       VOTING RIGHTS - PLEDGED NOTES

         SECTION 6.01. Voting Rights. 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 shall not refrain
from exercising such right, as the case may be, if, in the judgment of the
Purchase Contract Agent, 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 the Notes are entitled to vote or
solicitation of consents, waivers or proxies of holders of the Notes, the
Collateral Agent shall use reasonable efforts to send promptly to the
Purchase Contract Agent such notice or communication, and as soon as
reasonably practicable after receipt of a written request therefor from the
Purchase Contract Agent, execute and deliver to the Purchase Contract Agent
such proxies and other instruments in respect of such Pledged Notes (in
form and substance satisfactory to the Collateral Agent) as are prepared by
the Purchase Contract Agent with respect to the Pledged Notes.

                                 ARTICLE 7
                            RIGHTS AND REMEDIES

         SECTION 7.01. Rights and Remedies of the Collateral Agent.

         (a) In addition to the rights and remedies specified in Section
5.07 hereof or otherwise available at law or in equity, after an event of
default (as specified in Section 7.01(b) below) hereunder, the Collateral
Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the UCC (whether or not the UCC is in
effect in the jurisdiction where the rights and remedies are asserted) and
the TRADES Regulations and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted. Without limiting
the generality of the foregoing, such remedies may include, to the extent
permitted by applicable law, (1) retention of the Pledged Notes, Pledged
Treasury Securities or the appropriate Pledged Applicable Ownership
Interests in full satisfaction of the Holders' obligations under the
Purchase Contracts and the Purchase Contract Agreement or (2) sale of the
Pledged Notes, Pledged Treasury Securities or the appropriate Pledged
Applicable Ownership Interests in one or more public or private sales.

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

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

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

         SECTION 7.02. Tax Event Redemption. Upon the occurrence of a Tax
Event Redemption while Notes are still credited to the Collateral Account,
the Redemption Amount, plus any accrued and unpaid interest payable on the
Tax Event Redemption Date with respect to the principal amount of the
Pledged Notes shall be credited to the Collateral Account by the Indenture
Trustee, on or prior to 12:30 p.m., New York City time on such Tax Event
Redemption Date, by federal funds check or wire transfer of immediately
available funds. The Collateral Agent is hereby authorized to present the
Pledged Notes for payment as may be required by their respective terms.
Upon receipt of such funds, the Pledged Notes shall be released from the
Collateral Account. In the event such funds are credited to the Collateral
Account, the Collateral Agent, at the written direction of the Company,
shall instruct the Securities Intermediary to (a) apply an amount equal to
the Redemption Amount of such funds to purchase the Treasury Portfolio from
the Quotation Agent for credit to the Collateral Account and (b) promptly
remit the remaining portion of such funds, if any, to the Purchase Contract
Agent for payment to the Holders of Income PACS.

         SECTION 7.03. Initial Remarketing. The Collateral Agent shall, by
11:00 a.m., New York City time, on the Business Day immediately preceding
the Initial Remarketing Date, without any instruction from any Holder of
Income PACS, present the related Pledged Notes to the Remarketing Agent for
remarketing. Upon receiving such Pledged Notes, the Remarketing Agent,
pursuant to the terms of the Remarketing Agreement, will use its reasonable
efforts to remarket such Pledged Notes on the Initial Remarketing Date at a
price of approximately 100.5% (but not less than 100%) of the Treasury
Portfolio Purchase Price. After deduction as the Remarketing Fee of an
amount not exceeding 25 basis points (.25%) of the Treasury Portfolio
Purchase Price from any amount of such Proceeds in excess of the Treasury
Portfolio Purchase Price, the Remarketing Agent will remit the entire
amount of the Proceeds of such remarketing to the Collateral Agent on or
prior to 12:00 p.m., New York City time, by check or wire transfer in
immediately available funds at such place and at such account as may be
designated by the Collateral Agent in exchange for the Pledged Notes. In
the event the Collateral Agent receives such Proceeds, the Collateral Agent
will, at the written direction of the Company, apply an amount equal to the
Treasury Portfolio Purchase Price to purchase from the Quotation Agent the
Treasury Portfolio and promptly remit the remaining portion of such
Proceeds to the Purchase Contract Agent for payment to the Holders of
Income PACS. The Collateral Agent shall Transfer the Treasury Portfolio to
the Collateral Account to secure the obligation of all Holders of Income
PACS to purchase Common Stock of the Company under the Purchase Contracts
constituting a part of such Income PACS, in substitution for the Pledged
Notes, which shall be released from the Collateral Account. In the event of
a Failed Initial Remarketing, the Notes presented to the Remarketing Agent
pursuant to this Section 7.03 for Remarketing shall be redeposited into the
Collateral Account.

