Document:

<PAGE>
                                                                     EXHIBIT 4.2

                           ISTA PHARMACEUTICALS, INC.

                                       AND

                          MELLON INVESTOR SERVICES LLC

                                  RIGHTS AGENT

                        PREFERRED STOCK RIGHTS AGREEMENT

                          DATED AS OF DECEMBER 31, 2001

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>             <C>                                                                    <C>
Section 1.      Certain Definitions ................................................    1

Section 2.      Appointment of Rights Agent ........................................    7

Section 3.      Issuance of Rights Certificates ....................................    7

Section 4.      Form of Rights Certificates ........................................    9

Section 5.      Countersignature and Registration ..................................   10

Section 6.      Transfer, Split Up, Combination and Exchange of
                 Rights Certificates; Mutilated, Destroyed, Lost
                 or Stolen Rights Certificates .....................................   10

Section 7.      Exercise of Rights; Exercise Price; Expiration Date of Rights ......   11

Section 8.      Cancellation and Destruction of Rights Certificates ................   13

Section 9.      Reservation and Availability of Preferred Shares ...................   13

Section 10.     Record Date ........................................................   15

Section 11.     Adjustment of Exercise Price, Number of Shares or Number of Rights .   15

Section 12.     Certificate of Adjusted Exercise Price or Number of Shares .........   15

Section 13.     Consolidation, Merger or Sale or Transfer of Assets or Earning Power   21

Section 14.     Fractional Rights and Fractional Shares ............................   22

Section 15.     Rights of Action ...................................................   27

Section 16.     Agreement of Rights Holders ........................................   27

Section 17.     Rights Certificate Holder Not Deemed a Stockholder .................   27

Section 18.     Concerning the Rights Agent ........................................   28

Section 19.     Merger or Consolidation or Change of Name of Rights Agent ..........   28

Section 20.     Duties of Rights Agent .............................................   29

Section 21.     Change of Rights Agent .............................................   31

Section 22.     Issuance of New Rights Certificates ................................   32
</TABLE>
<PAGE>

<TABLE>
<S>             <C>                                                                    <C>
Section 23.     Redemption .........................................................   32

Section 24.     Exchange ...........................................................   33

Section 25.     Notice of Certain Events ...........................................   35

Section 26.     Notices ............................................................   35

Section 27.     Supplements and Amendments .........................................   36

Section 28.     Successors .........................................................   37

Section 29.     Determinations and Actions by the Board of Directors, etc ..........   37

Section 30.     Benefits of this Agreement .........................................   37

Section 31.     Severability .......................................................   37

Section 32.     Governing Law ......................................................   38

Section 33.     Counterparts .......................................................   38

Section 34.     Descriptive Headings ...............................................   39
</TABLE>

EXHIBITS

Exhibit A         Form of Certificate of Designation

Exhibit B         Form of Rights Certificate

Exhibit C         Summary of Rights
<PAGE>

                        PREFERRED STOCK RIGHTS AGREEMENT

         This Preferred Stock Rights Agreement is dated as of December 31, 2001,
between ISTA Pharmaceuticals, Inc., a Delaware corporation, and Mellon Investor
Services LLC, a New Jersey limited liability company.

         On December 5, 2001, (the "RIGHTS DIVIDEND DECLARATION DATE"), the
Board of Directors of the Company authorized and declared a dividend of one
Preferred Share Purchase Right (a "RIGHT") for each Common Share (as hereinafter
defined) of the Company outstanding as of the Close of Business (as hereinafter
defined) on January 25, 2002 (the "RECORD DATE"), each Right representing the
right to purchase one one-thousandth (0.001) of a share of Series A
Participating Preferred Stock (as such number may be adjusted pursuant to the
provisions of this Agreement), having the rights, preferences and privileges set
forth in the form of Certificate of Designations of Rights, Preferences and
Privileges of Series A Participating Preferred Stock attached hereto as Exhibit
A, upon the terms and subject to the conditions herein set forth, and further
authorized and directed the issuance of one Right (as such number may be
adjusted pursuant to the provisions of this Agreement) with respect to each
Common Share that shall become outstanding between the Record Date and the
earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined), and in certain circumstances after the Distribution Date.

         NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:

         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:

                  (a) "ACQUIRING PERSON" shall mean any Person, other than
Sanderling Venture Partners IV LP and Sanderling Venture Partners V LP and the
Affiliates and Associates of such Persons (the "Sanderling Group") provided the
number of shares beneficially owned by the Sanderling Group does not exceed 25%
of the Common Shares of the Company then outstanding, who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Shares then outstanding, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person as the result of an acquisition
of Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Shares of the Company
(other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person shall be deemed
to be an Acquiring Person unless upon becoming the
<PAGE>
Beneficial Owner of such additional Common Shares of the Company such Person
does not beneficially own 15% or more of the Common Shares of the Company then
outstanding. Notwithstanding the foregoing, (i) if the Company's Board of
Directors determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently (including, without limitation,
because (A) such Person was unaware that it beneficially owned a percentage of
the Common Shares that would otherwise cause such Person to be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
or (B) such Person was aware of the extent of the Common Shares it beneficially
owned but had no actual knowledge of the consequences of such beneficial
ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divested or divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be or
to have become an "Acquiring Person" for any purposes of this Agreement; and
(ii) if, as of the date hereof, any Person is the Beneficial Owner of 15% or
more of the Common Shares outstanding, such Person shall not be or become an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), unless and until such time as such Person shall become the
Beneficial Owner of additional Common Shares (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common Shares in
Common Shares or pursuant to a split or subdivision of the outstanding Common
Shares), unless, upon becoming the Beneficial Owner of such additional Common
Shares, such Person is not then the Beneficial Owner of 15% or more of the
Common Shares then outstanding.

                  (b) "ADJUSTMENT FRACTION" shall have the meaning set forth in
Section 11(a)(i) hereof.

                  (c) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.

                  (d) A Person shall be deemed the "BENEFICIAL OWNER" of and
shall be deemed to "BENEFICIALLY OWN" any securities:

                               (i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for purposes
of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder (or any
comparable or successor law or
regulation);

                               (ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed pursuant to this
Section 1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially own, (1)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or

                                      -2-
<PAGE>
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (2) securities which a Person or any of
such Person's Affiliates or Associates may be deemed to have the right to
acquire pursuant to any merger or other acquisition agreement between the
Company and such Person (or one or more of its Affiliates or Associates) if such
agreement has been approved by the Board of Directors of the Company prior to
there being an Acquiring Person; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any security
under this Section 1(d)(ii)(B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or

                               (iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding, whether or not in writing (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to
Section 1(d)(ii)(B)) or disposing of any securities of the Company; provided,
however, that in no case shall an officer or director of the Company be deemed
(x) the Beneficial Owner of any securities beneficially owned by another officer
or director of the Company solely by reason of actions undertaken by such
persons in their capacity as officers or directors of the Company or (y) the
Beneficial Owner of securities held of record by the trustee of any employee
benefit plan of the Company or any Subsidiary of the Company for the benefit of
any employee of the Company or any Subsidiary of the Company, other than the
officer or director, by reason of any influence that such officer or director
may have over the voting of the securities held in the plan.

                  (e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.

                  (f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.
M., New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.

                  (g) "COMMON STOCK EQUIVALENTS" shall have the meaning set
forth in Section 11(a)(iii) hereof. "COMMON SHARES" when used with reference to
the Company shall mean the shares of Common Stock of the Company, par value at
$0.001 per share. Common Shares when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.

