Document:

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                                                                     EXHIBIT 4.5

                          HOUSEHOLD INTERNATIONAL, INC.

                                       AND

                              THE BANK OF NEW YORK,

                           AS PURCHASE CONTRACT AGENT

                           PURCHASE CONTRACT AGREEMENT

                          DATED AS OF OCTOBER 30, 2002

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS AND OTHER PROVISIONS  OF GENERAL APPLICATION.......................................1

SECTION 1.1 Definitions..................................................................................1
SECTION 1.2 Compliance Certificates and Opinions........................................................15
SECTION 1.3 Form of Documents Delivered to Agent........................................................16
SECTION 1.4 Acts of Holders; Record Dates...............................................................16
SECTION 1.5 Notices.....................................................................................18
SECTION 1.6 Notice to Holders; Waiver...................................................................19
SECTION 1.7 Effect of Headings and Table of Contents....................................................19
SECTION 1.8 Successors and Assigns......................................................................19
SECTION 1.9 Separability Clause.........................................................................19
SECTION 1.10 Benefits of Agreement......................................................................19
SECTION 1.11 Governing Law..............................................................................20
SECTION 1.12 Legal Holidays.............................................................................20
SECTION 1.13 Counterparts...............................................................................20
SECTION 1.14 Inspection of Agreement....................................................................20
SECTION 1.15 Appointment of Financial Institution as Agent for the Company..............................21
SECTION 1.16 No Waiver..................................................................................21

ARTICLE II CERTIFICATE FORMS............................................................................21

SECTION 2.1 Forms of Certificates Generally.............................................................21
SECTION 2.2 Form of Agent's Certificate of Authentication...............................................22

ARTICLE III THE UNITS...................................................................................23

SECTION 3.1 Title and Terms; Denominations..............................................................23
SECTION 3.2 Rights and Obligations Evidenced by the Certificates........................................23
SECTION 3.3 Execution, Authentication, Delivery and Dating..............................................24
SECTION 3.4 Temporary Certificates......................................................................25
SECTION 3.5 Registration; Registration of Transfer and Exchange.........................................25
SECTION 3.6 Book-Entry Interests........................................................................27
SECTION 3.7 Notices to Holders..........................................................................28
SECTION 3.8 Appointment of Successor Clearing Agency....................................................28
SECTION 3.9 Definitive Certificates.....................................................................28
SECTION 3.10 Mutilated, Destroyed, Lost and Stolen Certificates.........................................29
SECTION 3.11 Persons Deemed Owners......................................................................30
SECTION 3.12 Cancellation...............................................................................30
SECTION 3.13 Establishment of Stripped Units............................................................31
SECTION 3.14 Reestablishment of Normal Units............................................................33
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SECTION 3.15 Transfer of Collateral upon Occurrence of Termination Event................................34
SECTION 3.16 No Consent to Assumption...................................................................34
SECTION 3.17 CUSIP Numbers..............................................................................35

ARTICLE IV THE NOTES....................................................................................35

SECTION 4.1 Payment of Interest; Rights to Interest Payments Preserved; Notice..........................35
SECTION 4.2 Notice and Voting...........................................................................36
SECTION 4.3 Tax Event Redemption........................................................................37
SECTION 4.4 Consent to Treatment for Tax Purposes.......................................................37

ARTICLE V THE PURCHASE CONTRACTS; THE REMARKETING.......................................................38

SECTION 5.1 Purchase of Common Stock....................................................................38
SECTION 5.2 Intentionally Omitted.......................................................................40
SECTION 5.3 Intentionally Omitted.......................................................................40
SECTION 5.4 Payment of Purchase Price; Remarketing......................................................40
SECTION 5.5 Issuance of Shares of Common Stock..........................................................45
SECTION 5.6 Adjustment of Settlement Rate...............................................................45
SECTION 5.7 Notice of Adjustments and Certain Other Events..............................................52
SECTION 5.8 Termination Event; Notice...................................................................53
SECTION 5.9 Early Settlement............................................................................54
SECTION 5.10 Early Settlement Upon Cash Merger..........................................................55
SECTION 5.11 Charges and Taxes..........................................................................57
SECTION 5.12 No Fractional Shares.......................................................................58

ARTICLE VI REMEDIES.....................................................................................58

SECTION 6.1 Unconditional Right of Holders to Purchase Common Stock.....................................58
SECTION 6.2 Restoration of Rights and Remedies..........................................................58
SECTION 6.3 Rights and Remedies Cumulative..............................................................59
SECTION 6.4 Delay or Omission Not Waiver................................................................59
SECTION 6.5 Undertaking for Costs.......................................................................59
SECTION 6.6 Waiver of Stay or Extension Laws............................................................59

ARTICLE VII THE AGENT...................................................................................60

SECTION 7.1 Certain Duties and Responsibilities.........................................................60
SECTION 7.2 Notice of Default...........................................................................61
SECTION 7.3 Certain Rights of Agent.....................................................................61
SECTION 7.4 Not Responsible for Recitals or Issuance of Units...........................................62
SECTION 7.5 May Hold Units..............................................................................62
SECTION 7.6 Money Held in Custody.......................................................................62
SECTION 7.7 Compensation and Reimbursement..............................................................62
SECTION 7.8 Corporate Agent Required; Eligibility.......................................................63
SECTION 7.9 Resignation and Removal; Appointment of Successor...........................................63
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SECTION 7.10 Acceptance of Appointment by Successor.....................................................65
SECTION 7.11 Merger, Conversion, Consolidation or Succession to Business................................65
SECTION 7.12 Preservation of Information................................................................66
SECTION 7.13 No Obligations of Agent....................................................................66
SECTION 7.14 Tax Compliance.............................................................................66

ARTICLE VIII SUPPLEMENTAL AGREEMENTS....................................................................67

SECTION 8.1 Supplemental Agreements Without Consent of Holders..........................................67
SECTION 8.2 Supplemental Agreements with Consent of Holders.............................................67
SECTION 8.3 Execution of Supplemental Agreements........................................................68
SECTION 8.4 Effect of Supplemental Agreements...........................................................69
SECTION 8.5 Reference to Supplemental Agreements........................................................69

ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE....................................................69

SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey Property Except
                Under Certain Conditions................................................................69
SECTION 9.2 Rights and Duties of Successor Corporation..................................................70
SECTION 9.3 Opinion of Counsel Given to Agent...........................................................70

ARTICLE X COVENANTS.....................................................................................70

SECTION 10.1 Performance Under Purchase Contracts.......................................................70
SECTION 10.2 Maintenance of Office or Agency............................................................71
SECTION 10.3 Company to Reserve Common Stock............................................................71
SECTION 10.4 Covenants as to Common Stock...............................................................71
SECTION 10.5 Statements of Officer of the Company as to Default.........................................72

EXHIBITS

EXHIBIT A.........Form of Normal Units Certificate
EXHIBIT B.........Form of Stripped Units Certificate
EXHIBIT C.........Instruction from Purchase Contract Agent to Collateral Agent
EXHIBIT D.........Instruction to Purchase Contract Agent
EXHIBIT E.........Notice to Settle by Separate Cash
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                                       iii
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                  PURCHASE CONTRACT AGREEMENT, dated as of October 30, 2002,
between Household International, Inc., a Delaware corporation (the "Company"),
and The Bank of New York, a New York banking corporation, acting as purchase
contract agent and attorney-in-fact for the Holders of Units from time to time
(the "Agent").

                                    RECITALS

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

                  All things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Company, and to constitute this Agreement a valid
agreement of the Company, in accordance with its terms, have been done.

                                   WITNESSETH:

                  For and in consideration of the premises and the purchase of
the Units by the Holders thereof, it is mutually agreed as follows:

                                    ARTICLE I

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

                  SECTION 1.1 Definitions.

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

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

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

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

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                  (d) the following terms have the meanings given to them in
         this Section 1.1(d):

                  "Act" when used with respect to any Holder, has the meaning
         specified in Section 1.4(a).

                  "Affiliate" has the same meaning as given to that term in Rule
         405 of the Securities Act or any successor rule thereunder.

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

                  "Agent-purchased Treasury Consideration" has the meaning
         specified in Section 5.4(b)(i).

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

                  "Applicable Market Value" has the meaning specified in Section
         5.1(c).

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

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

                  "Board of Directors" means either the Board of Directors of
         the Company or the executive committee of such Board of Directors or
         any other committee of such Board of Directors duly authorized to act
         generally or in any particular respect for the Board of Directors
         hereunder.

                  "Board Resolution" means (i) a copy of a resolution certified
         by the Secretary or the Assistant Secretary of the Company to have been
         duly adopted by the Board of Directors and to be in full force and
         effect on the date of such certification, (ii) a copy of a unanimous
         written consent of the Board of Directors or (iii) a certificate signed
         by the authorized officer or officers to whom the Board of Directors
         has delegated its authority, and in each case, delivered to the Agent.

                                       2
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                  "Book-Entry Interest" means a beneficial interest in a Global
         Certificate, ownership and transfers of which shall be maintained and
         made through book entries by a Clearing Agency as described in Section
         3.6.

                  "Business Day" means any day that is not a Saturday, Sunday or
         day on which banking institutions and trust companies in The City of
         New York or in the city where the principal corporate trust office of
         the Collateral Agent is located or at a place of payment are authorized
         or required by law, regulation or executive order to close.

                  "Capital Stock" means any and all shares, interests, rights to
         purchase, warrants, options, participations or other equivalents of or
         interests in (however designated, whether voting or non-voting)
         corporate stock or similar interests in other types of entities.

                  "Cash Merger" has the meaning set forth in Section 5.10(a).

                  "Cash Merger Date" means the date on which a Cash Merger is
         consummated.

                  "Cash Settlement" has the meaning set forth in Section 5.4(a).

                  "Certificate" means a Normal Units Certificate or a Stripped
         Units Certificate.

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

                  "Clearing Agency Participant" means a broker, dealer, bank,
         trust company, clearing corporation, other financial institution or
         other Person for whom from time to time the Clearing Agency effects
         book-entry transfers and pledges of securities deposited with the
         Clearing Agency.

                  "Closing Price" has the meaning specified in Section 5.1(c).

                  "Collateral" has the meaning specified in Section 2.1(a) of
         the Pledge Agreement.

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

                                       3
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                  "Collateral Substitution" has the meaning specified in Section
         3.13(a).

                  "Common Stock" means the Common Stock, par value $1 per share,
         of the Company.

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

                  "Constituent Person" has the meaning specified in Section
         5.6(b).

                  "Corporate Trust Office" means the office of the Agent at
         which, at any particular time, its corporate trust business shall be
         principally administered, which office at the date hereof is located at
         Suite 1020, 2 North LaSalle Street, Chicago, Illinois 60602, Attention:
         Corporate Trust Administration.

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

                  "Current Market Price" has the meaning specified in Section
         5.6(a)(8).

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

                  "Default" means a default by the Company in any of its
         obligations under this Agreement.

                  "Depositary" means, initially, DTC, until another Clearing
         Agency becomes its successor.

                  "DTC" means The Depository Trust Company, the initial Clearing
         Agency.

                  "Early Settlement" has the meaning specified in Section
         5.9(a).

                  "Early Settlement Amount" has the meaning specified in Section
         5.9(a).

                  "Early Settlement Date" has the meaning specified in Section
         5.9(a).

                  "Early Settlement Rate" has the meaning specified in Section
         5.9(b).

                                       4
<PAGE>

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

                  "Expiration Date" has the meaning specified in Section 1.4(f).

                  "Expiration Time" has the meaning specified in Section
         5.6(a)(6).

                  "Failed Remarketing" has the meaning specified in Section
         5.4(b)(ii).

                  "Fair Market Value" with respect to securities distributed in
         a Spin-Off means (a) in the case of any Spin-Off that is effected
         simultaneously with an Initial Public Offering of such securities, the
         initial public offering price of those securities and (b) in the case
         of any other Spin-Off, (i) the average of the Sale Price of those
         securities over the first ten Trading Days after the effective date of
         such Spin-Off or (ii) if the Sale Price is required to be defined
         without regard to the price on any Trading Days, the Sale Price as of
         the effective date of such Spin-Off.

                  "First Supplemental Indenture" means the First Supplemental
         Indenture, dated as of October 30, 2002, to the Indenture between
         Household Finance and the Trustee.

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

                  "Holder" means the Person in whose name the Unit evidenced by
         a Normal Units Certificate and/or a Stripped Units Certificate is
         registered in the related Normal Units Register and/or the Stripped
         Units Register, as the case may be.

                  "Household Finance" means Household Finance Corporation, a
         Delaware corporation.

                  "Indenture" means the Indenture for Senior Debt Securities,
         dated as of November 1, 1994 (including Household Finance's Standard
         Multiple-Series Indenture Provisions for Senior Debt Securities, dated
         as of June 1, 1992, incorporated by reference therein), between
         Household Finance and the Trustee, as supplemented by the First
         Supplemental Indenture, pursuant to which the Notes are to be issued,
         as originally executed and delivered and as it may from time to time be
         supplemented or amended by one or more indentures supplemental thereto
         entered into pursuant to the applicable provisions thereof and shall
         include the terms of a particular series established as contemplated
         thereof.

                                       5
<PAGE>

                  "Initial Public Offering" with respect to a Spin-Off means the
         first time securities of the same class or type as the securities being
         distributed in such Spin-Off are bona fide offered to the public for
         cash.

                  "Issuer Order" or "Issuer Request" means a written order or
         request signed in the name of the Company by the Chief Executive
         Officer, the Chief Financial Officer, the President, any
         Vice-President, the Treasurer, any Assistant Treasurer, the Secretary
         or any Assistant Secretary (or other officer performing similar
         functions) of the Company and delivered to the Agent.

                  "Last Failed Remarketing" has the meaning specified in Section
         5.4(b)(ii).

                  "Merger Early Settlement" has the meaning specified in Section
         5.10(a).

                  "Merger Early Settlement Amount" has the meaning specified in
         Section 5.10(b).

                  "Merger Early Settlement Date" has the meaning specified in
         Section 5.10(a)(i).

                  "Non-electing Share" has the meaning specified in Section
         5.6(b).

                  "Normal Unit" means the collective rights and obligations of a
         Holder of a Normal Units Certificate in respect of a Note or the
         appropriate Treasury Consideration, as the case may be, subject in each
         case to the Pledge thereof, and the related Purchase Contract.

                  "Normal Units Certificate" means a certificate evidencing the
         rights and obligations of a Holder in respect of the number of Normal
         Units specified on such certificate, substantially in the form of
         Exhibit A hereto.

                  "Normal Units Register" and "Normal Units Registrar" have the
         respective meanings specified in Section 3.5(a).

                  "Notes" means the 8.875% Senior Notes due February 15, 2008 of
         Household Finance issued under the Indenture.

                  "NYSE" has the meaning specified in Section 5.1(c).

                  "Officers' Certificate" means a certificate signed by the
         Chief Executive Officer, the Chief Financial Officer, the President or
         any Vice-President, and by the Treasurer, any Assistant Treasurer, the
         Secretary or any Assistant Secretary (or other officer performing
         similar functions) of the Company and delivered to the Agent.

                                       6
<PAGE>

                  "Opinion of Counsel" means an opinion in writing signed by
         legal counsel, who may be an employee of or counsel to the Company or
         an Affiliate of the Company and who shall be reasonably acceptable to
         the Agent.

                  "Opt-out Treasury Consideration" has the meaning specified in
         Section 5.4(b)(iv).

                  "Outstanding Units" means, as of the date of determination,
         all Normal Units or Stripped Units evidenced by Certificates
         theretofore authenticated, executed and delivered under this Agreement,
         except:

                           (i) If a Termination Event has occurred, (A) Stripped
                  Units and (B) Normal Units for which the related Notes or the
                  appropriate Treasury Consideration, as the case may be, has
                  been theretofore deposited with the Agent in trust for the
                  Holders of such Normal Units;

                           (ii) Normal Units and Stripped Units evidenced by
                  Certificates theretofore cancelled by the Agent or delivered
                  to the Agent for cancellation or deemed cancelled pursuant to
                  the provisions of this Agreement; and

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

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

                  "Payment Date" means each February 15, May 15, August 15 and
         November 15, commencing February 15, 2003 and ending on February 15,
         2006.

                                       7
<PAGE>

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

                  "Pledge" means the pledge under the Pledge Agreement of the
         Notes, the Treasury Securities or the appropriate Treasury
         Consideration, in each case constituting a part of the Units, property,
         cash, securities, financial assets and security entitlements of the
         Collateral Account (as defined in the Pledge Agreement) and any
         proceeds of any of the foregoing.

                  "Pledge Agreement" means the Pledge Agreement, dated as of the
         date hereof, by and among the Company, the Collateral Agent, the
         Custodial Agent, the Securities Intermediary and the Agent, on its own
         behalf and as attorney-in-fact for the Holders from time to time of the
         Units.

                  "Pledged Notes" has the meaning set forth in Section 2.1(c) of
         the Pledge Agreement.

                  "Pledged Treasury Consideration" has the meaning set forth in
         Section 2.1(c) of the Pledge Agreement.

                  "Pledged Treasury Securities" has the meaning set forth in
         Section 2.1(c) of the Pledge Agreement.

                  "Predecessor Certificate" means a Predecessor Normal Units
         Certificate or a Predecessor Stripped Units Certificate.

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

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

                                       8
<PAGE>

                  "Purchase Contract," when used with respect to any Unit, means
         the contract forming a part of such Unit and obligating the Company to
         sell and the Holder of such Unit to purchase shares of Common Stock on
         the terms and subject to the conditions set forth in Article Five.

                  "Purchase Contract Settlement Fund" has the meaning specified
         in Section 5.5.

                  "Purchase Price" has the meaning specified in Section 5.1(a).

                  "Purchased Shares" has the meaning specified in Section
         5.6(a)(6).

                  "Quotation Agent" means Goldman, Sachs & Co. or any of its
         successors or any other primary U.S. government securities dealer in
         New York City selected by the Company.

                  "Record Date" for the payment of a distribution payable on any
         Payment Date means, as to any Global Certificate, the Business Day next
         preceding such Payment Date, and as to any other Certificate, the 15th
         calendar day preceding such Payment Date.

                  "Redemption Price" means, for each Note, the product of (i)
         the principal amount of such Note and (ii) a fraction whose numerator
         is the applicable Treasury Portfolio Purchase Price and whose
         denominator is the applicable Tax Event Redemption Principal Amount.

                  "Register" means the Normal Units Register and the Stripped
         Units Register, as applicable.

                  "Registrar" means the Normal Units Registrar and the Stripped
         Units Registrar, as applicable.

                  "Remarketing Agent" has the meaning specified in Section
         5.4(b)(i).

                  "Remarketing Agreement" means the Remarketing Agreement to be
         entered into by and among the Company, Household Finance, the
         Remarketing Agent and the Agent.

                  "Remarketing Date" means the third Business Day preceding
         November 15, 2005.

                  "Remarketing Fee" has the meaning specified in Section
         5.4(b)(i).

                  "Remarketing Period" means each of (i) the three Business Day
         period beginning on the Remarketing Date and ending after the two
         immediately following Business Days; (ii) the three Business Day period
         immediately

                                       9
<PAGE>

         preceding December 15, 2005; and (iii) the third Business Day
         immediately preceding the Stock Purchase Date.

                  "Remarketing Rate" means the percentage rate per year at which
         each Note will bear interest on and following the Reset Date.

                  "Remarketing Value" means the sum of

                           (i) the value at the Remarketing Date or any
                  Subsequent Remarketing Date, as the case may be, of U.S.
                  Treasury securities that will pay, on or prior to the Stock
                  Purchase Date, an amount of cash equal to the interest payment
                  scheduled to be payable on that date on the Note, assuming for
                  that purpose, even if not true, that the interest rate on the
                  Note is equal to the Coupon Rate, and

                           (ii) the value at the Remarketing Date or any
                  Subsequent Remarketing Date, as the case may be, of U.S.
                  Treasury securities that will pay, on or prior to the Stock
                  Purchase Date, an amount of cash equal to the Stated Amount of
                  such Note;

         provided that for purposes of clauses (i) and (ii) above, the
         Remarketing Value shall be calculated on the assumptions that (x) the
         U.S. Treasury securities are highly liquid and mature on or within 35
         days prior to the Stock Purchase Date, as determined in good faith by
         the Remarketing Agent in a manner intended to minimize the cash value
         of the U.S. Treasury securities, and (y) the U.S. Treasury securities
         are valued based on the ask-side price of such U.S. Treasury securities
         at a time between 9:00 a.m. and 11:00 a.m., New York City time,
         selected by the Remarketing Agent, on the Remarketing Date or any
         Subsequent Remarketing Date, as the case may be, as determined on a
         third-day settlement basis by a reasonable and customary means selected
         in good faith by the Remarketing Agent, plus accrued interest to that
         date.

                  "Reorganization Event" has the meaning specified in Section
         5.6(b).

                  "Reset Date" means the date following the Remarketing Date or
         a Subsequent Remarketing Date, as applicable, on which the trades in a
         successful remarketing of the Notes, pursuant to the provisions of
         Section 5.4, settle.

                  "Responsible Officer" means, when used with respect to the
         Agent, any officer within the Corporate Finance Unit of the Corporate
         Trust Division of the Agent (or any successor unit or department of the
         Agent) located at the Corporate Trust Office of the Agent who has
         direct responsibility for the administration of this Agreement and, for
         the purposes of Section 7.1(b)(2), shall also include any officer of
         the Agent to whom any corporate trust matter is referred because of
         such person's knowledge of and familiarity with the particular subject.

                                       10
<PAGE>

                  "Sale Price" of any securities distributed in a Spin-Off on
         any Trading Day means the closing sale price per share (or if no
         closing sale price is reported, the average of the bid and ask prices
         or, if more than one in either case, the average of the average bid and
         average ask prices) on such Trading Day as reported in composite
         transactions for the principal U.S. securities exchange on which such
         securities are traded or, if such securities are not listed on a U.S.
         national or regional securities exchange, as reported by The Nasdaq
         Stock Market, or if such securities are not so reported, the last
         quoted bid price for such securities in the over-the-counter market as
         reported by the National Quotation Bureau or similar organization, or,
         if such bid price is not available, the market value of such securities
         on such date as determined by a nationally recognized independent
         investment banking firm retained by the Company for this purpose.

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

                  "Securities Intermediary" means JPMorgan Chase Bank, a New
         York banking corporation, in its capacity as Securities Intermediary
         under the Pledge Agreement, together with its successors in such
         capacity.

                  "Separate Notes" has the meaning set forth in the Pledge
         Agreement.

                  "Settlement Date" means any Early Settlement Date or Merger
         Early Settlement Date or the Stock Purchase Date.

                  "Settlement Rate" has the meaning specified in Section 5.1(a).

                  "Stock Purchase Date" means February 15, 2006.

                  "Spin-Off" means a dividend or other distribution on the
         Common Stock or shares of Capital Stock of any class or series, or
         similar equity interests, of or relating to a subsidiary or other
         business unit of the Company.

                  "Stated Amount" means, with respect to any one Normal Unit,
         Stripped Unit or Note, $25.

                  "Stripped Unit" means the collective rights and obligations of
         a Holder of a Stripped Units Certificate in respect of a 1/40 undivided
         beneficial interest in a Treasury Security, subject to the Pledge
         thereof, and the related Purchase Contract.

                  "Stripped Units Certificate" means a certificate evidencing
         the rights and obligations of a Holder in respect of the number of
         Stripped Units specified on such certificate, substantially in the form
         of Exhibit B hereto.

                                       11
<PAGE>

                  "Stripped Units Register" and "Stripped Units Registrar" have
         the respective meanings specified in Section 3.5(a).

                  "Subsequent Remarketing" has the meaning specified in Section
         5.4(b)(ii).

                  "Subsequent Remarketing Date" means any date during any
         Remarketing Period on which the Remarketing Agent attempts a Subsequent
         Remarketing in accordance with Section 5.4 hereof.

                  "Tax Event" means the receipt by the Company of an opinion of
         a nationally recognized tax counsel experienced in such matters to the
         effect that there is more than an insubstantial risk that interest
         payable by Household Finance on the Notes on the next Payment Date will
         not be deductible, in whole or in part, by Household Finance for United
         States federal income tax purposes, as a result of (a) any amendment
         to, or change (including any announced proposed change) in, the laws
         (or any regulations thereunder) of the United States or any political
         subdivision or taxing authority thereof or therein affecting taxation,
         (b) any amendment to or change in an official interpretation or
         application of such laws or regulations by any legislative body, court,
         governmental agency or regulatory authority or (c) any official
         interpretation, pronouncement or application that provides for a
         position with respect to such laws or regulations that differs from the
         generally accepted position on October 24, 2002, which amendment,
         change or proposed change is effective or which interpretation or
         pronouncement is announced on or after October 24, 2002.

                  "Tax Event Redemption" means, if a Tax Event shall occur and
         be continuing, the redemption of the Notes, at the option of Household
         Finance, in whole but not in part, on not less than 30 days nor more
         than 60 days' prior written notice.

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

                  "Tax Event Redemption Principal Amount" means (i) in the case
         of a Tax Event Redemption Date occurring prior to a successful
         remarketing of the Notes pursuant to Section 5.4 hereof, the aggregate
         principal amount of Notes included in Normal Units outstanding on such
         date, and (ii) in the case of a Tax Event Redemption Date occurring
         after either a successful remarketing of the Notes pursuant to Section
         5.4 hereof or the Stock Purchase Date, the aggregate principal amount
         of the Notes outstanding on such date.

                  "Tax Event Redemption Treasury Consideration" means, with
         respect to a Normal Unit and the U.S. Treasury securities in the
         Treasury Portfolio, (A) a 1/40, or 2.5%, undivided beneficial ownership
         interest in a $1,000 principal or interest amount of a principal or
         interest strip in a U.S. Treasury security included in such Treasury
         Portfolio which matures on or prior to the Stock Purchase Date

                                       12
<PAGE>

         and (B) for each scheduled interest Payment Date on the Notes that
         occurs after the Tax Event Redemption Date and on or before the Stock
         Purchase Date a 2.1875% undivided beneficial ownership interest in a
         $1,000 principal or interest of a principal or interest strip in a U.S.
         Treasury security included in the Treasury Portfolio that matures on or
         prior to that interest Payment Date.

