Document:

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                                                                    EXHIBIT 4.2

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                WILMINGTON TRUST COMPANY AS OWNER TRUSTEE OF THE
            HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I,
                                     Issuer

                                      and

                         U.S. BANK NATIONAL ASSOCIATION

          Indenture Trustee, Paying Agent and Securities Intermediary

                       SERIES 2001-2 INDENTURE SUPPLEMENT

                          Dated as of August 16, 2001

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                               TABLE OF CONTENTS

<Table>
<Caption>

                                                                                                               PAGE

<S>                                                                                                            <C>
ARTICLE I CREATION OF THE SERIES 2001-2 NOTES.....................................................................1

   Section 1.01 Designation.......................................................................................1

ARTICLE II DEFINITIONS............................................................................................2

   Section 2.01 Definitions.......................................................................................2

ARTICLE III SERVICING FEE........................................................................................14

   Section 3.01 Servicing Compensation...........................................................................14

ARTICLE IV RIGHTS OF SERIES 2001-2 NOTEHOLDERS  AND ALLOCATION AND APPLICATION OF COLLECTIONS....................15

   Section 4.01 Collections and Allocations......................................................................15

   Section 4.02 Determination of Monthly Interest................................................................16

   Section 4.03 Determination of Monthly Principal...............................................................17

   Section 4.04 Application of Available Funds on Deposit in the Collection Account..............................18

   Section 4.05 Investor Charge-offs.............................................................................21

   Section 4.06 Subordinated Principal Collections...............................................................21

   Section 4.07 Excess Finance Charge and Administrative Collections.............................................21

   Section 4.08 Shared Principal Collections.....................................................................21

   Section 4.09 [Reserved].......................................................................................22

   Section 4.10 Principal Funding Account........................................................................22

   Section 4.11 Reserve Account..................................................................................23

   Section 4.12 Determination of LIBOR...........................................................................25

   Section 4.13 Investment Instructions..........................................................................26

   Section 4.14 Exchange of Notes for Transferor Amount..........................................................26

ARTICLE V DELIVERY OF SERIES 2001-2 NOTES; DISTRIBUTIONS; REPORTS TO SERIES 2001-2 NOTEHOLDERS...................27

   Section 5.01 Delivery and Payment for the Series 2001-2 Notes.................................................27

   Section 5.02 Distributions....................................................................................27

   Section 5.03 Reports and Statements to Series 2001-2 Noteholders..............................................28

ARTICLE VI SERIES 2001-2 AMORTIZATION EVENTS.....................................................................28

   Section 6.01 Series 2001-2 Amortization Events................................................................28

ARTICLE VII REDEMPTION OF SERIES 2001-2 NOTES;  SERIES FINAL MATURITY; FINAL DISTRIBUTIONS.......................30
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<Table>

<S>                                                                                                           <C>
   Section 7.01 Optional Redemption of Series 2001-2 Notes.......................................................30

   Section 7.02 Series Final Maturity............................................................................30

ARTICLE VIII MISCELLANEOUS PROVISIONS............................................................................31

   Section 8.01 Ratification of Indenture........................................................................31

   Section 8.02 Counterparts.....................................................................................31

   Section 8.03 Governing Law....................................................................................32

   Section 8.04 Transfer of the O/C Amount.......................................................................32

   Section 8.05 Limitation of Liability..........................................................................32

   Section 8.06 Perfection of Security Interest..................................................................32

   Section 8.07 Transfer Restrictions............................................................................33

   Section 8.08 Notice of Servicing Delegation...................................................................33

   Section 8.09 Zero Balance Account Removal.....................................................................33

   Section 8.10 Notice of Insolvency Events......................................................................33
</Table>

EXHIBITS

EXHIBIT A-1       FORM OF CLASS A NOTE

EXHIBIT A-2       FORM OF CLASS B NOTE

EXHIBIT B         FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION
                  TO THE INDENTURE TRUSTEE

EXHIBIT C         FORM OF MONTHLY STATEMENT

EXHIBIT D         FORM OF MONTHLY SERVICER'S CERTIFICATE

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                  SERIES 2001-2 INDENTURE SUPPLEMENT, dated as of August 16,
2001 (the "INDENTURE SUPPLEMENT"), among WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner Trustee of the HOUSEHOLD PRIVATE LABEL
CREDIT CARD MASTER NOTE TRUST I, a common law trust existing under the laws of
the State of Delaware (herein, the "ISSUER" or the "TRUST"), and U.S. BANK
NATIONAL ASSOCIATION, not in its individual capacity, but solely as the
Indenture Trustee (herein, together with its successors in the trusts created
under the Master Indenture referred to below, the "INDENTURE TRUSTEE"), Paying
Agent and the Securities Intermediary under the Master Indenture, dated as of
June 12, 2001 (the "INDENTURE") between the Issuer, and the Indenture Trustee
(the Indenture, together with this Indenture Supplement, the "AGREEMENT").

                  The Transferor may direct the Owner Trustee, on behalf of the
Issuer, to issue one or more Series of Notes in accordance with Section 2.12 of
the Indenture. The Transferor has tendered the notice of issuance required by
subsection 2.12(b)(i) of the Indenture and hereby directs the Owner Trustee, on
behalf of the Issuer, to enter into this Indenture Supplement with the
Indenture Trustee as required by Section 2.12 to provide for the issuance,
authentication and delivery of the Class A Notes, Series 2001-2 and the
issuance, authentication and delivery of the Class B Notes, Series 2001-2 and
to specify the Principal Terms thereof. The Principal Terms of this Series are
set forth in this Indenture Supplement to the Indenture.

                                   ARTICLE I

                      CREATION OF THE SERIES 2001-2 NOTES

         Section 1.01 Designation

                  (a) There is hereby created a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as
"HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I, SERIES 2001-2" or the
"SERIES 2001-2 NOTES." The Series 2001-2 Notes shall be issued in two Classes,
the first of which shall be known as the "CLASS A SERIES 2001-2 FIXED RATE
ASSET BACKED NOTES" and the second of which shall be known as the "CLASS B
SERIES 2001-2 FLOATING RATE ASSET BACKED NOTES". The Series 2001-2 Notes shall
be due and payable on the Series 2001-2 Final Maturity Date.

                  (b) Series 2001-2 shall be a Pool One Series and shall be in
Principal Sharing Group One and Excess Finance Charge Sharing Group One, and
shall not be in a Reallocation Group, Shared Enhancement Group or be allocated
Shared Transferor Principal Collections. Series 2001-2 shall not be
subordinated to any other Series. Notwithstanding any provision in the
Indenture or in this Indenture Supplement to the contrary, the first
Distribution Date with respect to Series 2001-2 shall be the September 17, 2001
Distribution Date, and the first Due Period shall begin on and include August
1, 2001 and end on and include August 31, 2001.

                  (c) In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained in
the Indenture, the terms and provisions of this Indenture Supplement shall be
controlling. All capitalized terms not otherwise defined herein are defined in
the Indenture, the Transfer and Servicing Agreement or the Trust

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Agreement. Each capitalized term defined herein shall relate only to the Series
2001-2 Notes but not any other Series of Notes issued by the Issuer.

                                   ARTICLE II

                                  DEFINITIONS

         Section 2.01 Definitions

                  (a) Whenever used in this Indenture Supplement, the following
words and phrases shall have the following meanings, and the definitions of
such terms are applicable to the singular as well as the plural forms of such
terms and the masculine as well as the feminine and neuter genders of such
terms.

                  "Accumulation Period Factor" shall mean, with respect to any
Due Period, a fraction, (a) the numerator of which is equal to the sum of (i)
the initial invested amounts of all Outstanding Series in Principal Sharing
Group One which are not Variable Funding Series, (ii) the Invested Amount of
all Outstanding Variable Funding Series in Principal Sharing Group One which
are in the Revolving Period and (iii) the Invested Amount as of the end of the
Revolving Period for all Outstanding Variable Funding Series in Principal
Sharing Group One which are not in the Revolving Period and (b) the denominator
of which is equal to the sum of (i) the Initial Invested Amount, (ii) the
initial invested amounts of all Outstanding Principal Sharing Group One Series
(other than Series 2001-2) that have controlled accumulation periods or
controlled amortization periods (the length of which may be altered in
accordance with the terms of the related Indenture Supplements) and are not
expected to be in their respective revolving periods as of such Due Period and
(iii) the Invested Amount as of the end of the Revolving Period for all
Outstanding Variable Funding Series in Principal Sharing Group One which are
not expected to be in their revolving periods as of such Due Period; provided,
however, that this definition may be changed at anytime if an Officer's
Certificate is delivered indicating that such action will not result in an
Adverse Effect.

                  "Accumulation Period Length" shall have the meaning assigned
such term in subsection 4.04(e).

                  "Additional Interest" shall mean, with respect to any
Distribution Date, the Class A Additional Interest and the Class B Additional
Interest for such Distribution Date.

                  "Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Invested Amount minus the
Principal Funding Account Balance on such date.

                  "Adjusted Pool One Principal Balance" shall mean an amount
equal to the greater of (a) the sum of (i) the total amount of Principal
Receivables in Pool One as of the close of business on the last day of the
immediately preceding Due Period (or with respect to the first Due Period, the
total amount of Principal Receivables in Pool One as of the Series 2001-2
Cut-off Date) and (ii) the principal amount on deposit in the Special Funding
Account with respect to

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Pool One as of the close of business on such last day (or with respect to the
first Due Period, the Series 2001-2 Cut-off Date) and (b) the sum of the
numerators used to calculate the investor percentages for allocations with
respect to Principal Receivables, Finance Charge and Administrative Receivables
or Defaulted Amounts, as applicable, for all Pool One Series outstanding as of
the date as to which such determination is being made; provided, however, that
with respect to any Due Period in which an Addition Date for an Aggregate
Addition or a Removal Date occurs, the amount in clause (a)(i) above shall be
the sum of the amounts for each day in such Due Period computed as follows and
divided by the number of days in such Due Period: (1) the aggregate amount of
Principal Receivables in Pool One as of the close of business on the last day
of the prior Due Period, for each day in the period from and including the
first day of such Due Period to but excluding the related Additional Cut-Off
Date or Removal Date and (2) the aggregate amount of Principal Receivables in
Pool One as of the close of business on the related Additional Cut-off Date or
Removal Date after adjusting for the aggregate amount of Principal Receivables
added to or removed from Pool One on the related Additional Cut-off Date or
Removal Date, as the case may be, for each day in the period from and including
the related Additional Cut-off Date or Removal Date to and including the last
day of such Due Period.

                  "Administration Fee" shall mean the fee payable to the
Administrator pursuant to the Administration Agreement, to the extent not paid
by the Transferor.

                  "Available Investor Finance Charge and Administrative
Collections" shall mean, with respect to any Due Period, an amount equal to the
sum of (a) the Investor Finance Charge and Administrative Collections, (b)
Principal Funding Investment Proceeds, if any, with respect to the related
Distribution Date, and (c) amounts, if any, to be withdrawn from the Reserve
Account which will be deposited into the Collection Account on the related
Distribution Date to be treated as Available Investor Finance Charge and
Administrative Collections pursuant to subsections 4.11(b) and (d).

                  "Available Investor Principal Collections" shall mean, with
respect to any Due Period, an amount equal to the sum of (a) (i) an amount
equal to the Investor Percentage of all Collections of Principal Receivables
received during such Due Period minus (ii) the amount of Subordinated Principal
Collections with respect to such Due Period, (b) any Shared Principal
Collections with respect to other Principal Sharing Group One Series (including
any amounts on deposit in the Special Funding Account with respect to Pool One
that are allocated to Series 2001-2 pursuant to the Agreement for application
as Shared Principal Collections), (c) any Refunding Proceeds and (d) any other
amounts which pursuant to Section 4.04 hereof are to be treated as Available
Investor Principal Collections with respect to the related Distribution Date.

                  "Available Reserve Account Amount" shall mean, with respect
to any Distribution Date, the lesser of (a) the amount on deposit in the
Reserve Account on such date (after taking into account any interest and
earnings retained in the Reserve Account pursuant to subsection 4.11(b) on such
date, but before giving effect to any (i) deposit made or to be made pursuant
to subsection 4.04(a)(ix) to the Reserve Account on such date, or (ii) any
withdrawal made or to be made pursuant to subsection 4.11(d), (e) and (f) from
the Reserve Account with respect to such date) and (b) the Required Reserve
Account Amount.

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                  "Base Rate" shall mean, with respect to any Due Period, the
sum of (a) the product of the weighted average of the Class A Note Interest
Rate and the Class B Note Interest Rate for the Interest Period commencing in
such Due Period (weighted based on the Class A Note Principal Balance and the
Class B Note Principal Balance as of the last day of the prior Due Period)
multiplied by a fraction, the numerator of which is the Note Principal Balance
and the denominator of which is the sum of the Note Principal Balance and the
O/C Amount as of the last day of the prior Due Period and (b) a fraction, the
numerator of which is the product of (i) twelve and (ii) the Monthly Servicing
Fee and the denominator of which is the sum of the Note Principal Balance and
the O/C Amount as of the last day of the prior Due Period.

                  "Class A Additional Interest" shall have the meaning
specified in subsection 4.02(a).

                  "Class A Interest Shortfall" shall have the meaning specified
in subsection 4.02(a).

                  "Class A Monthly Interest" shall have the meaning specified
in subsection 4.02(a).

                  "Class A Note Initial Principal Balance" shall mean
$550,000,000.

                  "Class A Note Interest Rate" shall mean a per annum rate of
4.95%.

                  "Class A Note Principal Balance" shall mean, with respect to
any date, an amount equal to (a) the Class A Note Initial Principal Balance
minus (b) the aggregate amount of any principal payments made to the Class A
Noteholders prior to such date.

                  "Class A Noteholder" shall mean the Person in whose name a
Class A Note is registered in the Note Register.

                  "Class A Notes" shall mean any one of the Notes executed by
the Issuer and authenticated by or on behalf of the Indenture Trustee,
substantially in the form of EXHIBIT A-1.

                  "Class B Additional Interest" shall have the meaning
specified in subsection 4.02(b).

                  "Class B Interest Shortfall" shall have the meaning specified
in subsection 4.02(b).

                  "Class B Monthly Interest" shall have the meaning specified
in subsection 4.02(b).

                  "Class B Note Initial Principal Balance" shall mean
$74,050,000.

                  "Class B Note Interest Rate" shall mean a per annum rate of
0.45% in excess of LIBOR as determined (i) on August 14, 2001, for the period
from and including the Closing Date through and excluding September 17, 2001
and (ii) on the related LIBOR Determination Date with respect to each Interest
Period thereafter.

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                  "Class B Note Principal Balance" shall mean, with respect to
any date, the Class B Note Initial Principal Balance, minus the aggregate
amount of any principal payments made to the Class B Noteholders prior to such
date.

                  "Class B Noteholder" shall mean the Person in whose name a
Class B Note is registered in the Note Register.

                  "Class B Notes" shall mean any one of the Notes executed by
the Issuer and authenticated by or on behalf of the Indenture Trustee,
substantially in the form of EXHIBIT A-2.

                  "Closing Date" shall mean August 16, 2001.