         SECTION 7.04. Substitutions. Whenever a Holder has the right to
substitute Treasury Securities, Notes or security entitlements for any of
them or the appropriate Applicable Ownership Interests of the Treasury
Portfolio, as the case may be, for financial assets held in the Collateral
Account, such substitution shall not constitute a novation of the security
interest created hereby.

                                 ARTICLE 8
                 REPRESENTATIONS AND WARRANTIES; COVENANTS

         SECTION 8.01. Representations and Warranties. Each Holder from
time to time, acting through the Purchase Contract Agent as
attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any representation or warranty made by or on behalf
of a Holder), hereby represents and warrants to the Collateral Agent (with
respect to such Holder's interest in the Collateral), which representations
and warranties shall be deemed repeated on each day a Holder Transfers
Collateral that:

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

         (b) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form, is the sole
holder of such Collateral and is the sole beneficial owner of, or has the
right to Transfer, the Collateral it Transfers to the Collateral Agent for
credit to the Collateral Account, free and clear of any security interest,
lien, encumbrance, call, liability to pay money or other restriction other
than the security interest and lien granted under Article 2 hereof;

         (c) upon the Transfer of the Collateral to the Collateral Agent
for credit to the Collateral Account, the Collateral Agent, for the benefit
of the Company, will have a valid and perfected first priority security
interest therein (assuming that any central clearing operation or any
securities intermediary or other entity not within the control of the
Holder involved in the Transfer of the Collateral, including the Collateral
Agent and the Securities Intermediary, gives the notices and takes the
action required of it hereunder and under applicable law for perfection of
that interest and assuming the establishment and exercise of control
pursuant to Article 4 hereof); and

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

         SECTION 8.02. Covenants. The Holders from time to time, acting
through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any
covenant made by or on behalf of a Holder), hereby covenant to the
Collateral Agent that for so long as the Collateral remains subject to the
Pledge:

         (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 Securities.

                                 ARTICLE 9
        THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES
                                INTERMEDIARY

         It is hereby agreed as follows:

         SECTION 9.01. Appointment, Powers and Immunities. The Collateral
Agent, the Custodial Agent or 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 Securities Intermediary, as
the case may be, by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Collateral Agent, the
Custodial Agent and Securities Intermediary shall:

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

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

         (c) not be required to initiate or conduct any litigation or
collection proceedings hereunder (except pursuant to directions furnished
under Section 9.02 hereof, subject to Section 9.06 hereof);

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

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

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

         No provision of this Agreement shall require the Collateral Agent,
Custodial Agent or Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, Custodial Agent
or Securities Intermediary be liable for any amount in excess of the Value
of the Collateral. Notwithstanding the foregoing, each of the Collateral
Agent, Custodial Agent and Securities Intermediary in its individual
capacity hereby waives any right of setoff, bankers' lien, liens or
perfection rights as securities intermediary or any counterclaim with
respect to any of the Collateral.