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

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

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

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

                           (iii) at any time on or prior to the Stock Purchase
                  Date, either the Company or Household Finance shall file a
                  petition for relief under the Bankruptcy Code or any other
                  similar foreign, federal or state law, or shall consent to the
                  filing of a bankruptcy proceeding against either of the
                  Company or Household Finance, or shall file a petition or
                  answer or consent seeking reorganization or liquidation under
                  the Bankruptcy Code or any other similar foreign, federal or
                  state law, or shall consent to the filing of any such
                  petition, or shall consent to the appointment of a receiver or
                  liquidator or trustee or assignee in bankruptcy or insolvency
                  of the Company or Household Finance or of the Company's or
                  Household Finance's property substantially in its entirety, or
                  shall make an assignment for the benefit of creditors, or
                  shall admit in writing its inability to pay its debts
                  generally as they become due.

                                       13
<PAGE>

                  "Threshold Appreciation Price" has the meaning specified in
         Section 5.1(a).

                  "TIA" means the Trust Indenture Act of 1939, and any statute
         successor thereto, in each case as amended from time to time, and the
         rules and regulations promulgated thereunder.

                  "Trading Day" has the meaning specified in Section 5.1(c).

                  "Treasury Consideration" means the Agent-purchased Treasury
         Consideration, the Opt-out Treasury Consideration or the Tax Event
         Redemption Treasury Consideration.

                  "Treasury Portfolio" means: (i) if a Tax Event Redemption
         occurs prior to a successful remarketing of the Notes pursuant to the
         provisions of Section 5.4 hereof, a portfolio of (A) zero-coupon U.S.
         Treasury securities consisting of principal or interest strips of U.S.
         Treasury securities that mature on or prior to the Stock Purchase Date
         in an aggregate amount equal to the applicable Tax Event Redemption
         Principal Amount and (B) with respect to each scheduled interest
         Payment Date on the Notes that occurs after the Tax Event Redemption
         Date and on or before the Stock Purchase Date, interest or principal
         strips of U.S. Treasury securities that mature on or prior to such
         interest Payment Date in an aggregate amount equal to the aggregate
         interest payment that would be due on the applicable Tax Event
         Redemption Principal Amount on such date if the interest rate of the
         Notes were not reset on the Reset Date, and (ii) solely for purposes of
         determining the Treasury Portfolio Purchase Price in the case of a Tax
         Event Redemption Date occurring after either of a successful
         remarketing of the Notes or the Stock Purchase Date, a portfolio of (A)
         zero-coupon U.S. Treasury securities consisting of principal or
         interest strips of U.S. Treasury securities that mature on or prior to
         February 15, 2008 in an aggregate amount equal to the applicable Tax
         Event Redemption Principal Amount and (B) with respect to each
         scheduled interest Payment Date on the Notes that occurs after the Tax
         Event Redemption Date and on or before February 15, 2008, interest or
         principal strips of U.S. Treasury securities that mature on or prior to
         such interest Payment Date in an aggregate amount equal to the
         aggregate interest payment that would be due on the applicable Tax
         Event Redemption Principal Amount.

                  "Treasury Portfolio Purchase Price" means the lowest aggregate
         price quoted by a primary U.S. government securities dealer in New York
         City to the Quotation Agent on the third Business Day immediately
         preceding the Tax Event Redemption Date for the purchase of the
         Treasury Portfolio for settlement on the Tax Event Redemption Date.

                  "Treasury Security" means a zero-coupon U.S. Treasury security
         (CUSIP Number 912833CP3) maturing on February 15, 2006 that will pay
         $1,000 on such maturity date.

                                       14
<PAGE>

                  "Trustee" means The Bank of New York, a New York banking
         corporation, as successor-in-interest to NationsBank of Tennessee as
         trustee under the Indenture, and trustee under the First Supplemental
         Indenture, or any successor thereto.

                  "Underwriting Agreement" means the Underwriting Agreement
         relating to the Units dated October 24, 2002 among the Company,
         Household Finance and Goldman, Sachs & Co.

                  "Unit" means a Normal Unit or a Stripped Unit.

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

                  SECTION 1.2 Compliance Certificates and Opinions.

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

                  Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:

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

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

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

                  (d) a statement as to whether, in the opinion of such
         individual based on his or her knowledge, such condition or covenant
         has been complied with.

                                       15
<PAGE>

                  SECTION 1.3 Form of Documents Delivered to Agent.

                  (a) In any case where several matters are required to be
         certified by, or covered by an opinion of, any specified Person, it is
         not necessary that all such matters be certified by, or covered by the
         opinion of, only one such Person, or that they be so certified or
         covered by only one document, but one such Person may certify or give
         an opinion with respect to some matters and one or more other such
         Persons as to other matters, and any such Person may certify or give an
         opinion as to such matters in one or several documents.

                  (b) Any certificate or opinion of an officer of the Company
         may be based, insofar as it relates to legal matters, upon a
         certificate or opinion of, or representations by, counsel, unless such
         officer knows, or in the exercise of reasonable care should know, that
         the certificate or opinion or representations with respect to the
         matters upon which his certificate or opinion is based are erroneous.
         Any such certificate or Opinion of Counsel may be based, insofar as it
         relates to factual matters, upon a certificate or opinion of, or
         representations by, an officer or officers of the Company stating that
         the information with respect to such factual matters is in the
         possession of the Company unless such counsel knows, or in the exercise
         of reasonable care should know, that the certificate or opinion or
         representations with respect to such matters are erroneous.

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

                  SECTION 1.4 Acts of Holders; Record Dates.

                  (a) Any request, demand, authorization, direction, notice,
         consent, waiver or other action provided by this Agreement to be given
         or taken by Holders may be embodied in and evidenced by one or more
         instruments of substantially similar tenor signed by such Holders in
         person or by an agent duly appointed in writing; and, except as herein
         otherwise expressly provided, such action shall become effective when
         such instrument or instruments are delivered to the Agent and, where it
         is hereby expressly required, to the Company. Such instrument or
         instruments (and the action embodied therein and evidenced thereby) are
         herein sometimes referred to as the "Act" of the Holders signing such
         instrument or instruments. Proof of execution of any such instrument or
         of a writing appointing any such agent shall be sufficient for any
         purpose of this Agreement and (subject to Section 7.1) conclusive in
         favor of the Agent and the Company, if made in the manner provided in
         this Section.

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

                                       16
<PAGE>

                  (c) The ownership of Units shall be proved by the Normal Units
         Register or the Stripped Units Register, as the case may be.

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

                  (e) The Company may set any day as a record date for the
         purpose of determining the Holders of Outstanding Units entitled to
         give, make or take any request, demand, authorization, direction,
         notice, consent, waiver or other action provided or permitted by this
         Agreement to be given, made or taken by Holders of Units. If any record
         date is set pursuant to this paragraph, the Holders of the Outstanding
         Normal Units and the Outstanding Stripped Units, as the case may be, on
         such record date, and no other Holders, shall be entitled to take the
         relevant action with respect to the Normal Units or the Stripped Units,
         as the case may be, whether or not such Holders remain Holders after
         such record date; provided that no such action shall be effective
         hereunder unless taken on or prior to the applicable Expiration Date by
         Holders of the requisite number of Outstanding Units on such record
         date. Nothing in this paragraph shall be construed to prevent the
         Company from setting a new record date for any action for which a
         record date has previously been set pursuant to this paragraph
         (whereupon the record date previously set shall automatically and with
         no action by any Person be cancelled and of no effect), and nothing in
         this paragraph shall be construed to render ineffective any action
         taken by Holders of the requisite number of Outstanding Units on the
         date such action is taken. Promptly after any record date is set
         pursuant to this paragraph, the Company, at its own expense, shall
         cause notice of such record date, the proposed action by Holders and
         the applicable Expiration Date to be given to the Agent in writing and
         to each Holder of Units in the manner set forth in Section 1.6.

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

                                       17
<PAGE>

         foregoing, no Expiration Date shall be later than the 180th day after
         the applicable record date.

                  SECTION 1.5 Notices.

                  Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Agreement to be made upon, given or furnished to, or filed with:

                  (a) the Agent by any Holder or by the Company shall be
         sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if made, given, furnished or filed in writing and
         personally delivered, mailed, first-class postage prepaid, telecopied
         or delivered by overnight air courier guaranteeing next day delivery,
         addressed to and received by the Agent at The Bank of New York, Suite
         1020, 2 North LaSalle Street, Chicago, Illinois 60602, Attention:
         Corporate Trust Administration, telecopy: (312) 827-8542, or at any
         other address furnished in writing by the Agent to the Holders and the
         Company; or

                  (b) the Company by the Agent or by any Holder shall be
         sufficient for every purpose hereunder (unless otherwise herein
         expressly provided) if made, given, furnished or filed in writing and
         personally delivered, mailed, first-class postage prepaid, telecopied
         or delivered by overnight air courier guaranteeing at least second day
         delivery, addressed to and received by the Company at 2700 Sanders
         Road, Prospect Heights, Illinois 60070, Attention: Treasurer, telecopy:
         (847) 205-7538, or at any other address furnished in writing to the
         Agent by the Company; or

                  (c) the Collateral Agent by the Agent, the Company or any
         Holder shall be sufficient for every purpose hereunder (unless
         otherwise herein expressly provided) if made, given, furnished or filed
         in writing and personally delivered, mailed, first-class postage
         prepaid, telecopied or delivered by overnight air courier guaranteeing
         next day delivery, addressed to and received by the Collateral Agent at
         JPMorgan Chase Bank, 4 New York Plaza, 15th Floor, New York, New York
         10004, Attention: Institutional Trust Services, telecopy: (212)
         623-6167, or at any other address furnished in writing by the
         Collateral Agent to the Agent, the Company and the Holders; or

                  (d) the Trustee by the Company shall be sufficient for every
         purpose hereunder (unless otherwise herein expressly provided) if made,
         given, furnished or filed in writing and personally delivered, mailed,
         first-class postage prepaid, telecopied or delivered by overnight air
         courier guaranteeing next day delivery, addressed to and received by
         the Trustee at The Bank of New York, Suite 1020, 2 North LaSalle
         Street, Chicago, Illinois 60602, Attention: Corporate Trust
         Administration, telecopy: (312) 827-8542, or at any other address
         furnished in writing by the Trustee to the Company.

                                       18
<PAGE>

                  SECTION 1.6 Notice to Holders; Waiver.

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

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

                  SECTION 1.7 Effect of Headings and Table of Contents.

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

                  SECTION 1.8 Successors and Assigns.

                  All covenants and agreements in this Agreement by the Company
shall bind its successors and assigns, whether so expressed or not.

                  SECTION 1.9 Separability Clause.

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

                  SECTION 1.10 Benefits of Agreement.

                  Nothing in this Agreement or in the Units, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or

                                       19
<PAGE>
claim under this Agreement. The Holders from time to time shall be beneficiaries
of this Agreement and shall be bound by all of the terms and conditions hereof
and of the Units evidenced by their Certificates by their acceptance of delivery
of such Certificates.

                  SECTION 1.11 Governing Law.

                  (a) This Agreement and the Units shall be governed by, deemed
to be a contract under, and construed in accordance with, the laws of the State
of New York (including without limitation Section 5-1401 of the New York General
Obligations Law or any successor to such statute), and (by their acceptance of
the Units) the Holders agree to submit to the non-exclusive jurisdiction of any
United States federal or state court located in the Borough of Manhattan, in
the City of New York, in any action or proceeding arising out of or relating to
this Agreement or the Units.

                   (b) The Agent and the Company hereby knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under or in connection with,
this Agreement or any course of conduct, course of dealing, statements (whether
oral or written) or actions of the Agent or the Company relating thereto. The
Company acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Agent and the Holders entering into this Agreement.

                  SECTION 1.12 Legal Holidays.

                  (a) In any case where any Payment Date shall not be a Business
         Day, then (notwithstanding any other provision of this Agreement or the
         Normal Units Certificates) payments on the Notes shall not be made on
         such date, but such payments shall be made on the next succeeding day
         which is a Business Day with the same force and effect as if made on
         such Payment Date, provided that no interest shall accrue or be payable
         by the Company in respect of such payment for the period from and after
         any such Payment Date, except that if such next succeeding Business Day
         is in the next succeeding calendar year, such payment shall be made on
         the immediately preceding Business Day with the same force and effect
         as if made on such Payment Date.

                  (b) Intentionally omitted.

                  (c) In any case where the Stock Purchase Date shall not be a
         Business Day, then (notwithstanding any other provision of this
         Agreement or the Certificates), the Purchase Contracts shall not be
         performed on such date, but the Purchase Contracts shall be performed
         on the next succeeding day which is a Business Day with the same force
         and effect as if performed on the Stock Purchase Date.

                  SECTION 1.13 Counterparts.

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

                  SECTION 1.14 Inspection of Agreement.

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

                                       20
<PAGE>

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

                  The Company may appoint a financial institution (which may be
the Collateral Agent) to act as its agent in performing its obligations and in
accepting and enforcing performance of the obligations of the Agent and the
Holders, under this Agreement and the Purchase Contracts, by giving notice of
such appointment in the manner provided in Section 1.5 hereof. Any such
appointment shall not relieve the Company in any way from its obligation
hereunder.

                  SECTION 1.16 No Waiver.

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

                                   ARTICLE II

                                CERTIFICATE FORMS

                  SECTION 2.1 Forms of Certificates Generally.

                  (a) The Normal Units Certificates (including the form of
         Purchase Contract forming part of the Normal Units evidenced thereby)
         shall be in substantially the form set forth in Exhibit A hereto, with
         such letters, numbers or other marks of identification or designation
         and such legends or endorsements printed, lithographed or engraved
         thereon as may be required by the rules of any securities exchange or
         quotation system on which the Normal Units are listed or quoted for
         trading or any depositary therefor, or as may, consistently herewith,
         be determined by the officers of the Company executing such Normal
         Units Certificates, as evidenced by their execution of the Normal Units
         Certificates.

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

                  (c) The Stripped Units Certificates (including the form of
         Purchase Contracts forming part of the Stripped Units evidenced
         thereby) shall be in substantially the form set forth in Exhibit B
         hereto, with such letters, numbers or

                                       21
<PAGE>

         other marks of identification or designation and such legends or
         endorsements printed, lithographed or engraved thereon as may be
         required by the rules of any securities exchange or the quotation
         system on which the Stripped Units may be listed or quoted for trading
         or any depositary therefor, or as may, consistently herewith, be
         determined by the officers of the Company executing such Stripped Units
         Certificates, as evidenced by their execution of the Stripped Units
         Certificates.

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

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

                  "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
                  OF THE PURCHASE CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE
                  HEREOF) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY
                  OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN
                  WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
                  OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN
                  THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A
                  NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
                  IN THE PURCHASE CONTRACT AGREEMENT.

                  [Unless this Certificate is presented by an authorized
                  representative of the Depository Trust Company (55 Water
                  Street, New York, New York) to the Company or its agent for
                  registration or transfer, exchange or payment, and any
                  Certificate issued is registered in the name of Cede & Co., or
                  such other name as requested by an authorized representative
                  of the Depository Trust Company, and any payment hereon is
                  made to Cede & Co., ANY TRANSFER PLEDGE OR OTHER USE HEREOF OR
                  OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
                  hereof, Cede & Co., has an interest herein.]"

                  SECTION 2.2 Form of Agent's Certificate of Authentication.

                  (a) The form of the Agent's certificate of authentication of
         the Normal Units shall be in substantially the form set forth on the
         form of the Normal Units Certificates.

                                       22
<PAGE>

                  (b) The form of the Agent's certificate of authentication of
         the Stripped Units shall be in substantially the form set forth on the
         form of the Stripped Units Certificates.

                                   ARTICLE III

                                    THE UNITS

                  SECTION 3.1 Title and Terms; Denominations.

                  (a) The aggregate number of Normal Units and Stripped Units,
         if any, evidenced by Certificates authenticated, executed on behalf of
         the Holders and delivered hereunder is limited to 20,000,000
         (23,000,000 if the underwriter's option to purchase additional Normal
         Units pursuant to the Underwriting Agreement is exercised in full),
         except for Certificates authenticated, executed on behalf of the Holder
         and delivered upon registration of transfer of, in exchange for, or in
         lieu of, other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13,
         3.14, 5.9(e), 5.10(e) or 8.5.

                  (b) The Certificates shall be issuable only in registered form
         and only in denominations of a single Unit and any integral multiple
         thereof.

                  SECTION 3.2 Rights and Obligations Evidenced by the
Certificates.

                  (a) Each Normal Units Certificate shall evidence the number of
         Normal Units specified therein, with each such Normal Unit representing
         the ownership by the Holder thereof of a Note or the appropriate
         Treasury Consideration, as the case may be, subject to the Pledge of
         the Note or such Treasury Consideration, as the case may be, by such
         Holder pursuant to the Pledge Agreement, and the rights and obligations
         of the Holder thereof and the Company under one Purchase Contract. The
         Agent as attorney-in-fact for, and on behalf of, the Holder of each
         Normal Unit shall pledge, pursuant to the Pledge Agreement, the Note or
         the Treasury Consideration forming a part of such Normal Unit, to the
         Collateral Agent and grant to the Collateral Agent a security interest
         in the right, title, and interest of such Holder in the Note or
         Treasury Consideration for the benefit of the Company, to secure the
         obligation of such Holder under the related Purchase Contract to
         purchase shares of Common Stock of the Company.

                  (b) Each Stripped Units Certificate shall evidence the number
         of Stripped Units specified therein, with each such Stripped Unit
         representing the ownership by the Holder thereof of a 1/40 undivided
         beneficial interest in a Treasury Security, subject to the Pledge of
         such interest in such Treasury Security by such Holder pursuant to the
         Pledge Agreement, and the rights and obligations of the Holder thereof
         and the Company under one Purchase Contract. The Agent as
         attorney-in-fact for, and on behalf of, the Holder of each Stripped
         Unit shall

                                       23
<PAGE>

         pledge, pursuant to the Pledge Agreement, the interest in the Treasury
         Security forming a part of such Stripped Unit, to the Collateral Agent
         and grant to the Collateral Agent a security interest in the right,
         title, and interest of such Holder in such interest in the Treasury
         Security for the benefit of the Company, to secure the obligation of
         such Holder under the related Purchase Contract to purchase shares of
         Common Stock of the Company.

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

                  SECTION 3.3 Execution, Authentication, Delivery and Dating.

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

                  (b) The Certificates shall be executed on behalf of the
         Company by the Chief Executive Officer, the Chief Financial Officer,
         the President, any Vice-President, the Treasurer, any Assistant
         Treasurer, the Secretary or any Assistant Secretary (or other officer
         performing similar functions) of the Company and delivered to the
         Agent. The signature of any of these officers on the Certificates may
         be manual or facsimile.

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

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

                  (e) Each Certificate shall be dated the date of its
         authentication.

                                       24
<PAGE>

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

                  SECTION 3.4 Temporary Certificates.

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

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

                  SECTION 3.5 Registration; Registration of Transfer and
         Exchange.

                  (a) The Agent shall keep at the Corporate Trust Office a
         register (the "Normal Units Register") in which, subject to such
         reasonable regulations as it may prescribe, the Agent shall provide for
         the registration of Normal Units Certificates and of transfers of
         Normal Units Certificates (the Agent, in such capacity, the "Normal
         Units Registrar") and a register (the "Stripped Units Register") in
         which, subject to such reasonable regulations as it may prescribe, the

                                       25
<PAGE>

         Agent shall provide for the registration of the Stripped Units
         Certificates and transfers of Stripped Units Certificates (the Agent,
         in such capacity, the "Stripped Units Registrar").

                  (b) Upon surrender for registration of transfer of any
         Certificate at the Corporate Trust Office, the Company shall execute
         and deliver to the Agent, and the Agent shall authenticate, execute on
         behalf of the designated transferee or transferees, and deliver one or
         more new Certificates of like tenor and denominations, registered in
         the name of the designated transferee or transferees, and evidencing a
         like number of Normal Units or Stripped Units, as the case may be.

                  (c) At the option of the Holder, Certificates may be exchanged
         for other Certificates, of like tenor and denominations and evidencing
         a like number of Normal Units or Stripped Units, as the case may be,
         upon surrender of the Certificates to be exchanged at the Corporate
         Trust Office. Whenever any Certificates are so surrendered for
         exchange, the Company shall execute and deliver to the Agent, and the
         Agent shall authenticate, execute on behalf of the Holder, and deliver
         the Certificates which the Holder making the exchange is entitled to
         receive.

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

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

                  (f) No service charge shall be made for any registration of
         transfer or exchange of a Certificate, but the Company and the Agent
         may require payment from the Holder of a sum sufficient to cover any
         tax or other governmental charge that may be imposed in connection with
         any registration of transfer or exchange of Certificates, other than
         any exchanges pursuant to Sections 3.6, 3.9 and 8.5 not involving any
         transfer.

                  (g) Notwithstanding the foregoing, the Company shall not be
         obligated to execute and deliver to the Agent, and the Agent shall not
         be obligated to authenticate, execute on behalf of the Holder and
         deliver, any Certificate presented or surrendered for registration of
         transfer or for exchange on or after the Business Day immediately
         preceding the earlier of the Stock Purchase Date or the

                                       26
<PAGE>

         Termination Date. In lieu of delivery of a new Certificate, upon
         satisfaction of the applicable conditions specified above in this
         Section and receipt of appropriate registration or transfer
         instructions from such Holder, the Agent shall,

                           (i) if the Stock Purchase Date has occurred, deliver
                  the shares of Common Stock issuable in respect of the Purchase
                  Contracts forming a part of the Units evidenced by such
                  Certificate,

                           (ii) in the case of Normal Units, if a Termination
                  Event shall have occurred prior to the Stock Purchase Date,
                  transfer the Notes or the appropriate Treasury Consideration,
                  as applicable, relating to such Normal Units, or

                           (iii) in the case of Stripped Units, if a Termination
                  Event shall have occurred prior to the Stock Purchase Date,
                  transfer the Treasury Securities relating to such Stripped
                  Units,

         in each case subject to the applicable conditions and in accordance
         with the applicable provisions of Article V.

                  SECTION 3.6 Book-Entry Interests.

                  The Certificates, on original issuance, will be issued in the
form of one or more fully registered Global Certificates, to be delivered to the
Depositary or a nominee or custodian thereof by, or on behalf of, the Company.
Such Global Certificate shall initially be registered on the books and records
of the Company in the name of Cede & Co., the nominee of the Depositary, and no
Beneficial Owner will receive a definitive Certificate representing such
Beneficial Owner's interest in such Global Certificate, except as provided in
Section 3.9. The Agent shall enter into a customary agreement with the
Depositary if so requested by the Company. Unless and until definitive, fully
registered Certificates have been issued to Beneficial Owners pursuant to
Section 3.9:

                  (a) the provisions of this Section 3.6 shall be in full force
         and effect;

                  (b) the Company and the Agent shall be entitled to deal with
         the Clearing Agency for all purposes of this Agreement (including
         receiving approvals, votes or consents hereunder) as the Holder of the
         Units and the sole holder of the Global Certificate(s) and shall have
         no obligation to the Beneficial Owners;

                  (c) to the extent that the provisions of this Section 3.6
         conflict with any other provisions of this Agreement or any
         Certificate, the provisions of this Section 3.6 shall control; and

                  (d) the rights of the Beneficial Owners shall be exercised
         only through the Clearing Agency and shall be limited to those
         established by law and

                                       27
<PAGE>

         agreements between such Beneficial Owners and the Clearing Agency
         and/or the Clearing Agency Participants.

                  The Clearing Agency will make book-entry transfers among
Clearing Agency Participants.

                  SECTION 3.7 Notices to Holders.

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

                  SECTION 3.8 Appointment of Successor Clearing Agency.

                  If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Units, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Units.

                  SECTION 3.9 Definitive Certificates.

                  If

                           (i) a Clearing Agency notifies the Company that it is
                  unwilling or unable to continue its services as securities
                  depositary with respect to the Units and a successor Clearing
                  Agency is not appointed within 90 days after such
                  discontinuance pursuant to Section 3.8,

                           (ii) the Company elects to terminate the book-entry
                  system arrangements through the Clearing Agency with respect
                  to the Units, or

                           (iii) there shall have occurred and be continuing a
                  default by the Company in respect of its obligations under one
                  or more Purchase Contracts,

then upon surrender of the Global Certificates representing the Book-Entry
Interests with respect to the Units by the Clearing Agency, accompanied by
registration instructions, the Company shall cause definitive Certificates to be
delivered to Beneficial Owners in accordance with the instructions of the
Clearing Agency. The Company shall not be liable for any delay in delivery of
such instructions and may conclusively rely on and shall be protected in relying
on, such instructions.

                                       28
<PAGE>

                  SECTION 3.10 Mutilated, Destroyed, Lost and Stolen
Certificates.

                  (a) If any mutilated Certificate is surrendered to the Agent,
         the Company shall execute and deliver to the Agent, and the Agent shall
         authenticate, execute on behalf of the Holder, and deliver in exchange
         therefor, a new Certificate at the cost of the Holder, evidencing the
         same number of Normal Units or Stripped Units, as the case may be, and
         bearing a Certificate number not contemporaneously outstanding.

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

                  (c) Notwithstanding the foregoing, the Company shall not be
         obligated to execute and deliver to the Agent, and the Agent shall not
         be obligated to authenticate, execute on behalf of the Holder, and
         deliver to the Holder, a Certificate on or after the Business Day
         immediately preceding the earlier of the Stock Purchase Date or the
         Termination Date. In lieu of delivery of a new Certificate, upon
         satisfaction of the applicable conditions specified above in this
         Section and receipt of appropriate registration or transfer
         instructions from such Holder, the Agent shall

                           (i) if the Stock Purchase Date has occurred, deliver
                  the shares of Common Stock issuable in respect of the Purchase
                  Contracts forming a part of the Units evidenced by such
                  Certificate,

                           (ii) in the case of Normal Units, if a Termination
                  Event shall have occurred prior to the Stock Purchase Date,
                  transfer the Notes or the appropriate Treasury Consideration,
                  as applicable, relating to such Normal Units, or

                           (iii) in the case of Stripped Units, if a Termination
                  Event shall have occurred prior to the Stock Purchase Date,
                  transfer the Treasury Securities relating to such Stripped
                  Units,

         in each case subject to the applicable conditions and in accordance
         with the applicable provisions of Article V.