                  "Controlled Accumulation Amount" shall mean for any
Distribution Date with respect to the Controlled Accumulation Period,
$52,004,167; provided, however, that if the Accumulation Period Length is
determined to be less than 12 Due Periods pursuant to subsection 4.04(e), the
Controlled Accumulation Amount for each Distribution Date with respect to the
Controlled Accumulation Period will be equal to (a) the product of (i) the sum
of the Class A Note Initial Principal Balance and the Class B Note Initial
Principal Balance and (ii) the Accumulation Period Factor for the Due Period
related to each Distribution Date divided by (b) the Required Accumulation
Factor Number.

                  "Controlled Accumulation Period" shall mean, unless an
Amortization Event shall have occurred prior thereto, the period commencing at
the close of business on July 31, 2003 or such later date as is determined in
accordance with subsection 4.04(e) and ending on the first to occur of (a) the
commencement of the Early Amortization Period, (b) the payment in full of the
Note Principal Balance and (c) the Expected Principal Payment Date.

                  "Controlled Deposit Amount" shall mean, with respect to any
Distribution Date with respect to the Controlled Accumulation Period, an amount
equal to the sum of (a) the Controlled Accumulation Amount for such
Distribution Date and (b) any Deficit Controlled Accumulation Amount for the
prior Distribution Date.

                  "Covered Amount" shall mean an amount, determined as of each
Distribution Date with respect to any Interest Period during the Controlled
Accumulation Period, equal to the sum of (a) the product of (i) one-twelfth,
times (ii) the Class A Note Interest Rate, times (iii) the aggregate amount on
deposit in the Principal Funding Account up to the Class A Note Principal
Balance as of the Record Date preceding such Distribution Date and (b) the
product of (i) a fraction, the numerator of which is the actual number of days
in such Interest Period and the denominator of which is 360, times (ii) the
Class B Note Interest Rate in effect with respect to such Interest Period,
times (iii) the lesser of (A) the aggregate amount on deposit in the Principal
Funding Account in excess of the Class A Note Principal Balance and (B) the
Class B Note Principal Balance, in each case as of the Record Date preceding
such Distribution Date.

                  "Deficit Controlled Accumulation Amount" shall mean (a) on
the first Distribution Date during the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution
Date over the amount deposited in the Principal Funding Account on such
Distribution Date and (b) on each subsequent Distribution Date with respect to
the Controlled Accumulation Period, the excess, if any, of the Controlled

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Deposit Amount for such subsequent Distribution Date over the amount deposited
into the Principal Funding Account on such subsequent Distribution Date.

                  "Distribution Date" shall mean September 17, 2001 and the
fifteenth day of each calendar month thereafter, or if such fifteenth day is
not a Business Day, the next succeeding Business Day.

                  "Early Amortization Period" shall mean the period commencing
on the first day of the Due Period on which an Amortization Event with respect
to Series 2001-2 is deemed to have occurred or, if the Servicer is required to
make daily deposits into the Collection Account, on the day such Amortization
Event is deemed to have occurred, and ending upon the earlier to occur of (a)
the payment in full of the Note Principal Balance to the Series 2001-2
Noteholders and (b) the Series 2001-2 Final Maturity Date.

                  "Eligible Investments" shall mean, with respect to funds
allocable to Series 2001-2 in the Collection Account, the Principal Funding
Account and the Reserve Account, "Eligible Investments" as defined in the
Indenture, except that (a) all references in such definition to "rating
satisfactory to the Rating Agency" shall mean ratings of not less than "A-1+",
"P-1" and "F1+" (whichever is applicable), unless otherwise specified by the
Rating Agency, and (b) all such investments shall have maturities at the time
of the acquisition thereof occurring no later than the Distribution Date
following such date of acquisition.

                  "Excess Finance Charge and Administrative Collections" shall
have the meaning specified in Section 8.08C of the Master Indenture.

                  "Excess Finance Charge Sharing Group One" shall mean Series
2001-2 and each other Series specified in the related Indenture Supplement to
be included in Excess Finance Charge Sharing Group One.

                  "Excess O/C Amount" shall mean, with respect to any
Distribution Date, the excess of the O/C Amount (before giving effect to
distributions on such Distribution Date) over the Required O/C Amount as of
such Distribution Date.

                  "Excess Spread" shall mean with respect to any Due Period,
the annualized percentage equivalent of a fraction, (a) the numerator of which
is equal to (i) Available Investor Finance Charge and Administrative
Collections with respect to such Due Period, plus (ii) any Excess Finance
Charge and Administrative Collections that are allocated to Series 2001-2 with
respect to such Due Period, minus (iii) the amounts distributable pursuant to
subsection 4.04(a)(i) through (viii) with respect to the related Distribution
Date, and (b) the denominator of which is the sum of the Note Principal Balance
and the O/C Amount as of the last day of the immediately preceding Due Period.

                  "Expected Principal Payment Date" shall mean the August 16,
2004 Distribution Date.

                  "Finance Charge Shortfall" shall have the meaning specified
in Section 4.07.

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                  "Fixed Investor Percentage" shall mean, with respect to any
Due Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, (a) the numerator of which is the Adjusted Invested Amount
as of the close of business on the last day of the Revolving Period and (b) the
denominator of which is the Adjusted Pool One Principal Balance.

                  "Floating Investor Percentage" shall mean, with respect to
any Due Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, (a) the numerator of which is the Adjusted Invested Amount
as of the close of business on the last day of the preceding Due Period (or
with respect to the first Due Period, the Initial Invested Amount) and (b) the
denominator of which is the Adjusted Pool One Principal Balance.

                  "Initial O/C Amount" shall mean $81,100,000.

                  "Initial Invested Amount" shall mean $705,150,000.

                  "Initial Principal Amount" shall mean $624,050,000.

                  "Interest Period" shall mean, with respect to any
Distribution Date, the period from and including the Distribution Date
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, from the Closing Date) to but excluding such Distribution
Date.

                  "Interim Note Principal Amount" shall mean as of any
Distribution Date (before giving effect to distributions on such Distribution
Date) (a) the Class A Note Principal Balance plus (b) the Class B Note
Principal Balance minus (c) the Principal Funding Account Balance, if any, as
of such Distribution Date, minus (d) the Controlled Deposit Amount for such
Distribution Date.

                  "Invested Amount" shall mean, as of any date of
determination, an amount equal to the Initial Principal Amount and the Initial
O/C Amount minus (a) the amount of principal previously paid to the Series
2001-2 Noteholders with respect to the Class A Notes and the Class B Notes
(including the principal amount of any Notes purchased by the Transferor) and
any reduction in the O/C Amount pursuant to Section 4.04(b) or (c), and (b) the
amount of unreimbursed Investor Charge-offs and unreimbursed Subordinated
Principal Collections.

                  "Investor Charge-off" shall have the meaning specified in
Section 4.05.

                  "Investor Defaulted Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Defaulted Amount
for the related Due Period and (b) the Investor Percentage for such Due Period.

                  "Investor Finance Charge and Administrative Collections"
shall mean, with respect to any Distribution Date, an amount equal to the
product of (a) Investor Percentage for the related Due Period and (b)
Collections of Finance Charge and Administrative Receivables deposited in the
Collection Account for the related Due Period.

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                  "Investor Percentage" shall mean, for any Due Period, (a)
with respect to (i) Finance Charge and Administrative Receivables during any
period other than the Early Amortization Period, (ii) Principal Receivables
during the Revolving Period and (iii) Defaulted Amounts at any time, the
Floating Investor Percentage and (b) with respect to (i) Principal Receivables
during any period other than the Revolving Period and (ii) Finance Charge and
Administrative Receivables during the Early Amortization Period, the Fixed
Investor Percentage.

                  "LIBOR" shall mean, for any LIBOR Determination Date, the
London interbank offered rate for one-month United States dollar deposits
determined by the Indenture Trustee for each Interest Period in accordance with
the provisions of Section 4.12.

                  "LIBOR Determination Date" shall mean for any Interest
Period, two London Business Days before that Interest Period commences;
provided that the LIBOR Determination Date for the first Interest Period will
be two London Business Days before the Closing Date.

                  "London Business Day" shall mean any Business Day on which
dealings in deposits in United States dollars are transacted in the London
interbank market.

                  "Monthly Administration Fee" shall mean the product of (i)
one-twelfth of the Administration Fee and (ii) the Floating Investor
Percentage.

                  "Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of the Class A Monthly Interest and the Class B
Monthly Interest for such Distribution Date.

                  "Monthly Principal" shall mean the monthly principal
distributable in respect of the Notes and the O/C Amount as calculated in
accordance with Section 4.03.

                  "Monthly Servicing Fee" shall mean, for any Distribution
Date, an amount equal to one-twelfth of the product of:

                  (a) the Servicing Fee Rate;

                  (b) the Floating Investor Percentage for the related Due
Period; and

                  (c) the total amount of Principal Receivables as of the close
of business on the last day of the immediately preceding Due Period, or with
respect to the first Due Period, the total amount of Principal Receivables as
of the Closing Date, in either case, excluding the principal portion of
Participation Interests;

provided, however, that with respect to any Due Period in which an Addition
Date for an Aggregate Addition or a Removal Date occurs, the amount in clause
(c) above shall be the sum of the amounts for each day in that Due Period
computed as follows and divided by the number of days in that Due Period:

                  (i)      the aggregate amount of Principal Receivables,
                           excluding the principal portion of participation
                           interests, as of the close of business on the last
                           day of the prior Due Period, for each day in the
                           period from and including the

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                           first day of that Due Period to but excluding the
                           related Additional Cut-off Date or Removal Date; and

                  (ii)     the aggregate amount of Principal Receivables,
                           excluding the principal portion of participation
                           interests, as of the close of business on the
                           related Additional Cut-off Date or Removal Date
                           after adjusting for the aggregate amount of
                           Principal Receivables, excluding the principal
                           portion of Participation Interests, added to or
                           removed on the related Additional Cut-off Date or
                           Removal Date, as the case may be, for each day in
                           the period from and including the related Additional
                           Cut-off Date or Removal Date to and including the
                           last day of that Due Period;

provided further, that with respect to the first Distribution Date, the Monthly
Servicing Fee will equal $1,175,250.

                  "Monthly Subordination Amount" shall mean with respect to any
Due Period an amount equal to the sum of:

                  (a) the lower of (i) the excess of the amounts distributable
pursuant to subsection 4.04(a)(i) over the Available Investor Finance Charge
and Administrative Collections and Excess Finance Charge and Administrative
Collections allocated with respect thereto pursuant to subsection 4.04(a)(i),
and (ii) (1) the product of (I) 22.0% and (II) the Initial Invested Amount
minus (2) any principal payments to the O/C Holder and (3) the amount of
unreimbursed Investor Charge-offs (after giving effect to Investor Charge-offs
for the related Due Period) and unreimbursed Subordinated Principal Collections
(as of the previous Distribution Date); and

                  (b) the lower of (i) the excess of the amounts distributable
pursuant to subsections 4.04(a)(ii) and 4.04(a)(iii), over the Available
Investor Finance Charge and Administrative Collections and Excess Finance
Charge and Administrative Collections allocated with respect thereto pursuant
to subsections 4.04(a)(ii) and (iii), and (ii)(1) the product of (I) 11.5% and
(II) the Initial Invested Amount minus (2) any principal payments to the O/C
Holder and (3) the amount of unreimbursed Investor Charge-offs (after giving
effect to Investor Charge-offs for the related Due Period) and unreimbursed
Subordinated Principal Collections, (including amounts allocated pursuant to
clause (a) above with respect to the related Distribution Date).

                  "Note Principal Balance" shall mean, at any time of
determination, the sum of the Class A Note Principal Balance and the Class B
Note Principal Balance.

                  "O/C Amount" shall mean, with respect to any date, an amount
equal to (a) the Invested Amount minus (b) the Note Principal Balance.

                  "O/C Holder" shall mean HRSI Funding, Inc. II, a Delaware
corporation, as holder of the Transferor Certificate.

                  Plan "shall mean employee benefit plans and certain other
retirement plans and arrangements (including, without limitation, individual
retirement accounts and annuities), as

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well as collective investment funds and certain separate and general accounts
in which such plans or arrangements are invested.

                  "Pool One" shall mean the pool of Receivables related to the
Accounts designated as "Pool One Accounts" by the Issuer to the Indenture
Trustee. Initially, the Issuer has designated all Accounts as "Pool One
Accounts".

                  "Pool One Series" shall mean Series 2001-2 and each other
Series which is designated as a Pool One Series in the related Indenture
Supplement.

                  "Principal Funding Account" shall have the meaning set forth
in subsection 4.10(a).

                  "Principal Funding Account Balance" shall mean, with respect
to any date of determination, the principal amount, if any, on deposit in the
Principal Funding Account on such date of determination.

                  "Principal Funding Investment Proceeds" shall mean, with
respect to each Distribution Date, the investment earnings on funds in the
Principal Funding Account (net of investment expenses and losses) for the period
from and including the immediately preceding Distribution Date to but excluding
such Distribution Date.

                  "Principal Sharing Group One" shall mean Series 2001-2 and
each other Series specified in the related Indenture Supplement to be included
in Principal Sharing Group One.

                  "Rating Agency" shall mean each of Standard & Poor's, Moody's
and Fitch.

                  "Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (a) the Note
Principal Balance and the O/C Amount on such Distribution Date, plus (b)
Monthly Interest for such Distribution Date and any Monthly Interest previously
due but not distributed to the Series 2001-2 Noteholders, plus (c) the amount
of Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not distributed to the Series 2001-2 Noteholders on
a prior Distribution Date.

                  "Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer.

                  "Refunding Proceeds" shall mean with respect to any
Distribution Date, any proceeds of the issuance of a new Series of Notes
remitted by the Transferor, with the prior written consent of the Indenture
Trustee at least one Business Day prior to such Distribution Date for deposit
into the Collection Account and application as Available Investor Principal
Collections.

                  "Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which
is one and the denominator of which is equal to the lowest monthly principal
payment rate (calculated based upon Collections of Principal Receivables for
any Due Period, over the amount of Principal Receivables on the

                                      10
<PAGE>   14

first day of such Due Period) on the Accounts for the 12 months preceding the
date of such calculation; provided, however, that this definition may be
changed at any time if the Rating Agency Condition is satisfied.

                  "Required O/C Amount" shall mean, as of the Closing Date, the
Initial O/C Amount and, as of any Distribution Date thereafter, an amount equal
to the lesser of 13% of the Initial Principal Amount or 15.61% of the Interim
Note Principal Amount for such Distribution Date but not less than 3% of the
Initial Invested Amount; provided that (a) if an Amortization Event has
occurred, the Required O/C Amount for any Distribution Date shall equal the
amount of such requirement immediately preceding such Amortization Event, (b)
in no event shall the Required O/C Amount exceed the Class A Note Principal
Balance and the Class B Note Principal Balance on any such date, (c) the
Required O/C Amount may be reduced at any time to a lesser amount if (i) the
Rating Agency Condition is satisfied and (ii) an Officer's Certificate of the
Transferor has been delivered to the effect that in the reasonable belief of
the Transferor, such reduction will not result in an Adverse Effect and (d) the
Transferor, in its sole discretion may increase the Required O/C Amount at any
time.