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

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

         SECTION 9.04. 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 other Person interested herein and any Holder of Securities (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, the
Securities Intermediary and their affiliates may accept fees and other
consideration from the Purchase Contract Agent and any Holder of Securities
without having to account for the same to the Company; provided that each
of the Securities Intermediary, the Custodial Agent and the Collateral
Agent covenants and agrees with the Company that it shall not accept,
receive or permit there to be created in favor of itself and shall take no
affirmative action to permit there to be created in favor of any other
Person, any security interest, lien or other encumbrance of any kind in or
upon the Collateral other than the lien created by the Pledge.

         SECTION 9.05. Non-Reliance on Collateral Agent, the Custodial
Agent and Securities Intermediary. 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 Securities of this Agreement, the Purchase Contract
Agreement, the Securities 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 Securities. None of the Collateral Agent,
the Custodial Agent or the Securities Intermediary shall have any duty or
responsibility to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the Purchase
Contract Agent or any Holder of Securities (or any of their respective
affiliates) that may come into the possession of the Collateral Agent, the
Custodial Agent or the Securities Intermediary or any of their respective
affiliates.

         SECTION 9.06. Compensation and Indemnity. The Company agrees to:

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

         (b) indemnify and hold harmless the Collateral Agent, the
Custodial Agent, the Securities Intermediary and each of their respective
directors, officers, agents and employees (collectively, the
"Indemnitees"), harmless from and against any and all claims, liabilities,
losses, damages, fines, penalties and expenses (including reasonable fees
and expenses of counsel) (collectively, "Losses" and individually, a
"Loss") that may be imposed on, incurred by, or asserted against, the
Indemnitees or any of them for following any instructions or other
directions upon which either the Collateral Agent, the Custodial Agent or
the Securities Intermediary is entitled to rely pursuant to the terms of
this Agreement; and

         (c) in addition to and not in limitation of paragraph (b)
immediately above, indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on,
incurred by or asserted against, the Indemnitees or any of them in
connection with or arising out of the Collateral Agent's, the Custodial
Agent's or the Securities Intermediary's acceptance or performance of its
powers and duties under this Agreement, provided the Collateral Agent, the
Custodial Agent or the Securities Intermediary has not acted with
negligence or engaged in willful misconduct or bad faith with respect to
the specific Loss against which indemnification is sought.

         The provisions of this Section and Section 11.07 shall survive the
resignation or removal of the Collateral Agent, Custodial Agent or
Securities Intermediary and the termination of this Agreement.

         SECTION 9.07. Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims
by or among the parties hereto or any other Person with respect to any
funds or property deposited hereunder, then at its sole option, each of the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall
be entitled, after prompt notice to the Company and the Purchase Contract
Agent, to refuse to comply with any and all claims, demands or instructions
with respect to such property or funds so long as such dispute or conflict
shall continue, and the Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not be or become liable in any way to any of
the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent, the
Custodial Agent and the Securities Intermediary shall be entitled to refuse
to act until either:

         (a) such conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by
agreement between the conflicting parties as evidenced in a writing
satisfactory to the Collateral Agent, the Custodial Agent or the Securities
Intermediary; or

         (b) the Collateral Agent, the Custodial Agent or the Securities
Intermediary shall have received security or an indemnity satisfactory to
it sufficient to save it harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which it may incur by reason
of its acting. The Collateral Agent, the Custodial Agent and the Securities
Intermediary may in addition elect to commence an interpleader action or
seek other judicial relief or orders as the Collateral Agent, the Custodial
Agent or the Securities Intermediary may deem necessary. Notwithstanding
anything contained herein to the contrary, none of the Collateral Agent,
the Custodial Agent or the Securities Intermediary shall be required to
take any action that is in its opinion contrary to law or to the terms of
this Agreement, or which would in its opinion subject it or any of its
officers, employees or directors to liability.

         SECTION 9.08. Resignation of Collateral Agent, the Custodial Agent
and Securities Intermediary.