                                       29
<PAGE>

                  (d) Upon the issuance of any new Certificate under this
         Section, the Company and the Agent may require the payment by the
         Holder of a sum sufficient to cover any tax or other governmental
         charge that may be imposed in relation thereto and any other expenses
         (including the fees and expenses of the Agent) connected therewith.

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

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

                  SECTION 3.11 Persons Deemed Owners.

                  (a) Prior to due presentment of a Certificate for registration
         of transfer, the Company and the Agent, and any agent of the Company or
         the Agent, may treat the Person in whose name such Certificate is
         registered on the Register as the owner of the Units evidenced thereby,
         for the purpose of receiving quarterly payments of interest on the
         Notes or the Treasury Consideration, performance of the Purchase
         Contracts and for all other purposes whatsoever, whether or not any
         such payments shall be overdue and notwithstanding any notice to the
         contrary, and neither the Company nor the Agent, nor any agent of the
         Company or the Agent, shall be affected by notice to the contrary.

                  (b) Notwithstanding the foregoing, with respect to any Global
         Certificate, nothing herein shall prevent the Company, the Agent or any
         agent of the Company or the Agent, from treating the Clearing Agency as
         the sole Holder of such Global Certificate or from giving effect to any
         written certification, proxy or other authorization furnished by any
         Clearing Agency (or its nominee), as a Holder of such Global
         Certificate, with respect to such Global Certificate or impair, as
         between such Clearing Agency and owners of beneficial interests in such
         Global Certificate, the operation of customary practices governing the
         exercise of rights of such Clearing Agency (or its nominee) as a Holder
         of such Global Certificate.

                  SECTION 3.12 Cancellation.

                  (a) All Certificates surrendered (i) for delivery of Common
         Stock on or after any Settlement Date; (ii) upon the transfer of Notes
         or Treasury

                                       30
<PAGE>

         Consideration or Treasury Securities, as the case may be, after the
         occurrence of a Termination Event or pursuant to an Early Settlement or
         Merger Early Settlement, or a Collateral Substitution or an
         establishment or re-establishment of a Normal Unit; or (iii) upon the
         registration of a transfer or exchange of a Unit shall, if surrendered
         to any Person other than the Agent, be delivered to the Agent and, if
         not already cancelled, shall be promptly cancelled by it. The Company
         may at any time deliver to the Agent for cancellation any Certificates
         previously authenticated, executed on behalf of the Holder and
         delivered hereunder which the Company may have acquired in any manner
         whatsoever, and all Certificates so delivered shall, upon Issuer Order,
         be promptly cancelled by the Agent. No Certificates shall be
         authenticated, executed on behalf of the Holder and delivered in lieu
         of or in exchange for any Certificates cancelled as provided in this
         Section, except as expressly permitted by this Agreement. All cancelled
         Certificates held by the Agent shall be disposed of by the Agent in
         accordance with its then customary procedures.

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

                  SECTION 3.13 Establishment of Stripped Units.

                  (a) A Holder may separate the Pledged Notes or Pledged
         Treasury Consideration, as applicable, from the related Purchase
         Contracts in respect of the Normal Units held by such Holder by
         substituting for such Pledged Notes or Pledged Treasury Consideration,
         as the case may be, Treasury Securities that will pay at the Stock
         Purchase Date an amount equal to the aggregate Stated Amount of such
         Normal Units (a "Collateral Substitution"), at any time from and after
         the date of this Agreement and on or prior to the second Business Day
         immediately preceding the Stock Purchase Date, by (i) depositing with
         the Collateral Agent Treasury Securities having an aggregate principal
         amount equal to the aggregate Stated Amount of such Normal Units, and
         (ii) transferring the related Normal Units to the Agent accompanied by
         a notice to the Agent, substantially in the form of Exhibit D hereto,
         stating that the Holder has transferred the relevant amount of Treasury
         Securities to the Collateral Agent and requesting that the Agent
         instruct the Collateral Agent to release the Pledged Notes or Pledged
         Treasury Consideration, as the case may be, underlying such Normal
         Units, whereupon the Agent shall promptly give such instruction to the
         Collateral Agent, substantially in the form of Exhibit C hereto.
         Notwithstanding the foregoing, a Holder may not separate the Pledged
         Notes or Pledged Treasury Consideration from the related Purchase
         Contracts in respect of the Normal Units held by such Holder during the
         periods beginning on the fourth Business Day prior to the first day of
         any Remarketing Period and ending on the third Business Day after the
         end of such Remarketing Period. Upon receipt of the Treasury Securities
         described in

                                       31
<PAGE>

         clause (i) above and the instruction described in clause (ii) above, in
         accordance with the terms of the Pledge Agreement, the Collateral Agent
         will release to the Agent, on behalf of the Holder, such Pledged Notes
         or Pledged Treasury Consideration from the Pledge, free and clear of
         the Company's security interest therein, and upon receipt thereof the
         Agent shall promptly:

                           (x) cancel the related Normal Units;

                           (y) transfer the Pledged Notes or Pledged Treasury
                  Consideration, as the case may be, to the Holder; and

                           (z) authenticate, execute on behalf of such Holder
                  and deliver a Stripped Units Certificate executed by the
                  Company in accordance with Section 3.3 evidencing the same
                  number of Purchase Contracts as were evidenced by the
                  cancelled Normal Units.

                  (b) Holders who elect to separate the Pledged Notes or Pledged
         Treasury Consideration, as the case may be, from the related Purchase
         Contract and to substitute Treasury Securities for such Pledged Notes
         or Pledged Treasury Consideration shall be responsible for any fees or
         expenses payable to the Collateral Agent for its services as Collateral
         Agent in respect of the substitution, and the Company shall not be
         responsible for any such fees or expenses.

                  (c) Holders may make Collateral Substitutions (i) if Treasury
         Securities are being substituted for Pledged Notes, only in integral
         multiples of 40 Normal Units, or (ii) if the Collateral Substitutions
         occur after a successful remarketing of the Notes pursuant to the
         provisions of Section 5.4 or after a Tax Event Redemption, as the case
         may be, only in integral multiples of Normal Units such that the
         Treasury Securities to be deposited and the Treasury Consideration to
         be released are in integral multiples of $1,000.

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

                  (e) Except as described in this Section 3.13, for so long as
         the Purchase Contract underlying a Normal Unit remains in effect, such
         Normal Unit

                                       32
<PAGE>

         shall not be separable into its constituent parts, and the rights and
         obligations of the Holder of such Normal Unit in respect of the Pledged
         Note or the Pledged Treasury Consideration, as the case may be, and the
         Purchase Contract comprising such Normal Unit may be acquired, and may
         be transferred and exchanged, only as a Normal Unit.

                  SECTION 3.14 Reestablishment of Normal Units.

                  (a) A Holder of Stripped Units may reestablish Normal Units at
         any time from and after the date of this Agreement and on or prior to
         the second Business Day immediately preceding the Stock Purchase Date,
         by (i) depositing with the Collateral Agent the Notes or the
         appropriate Treasury Consideration (identified and calculated by
         reference to the Treasury Consideration then comprising Normal Units),
         as the case may be, then comprising such number of Normal Units as is
         equal to the number of such Stripped Units and (ii) transferring such
         Stripped Units to the Agent accompanied by a notice to the Agent,
         substantially in the form of Exhibit D hereto, stating that the Holder
         has transferred the relevant amount of Notes or the appropriate
         Treasury Consideration, as the case may be, to the Collateral Agent and
         requesting that the Agent instruct the Collateral Agent to release the
         Pledged Treasury Securities underlying such Stripped Unit, whereupon
         the Agent shall promptly give such instruction to the Collateral Agent,
         substantially in the form of Exhibit C hereto. Notwithstanding the
         foregoing, a Holder may not reestablish Normal Units during the periods
         beginning on the fourth Business Day prior to the first day of any
         Remarketing Period and ending on the third Business Day after the end
         of such Remarketing Period. Upon receipt of the Notes or the
         appropriate Treasury Consideration, as the case may be, described in
         clause (i) above and the instruction described in clause (ii) above, in
         accordance with the terms of the Pledge Agreement, the Collateral Agent
         will release to the Agent, on behalf of the Holder, such Pledged
         Treasury Securities from the Pledge, free and clear of the Company's
         security interest therein, and upon receipt thereof the Agent shall
         promptly:

                           (x)      cancel the related Stripped Units;

                           (y) transfer the Pledged Treasury Securities to the
                  Holder; and

                           (z) authenticate, execute on behalf of such Holder
                  and deliver a Normal Units Certificate executed by the Company
                  in accordance with Section 3.3 evidencing the same number of
                  Purchase Contracts as were evidenced by the cancelled Stripped
                  Units.

                  (b) Holders of Stripped Units may reestablish Normal Units (i)
         if Notes are being substituted for the Pledged Treasury Securities,
         only in integral multiples of 40 Stripped Units for 40 Normal Units or
         (ii) if the reestablishment occurs after a successful remarketing of
         the Notes pursuant to the provisions of

                                       33
<PAGE>

         Section 5.4 or after a Tax Event Redemption, as the case may be, only
         in integral multiples of Stripped Units such that the Treasury
         Consideration to be deposited and the Treasury Securities to be
         released are in integral multiples of $1,000.

                  (c) Except as provided in this Section 3.14, for so long as
         the Purchase Contract underlying a Stripped Unit remains in effect,
         such Stripped Unit shall not be separable into its constituent parts,
         and the rights and obligations of the Holder of such Stripped Unit in
         respect of the Pledged Treasury Securities and Purchase Contract
         comprising such Stripped Unit may be acquired, and may be transferred
         and exchanged, only as a Stripped Unit.

                  SECTION 3.15 Transfer of Collateral upon Occurrence of
Termination Event.

                  Upon the occurrence of a Termination Event and the transfer to
the Agent of the Notes or the appropriate Treasury Consideration or the Treasury
Securities, as the case may be, underlying the Normal Units and the Stripped
Units pursuant to the terms of the Pledge Agreement, the Agent shall request
transfer instructions with respect to such Notes or the appropriate Treasury
Consideration or Treasury Securities, as the case may be, from each Holder by
written request mailed to such Holder at its address as it appears in the Normal
Units Register or the Stripped Units Register, as the case may be. Upon
book-entry transfer of the Normal Units or Stripped Units or delivery of a
Normal Units Certificate or Stripped Units Certificate to the Agent with such
transfer instructions, the Agent shall transfer the Notes, the appropriate
Treasury Consideration or the Treasury Securities underlying such Normal Units
or Stripped Units, as the case may be, to such Holder by book-entry transfer, or
other appropriate procedures, in accordance with such instructions. In the event
a Holder of Normal Units or Stripped Units fails to effect such transfer or
delivery, the Notes, the appropriate Treasury Consideration or the Treasury
Securities, as the case may be, underlying such Normal Units or Stripped Units,
as the case may be, and any distributions thereon, shall be held in the name of
the Agent or its nominee in trust for the benefit of such Holder, until such
Normal Units or Stripped Units are transferred or the Normal Units Certificate
or Stripped Units Certificate is surrendered or such Holder provides
satisfactory evidence that such Normal Units Certificate or Stripped Units
Certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Agent and the Company. In the case of the Treasury
Portfolio or any Treasury Securities, the Agent may dispose of the subject
securities for cash and pay the applicable portion of such cash to the Holders
in lieu of such Holders' Treasury Securities, where such Holder would otherwise
have been entitled to receive less than $1,000 of any such security.

                  SECTION 3.16 No Consent to Assumption.

                  Each Holder of a Unit, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption (i.e., affirmance),
under Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract
by the Company, any

                                       34
<PAGE>
receiver, liquidator or person or entity performing similar functions or its
trustee in the event that the Company becomes the debtor under the Bankruptcy
Code or subject to other similar state or federal law providing for
reorganization or liquidation.

         SECTION 3.17 CUSIP Numbers.

         The Company in issuing the Securities may use "CUSIP" and/or other
similar numbers (if then generally in use), and, if so, the Agent shall use
"CUSIP" and/or other similar numbers in notices of redemption as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Agent of any changes in the "CUSIP" and/or
other similar numbers.

                                   ARTICLE IV

                                    THE NOTES

         SECTION 4.1 Payment of Interest; Rights to Interest Payments Preserved;
Notice.

                  (a) A payment on any Note or Treasury Consideration, as the
         case may be, which is paid on any Payment Date shall, subject to
         receipt thereof by the Agent from the Collateral Agent as provided by
         the terms of the Pledge Agreement, be paid to the Person in whose name
         the Normal Units Certificate (or one or more Predecessor Normal Units
         Certificates) of which such Note or the appropriate Treasury
         Consideration is a part is registered at the close of business on the
         Record Date for such Payment Date.

                  (b) Each Normal Units Certificate evidencing Notes delivered
         under this Agreement upon registration of transfer of or in exchange
         for or in lieu of any other Normal Units Certificate shall carry the
         rights to interest accrued and unpaid, and rights to accrue interest,
         which were carried by the Notes underlying such other Normal Units
         Certificate.

                  (c) In the case of any Normal Unit with respect to which Early
         Settlement of the underlying Purchase Contract is effected on an Early
         Settlement Date, or with respect to which Merger Early Settlement of
         the underlying Purchase Contract is effected on a Merger Early
         Settlement Date, or with respect to which Cash Settlement is effected
         on the Business Day immediately preceding the Stock Purchase Date, or
         with respect to which a Collateral Substitution is effected, in each
         case on a date that is after any Record Date and on or prior to the
         next succeeding Payment Date, payments on the Note or the appropriate
         Treasury Consideration, as the case may be, underlying such Normal Unit
         otherwise

                                       35
<PAGE>

         payable on such Payment Date shall be payable on such Payment Date
         notwithstanding such Early Settlement, Merger Early Settlement, Cash
         Settlement or Collateral Substitution, as the case may be, and such
         payments shall, subject to receipt thereof by the Agent, be payable to
         the Person in whose name the Normal Units Certificate (or one or more
         Predecessor Normal Unit Certificates) was registered at the close of
         business on such Record Date. Except as otherwise expressly provided in
         the immediately preceding sentence, in the case of any Normal Unit with
         respect to which Early Settlement, Merger Early Settlement or Cash
         Settlement of the underlying Purchase Contract is effected, or with
         respect to which a Collateral Substitution has been effected, payments
         on the related Notes or payments on the appropriate Treasury
         Consideration that would otherwise be payable after the applicable
         Settlement Date or after such Collateral Substitution, as the case may
         be, shall not be payable hereunder to the Holder of such Normal Unit;
         provided, that to the extent that such Holder continues to hold the
         separated Notes that formerly comprised a part of such Holder's Normal
         Units, such Holder shall be entitled to receive any payments on such
         separated Notes.

                  (d) By purchasing and accepting the Units or the Separate
         Notes, a Holder of the Units or a holder of the Separate Notes, as the
         case may be, will be deemed to have agreed to treat for all U.S.
         federal income tax purposes the Notes forming a part of such Units or
         the Separate Notes, as the case may be, as "contingent payment debt
         instruments" as the term is used in Treasury regulation section
         1.1275-4.

         SECTION 4.2 Notice and Voting.

         Under and subject to the terms of the Pledge Agreement and this
Agreement, the Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Pledged Notes but only to the extent
instructed by the Holders as described below. Upon receipt of notice of any
meeting at which holders of Notes are entitled to vote or upon any solicitation
of consents, waivers or proxies of holders of Notes, the Agent shall, as soon as
practicable thereafter, mail to the Holders of Normal Units a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Notes entitled to vote) shall be entitled to instruct the Agent
as to the exercise of the voting rights pertaining to the Pledged Notes
underlying their Normal Units and (c) stating the manner in which such
instructions may be given. Upon the written request of any Holder of Normal
Units on such record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
request, the maximum number of Pledged Notes as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of a Normal Unit, the Agent shall abstain from voting the Pledged Note
underlying such Normal Unit. The Company hereby agrees, if applicable, to
solicit Holders of Normal

                                       36
<PAGE>

Units to timely instruct the Agent in order to enable the Agent to vote such
Pledged Notes.

         SECTION 4.3 Tax Event Redemption.

         Upon the occurrence of a Tax Event Redemption prior to the successful
remarketing of the Notes pursuant to the provisions of Section 5.4, the Company
may elect to instruct in writing the Collateral Agent to apply, and upon such
written instruction, the Collateral Agent shall apply, out of the aggregate
Redemption Price for the Notes that are components of Normal Units, an amount
equal to the Tax Event Redemption Principal Amount to purchase on behalf of the
Holders of Normal Units the Treasury Portfolio and promptly remit the remaining
portion of such Redemption Price to the Agent for payment to the Holders of such
Normal Units. The Treasury Portfolio will be substituted for the Pledged Notes,
and will be pledged to the Collateral Agent in accordance with the terms of the
Pledge Agreement to secure the obligation of each Holder of a Normal Unit to
purchase the Common Stock under the Purchase Contract constituting a part of
such Normal Unit. Following the occurrence of a Tax Event Redemption prior to a
successful remarketing of the Notes pursuant to the provisions of Section 5.4,
the Holders of Normal Units and the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as the
Holder of Normal Units and the Collateral Agent had in respect of the Notes, as
the case may be, subject to the Pledge thereof as provided in Articles II, III,
IV, V and VI of the Pledge Agreement, and any reference herein or in the
Certificates to the Note shall be deemed to be a reference to such Treasury
Portfolio and any reference herein or in the Certificates to interest on the
Notes shall be deemed to be a reference to corresponding distributions on the
Treasury Portfolio. The Company may cause to be made in any Normal Unit
Certificates thereafter to be issued such change in phraseology and form (but
not in substance) as may be appropriate to reflect the substitution of the
Treasury Portfolio for Notes as collateral.

         Upon the occurrence of a Tax Event Redemption after the successful
remarketing of the Notes, the Redemption Price will be payable in cash to the
holders of the Notes.

         SECTION 4.4 Consent to Treatment for Tax Purposes.

         Each Holder of a Normal Unit or a Stripped Unit, by its acceptance
thereof, covenants and agrees to treat itself as the owner, for federal, state
and local income and franchise tax purposes of (i) the related Notes or the
appropriate Treasury Consideration, in the case of the Normal Units, or (ii) the
Treasury Securities, in the case of the Stripped Units. Each Holder of a Normal
Unit, by its acceptance thereof, further covenants and agrees (i) to treat the
Notes as indebtedness of Household Finance for federal, state and local income
and franchise tax purposes and (ii) to allocate $23.55 of the issue price of a
Normal Unit to the Note and $1.45 of the issue price to the Purchase Contract.

                                       37
<PAGE>

                                    ARTICLE V

                     THE PURCHASE CONTRACTS; THE REMARKETING

         SECTION 5.1 Purchase of Common Stock.

         (a) Each Purchase Contract shall, unless an Early Settlement has
occurred in accordance with Section 5.9, or a Merger Early Settlement has
occurred in accordance with Section 5.10, obligate the Holder of the related
Unit to purchase, and the Company to sell, on the Stock Purchase Date at a price
equal to $25 (the "Purchase Price"), a number of newly issued shares of Common
Stock equal to the Settlement Rate unless, on or prior to the Stock Purchase
Date, a Termination Event shall have occurred. The "Settlement Rate" is equal
to,

                  (i) if the Applicable Market Value (as defined below) is equal
         to or greater than $25.68 (the "Threshold Appreciation Price"), 0.9735
         shares of Common Stock per Purchase Contract,

                  (ii) if the Applicable Market Value is less than the Threshold
         Appreciation Price, but is greater than $21.40, the number of shares of
         Common Stock per Purchase Contract equal to the Purchase Price divided
         by the Applicable Market Value, and

                  (iii) if the Applicable Market Value is equal to or less than
         $21.40, 1.1682 shares of Common Stock per Purchase Contract,

in each case subject to adjustment as provided in Section 5.6 (and in each case
rounded upward or downward to the nearest 1/10,000th of a share).

         (b) Intentionally omitted.

         (c) The "Applicable Market Value" means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Stock Purchase Date.
The "Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such
date or, if the Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States securities exchange, as reported by
The Nasdaq Stock Market, or, if the Common Stock is not so reported, the last
quoted bid price for the Common Stock in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, or, if such bid price
is not

                                       38
<PAGE>

available, the market value of the Common Stock on such date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Company. A "Trading Day" means a day on which the Common Stock
(A) are not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) have traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock at the close of business on such day.

         (d) Each Holder of a Unit, by its acceptance thereof, irrevocably
authorizes the Agent to enter into and perform the related Purchase Contract on
its behalf as its attorney-in-fact (including the execution of Certificates on
behalf of such Holder), agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase Contract,
consents to the provisions hereof, irrevocably authorizes the Agent as its
attorney-in-fact to enter into and perform the Pledge Agreement on its behalf as
its attorney-in-fact, and consents to and agrees to be bound by the Pledge of
the Notes, the appropriate Treasury Consideration or the Treasury Securities
pursuant to the Pledge Agreement; provided that upon a Termination Event, the
rights of the Holder of such Unit under the Purchase Contract may be enforced
without regard to any other rights or obligations. Each Holder of a Unit, by its
acceptance thereof, further covenants and agrees, that, to the extent and in the
manner provided in Section 5.4 and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Pledged Notes, the Pledged Treasury
Consideration or the Pledged Treasury Securities to be paid upon settlement of
such Holder's obligations to purchase shares of Common Stock under the Purchase
Contract, shall be paid on the Stock Purchase Date by the Collateral Agent to
the Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.

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

                                       39
<PAGE>

         SECTION 5.2 Intentionally Omitted.

         SECTION 5.3 Intentionally Omitted.

         SECTION 5.4 Payment of Purchase Price; Remarketing.

         (a) Unless a Tax Event Redemption, successful remarketing of the Notes
pursuant to the provisions of this Section 5.4 or Termination Event has
occurred, or a Holder of a Unit has settled the underlying Purchase Contract
through an Early Settlement pursuant to Section 5.9 or a Merger Early Settlement
pursuant to Section 5.10, each Holder of a Normal Unit may pay in cash ("Cash
Settlement") the Purchase Price for the shares of Common Stock to be purchased
pursuant to a Purchase Contract if such Holder notifies the Agent by surrender
of the Normal Unit Certificate and delivery of a notice in substantially the
form of Exhibit E hereto of its intention to make a Cash Settlement. Such notice
shall be made on or prior to 5:00 p.m., New York City time, on the seventh
Business Day immediately preceding the Stock Purchase Date. The Agent shall
promptly notify the Collateral Agent of the receipt of such a notice from a
Holder intending to make a Cash Settlement.

                  (i) A Holder of a Normal Unit who has so notified the Agent of
         its intention to make a Cash Settlement is required to pay the Purchase
         Price to the Collateral Agent prior to 11:00 a.m., New York City time,
         on the Business Day immediately preceding the Stock Purchase Date in
         lawful money of the United States by certified or cashiers' check or
         wire transfer, in each case in immediately available funds payable to
         or upon the order of the Company. Any cash received by the Collateral
         Agent will be paid to the Company on the Stock Purchase Date in
         settlement of the Purchase Contract in accordance with the terms of
         this Agreement and the Pledge Agreement.

                  (ii) If a Holder of a Normal Unit fails to notify the Agent of
         its intention to make a Cash Settlement in accordance with paragraph
         (a)(i) above, the Holder shall be deemed to have consented to the
         disposition of the Pledged Notes pursuant to the remarketing as
         described in paragraph (b) below. If a Holder of a Normal Unit does
         notify the Agent as provided in paragraph (a)(i) above of its intention
         to pay the Purchase Price in cash, but fails to make such payment as
         required by paragraph (a)(i) above, such failure shall constitute an
         event of default; however, the Notes of such a Holder will not be
         remarketed but instead the Collateral Agent, for the benefit of the
         Company, will exercise its rights as a secured party with respect to
         such Notes, including but not limited to those rights specified in
         subsection (b)(iii) below.