                  "Required Reserve Account Amount" shall mean, with respect to
any Distribution Date on or after the Reserve Account Funding Date, an amount
equal to (a) 0.50% of the Class A Note Principal Balance or (b) any other
amount designated by the Transferor; provided, however, that if such
designation is of a lesser amount, the Transferor shall (i) provide the
Servicer and the Indenture Trustee with evidence that the Rating Agency
Condition shall have been satisfied and (ii) deliver to the Indenture Trustee
an Officer's Certificate indicating that such designation will not result in an
Adverse Effect.

                  "Required Transferor Amount" shall have the meaning specified
in the Indenture.

                  "Required Transferor Percentage" shall mean with respect to
Pool One, (a) initially 7% or (b) any other percentage designated by the
Transferor; provided, however, that if such designation is of a lesser amount,
the Transferor shall (i) provide the Servicer and the Indenture Trustee with
evidence that the Rating Agency Condition shall have been satisfied and (ii)
deliver to the Indenture Trustee a certificate of an authorized officer to the
effect that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such designation will not have an Adverse
Effect.

                  "Reserve Account" shall have the meaning specified in
subsection 4.11(a).

                  "Reserve Account Funding Date" shall mean (a) the third
Distribution Date prior to the scheduled commencement of the Controlled
Accumulation Period if the average Excess Spread for any three consecutive
months is 4% or greater, (b) the fourth Distribution Date prior to the
scheduled commencement of the Controlled Accumulation Period if the average
Excess Spread for any three consecutive months is 3% or greater, but less than
4% (c) the sixth Distribution Date prior to the scheduled commencement of the
Controlled Accumulation Period if the average Excess Spread for any three
consecutive months is 3% or greater, but less than 2% and (d) the twelfth
Distribution Date prior to the scheduled commencement of the Controlled
Accumulation Period if the average Excess Spread for any three consecutive
months is less than 2%. For purposes of this definition, Excess Spread shall be
determined for each month

                                      11
<PAGE>   15

beginning 13 months prior to the scheduled commencement of the Controlled
Accumulation Period.

                  "Reserve Account Surplus" shall mean, as of any Distribution
Date following the Reserve Account Funding Date, the amount, if any, by which
the amount on deposit in the Reserve Account exceeds the Required Reserve
Account Amount.

                  "Reserve Draw Amount" shall mean, with respect to each
Distribution Date relating to the Controlled Accumulation Period or the first
Distribution Date relating to the Early Amortization Period, the amount, if
any, by which the Principal Funding Investment Proceeds for such Distribution
Date are less than the Covered Amount determined as of such Distribution Date.

                  "Revolving Period" shall mean the period beginning on the
Closing Date and ending on the earlier of the close of business on the day
immediately preceding the day the Controlled Accumulation Period or the Early
Amortization Period commences.

                  "Series 2001-2" shall mean the Series of Notes for which the
terms are specified in this Indenture Supplement.

                  "Series 2001-2 Accounts" shall mean the Reserve Account and
the Principal Funding Account.

                  "Series 2001-2 Amortization Event" shall have the meaning
specified in Section 6.01.

                  "Series 2001-2 Cut-off Date" shall mean the commencement of
business on August 1, 2001.

                  "Series 2001-2 Final Maturity Date" shall mean the earliest
to occur of (a) the June, 2008 Distribution Date, (b) the Distribution Date on
which the Notes are paid in full, (c) the termination of the Trust pursuant to
Section 11.01 of the Indenture and (d) at the option of the Transferor, the day
on which the right of all Series of Notes to receive payments from the Trust
has terminated.

                  "Series 2001-2 Note" shall mean a Class A Note or a Class B
Note.

                  "Series 2001-2 Noteholder" shall mean a Class A Noteholder or
a Class B Noteholder.

                  "Series 2001-2 Principal Shortfall" shall have the meaning
specified in Section 4.08.

                  "Series Adjusted Invested Amount" shall mean, with respect to
any Due Period:

                  (a) during the Revolving Period, the Invested Amount as of
the last day of the immediately preceding Due Period;

                                      12
<PAGE>   16

                  (b) during the Controlled Accumulation Period, the amount
specified in clause (a) above as of the close of business on the last day of
the Revolving Period less unreimbursed Investor Charge-offs thereafter;
provided, however, that on any date, at the option of the Transferor (the
exercise of such option to be evidenced by written instructions from the
Transferor to the Servicer and the Indenture Trustee) and upon ten days written
notice to the Rating Agency, such amount may be reduced below the amount
specified for the previous Due Period to an amount not less than the greater of
(i) the Adjusted Invested Amount as of the last day of the immediately
preceding Due Period (less any amounts deposited into the Principal Funding
Account since the last day of the immediately preceding Due Period) and (ii) an
amount that, if used as the numerator of the Fixed Investor Percentage for the
remainder of the Controlled Accumulation Period, would assure that Available
Investor Principal Collections for this Series plus the product of the
aggregate amount of the Shared Principal Collections during each Due Period
multiplied by a fraction the numerator of which is the Invested Amount of this
Series and the denominator of which is the aggregate invested amount of all
Series not scheduled to be in their revolving period during such Due Period
would equal at least 125% of the applicable Controlled Accumulation Amount for
such Due Period for so long as the Invested Amount is greater than zero,
assuming for this purpose that (A) the payment rate with respect to Collections
of Principal Receivables remains constant at the level of the immediately
preceding Due Period, (B) the total amount of Principal Receivables theretofore
conveyed to and in the Trust (and the Special Funding Amount) remains constant
at the level existing on the date of such reduction, (C) no amortization event
with respect to any Series will subsequently occur and (D) no additional Series
(other than any Series being issued on the date of such reduction) will be
subsequently issued; and

                  (c) during any Early Amortization Period, the Invested Amount
as of the last day of the Revolving Period less unreimbursed Investor
Charge-offs thereafter or, if less, the amount last determined pursuant to
clause (b) above during the Controlled Accumulation Period.

                  "Series Portfolio Yield" shall mean, with respect to any Due
Period, the annualized percentage equivalent of a fraction, (a) the numerator
of which is equal to the sum of (i) Available Investor Finance Charge and
Administrative Collections with respect to such Due Period, plus (ii) any
Excess Finance Charge and Administrative Collections that are allocated to
Series 2001-2 with respect to such Due Period, such sum to be calculated after
subtracting the Investor Defaulted Amount for such Due Period, and (b) the
denominator of which is the sum of the Note Principal Balance and the O/C
Amount as of the last day of the immediately preceding Due Period.

                  "Servicing Fee Rate" shall mean 2% per annum or such lesser
percentage as may be specified by the Servicer in an Officer's Certificate
filed with the Indenture Trustee; provided, however, that (a) such Officer's
Certificate shall state that, in the reasonable belief of the Servicer, such
change in percentage will not result in an Adverse Effect and (b) the Servicer
shall have provided written notice of such change to the Rating Agency at least
ten days prior to the date such change is to take effect.

                  "Subordinated Principal Collections" shall mean with respect
to any Due Period, Available Investor Principal Collections applied in
accordance with Section 4.06 in an amount

                                      13
<PAGE>   17

not to exceed the lesser of the Monthly Subordination Amount for the related
Due Period and the Invested Amount after giving effect to any Investor
Charge-offs for the related Distribution Date.

                  "Telerate Page 3750" shall mean the display page currently so
designated on the Bridge Telerate Capital Markets Report (or such other page as
may replace that page in that service for the purpose of displaying comparable
rates or prices).

                  "Variable Funding Series" shall mean any Series, the invested
amount of which may be increased or decreased subject to the satisfaction of
certain conditions specified in the Indenture Supplement related to such
Series.

                  Each capitalized term defined herein shall relate to the
Series 2001-2 Notes and no other Series of Notes issued by the Trust, unless
the context otherwise requires. All capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them in the Indenture or
the Transfer and Servicing Agreement. In the event that any term or provision
contained herein shall conflict with or be inconsistent with any term or
provision contained in the Indenture or Transfer and Servicing Agreement, the
terms and provisions of this Indenture Supplement shall govern.

                  The words "HEREOF," "HEREIN" and "HEREUNDER" and words of
similar import when used in this Indenture Supplement shall refer to this
Indenture Supplement as a whole and not to any particular provision of this
Indenture Supplement; references to any Article, subsection, Section or Exhibit
are references to Articles, subsections, Sections and Exhibits in or to this
Indenture Supplement unless otherwise specified; and the term "INCLUDING" means
"INCLUDING WITHOUT LIMITATION."

                                  ARTICLE III

                                 SERVICING FEE

         Section 3.01 Servicing Compensation.

                  (a) Servicing Fee. The share of the Servicing Fee allocable
to the Series 2001-2 Noteholders with respect to any Distribution Date shall
equal the Monthly Servicing Fee. The portion of the Servicing Fee that is not
allocable to the Series 2001-2 Noteholders shall be paid by the holders of the
Transferor Certificates or the noteholders of other Series (as provided in the
related Indenture Supplements), and in no event shall the Trust, the Owner
Trustee, the Indenture Trustee or the Series 2001-2 Noteholders be liable for
the share of the Servicing Fee to be paid by the holders of the Transferor
Certificates or the noteholders of any other Series.

                                      14
<PAGE>   18

                                  ARTICLE IV

                      RIGHTS OF SERIES 2001-2 NOTEHOLDERS
                 AND ALLOCATION AND APPLICATION OF COLLECTIONS

         Section 4.01 Collections and Allocations.

                  (a) Allocations. Collections of Finance Charge and
Administrative Receivables and Principal Receivables and Defaulted Receivables
allocated to Series 2001-2 pursuant to Article VIII of the Indenture shall be
allocated and distributed as set forth in this Article.

                  (b) Payments to the Transferor. The Servicer shall on Deposit
Dates direct the Indenture Trustee to withdraw from the Collection Account and
pay to the Transferor the following amounts:

                           (i) an amount equal to the Transferor Percentage for
         the related Due Period of Collections of Finance Charge and
         Administrative Receivables to the extent that such amount is then on
         deposit in the Collection Account; and

                           (ii) (A) (A) if the Transferor Amount (determined
                  after giving effect to any Principal Receivables transferred
                  to the Trust on such Deposit Date) exceeds zero, an amount
                  equal to the Transferor Percentage for the related Due Period
                  of Collections of Principal Receivables that are then on
                  deposit in the Collection Account, and

                                (B) if the Transferor Amount (determined after
                  giving effect to any Principal Receivables transferred to the
                  Trust on such Deposit Date) does not exceed zero, the amount
                  set forth in clause (A) shall be deposited into the Special
                  Funding Account.

                  The withdrawals to be made from the Collection Account
pursuant to this subsection 4.01(b) do not apply to deposits into the
Collection Account that do not represent Collections, including payment of the
purchase price for the Receivables or the Notes pursuant to Section 2.06 or
7.01 of the Transfer and Servicing Agreement or Section 11.04 of the Indenture.

                  (c) Allocations to the Series 2001-2 Noteholders and to the
O/C Holder. The Servicer shall, prior to the close of business on any Deposit
Date, allocate to the Series 2001-2 Noteholders and to the O/C Holder the
following amounts as set forth below:

                           (i) Allocations of Investor Finance Charge and
         Administrative Collections. The Servicer shall allocate to the Series
         2001-2 Noteholders and to the O/C Holder and retain in the Collection
         Account for application as provided herein an amount equal to the
         product of (A) the Investor Percentage and (B) the aggregate amount of
         Collections of Finance Charge and Administrative Receivables deposited
         in the Collection Account on such Deposit Date.

                           (ii) Allocations of Principal Collections. The
         Servicer shall allocate to the Series 2001-2 Noteholders and to the
         O/C Holder the following amounts as set forth below:

                           (A) Allocations During the Revolving Period. During
                  the Revolving Period an amount equal to the product of (I)
                  the Investor Percentage and (II) the

                                      15
<PAGE>   19

                  aggregate amount of Collections of Principal Receivables
                  deposited in the Collection Account on such Deposit Date,
                  shall be allocated to the Series 2001-2 Noteholders and
                  retained in the Collection Account until applied as provided
                  herein.

                           (B) Allocations During the Controlled Accumulation
                  Period. During the Controlled Accumulation Period an amount
                  equal to the product of (I) the Investor Percentage and (II)
                  the aggregate amount of Collections of Principal Receivables
                  deposited in the Collection Account on such Deposit Date
                  shall be allocated to the Series 2001-2 Noteholders and
                  deposited in the Principal Funding Account until applied as
                  provided herein; provided, however, that if such Collections
                  with respect to such Due Period exceeds the Controlled
                  Deposit Amount for the related Distribution Date then such
                  excess shall be first, retained in the Collection Account for
                  application to reduce the O/C Amount to the Required O/C
                  Amount, second, if any other Principal Sharing Series in
                  Principal Sharing Group One is outstanding and in its
                  amortization period or accumulation period, retained in the
                  Collection Account for application, to the extent necessary,
                  as Shared Principal Collections to other Series in Principal
                  Sharing Group One on the related Distribution Date, and third
                  paid to the holders of the Transferor Certificates only if
                  the Transferor Amount on such Deposit Date is greater than
                  the Required Transferor Amount (after giving effect to all
                  Principal Receivables transferred to the Trust on such day)
                  and otherwise shall be deposited in the Special Funding
                  Account for Pool One.

                           (C) Allocations During the Early Amortization
                  Period. During the Early Amortization Period, an amount equal
                  to the product of (I) the Investor Percentage and (II) the
                  aggregate amount of Collections of Principal Receivables
                  deposited in the Collection Account on such Deposit Date,
                  shall be allocated to the Series 2001-2 Noteholders and
                  retained in the Collection Account until applied as provided
                  herein; provided, however, that after the date on which an
                  amount of such Collections equal to the Note Principal
                  Balance has been deposited into the Collection Account and
                  allocated to the Series 2001-2 Noteholders, the excess over
                  such amount shall be first, retained in the Collection
                  Account for application to reduce the O/C Amount to the
                  Required O/C Amount, second, if any other Principal Sharing
                  Series in Principal Sharing Group One is outstanding and in
                  its amortization period or accumulation period, retained in
                  the Collection Account for application, to the extent
                  necessary, as Shared Principal Collections on the related
                  Distribution Date, and third paid to the holders of the
                  Transferor Certificates only if the Transferor Amount on such
                  date is greater than the Required Transferor Amount (after
                  giving effect to all Principal Receivables transferred to the
                  Trust on such day) and otherwise shall be deposited in the
                  Special Funding Account for Pool One.

         Section 4.02 Determination of Monthly Interest.

                  (a) The amount of monthly interest ("CLASS A MONTHLY
INTEREST") distributable from the Collection Account with respect to the Class
A Notes (i) on the initial

                                      16
<PAGE>   20

Distribution Date shall be an amount equal to the product of (A) twenty nine -
three hundreds sixtieths (29/360), (B) the Class A Note Interest Rate, and (C)
the Class A Note Principal Balance as of the close of business on the Closing
Date; and (ii) on any subsequent Distribution Date shall be an amount equal to
the product of (A) one-twelfth, (B) the Class A Note Interest Rate and (C) the
Class A Note Principal Balance as of the close of business on the last day of
the preceding Due Period.