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

                  (i) if the Collateral Agent, the Custodial Agent or the
         Securities Intermediary is the same Person and the Purchase
         Contract Agent and an event of default occurs under the Purchase
         Contract Agreement or this Agreement, except an event of default
         as a result of (x) a Failed Secondary Remarketing or (y) the event
         referred to in clause (ii) of the second paragraph of Section
         5.07(a) hereof, the Collateral Agent, the Custodial Agent or the
         Securities Intermediary shall resign immediately;

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

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

                  (iv) if the Collateral Agent, the Custodial Agent or the
         Securities Intermediary fails to perform any of its material
         obligations hereunder in any material respect for a period of not
         less than 20 days after receiving written notice of such failure
         by the Purchase Contract Agent and such failure shall be
         continuing, the Collateral Agent, the Custodial Agent and the
         Securities Intermediary may be removed by the Purchase Contract
         Agent, acting at the direction of the Holders of Securities.

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 (iv) of this Section 9.08(a). Upon any such
resignation or removal, the Company shall have the right to appoint a
successor Collateral Agent, Custodial Agent or Securities Intermediary, as
the case may be, which, in the case of a resignation pursuant to clause (i)
of this Section 9.08(a), shall not be an Affiliate of the Purchase Contract
Agent. If no successor Collateral Agent, Custodial Agent or Securities
Intermediary shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Collateral Agent's, Custodial
Agent's or Securities Intermediary's giving of notice of resignation or the
Company's or the Purchase Contract Agent's giving notice of such removal,
then the retiring Collateral Agent, Custodial Agent or Securities
Intermediary may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Custodial Agent or Securities
Intermediary. The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall each be a bank or a national banking association which
has an office (or an agency office) in New York City with a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Collateral Agent, Custodial Agent or Securities Intermediary
hereunder by a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, such successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, and the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be,
shall take all appropriate action, subject to payment of any amounts owed
to it hereunder, to transfer any money and property held by it hereunder
(including the Collateral) to such successor. The retiring Collateral
Agent, Custodial Agent or 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 Article 9 shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Collateral Agent, Custodial Agent or Securities
Intermediary. Any resignation or removal of the Collateral Agent, Custodial
Agent or Securities Intermediary hereunder, at a time when such Person is
acting as the Collateral Agent, Custodial Agent or Securities Intermediary,
shall be deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Collateral Agent, Securities Intermediary or
Custodial Agent, as the case may be.

         SECTION 9.09. Right to Appoint Agent or Advisor. The Collateral
Agent shall have the right to appoint agents or advisors in connection with
any of its duties hereunder, and the Collateral Agent shall not be liable
for any action taken or omitted by, or in reliance upon the advice of, such
agents or advisors selected in good faith. The appointment of agents
pursuant to this Section 9.09 shall be subject to prior written consent of
the Company, which consent shall not be unreasonably withheld.

         SECTION 9.10. Survival. The provisions of this Article 9 shall
survive termination of this Agreement and the resignation or removal of the
Collateral Agent, the Custodial Agent or the Securities Intermediary.

         SECTION 9.11. Exculpation. Anything contained in this Agreement to
the contrary notwithstanding, in no event shall the Collateral Agent, the
Custodial Agent or the Securities Intermediary or their officers,
directors, employees or agents be liable under this Agreement to any third
party for indirect, special, punitive, or consequential loss or damage of
any kind whatsoever, including, but not limited to, lost profits, whether
or not the likelihood of such loss or damage was known to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, or any of them
and regardless of the form of action.

                                 ARTICLE 10
                                 AMENDMENT

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

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

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

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

         (d) cure any ambiguity (or formal defect), correct or supplement
any provisions herein which may be inconsistent with any other such
provisions herein, or 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 in any material
respect.