         (b) (i) Unless a Tax Event Redemption has occurred, the Company and
Household Finance shall engage a nationally recognized investment bank (the

                                       40
<PAGE>

"Remarketing Agent") pursuant to a Remarketing Agreement to be mutually agreed
on by the Company, Household Finance, the Agent and the Remarketing Agent, but
providing for remarketing procedures substantially as set forth below to sell
the Notes of Holders of Normal Units, other than Holders that have elected not
to participate in the remarketing pursuant to the procedures set forth in clause
(iv) below, and holders of Separate Notes that have elected to participate in
the remarketing pursuant to the procedures set forth in Section 4.5(d) of the
Pledge Agreement. On the seventh Business Day prior to first day of each
Remarketing Period, the Agent shall give Holders of Normal Units and holders of
Separate Notes notice of the remarketing in a daily newspaper in the English
language of general circulation in The City of New York (which is expected to be
The Wall Street Journal) including the specific U.S. Treasury security or
securities (including the CUSIP number and/or the principal terms of such
Treasury security or securities) described in clause (iv) below, that must be
delivered by Holders of Normal Units that elect not to participate in the
remarketing pursuant to clause (iv) below no later than 10:00 a.m., New York
City time, on the fourth Business Day preceding the first day of such
Remarketing Period. The Company or the Agent, at the Company's request, shall
request not later than seven nor more than 15 calendar days prior to any
Remarketing Period, that the Clearing Agency notify the Clearing Agency
participants of such Remarketing Period. The Agent shall notify, by 10:00 a.m.,
New York City time, on the third Business Day preceding the first day of such
Remarketing Period, the Remarketing Agent and the Collateral Agent of the
aggregate number of Notes of Normal Unit Holders to be remarketed. On the third
Business Day preceding the first day of such Remarketing Period, no later than
by 10:00 a.m., New York City time, pursuant to the terms of the Pledge
Agreement, the Custodial Agent will notify the Remarketing Agent of the
aggregate number of Separate Notes to be remarketed. No later than 10:00 a.m.,
New York City time, on the Business Day immediately preceding the first day of
such Remarketing Period, the Collateral Agent and the Custodial Agent, pursuant
to the terms of the Pledge Agreement, will deliver for remarketing to the
Remarketing Agent all Notes to be remarketed. Upon receipt of such notice from
the Agent and the Custodial Agent and such Notes from the Collateral Agent and
the Custodial Agent, the Remarketing Agent will, on the Remarketing Date, use
its commercially reasonable best efforts to sell such Notes on such date at an
aggregate price equal to at least 100.25% of the Remarketing Value. The
Remarketing Agent will use the proceeds from a successful remarketing to
purchase the appropriate U.S. Treasury securities (the "Agent-purchased Treasury
Consideration") with the CUSIP numbers, if any, selected by the Remarketing
Agent, described in clauses (i)(1) and (ii)(1) of the definition of Remarketing
Value related to the Notes of Holders of Normal Units that were remarketed. On
or prior to the third Business Day following the Remarketing Date or any
Subsequent Remarketing Date on which the Notes are successfully remarketed, the
Remarketing Agent shall deliver such Agent-purchased Treasury Consideration to
the Agent, which shall thereupon deliver such Agent-purchased Treasury
Consideration to the Collateral Agent. The

                                       41
<PAGE>

Collateral Agent, for the benefit of the Company, will thereupon apply such
Agent-purchased Treasury Consideration, in accordance with the Pledge Agreement,
to secure such Holders' obligations under the Purchase Contracts. In the event
of a successful remarketing pursuant to this Section 5.4, the Remarketing Agent
will deduct as a remarketing fee an amount not exceeding 25 basis points (.25%)
of the total proceeds from the remarketing (the "Remarketing Fee"). The
Remarketing Agent will remit (1) the portion of the proceeds from the
remarketing attributable to the Separate Notes to the holders of Separate Notes
that were remarketed and (2) the remaining portion of the proceeds, less those
proceeds used to purchase the Agent-purchased Treasury Consideration, to the
Agent for the benefit of the Holders of the Normal Units that were remarketed,
all determined on a pro rata basis, in each case, on or prior to the third
Business Day following the Remarketing Date or any Subsequent Remarketing Date
on which the Notes were successfully remarketed. Holders whose Notes are so
remarketed will not otherwise be responsible for the payment of any Remarketing
Fee in connection therewith.

                  (ii) If, in spite of using its commercially reasonable best
         efforts, the Remarketing Agent cannot remarket the Notes included in
         the remarketing at a price equal to at least 100.25% of the Remarketing
         Value on the Remarketing Date, the Remarketing Agent will attempt to
         establish a Remarketing Rate meeting these requirements on each of the
         two immediately following Business Days. If the Remarketing Agent
         cannot establish a Remarketing Rate meeting these requirements on
         either of those days, the remarketing in such period will be deemed to
         have failed (a "Failed Remarketing"). In the event of a Failed
         Remarketing with respect to the first Remarketing Period, the
         Remarketing Agent will undertake the procedures set forth in clause (i)
         above on each of the three Business Days in the second Remarketing
         Period. In the event of a Failed Remarketing in the second Remarketing
         Period, the Remarketing Agent will further attempt to establish such a
         Remarketing Rate on the third Business Day immediately preceding the
         Stock Purchase Date. If, in spite of using its commercially reasonable
         best efforts, the Remarketing Agent fails to remarket the Notes
         underlying the Normal Units at a price equal to at least 100.25% of the
         Remarketing Value in accordance with the terms of the Pledge Agreement
         by 4:00 p.m., New York City time, on the third Business Day immediately
         preceding the Stock Purchase Date, the "Last Failed Remarketing" will
         be deemed to have occurred. Each remarketing attempt that takes place
         in accordance with this Section 5.4 after the Remarketing Date is
         referred to herein as a "Subsequent Remarketing." Within three Business
         Days following the date of a Failed Remarketing or the Last Failed
         Remarketing, as the case may be, the Remarketing Agent shall return any
         Notes delivered to it to the Collateral Agent and the Custodial Agent,
         as applicable. The Collateral Agent, for the benefit of the Company,
         may exercise its rights as a secured party with respect to

                                       42
<PAGE>

         such Notes, including those actions specified in (b) (iii) below;
         provided that if upon the Last Failed Remarketing, the Collateral Agent
         exercises such rights for the benefit of the Company with respect to
         such Notes, any accumulated and unpaid interest on such Notes will
         become payable by Household Finance to the Agent for payment to the
         Holders of the Normal Units to which such Notes relate. Such payment
         will be made by Household Finance on or prior to 11:00 a.m., New York
         City time, on the Stock Purchase Date in lawful money of the United
         States by certified or cashier's check or wire transfer in immediately
         available funds payable to or upon the order of the Agent. The Company
         will cause a notice of any Failed Remarketing and of the Last Failed
         Remarketing to be published on the fourth Business Day following each
         Failed Remarketing and the Last Failed Remarketing, as the case may be,
         in a daily newspaper in the English language of general circulation in
         The City of New York, which shall be The Wall Street Journal, if such
         newspaper is then so published. The Company will also release this
         information by means of Bloomberg and Reuters newswire.

                  (iii) With respect to any Notes which constitute part of
         Normal Units which are subject to the Last Failed Remarketing, the
         Collateral Agent for the benefit of the Company reserves all of its
         rights as a secured party with respect thereto and, subject to
         applicable law and Section 5.4 (e) below, may, among other things, (A)
         retain such Notes in full satisfaction of the Holders' obligations
         under the Purchase Contracts or (B) sell such Notes in one or more
         public or private sales or otherwise.

                  (iv) A Holder of Normal Units may elect not to participate in
         the remarketing and retain the Notes underlying such Units by notifying
         the Agent of such election and delivering the specific U.S. Treasury
         security or securities (including the CUSIP number and/or the principal
         terms of such security or securities) identified by the Agent (as
         having been based solely on the identification that the Remarketing
         Agent shall have advised the Agent) that constitute the U.S. Treasury
         securities described in clauses (i) and (ii) of the definition of
         Remarketing Value relating to the retained Notes (as if only such Notes
         were being remarketed) (the "Opt-out Treasury Consideration") to the
         Agent not later than 10:00 a.m., New York City time, on the fourth
         Business Day prior to the beginning of any Remarketing Period. Upon
         receipt thereof by the Agent, the Agent shall deliver such Opt-out
         Treasury Consideration to the Collateral Agent, which will, for the
         benefit of the Company, thereupon apply such Opt-out Treasury
         Consideration to secure such Holder's obligations under the Purchase
         Contracts. On the Business Day immediately preceding the first day of a
         Remarketing Period, the Collateral Agent, pursuant to the terms of the
         Pledge Agreement, will deliver the Pledged Notes of such Holder to the
         Agent. Within three

                                       43
<PAGE>

         Business Days following the last day of such Remarketing Period, (A) if
         the remarketing was successful, the Agent shall distribute such Notes
         to the Holders thereof, and (B) if there was a Failed Remarketing on
         such date, the Agent will deliver such Notes to the Collateral Agent,
         which will, for the benefit of the Company, thereupon apply such Notes
         to secure such Holders' obligations under the Purchase Contract and
         return the Opt-out Treasury Consideration delivered by such Holders to
         such Holders. A Holder that does not so deliver the Opt-out Treasury
         Consideration or does not so notify the agent of its election not to
         participate in the remarketing pursuant to this clause (iv) shall be
         deemed to have elected to participate in the remarketing.

         (c) Upon the maturity of the Pledged Treasury Securities underlying the
Stripped Units and, in the event of a successful remarketing or a Tax Event
Redemption, the Pledged Treasury Consideration underlying the Normal Units on
the Stock Purchase Date, the Collateral Agent shall remit to the Company an
amount equal to the aggregate Purchase Price applicable to such Units, as
payment for the shares of Common Stock issuable upon settlement thereof without
needing to receive any instructions from the Holders of such Units. In the event
the payments in respect of the Pledged Treasury Securities or the Pledged
Treasury Consideration underlying a Unit is in excess of the Purchase Price of
the Purchase Contract being settled thereby, the Collateral Agent will
distribute such excess to the Agent for the benefit of the Holder of such Unit
when received.

         (d) Any distribution to Holders of excess funds and interest described
in Section 5.4 (b) and (c) above shall be payable at the Corporate Trust Office
or, at the option of the Holder or the holder of Separate Notes, as applicable,
by check mailed to the address of the Person entitled thereto at such address as
it appears on the Register or by wire transfer to an account maintained in the
United States specified by the Holder or the holder of Separate Notes, as
applicable.

         (e) Notwithstanding anything to the contrary herein or in the Pledge
Agreement, subject to Section 3.2 of the Pledge Agreement, the obligations of
each Holder to pay the Purchase Price are non-recourse obligations and are
payable solely out of the proceeds of any Collateral pledged to secure the
obligations of the Holders (except to the extent paid by Cash Settlement, Early
Settlement or Merger Early Settlement) and in no event will Holders be liable
for any deficiency between such payments and the Purchase Price.

         (f) Notwithstanding anything to the contrary herein, the Company shall
not be obligated to issue any shares of Common Stock in respect of a Purchase
Contract or deliver any certificates therefor to the Holder of the related Unit
unless the Company shall have (i) received payment in full of the aggregate
Purchase Price for the shares of Common Stock to be purchased thereunder by

                                       44
<PAGE>

such Holder in the manner herein set forth or (ii) exercised its rights as a
secured party under Section 5.4(b)(iii).

         SECTION 5.5 Issuance of Shares of Common Stock.

         Unless a Termination Event shall have occurred on or prior to the Stock
Purchase Date or an Early Settlement or a Merger Early Settlement shall have
occurred, on the Stock Purchase Date, upon the Company's receipt of payment in
full of the Purchase Price for the shares of Common Stock purchased by the
Holders pursuant to the foregoing provisions of this Article and subject to
Section 5.6(b) or the Company's exercise of its rights as a secured party
pursuant to Section 5.4(b)(iii), the Company shall issue and deposit with the
Agent, for the benefit of the Holders of the Outstanding Units, one or more
certificates representing the newly issued shares of Common Stock, registered in
the name of the Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions for which both a record date and payment date for such dividend or
distribution has occurred after the Stock Purchase Date, being hereinafter
referred to as the "Purchase Contract Settlement Fund"), to which the Holders
are entitled hereunder. Subject to the foregoing, upon surrender of a
Certificate to the Agent on or after the Stock Purchase Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article V (after taking
into account all Units then held by such Holder) together with cash in lieu of
fractional shares as provided in Section 5.12 and any dividends or distributions
with respect to such shares constituting part of the Purchase Contract
Settlement Fund, but without any interest thereon, and the Certificate so
surrendered shall forthwith be cancelled. Such shares shall be registered in the
name of the Holder or the Holder's designee as specified in the settlement
instructions provided by the Holder to the Agent. If any shares of Common Stock
issued in respect of a Purchase Contract are to be registered to a Person other
than the Person in whose name the Certificate evidencing such Purchase Contract
is registered, no such registration shall be made unless the Person requesting
such registration has paid any transfer and other taxes required by reason of
such registration in a name other than that of the registered Holder of such
Certificate or has established to the satisfaction of the Company that such tax
either has been paid or is not payable.

         SECTION 5.6 Adjustment of Settlement Rate.

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

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

                                       45
<PAGE>

         dividing such Settlement Rate by a fraction of which the numerator
         shall be the number of shares of Common Stock outstanding at the close
         of business on the date fixed for such determination and the
         denominator shall be the sum of such number of shares of Common Stock
         and the total number of shares of Common Stock constituting such
         dividend or other distribution, such increase to become effective
         immediately after the opening of business on the day following the date
         fixed for such determination. For the purposes of this paragraph (1),
         the number of shares of Common Stock at the time outstanding shall not
         include shares held in the treasury of the Company but shall include
         any shares issuable in respect of any scrip certificates issued in lieu
         of fractions of shares of Common Stock. The Company will not pay any
         dividend or make any distribution on Common Stock held in the treasury
         of the Company.

                  (2) Share Purchase Rights. In case the Company shall issue
         rights, options or warrants to all holders of Common Stock (that are
         not available on an equivalent basis to Holders of the Units upon
         settlement of the Purchase Contracts underlying such Units) entitling
         them, for a period expiring within 45 days after the record date for
         the determination of shareholders entitled to receive such rights,
         options or warrants, to subscribe for or purchase Common Stock at a
         price per share less than the Current Market Price per share of Common
         Stock on the date fixed for the determination of shareholders entitled
         to receive such rights, options or warrants (other than pursuant to a
         dividend reinvestment, share purchase or similar plan), the Settlement
         Rate in effect at the opening of business on the day following the date
         fixed for such determination shall be increased by dividing such
         Settlement Rate by a fraction, the numerator of which shall be the
         number of shares of Common Stock outstanding at the close of business
         on the date fixed for such determination plus the number of shares of
         Common Stock which the aggregate of the offering price of the total
         number of shares of Common Stock so offered for subscription or
         purchase would purchase at such Current Market Price per share of
         Common Stock and the denominator of which shall be the number of shares
         of Common Stock outstanding at the close of business on the date fixed
         for such determination plus the number of shares of Common Stock so
         offered for subscription or purchase, such increase to become effective
         immediately after the opening of business on the day following the date
         fixed for such determination. For the purposes of this paragraph (2),
         the number of shares of Common Stock at any time outstanding shall not
         include shares held in the treasury of the Company but shall include
         any shares issuable in respect of any scrip certificates issued in lieu
         of fractions of shares of Common Stock. The Company shall not issue any
         such rights, options or warrants in respect of Common Stock held in the
         treasury of the Company.

                                       46
<PAGE>

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

                  (4) Debt or Asset Distributions. (i) In case the Company
         shall, by dividend or otherwise, distribute to all holders of its
         Common Stock evidences of its indebtedness or assets (including
         securities, but excluding any rights or warrants referred to in
         paragraph (2) of this Section, shares of capital stock of any class or
         series, or similar equity interests, of or relating to a subsidiary or
         other business unit in the case of a Spin-Off referred to in the next
         paragraph, or any dividend or distribution paid exclusively in cash and
         any dividend or distribution referred to in paragraph (1) of this
         Section), the Settlement Rate shall be adjusted so that the same shall
         equal the rate determined by dividing the Settlement Rate in effect
         immediately prior to the close of business on the date fixed for the
         determination of shareholders entitled to receive such distribution by
         a fraction, the numerator of which shall be the Current Market Price
         per share of Common Stock on the date fixed for such determination less
         the then fair market value (as determined by the Board of Directors,
         whose determination shall be conclusive and described in a Board
         Resolution filed with the Agent) of the portion of the assets or
         evidences of indebtedness so distributed applicable to one share of
         Common Stock and the denominator of which shall be such Current Market
         Price per share of Common Stock, such adjustment to become effective
         immediately prior to the opening of business on the day following the
         date fixed for the determination of shareholders entitled to receive
         such distribution. In any case in which this paragraph (4) is
         applicable, paragraph (2) of this Section shall not be applicable.

                  (ii) In the case of a Spin-Off, the Settlement Rate in effect
         immediately before the close of business on the record date fixed for
         determination of shareholders entitled to receive that distribution
         will be increased by multiplying the Settlement Rate by a fraction, the
         numerator of which is the Current Market Price per share of Common
         Stock plus the Fair Market Value of the portion of those shares of
         Capital Stock or similar equity interests so distributed applicable to
         one share of Common

                                       47
<PAGE>

         Stock and the denominator of which is the Current Market Price per
         share of Common Stock. Any adjustment to the settlement rate under this
         paragraph 4(ii) will occur on the date that is the earlier of (1) the
         tenth Trading Day following the effective date of the Spin-Off and (2)
         the date of the securities being offered in the Initial Public Offering
         of the Spin-Off, if that Initial Public Offering is effected
         simultaneously with the Spin-Off.

                  (5) Cash Distributions. In case the Company shall, (i) by
         dividend or otherwise, distribute to all holders of its Common Stock
         cash (excluding any regular quarterly cash dividends or any cash that
         is distributed in a Reorganization Event to which Section 5.6(b)
         applies or as part of a distribution referred to in paragraph (4) of
         this Section) in an aggregate amount that, combined together with (ii)
         the aggregate amount of any other distributions to all holders of its
         Common Stock made exclusively in cash (other than regular quarterly
         cash dividends) within the 12 months preceding the date of payment of
         such distribution and in respect of which no adjustment pursuant to
         this paragraph (5) or paragraph (6) of this Section has been made and
         (iii) the aggregate of any cash plus the fair market value as of the
         date or expiration of the tender or exchange offer referred to below
         (as determined by the Board of Directors, whose determination shall be
         conclusive and described in a Board Resolution filed with the Agent) of
         consideration payable in respect of any tender or exchange offer (other
         than consideration payable in respect of any odd-lot tender offer) by
         the Company or any of its subsidiaries for all or any portion of its
         Common Stock concluded within the 12 months preceding the date of
         payment of the distribution described in clause (i) above and in
         respect of which no adjustment pursuant to this paragraph (5) or
         paragraph (6) of this Section has been made, exceeds 10% of the product
         of the Current Market Price per share of Common Stock on the date for
         the determination of holders of Common Stock entitled to receive such
         distribution times the number of shares of Common Stock outstanding on
         such date, then, and in each such case, immediately after the close of
         business on such date for determination, the Settlement Rate shall be
         increased so that the same shall equal the rate determined by dividing
         the Settlement Rate in effect immediately prior to the close of
         business on the date fixed for determination of the shareholders
         entitled to receive such distribution by a fraction (A) the numerator
         of which shall be equal to the Current Market Price per share of Common
         Stock on the date fixed for such determination less an amount equal to
         the quotient of (x) the combined amount distributed or payable in the
         transactions described in clauses (i), (ii) and (iii) above and (y) the
         number of shares of Common Stock outstanding on such date for
         determination and (B) the denominator of which shall be equal to the
         Current Market Price per share of Common Stock on such date for
         determination.

                                       48
<PAGE>

                  (6) Tender Offers. In case (i) a tender or exchange offer made
         by the Company or any subsidiary of the Company for all or any portion
         of the Common Stock shall expire and such tender or exchange offer (as
         amended upon the expiration thereof) shall require the payment to
         shareholders (based on the acceptance (up to any maximum specified in
         the terms of the tender or exchange offer) of Purchased Shares) of an
         aggregate consideration having a fair market value (as determined by
         the Board of Directors, whose determination shall be conclusive and
         described in a Board Resolution filed with the Agent) that when
         combined together with (ii) the aggregate of the cash plus the fair
         market value (as determined by the Board of Directors, whose
         determination shall be conclusive and described in a Board Resolution
         filed with the Agent), as of the expiration of such tender or exchange
         offer (other than consideration payable in respect of any odd-lot
         tender offer), of consideration payable in respect of any other tender
         or exchange offer, by the Company or any subsidiary of the Company for
         all or any portion of the Common Stock expiring within the 12 months
         preceding the expiration of such tender or exchange offer and in
         respect of which no adjustment pursuant to paragraph (5) of this
         Section or this paragraph (6) has been made and (iii) the aggregate
         amount of any distributions to all holders of the Common Stock made
         exclusively in cash (other than regular quarterly cash dividends)
         within the 12 months preceding the expiration of such tender or
         exchange offer and in respect of which no adjustment pursuant to
         paragraph (5) of this Section or this paragraph (6) has been made,
         exceeds 10% of the product of the Current Market Price per share of
         Common Stock as of the last time (the "Expiration Time") tenders could
         have been made pursuant to such tender or exchange offer (as it may be
         amended) times the number of shares of Common Stock outstanding
         (including any tendered shares) on the Expiration Time, then, and in
         each such case, immediately prior to the opening of business on the day
         after the date of the Expiration Time, the Settlement Rate shall be
         adjusted so that the same shall equal the rate determined by dividing
         the Settlement Rate immediately prior to the close of business on the
         date of the Expiration Time by a fraction (A) the numerator of which
         shall be equal to (x) the product of (I) the Current Market Price per
         share of Common Stock on the date of the Expiration Time and (II) the
         number of shares of Common Stock outstanding (including any tendered
         shares) on the Expiration Time less (y) the amount of cash plus the
         fair market value (determined as aforesaid) of the aggregate
         consideration payable to shareholders based on the transactions
         described in clauses (i), (ii) and (iii) above (assuming in the case of
         clause (i) the acceptance, up to any maximum specified in the terms of
         the tender or exchange offer, of Purchased Shares), and (B) the
         denominator of which shall be equal to the product of (x) the Current
         Market Price per share of Common Stock as of the Expiration Time and
         (y) the number of shares of Common Stock outstanding (including any

                                       49
<PAGE>

         tendered shares) as of the Expiration Time less the number of all
         shares validly tendered and not withdrawn as of the Expiration Time
         (the shares deemed so accepted, up to any such maximum, being referred
         to as the "Purchased Shares").

                  (7) Reclassification. The reclassification of Common Stock
         into securities including securities other than Common Stock (other
         than any reclassification upon a Reorganization Event to which Section
         5.6(b) applies) shall be deemed to involve (i) a distribution of such
         securities other than Common Stock to all holders of Common Stock (and
         the effective date of such reclassification shall be deemed to be "the
         date fixed for the determination of shareholders entitled to receive
         such distribution" and the "date fixed for such determination" within
         the meaning of paragraph (4) of this Section), and (ii) a subdivision,
         split or combination, as the case may be, of the number of shares of
         Common Stock outstanding immediately prior to such reclassification
         into the number of shares of Common Stock outstanding immediately
         thereafter (and the effective date of such reclassification shall be
         deemed to be "the day upon which such subdivision or split becomes
         effective" or "the day upon which such combination becomes effective,"
         as the case may be, and "the day upon which such subdivision, split or
         combination becomes effective" within the meaning of paragraph (3) of
         this Section).

                  (8) "Current Market Price". The "Current Market Price" per
         share of Common Stock means (a) on any day the average of the Closing
         Price per share of Common Stock on each of the 20 consecutive Trading
         Days ending on the earlier of the day in question and the day before
         the "ex date" with respect to the issuance or distribution requiring
         such computation, (b) in the case of any Spin-Off that is effected
         simultaneously with an Initial Public Offering of the securities being
         distributed in the Spin-Off, the Closing Price of the Common Stock on
         the Trading Day on which the initial price of the securities being
         distributed in the Spin-Off is determined, and (c) in the case of any
         other Spin-Off, the average of the Closing Prices per share of Common
         Stock over the first 10 Trading Days after the effective date of such
         Spin-Off. For purposes of this paragraph, the term "ex date," when used
         with respect to any issuance or distribution, shall mean the first date
         on which the Common Stock trades regular way on such exchange or in
         such market without the right to receive such issuance or distribution.

                  (9) Calculation of Adjustments. All adjustments to the
         Settlement Rate shall be calculated to the nearest 1/10,000th of a
         share of Common Stock (or if there is not a nearest 1/10,000th of a
         share to the next lower 1/10,000th of a share). No adjustment in the
         Settlement Rate shall be required unless such adjustment would require
         an increase or

                                       50
<PAGE>

         decrease of at least one percent therein; provided, that any
         adjustments which by reason of this subparagraph are not required to be
         made shall be carried forward and taken into account in any subsequent
         adjustment. If an adjustment is made to the Settlement Rate pursuant to
         paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section
         5.6(a), an adjustment shall also be made to the Applicable Market Value
         solely to determine which of clauses (i), (ii) or (iii) of the
         definition of Settlement Rate in Section 5.1(a) will apply on the Stock
         Purchase Date. Such adjustment shall be made by multiplying the
         Applicable Market Value by a fraction, the numerator of which shall be
         the Settlement Rate immediately after such adjustment pursuant to
         paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section
         5.6(a) and the denominator of which shall be the Settlement Rate
         immediately before such adjustment; provided, that if such adjustment
         to the Settlement Rate is required to be made pursuant to the
         occurrence of any of the events contemplated by paragraph (1), (2),
         (3), (4), (5), (7) or (10) of this Section 5.6(a) during the period
         taken into consideration for determining the Applicable Market Value,
         appropriate and customary adjustments shall be made to the Settlement
         Rate.

                  (10) Increase of Settlement Rate. The Company may make such
         increases in the Settlement Rate, in addition to those required by this
         Section, as it considers to be advisable in order to avoid or diminish
         any income tax to any holders of shares of Common Stock resulting from
         any dividend or distribution of Capital Stock or issuance of rights or
         warrants to purchase or subscribe for stock or from any event treated
         as such for income tax purposes or for any other reasons.

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

         In the event of

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

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

                  (3) any statutory exchange of securities of the Company with
         another Person (other than in connection with a merger or acquisition),
         or

                                       51
<PAGE>

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

each share of Common Stock covered by each Purchase Contract forming part of a
Unit immediately prior to such Reorganization Event shall, after such
Reorganization Event, be converted for purposes of the Purchase Contract into
the kind and amount of securities, cash and other property receivable in such
Reorganization Event (without any interest thereon, and without any right to
dividends or distribution thereon which have a record date that is prior to the
Stock Purchase Date per share of Common Stock) by a holder of shares of Common
Stock that (i) is not a Person with which the Company consolidated or into which
the Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be (any such Person, a "Constituent Person"),
or an Affiliate of a Constituent Person to the extent such Reorganization Event
provides for different treatment of shares of Common Stock held by Affiliates of
the Company and non-Affiliates, and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Reorganization Event (provided that if the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by a Person other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such Reorganization Event by each Non-electing Share
shall be deemed to be the kind and amount so receivable per share of Common
Stock by a plurality of the Non-electing Shares). On the Stock Purchase Date,
the Settlement Rate then in effect will be applied to the value on the Stock
Purchase Date of such securities, cash or other property.

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

         SECTION 5.7 Notice of Adjustments and Certain Other Events.