                  On each Determination Date, the Servicer shall determine the
excess, if any (the "CLASS A INTEREST SHORTFALL"), of (x) the Class A Monthly
Interest for such Distribution Date over (y) the aggregate amount of funds
expected to be paid with respect to such Class A Monthly Interest on the
related Distribution Date. If the Class A Interest Shortfall with respect to
any Distribution Date is greater than zero, on each subsequent Distribution
Date until such Class A Interest Shortfall is fully paid, an additional amount
("CLASS A ADDITIONAL INTEREST") equal to the product of (i) (A) one-twelfth,
times (B) the Class A Note Interest Rate and (ii) such Class A Interest
Shortfall (or the portion thereof which has not been paid to the Class A
Noteholders) shall be payable as provided herein with respect to the Class A
Notes. Notwithstanding anything to the contrary herein, Class A Additional
Interest shall be payable or distributed to the Class A Noteholders only to the
extent permitted by applicable law.

                  (b) The amount of monthly interest ("CLASS B MONTHLY
INTEREST") distributable from the Collection Account with respect to the Class
B Notes on any Distribution Date shall be an amount equal to the product of (i)
(A) a fraction, the numerator of which is the actual number of days in the
related Interest Period and the denominator of which is 360, times (B) the
Class B Note Interest Rate in effect with respect to the related Interest
Period and (ii) the Class B Note Principal Balance as of the close of business
on the last day of the preceding Due Period.

                  On each Determination Date, the Servicer shall determine the
excess, if any (the "CLASS B INTEREST SHORTFALL"), of (x) the Class B Monthly
Interest for such Distribution Date over (y) the aggregate amount of funds
expected to be paid with respect to such Class B Monthly Interest on the
related Distribution Date. If the Class B Interest Shortfall with respect to
any Distribution Date is greater than zero, on each subsequent Distribution
Date until such Class B Interest Shortfall is fully paid, an additional amount
("CLASS B ADDITIONAL INTEREST") equal to the product of (i) (A) a fraction, the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, times (B) the Class B Note Interest Rate
and (ii) such Class B Interest Shortfall (or the portion thereof which has not
been paid to the Class B Noteholders) shall be payable as provided herein with
respect to the Class B Notes. Notwithstanding anything to the contrary herein,
Class B Additional Interest shall be payable or distributed to the Class B
Noteholders only to the extent permitted by applicable law.

         Section 4.03 Determination of Monthly Principal.

                  The amount of monthly principal distributable from the
Collection Account with respect to the Notes and the O/C Amount on each
Distribution Date (the "MONTHLY PRINCIPAL"), beginning with the Distribution
Date in the month following the month in which the Controlled Accumulation
Period or, if earlier, the Early Amortization Period, begins, shall be equal to
the least of (a) the Available Investor Principal Collections on deposit in the
Collection Account

                                      17
<PAGE>   21

with respect to such Distribution Date, (b) for each Distribution Date with
respect to the Controlled Accumulation Period, the sum of the Controlled
Deposit Amount for such Distribution Date and the Excess O/C Amount for the
related Due Period and (c) the Adjusted Invested Amount for such Distribution
Date (after taking into account any adjustments to be made on such Distribution
Date pursuant to Sections 4.05 and 4.06).

         Section 4.04 Application of Available Funds on Deposit in the
Collection Account. The Servicer shall apply, or shall cause the Indenture
Trustee to apply by written instruction to the Indenture Trustee, on each
Distribution Date, Available Investor Finance Charge and Administrative
Collections and Excess Finance Charge and Administrative Collections allocable
to Series 2001-2 in accordance with Section 4.07 and Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:

                  (a) On each Distribution Date, an amount equal to the
Available Investor Finance Charge and Administrative Collections and Excess
Finance Charge and Administrative Collections allocable to Series 2001-2 in
accordance with Section 4.07 with respect to such Distribution Date will be
distributed or deposited in the following priority:

                           (i) an amount equal to Class A Monthly Interest for
         such Distribution Date, plus the amount of any Class A Monthly
         Interest, or portion thereof, previously due but not distributed to
         Class A Noteholders on a prior Distribution Date, plus the amount of
         any Class A Additional Interest for such Distribution Date, plus the
         amount of any Class A Additional Interest, or portion thereof,
         previously due but not distributed to Class A Noteholders on a prior
         Distribution Date, shall be distributed to the Paying Agent for
         payment to Class A Noteholders on such Distribution Date;

                           (ii) an amount equal to Class B Monthly Interest for
         such Distribution Date, plus the amount of any Class B Monthly
         Interest previously due but not distributed to Class B Noteholders on
         a prior Distribution Date, plus the amount of any Class B Additional
         Interest for such Distribution Date, plus the amount of any Class B
         Additional Interest, or portion thereof, previously due but not
         distributed to Class B Noteholders on a prior Distribution Date, shall
         be distributed to the Paying Agent for payment to Class B Noteholders
         on the applicable Distribution Date;

                           (iii) (A) if HFC or an Affiliate of HFC is no longer
         the Servicer, an amount equal to the Monthly Servicing Fee for such
         Distribution Date, plus the amount of any Monthly Servicing Fee, or
         portion thereof, previously due but not distributed to such Servicer
         on a prior Distribution Date, shall be distributed to such Servicer
         and (B) if HFC or an Affiliate of HFC is no longer the Administrator,
         an amount equal to the Monthly Administration Fee for such
         Distribution Date, plus the amount of any Monthly Administration Fee,
         or portion thereof, previously due but not distributed to such
         Administrator on a prior Distribution Date, shall be distributed to
         such Administrator;

                           (iv) an amount equal to the Investor Defaulted
         Amount for such Distribution Date shall be treated as a portion of
         Available Investor Principal Collections for such Distribution Date;

                                      18
<PAGE>   22

                           (v) an amount equal to the sum of the aggregate
         amount of Investor Charge-offs and the amount of Subordinated
         Principal Collections which have not been previously reimbursed shall
         be treated as a portion of Available Investor Principal Collections
         for such Distribution Date;

                           (vi) upon the occurrence of an Event of Default with
         respect to Series 2001-2 and acceleration of the maturity of the
         Series 2001-2 Notes pursuant to Section 5.03 of the Indenture, the
         balance, if any, up to the outstanding Note Principal Balance shall be
         treated as a portion of Available Investor Principal Collections for
         such Distribution Date for distribution to the Series 2001-2
         Noteholders;

                           (vii) if HFC or an Affiliate of HFC is the Servicer,
         an amount equal to the Monthly Servicing Fee for such Distribution
         Date that has not been paid to the Servicer and any Monthly Servicing
         Fee, or portion thereof, due but not paid to the Servicer on a prior
         Distribution Date shall be paid to the Servicer (unless such amount
         has been netted against deposits to the Collection Account in
         accordance with Section 8.04 of the Indenture);

                           (viii) if HFC or an Affiliate of HFC is the
         Administrator, an amount equal to the Monthly Administration Fee for
         such Distribution Date and any Monthly Administration Fee due but not
         paid to the Administrator on a prior Distribution Date shall be paid
         to the Administrator (unless such amount has been netted against
         deposits to the Collection Account in accordance with Section 8.04 of
         the Indenture);

                           (ix) on each Distribution Date from and after the
         Reserve Account Funding Date, but prior to the date on which the
         Reserve Account terminates as described in Section 4.11(f), an amount
         equal to the excess, if any, of the Required Reserve Account Amount
         over the Available Reserve Account Amount shall be deposited into the
         Reserve Account; and

                           (x) the balance, if any, will constitute a portion
         of Excess Finance Charge and Administrative Collections for such
         Distribution Date and will be available for allocation to other Series
         in Excess Finance Charge Sharing Group One or to the Transferor, as
         set forth in Section 8.08C of the Indenture.

                  (b) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Available Investor Principal Collections
deposited in the Collection Account for the related Due Period shall be
distributed in the following order of priority:

                           (i) an amount equal to the excess, if any, of the
         O/C Amount over the Required O/C Amount shall be paid to the
         Transferor, for reduction of the O/C Amount, to the extent that the
         Transferor Amount exceeds zero; and

                           (ii) the balance of such Available Investor
         Principal Collections shall be treated as Shared Principal Collections
         with respect to Principal Sharing Group One and applied in accordance
         with Section 8.05 of the Indenture.

                                      19
<PAGE>   23

         (c) On each Distribution Date with respect to the Controlled
Accumulation Period or the Early Amortization Period, an amount equal to the
Available Investor Principal Collections deposited in the Collection Account
for the related Due Period shall be distributed or deposited in the following
order of priority:

                           (i) during the Controlled Accumulation Period and
         prior to the payment in full of the Class A Notes, the Class B Notes
         and the O/C Amount an amount equal to the Monthly Principal for such
         Distribution Date shall be first, deposited into the Principal Funding
         Account in an amount not to exceed the Controlled Deposit Amount and
         second, an amount not to exceed the Excess O/C Amount shall be
         distributed to the O/C Holder for reduction of the O/C Amount;

                           (ii) during the Early Amortization Period, an amount
         equal to the Monthly Principal for such Distribution Date shall be
         distributed to the Paying Agent for payment to the Class A Noteholders
         on such Distribution Date and on each subsequent Distribution Date
         until the Class A Note Principal Balance has been paid in full;

                           (iii) after giving effect to the distribution
         referred to in clause (ii) above, during the Early Amortization
         Period, an amount equal to the Monthly Principal remaining, if any,
         shall be distributed to the Paying Agent for payment to the Class B
         Noteholders on such Distribution Date and on each subsequent
         Distribution Date until the Class B Note Principal Balance has been
         paid in full;

                           (iv) after the Class B Note Principal Balance has
         been reduced to zero, during the Early Amortization Period, an amount
         equal to the Monthly Principal remaining, if any, shall be distributed
         to the O/C Holder, for reduction of the O/C Amount, on such
         Distribution Date and on each subsequent Distribution Date until the
         O/C Amount has been paid in full; and

                           (v) the balance of such Available Investor Principal
         Collections shall be treated as Shared Principal Collections with
         respect to Principal Sharing Group One and applied in accordance with
         Section 8.05 of the Indenture.

                  (d) On the earlier to occur of (i) the first Distribution
Date with respect to the Early Amortization Period and (ii) the Expected
Principal Payment Date, the Indenture Trustee, acting in accordance with
instructions from the Servicer, shall withdraw from the Principal Funding
Account and distribute to the Paying Agent for payment first, to the Class A
Noteholders up to the Class A Note Principal Balance and second, to the Class B
Noteholders up to the Class B Note Principal Balance, the amounts deposited
into the Principal Funding Account pursuant to subsection 4.04(c)(i).

                  (e) The Controlled Accumulation Period is scheduled to
commence at the close of business on July 31, 2003; provided, however, that, if
the Accumulation Period Length (determined as described below) is less than 12
Due Periods, the date on which the Controlled Accumulation Period actually
commences will be delayed to the first Business Day of the Due Period that is
the number of whole Due Periods prior to the Expected Principal Payment Date at
least equal to the Accumulation Period Length and, as a result, the number of
Due Periods in the

                                      20
<PAGE>   24

Controlled Accumulation Period will at least equal the Accumulation Period
Length. On the Determination Date immediately preceding the July 2003
Distribution Date, and each Determination Date thereafter until the Controlled
Accumulation Period begins, the Servicer will determine the "ACCUMULATION
PERIOD LENGTH" which will equal the number of whole Due Periods such that the
sum of the Accumulation Period Factors for each Due Period during such period
will be equal to or greater than the Required Accumulation Factor Number;
provided, however, that the Accumulation Period Length will not be determined
to be less than one Due Period; provided further, however, that the
determination of the Accumulation Period Length may be changed at any time if
an Officer's Certificate is delivered indicating that such action will not
result in an Adverse Effect.

         Section 4.05 Investor Charge-offs. On each Determination Date, the
Servicer shall calculate the Investor Defaulted Amount, if any, for the related
Distribution Date. If, on any Distribution Date, the Investor Defaulted Amount
for such Distribution Date exceeds the amount available therefor pursuant to
Section 4.04(a)(iv) with respect to such Due Period, the Invested Amount will
be reduced by the amount of such excess, but not by more than the Investor
Defaulted Amount for such Distribution Date (such reduction, an "INVESTOR
CHARGE-OFF").

         Section 4.06 Subordinated Principal Collections. On each Distribution
Date, the Servicer shall apply, or shall cause the Indenture Trustee to
withdraw from the Collection Account and apply, Subordinated Principal
Collections with respect to such Distribution Date, in an amount equal to the
lesser of the (a) Investor Percentage of all Collections of Principal
Receivables received during the preceding Due Period and (b) the Monthly
Subordination Amount for the preceding Due Period in accordance with the
priority set forth in clauses (i) through (iii) of Section 4.04(a). On each
Distribution Date, the Invested Amount shall be reduced by the amount of
Subordinated Principal Collections for such Distribution Date.

         Section 4.07 Excess Finance Charge and Administrative Collections.
Subject to Section 8.08C of the Indenture, Excess Finance Charge and
Administrative Collections with respect to the Excess Finance Charge Sharing
Series in Excess Finance Charge Sharing Group One for any Distribution Date
will be allocated to Series 2001-2 in an amount equal to the product of (a) the
aggregate amount of Excess Finance Charge and Administrative Collections with
respect to all the Excess Finance Charge Sharing Series in Excess Finance
Charge Sharing Group One for such Distribution Date and (b) a fraction, the
numerator of which is the Finance Charge Shortfall for Series 2001-2 for such
Distribution Date and the denominator of which is the aggregate amount of
Finance Charge Shortfalls for all the Excess Finance Charge Sharing Series in
Excess Finance Charge Sharing Group One for such Distribution Date. The
"FINANCE CHARGE SHORTFALL" for Series 2001-2 for any Distribution Date will be
equal to the excess, if any, of (a) the full amount required to be paid,
without duplication, pursuant to subsections 4.04(a)(i) through (ix) on such
Distribution Date over (b) the Available Investor Finance Charge and
Administrative Collections with respect to the Due Period related to such
Distribution Date.

         Section 4.08 Shared Principal Collections. Subject to Section 8.05 of
the Indenture, Shared Principal Collections with respect to the Series in
Principal Sharing Group One for any Distribution Date will be allocated to
Series 2001-2 in an amount equal to the product of (a) the aggregate amount of
Shared Principal Collections with respect to all Principal Sharing Series in
Principal Sharing Group One for such Distribution Date and (b) a fraction, the
numerator of

                                      21
<PAGE>   25

which is the Series 2001-2 Principal Shortfall for such Distribution Date and
the denominator of which is the aggregate amount of Principal Shortfalls for
all the Series which are Principal Sharing Series in Principal Sharing Group
One for such Distribution Date. The "SERIES 2001-2 PRINCIPAL SHORTFALL" will be
equal to (a) for any Distribution Date with respect to the Revolving Period,
zero, (b) for any Distribution Date with respect to the Controlled Accumulation
Period, the excess, if any, of the Controlled Deposit Amount for such
Distribution Date and the Excess O/C Amount with respect to the Due Period
related to such Distribution Date over the amount of Available Investor
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections), and (c) for any Distribution
Date with respect to the Early Amortization Period, the excess, if any, of the
Adjusted Invested Amount over the amount of Available Investor Principal
Collections for the Due Period related to such Distribution Date (excluding any
portion thereof attributable to Shared Principal Collections).

         Section 4.09 [Reserved].