         SECTION 10.02. Amendment with Consent of Holders. With the consent
of the Holders of not less than a majority of the Purchase Contracts at the
time outstanding, by Act of such Holders delivered to the Company, the
Purchase Contract Agent, the Custodial Agent, the Securities Intermediary
and the Collateral Agent, as the case may be, the Company, when duly
authorized by a Board Resolution, the Purchase Contract Agent, the
Collateral Agent, the Securities Intermediary and the Collateral Agent 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
Securities; provided, however, that no such supplemental agreement shall,
without the unanimous consent of the Holders of each Outstanding Security
adversely affected thereby in any material respect:

         (a) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Income PACS to substitute the Treasury
Securities for the Pledged Notes or the Pledged Applicable Ownership
Interest, as the case may be, or the rights of Holders of Growth PACS to
substitute Notes or the Applicable Ownership Interest (as specified in
clause (A) of such term) of the Treasury Portfolio, as applicable, for the
Pledged Treasury Securities), impair the right of the Holder of any
Security to receive distributions on the underlying Collateral or otherwise
adversely affect the Holder's rights in or to such Collateral; or

         (b) otherwise effect any action that would require the consent of
the Holder of each Outstanding Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by a modification
or amendment of the provisions of the Purchase Contract Agreement; or

         (c) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for the modification or amendment of the
provisions of this Agreement;

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

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

         SECTION 10.03. Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent shall be entitled
to receive and (subject to Section 7.01 of the Purchase Contract Agreement
with respect to the Purchase Contract Agent) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all
conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied. The Collateral Agent, Custodial Agent,
Securities Intermediary and Purchase Contract Agent may, but shall not be
obligated to, enter into any such amendment which affects their own
respective rights, duties or immunities under this Agreement or otherwise.

         SECTION 10.04. Effect of Amendments. Upon the execution of any
amendment under this Section, this Agreement shall be modified in
accordance therewith, and such amendment shall form a part of this
Agreement for all purposes; and every Holder of Certificates theretofore or
thereafter authenticated, executed on behalf of the Holders and delivered
under the Purchase Contract Agreement shall be bound thereby.

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

                                 ARTICLE 11
                               MISCELLANEOUS

         SECTION 11.01. No Waiver. No failure on the part of the Company,
the Collateral Agent, the Securities Intermediary or any of their
respective agents to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by
the Company, the Collateral Agent, the Securities Intermediary or any of
their respective agents of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided by law.

         SECTION 11.02. Governing Law; Submission to Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISION
THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
The Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby
submit to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York state court
sitting in New York City for the purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Holders from time to time of the
Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in
an inconvenient forum.

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

         SECTION 11.04. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective successors and
assigns of the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, and the Holders
from time to time of the Securities, by their acceptance of the same, shall
be deemed to have agreed to be bound by the provisions hereof and to have
ratified the agreements of, and the grant of the Pledge hereunder by, the
Purchase Contract Agent.

         SECTION 11.05. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.

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

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

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

         (b) all reasonable costs and expenses of the Collateral Agent, the
Custodial Agent and the Securities Intermediary (including, without
limitation, reasonable fees and expenses of counsel) in connection with (i)
any enforcement or proceedings resulting or incurred in connection with
causing any Holder of Securities to satisfy its obligations under the
Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 11.07;

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

         (d) all fees and expenses of any agent or advisor appointed by the
Collateral Agent and consented to by the Company under Section 9.09 of this
Agreement; and

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

         SECTION 11.08. Security Interest Absolute. All rights of the
Collateral Agent and security interests hereunder, and all obligations of
the Holders from time to time hereunder, shall be absolute and
unconditional irrespective of:

         (a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities 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 the Securities 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
pledger.

         SECTION 11.09. Notice of Tax Event, Tax Event Redemption and
Termination Event. Upon the occurrence of a Tax Event, a Tax Event
Redemption or a Termination Event, the Company shall deliver written notice
to the Collateral Agent and the Securities Intermediary. Upon the written
request of the Collateral Agent or the Securities Intermediary, the Company
shall inform such party whether or not a Tax Event, a Tax Event Redemption
or a Termination Event has occurred.