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

                                       52
<PAGE>

                  (i) forthwith compute the Settlement Rate in accordance with
         Section 5.6 and prepare and transmit to the Agent an Officers'
         Certificate setting forth the Settlement Rate, the method of
         calculation thereof in reasonable detail, and the facts requiring such
         adjustment and upon which such adjustment is based; and

                  (ii) as soon as practicable following the occurrence of an
         event that requires an adjustment to the Settlement Rate pursuant to
         Section 5.6 (or if the Company is not aware of such occurrence, as soon
         as practicable after becoming so aware), provide a written notice to
         the Agent and the Holders of the occurrence of such event and a
         statement setting forth in reasonable detail the method by which the
         adjustment to the Settlement Rate was determined and setting forth the
         adjusted Settlement Rate.

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

         SECTION 5.8 Termination Event; Notice.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the obligations of
Holders to purchase shares of Common Stock, shall immediately and automatically
terminate, without the necessity of any notice or action by any Holder, the
Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination
Event shall have occurred. Upon and after the occurrence of a Termination Event,
the Normal Units shall thereafter represent the right to receive the Notes or
the appropriate Treasury Consideration, as the case may be, forming a part of
such Normal Units, and the Stripped Units shall thereafter represent the right
to receive the Treasury Securities forming a part of such Stripped Units, in
each case in accordance with the provisions of Section 4.3 of the Pledge
Agreement. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event later than two Business Days thereafter give written
notice to the Agent, the Collateral Agent and to the Holders, at their addresses
as they appear in the Register.

                                       53
<PAGE>

         SECTION 5.9 Early Settlement.

         (a) Subject to and upon compliance with the provisions of this Section
5.9, Purchase Contracts underlying Units having an aggregate Stated Amount equal
to $1,000 or an integral multiple thereof may, at the option of the Holder
thereof, be settled early ("Early Settlement") on or prior to 10:00 a.m., New
York City time, on the seventh Business Day immediately preceding the Stock
Purchase Date. Holders of Stripped Units may only effect Early Settlement of the
related Purchase Contracts in integral multiples of 40 Stripped Units, and if
Treasury Consideration has been substituted for the Notes as a component in the
Normal Units due to a successful remarketing or the occurrence of a Tax Event
Redemption, Purchase Contracts underlying such Normal Units may only be settled
early in integral multiples of Normal Units such that the Treasury Consideration
to be deposited and the Treasury Consideration to be released are in integral
multiples of $1,000. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contracts, the Holder of the Certificate evidencing
the related Units shall deliver such Certificate to the Agent at the Corporate
Trust Office duly endorsed for transfer to the Company or in blank with the form
of Election to Settle Early on the reverse thereof duly completed and
accompanied by payment payable to the Company in immediately available funds in
an amount (the "Early Settlement Amount") equal to the product of (i) the
Purchase Price multiplied by (ii) the number of Purchase Contracts with respect
to which the Holder has elected to effect Early Settlement. Except as provided
in the immediately preceding sentence, no payment or adjustment shall be made
upon Early Settlement of any Purchase Contract on account of any dividends on
the shares of Common Stock issued upon such Early Settlement. If the foregoing
requirements are first satisfied with respect to Purchase Contracts underlying
any Unit at or prior to 5:00 p.m., New York City time, on a Business Day, such
day shall be the "Early Settlement Date" with respect to such Unit and if such
requirements are first satisfied after 5:00 p.m., New York City time, on a
Business Day or on a day that is not a Business Day, the "Early Settlement Date"
with respect to such Units shall be the next succeeding Business Day.

         (b) Upon Early Settlement of any Purchase Contract by the Holder of the
related Units, the Company shall issue, and the Holder shall be entitled to
receive, 0.9735 shares of Common Stock on account of such Purchase Contract (the
"Early Settlement Rate"). The Early Settlement Rate shall be adjusted in the
same manner and at the same time as the Settlement Rate is adjusted pursuant to
Section 5.6. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the provisions of this Section 5.9, the Company
shall issue and shall deliver to the Agent at the Corporate Trust Office a
certificate or certificates for the full number of shares of Common Stock
issuable upon such Early Settlement together with payment in lieu of any
fraction of a share, as provided in Section 5.12.

                                       54
<PAGE>

         (c) No later than the third Business Day after the applicable Early
Settlement Date the Company shall cause (i) the shares of Common Stock issuable
upon Early Settlement of Purchase Contracts to be issued and delivered, and (ii)
the related Pledged Notes or Pledged Treasury Consideration, in the case of
Normal Units, or the related Pledged Treasury Securities, in the case of
Stripped Units, to be released from the Pledge by the Collateral Agent and
transferred, in each case, to the Agent for delivery to the Holder thereof or
the Holder's designee.

         (d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Pledged Notes,
Pledged Treasury Consideration or Pledged Treasury Securities, as the case may
be, from the Collateral Agent, as applicable, the Agent shall, in accordance
with the instructions provided by the Holder thereof on the applicable form of
Election to Settle Early on the reverse of the Certificate evidencing the
related Units, (i) transfer to the Holder the Pledged Notes, Pledged Treasury
Consideration or Pledged Treasury Securities, as the case may be, forming a part
of such Units, and (ii) deliver to the Holder a certificate or certificates for
the full number of shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as provided in Section
5.12.

         (e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Units evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, execute on behalf of the Holder and deliver to the Holder
thereof, at the expense of the Company, a Certificate evidencing the Units as to
which Early Settlement was not effected.

         (f) No Early Settlement will be permitted under this Section 5.9
unless, at the time of delivery of the Election to Settle Early form or the time
the Early Settlement is effected, there is an effective registration statement
with respect to the shares of Common Stock to be issued and delivered in
connection with such Early Settlement, if such a registration statement is
required (in the view of counsel, which need not be in the form of a written
opinion, for either the Company or the Agent) under the Securities Act. If such
a registration statement is so required, the Company covenants and agrees to use
its commercially reasonable efforts to (A) have in effect a registration
statement covering the shares of Common Stock to be delivered in respect of the
Purchase Contracts being settled and (B) provide a prospectus in connection
therewith, in each case in a form that the Agent may use in connection with such
Early Settlement.

         SECTION 5.10 Early Settlement Upon Cash Merger.

         (a) In the event of a merger or consolidation of the Company of the
type described in clause (1) of Section 5.6(b) in which the shares of Common

                                       55
<PAGE>

Stock outstanding immediately prior to such merger or consolidation are
exchanged for consideration consisting of at least 30% cash or cash equivalents
(any such event a "Cash Merger"), then the Company (or the successor to the
Company hereunder) shall be required to offer the Holder of each Unit the right
to settle the Purchase Contract underlying such Unit prior to the Stock Purchase
Date ("Merger Early Settlement") as provided herein. On or before the fifth
Business Day after the consummation of a Cash Merger, the Company or, at the
request and expense of the Company, the Agent, shall give all Holders notice of
the occurrence of the Cash Merger and of the right of Merger Early Settlement
arising as a result thereof. The Company shall also deliver a copy of such
notice to the Agent and the Collateral Agent.

         Each such notice shall contain:

                  (i) the date, which shall be not less than 20 nor more than 30
         calendar days after the date of such notice, on which the Merger Early
         Settlement will be effected (the "Merger Early Settlement Date");

                  (ii) the date, which shall be on or one Business Day prior to
         the Merger Early Settlement Date, by which the Merger Early Settlement
         right must be exercised;

                  (iii) the Settlement Rate in effect as a result of such Cash
         Merger and the kind and amount of securities, cash and other property
         receivable by the Holder upon settlement of each Purchase Contract
         pursuant to Section 5.6(b);

                  (iv) a statement to the effect that all or a portion of the
         Purchase Price payable by the Holder to settle the Purchase Contract
         will be offset against the amount of cash so receivable upon exercise
         of Merger Early Settlement, as applicable; and

                  (v) the instructions a Holder must follow to exercise the
         Merger Early Settlement right.

         (b) To exercise a Merger Early Settlement right, a Holder shall deliver
    to the Agent at the Corporate Trust Office on or before 5:00 p.m., New York
    City time, on the date specified in the notice the Certificate(s) evidencing
    the Units with respect to which the Merger Early Settlement right is being
    exercised duly endorsed for transfer to the Company or in blank with the
    form of Election to Settle Early on the reverse thereof duly completed and
    accompanied by payment payable to the Company in immediately available funds
    in an amount equal to the Early Settlement Amount less the amount of cash
    that otherwise would be deliverable by the Company or its successor upon
    settlement of the Purchase Contract in lieu of shares of Common Stock
    pursuant to Section 5.6(b) and as described in the notice to Holders (the
    "Merger Early Settlement Amount").

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<PAGE>

         (c) On the Merger Early Settlement Date, the Company shall deliver or
    cause to be delivered (i) the net cash, securities and other property to be
    received by such exercising Holder, equal to the Settlement Rate as adjusted
    pursuant to Section 5.6, in respect of the number of Purchase Contracts for
    which such Merger Early Settlement right was exercised, and (ii) the related
    Pledged Notes or Pledged Treasury Consideration, in the case of Normal
    Units, or Pledged Treasury Securities, in the case of Stripped Units, to be
    released from the Pledge by the Collateral Agent and transferred, in each
    case, to the Corporate Trust Office for delivery to the Holder thereof or
    its designee. In the event a Merger Early Settlement right shall be
    exercised by a Holder in accordance with the terms hereof, all references
    herein to the Stock Purchase Date shall be deemed to refer to such Merger
    Early Settlement Date.

         (d) Upon Merger Early Settlement of any Purchase Contracts, and subject
    to receipt of such net cash, securities or other property from the Company
    and the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury
    Securities, as the case may be, from the Collateral Agent, as applicable,
    the Agent shall, in accordance with the instructions provided by the Holder
    thereof on the applicable form of Election to Settle Early on the reverse of
    the Certificate evidencing the related Units, (i) transfer to the Holder the
    Pledged Notes, Pledged Treasury Consideration or Pledged Treasury
    Securities, as the case may be, forming a part of such Units, and (ii)
    deliver to the Holder such net cash, securities or other property issuable
    upon such Merger Early Settlement together with payment in lieu of any
    fraction of a share, as provided in Section 5.12.

         (e) In the event that Merger Early Settlement is effected with respect
    to Purchase Contracts underlying less than all the Units evidenced by a
    Certificate, upon such Merger Early Settlement the Company (or the successor
    to the Company hereunder) shall execute and the Agent shall authenticate,
    execute on behalf of the Holder and deliver to the Holder thereof, at the
    expense of the Company, a Certificate evidencing the Units as to which
    Merger Early Settlement was not effected.

         SECTION 5.11 Charges and Taxes.

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

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<PAGE>

or issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.

         SECTION 5.12 No Fractional Shares.

         No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Stock Purchase Date or
upon Early Settlement or Merger Early Settlement of any Purchase Contracts. If
Certificates evidencing more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full shares of Common
Stock which shall be delivered upon settlement shall be computed on the basis of
the aggregate number of Purchase Contracts evidenced by the Certificates so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
applicable Settlement Date or upon Early Settlement or Merger Early Settlement,
the Company, through the Agent, shall make a cash payment in respect of such
fractional shares in an amount equal to the value of such fractional shares
times the Applicable Market Value. The Company shall provide the Agent from time
to time with sufficient funds to permit the Agent to make all cash payments
required by this Section 5.12 in a timely manner.

                                   ARTICLE VI

                                    REMEDIES

         SECTION 6.1 Unconditional Right of Holders to Purchase Common Stock.

         The Holder of any Unit shall have the right, which is absolute and
unconditional, to purchase shares of Common Stock pursuant to the Purchase
Contract constituting a part of such Unit and to institute suit for the
enforcement of any such right to purchase shares of Common Stock, and such
rights shall not be impaired without the consent of such Holder.

         SECTION 6.2 Restoration of Rights and Remedies.

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

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<PAGE>

         SECTION 6.3 Rights and Remedies Cumulative.

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

         SECTION 6.4 Delay or Omission Not Waiver.

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

         SECTION 6.5 Undertaking for Costs.

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

         SECTION 6.6 Waiver of Stay or Extension Laws.

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

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<PAGE>

                                   ARTICLE VII

                                    THE AGENT

         SECTION 7.1 Certain Duties and Responsibilities.

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

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

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

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

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

             (3) no provision of this Agreement shall require the Agent to
         expend or risk its own funds or otherwise incur any financial liability
         in the performance of any of its duties hereunder, or in the exercise
         of any of its rights or powers.

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

         (d) The Agent is authorized to execute and deliver the Pledge Agreement
    in its capacity as Agent. The Agent shall be entitled to all of the rights,
    privileges, immunities and indemnities contained in this Agreement with

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<PAGE>

    respect to any duties of the Agent under, or actions taken, omitted to be
    taken or suffered by the Agent pursuant to the Pledge Agreement.

         SECTION 7.2 Notice of Default.

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

         SECTION 7.3 Certain Rights of Agent.

         Subject to the provisions of Section 7.1:

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

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

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

         (d) the Agent may consult with counsel and the advice of such counsel
    or any Opinion of Counsel shall be full and complete authorization and
    protection in respect of any action taken, suffered or omitted by it
    hereunder in good faith and in reliance thereon;

         (e) the Agent shall not be bound to make any investigation into the
    facts or matters stated in any resolution, certificate, statement,
    instrument, opinion, report, notice, request, direction, consent, order,
    bond, debenture, note, other evidence of indebtedness or other paper or
    document, but the Agent, in its discretion, may make reasonable further
    inquiry or investigation into such facts or matters related to the
    execution, delivery and performance of the Purchase Contracts as it may see
    fit, and, if the Agent shall determine to make such further inquiry or
    investigation, it shall be given a reasonable opportunity to examine the

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<PAGE>

    books, records and premises of the Company, personally or by agent or
    attorney at the sole cost of the Company and shall incur no liability or
    additional liability of any kind by reason of such inquiry or investigation;

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

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

         (h) the Agent shall not be deemed to have or be charged with knowledge
    of any default unless a Responsible Officer receives written notice at its
    Corporate Trust Office of such default giving rise thereto from the Company
    or any of the Holders and such notice references the Units and this
    Agreement;

         (i) in no event shall the Agent be liable for any consequential,
    punitive, indirect or special loss or damages of any kind whatsoever
    (including but not limited to lost profit), even if the Agent has been
    advised of the likelihood of such loss or damage and regardless of the form
    of action; and

         (j) the Agent shall not be responsible or liable for any failure or
    delay in the performance of its obligations under this Agreement arising out
    of or caused, directly or indirectly, by circumstances beyond its reasonable
    control, including without limitation, act of God; earthquakes; fires;
    floods; wars; civil or military disturbances; terrorist acts; sabotage;
    epidemics; riots; interruptions, loss or malfunctions of utilities, computer
    (hardware or software) or communications service; accidents; labor disputes;
    and acts of civil or military authority or governmental actions; it being
    understood that the Agent shall use reasonable efforts which are consistent
    with accepted practices in the banking industry to resume performance as
    soon as practicable under the circumstances.

         SECTION 7.4 Not Responsible for Recitals or Issuance of Units.

          The recitals contained herein and in the Certificates shall be taken
as the statements of the Company and the Agent assumes no responsibility for
their accuracy. The Agent makes no representations as to the validity or
sufficiency of either this Agreement or of the Units, or of the Pledge Agreement
or the Pledge. The Agent shall not be accountable for the use or application by
the Company of the Units or the proceeds therefrom or in respect of the Purchase
Contracts and shall not be responsible for the perfection, priority or
maintenance of any security interest created pursuant to the Pledge Agreement.

         SECTION 7.5 May Hold Units.

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

         SECTION 7.6 Money Held in Custody.

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

         SECTION 7.7 Compensation and Reimbursement.

         The Company agrees:

         (a) to pay to the Agent from time to time reasonable compensation for
    all services rendered by it hereunder;

         (b) except as otherwise expressly provided herein, to reimburse the
    Agent upon its request for all reasonable expenses, disbursements and
    advances incurred or made by the Agent in accordance with any provision of
    this Agreement (including the reasonable compensation and the reasonable
    expenses

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<PAGE>
    and disbursements of its agents and counsel), except any such expense,
    disbursement or advance as may be attributable to its negligence or willful
    misconduct; and

         (c) to indemnify the Agent, as agent in any of the other capacities
contemplated hereunder, any predecessor Agent for, and their officers,
directors, employees and agents and to hold them harmless against, any loss,
liability or expense incurred without negligence or willful misconduct on their
part, arising out of or in connection with the acceptance or administration of
their duties hereunder, including the costs and expenses of defending themselves
against any claim or liability arising out of, relating to or in connection with
this Agreement, the transactions contemplated hereby or thereby, the
administration of this trust or its rights or duties hereunder, including the
reasonable costs (including reasonable counsel fees and expenses) and expenses
of defending itself against any claim or liability in connection with any
thereof, including the expenses of enforcing this provision.

         For purposes of this Section 7.7, "Agent" shall include any predecessor
Agent; provided, however, that the negligence, bad faith or willful misconduct
of any Agent hereunder shall not affect the rights of any other Agent hereunder.

         The provisions of this Section 7.7 shall survive the termination of
this Agreement, the satisfaction or discharge of the Units and/or the Separate
Notes and/or the resignation or removal of the Agent.

         In addition to and without prejudice to the rights provided to the
Agent under any of the provisions of this Agreement, when the Agent (in its
capacity as Agent and, if applicable, in any of its other capacities
contemplated hereunder) incurs expenses (including the reasonable charges and
expenses of counsel) or renders services after any default, such expenses and
the compensation for services are intended to constitute expenses of
administration under any applicable bankruptcy law.

         The Company's obligations under this Section 7.7 shall survive the
resignation or removal of the Agent, the discharge of the Company's obligations
and any rejection or termination of this Agreement under any applicable
bankruptcy law or other termination of this Agreement.

         SECTION 7.8 Corporate Agent Required; Eligibility.

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

         SECTION 7.9 Resignation and Removal; Appointment of Successor.

         (a) No resignation or removal of the Agent and no appointment of a
    successor Agent pursuant to this Article shall become effective until the

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<PAGE>

    acceptance of appointment by the successor Agent in accordance with the
    applicable requirements of Section 7.10.

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

         (c) The Agent may be removed at any time by Act of the Holders of a
    majority in number of the Outstanding Units delivered to the Agent and the
    Company.

         (d) If at any time:

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

                  (2) the Agent shall cease to be eligible under Section 7.8 and
         shall fail to resign after written request therefor by the Company or
         by any such Holder; or

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

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

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

                                       64
<PAGE>

    situated, petition any court of competent jurisdiction for the appointment
    of a successor Agent.

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

         SECTION 7.10 Acceptance of Appointment by Successor.

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

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

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

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

         Any Person into which the Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Agent, shall be the successor of the Agent hereunder, provided such Person shall
be otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Certificates shall have been authenticated and executed on behalf of
the Holders, but not delivered, by the Agent then in office, any successor to
such Agent shall adopt such authentication and execution and deliver the

                                       65
<PAGE>

Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Units.

         SECTION 7.12 Preservation of Information.

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

         SECTION 7.13 No Obligations of Agent.

         Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligation and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Unit thereunder. The Company agrees, and each
Holder of a Certificate, by such Holder's acceptance thereof, shall be deemed to
have agreed, that the Agent's execution of the Certificates on behalf of the
Holders shall be solely as agent and attorney-in-fact for the Holders, and that
the Agent shall have no obligation to perform such Purchase Contracts on behalf
of the Holders, except to the extent expressly provided in Article V.

         SECTION 7.14 Tax Compliance.

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

         (b) The Agent shall comply with any reasonable written direction timely
    received from the Company with respect to the execution or certification of
    any required documentation and the application of such requirements to
    particular payments or Holders or in other particular circumstances, and may
    for purposes of this Agreement conclusively rely on any such direction in
    accordance with the provisions of Section 7.1(a)(2).

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

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                                  ARTICLE VIII

                             SUPPLEMENTAL AGREEMENTS

         SECTION 8.1 Supplemental Agreements Without Consent of Holders.

Without the consent of any Holders, the Company and the Agent, at any time and
from time to time, may enter into one or more agreements supplemental hereto, in
form satisfactory to the Company and the Agent, for any of the following
purposes:

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

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

         (c) to evidence and provide for the acceptance of appointment hereunder
    by a successor Agent; or

         (d) to make provision with respect to the rights of Holders pursuant to
    the requirements of Section 5.6(b) or 5.10; or

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

         SECTION 8.2 Supplemental Agreements with Consent of Holders.

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

                  (1) change any Payment Date;

                  (2) change the amount or the type of Collateral required to be
         Pledged to secure a Holder's obligations under the Purchase Contract,

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<PAGE>

         impair the right of the Holder of any Purchase Contract to receive
         distributions on the related Collateral (except for the rights of
         Holders of Normal Units to substitute the Treasury Securities for the
         Pledged Notes or Pledged Treasury Consideration or the rights of
         holders of Stripped Units to substitute Notes or appropriate Treasury
         Consideration for the Pledged Treasury Securities) or otherwise
         materially adversely affect the Holder's rights in or to such
         Collateral;

                  (3) increase any amounts payable in respect of the Units or
         decrease any amounts receivable by Holders in respect of the Units;

                  (4) impair the right to institute suit for the enforcement of
         any Purchase Contract;

                  (5) reduce the number of shares of Common Stock to be
         purchased pursuant to any Purchase Contract, increase the price to
         purchase shares of Common Stock upon settlement of any Purchase
         Contract, change the Stock Purchase Date or otherwise materially
         adversely affect the Holder's rights under any Purchase Contract; or

                  (6) reduce the percentage of the outstanding Purchase
         Contracts the consent of whose Holders is required for any such
         supplemental agreement;

    provided, that if any amendment or proposal referred to above would
    adversely affect only the Normal Units or the Stripped Units, then only the
    affected class of Holder as of the record date for the Holders entitled to
    vote thereon will be entitled to vote on or consent to such amendment or
    proposal, and such amendment or proposal shall not be effective except with
    the consent of Holders of not less than a majority of such class; provided,
    however, that no such agreement, whether with or without the consent of
    Holders, shall affect Section 3.16.

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

         SECTION 8.3 Execution of Supplemental Agreements.

         In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement and
that all conditions precedent to the execution of such supplemental agreement
have been satisfied. The Agent shall enter into

                                       68
<PAGE>

any such supplemental agreement which does not materially adversely affect the
Agent's own rights, duties or immunities under this Agreement or otherwise.

         SECTION 8.4 Effect of Supplemental Agreements.

         Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.

         SECTION 8.5 Reference to Supplemental Agreements.

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

                                   ARTICLE IX

                    CONSOLIDATION, MERGER, SALE OR CONVEYANCE

         SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.

         The Company covenants that, so long as any Units are outstanding, it
will not (a) merge with or into or consolidate with any other Person or (b)
transfer, lease or convey all or substantially all its assets to any Person,
unless (i) either the Company shall be the continuing entity, or the successor
(if other than the Company) shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or a State
thereof or the District of Columbia and such Person shall expressly assume all
the obligations of the Company under the Purchase Contracts, this Agreement, the
Remarketing Agreement and the Pledge Agreement by one or more supplemental
agreements in form reasonably satisfactory to the Agent and the Collateral
Agent, executed and delivered to the Agent and the Collateral Agent by such
Person, and (ii) the Company or such successor, as the case may be, shall not,
immediately after such merger or consolidation, or such transfer, lease or
conveyance, be in default in the performance of any covenant or condition
hereunder, under any of the Purchase Contracts, under the Remarketing Agreement
or under the Pledge Agreement.

                                       69
<PAGE>

         SECTION 9.2 Rights and Duties of Successor Corporation.

         (a) In case of any such consolidation, merger, transfer, lease or
    conveyance and upon any such assumption by a successor entity in accordance
    with Section 9.1, such successor entity shall succeed to and be substituted
    for the Company with the same effect as if it had been named herein as the
    Company. Such successor entity thereupon may cause to be signed, and may
    issue either in its own name or in the name of the Company, any or all of
    the Certificates evidencing Units issuable hereunder which theretofore shall
    not have been signed by the Company and delivered to the Agent; and, upon
    the order of such successor corporation, instead of the Company, and subject
    to all the terms, conditions and limitations in this Agreement prescribed,
    the Agent shall authenticate and execute on behalf of the Holders and
    deliver any Certificates which previously shall have been signed and
    delivered by the officers of the Company to the Agent for authentication,
    execution on behalf of the Holder and delivery, and any Certificate
    evidencing Units which such successor entity thereafter shall cause to be
    signed and delivered to the Agent for that purpose. All the Certificates so
    issued shall in all respects have the same legal rank and benefit under this
    Agreement as the Certificates theretofore or thereafter issued in accordance
    with the terms of this Agreement as though all of such Certificates had been
    issued at the date of the execution hereof.

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

         SECTION 9.3 Opinion of Counsel Given to Agent.

         The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, transfer,
lease or conveyance, and any such assumption, complies with the provisions of
this Article and that all conditions precedent to the consummation of any such
consolidation, merger, sale, assignment, transfer, lease or conveyance have been
met.

                                    ARTICLE X

                                    COVENANTS

         SECTION 10.1 Performance Under Purchase Contracts.

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

                                       70
<PAGE>

         SECTION 10.2 Maintenance of Office or Agency.

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

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

         SECTION 10.3 Company to Reserve Common Stock.

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

         SECTION 10.4 Covenants as to Common Stock.

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

                                       71
<PAGE>

         SECTION 10.5 Statements of Officer of the Company as to Default.

         The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions hereof, and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which such
Officers may have knowledge. In the event the Company shall change its fiscal
year at any time the Units are outstanding, the Company shall notify the Agent
of the effective date of such change.

                                       72
<PAGE>

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

                                     HOUSEHOLD INTERNATIONAL, INC.

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

                                     THE BANK OF NEW YORK,
                                     as Purchase Contract Agent

                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:
<PAGE>
                                    EXHIBIT A
                        FORM OF NORMAL UNITS CERTIFICATE
                       (FORM OF GLOBAL CERTIFICATE LEGEND)

[THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.]*

[SO LONG AS DTC IS THE DEPOSITARY, INSERT: Unless this Certificate is presented
by an authorized representative of The Depository Trust Company (55 Water
Street, New York, New York) to the Company or its agent for registration or
transfer, exchange or payment, and any Certificate issued is registered in the
name of Cede & Co., or such other name as requested by an authorized
representative of the Depository Trust Company, and any payment hereon is made
to Cede & Co., ANY TRANSFER PLEDGE OR OTHER USE HEREOF OR OTHERWISE BY A PERSON
IS wrongful since the registered owner hereof, Cede & Co., has an interest
herein.]