                                      -3-
<PAGE>

                  (h) "COMPANY" shall mean ISTA Pharmaceuticals, Inc. , a
Delaware corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

                  (i) "CURRENT PER SHARE MARKET PRICE" of any security (a
"Security" for purposes of this definition), for all computations other than
those made pursuant to Section 11(a)(iii) hereof, shall mean the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price
of any Security on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the ten (10) consecutive Trading
Days immediately prior to such date; provided, however, that in the event that
the Current Per Share Market Price of the Security is determined during a period
following the announcement by the issuer of such Security of (i) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or
reclassification of such Security, and prior to the expiration of the applicable
thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last sale price or, if such last sale price is not reported, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Security, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used. If the Preferred Shares are not publicly traded, the
Current Per Share Market Price of the Preferred Shares shall be conclusively
deemed to be (x) the Current Per Share Market Price of the Common Shares as
determined pursuant to this Section 1(i), as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof, multiplied by (y) 1,000. If the Security is not publicly held or so
listed or traded, Current Per Share Market Price shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

                  (j) "CURRENT VALUE" shall have the meaning set forth in
Section 11(a)(iii) hereof.

                  (k) "DISTRIBUTION DATE" shall mean the earlier of (i) the
Close of Business on the tenth (10th) day (or such later date as may be
determined by action of the Company's Board of Directors) after the Shares
Acquisition

                                      -4-
<PAGE>
Date (or, if the tenth (10th) day after the Shares Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date) or (ii) the
Close of Business on the tenth (10th) Business Day (or such later date as may be
determined by action of the Company's Board of Directors) after the date that a
tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if, assuming the successful consummation
thereof, such Person would be an Acquiring Person.

                  (l) "EQUIVALENT SHARES" shall mean Preferred Shares and any
other class or series of capital stock of the Company which is entitled to the
same rights, privileges and preferences as the Preferred Shares.

                  (m) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.

                  (n) "EXCHANGE RATIO" shall have the meaning set forth in
Section 24(a) hereof.

                  (o) "EXERCISE PRICE" shall have the meaning set forth in
Section 4(a) hereof.

                  (p) "EXPIRATION DATE" shall mean the earliest to occur of: (i)
the Close of Business on the Final Expiration Date, (ii) the Redemption Date, or
(iii) the time at which the Board of Directors orders the exchange of the Rights
as provided in Section 24 hereof.

                  (q) "FINAL EXPIRATION DATE" shall mean January 25, 2012.

                  (r) "NYSE" shall mean the NEW YORK STOCK EXCHANGE Stock
Market, Inc.

                  (s) "PERSON" shall mean any individual, firm, corporation,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.

                  (t) "POST-EVENT TRANSFEREE" shall have the meaning set forth
in Section 7(e) hereof.

                  (u) "PREFERRED SHARES" shall mean shares of Series A
Participating Preferred Stock, par value $0.001 per share, of the Company.

                  (v) "PRE-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

                  (w) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b) hereof.

                                      -5-
<PAGE>

                  (x) "RECORD DATE" shall have the meaning set forth in the
recitals at the beginning of this Agreement.

                  (y) "REDEMPTION DATE" shall have the meaning set forth in
Section 23(a) hereof.

                  (z) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a) hereof.

                  (aa) "RIGHTS AGENT" shall mean (i) Mellon Investor Services
LLC, (ii) its successor or replacement as provided in Sections 19 and 21 hereof
or (iii) any additional Person appointed pursuant to Section 2 hereof.

                  (bb) "RIGHTS CERTIFICATE" shall mean a certificate
substantially in the form attached hereto as Exhibit B.

                  (cc) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning
set forth in the recitals at the beginning of this Agreement.

                  (dd) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning
set forth in Section 11(a)(iii) hereof.

                  (ee) "SECTION 13 EVENT" shall mean any event described in
clause (i), (ii) or (iii) of Section 13(a) hereof.

                  (ff) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.

                  (gg) "SHARES ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such; provided that, if such Person is determined not to have become an
Acquiring Person pursuant to Section 1(a) hereof, then no Shares Acquisition
Date shall be deemed to have occurred.

                  (hh) "SPREAD" shall have the meaning set forth in Section
11(a)(iii) hereof.