                     [SIGNATURES ON THE FOLLOWING PAGE]

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

THE WILLIAMS COMPANIES, INC.                 JPMorgan Chase Bank, as
                                             Purchase Contract Agent and
                                             as attorney-in-fact of the Holders
                                             from time to time of the Securities

By: /s/ James G. Ivey                        By: /s/ Joanne Adamis
    ------------------------------               -----------------------------
    Name:  James G. Ivey                         Name:  Joanne Adamis
    Title: Treasurer                             Title: Vice President

Address for Notices:                         Address for Notices:

The Williams Companies, Inc.                   450 W. 33rd Street
The Williams Companies, Inc.                   New York, New York 10001
One Williams Center, Suite 5000                Telecopier No.: (212) 946-8154
Tulsa, Oklahoma 74172                          Attention: Institutional Trust
Telecopier No.: (918) 573-2065                            Services
Attention: Treasurer
Telecopier No.:(918) 573-4503
Attention: General Counsel

With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopier No.: (212) 735-2000
Attention:  John Osborn, Esq.

JPMorgan Chase Bank,
as Collateral Agent, Custodial Agent and
Securities Intermediary

By: /s/ Joanne Adamis
   --------------------------------
      Name: Joanne Adamis
      Title:   Vice President

Address for Notices:

450 West 33rd Street
New York, New York 10001
Telecopier No.: (212) 946-8154
Attention: Institutional Trust Services

                                                                  EXHIBIT A

                                INSTRUCTION
                        FROM PURCHASE CONTRACT AGENT
                            TO COLLATERAL AGENT
                       (Establishment of Growth PACS)

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

      Re:   _______ Income PACS of The Williams Companies, Inc.
            (the "Company")

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

         Please refer to the Pledge Agreement, dated as of January 14, 2002
(the "Pledge Agreement"), among the Company, you, as Collateral Agent, as
Securities Intermediary and as Custodial Agent and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of Income
PACS from time to time. Capitalized terms used herein but not defined shall
have the meaning set forth in the Pledge Agreement.

         We hereby notify you in accordance with Section 5.02 of the Pledge
Agreement that the holder of securities named below (the "Holder") has
elected to substitute $__________ Value of Treasury Securities or security
entitlements with respect thereto in exchange for an equal Value of
[Pledged Notes] [Pledged Applicable Ownership Interests] relating to
_________ Income PACS and has delivered to the undersigned a notice stating
that the Holder has Transferred such Treasury Securities or security
entitlements with respect thereto to the Securities Intermediary, for
credit to the Collateral Account.

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

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

                                          By:__________________________
                                             Name:
                                             Title:

Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements with respect thereto for the [Pledged
Notes] [Pledged Applicable Ownership Interests]:

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

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

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

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

                                                                  EXHIBIT B

                                INSTRUCTION
                           FROM COLLATERAL AGENT
                         TO SECURITIES INTERMEDIARY
                       (Establishment of Growth PACS)

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

Re:      __________ Income PACS of The Williams Companies, Inc. (the
         "Company")

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

         Please refer to the Pledge Agreement, dated as of January 14, 2002
(the "Pledge Agreement"), among the Company, you, as Securities
Intermediary, JPMorgan Chase Bank, as Purchase Contract Agent and as
attorney-in-fact for the holders of Income PACS from time to time, and the
undersigned, as Collateral Agent. Capitalized terms used herein but not
defined shall have the meanings set forth in the Pledge Agreement.

         When you have confirmed that $__________ Value of Treasury
Securities or security entitlements thereto has been credited to the
Collateral Account by or for the benefit of _________, as Holder of Growth
PACS (the "Holder"), you are hereby instructed to release from the
Collateral Account an equal Value of [Pledged Notes or security
entitlements with respect thereto] [Pledged Applicable Ownership Interests]
relating to _____ Income PACS of the Holder by Transfer to the Purchase
Contract Agent.