                   (Form of Face of Normal Units Certificate)

                          Household International, Inc.

             8.875% Adjustable Conversion-Rate Equity Security Units

No._________________                             CUSIP No. 441815677
Number of Normal Units _______________

                  This Normal Units Certificate certifies that _____ is the
registered Holder of the number of Normal Units set forth above. Each Normal
Unit represents (i) either (a) one 8.875% Senior Note due February 15, 2008 (the
"Note") of Household Finance Corporation, a Delaware corporation, having a
principal amount of $25, subject to the Pledge of such Note by such Holder
pursuant to the Pledge Agreement, or (b) if the Note has been remarketed by the
Remarketing Agent (or if the Holder has elected not to have the Note remarketed
or a Tax Event Redemption has occurred), the appropriate Treasury Consideration,
subject to the Pledge of such Treasury Consideration by such Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the Holder under
one Purchase Contract with Household International, Inc., a Delaware corporation
(the "Company"). Each Normal Unit will have a stated amount of $25 (the "Stated

--------------------
* To be inserted in Global Certificates only.

                                      A-1
<PAGE>
Amount"). All capitalized terms used herein which are defined in the Purchase
Contract Agreement have the meanings set forth therein.

                  Pursuant to the Pledge Agreement, the Note or the interest in
the appropriate Treasury Consideration, as the case may be, constituting part of
each Normal Unit evidenced hereby has been pledged to the Collateral Agent, for
the benefit of the Company, to secure the obligations of the Holder under the
Purchase Contract comprising a part of such Normal Unit to purchase shares of
Common Stock of the Company. Prior to the purchase of shares of Common Stock
under each Purchase Contract, such Purchase Contracts shall not entitle the
Holders of Normal Units Certificates to any of the rights of a holder of shares
of Common Stock, including without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as shareholders
in respect of the meetings of shareholders, or for the election of directors of
the Company or for any other matter or any other rights whatsoever as
shareholder of the Company.

                  The Pledge Agreement provides that all payments in respect of
the Pledged Notes or Pledged Treasury Consideration received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer in same day funds
(i) in the case of (A) quarterly cash distributions on Normal Units which
include Pledged Notes or Pledged Treasury Consideration and (B) any payments in
respect of the Notes or Treasury Consideration, as the case may be, that have
been released from the Pledge pursuant to the Pledge Agreement, to the Agent to
the account designated by the Agent, no later than 10:00 a.m., New York City
time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the Collateral Agent on
a day that is not a Business Day or after 9:00 a.m., New York City time, on a
Business Day, then such payment shall be made no later than 9:30 a.m., New York
City time, on the next succeeding Business Day) and (ii) in the case of payments
in respect of any Pledged Notes or Pledged Treasury Consideration, as the case
may be, to be paid upon settlement of such Holder's obligations to purchase
shares of Common Stock under the Purchase Contract, to the Company on the Stock
Purchase Date (as defined herein) in accordance with the terms of the Pledge
Agreement, in full satisfaction of the respective obligations of the Holders of
the Normal Units of which such Pledged Notes or Pledged Treasury Consideration
are a part under the Purchase Contracts forming a part of such Normal Units.
Quarterly distributions on Normal Units which include Pledged Notes or Pledged
Treasury Consideration which are payable quarterly in arrears on February 15,
May 15, August 15 and November 15 each year, commencing February 15, 2003 (a
"Payment Date"), shall, subject to receipt thereof by the Agent from the Trustee
or Collateral Agent, as the case may be, be paid to the Person in whose name
this Normal Units Certificate (or a Predecessor Normal Units Certificate) is
registered at the close of business on the Record Date for such Payment Date.

                  Each Purchase Contract evidenced hereby obligates the Holder
of this Normal Units Certificate to purchase, and the Company to sell, on
February 15, 2006 (the "Stock Purchase Date"), at a price equal to $25 (the
"Purchase Price"), a number of

                                      A-2
<PAGE>

shares of Common Stock, $1.00 par value per share ("Common Stock"), of the
Company, equal to the Settlement Rate, unless on or prior to the Stock Purchase
Date there shall have occurred a Termination Event or an Early Settlement or
Merger Early Settlement with respect to the Normal Units of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement, as
defined and more fully described on the reverse hereof. The Purchase Price for
the shares of Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be satisfied on the Stock Purchase
Date by either (i) the application of payments received with regard to Pledged
Treasury Consideration, or (ii) the exercise of the Company's rights as a
secured party in connection with the Pledged Notes, as the case may be.

                  Payments on the Notes or the appropriate Treasury
Consideration will be payable at the office of the Agent in The City of New York
or, at the option of the Company, by check mailed to the address of the Person
entitled thereto as such address appears on the Normal Units Register or by wire
transfer to an account specified by the Company.

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

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

                                      A-3
<PAGE>

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

Dated: ____________

                                     HOUSEHOLD INTERNATIONAL, INC.

                                     By: __________________________________
                                         Name:
                                         Title:

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

                                     By: THE BANK OF NEW YORK,
                                         not individually but solely as
                                         Attorney-in-Fact of such Holder

                                         By:_______________________________
                                             Name:
                                             Title:

                                      A-4
<PAGE>

                      AGENT'S CERTIFICATE OF AUTHENTICATION

                  This is one of the Normal Units Certificates referred to in
the within mentioned Purchase Contract Agreement.

                                     THE BANK OF NEW YORK,
                                     as Purchase Contract Agent

Dated: ___________________           By:__________________________________
                                        Authorized Officer

                                      A-5
<PAGE>

                  (Form of Reverse of Normal Units Certificate)

                  Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of October 30, 2002 (as may be
supplemented from time to time, the "Purchase Contract Agreement"), between the
Company and The Bank of New York, as Purchase Contract Agent (including its
successors thereunder, herein called the "Agent"), to which Purchase Contract
Agreement and supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations, duties
and immunities thereunder of the Agent, the Company, and the Holders and of the
terms upon which the Normal Units Certificates are, and are to be, executed and
delivered. All defined terms used but not defined in this Certificate have the
meanings ascribed to them in the Purchase Contract Agreement.

                  Each Purchase Contract evidenced hereby obligates the Holder
of this Normal Units Certificate to purchase, and the Company to sell, on the
Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Stock Purchase Date, there shall have occurred a Termination
Event or a Cash Settlement, Early Settlement or Merger Early Settlement with
respect to the Unit of which such Purchase Contract is a part. The "Settlement
Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal
to or greater than $25.68 (the "Threshold Appreciation Price"), 0.9735 shares of
Common Stock per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price but is greater than $21.40, the number of
shares of Common Stock per Purchase Contract equal to the Purchase Price divided
by the Applicable Market Value and (c) if the Applicable Market Value is equal
to or less than $21.40, 1.1682 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase Contract Agreement.
No fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.

                  The "Applicable Market Value" means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Stock Purchase Date
or, in the event of a Cash Merger, the Cash Merger Date.

                  The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed
for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or if the Common Stock is not so listed on a United
States national or regional securities exchange, as reported by The Nasdaq Stock
Market, or, if the Common Stock is not so reported, the last quoted bid price
for the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of

                                      A-6
<PAGE>

the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the Company.

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

                  Each Purchase Contract evidenced hereby may be settled prior
to the Stock Purchase Date through Cash Settlement, Early Settlement or Merger
Early Settlement, in accordance with the terms of the Purchase Contract
Agreement.

                  In accordance with the terms of the Purchase Contract
Agreement, the Holder of this Normal Units Certificate shall pay the Purchase
Price for the shares of Common Stock purchased pursuant to each Purchase
Contract evidenced hereby (i) by effecting a Cash Settlement, an Early
Settlement or Merger Early Settlement, (ii) by application of payments received
in respect of the Pledged Treasury Consideration acquired from the proceeds of a
remarketing of the related Pledged Notes underlying the Normal Units represented
by this Normal Units Certificate as contemplated by Section 5.4 of the Purchase
Contract Agreement or (iii) if the Holder has elected not to participate in the
remarketing, by application of payments received in respect of the Pledged
Opt-out Treasury Consideration deposited by such Holder in respect of such
Purchase Contract or (iv) if a Tax Event Redemption has occurred prior to the
successful remarketing of the Notes as contemplated by Section 5.4 of the
Purchase Contract Agreement, by application of payments received in respect of
the Pledged Treasury Consideration purchased by the Collateral Agent on behalf
of the Holder of this Normal Units Certificate. If, as provided in the Purchase
Contract Agreement, upon the occurrence of a Last Failed Remarketing the
Collateral Agent, for the benefit of the Company, exercises its rights as a
secured creditor with respect to the Pledged Notes related to this Normal Units
Certificate, any accrued and unpaid interest on such Pledged Notes will become
payable by the Company to the Holder of this Normal Units Certificate in the
manner provided for in the Purchase Contract Agreement.

                  Under and subject to the terms of the Pledge Agreement and the
Purchase Contract Agreement, the Agent will be entitled to exercise the voting
and any other consensual rights pertaining to the Pledged Notes, but only to the
extent instructed by the Holders as described below. Upon receipt of notice of
any meeting at which holders of Notes are entitled to vote or upon the
solicitation of consents, waivers or proxies of holders of Notes, the Agent
shall, as soon as practicable thereafter, mail to the Holders of Normal Units a
notice (a) containing such information as is contained in the notice or
solicitation, (b) stating that each such Holder on the record date set by the
Agent therefor (which, to the extent possible, shall be the same date as the
record date for determining the holders of Notes entitled to vote) shall be
entitled to instruct the Agent as to the exercise of the voting rights
pertaining to the Pledged Notes constituting a part of such

                                      A-7
<PAGE>

Holder's Normal Units and (c) stating the manner in which such instructions may
be given. Upon the written request of any Holder of Normal Units on such record
date, the Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such request the maximum
number of Pledged Notes as to which any particular voting instructions are
received. In the absence of specific instructions from the Holder of a Normal
Unit, the Agent shall abstain from voting the Pledged Note evidenced by such
Normal Unit.

                  The Normal Units Certificates are issuable only in registered
form and only in denominations of a single Normal Unit and any integral multiple
thereof. The transfer of any Normal Units Certificate will be registered and
Normal Units Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Normal Units Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange of a Normal Units Certificate, but the
Company and the Agent may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Certificates, other than exchanges not
involving any transfer as provided for in the Purchase Contract Agreement. The
Holder of a Normal Unit may substitute for the Pledged Notes or Pledged Treasury
Consideration securing its obligations under the related Purchase Contract
Treasury Securities in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement. From and after such Collateral Substitution,
the Unit for which such Pledged Treasury Securities secures the Holder's
obligation under the Purchase Contract shall be referred to as a "Stripped
Unit." A Holder that elects to substitute Treasury Securities for Pledged Notes
or Pledged Treasury Consideration, thereby creating Stripped Units, shall be
responsible for any fees or expenses payable in connection therewith. Except as
provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying a Normal Unit remains in effect, such Normal Unit shall not
be separable into its constituent parts, and the rights and obligations of the
Holder of such Normal Units in respect of the Pledged Note or Pledged Treasury
Consideration and Purchase Contract comprising such Normal Unit may be acquired,
and may be transferred and exchanged, only as a Normal Unit.

                  A Holder of Stripped Units may reestablish Normal Units at any
time from and after the date of the Purchase Contract Agreement and on or prior
to the second Business Day immediately preceding the Stock Purchase Date by
depositing with the Collateral Agent the Notes or the appropriate Treasury
Consideration in exchange for the release of the Pledged Treasury Securities in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.

                  The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder and the obligations of the Holders to
purchase shares of Common Stock, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Stock Purchase Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination

                                      A-8
<PAGE>

Event, the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Agent, the Collateral Agent and to the
Holders, at their addresses as they appear in the Normal Units Register. Upon
and after the occurrence of a Termination Event, the Collateral Agent shall
release the Pledged Notes or Pledged Treasury Consideration from the Pledge in
accordance with the provisions of the Pledge Agreement.

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

                  The Holder of this Normal Units Certificate, by its acceptance
hereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contracts forming part of the Normal Units evidenced hereby on his
behalf as his attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform such Holder's obligations under such Purchase
Contracts, consents to the provisions of the Purchase Contract Agreement,
authorizes the Agent to enter into and perform the Pledge Agreement on such
Holder's behalf as attorney-in-fact, and consents to the Pledge of the Notes or
the appropriate Treasury Consideration underlying this Normal Units Certificate
pursuant to the Pledge Agreement. The Holder further covenants and agrees, that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect of
the Pledged Notes or the Pledged Treasury Consideration to be paid upon
settlement of such Holder's obligations to purchase shares of Common Stock under
the Purchase Contract, shall be paid on the Stock Purchase Date by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments. The obligations of each Holder to pay the Purchase
Price are non-recourse obligations and except to the extent paid by Cash
Settlement, Early Settlement or Merger Early Settlement, are payable solely out
of the proceeds of any Collateral pledged to secure the obligations of the
Holders and in no event will Holders be liable for any deficiency between such
payments and the Purchase Price. Notwithstanding anything to the contrary
herein, the Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder of the related Unit unless the Company shall have (i) received payment in
full of the aggregate Purchase Price for the shares of Common Stock to be
purchased thereunder by such Holder in the manner herein set forth

                                      A-9
<PAGE>

or (ii) exercised its rights as a secured party under Section 5.4(b)(iii) of the
Purchase Contract Agreement.

                  Each Holder of any Unit, and each Beneficial Owner thereof, by
its acceptance thereof or of its interest therein, further agrees to treat (i)
itself as the owner of the related Notes, Treasury Consideration or Treasury
Securities, as the case may be, (ii) the Notes as indebtedness of Household
Finance Corporation, in each case, for United States federal, state and local
income and franchise tax purposes, and (iii) the Purchase Contract and the
Notes, the Treasury Consideration or Treasury Securities, as the case may be, as
separate financial instruments, in each case, for all tax purposes.

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

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

                  The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Normal Units
Certificate is registered as the owner of the Normal Units evidenced hereby for
the purpose of receiving quarterly payments of interest on the Notes or the
Treasury Consideration, as the case may be, performance of the Purchase
Contracts and for all other purposes whatsoever, whether or not any payments in
respect thereof be overdue and notwithstanding any notice to the contrary, and
neither the Company, the Agent, such Affiliates nor any such agent shall be
affected by notice to the contrary.

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

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

                                      A-10
<PAGE>

                                  ABBREVIATIONS

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

TEN COM -                            as tenants in common
UNIF GIFT MIN ACT -                  Custodian

                                     ----------------------------------
                                     (cust)                  (minor)

                                     Under Uniform Gifts to Minors Act

                                     ----------------------------------
                                                   (State)

TEN ENT -                            as tenants by the entireties

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

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

                                      A-11
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

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

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

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

the within Normal Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing __________________________ attorney to
transfer said Normal Units Certificates on the books of Household International,
Inc. with full power of substitution in the premises.

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

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

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

                                      A-12

<PAGE>

                             SETTLEMENT INSTRUCTIONS

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

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

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

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

--------------------------------------      ------------------------------------
              Name                                         Name

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

Social Security or other Taxpayer Identification
Number, if any

                                      A-13

<PAGE>

                            ELECTION TO SETTLE EARLY

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

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

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

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

If shares of Common Stock are to be         REGISTERED HOLDER
registered in the name of and
delivered to and Pledged Notes or           Please print name and address of
Pledged Treasury Consideration are          Registered  Holder:
to be transferred to a Person other
than the Holder, please print such
Person's name and address:

--------------------------------------      ------------------------------------
              Name                                         Name

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

Social Security or other Taxpayer Identification
Number, if any

Transfer instructions for Pledged Notes or Pledged Treasury Consideration
transferable upon Early Settlement or a Termination Event:

                                      A-14

<PAGE>

                     [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

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

<TABLE>
<CAPTION>

                                                                       STATED AMOUNT
                             AMOUNT OF             AMOUNT OF           OF THE GLOBAL
                           DECREASE IN            INCREASE IN           CERTIFICATE         SIGNATURE OF
                           STATED AMOUNT         STATED AMOUNT           FOLLOWING           AUTHORIZED
                           OF THE GLOBAL         OF THE GLOBAL         SUCH DECREASE         OFFICER OF
         DATE               CERTIFICATE           CERTIFICATE           OR INCREASE            AGENT
         ----               -----------           -----------           -- --------            -----
<S>                       <C>                    <C>                  <C>                  <C>

</TABLE>

                                      A-15

<PAGE>

                                    EXHIBIT B
                       FORM OF STRIPPED UNITS CERTIFICATE
                       (FORM OF GLOBAL CERTIFICATE LEGEND)

[THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE
NAME OF A CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.] *

[SO LONG AS DTC IS THE DEPOSITARY, INSERT: Unless this Certificate is presented
by an authorized representative of The Depository Trust Company (55 Water
Street, New York, New York) to the Company or its agent for registration of
transfer, exchange or payment, and any Certificate issued is registered in the
name of Cede & Co., or such other name as requested by an authorized
representative of The Depository Trust Company, and any payment hereon is made
to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]

                  (Form of Face of Stripped Units Certificate)

                          Household International, Inc.

             8.875% Adjustable Conversion-Rate Equity Security Units

No.                                          CUSIP No. 441815669
Number of Stripped Units

                  This Stripped Units Certificate certifies that _________ is
the registered Holder of the number of Stripped Units set forth above. Each
Stripped Unit represents (i) a 1/40 undivided beneficial ownership interest in a
Treasury Security, subject to the Pledge of such interest in such Treasury
Security by such Holder pursuant to the Pledge Agreement, and (ii) the rights
and obligations of the Holder under one Purchase Contract with Household
International, Inc., a Delaware corporation (the "Company"). Each Stripped Unit
will have a stated amount of $25 (the "Stated Amount"). All capitalized terms
used herein which are defined in the Purchase Contract Agreement have the
meaning set forth therein.

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

* To be inserted in Global Certificates only.

                                      B-1

<PAGE>

                  Pursuant to the Pledge Agreement, the Treasury Security
constituting part of each Stripped Unit evidenced hereby has been pledged to the
Collateral Agent, for the benefit of the Company, to secure the obligations of
the Holder under the Purchase Contract comprising a part of such Stripped Unit
to purchase shares of Common Stock of the Company. Prior to the purchase of
shares of Common Stock under each Purchase Contract, such Purchase Contracts
shall not entitle the Holders of Normal Units Certificates to any of the rights
of a holder of shares of Common Stock, including, without limitation, the right
to vote or receive any dividends or other payments or to consent or to receive
notice as shareholders in respect of the meetings of shareholders, or for the
election of directors of the Company or for any other matter or any other rights
whatsoever as shareholder of the Company.

                  Each Purchase Contract evidenced hereby obligates the Holder
of this Stripped Units Certificate to purchase, and the Company to sell, on
February 15, 2006 (the "Stock Purchase Date"), at a price equal to $25 (the
"Purchase Price"), a number of shares of Common Stock, $1.00 par value per share
("Common Stock"), of the Company, equal to the Settlement Rate, unless on or
prior to the Stock Purchase Date there shall have occurred a Termination Event
or an Early Settlement or Merger Early Settlement with respect to the Stripped
Units of which such Purchase Contract is a part, all as provided in the Purchase
Contract Agreement and more fully described on the reverse hereof. The Purchase
Price (as defined herein) for the shares of Common Stock purchased pursuant to
each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on
the Stock Purchase Date by application of payments received in respect of the
Pledged Treasury Securities pledged to secure the obligations of the Holder
under such Purchase Contract in accordance with the terms of the Pledge
Agreement.

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

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

                                      B-2
<PAGE>

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

Dated:  ____________

                          HOUSEHOLD INTERNATIONAL, INC.

                                            By: ________________________________
                                                Name:
                                                Title:

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

                                            By: THE BANK OF NEW YORK, not
                                                individually but solely as
                                                Attorney-in-Fact of such Holder

                                                By: ____________________________
                                                    Name:
                                                    Title:

                                      B-3

<PAGE>

                  AGENT'S CERTIFICATE OF AUTHENTICATION

                  This is one of the Stripped Units Certificates referred to in
the within-mentioned Purchase Contract Agreement.

Dated:  ____________

                                           THE BANK OF NEW YORK,
                                           as Purchase Contract Agent

                                           By:____________________________
                                                Authorized Officer

                                      B-4
<PAGE>

                 (Form of Reverse of Stripped Units Certificate)

                  Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of October 30, 2002 (as may be
supplemented from time to time, the "Purchase Contract Agreement"), between the
Company and The Bank of New York, as Purchase Contract Agent (including its
successors thereunder, herein called the "Agent"), to which the Purchase
Contract Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Agent, the Company and the Holders and
of the terms upon which the Stripped Units Certificates are, and are to be,
executed and delivered.

                  Each Purchase Contract evidenced hereby obligates the Holder
of this Stripped Units Certificate to purchase, and the Company to sell, on the
Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Stock Purchase Date, there shall have occurred a Termination
Event or a Cash Settlement, an Early Settlement or Merger Early Settlement with
respect to the Unit of which such Purchase Contract is a part. The "Settlement
Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal
to or greater than $25.68 (the "Threshold Appreciation Price"), 0.9735 shares of
Common Stock per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price but is greater than $21.40, the number of
shares of Common Stock per Purchase Contract equal to the Purchase Price divided
by the Applicable Market Value and (c) if the Applicable Market Value is equal
to or less than $21.40, 1.1682 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase Contract Agreement.
No fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.

                  The "Applicable Market Value" means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Stock Purchase Date or
in the event of a Cash Merger, the Cash Merger Date.

                  The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed
for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or if the Common Stock is not so listed on a United
States national or regional securities exchange, as reported by The Nasdaq Stock
Market, or, if the Common Stock is not so reported, the last quoted bid price
for the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of

                                      B-5
<PAGE>

the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the Company.

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

                  Each Purchase Contract evidenced hereby may be settled prior
to the Stock Purchase Date through Cash Settlement, Early Settlement or Merger
Early Settlement, in accordance with the terms of the Purchase Contract
Agreement.

                  In accordance with the terms of the Purchase Contract
Agreement, the Holder of this Stripped Units Certificate shall pay the Purchase
Price for the shares of Common Stock purchased pursuant to each Purchase
Contract evidenced hereby (i) by effecting a Cash Settlement, an Early
Settlement or Merger Early Settlement or (ii) by application of payments
received in respect of the Pledged Treasury Securities underlying the Stripped
Units represented by this Stripped Units Certificate.

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

                  The Stripped Units Certificates are issuable only in
registered form and only in denominations of a single Stripped Unit and any
integral multiple thereof. The transfer of any Stripped Units Certificate will
be registered and Stripped Units Certificates may be exchanged as provided in
the Purchase Contract Agreement. The Stripped Units Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents permitted by the Purchase Contract Agreement. No service charge shall
be required for any such registration of transfer or exchange of a Stripped
Units Certificate, but the Company and the Agent may require payment from the
Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates, other than exchanges not involving any transfer as provided for in
the Purchase Contract Agreement. The Holder of a Stripped Unit may substitute
for the Pledged Treasury Securities securing its obligations under the related
Purchase Contract Notes or the appropriate Treasury Consideration in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement. From
and after such Collateral Substitution, the Unit for which such Pledged Notes or
Pledged Treasury Consideration secures the Holder's obligation under the
Purchase Contract shall be referred to as a "Normal Unit." A Holder that elects
to substitute Notes or the appropriate Treasury Consideration for Pledged
Treasury Securities, thereby reestablishing Normal Units, shall

                                      B-6
<PAGE>

be responsible for any fees or expenses payable in connection therewith. Except
as provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying a Stripped Unit remains in effect, such Stripped Unit shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Stripped Unit in respect of the Pledged Treasury Security and
the Purchase Contract comprising such Stripped Unit may be acquired, and may be
transferred and exchanged, only as a Stripped Unit.

                  A Holder of Normal Units may establish Stripped Units at any
time from and after the date of the Purchase Contract Agreement and on or prior
to the second Business Day immediately preceding the Stock Purchase Date by
depositing with the Collateral Agent Treasury Securities in exchange for the
release of the Pledged Notes or the appropriate Pledged Treasury Consideration
in accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.

                  The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder and the obligations of the Holders to
purchase shares of Common Stock, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Stock Purchase Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event later than two business days thereafter give written
notice to the Agent, the Collateral Agent and to the Holders, at their addresses
as they appear in the Stripped Units Register. Upon and after the occurrence of
a Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities from the Pledge in accordance with the provisions of the Pledge
Agreement.

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

                  The Holder of this Stripped Units Certificate, by its
acceptance hereof, irrevocably authorizes the Agent to enter into and perform
the related Purchase Contracts forming part of the Stripped Units evidenced
hereby on his behalf as its attorney-in-fact, expressly withholds any consent to
the assumption (i.e., affirmance) of the Purchase Contracts by the Company or
its trustee in the event that the Company becomes the subject of a case under
the Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform such Holder's obligations under such Purchase
Contracts, consents to the provisions of the Purchase Contract Agreement,

                                      B-7
<PAGE>

authorizes the Agent to enter into and perform the Pledge Agreement on such
Holder's behalf as attorney-in-fact, and consents to the Pledge of the Treasury
Securities underlying this Stripped Units Certificate pursuant to the Pledge
Agreement. The Holder further covenants and agrees, that, to the extent and in
the manner provided in the Purchase Contract Agreement and the Pledge Agreement,
but subject to the terms thereof, payments in respect of the Pledged Treasury
Securities, to be paid upon settlement of such Holder's obligations to purchase
shares of Common Stock under the Purchase Contract, shall be paid on the Stock
Purchase Date by the Collateral Agent to the Company in satisfaction of such
Holder's obligations under such Purchase Contract and such Holder shall acquire
no right, title or interest in such payments. The obligations of each Holder to
pay the Purchase Price are non-recourse obligations and except to the extent
paid by Early Settlement or Merger Early Settlement, are payable solely out of
the proceeds of any Collateral pledged to secure the obligations of the Holders
and in no event will Holders be liable for any deficiency between such payments
and the Purchase Price.