         Section 4.10 Principal Funding Account.

                  (a) The Indenture Trustee shall establish and maintain with
an Eligible Institution, which may be the Indenture Trustee, in the name of the
Trust, on behalf of the Trust, for the benefit of the Series 2001-2
Noteholders, a segregated trust account with the corporate trust department of
such Eligible Institution (the "PRINCIPAL FUNDING ACCOUNT"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Series 2001-2 Noteholders. The Indenture Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Principal Funding Account and in all proceeds thereof. The Principal
Funding Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Series 2001-2 Noteholders. If at any time the
institution holding the Principal Funding Account ceases to be an Eligible
Institution, the Transferor shall notify the Indenture Trustee, and the
Indenture Trustee upon being notified (or the Servicer on its behalf) shall,
within 10 Business Days, (or such longer period as to which the Rating Agency
has consented) establish a new Principal Funding Account meeting the conditions
specified above with an Eligible Institution, and shall transfer any cash or
any investments to such new Principal Funding Account. The Indenture Trustee,
at the direction of the Servicer, shall (i) make withdrawals from the Principal
Funding Account from time to time, in the amounts and for the purposes set
forth in this Indenture Supplement, and (ii) on each Distribution Date (from
and after the commencement of the Controlled Accumulation Period) prior to the
termination of the Principal Funding Account, make deposits into the Principal
Funding Account in the amounts specified in, and otherwise in accordance with,
subsection 4.04(c)(i).

                  (b) Funds on deposit in the Principal Funding Account shall
be invested at the direction of the Servicer by the Indenture Trustee in
Eligible Investments. Funds on deposit in the Principal Funding Account on any
Distribution Date, after giving effect to any withdrawals from the Principal
Funding Account on such Distribution Date, shall be invested in such
investments that will mature so that such funds will be available for
withdrawal on or prior to the following Distribution Date. The Indenture
Trustee shall:

                           (i) hold each Eligible Investment that constitutes
         investment property through a Securities Intermediary, which
         Securities Intermediary shall agree with the Indenture Trustee that
         (A) such investment property at all times shall be credited to a

                                      22
<PAGE>   26

         securities account of the Indenture Trustee, (B) all property credited
         to such securities account shall be treated as a financial asset, (C)
         such Securities Intermediary shall treat the Indenture Trustee as
         entitled to exercise the rights that comprise each financial asset
         credited to such securities account, (D) such Securities Intermediary
         shall comply with entitlement orders originated by the Indenture
         Trustee without the further consent of any other person or entity, (E)
         such Securities Intermediary shall not agree with any person or entity
         other than the Indenture Trustee to comply with entitlement orders
         originated by any person or entity other than the Indenture Trustee,
         (F) such securities account and all property credited thereto shall
         not be subject to any lien, security interest, right of set-off, or
         encumbrance in favor of such Securities Intermediary or anyone
         claiming through such Securities Intermediary (other than the
         Indenture Trustee), and (G) such agreement between such Securities
         Intermediary and the Indenture Trustee shall be governed by the laws
         of the State of New York; and

                           (ii) maintain possession of each other Eligible
         Investment not described in clause (i) above;

provided, that no Eligible Investment shall be disposed of prior to its
maturity date. Terms used in clause (i) above that are defined in the New York
UCC and not otherwise defined herein shall have the meaning set forth in the
New York UCC.

                  On each Distribution Date with respect to the Controlled
Accumulation Period and on the first Distribution Date with respect to the
Early Amortization Period, the Indenture Trustee, acting at the Servicer's
direction given on or before such Distribution Date, shall transfer from the
Principal Funding Account to the Collection Account the Principal Funding
Investment Proceeds on deposit in the Principal Funding Account for application
as Available Investor Finance Charge and Administrative Collections for such
Distribution Date.

                  Principal Funding Investment Proceeds (including reinvested
interest) shall not be considered part of the amounts on deposit in the
Principal Funding Account for purposes of this Indenture Supplement.

         Section 4.11 Reserve Account.

                  (a) The Indenture Trustee shall establish and maintain with
an Eligible Institution, which may be the Indenture Trustee in the name of the
Trust, on behalf of the Trust, for the benefit of the Series 2001-2
Noteholders, a segregated trust account with the corporate trust department of
such Eligible Institution (the "RESERVE ACCOUNT"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 2001-2 Noteholders. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Reserve
Account and in all proceeds thereof. The Reserve Account shall be under the
sole dominion and control of the Indenture Trustee for the benefit of the
Series 2001-2 Noteholders. If at any time the institution holding the Reserve
Account ceases to be an Eligible Institution, the Transferor shall notify the
Indenture Trustee, and the Indenture Trustee upon being notified (or the
Servicer on its behalf) shall, within 10 Business Days (or such longer period
as to which the Rating Agency has consented), establish a new Reserve Account
meeting the conditions specified above with an Eligible Institution, and shall
transfer

                                      23
<PAGE>   27

any cash or any investments to such new Reserve Account. The Indenture Trustee,
at the direction of the Servicer, shall (i) make withdrawals from the Reserve
Account from time to time in an amount up to the Available Reserve Account
Amount at such time, for the purposes set forth in this Indenture Supplement,
and (ii) on each Distribution Date (from and after the Reserve Account Funding
Date) prior to termination of the Reserve Account, make a deposit into the
Reserve Account in the amount specified in, and otherwise in accordance with,
subsection 4.04(a)(ix).

                  (b) Funds on deposit in the Reserve Account shall be invested
at the direction of the Servicer by the Indenture Trustee in Eligible
Investments. Funds on deposit in the Reserve Account on any Distribution Date,
after giving effect to any withdrawals from the Reserve Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date. The Indenture Trustee shall:

                           (i) hold each Eligible Investment that constitutes
         investment property through a Securities Intermediary, which
         Securities Intermediary shall agree with the Indenture Trustee that
         (A) such investment property at all times shall be credited to a
         securities account of the Indenture Trustee, (B) all property credited
         to such securities account shall be treated as a financial asset, (C)
         such Securities Intermediary shall treat the Indenture Trustee as
         entitled to exercise the rights that comprise each financial asset
         credited to such securities account, (D) such Securities Intermediary
         shall comply with entitlement orders originated by the Indenture
         Trustee without the further consent of any other person or entity, (E)
         such Securities Intermediary shall not agree with any person or entity
         other than the Indenture Trustee to comply with entitlement orders
         originated by any person or entity other than the Indenture Trustee,
         (F) such securities account and all property credited thereto shall
         not be subject to any lien, security interest, right of set-off, or
         encumbrance in favor of such Securities Intermediary or anyone
         claiming through such Securities Intermediary (other than the
         Indenture Trustee), and (G) such agreement between such Securities
         Intermediary and the Indenture Trustee shall be governed by the laws
         of the State of New York; and

                           (ii) maintain possession of each other Eligible
         Investment not described in clause (i) above;

provided, that no Eligible Investment shall be disposed of prior to its
maturity date. Terms used in clause (i) above that are defined in the New York
UCC and not otherwise defined herein shall have the meaning set forth in the
New York UCC.

                  On each Distribution Date, all interest and earnings (net of
losses and investment expenses) accrued since the preceding Distribution Date
on funds on deposit in the Reserve Account shall be retained in the Reserve
Account to the extent that the Available Reserve Account Amount is less than
the Required Reserve Account Amount, and the balance, if any, shall be
deposited into the Collection Account and included in Available Investor
Finance Charge and Administrative Collections for such Distribution Date. For
purposes of determining the availability of funds or the balance in the Reserve
Account for any reason under this

                                      24
<PAGE>   28

Indenture Supplement, except as otherwise provided in the preceding sentence,
investment earnings on such funds shall be deemed not to be available or on
deposit.

                  (c) On or before each Distribution Date with respect to the
Controlled Accumulation Period and on the first Distribution Date with respect
to the Early Amortization Period, the Servicer shall calculate the Reserve Draw
Amount; provided, however, that such amount will be reduced to the extent that
funds otherwise would be available for deposit in the Reserve Account under
Section 4.04(a)(ix) with respect to such Distribution Date.

                  (d) In the event that for any Distribution Date the Reserve
Draw Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Indenture Trustee (acting in accordance with the
instructions of the Servicer) and deposited into the Collection Account for
application as Available Investor Finance Charge and Administrative Collections
for such Distribution Date.

                  (e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Indenture Trustee, acting in accordance with the instructions of the
Servicer, shall withdraw from the Reserve Account and pay to the holder of the
interest of the Transferor Certificate an amount equal to such Reserve Account
Surplus.

                  (f) Upon the earliest to occur of (i) the termination of the
Trust pursuant to Article VIII of the Trust Agreement, (ii) if the Controlled
Accumulation Period has not commenced, the first Distribution Date relating to
the Early Amortization Period and (iii) if the Controlled Accumulation Period
has commenced, the earlier of the first Distribution Date with respect to the
Early Amortization Period and the Expected Principal Payment Date, the
Indenture Trustee, acting in accordance with the instructions of the Servicer,
after the prior payment of all amounts owing to the Series 2001-2 Noteholders
that are payable from the Reserve Account as provided herein, shall withdraw
from the Reserve Account and pay first, to the O/C Holder for reduction of the
O/C Amount until reduced to zero and second, to the Transferor, all amounts, if
any, on deposit in the Reserve Account and the Reserve Account shall be deemed
to have terminated for purposes of this Indenture Supplement; provided,
however, that following the occurrence of an Event of Default with respect to
Series 2001-2 and acceleration of the maturity of the Series 2001-2 Notes
pursuant to Section 5.03 of the Indenture, the Servicer shall withdraw from the
Reserve Account all amounts on deposit therein and the Indenture Trustee or the
Servicer shall deposit such amounts in the Collection Account for distribution
to the Series 2001-2 Noteholders in accordance with Section 5.02 to fund any
shortfalls in amounts owed to such Series 2001-2 Noteholders.

         Section 4.12 Determination of LIBOR.

                  (a) On each LIBOR Determination Date, the Indenture Trustee
shall determine LIBOR on the basis of the rate for deposits in United States
dollars for a one-month period which appears on Telerate Page 3750 as of 11:00
a.m., London time, on such date. If such rate does not appear on Telerate Page
3750, the rate for that LIBOR Determination Date shall be determined on the
basis of the rates at which deposits in United States dollars are offered

                                      25
<PAGE>   29

by the Reference Banks at approximately 11:00 a.m., London time, on that day to
prime banks in the London interbank market for a one-month period. The
Indenture Trustee shall request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that LIBOR Determination Date shall be
the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that LIBOR Determination Date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected
by the Servicer, at approximately 11:00 a.m., New York City time, on that day
for loans in United States dollars to leading European banks for a one-month
period.

                  (b) The Class B Note Interest Rate applicable to the then
current and the immediately preceding Interest Periods may be obtained by
telephoning the Indenture Trustee at its Corporate Trust Office or such other
address and telephone number as shall be designated by the Indenture Trustee
for such purpose by prior written notice by the Indenture Trustee to each
Series 2001-2 Noteholder from time to time.

                  (c) On each LIBOR Determination Date, the Indenture Trustee
shall send to the Servicer and the Administrator by facsimile transmission,
notification of LIBOR for the following Interest Period.

         Section 4.13 Investment Instructions. Any investment instructions
required to be given to the Indenture Trustee pursuant to the terms hereof must
be given to the Indenture Trustee no later than 12:00 p.m. (New York City time)
on the date such investment is to be made. In the event the Indenture Trustee
receives such investment instruction later than such time, the Indenture
Trustee may, but shall have no obligation to, make such investment. In the
event the Indenture Trustee is unable to make an investment required in an
investment instruction received by the Indenture Trustee after 12:00 p.m. (New
York City time) on such day, such investment shall be made by the Indenture
Trustee on the next succeeding Business Day. In no event shall the Indenture
Trustee be liable for any investment not made pursuant to investment
instructions received after 12:00 p.m. (New York City time) on the day such
investment is requested to be made.

         Section 4.14 Exchange of Notes for Transferor Amount. If the
Transferor purchases Series 2001-2 Notes from Series 2001-2 Noteholders, the
Transferor may, on any Distribution Date (after giving effect to all required
allocations and payments on such Distribution Date), cancel such purchased
Series 2001-2 Notes by delivering a written request to the Indenture Trustee to
do so; provided, however, that the Transferor may only cancel Class A and Class
B Notes it has purchased if the Rating Agency Condition has been satisfied and
a credit enhancement deficiency will not result. The Transferor may in
connection with such cancellation reduce a portion of the O/C Amount and may
(but shall not be required to) cancel such portion of the O/C Amount, provided
that the reduction in the O/C Amount resulting from such cancellation may not
result in the O/C Amount being less than the Required O/C Amount. As a result
of any cancellation of Series 2001-2 Notes pursuant to this Section, (a) the
Invested Amount shall be reduced by (i) the aggregate principal amount of such
purchased Series 2001-2 Notes and (ii) the reduction in the O/C Amount and (b)
the Transferor Amount shall be increased in an amount equal to such reduction
in the Invested Amount.

                                      26
<PAGE>   30

                                   ARTICLE V

                        DELIVERY OF SERIES 2001-2 NOTES;
              DISTRIBUTIONS; REPORTS TO SERIES 2001-2 NOTEHOLDERS

         Section 5.01 Delivery and Payment for the Series 2001-2 Notes. With
respect to the Series 2001-2 Notes which are in certificated form, the Issuer
shall execute and the Indenture Trustee shall authenticate the Series 2001-2
Notes in accordance with Section 2.03 of the Indenture. The Indenture Trustee
shall deliver those Series 2001-2 Notes to or upon the order of the Trust when
so authenticated.

         Section 5.02 Distributions.

                  (a) On each Distribution Date, the Paying Agent shall
distribute to each Class A Noteholder of record on the related Record Date
(other than as provided in Section 11.02 of the Indenture) such Class A
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay interest on the Class
A Notes pursuant to this Indenture Supplement.

                  (b) On each Distribution Date, the Paying Agent shall
distribute to each Class A Noteholder of record on the related Record Date such
Class A Noteholder's pro rata share of the amounts held by the Paying Agent
that are allocated and available on such Distribution Date to pay principal of
the Class A Notes pursuant to this Indenture Supplement.

                  (c) On each Distribution Date, the Paying Agent shall
distribute to each Class B Noteholder of record on the related Record Date
(other than as provided in Section 11.02 of the Indenture) such Class B
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay interest on the Class
B Notes pursuant to this Indenture Supplement.

                  (d) On each Distribution Date, the Paying Agent shall
distribute to each Class B Noteholder of record on the related Record Date such
Class B Noteholder's pro rata share of the amounts held by the Paying Agent
that are allocated and available on such Distribution Date to pay principal of
the Class B Notes pursuant to this Indenture Supplement.

                  (e) On each Distribution Date, the Paying Agent shall
distribute to the O/C Holder, in immediately available funds, the amounts held
by the Paying Agent that are allocated and available on such Distribution Date
to reduce the O/C Amount pursuant to this Indenture Supplement.

                  (f) The distributions to be made pursuant to this Section
5.02 are subject to the provisions of Sections 2.06, 6.01 and 7.01 of the
Transfer and Servicing Agreement, Section 11.02 of the Indenture and Section
7.01 of this Indenture Supplement.