                                                 JPMorgan Chase Bank
                                                 as Collateral Agent

Dated:_______________
                                                 By:_______________________
                                                    Name:
                                                    Title:

Please print name and address of Holder:

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

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

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

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

                                                                  EXHIBIT C

                                INSTRUCTION
                        FROM PURCHASE CONTRACT AGENT
                            TO COLLATERAL AGENT
                     (Reestablishment of Income PACS )

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

Re:      ____________ Growth PACS of The Williams Companies, Inc. (the
         "Company")

         Please refer to the Pledge Agreement dated as of January 14, 2002
(the "Pledge Agreement"), among the Company, you, as Collateral Agent, as
Securities Intermediary, as Custodial Agent and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of Income
PACS from time to time. Capitalized terms used herein but not defined shall
have the meaning set forth in the Pledge Agreement.

         We hereby notify you in accordance with Section 5.03[(a)][(b)] of
the Pledge Agreement that the holder of securities listed below (the
"Holder") has elected to substitute $ Value of [Notes or security
entitlements with respect thereto] [Applicable Ownership Interests (as
specified in clause (A) of the definition of such term] in exchange for
$__________ Value of Pledged Treasury Securities and has delivered to the
undersigned a notice stating that the holder has Transferred such [Notes or
security entitlements with respect thereto] [Applicable Ownership Interests
(as specified in clause (A) of the definition of such term] to the
Securities Intermediary, for credit to the Collateral Account.

         We hereby request that you instruct the Securities Intermediary,
upon confirmation that such [Notes or security entitlements with respect
thereto] [Applicable Ownership Interests (as specified in clause (A) of the
definition of such term] have been credited to the Collateral Account, to
release to the undersigned $__________ Value of Treasury Securities or
security entitlements with respect thereto related to _____ Growth PACS of
such Holder in accordance with Section 5.03(a) of the Pledge Agreement.

                                            JPMorgan Chase Bank,
                                            as Purchase Contract Agent

Dated:_______________                       By:_____________________________
                                               Name:
                                               Title:

Please print name and address of Holder electing to substitute [Notes or
security entitlements with respect thereto] [Applicable Ownership Interests
(as specified in clause (A) of the definition of such term] for Pledged
Treasury Securities:

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

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

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

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

                                                                  EXHIBIT D

                                INSTRUCTION
                           FROM COLLATERAL AGENT
                         TO SECURITIES INTERMEDIARY
                      (Reestablishment of Income PACS)

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

Re:      ___________ Growth PACS of The Williams Companies, Inc. (the
         "Company")

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

         Please refer to the Pledge Agreement dated as of January 14, 2002
(the "Pledge Agreement"), among the Company, you, as Securities
Intermediary, Custodial Agent and Collateral Agent and JPMorgan Chase Bank,
as Purchase Contract Agent and as attorney-in-fact for the holders of
Income PACS from time to time, and the undersigned, as Collateral Agent.
Capitalized terms used herein but no defined shall have the meaning set
forth in the Pledge Agreement.

         When you have confirmed that $ __________ Value of [Notes or
security entitlements with respect thereto] [Applicable Ownership Interests
(as specified in clause (A) of the definition of such term] has been
credited to the Collateral Account by or for the benefit of
________________, as Holder of Income PACS (the "Holder"), you are hereby
instructed to release from the Collateral Account $ ________________ Value
of Treasury Securities or security entitlements thereto by Transfer to the
Purchase Contract Agent.

                                            JPMorgan Chase Bank,
                                            as Collateral Agent

Dated:_______________                       By:____________________________
                                               Name:
                                               Title:

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

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

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

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

                                                                  EXHIBIT E

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

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

Re:      __________  Income PACS of The Williams Companies, Inc. (the
         "Company")
         __________ Growth PACS of the Company

         Please refer to the Pledge Agreement dated as of January 14, 2002
(the "Pledge Agreement"), by and among you, the Company, and JPMorgan Chase
Bank, as Collateral Agent, Custodial Agent and Securities Intermediary.
Unless otherwise defined herein, terms defined in the Pledge Agreement are
used herein as defined therein.