                  Each Holder of any Unit, and each Beneficial Owner thereof, by
its acceptance thereof or of its interest therein, further agrees to treat (i)
itself as the owner of the related Notes, Treasury Consideration or Treasury
Securities, as the case may be, (ii) the Notes as indebtedness of Household
Finance Corporation, in each case, for United States federal, state and local
income and franchise tax purposes, and (iii) the Purchase Contract and the
Notes, the Treasury Consideration or Treasury Securities, as the case may be, as
separate financial instruments, in each case, for all tax purposes.

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

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

                  The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Stripped Units
Certificate is registered as the owner of the Stripped Units evidenced hereby
for the purpose of performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any payments in respect thereof be overdue
and notwithstanding any notice to the contrary, and neither the Company, the
Agent, such Affiliate, nor any such agent shall be affected by notice to the
contrary.

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

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

                                      B-8
<PAGE>

                                  ABBREVIATIONS

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

TEN COM -                            as tenants in common

UNIF GIFT MIN ACT -                  Custodian

                                     --------------------------------
                                     (cust)                   (minor)

                                     Under Uniform Gifts to Minors Act

                                     --------------------------------
                                               (State)

TEN ENT -                            as tenants by the entireties

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

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

                                      B-9
<PAGE>

                                   ASSIGNMENT

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

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

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

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

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

the within Stripped Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing _____________________________________
attorney to transfer said Stripped Units Certificates on the books of Household
International, Inc. with full power of substitution in the premises.

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

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

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

                                      B-10
<PAGE>

                             SETTLEMENT INSTRUCTIONS

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

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

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

------------------------------------      -------------------------------------
           Name                                          Name

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

Social Security or other Taxpayer Identification
Number, if any

                                      B-11

<PAGE>

                            ELECTION TO SETTLE EARLY

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

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

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

If shares of Common Stock are to be         REGISTERED HOLDER
registered in the name of and
delivered to and Pledged Treasury           Please print name and address of
Securities are to be transferred to a       Registered Holder:
Person other than the Holder, please
print such Person's name and address:

------------------------------------      -------------------------------------
           Name                                          Name

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

Social Security or other Taxpayer Identification
Number, if any

Transfer instructions for Pledged Treasury Securities, transferable upon Early
Settlement or a Termination Event:

                                      B-12

<PAGE>

                     [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

                  The following increases or decreases in this Global
Certificate have been made:
<TABLE>
<CAPTION>
                                                                    STATED AMOUNT OF
                        AMOUNT OF DECREASE    AMOUNT OF INCREASE       THE GLOBAL
                        IN STATED AMOUNT OF    IN STATED AMOUNT        CERTIFICATE            SIGNATURE OF
                             THE GLOBAL          OF THE GLOBAL       FOLLOWING SUCH        AUTHORIZED OFFICER
        DATE                CERTIFICATE          CERTIFICATE       DECREASE OR INCREASE         OF AGENT
        ----                -----------          -----------       --------------------         --------

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

</TABLE>

                                      B-13
<PAGE>

                                    EXHIBIT C

                   INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
                                COLLATERAL AGENT

JPMorgan Chase Bank
4 New York Plaza
15th Floor
New York, New York 10004
Attention: Institutional Trust Services

                  Re:   8.875% Adjustable Conversion-Rate Equity Security
                        Units of Household International, Inc. (the "Company")

                  We hereby notify you in accordance with Section 4.1 of the
Pledge Agreement, dated as of October 30, 2002, among the Company, you, as
Collateral Agent, Custodial Agent and Securities Intermediary, and us, as
Purchase Contract Agent and as attorney-in-fact for the holders of [Normal
Units] [Stripped Units] from time to time, that the holder of securities listed
below (the "Holder") has elected to substitute [$ _______ aggregate principal
amount of Treasury Securities (CUSIP No. _____)] [$_______ principal amount of
Notes or the appropriate Treasury Consideration, as the case may be,] in
exchange for the related [Pledged Notes or Pledged Treasury Consideration]
[Pledged Treasury Securities (CUSIP No. ____),] held by you in accordance with
the Pledge Agreement and has delivered to us a notice stating that the Holder
has transferred [Treasury Securities] [Notes or the appropriate Treasury
Consideration] to you, as Collateral Agent. We hereby instruct you, upon receipt
of such [Pledged Treasury Securities] [Pledged Notes or Pledged Treasury
Consideration], and upon the payment by such Holder of any applicable fees, to
release the [Notes or Treasury Consideration, as the case may be,] [Treasury
Securities] related to such [Normal Units] [Stripped Units] to us in accordance
with the Holder's instructions. Capitalized terms used herein but not defined
shall have the meaning set forth in the Purchase Contract Agreement.

Date:
      ----------------------

                              THE BANK OF NEW YORK,

                              As Purchase Contract Agent under the Purchase
                              Contract Agreement, dated as of October 30, 2002,
                              between the Company and the Purchase Contract
                              Agent

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

                                      C-1
<PAGE>

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

         Name

         Address

Social Security or other Taxpayer
Identification Number, if any

                                      C-2
<PAGE>

                                    EXHIBIT D

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

The Bank of New York
Suite 1020
2 North LaSalle Street
Chicago, Illinois 60602

Attn: Corporate Trust Administration

                  Re:  8.875% Adjustable Conversion-Rate Equity Security
                       Units of Household International, Inc. (the "Company")

                  The undersigned Holder hereby notifies you, as Purchase
Contract Agent under the Purchase Contract Agreement, dated as of October 30,
2002, between the Company and you, that it has delivered to JPMorgan Chase Bank,
as Collateral Agent, Custodial Agent and Securities Intermediary [$_________
aggregate principal amount of Treasury Securities] [$_________ principal amount
of Notes or the appropriate Treasury Consideration, as the case may be,] in
exchange for the related [Pledged Notes or Pledged Treasury Consideration, as
the case may be,] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section 4.1 of the Pledge Agreement, dated as of October 30,
2002, among you, the Company and the Collateral Agent. The undersigned Holder
has paid the Collateral Agent all applicable fees relating to such exchange. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Notes or Pledged
Treasury Consideration, as the case may be,] [Pledged Treasury Securities]
related to such [Normal Units] [Stripped Units]. Capitalized terms used herein
but not defined shall have the meaning set forth in the Purchase Contract
Agreement.

Date:
                                       By:
                                           -----------------------------------
                                       Signature Guarantee:
                                                           -------------------
Dated:

Please print name and address of
Registered Holder:

Name                                   Social Security or other Taxpayer
                                       Identification Number, if any

Address

<PAGE>

                                    EXHIBIT E

                        NOTICE TO SETTLE BY SEPARATE CASH

The Bank of New York
Suite 1020
2 North LaSalle Street
Chicago, Illinois 60602

Attn: Corporate Trust Administration

                  Re:  8.875% Adjustable Conversion-Rate Equity Security
                       Units of Household International, Inc. (the "Company")

                  The undersigned Holder hereby notifies you in accordance with
Section 5.4 of the Purchase Contract Agreement, dated as of October 30, 2002,
between the Company and you, that it has delivered to JPMorgan Chase Bank, as
Collateral Agent, Custodial Agent and Securities Intermediary as Purchase
Contract Agent, Attorney-in-Fact and Trustee for the Holders of the Purchase
Contracts, that such Holder has elected to pay to the Collateral Agent, on or
prior to 11:00 a.m. New York City time, on the Business Day immediately
preceding the Stock Purchase Date, (in lawful money of the United States by
certified or cashiers check or wire transfer, in each case in immediately
available funds), $_________ as the Purchase Price for the shares of Common
Stock issuable to such Holder by the Company under the related Purchase Contract
on the Stock Purchase Date. The undersigned Holder hereby instructs you to
notify promptly the Collateral Agent of the undersigned Holder's election to
make such cash settlement with respect to the Purchase Contracts related to such
Holder's Normal Units. Capitalized terms used herein but not defined shall have
the meaning set forth in the Purchase Contract Agreement.

Date:
                                       By:
                                           -----------------------------------
                                       Signature Guarantee:
                                                           -------------------
Dated:

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

Please print name and address of
Registered Holder:

Name                                   Social Security or other Taxpayer
                                       Identification Number, if any

Address<PAGE>
                                                                     EXHIBIT 4.6

                          HOUSEHOLD INTERNATIONAL, INC.

                               JPMORGAN CHASE BANK

                      AS COLLATERAL AGENT, CUSTODIAL AGENT

                           AND SECURITIES INTERMEDIARY

                                       AND

                              THE BANK OF NEW YORK

                           AS PURCHASE CONTRACT AGENT

                                PLEDGE AGREEMENT

                          DATED AS OF OCTOBER 30, 2002

<PAGE>

                                TABLE OF CONTENTS

ARTICLE I Definitions                                                          2

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

ARTICLE II Pledge; Control and Perfection                                      4

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

ARTICLE III PAYMENTS on Collateral                                             8

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

ARTICLE IV Substitution, Release, Repledge and Settlement of Notes             9

SECTION 4.1 Collateral Substitution and the Creation of Stripped Units.........9
SECTION 4.2 Collateral Substitution and the Re-Creation of Normal Units.......10
SECTION 4.3 Termination Event.................................................11
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement........12
SECTION 4.5 Remarketing; Application of Proceeds; Settlement..................12

ARTICLE V Voting Rights-- Notes                                               15

SECTION 5.1 Exercise by Purchase Contract Agent...............................15

ARTICLE VI Rights and Remedies; TAX EVENT REDEMPTION                          15

SECTION 6.1 Rights and Remedies of the Collateral Agent.......................15
SECTION 6.2 Substitutions.....................................................16
SECTION 6.3 Tax Event Redemption..............................................16

ARTICLE VII Representations and Warranties; Covenants                         17

SECTION 7.1 Representations and Warranties of the Holders.....................17
SECTION 7.2 Representations and Warranties of the Collateral Agent,
            Custodial Agent and Securities Intermediary.......................18
SECTION 7.3 Covenants.........................................................18

ARTICLE VIII The Collateral Agent                                             19

SECTION 8.1 Appointment, Powers and Immunities................................19
SECTION 8.2 Instructions of the Company.......................................20
SECTION 8.3 Reliance..........................................................21

<PAGE>
SECTION 8.4 Rights in Other Capacities........................................21
SECTION 8.5 Non-Reliance on Collateral Agent..................................21
SECTION 8.6 Compensation and Indemnity........................................22
SECTION 8.7 Failure to Act....................................................22
SECTION 8.8 Resignation.......................................................23
SECTION 8.9 Right to Appoint Agent or Advisor.................................24
SECTION 8.10 Survival.........................................................24
SECTION 8.11 Exculpation......................................................24

ARTICLE IX Amendment                                                          25

SECTION 9.1 Amendment Without Consent of Holders..............................25
SECTION 9.2 Amendment with Consent of Holders.................................25
SECTION 9.3 Execution of Amendments...........................................26
SECTION 9.4 Effect of Amendments..............................................26
SECTION 9.5 Reference to Amendments...........................................27

ARTICLE X Miscellaneous                                                       27

SECTION 10.1 No Waiver........................................................27
SECTION 10.2 GOVERNING LAW....................................................27
SECTION 10.3 Notices..........................................................28
SECTION 10.4 Successors and Assigns...........................................28
SECTION 10.5 Counterparts.....................................................28
SECTION 10.6 Severability.....................................................28
SECTION 10.7 Expenses, Etc....................................................29
SECTION 10.8 Security Interest Absolute.......................................29
SECTION 10.9 Waiver of Jury Trial.............................................30

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

<PAGE>

                                PLEDGE AGREEMENT

         PLEDGE AGREEMENT, dated as of October 30, 2002 (this "Agreement"),
among Household International, Inc., a Delaware corporation (the "Company"),
JPMorgan Chase Bank, a New York banking corporation, not individually but solely
as collateral agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent"), as custodial agent (in such capacity,
together with its successors in such capacity, the "Custodial Agent") and as
"securities intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors in such
capacity, the "Securities Intermediary"), and The Bank of New York, a New York
banking corporation, not individually but solely as purchase contract agent and
as attorney-in-fact of the Holders from time to time of the Units (in such
capacity, together with its successors in such capacity, the "Purchase Contract
Agent") under the Purchase Contract Agreement (as defined herein).

                                    RECITALS

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

         WHEREAS, each Normal Unit will be comprised of (a) a Purchase Contract
and (b) either (i) a Note having a $25 principal amount or (ii) following the
remarketing of the Notes in accordance with the Purchase Contract Agreement and
the Remarketing Agreement or if the Holder has elected not to have the Note
remarketed or a Tax Event Redemption in accordance with the Purchase Contract
Agreement and the terms of the Notes, beneficial ownership of the appropriate
Treasury Consideration.

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

         WHEREAS, pursuant to the terms of the Purchase Contract Agreement and
the Purchase Contracts, the Holders, from time to time, of the Units have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on behalf of
such Holders and to grant the pledge provided hereby of the Notes, any Treasury
Consideration and any Treasury

<PAGE>

Securities delivered in exchange therefor to secure each Holder's obligations
under the related Purchase Contract, as provided herein and subject to the terms
hereof.

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

                                   ARTICLE I

                                  DEFINITIONS

         SECTION 1.1 Definitions

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

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

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

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

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

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

         "Collateral" has the meaning specified in Section 2.1 hereof.

         "Collateral Account" means the securities account (number [ ])
maintained at JPMorgan Chase Bank in the name "The Bank of New York, as Purchase
Contract Agent on behalf of the holders of certain securities of Household
International, Inc., Collateral Account subject to the security interest of
JPMorgan Chase Bank, as Collateral Agent, for the benefit of Household
International, Inc., as pledgee" and any successor account.

         "Collateral Agent" has the meaning specified in the first paragraph of
this Agreement.

                                       2
<PAGE>

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

         "Custodial Agent" has the meaning specified in the first paragraph of
this Agreement.

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

         "Pledge" has the meaning specified in Section 2.1 hereof.

         "Pledged Notes" has the meaning specified in Section 2.1 hereof.

         "Pledged Treasury Consideration" has the meaning specified in Section
2.1 hereof.

         "Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.

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

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

         "Purchase Contract Agreement" has the meaning specified in the
Recitals.

         "Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.

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

         "Separate Notes" means any Notes that are not Pledged Notes.

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

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

                                       3
<PAGE>
         (i)   in the case of Collateral consisting of securities which cannot
               be delivered by book-entry or which the parties agree are to be
               delivered in physical form, delivery in appropriate physical form
               to the recipient accompanied by any duly executed instruments of
               transfer, assignments in blank, transfer tax stamps and any other
               documents necessary to constitute a legally valid transfer to the
               recipient;

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

                                   ARTICLE II

                         PLEDGE; CONTROL AND PERFECTION

         SECTION 2.1  The Pledge

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

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

                                       4
<PAGE>

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

         (iii) all Proceeds of the foregoing (all of the foregoing,
               collectively, the "Collateral").

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

         (c) The pledge provided in this Section 2.1 is herein referred to as
the "Pledge" and the Notes (including any Notes that are delivered pursuant to
Section 6.2 hereof), Treasury Consideration and Treasury Securities subject to
the Pledge, excluding any Notes, Treasury Consideration or Treasury Securities
released from the Pledge as provided in Sections 4.1 and 4.2 hereof,
respectively, are hereinafter referred to as "Pledged Notes," "Pledged Treasury
Consideration" and "Pledged Treasury Securities," respectively. Subject to the
Pledge and the provisions of Section 2.2 hereof, the Holders from time to time
shall have full beneficial ownership of the Collateral. For purposes of
perfecting the Pledge under applicable law, including, to the extent applicable,
the TRADES Regulations or the Uniform Commercial Code as adopted and in effect
in any applicable jurisdiction, the Collateral Agent shall be the agent of the
Company as provided herein. Whenever directed by the Collateral Agent acting on
behalf of the Company, the Securities Intermediary shall have the right to
reregister the Notes or any other securities held in physical form in its name.

         (d) Except as may be required in order to release Notes or Treasury
Consideration, as applicable, in connection with a Tax Event Redemption or with
a Holder's election to convert its investment from a Normal Unit to a Stripped
Unit, or except as otherwise required to release Notes as specified herein,
neither the Collateral Agent, the Custodial Agent nor the Securities
Intermediary shall relinquish physical possession of any certificate evidencing
Notes, Treasury Securities or Treasury Consideration, as applicable, prior to
the termination of this Agreement. If it becomes necessary for the Securities
Intermediary to relinquish physical possession of a certificate in order to
release a portion of the Notes evidenced thereby from the Pledge, the Collateral
Agent shall use its best efforts to obtain physical possession of a replacement
certificate evidencing any Notes remaining subject to the Pledge hereunder
registered to it or endorsed in blank within fifteen days of the date it
relinquished possession. The Collateral Agent shall promptly notify the Company
of its inability to obtain possession of any such replacement certificate as
required hereby.

         SECTION 2.2 Control and Perfection

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

                                       5
<PAGE>

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

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

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

         (ii)  all property delivered to the Securities Intermediary pursuant to
               this Agreement (including, without limitation, any Notes,
               Treasury

                                       6
<PAGE>

               Consideration or Treasury Securities) will be promptly credited
               to the Collateral Account;

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

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

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

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

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

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

                                       7
<PAGE>

                                  ARTICLE III

                             PAYMENTS ON COLLATERAL

         SECTION 3.1 Payments

         So long as the Purchase Contract Agent is the registered owner of the
Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, it
shall receive all payments thereon. If the Pledged Notes are reregistered such
that the Collateral Agent becomes the registered holder, all payments of the
principal of, or interest on, the Pledged Notes and all payments of the
principal of, or cash distributions on, any Pledged Treasury Consideration or
Pledged Treasury Securities, that are received by the Collateral Agent and that
are properly payable hereunder shall be paid by the Collateral Agent by wire
transfer in same day funds:

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

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

                                       8
<PAGE>

               number by furnishing appropriate Forms W-9 (or such other forms
               as shall be applicable); and

         (iii) in the case of payments in respect of any Pledged Notes, Pledged
               Treasury Consideration or Pledged Treasury Securities, as the
               case may be, to be paid upon settlement of such Holder's
               obligations to purchase Common Stock under the Purchase Contract,
               to the Company on the Stock Purchase Date in accordance with the
               procedure set forth in Section 4.5(a) or 4.5(b) hereof, in full
               satisfaction of the respective obligations of the Holders under
               the related Purchase Contracts.

         SECTION 3.2 Application of Payments

         All payments received by the Purchase Contract Agent as provided herein
shall be applied by the Purchase Contract Agent pursuant to the provisions of
the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of principal on account of any Notes
or Treasury Consideration, as applicable, that, at the time of such payment, are
Pledged Notes or Pledged Treasury Consideration, as the case may be (other than
payments to which it is entitled pursuant to the terms of the Purchase Contract
Agreement), or a Holder of a Stripped Unit shall receive any payments of
principal on account of any Treasury Securities that, at the time of such
payment, are Pledged Treasury Securities (other than payments to which it is
entitled pursuant to the terms of the Purchase Contract Agreement), the Purchase
Contract Agent or such Holder shall hold the same as trustee of an express trust
for the benefit of the Company (and promptly deliver the same over to the
Company) for application to the obligations of the Holders under the related
Purchase Contracts, and the Holders shall acquire no right, title or interest in
any such payments of principal so received.

                                   ARTICLE IV

             SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES

         SECTION 4.1 Collateral Substitution and the Creation of Stripped Units

         At any time on or prior to the second Business Day immediately
preceding the Stock Purchase Date, a Holder of Normal Units shall have the right
to substitute Treasury Securities for the Pledged Notes or Pledged Treasury
Consideration, as the case may be, securing such Holder's obligations under the
Purchase Contracts comprising a part of such Normal Units, in integral multiples
of 40 Normal Units, or after a successful remarketing of the Notes pursuant to
the Purchase Contract Agreement or a Tax Event Redemption, in integral multiples
of Normal Units so that Treasury Securities to be deposited and the applicable
Treasury Consideration, as the case may be, to be released are in integral
multiples of $1,000, by (a) Transferring to the Collateral Agent Treasury
Securities having an aggregate principal amount equal to the aggregate Stated
Amount of

                                       9
<PAGE>

such Normal Units and (b) delivering such Normal Units to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of Exhibit B hereto,
to the Purchase Contract Agent stating that such Holder has Transferred Treasury
Securities to the Collateral Agent pursuant to clause (a) above (stating the
principal amount, the maturities and the CUSIP numbers of the Treasury
Securities Transferred by such Holder) and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release from the Pledge the Pledged Notes
or Pledged Treasury Consideration related to such Normal Units, whereupon the
Purchase Contract Agent shall promptly give such instruction to the Collateral
Agent in the form provided in Exhibit A; provided that such Holder may not
substitute such Treasury Securities for such Pledged Notes or Pledged Treasury
Consideration pursuant to this Section 4.1 during the period from four Business
Days prior to any Remarketing Period until the expiration of three Business Days
after the end of such Remarketing Period. Upon receipt of Treasury Securities
from a Holder of Normal Units and the related instruction from the Purchase
Contract Agent, the Collateral Agent shall release the Pledged Notes or Pledged
Treasury Consideration and shall promptly Transfer such Pledged Notes or Pledged
Treasury Consideration free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent. All items Transferred and/or
substituted by any Holder pursuant to this Section 4.1, Section 4.2 or any other
Section of this Agreement shall be Transferred and/or substituted free and clear
of all liens, claims and encumbrances.

         SECTION 4.2 Collateral Substitution and the Re-Creation of Normal Units

         At any time on or prior to the second Business Day immediately
preceding the Stock Purchase Date, a Holder of Stripped Units shall have the
right to reestablish Normal Units (a) consisting of the Purchase Contracts and
Notes in integral multiples of 40 Normal Units, or (b) after a remarketing of
the Notes pursuant to the Purchase Contract Agreement or a Tax Event Redemption,
consisting of the Purchase Contracts and the appropriate Treasury Consideration
(identified and calculated by reference to the Treasury Consideration then
comprising Normal Units) or the appropriate portion of the Treasury Portfolio in
integral multiples of Stripped Units so that the Treasury Consideration to be
deposited and the Treasury Securities to be released are in integral multiples
of $1,000, by (x) Transferring to the Collateral Agent Notes or the appropriate
Treasury Consideration, as the case may be, then comprising such number of
Normal Units as is equal to such Stripped Units and (y) delivering such Stripped
Units to the Purchase Contract Agent, accompanied by a notice, substantially in
the form of Exhibit B hereto, to the Purchase Contract Agent stating that such
Holder has transferred Notes or Treasury Consideration to the Collateral Agent
pursuant to clause (a) above and requesting that the Purchase Contract Agent
instruct the Collateral Agent to release from the Pledge the Pledged Treasury
Securities related to such Stripped Units, whereupon the Purchase Contract Agent
shall give such instruction to the Collateral Agent in the form provided in
Exhibit A. Upon receipt of the Notes or the appropriate Treasury Consideration,
as the case may be, from such Holder and the instruction from the Purchase
Contract Agent, the Collateral Agent shall release the Pledged Treasury

                                       10
<PAGE>

Securities and shall promptly Transfer such Treasury Securities, free and clear
of any lien, pledge or security interest created hereby, to the Purchase
Contract Agent.

         SECTION 4.3 Termination Event

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

         (b) If such Termination Event shall result from the Company's becoming
a debtor under the Bankruptcy Code, and if the Collateral Agent shall advise the
Purchase Contract Agent in writing that the Collateral Agent shall for any
reason be prohibited from promptly effectuating the release and Transfer of all
Pledged Notes, Pledged Treasury Consideration or Pledged Treasury Securities, as
the case may be, as provided by this Section 4.3, the Purchase Contract Agent
shall:

         (i)   use its best efforts to obtain an opinion of a nationally
               recognized law firm reasonably acceptable to the Collateral Agent
               to the effect that, as a result of the Company's being the debtor
               in such a bankruptcy case, the Collateral Agent will not be
               prohibited from releasing or Transferring the Collateral as
               provided in this Section 4.3, and shall deliver such opinion to
               the Collateral Agent within ten days after the occurrence of such
               Termination Event, and if (y) the Purchase Contract Agent shall
               be unable to obtain such opinion within ten days after the
               occurrence of such Termination Event or (z) the Collateral Agent
               shall continue, after delivery of such opinion, to refuse to
               effectuate the release and Transfer of all Pledged Notes, Pledged
               Treasury Consideration or Pledged Treasury Securities, as the
               case may be, as provided in this Section 4.3, then the Purchase
               Contract Agent shall within fifteen days after the occurrence of
               such Termination Event commence an action or proceeding in the
               court with jurisdiction of the Company's case under the
               Bankruptcy Code seeking an order requiring the Collateral Agent
               to effectuate the release and transfer of all Pledged Notes,
               Pledged Treasury Consideration or Pledged Treasury Securities, as
               the case may be, as provided by this Section 4.3 or

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

                                       11
<PAGE>

         SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement

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

         SECTION 4.5 Remarketing; Application of Proceeds; Settlement

         (a) Pursuant to the Purchase Contract Agreement, the Purchase Contract
Agent shall notify, by 10:00 a.m., New York City time, on the third Business Day
preceding the first day of any Remarketing Period, the Remarketing Agent and the
Collateral Agent of the aggregate principal amount of Notes comprising part of
Normal Units to be remarketed. The Collateral Agent shall, by 10:00 a.m., New
York City time, on the Business Day immediately preceding the first day of any
Remarketing Period, without any instruction from Holders of Normal Units,
deliver (i) the Pledged Notes to be remarketed to the Remarketing Agent for
remarketing and (ii) the remaining Pledged Notes to the Purchase Contract Agent
for distribution to the Holders that have elected not to participate in the
remarketing in accordance with the Purchase Contract Agreement. The Remarketing
Agent will agree pursuant to the Remarketing Agreement to deliver the
Agent-purchased Treasury Consideration purchased from the proceeds of a
successful remarketing to the Purchase Contract Agent, which shall thereupon
deliver such Agent-purchased Treasury Consideration to the Collateral Agent.
Upon receipt of the Agent-purchased Treasury Consideration from the Purchase
Contract Agent following a successful remarketing, the Collateral Agent, for the
benefit of the Company, shall thereupon hold such Agent-purchased Treasury
Consideration to secure such Holders' obligations under the Purchase Contracts.
On the Stock Purchase Date, the Collateral Agent shall apply that portion of the
payments received in respect of the Pledged

                                       12
<PAGE>

Treasury Consideration equal to the aggregate Stated Amount of the related
Normal Units to satisfy in full the obligations of such Holders of Normal Units
to pay the Purchase Price under the related Purchase Contracts. The remaining
portion of such proceeds, if any, shall be distributed by the Collateral Agent
to the Purchase Contract Agent for payment to each Holder of a Normal Unit a
cash payment in an amount equal to the quarterly interest payment on the Notes
at the initial annual rate of 8.875%.