                  (g) Except as provided in Section 11.02 of the Indenture with
respect to a final distribution, distributions to Series 2001-2 Noteholders
hereunder shall be made by (i) check

                                      27
<PAGE>   31

mailed to each Series 2001-2 Noteholder (at such Noteholder's address as it
appears in the Note Register), except that with respect to any Series 2001-2
Notes registered in the name of the nominee of a Clearing Agency, such
distribution shall be made in immediately available funds and (ii) without
presentation or surrender of any Series 2001-2 Note or the making of any
notation thereon.

         Section 5.03 Reports and Statements to Series 2001-2 Noteholders.

                  (a) On each Distribution Date, the Paying Agent, on behalf of
the Indenture Trustee, shall, provided the Servicer has delivered a statement
substantially in the form of EXHIBIT C, forward to each Series 2001-2
Noteholder such statement substantially in the form of EXHIBIT C prepared by
the Servicer.

                  (b) Not later than the second Business Day preceding each
Distribution Date, the Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Paying Agent and each Rating Agency (i) a statement
substantially in the form of EXHIBIT C prepared by the Servicer and (ii) a
certificate of an Authorized Officer substantially in the form of EXHIBIT D;
provided that the Servicer may amend the form of EXHIBIT C and EXHIBIT D, from
time to time.

                  (c) A copy of each statement or certificate provided pursuant
to paragraph (a) or (b) may be obtained by any Series 2001-2 Noteholder by a
request in writing to the Servicer.

                  (d) On or before March 31 of each calendar year, beginning
with calendar year 2002, the Paying Agent, on behalf of the Indenture Trustee,
shall furnish or cause to be furnished to each Person who at any time during
the preceding calendar year was a Series 2001-2 Noteholder, a statement
prepared by the Servicer containing the information which is required to be
contained in the statement to Series 2001-2 Noteholders, as set forth in
paragraph (a) above, aggregated for such calendar year together with other
information as is required to be provided by an issuer of indebtedness under
the Code. Such obligation of the Paying Agent shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Paying Agent pursuant to any requirements of the Code as from
time to time in effect.

                  (e) On or before March 31 of each calendar year, beginning
with March 31, 2002, the Paying Agent, on behalf of the Indenture Trustee,
shall forward to each Series 2001-2 Noteholder copies of each certificate and
report furnished to the Indenture Trustee pursuant to Section 3.05 or 3.06 of
the Transfer and Servicing Agreement.

                                   ARTICLE VI

                       SERIES 2001-2 AMORTIZATION EVENTS

         Section 6.01 Series 2001-2 Amortization Events. If any one of the
following events shall occur with respect to Series 2001-2:

                                      28
<PAGE>   32

                  (a) failure on the part of the Transferor (i) to make any
payment or deposit required by the terms of the Transfer and Servicing
Agreement, the Indenture or this Indenture Supplement on or before the date
occurring five Business Days after the date such payment or deposit is required
to be made therein or herein or (ii) duly to observe or perform in any material
respect any other covenants or agreements of the Transferor set forth in the
Transfer and Servicing Agreement, the Indenture or this Indenture Supplement,
which failure has an Adverse Effect on the Series 2001-2 Noteholders and which
continues unremedied and continues to materially and adversely affect the
interests of the Series 2001-2 Noteholders for a period of 60 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Indenture Trustee, or
to the Transferor and the Indenture Trustee by any Holder of the Series 2001-2
Notes;

                  (b) any representation or warranty made by the Transferor in
the Transfer and Servicing Agreement, or any information contained in a
computer file or microfiche list required to be delivered by the Transferor
pursuant to Section 2.01 or subsection 2.09(h) of the Transfer and Servicing
Agreement shall prove to have been incorrect in any material respect when made
or when delivered, which continues to be incorrect in any material respect for
a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor by
the Indenture Trustee, or to the Transferor and the Indenture Trustee by any
Holder of the Series 2001-2 Notes and as a result of which an Adverse Effect
occurs with respect to the Series 2001-2 Noteholders and such Adverse Effect
continues for the designated period; provided, however, that a Series 2001-2
Amortization Event pursuant to this subsection 6.01(b) shall not be deemed to
have occurred hereunder if the Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Transfer and Servicing
Agreement;

                  (c) a failure by the Transferor to convey Receivables in
Additional Accounts or Participation Interests to the Trust within five
Business Days after the day on which it is required to convey such Receivables
or Participation Interests pursuant to subsection 2.09(a) of the Transfer and
Servicing Agreement;

                  (d) any Servicer Default shall occur which has an Adverse
Effect on the Series 2001-2 Noteholders;

                  (e) the average Series Portfolio Yield for any three
consecutive Due Periods is reduced to a rate which is less than the average of
the Base Rates for such period; (f) the Class A Note Principal Balance or the
Class B Note Principal Balance shall not be paid in full on the Expected
Principal Payment Date;

                  (g) without limiting the foregoing, the occurrence of an
Event of Default with respect to Series 2001-2 and an acceleration of the
maturity of the Series 2001-2 Notes pursuant to Section 5.03 of the Indenture;
or

                  (h) the bankruptcy or insolvency of any other receivables
seller;

then, in the case of any event described in subparagraph (a), (b) or (d) after
the applicable grace period, if any, set forth in such subparagraphs, either
the Indenture Trustee or the Holders of

                                      29
<PAGE>   33

Series 2001-2 Notes evidencing more than 50% of the aggregate Outstanding
Amount of Series 2001-2 Notes by notice then given in writing to the Transferor
and the Servicer (and to the Indenture Trustee if given by the Series 2001-2
Noteholders) may declare that an amortization event (a "SERIES 2001-2
AMORTIZATION EVENT") has occurred as of the date of such notice, and, in the
case of any event described in subparagraph (c), (e), (f), or (h), a Series
2001-2 Amortization Event shall occur without any notice or other action on the
part of the Indenture Trustee or the Series 2001-2 Noteholders immediately upon
the occurrence of such event.

                                  ARTICLE VII

                       REDEMPTION OF SERIES 2001-2 NOTES;
                   SERIES FINAL MATURITY; FINAL DISTRIBUTIONS

         Section 7.01 Optional Redemption of Series 2001-2 Notes.

                  (a) On any day occurring on or after the date on which the
Note Principal Balance is reduced to 10% or less of the sum of the Class A Note
Initial Principal Balance and the Class B Note Initial Principal Balance the
Transferor shall have the option to redeem the Series 2001-2 Notes and the O/C
Amount, at a purchase price equal to (i) if such day is a Distribution Date,
the Reassignment Amount for such Distribution Date or (ii) if such day is not a
Distribution Date, the Reassignment Amount for the Distribution Date following
such day.

                  (b) The Transferor shall give the Servicer and the Indenture
Trustee at least 30 days prior written notice of the date on which the
Transferor intends to exercise such optional redemption. Not later than 1:00
p.m., New York City time, on such day the Transferor shall deposit into the
Principal Funding Account in immediately available funds the excess of the
Reassignment Amount (less the O/C Amount) over the amount, if any, on deposit
in the Principal Funding Account. The remaining Reassignment Amount shall be
distributed to the O/C Holder for reduction of the O/C Amount. Such redemption
option is subject to payment in full of the Reassignment Amount. Following such
deposit into the Principal Funding Account and such distribution to the O/C
Holder in accordance with the foregoing, the Invested Amount for Series 2001-2
shall be reduced to zero and the Series 2001-2 Noteholders shall have no
further interest in or claim against the Trust. The Reassignment Amount shall
be distributed as set forth in subsection 7.02(a).

         Section 7.02 Series Final Maturity.

                  (a) The amount to be paid by the Transferor with respect to
Series 2001-2 in connection with (i) a reassignment of Receivables to the
Transferor pursuant to Section 2.06 of the Transfer and Servicing Agreement or
(ii) an Optional Redemption of the Notes pursuant to Section 7.01, shall be the
Reassignment Amount for the first Distribution Date following the Due Period in
which the reassignment obligation arises under the Transfer and Servicing
Agreement. With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.01 herein or Section 2.06 of the
Transfer and Servicing Agreement or the proceeds from any Foreclosure Remedy
pursuant to Section 5.05 of the Indenture, the Indenture Trustee

                                      30
<PAGE>   34

shall, in accordance with the written direction of the Servicer, not later than
1:00 p.m. New York City time, on the related Distribution Date, make deposits
or distributions of the following amounts (in the priority set forth below and,
in each case after giving effect to any deposits and distributions otherwise to
be made on such date) in immediately available funds:

                           (i) (x) the Class A Note Principal Balance on such
         Distribution Date will be distributed to the Paying Agent for payment
         to the Class A Noteholders and (y) an amount equal to the sum of (A)
         Class A Monthly Interest for such Distribution Date, (B) any Class A
         Monthly Interest previously due but not distributed to the Class A
         Noteholders on a prior Distribution Date and (C) the amount of Class A
         Additional Interest, if any, for such Distribution Date and any Class
         A Additional Interest previously due but not distributed to the Class
         A Noteholders on any prior Distribution Date, will be distributed to
         the Paying Agent for payment to the Class A Noteholders;

                           (ii) (x) the Class B Note Principal Balance on such
         Distribution Date will be distributed to the Paying Agent for payment
         to the Class B Noteholders and (y) an amount equal to the sum of (A)
         Class B Monthly Interest for such Distribution Date, (B) any Class B
         Monthly Interest previously due but not distributed to the Class B
         Noteholders on a prior Distribution Date and (C) the amount of Class B
         Additional Interest, if any, for such Distribution Date and any Class
         B Additional Interest previously due but not distributed to the Class
         B Noteholders on any prior Distribution Date, will be distributed to
         the Paying Agent for payment to the Class B Noteholders; and

                           (iii) the O/C Amount on such Distribution Date will
         be distributed to the Paying Agent for payment to the O/C Holder.

                  (b) Notwithstanding anything to the contrary in this
Indenture Supplement, the Indenture or the Transfer and Servicing Agreement,
all amounts distributed to the Paying Agent pursuant to subsection 7.02(a) for
payment to the Series 2001-2 Noteholders shall be deemed distributed in full to
the Series 2001-2 Noteholders on the date on which such funds are distributed
to the Paying Agent pursuant to this Section and shall be deemed to be a final
distribution pursuant to Section 11.02 of the Indenture.

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

         Section 8.01 Ratification of Indenture. As supplemented by this
Indenture Supplement, the Indenture is in all respects ratified and confirmed
and the Indenture as so supplemented by this Indenture Supplement shall be
read, taken and construed as one and the same instrument.

         Section 8.02 Counterparts. This Indenture Supplement may be executed
in two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.

                                      31
<PAGE>   35

         Section 8.03 Governing Law. THIS INDENTURE SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.

         Section 8.04 Transfer of the O/C Amount. Notwithstanding anything to
the contrary in this Indenture Supplement, no interest in the O/C Amount may be
directly or indirectly sold, assigned, pledged, hypothecated, exchanged,
participated or otherwise transferred (other than in connection with the
transfer upon initial issuance to the Indenture Trustee as security for the
Series 2001-2 Notes) except to a Person who is a "United States person" for
United States federal income tax purposes and only upon the prior delivery of a
Tax Opinion to the Indenture Trustee, and any such transfer in violation of
these requirements shall be null and void ab initio.

         Section 8.05 Limitation of Liability. Notwithstanding any other
provision herein or elsewhere, this Agreement has been executed and delivered
by Wilmington Trust Company, not in its individual capacity, but solely in its
capacity as Owner Trustee of the Trust, in no event shall Wilmington Trust
Company in its individual capacity have any liability in respect of the
representations, warranties, or obligations of the Trust hereunder or under any
other document, as to all of which recourse shall be had solely to the assets
of the Trust, and for all purposes of this Agreement and each other document,
the Owner Trustee (as such or in its individual capacity) shall be subject to,
and entitled to the benefits of, the terms and provisions of the Trust
Agreement.

         Section 8.06 Perfection of Security Interest.

                  (a) The Issuer hereby represents and warrants, as of the
closing date, that:

                           (i) this Agreement creates a valid and continuing
         security interest (as defined in the applicable UCC) in the
         Receivables in favor of the Indenture Trustee on behalf of the Holders
         of the Notes including the Series 2001-2 Noteholders, which security
         interest is prior to all other liens, and is enforceable as such as
         against creditors of and purchasers from the Issuer;

                           (ii) the Receivables constitutes "accounts" within
         the meaning of the applicable UCC;

                           (iii) the Issuer owns and has good and marketable
         title to the Receivables free and clear of any lien, claim or
         encumbrance of any Person;

                           (iv) the Issuer has caused or will have caused,
         within ten days, the filing of all appropriate financing statements in
         the proper filing office in the appropriate jurisdictions under
         applicable law in order to perfect the security interest in the
         Receivables granted to the Indenture Trustee on behalf of the Holders
         of the Notes including the Series 2001-2 Noteholders hereunder;

                           (v) other than the security interest granted to the
         Indenture Trustee, pursuant to this Agreement, the Issuer has not
         pledged, assigned, sold, granted a security

                                      32
<PAGE>   36

         interest in, or otherwise conveyed any of the Receivables. The Issuer
         has not authorized the filing of and is not aware of any financing
         statements against the Issuer that include a description of collateral
         covering the Receivables other than any financing statement relating to
         the security interest granted to the Indenture Trustee hereunder or
         that has been terminated. The Issuer is not aware of any judgment or
         tax lien filings against the Issuer.

                  (b) The Indenture Trustee may not waive a breach of any of
the foregoing representations unless prior to such waiver (1) it has notified
Standard & Poor's Rating Service ("S&P") of its intention to waive such breach
and S&P has informed the Indenture Trustee, and the Indenture Trustee has
informed the Series 2001-2 Noteholders, as to whether such waiver will result
in a downgrade of the Series 2001-2 Notes and (2) the Indenture Trustee has
subsequently received the unanimous consent of the Series 2001-2 Noteholders to
such waiver.

         Section 8.07 Transfer Restrictions. Each purchaser or transferee of a
Note that is a Plan or a person acting on behalf of or investing the assets of
a Plan shall be deemed to represent that its purchase and continued holding of
the Note will be covered by a U.S. Department of Labor prohibited transaction
class exemption.

         Section 8.08 Notice of Servicing Delegation. To the extent that the
Servicer delegates any of its servicing duties pursuant to Section 5.07 of the
Transfer and Servicing Agreement, other than to Household Corporation or an
affiliate thereof, the Issuer shall provide, or cause to be provided, written
notice to Standard & Poor's of such a delegation of servicing duties by the
Servicer.

         Section 8.09 Zero Balance Account Removal. To the extent that a Zero
Balance Account, having a zero balance for less than 180 consecutive days, is
the subject of a removal pursuant to Section 2.10 of the Transfer and Servicing
Agreement, the Issuer shall provide, or cause to be provided, written notice of
such removal to Standard & Poor's.

         Section 8.10 Notice of Insolvency Events. To the extent that an
Insolvency Event shall occur with respect to (a) the Transferor, as specified
in Section 6.01 of the Transfer and Servicing Agreement, (b) the Bank, as
specified in Section 8.02 of the HRAC RPA, or (c) HRAC, as specified in Section
8.02 of the Transferor RPA, the Issuer shall provide, or cause to be provided,
written notice of such occurrence to Standard & Poor's.