         In accordance with Section 5.05(d) of the Pledge Agreement, we
hereby notify you that as of 11:00 a.m. (New York City time) on the
Business Day immediately preceding ___________, we have received (i) $
_______________ in immediately available funds paid in an aggregate amount
equal to the Purchase Price due to the Company on the Purchase Contract
Settlement Date with respect to ________________ Income PACS and (ii) $
___________ in immediately available funds paid in an aggregate amount
equal to the Purchase Price due to the Company on the Purchase Contract
Settlement Date with respect to ______ Growth PACS.

                                            JPMorgan Chase Bank,
                                            as Collateral Agent,

Dated:_______________                       By:_______________________
                                               Name:
                                               Title:

                                                                  EXHIBIT F

                  INSTRUCTION TO CUSTODIAL AGENT REGARDING
                                REMARKETING

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

                  Re: Notes of The Williams Companies, Inc. (the "Company")

      The undersigned hereby notifies you in accordance with Section
5.07(c) of the Pledge Agreement, dated as of January 14, 2002 (the "Pledge
Agreement"), among the Company, you, as Collateral Agent, Custodial Agent
and Securities Intermediary, the Purchase Contract Agent and as
attorney-in-fact for the holders of Income PACS from time to time, that the
undersigned elects to deliver $______________ aggregate principal amount of
Separate Notes for delivery to the Remarketing Agent on the Business Day
immediately preceding the [Initial Remarketing Date] [Secondary Remarketing
Date] for remarketing pursuant to Section 5.07(c) of the Pledge Agreement.
The undersigned will, upon request of the Remarketing Agent, execute and
deliver any additional documents deemed by the Remarketing Agent or by the
Company to be necessary or desirable to complete the sale, assignment and
transfer of the Separate Notes tendered hereby. Capitalized terms used
herein but no defined shall have the meaning set forth in the Pledge
Agreement.

      The undersigned hereby instructs you, upon receipt of the Proceeds of
such remarketing from the Remarketing Agent to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under "A.
Payment Instructions." The undersigned hereby instructs you, in the event
of a Failed [Initial] [Secondary] Remarketing, upon receipt of the Separate
Notes tendered herewith from the Remarketing Agent, to be delivered to the
person(s) and the address(es) indicated herein under "B. Delivery
Instructions."

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

Date:_____________
                                    ------------------------------------

                                    By:_________________________________
                                    Name:
                                    Title:
                                    Signature Guarantee:___________________

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

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

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

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

A. PAYMENT INSTRUCTIONS

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

Name(s)

(Please Print)
Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

B. DELIVERY INSTRUCTIONS

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

Name(s)

(Please Print)
Address

(Please Print)

(Zip Code)

(Tax Identification or Social Security Number)

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

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

Name of Account Party:_________________________________

                                                                  EXHIBIT G

                  INSTRUCTION TO CUSTODIAL AGENT REGARDING
                        WITHDRAWAL FROM REMARKETING

JPMorgan Chase Bank
450 West 33rd Street
New York, NY 10001
Telecopier No: (212) 946-8154
Attention: Institutional Trust Services

                  Re:  Notes of The Williams Companies, Inc. (the "Company")

      The undersigned hereby notifies you in accordance with Section
5.07(c) of the Pledge Agreement, dated as of January 14, 2002 (the "Pledge
Agreement"), among the Company and you, as Collateral Agent, Custodial
Agent and Securities Intermediary, and as Purchase Contract Agent and as
attorney-in-fact for the holders of Income PACS from time to time, that the
undersigned elects to withdraw the $_________ aggregate principal amount of
Separate Notes delivered to the Custodial Agent on _________, 200_ for
remarketing pursuant to Section 5.07(c) of the Pledge Agreement. The
undersigned hereby instructs you to return such Notes to the undersigned in
accordance with the undersigned's instructions. With this notice, the
Undersigned hereby agrees to be bound by the terms and conditions of
Section 5.07(c) of the Pledge Agreement. Capitalized terms used herein but
not defined shall have the meaning set forth in the Pledge Agreement.

Date:_____________
                                      ------------------------------------
                                      By:_________________________________
                                      Name:
                                      Title:
                                      Signature Guarantee:___________________

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

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

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

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

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