         (b) Promptly following a Failed Remarketing, the Notes delivered to the
Remarketing Agent and the Purchase Contract Agent pursuant to Section 4.5(a)
shall be returned to the Collateral Agent, together with written notice from the
Remarketing Agent of the Failed Remarketing. The Collateral Agent, for the
benefit of the Company, shall thereupon hold such Notes to secure the
obligations of Holders of Normal Units under the Purchase Contracts. The
Remarketing Agent shall agree to make one or more attempts to remarket the Notes
in accordance with the procedures set forth in the Purchase Contract Agreement
and the Remarketing Agreement between the Remarketing Date and the Stock
Purchase Date, provided that the requirements of Section 5.4(b)(ii) of the
Purchase Contract Agreement have been met. If by 4:00 p.m., New York City time,
on the third Business Day immediately preceding the Stock Purchase Date the
Remarketing Agent has failed to remarket the Notes at a price equal to at least
100.25% of the Remarketing Value (as described in the Purchase Contract
Agreement), the "Last Failed Remarketing" shall be deemed to have occurred. In
this case, the Remarketing Agent will agree pursuant to the Remarketing
Agreement to advise the Collateral Agent in writing that it cannot remarket the
related Pledged Notes of such Holders of Normal Units and the Remarketing Agent
will agree pursuant to the Remarketing Agreement to promptly return to the
Collateral Agent the Notes delivered to it pursuant to Section 4.5(a). The
Collateral Agent, for the benefit of the Company will, at the written direction
of the Company, deliver or dispose of the Pledged Notes in accordance with the
Company's written instructions to satisfy in full, from any such disposition or
retention, such Holders' obligations to pay the Purchase Price for the Common
Stock; provided that if upon a Failed Remarketing or the Last Failed
Remarketing, as the case may be, the Collateral Agent delivers or disposes of
the Pledged Notes in accordance with the written instructions of the Company,
any accrued and unpaid interest on such Notes will become payable by the Company
to the Purchase Contract Agent for payment to the Holders of the Normal Units to
which such Notes relate in accordance with the Purchase Contract Agreement.

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

                                       13
<PAGE>

Price of the Purchase Contracts being settled thereby, the Collateral Agent
shall distribute such excess, when received, to the Purchase Contract Agent for
payment to such Holders of Stripped Units.

         (d) Pursuant to the Remarketing Agreement and Purchase Contract
Agreement, on or prior to the fourth Business Day preceding the first day of any
Remarketing Period, but no earlier than the Payment Date immediately preceding
the first day of such Remarketing Period, holders of Separate Notes may elect to
have their Separate Notes remarketed by delivering their Separate Notes,
together with a notice of such election, substantially in the form of Exhibit C
hereto, to the Custodial Agent. On the third Business Day prior to the first day
of any Remarketing Period, by 10:00 a.m., New York City time, the Custodial
Agent shall notify the Remarketing Agent of the principal amount of such
Separate Notes to be remarketed. The Custodial Agent will hold such Separate
Notes in an account separate from the Collateral Account. A holder of Separate
Notes electing to have its Separate Notes remarketed will also have the right to
withdraw such election by written notice to the Custodial Agent, substantially
in the form of Exhibit D hereto, on or prior to the fourth Business Day
immediately preceding the first day of any Remarketing Period, upon which notice
the Custodial Agent will return such Separate Notes to such holder. On the
Business Day immediately preceding the first day of any Remarketing Period, the
Custodial Agent will deliver to the Remarketing Agent for remarketing all
Separate Notes delivered to the Custodial Agent pursuant to this Section 4.5(d)
and not withdrawn pursuant to the terms hereof prior to such date. The portion
of the proceeds from such remarketing equal to the amount calculated in respect
of such Separate Notes as set forth in Section 5.4(b) of the Purchase Contract
Agreement will automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such Separate Notes. In
addition, after deducting as the remarketing fee an amount not exceeding 25
basis points (.25%) of the total proceeds of such remarketing of such Separate
Notes, the Remarketing Agent will agree pursuant to the Remarketing Agreement to
remit to the Custodial Agent the remaining portion of the proceeds, if any, for
payment to such holders. If, despite using commercially reasonable best efforts,
the Remarketing Agent advises the Custodial Agent in writing that there has been
a Failed Remarketing, the Remarketing Agent will agree pursuant to the
Remarketing Agreement to promptly return such Notes to the Custodial Agent for
redelivery to the holders of such Separate Notes. For purposes of this Section
4.5(d), a "holder" of a Separate Notes shall mean the Person in whose name such
Separate Notes is registered on the books of the registrar for the Notes.

                                       14
<PAGE>

                                   ARTICLE V

                             VOTING RIGHTS -- NOTES

         SECTION 5.1 Exercise by Purchase Contract Agent

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

                                   ARTICLE VI

                    RIGHTS AND REMEDIES; TAX EVENT REDEMPTION

         SECTION 6.1 Rights and Remedies of the Collateral Agent

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

                                       15
<PAGE>

Purchase Contracts or (ii) sale of the Pledged Notes or other Collateral in one
or more public or private sales or otherwise at the written direction of the
Company.

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

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

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

         SECTION 6.2 Substitutions

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

         SECTION 6.3 Tax Event Redemption

         Upon the occurrence of a Tax Event Redemption prior to the Stock
Purchase Date or the earlier successful remarketing of the Notes pursuant to
Section 5.4 of the Purchase

                                       16
<PAGE>

Contract Agreement and the receipt of the Redemption Price of the Pledged Notes
by the Collateral Agent, the Collateral Agent will, at the written direction of
the Company, apply the Redemption Price to purchase on behalf of the Holders of
Normal Units the Tax Event Redemption Treasury Consideration; provided, however,
that any amounts remaining after the purchase of the Tax Event Redemption
Treasury Consideration will be remitted promptly to the Purchase Contract Agent
for payment to the Holders of the Normal Units. The Collateral Agent shall
transfer the Tax Event Redemption Treasury Consideration to the Collateral
Account to secure the obligation of all Holders of Normal Units to purchase
Common Stock of the Company under the Purchase Contracts constituting a part of
such Normal Units, in substitution for the Pledged Notes. Thereafter the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Tax Event Redemption Treasury Consideration as it had in respect
of the Pledged Notes as provided in Articles II, III, IV, V and VI, and any
reference herein to the Notes shall be deemed to be reference to such Tax Event
Redemption Treasury Consideration, and any reference herein to interest on the
Notes shall be deemed to be a reference to corresponding distributions on such
Tax Event Redemption Treasury Consideration. Upon the occurrence of a Tax Event
Redemption, the Collateral Agent shall be authorized to surrender the Notes in
accordance with the provisions of the Indenture.

                                  ARTICLE VII

                    REPRESENTATIONS AND WARRANTIES; COVENANTS

         SECTION 7.1 Representations and Warranties of the Holders

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

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

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

         (c) upon the Transfer of the Collateral to the Collateral Account, the
Collateral Agent, for the benefit of the Company, will have a valid and
perfected first priority security interest therein (assuming that any central
clearing operation or any Intermediary or other entity not within the control of
the Holder involved in the Transfer

                                       17
<PAGE>

of the Collateral, including the Collateral Agent, gives the notices and takes
the action required of it hereunder and under applicable law for perfection of
that interest and assuming the establishment and exercise of control pursuant to
Section 2.2); and

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

         SECTION 7.2 Representations and Warranties of the Collateral Agent,
                     Custodial Agent and Securities Intermediary

         The Collateral Agent, Custodial Agent and Securities Intermediary (each
an "Agent") hereby represents and warrants:

         (a) The Collateral Agent, Custodial Agent and Securities Intermediary
is a banking corporation duly incorporated and validly existing under the laws
of the State of New York;

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

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

         (d) No consent of any federal or state banking authority is required
for the execution, delivery or performance by the Agents of their respective
obligations under this Agreement.

         SECTION 7.3 Covenants

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

                                       18
<PAGE>

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

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

                                  ARTICLE VIII

                              THE COLLATERAL AGENT

         SECTION 8.1 Appointment, Powers and Immunities

         (a) The Collateral Agent shall act as agent for the Company hereunder
with such powers as are specifically vested in the Collateral Agent by the terms
of this Agreement, together with such other powers as are reasonably incidental
thereto. Each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary:

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

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

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

                                       19
<PAGE>

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

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

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

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

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

         (d) The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall not be responsible or liable for any failure or delay in
the performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods, wars;
civil or military disturbances; sabotage; epidemics; riots; interruptions, loss
or malfunctions of utilities, computer (hardware or software) or communications
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.

         SECTION 8.2 Instructions of the Company.

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

                                       20
<PAGE>

         SECTION 8.3 Reliance

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

         SECTION 8.4 Rights in Other Capacities

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

         SECTION 8.5 Non-Reliance on Collateral Agent

         None of the Securities Intermediary, the Custodial Agent or the
Collateral Agent shall be required to keep itself informed as to the performance
or observance by the Purchase Contract Agent or any Holder of Units of this
Agreement, the Purchase Contract Agreement, the Units or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Purchase Contract Agent or any Holder of Units. The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall not have any
duty or responsibility to provide the Company or the Remarketing Agent with any
credit or other information concerning the affairs, financial condition or
business of the Purchase Contract Agent, any Holder of Units or any holder

                                       21
<PAGE>

of Separate Notes (or any of their respective subsidiaries or affiliates) that
may come into the possession of the Collateral Agent, the Custodial Agent or the
Securities Intermediary or any of their respective affiliates.

         SECTION 8.6 Compensation and Indemnity

         The Company agrees:

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

         (b) to indemnify the Collateral Agent, the Custodial Agent and the
Securities Intermediary (which for purposes of this paragraph, in each case,
shall include its directors, officers, employees and agents) for, and to hold
each of them harmless from and against, any loss, liability or reasonable
out-of-pocket expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
reasonable out-of-pocket costs and expenses (including reasonable fees and
expenses of counsel) of defending itself against any claim or liability in
connection with the exercise or performance of such powers and duties or
collecting such amounts. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall each promptly notify the Company of any third
party claim which may give rise to the indemnity hereunder and give the Company
the opportunity to control the defense of such claim with counsel reasonably
satisfactory to the indemnified party and no such claim shall be settled without
the written consent of the Company, which consent shall not be unreasonably
withheld.

         SECTION 8.7 Failure to Act

         In the event of any ambiguity in the provisions of this Agreement or
any dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, the
Collateral Agent, Custodial Agent and the Securities Intermediary shall be
entitled, after prompt notice to the Company and the Purchase Contract Agent, at
its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent, Custodial Agent nor
the Securities Intermediary shall be or become liable in any way to any of the
parties hereto for its failure or refusal to comply with such conflicting
claims, demands or instructions. The Collateral Agent, Custodial Agent and the
Securities Intermediary shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined by a
court of competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, reasonably satisfactory to the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, or
(ii) the Collateral Agent, the Custodial Agent or the Securities

                                       22
<PAGE>

Intermediary, as the case may be, shall have received security or an indemnity
reasonably satisfactory to the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, sufficient to save the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be,
harmless from and against any and all loss, liability or reasonable
out-of-pocket expense which the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, may incur by reason of its acting
without bad faith, willful misconduct or negligence. The Collateral Agent,
Custodial Agent or the Securities Intermediary may in addition elect to commence
an interpleader action or seek other judicial relief or orders as the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, may
deem necessary. Notwithstanding anything contained herein to the contrary,
neither the Collateral Agent, Custodial Agent nor the Securities Intermediary
shall be required to take any action that is in its reasonable opinion contrary
to law or to the terms of this Agreement, or which would in its reasonable
opinion subject it or any of its officers, employees or directors to liability.

         SECTION 8.8 Resignation

         Subject to the appointment and acceptance of a successor Collateral
Agent, Custodial Agent or Securities Intermediary, as provided below, (a) the
Collateral Agent, Custodial Agent and the Securities Intermediary may resign at
any time by giving notice thereof to the Company and the Purchase Contract Agent
as attorney-in-fact for the Holders of Units, (b) the Collateral Agent,
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, Custodial Agent or the Securities
Intermediary fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving written
notice of such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, Custodial Agent or the Securities Intermediary
may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (c) of the
immediately preceding sentence. Upon any such resignation or removal, the
Company shall have the right to appoint a successor Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be. If no successor Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, shall
have been so appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's, Custodial Agent's or Securities
Intermediary's giving of notice of resignation or such removal, then the
retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, may at the Company's expense petition any court of competent
jurisdiction for the appointment of a successor Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be. Upon removal of the
Collateral Agent, Custodial Agent or Securities Intermediary, no fees paid to
the retiring Collateral Agent, Custodial Agent or Securities Intermediary
pursuant to Section 8.6(a) of this Agreement shall be refunded. Each of the
Collateral Agent, Custodial Agent and the Securities Intermediary shall be a
bank which has an office in New York, New York with a combined capital and
surplus of at least $50,000,000. Upon the acceptance of any appointment as
Collateral Agent, Custodial

                                       23
<PAGE>

Agent or Securities Intermediary, as the case may be, hereunder by a successor
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be, such successor shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, and the retiring
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be, shall take all appropriate action to transfer any money and property held by
it hereunder (including the Collateral) to such successor. The retiring
Collateral Agent, Custodial Agent or Securities Intermediary shall, upon such
succession, be discharged from its duties and obligations as Collateral Agent,
Custodial Agent or Securities Intermediary hereunder. After any retiring
Collateral Agent's, Custodial Agent's or Securities Intermediary's resignation
hereunder as Collateral Agent, Custodial Agent or Securities Intermediary, the
provisions of this Section 8.8 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Collateral Agent, Custodial Agent or Securities Intermediary. Any
resignation or removal of the Collateral Agent hereunder shall be deemed for all
purposes of this Agreement as the simultaneous resignation or removal of the
Custodial Agent and the Securities Intermediary hereunder.

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

         SECTION 8.9 Right to Appoint Agent or Advisor

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

         SECTION 8.10 Survival

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

         SECTION 8.11 Exculpation

         Anything in this Agreement to the contrary notwithstanding, in no event
shall any of the Collateral Agent, the Custodial Agent or the Securities
Intermediary or their

                                       24
<PAGE>

officers, employees or agents be liable under this Agreement to any third party
for indirect, special, punitive or consequential loss or damage of any kind
whatsoever, including lost profits, whether or not the likelihood of such loss
or damage was known to the Collateral Agent, the Custodial Agent or the
Securities Intermediary, or any of them, incurred without any act or deed that
is found to be attributable to negligence, bad faith or willful misconduct on
the part of the Collateral Agent, the Custodial Agent or the Securities
Intermediary.

                                   ARTICLE IX

                                    AMENDMENT

         SECTION 9.1 Amendment Without Consent of Holders

         Without the consent of any Holders or the holders of any Separate
Notes, the Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, at any time and from time to time,
may amend this Agreement, in form satisfactory to the Company, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent, for any of the following purposes:

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

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

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

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

         SECTION 9.2 Amendment with Consent of Holders

         With the consent of the Holders of not less than a majority of the
Purchase Contracts at the time outstanding, by Act of said Holders delivered to
the Company, the Purchase Contract Agent or the Collateral Agent, as the case
may be, the Company, when

                                       25
<PAGE>

duly authorized, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary may amend this Agreement for the
purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Units; provided that no such
supplemental agreement shall, without the consent of the Holder of each
Outstanding Unit adversely affected thereby,

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

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

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

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

         SECTION 9.3 Execution of Amendments

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

         SECTION 9.4 Effect of Amendments

         Upon the execution of any amendment under this Article IX, this
Agreement shall be modified in accordance therewith, and such amendment shall
form a part of this Agreement for all purposes; and every Holder of Certificates
theretofore or thereafter

                                       26
<PAGE>

authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.

         SECTION 9.5 Reference to Amendments

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

                                   ARTICLE X

                                  MISCELLANEOUS

         SECTION 10.1 No Waiver

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

         SECTION 10.2 GOVERNING LAW

         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF. Without limiting the foregoing, the above choice of law is
expressly agreed to by the Securities Intermediary, the Collateral Agent, the
Custodial Agent and the Holders from time to time acting through the Purchase
Contract Agent, as their attorney-in-fact, in connection with the establishment
and maintenance of the Collateral Account, which law, for purposes of the Code,
shall be deemed to be the law governing all Security Entitlements related
thereto. In addition, such parties agree that, for purposes of the Code, New
York shall be the Securities Intermediary's jurisdiction. The Company, the
Collateral Agent and the Holders from time to time of the Units, acting through
the Purchase Contract Agent as their attorney-in-fact, hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in the Borough of
Manhattan in New York City for the purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated

                                       27
<PAGE>

hereby. The Company, the Collateral Agent and the Holders from time to time of
the Units, acting through the Purchase Contract Agent as their attorney-in-fact,
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.

         SECTION 10.3 Notices

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

         SECTION 10.4 Successors and Assigns

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

         SECTION 10.5 Counterparts

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

         SECTION 10.6 Severability

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

                                       28
<PAGE>

         SECTION 10.7 Expenses, Etc.

         The Company agrees to reimburse the Collateral Agent, the Securities
Intermediary and the Custodial Agent for:

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

         (b) all reasonable costs and expenses of the Collateral Agent (which
for purposes of this paragraph shall include its directors, officers, employees
and agents) (including, without limitation, reasonable fees and expenses of
counsel) in connection with (i) any enforcement or proceedings resulting or
incurred in connection with causing any Holder of Units to satisfy its
obligations under the Purchase Contracts forming a part of the Units and (ii)
the enforcement of this Section 10.7; and

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

         SECTION 10.8 Security Interest Absolute

         All rights of the Collateral Agent and security interests hereunder,
and all obligations of the Holders from time to time hereunder, shall be
absolute and unconditional irrespective of:

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

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

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

                                       29
<PAGE>

         SECTION 10.9 Waiver of Jury Trial

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

                                       30
<PAGE>

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

                                     HOUSEHOLD INTERNATIONAL, INC.

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

                                     Address for Notices:

                                     2700 Sanders Road
                                     Prospect Heights, Illinois 60070
                                     Attention: Treasurer
                                     Telecopy: (847) 205-7538
                                     Telephone: (847) 564-7958

                                     THE BANK OF NEW YORK,
                                     as Purchase Contract Agent and
                                     as attorney-in-fact of the Holders
                                     from time to time of the Units

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

                                     Address for Notices:

                                     Suite 1020
                                     2 North LaSalle Street
                                     Chicago, Illinois 60602
                                     Attention: Corporate Trust Administration
                                     Telecopy: (312) 827-8542
                                     Telephone: (312) 827-8547

<PAGE>
                                     JPMORGAN CHASE BANK,
                                     as Collateral Agent, Custodial Agent
                                     and Securities Intermediary

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

                                     Address for Notices:

                                     4 New York Plaza
                                     15th Floor
                                     New York, New York 10004
                                     Attention: Institutional Trust Services
                                     Telecopy: 212-623-6167
                                     Telephone: 212-623-6797

<PAGE>
                                                                       EXHIBIT A

                       INSTRUCTION FROM PURCHASE CONTRACT
                            AGENT TO COLLATERAL AGENT

JPMorgan Chase Bank
4 New York Plaza
15th Floor
New York, New York 10004
Attention: Institutional Trust Services

                  Re:  8.875% Adjustable Conversion-Rate Equity Security
                       Units of Household International, Inc. (the "Company")

         We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of October 30, 2002, (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Normal Units] [Stripped Units] from time to time, that the
holder of Units listed below (the "Holder") has elected to substitute [$_____
aggregate principal amount of Treasury Securities (CUSIP No. _____)] [$_______
aggregate principal amount of Notes or $_____ aggregate principal amount of
Treasury Consideration (CUSIP No. _____)] in exchange for the related [Pledged
Notes or Pledged Treasury Consideration] [Pledged Treasury Securities] held by
you in accordance with the Pledge Agreement and has delivered to us a notice
stating that the Holder has Transferred [Treasury Securities] [Notes or the
Treasury Consideration] to you, as Collateral Agent. We hereby instruct you,
upon receipt of such [Pledged Treasury Securities] [Pledged Notes or Pledged
Treasury Consideration], to release the [Notes or the Treasury Consideration]
[Treasury Securities] related to such [Normal Units] [Stripped Units] to us in
accordance with the Holder's instructions. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.

Date:  ________________

                                     THE BANK OF NEW YORK,
                                     as Purchase Contract Agent

                                     By: _____________________
                                         Name:
                                         Title:

                                      A-1
<PAGE>

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

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

                                      A-2
<PAGE>

                                                                       EXHIBIT B

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

The Bank of New York
   as Purchase Contract Agent
Suite 1020
2 North LaSalle Street
Chicago, Illinois 60602

Attention: Corporate Trust Administration

                  Re:  8.875% Adjustable Conversion-Rate Equity Security
                       Units of Household International, Inc. (the "Company")

         The undersigned Holder hereby notifies you that it has delivered to
JPMorgan Chase Bank, as Collateral Agent, [$_______ aggregate principal amount
of Treasury Securities (CUSIP No. _____)] [$_______ aggregate principal amount
of Notes or $_____ principal amount of Treasury Consideration (CUSIP No. _____)]
in exchange for the related [Pledged Notes or Pledged Treasury Consideration]
[Pledged Treasury Securities] held by the Collateral Agent, in accordance with
Section 4.1 of the Pledge Agreement, dated as of October 30, 2002 (the "Pledge
Agreement"), between you, the Company and the Collateral Agent. The undersigned
Holder hereby instructs you to instruct the Collateral Agent to release to you
on behalf of the undersigned Holder the [Pledged Notes or the Pledged Treasury
Consideration] [Pledged Treasury Securities] related to such [Normal Units]
[Stripped Units]. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.

Date:  ___________________                  Signature:__________________________

                                            Signature Guarantee: _______________

Please print name and address of Registered Holder:

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

                                      B-1
<PAGE>
                                                                       EXHIBIT C

              INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING

JPMorgan Chase Bank
4 New York Plaza
15th Floor
New York, New York 10004
Attention: Institutional Trust Services

                  Re:  Notes of Household Finance Corporation

         The undersigned hereby notifies you in accordance with Section 4.5(d)
of the Pledge Agreement, dated as of October 30, 2002 (the "Pledge Agreement"),
among Household International, Inc., yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and The Bank of New York, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Normal Units and Stripped Units
from time to time, that the undersigned elects to deliver on the fourth Business
Day immediately preceding the first day of the Remarketing Period commencing on
__________, [2005][2006] $__________ aggregate principal amount of Notes for
delivery to the Remarketing Agent for remarketing pursuant to Section 4.5(d) of
the Pledge Agreement. The undersigned will, upon request of the Remarketing
Agent, execute and deliver any additional documents deemed by the Remarketing
Agent or by the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Notes tendered hereby.

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

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

Date:      _______________
                                          Signature:__________________________

                                      C-1
<PAGE>

                                          Signature Guarantee:

Name:             ________________________________
                  (Please Print)
Address:          ________________________________
                  (Please Print)
Country:
Zip Code:
Telecopy (include country code if outside U.S.):
Telephone (include country code if outside U.S.):
(Tax Identification or Social Security Number):

A.  PAYMENT INSTRUCTIONS

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

Name(s):          ________________________________
                  (Please Print)
Address:          ________________________________
                  (Please Print)
Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

                                      C-2
<PAGE>

B.  DELIVERY INSTRUCTIONS

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

Name(s):          ________________________________
                  (Please Print)

Address:          ________________________________
                  (Please Print)
Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

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

Name of Account Party:                                DTC Account Number:

                                      C-3
<PAGE>

                                                                       EXHIBIT D

                    INSTRUCTION TO CUSTODIAL AGENT REGARDING
                           WITHDRAWAL FROM REMARKETING

JPMorgan Chase Bank
4 New York Plaza
15th Floor
New York, New York 10004
Attention: Institutional Trust Services

                  Re:  Notes of Household Finance Corporation

         The undersigned hereby notifies you in accordance with Section 4.5(d)
of the Pledge Agreement, dated as of October 30, 2002 (the "Pledge Agreement"),
among Household International, Inc., yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and The Bank of New York, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Normal Units and Stripped Units
from time to time, that the undersigned elects to withdraw the $_____ aggregate
principal amount of Notes delivered to the Custodial Agent on ___________,
[2005][2006] for remarketing pursuant to Section 4.5(d) of the Pledge Agreement.
The undersigned hereby instructs you to return such Notes to the undersigned in
accordance with the undersigned's instructions. With this notice, the
undersigned hereby agrees to be bound by the terms and conditions of Section
4.5(d) of the Pledge Agreement. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.

Date:      _______________
                                               Signature:_______________________

                                               Signature Guarantee:
Name(s):      _____________________________
              (Please Print)
Address:      _____________________________
              (Please Print)
Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

                                      D-1
<PAGE>

A.  DELIVERY INSTRUCTIONS

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

Name(s):      ________________________________
              (Please Print)

Address:      ________________________________
              (Please Print)
Zip Code:

Country:

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

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

(Tax Identification or Social Security Number):

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

Name of Account Party:                                     DTC Account Number:

                                      D-2

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