                            [SIGNATURE PAGE FOLLOWS]

                                      33
<PAGE>   37

         IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.

                                  WILMINGTON TRUST COMPANY,
                                  not in its individual capacity, but solely as
                                  Owner Trustee on behalf of the HOUSEHOLD
                                  PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I

                                  By: /s/ JOSEPH B. FEIL
                                     -------------------------------------------
                                     Name: Joseph B. Feil
                                     Title: Senior Financial Services Officer

                                  U.S. BANK NATIONAL ASSOCIATION,
                                  not in its individual capacity, but solely as
                                  Indenture Trustee and Securities Intermediary

                                  By:  /s/ PATRICIA M. CHILD
                                     -------------------------------------------
                                     Name: Patricia M. Child
                                     Title: Vice President

                                      34<PAGE>   1
                                                                    EXHIBIT 4(i)

                           RAMSAY YOUTH SERVICES, INC.
                          1995 LONG TERM INCENTIVE PLAN

                       (formerly, RAMSAY HEALTH CARE, INC.
                         1995 LONG TERM INCENTIVE PLAN)

                  SECTION 1. PURPOSE. The purposes of this Ramsay Health Care,
Inc. 1995 Long Term Incentive Plan (the "Plan") are to encourage selected
employees, officers, directors and consultants of, and other individuals
providing services to, Ramsay Health Care, Inc. (together with any successor
thereto, the "Company") and its Affiliates (as defined below) to acquire a
proprietary interest in the growth and performance of the Company, to generate
an increased incentive to contribute to the Company's future success and
prosperity thus enhancing the value of the Company for the benefit of its
stockholders, and to enhance the ability of the Company and its Affiliates to
attract and retain exceptionally qualified individuals upon whom, in large
measure, the sustained progress, growth and profitability of the Company depend.

                  SECTION 2. DEFINITIONS. As used in the Plan, the following
terms shall have the meanings set forth below:

                  "Affiliate" shall mean (i) any entity that, directly or
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, as determined by
the Committee.

                  "Award" shall mean any Option, Stock Appreciation Right,
Restricted Security, Performance Award, or Other Stock-Based Award granted under
the Plan.

                  "Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing any Award granted under the Plan.

                  "Board" shall mean the Board of Directors of the Company.

                  "Cause", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company which agreement includes a definition of "cause," "cause" as
defined in such agreement or, if such agreement contains no such definition, a
material breach by the Participant of such agreement, or (ii) with respect to
any other Participant, the failure to perform adequately in carrying out such
Participant's employment responsibilities, including any directives from the
Board, or engaging in such behavior in his personal or business life as to lead
the Committee in its reasonable judgment to determine that it is in the best
interests of the Company to terminate his employment.

                  "Common Stock" shall mean the common stock of the Company,
$.01 par value.

                  "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.

                                       1
<PAGE>   2

                  "Committee" shall mean the Compensation and Conflict of
Interest Committee or any other committee of the Board designated by the Board
to administer the Plan and composed of not less than three outside directors.

                  "Common Shares" shall mean any or all, as applicable, of the
Common Stock and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(b) of the Plan and any other securities of the Company or any
Affiliate or any successor that may be so designated by the Committee.

                  "Employee" shall mean any employee of the Company or of any
Affiliate.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "Fair Market Value" shall mean (A) with respect to any
property other than the Common Shares, the fair market value of such property
determined by such methods or procedures as shall be established from time to
time by the Committee; and (B) with respect to the Common Shares, the last sale
price regular way on the date of reference, or, in case no sale takes place on
such date, the average of the high bid and low asked prices, in either case on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading, or if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, or the average of the
closing high bid and low asked prices in the over-the-counter market reported on
NASDAQ on such date, whichever is applicable, or if there are no such prices
reported on NASDAQ on such date, as furnished to the Committee by any New York
Stock Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the Fair
Market Value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.

                  "Good Reason", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company, "good reason" as defined in such written agreement or, if such
agreement contains no such definition, a material breach by the Company of such
agreement, or (ii) with respect to any other Participant, a failure by the
Company to pay such Participant any amount otherwise vested and due and a
continuation of such failure for 30 business days following notice to the
Company thereof.

                  "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision thereto.

                  "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option. Any stock option granted by the Committee which is not designated an
Incentive Stock Option shall be deemed a Non-Qualified Stock Option.

                  "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.

                                       2
<PAGE>   3

                  "Other Stock-Based Award" shall mean any right granted under
Section 6(e) of the Plan.

                  "Participant" shall mean any individual granted an Award under
the Plan.

                  "Performance Award" shall mean any right granted under Section
6(d) of the Plan.

                  "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.

                  "Released Securities" shall mean securities that were
Restricted Securities but with respect to which all applicable restrictions have
expired, lapsed or been waived in accordance with the terms of the Plan or the
applicable Award Agreement.

                  "Restricted Securities" shall mean any Common Shares granted
under Section 6(c) of the Plan, any right granted under Section 6(c) of the Plan
that is denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.

                  "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act, or any successor rule
or regulation thereto as in effect from time to time.

                  "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.

                  SECTION 3. ADMINISTRATION. The Plan shall be administered by
the Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee or other individual under the Plan; (iii) determine the number
and classification of Common Shares to be covered by (or with respect to which
payments, rights or other matters are to be calculated in connection with)
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Common Shares, other securities, other Awards or other
property, or canceled, forfeited or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or suspended; (vi)
determine requirements for the vesting of Awards or performance criteria to be
achieved in order for Awards to vest; (vii) determine whether, to what extent
and under what circumstances cash, Common Shares, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (viii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint such

                                       3
<PAGE>   4

agents as it shall deem appropriate for the proper administration of the Plan;
and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder or beneficiary
of any Award, any shareholder and any Employee. Notwithstanding the foregoing,
the maximum number of Awards which may be granted to any one Participant under
this Plan shall not exceed 150,000 Common Shares, subject to the adjustments
provided in Section 4(b) hereof and no Awards under this Plan shall be granted
after June 30, 2005.

                  SECTION 4. COMMON SHARES AVAILABLE FOR AWARDS.

                  (a) Common Shares Available. Subject to adjustment as provided
in Section 4(b):

                           (i) Calculation of Number of Common Shares Available.
                  The number of Common Shares available for granting Awards
                  under the Plan shall be 500,000, any or all of which may be or
                  may be based on Common Stock, any other security which becomes
                  the subject of Awards, or any combination thereof. Initially
                  500,000 shares of Common Stock shall be reserved for Awards
                  hereunder. Further, if, after the effective date of the Plan,
                  any Common Shares covered by an Award granted under the Plan
                  or to which such an Award relates, are forfeited, or if an
                  Award otherwise terminates or is canceled without the delivery
                  of Shares or of other consideration, then the Common Shares
                  covered by such Award or to which such Award relates, or the
                  number of Common Shares otherwise counted against the
                  aggregate number of Common Shares available under the Plan
                  with respect to such Award, to the extent of any such
                  forfeiture, termination or cancellation, shall again be, or
                  shall become, available for granting Awards under the Plan.

                           (ii) ACCOUNTING FOR AWARDS. For purposes of this
                  Section 4.

                  (A) if an Award is denominated in or based upon Common Shares,
the number of Common Shares covered by such Award or to which such Award relates
shall be counted on the date of grant of such Award against the aggregate number
of Common Shares available for granting Awards under the Plan and against the
maximum number of Awards available to any Participant; and

                  (B) Awards not denominated in Common Shares may be counted
against the aggregate number of Common Shares available for granting Awards
under the Plan and against the maximum number of Awards available to any
participant in such amount and at such time as the Committee shall determine
under procedures adopted by the Committee consistent with the purposes of the
Plan;

PROVIDED, HOWEVER, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards may be counted or not counted under procedures adopted by the
Committee in order to avoid double counting. Any Common Shares that are
delivered by the Company, and any Awards that are granted by, or become

                                       4
<PAGE>   5

obligations of, the Company, through the assumption by the Company or an
Affiliate of, or in substitution for, outstanding awards previously granted by
an acquired company shall, in the case of Awards granted to Participants who are
officers or directors of the Company for purposes of Section 16 of the Exchange
Act, be counted against the Common Shares available for granting Awards under
the Plan.

                           (iii) SOURCES OF COMMON SHARES DELIVERABLE UNDER
                  AWARDS. Any Common Shares delivered pursuant to an Award may
                  consist, in whole or in part, of authorized and unissued
                  Common Shares or of treasury Common Shares.

                  (b) ADJUSTMENTS. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Common Shares, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of Common Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Common Shares or other securities of the Company, or other similar corporate
transaction or event affects the Common Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of Common Shares (or
other securities or property) which thereafter may be made the subject of
Awards, (ii) the number and kind of Common Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, that the
number of Common Shares subject to any Award denominated in Common Shares shall
always be a whole number.

                  In connection with any merger or consolidation in which the
Company is not the surviving corporation and which results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning less than a majority of the outstanding
voting securities of the surviving corporation (determined immediately following
such merger or consolidation), or any sale or transfer by the Company of all or
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Company, all outstanding
Options under the Plan shall become exercisable in full, notwithstanding any
other provision of the Plan or of any outstanding options granted thereunder, on
and after (i) the fifteenth day prior to the effective date of such merger,
consolidation, sale, transfer or acquisition or (ii) the date of commencement of
such tender offer or exchange offer, as the case may be. The provisions of the
foregoing sentence shall apply to any outstanding Options which are Incentive
Stock Options to the extent permitted by Section 422(d) of the Code and such
outstanding Options in excess thereof shall, immediately upon the occurrence of
the event described in clause (i) or (ii) of the foregoing sentence, be treated
for all purposes of the Plan as Non-Qualified Stock Options and shall be
immediately exercisable as such as provided in the foregoing sentence.

                  SECTION 5. ELIGIBILITY. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any consultant of, or
other individual providing services to, the Company or any Affiliate shall be

                                       5
<PAGE>   6

eligible to be designated a Participant. A non-employee director shall be
eligible to receive Non

Qualified Stock Options under the Plan.

                  SECTION 6. AWARDS.

                  (a) OPTIONS. The Committee is hereby authorized to grant to
eligible individuals options to purchase Common Shares (each, an "Option") which
shall contain the following terms and conditions and with such additional terms
and conditions, in either case not inconsistent with the provisions of the Plan,
as the Committee shall determine:

                           (i) EXERCISE PRICE. The purchase price per Common
                  Share purchasable under an Option shall be determined by the
                  Committee; provided, however, that such purchase price shall
                  not be less than the Fair Market Value of a Common Share on
                  the date of grant of such Option, or such other price as
                  required under Subsection 6(a)(iv) hereof.

                           (ii) TIME AND METHOD OF EXERCISE. Subject to the
                  terms of Section 6(a)(iii), the Committee shall determine the
                  time or times at which an Option may be exercised in whole or
                  in part, and the method or methods by which, and the form or
                  forms (including, without limitation, cash, Common Shares,
                  outstanding Awards, or other property, or any combination
                  thereof, having a Fair Market Value on the exercise date equal
                  to the relevant exercise price) in which, payment of the
                  exercise price with respect thereto may be made or deemed to
                  have been made.

                           (iii) EXERCISABILITY UPON DEATH, RETIREMENT AND
                  TERMINATION OF EMPLOYMENT. Subject to the condition that no
                  Option may be exercised in whole or in part after the
                  expiration of the Option period specified in the applicable
                  Award Agreement:

                  (A) Subject to the terms of paragraph (D) below, upon the
death of a Participant while employed or within 3 months of retirement or
disability as defined in paragraph (B) below, the person or persons to whom such
Participant's rights with respect to any Option held by such Participant are
transferred by will or the laws of descent and distribution may, prior to the
expiration of the earlier of: (1) the outside exercise date determined by the
Committee at the time of granting the Option, or (2) nine months after such
Participant's death, purchase any or all of the Common Shares with respect to
which such Participant was entitled to exercise such Option immediately prior to
such Participant's death, and any Options not so exercisable will lapse on the
date of such Participant's death;

                  (B) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the Company (x) as a result of
retirement pursuant to a retirement plan of the Company or an Affiliate or
disability (as determined by the Committee) of such Participant, (y) by the
Company other than for Cause, or (z) by the Participant with Good Reason, such
Participant may, prior to the expiration of the earlier of: (1) the outside

                                       6
<PAGE>   7

exercise date determined by the Committee at the time of granting the Option, or
(2) three months after the date of such termination, purchase any or all of the
Common Shares with respect to which such Participant was entitled to exercise
any Options immediately prior to such termination, and any Options not so
exercisable will lapse on such date of termination;

                  (C) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the Company under any
circumstances not described in paragraphs (A) or (B) above, such Participant's
Options shall be canceled to the extent not theretofore exercised;

                  (D) Upon (i) the death of the Participant, or (ii) termination
of the Participant's employment with the Company (x) by the Company other than
for Cause (y) by the Participant with Good Reason or (z) as a result of
retirement or disability as defined in paragraph (B) above, the Company shall
have the right to cancel all of the Options such Participant was entitled to
exercise at the time of such death or termination (subject to the terms of
paragraphs (A) or (B) above) for a payment in cash equal to the excess, if any,
of the Fair Market Value of one Common Share on the date of death or termination
over the exercise price of such Option for one Common Share times the number of
Common Shares subject to the Option and exercisable at the time of such death or
termination; and

                  (E) Upon expiration of the respective periods set forth in
each of paragraphs (A) through (C) above, the Options of a Participant who has
died or whose employment has been terminated shall be canceled to the extent not
theretofore canceled or exercised.

                  (F) For purposes of paragraphs (A) through (D) above, the
period of service of an individual as a director or consultant of the Company or
an Affiliate shall be deemed the period of employment.

                           (iv) INCENTIVE STOCK OPTIONS. The following
                  provisions shall apply only to Incentive Stock Options granted
                  under the Plan:

                  (A) No Incentive Stock Option shall be granted to any eligible
Employee who, at the time such Option is granted, owns securities possessing
more than ten percent (10%) of the total combined voting power of all classes of
securities of the Company or of any Affiliate, except that such an Option may be
granted to such an Employee if at the time the Option is granted the option
price is at least one hundred ten percent (110%) of the Fair Market Value of the
Common Shares (determined in accordance with Section 2) subject to the Option,
and the Option by its terms is not exercisable after the expiration of five (5)
years from the date the Option is granted; and

                  (B) To the extent that the aggregate Fair Market Value of the
Common Shares with respect to which Incentive Stock Options (without regard to
this subsection) are exercisable for the first time by any individual during any
calendar year (under all plans of the Company and its Affiliates) exceeds
$100,000, such Options shall be treated as Non-Qualified Stock Options. This
subsection shall be applied by taking Options into account in the order in which
they were granted. If some but not all Options granted on any one day are
subject to this subsection, then such Options shall be apportioned between

                                       7
<PAGE>   8

Incentive Stock Option and Non-Qualified Stock Option treatment in such manner
as the Committee shall determine. For purposes of this subsection, the Fair
Market Value of any Common Shares shall be determined, in accordance with
Section 2, as of the date the Option with respect to such Common Shares is
granted.

                           (v) TERMS AND CONDITIONS OF OPTIONS GRANTED TO
                  DIRECTORS. Notwithstanding any provision contained in the Plan
                  to the contrary, during any period when any member of the
                  Committee shall not be a "disinterested person" as defined in
                  Rule 16b-3, as such Rule was in effect at April 30, 1991,
                  then, the terms and conditions of Options granted under the
                  Plan to any director of the Company during such period shall
                  be as follows:

                  (A) The price at which each Common Share subject to an option
may be purchased shall, subject to any adjustments which may be made pursuant to
Section 4, in no event be less than the Fair Market Value of a Common Share on
the date of grant, and provided further that in the event the option is intended
to be an Incentive Stock Option and the optionee owns on the date of grant
securities possessing more than ten percent (10%) of the total combined voting
power of all classes of securities of the Company or of any Affiliate, the price
per share shall not be less than one hundred ten percent (110%) of the Fair
Market Value per Common Share on the date of grant.

                  (B) The Option may be exercised to purchase Common Shares
covered by the Option not sooner than six (6) months following the date of
grant. The Option shall terminate and no Common Shares may be purchased
thereunder more than ten (10) years after the date of grant, provided that if
the Option is intended to be an Incentive Stock Option and the Optionee owns on
the date of grant securities possessing more than ten percent (10%) of the total
combined voting power of all classes of securities of the Company or of any
Affiliate, the Option shall terminate and no Common Shares may be purchased
thereunder more than five (5) years after the date of grant.

                  (C) The maximum number of Common Shares which may be subject
to options granted to all directors pursuant to this Section 5(j) shall be
500,000 shares in the aggregate. The maximum number of Common Shares which may
be subject to options granted to any director of the Company shall be 150,000
shares.

                  (b) STOCK APPRECIATION RIGHTS. The Committee is hereby
authorized to grant to eligible Employees "Stock Appreciation Rights." Each
Stock Appreciation Right shall consist of a right to receive the excess of (i)
the Fair Market Value of one Common Share on the date of exercise or, if the
Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before or after the date of exercise over (ii) the grant price of the right as
specified by the Committee, which shall not be less than one hundred percent
(100%) of the Fair Market Value of one Common Share on the date of grant of the
Stock Appreciation Right (or, if the Committee so determines, in the case of any
Stock Appreciation Right retroactively granted in tandem with or in substitution
for another Award, on the date of grant of such other Award). Subject to the
terms of the Plan and any applicable Award Agreement, the grant price, term,
methods of exercise, methods of settlement, and any other terms and conditions
of any Stock Appreciation Right granted under the Plan shall be as determined by
the Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.

                                       8
<PAGE>   9

                  (c) RESTRICTED SECURITIES.

                           (i) ISSUANCE. The Committee is hereby authorized to
                  grant to eligible Employees "Restricted Securities" which
                  shall consist of the right to receive, by purchase or
                  otherwise, Common Shares which are subject to such
                  restrictions as the Committee may impose (including, without
                  limitation, any limitation on the right to vote such Common
                  Shares or the right to receive any dividend or other right or
                  property), which restrictions may lapse separately or in
                  combination at such time or times, in such installments or
                  otherwise, as the Committee may deem appropriate.

                           (ii) REGISTRATION. Restricted Securities granted
                  under the Plan may be evidenced in such manner as the
                  Committee may deem appropriate, including, without limitation,
                  book-entry registration or issuance of a stock certificate or
                  certificates. In the event any stock certificate is issued in
                  respect of Restricted Securities granted under the Plan, such
                  certificate shall be registered in the name of the Participant
                  and shall bear an appropriate legend referring to the terms,
                  conditions and restrictions applicable to such Restricted
                  Securities.

                           (iii) FORFEITURE. Except as otherwise determined by
                  the Committee, upon termination of a Participant's employment
                  for any reason during the applicable restriction period, all
                  of such Participant's Restricted Securities which had not
                  become Released Securities by the date of termination of
                  employment shall be forfeited and reacquired by the Company;
                  provided, however, that the Committee may, when it finds that
                  a waiver would be in the best interests of the Company, waive
                  in whole or in part any or all remaining restrictions with
                  respect to such Participant's Restricted Securities.
                  Unrestricted Common Shares, evidenced in such manner as the
                  Committee shall deem appropriate, shall be issued to the
                  holder of Restricted Securities promptly after such Restricted
                  Securities become Released Securities.

                  (d) PERFORMANCE AWARDS. The Committee is hereby authorized to
grant to eligible Employees "Performance Awards." Each Performance Award shall
consist of a right, (i) denominated or payable in cash, Common Shares, other
securities or other property (including, without limitation, Restricted
Securities), and (ii) which shall confer on the holder thereof rights valued as
determined by the Committee and payable to, or exercisable by, the holder of the
Performance Award, in whole or in part, upon the achievement of such performance
goals during such performance periods as the Committee shall establish. Subject
to the terms of the Plan and any applicable Award Agreement, the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted, the termination
of a Participant's employment and the amount of any payment or transfer to be
made pursuant to any Performance Award shall be determined by the Committee and
by the other terms and conditions of any Performance Award. The Committee shall
issue performance goals prior to the commencement of the performance period to
which such performance goals pertain.

                  (e) OTHER STOCK-BASED AWARDS. The Committee is hereby
authorized to grant to eligible Employees "Other Stock Based Awards." Each Other
Stock-Based Award shall consist of a right (i) which is other than an Award or

                                       9
<PAGE>   10

right described in Section 6(a), (b), (c) or (d) above and (ii) which is
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Common Shares (including, without limitation,
securities convertible into Common Shares) as are deemed by the Committee to be
consistent with the purposes of the Plan; provided, however, that such right
shall comply, to the extent deemed desirable by the Committee, with Rule 16b-3
and applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of Other
Stock-Based Awards. Common Shares or other securities delivered pursuant to a
purchase right granted under this Section 6(e) shall be purchased for such
consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, Common Shares, other securities,
other Awards, other property, or any combination thereof, as the Committee shall
determine.

                  (f) GENERAL.

                           (i) NO CASH CONSIDERATION FOR AWARDS. Awards may be
                  granted for no cash consideration or for such minimal cash
                  consideration as may be required by applicable law.

                           (ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER.
                  Awards may, in the discretion of the Committee, be granted
                  either alone or in addition to, in tandem with, or in
                  substitution for any other Award, except that in no event
                  shall an Incentive Stock Option be granted together with a
                  Non-Qualified Stock Option in such a manner that the exercise
                  of one Option affects the right to exercise the other. Awards
                  granted in addition to or in tandem with other Awards may be
                  granted either at the same time as or at a different time from
                  the grant of such other awards.

                           (iii) FORMS OF PAYMENT UNDER AWARDS. Subject to the
                  terms of the Plan and of any applicable Award Agreement,
                  payments or transfers to be made by the Company or an
                  Affiliate upon the grant, exercise or payment of an Award may
                  be made in such form or forms as the Committee shall
                  determine, including, without limitation, cash, Common Shares,
                  other securities, other Awards, or other property, or any
                  combination thereof, and may be made in a single payment or
                  transfer, in installments, or on a deferred basis, in each
                  case in accordance with rules and procedures established by
                  the Committee. Such rules and procedures may include, without
                  limitation, provisions for the payment or crediting of
                  reasonable interest on installment or deferred payments. In
                  accordance with the above, the Committee may elect (i) to pay
                  a Participant (or such Participant's permitted transferee)
                  upon the exercise of an Option in whole or in part, in lieu of
                  the exercise thereof and the delivery of Common Shares
                  thereunder, an amount of cash equal to the excess, if any, of
                  the Fair Market Value of one Common Share on the date of such
                  exercise over the exercise price of such Option for one Common
                  Share times the number of Common Shares subject to the Option
                  or portion thereof so exercised or (ii) to settle other stock
                  denominated Awards in cash.

                                       10
<PAGE>   11

                           (iv) LIMITS ON TRANSFER OF AWARDS.

                  (A) No award (other than Released Securities), and no right
under any such Award, may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant otherwise than by will or
by the laws of descent and distribution (or, in the case of Restricted
Securities, to the Company) and any such purported assignment, alienation,
pledge, attachment, sale or other transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate.

                  (B) Each award, and each right under any Award, shall be
exercisable during the Participant's lifetime only by the Participant or, if
permissible under applicable law, by the Participant's guardian or legal
representative.

                           (v) TERMS OF AWARDS. The term of each Award shall be
                  for such period as may be determined by the Committee;
                  provided, however, that in no event shall the term of any
                  Option exceed a period of ten years from the date of its
                  grant.

                           (vi) RULE 16B-3 SIX-MONTH LIMITATIONS. To the extent
                  required in order to maintain the exemption provided under
                  Rule 16b-3 only, any equity security offered pursuant to the
                  Plan must be held for at least six months after the date of
                  grant, and with respect to any derivative security issued
                  pursuant to the Plan, at least six months must elapse from the
                  date of acquisition of such derivative security to the date of
                  disposition of the derivative security (other than upon
                  exercise or conversion) or its underlying equity security.
                  Terms used in the preceding sentence shall, for the purposes
                  of such sentence only, have the meanings, if any, assigned or
                  attributed to them under Rule 16b-3.

                           (vii) COMMON SHARE CERTIFICATES. All certificates for
                  Common Shares delivered under the Plan pursuant to any Award
                  of the exercise thereof shall be subject to such stop transfer
                  orders and other restrictions as the Committee may deem
                  advisable under the Plan or the rules, regulations, and other
                  requirements of the Securities and Exchange Commission, any
                  stock exchange upon which such Common Shares are then listed,
                  and any applicable Federal or state securities laws, and the
                  Committee may cause a legend or legends to be put on any such
                  certificates to make appropriate reference to such
                  restrictions.

                           (viii) DELIVERY OF COMMON SHARES OR OTHER SECURITIES
                  AND PAYMENT BY PARTICIPANT OF CONSIDERATION. No Common Shares
                  or other securities shall be delivered pursuant to any Award
                  until payment in full of any amount required to be paid
                  pursuant to the Plan or the applicable Award Agreement is
                  received by the Company. Such payment may be made by such
                  method or methods and in such form or forms as the Committee
                  shall determine, including, without limitation, cash, Common
                  Shares, other securities, other Awards or other property, or
                  any combination thereof; provided that the combined value, as
                  determined by the Committee, of all cash and cash equivalents

                                       11
<PAGE>   12

                  and the Fair Market Value of any such Common Shares or other
                  property so tendered to the Company, as of the date of such
                  tender, is at least equal to the full amount required to be
                  paid pursuant to the Plan or the applicable Award Agreement to
                  the Company.

                  SECTION 7. AMENDMENTS; ADJUSTMENTS AND TERMINATION. Except to
the extent prohibited by applicable law and unless otherwise expressly provided
in an Award Agreement or in the Plan:

                  (a) AMENDMENTS TO THE PLAN. The Board may amend, alter,
suspend, discontinue, or terminate the Plan without the consent of any
stockholder, Participant, other holder or beneficiary of an Award, or other
Person; provided, however, that, subject to the Company's rights to adjust
Awards under Sections 7(c) and (d), any amendment, alteration, suspension,
discontinuation, or termination that would impair the rights of any Participant,
or any other holder or beneficiary of any Award theretofore granted, shall not
to that extent be effective without the consent of such Participant, other
holder or beneficiary of an Award, as the case may be; and provided further,
however, that notwithstanding any other provision of the Plan or any Award
Agreement, without the approval of the stockholders of the Company no such
amendment, alteration, suspension, discontinuation, or termination shall be made
that would:

                           (i) increase the total number of Common Shares
                  available for Awards under the Plan, except as provided in
                  Section 4 hereof; or

                           (ii) otherwise cause the Plan to cease to comply with
                  any tax or regulatory requirement, including for these
                  purposes any approval or other requirement which is or would
                  be a prerequisite for exemptive relief from Section 16(b) of
                  the Exchange Act.

                  (b) AMENDMENTS TO AWARDS. The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted, prospectively or
retroactively; provided, however, that, subject to the Company's rights to
adjust Awards under Sections 7(c) and (d), any amendment, alteration,
suspension, discontinuation, cancellation or termination that would impair the
rights of any Participant or holder or beneficiary of any Award theretofore
granted, shall not to that extent be effective without the consent of such
Participant or holder or beneficiary of an Award, as the case may be.

                  (c) ADJUSTMENT OF AWARDS UPON CERTAIN ACQUISITIONS. In the
event the Company or any Affiliate shall assume outstanding employee awards or
the right or obligation to make future such awards in connection with the
acquisition of another business or another corporation or business entity, the
Committee may make such adjustments, not inconsistent with the terms of the
Plan, in the terms of Awards as it shall deem appropriate in order to achieve
reasonable comparability or other equitable relationship between the assumed
awards and the Awards granted under the Plan as so adjusted.

                  (d) ADJUSTMENTS OF AWARDS UPON THE OCCURRENCE OF CERTAIN
UNUSUAL OR NON-RECURRING EVENTS. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or non-recurring events (including, without
limitation, the events described in Section 4(b) hereof) affecting the Company,

                                       12
<PAGE>   13

any Affiliate, or the financial statements of the Company or any Affiliate, or
of changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.

                  SECTION 8. GENERAL PROVISIONS.

                  (a) NO RIGHTS TO AWARDS. No Employee or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Employees, or holders or beneficiaries
of Awards under the Plan. The terms and conditions of Awards need not be the
same with respect to each recipient.

                  (b) DELEGATION. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers or managers
of the Company or any Affiliate, or to a committee of such officers or managers,
the authority, subject to such terms and limitations as the Committee shall
determine, to grant Awards to, or to cancel, modify, waive rights with respect
to, alter, discontinue, suspend, or terminate Awards; provided, however, that,
no such delegation shall be permitted with respect to Awards held by Employees
who are officers or directors of the Company for purposes of Section 16 of the
Exchange Act, or any successor section thereto or who are otherwise subject to
such Section.

                  (c) CORRECTION OF DEFECTS, OMISSIONS, AND INCONSISTENCIES. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.

                  (d) WITHHOLDING. The Company or any Affiliate shall be
authorized to withhold from any Award granted, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Common Shares, other securities,
other Awards, or other property) of withholding taxes due in respect of an
Award, its exercise, or any payment or transfer under such Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company or Affiliate to satisfy all obligations for the payment of such taxes.

                  (e) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.

                  (f) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability, or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.

                  (g) GOVERNING LAW. The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Delaware and applicable Federal law.

                                       13
<PAGE>   14

                  (h) SEVERABILITY. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any Person or Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.

                  (i) NO TRUST OR FUND CREATED. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

                  (j) NO FRACTIONAL COMMON SHARES. No fractional Common Shares
shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Common Shares or whether
such fractional Common Shares or any rights thereto shall be canceled,
terminated, or otherwise eliminated.

                  (k) HEADINGS. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.

                  SECTION 9. ADOPTION, APPROVAL AND EFFECTIVE DATE OF THE PLAN.
The Plan shall be considered adopted and shall become effective on the date the
Plan is approved by the Board; provided, however, that the Plan and any Awards
granted under the Plan shall be void, if the stockholders of the Company shall
not have approved the adoption of the Plan within twelve (12) months after the
effective date, by a majority of votes cast thereon at a meeting of stockholders
duly called and held for such purpose.

                                       14

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