                  (ii) "SUBSIDIARY" of any Person shall mean any corporation or
other entity of which an amount of voting securities sufficient to elect a
majority of the directors or Persons having similar authority of such
corporation or other entity is beneficially owned, directly or indirectly, by
such Person, or any corporation or other entity otherwise controlled by such
Person.

                                      -6-
<PAGE>

                  (jj) "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii) hereof.

                  (kk) "SUMMARY OF RIGHTS" shall mean a summary of this
Agreement substantially in the form attached hereto as Exhibit C.

                  (ll) "TOTAL EXERCISE PRICE" shall have the meaning set forth
in Section 4(a) hereof.

                  (mm) "TRADING DAY" shall mean a day on which the principal
national securities exchange on which a referenced security is listed or
admitted to trading is open for the transaction of business or, if a referenced
security is not listed or admitted to trading on any national securities
exchange, a Business Day.

                  (nn) A "TRIGGERING EVENT" shall be deemed to have occurred
upon any Person becoming an Acquiring Person.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any co-Rights Agent.

         Section 3. Issuance of Rights Certificates.

                  (a) Until the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates and (ii) the right to receive Rights Certificates
will be transferable only in connection with the transfer of Common Shares.
Until the earlier of the Distribution Date or the Expiration Date, the surrender
for transfer of certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested
and provided with a shareholder list and all relevant information, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Rights Certificate evidencing one Right
for each Common Share so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per Common Share has been made
pursuant to Section 11 hereof, then at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with

                                      -7-
<PAGE>
Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights (in accordance with Section 14(a) hereof). As of the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificates as permitted hereby,
separately and apart from any transfer of Common Shares, and the holders of such
Rights Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders thereof.

                  (b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company's transfer agent and registrar. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights.

                  (c) Unless the Board of Directors by resolution adopted at or
before the time of the issuance of any Common Shares after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date (or, in
certain circumstances provided in Section 22 hereof, after the Distribution
Date) specifies to the contrary, Rights shall be issued in respect of all Common
Shares that are so issued, and Certificates representing such Common Shares
shall also be deemed to be certificates for Rights, and shall bear the following
legend:

         THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
         CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN ISTA
         PHARMACEUTICALS, INC. AND MELLON INVESTOR SERVICES LLC, AS THE RIGHTS
         AGENT, DATED AS OF DECEMBER 31, 2001 (THE "RIGHTS AGREEMENT"), THE
         TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY
         OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF ISTA
         PHARMACEUTICALS, INC. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
         RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE
         CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE
         COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE
         RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST
         THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
         AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
         BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS
         SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD
         BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
         NULL AND VOID.

With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Shares represented by such

                                      -8-
<PAGE>
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.

                  (d) In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.

         Section 4.        Form of Rights Certificates.

                  (a) The Rights Certificates (and the forms of election to
purchase Common Shares and of assignment to be printed on the reverse thereof)
shall be substantially in the form of Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect the
rights, duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or a national
market system, on which the Rights may from time to time be listed or included,
or to conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date (or in the case of Rights issued with respect to Common Shares
issued by the Company after the Record Date, as of the date of issuance of such
Common Shares) and on their face shall entitle the holders thereof to purchase
such number of one-thousandths (0.001) of a Preferred Share as shall be set
forth therein at the price set forth therein (such exercise price per one
one-thousandth (0.001) of a Preferred Share being hereinafter referred to as the
"EXERCISE PRICE" and the aggregate Exercise Price of all Preferred Shares
issuable upon exercise of one Right being hereinafter referred to as the "TOTAL
EXERCISE PRICE"), but the number and type of securities purchasable upon the
exercise of each Right and the Exercise Price shall be subject to adjustment as
provided herein.

                  (b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a Post-Event
Transferee, (iii) a Pre-Event Transferee or (iv) any subsequent transferee
receiving transferred Rights from a Post-Event Transferee or a Pre-Event
Transferee, either directly or through one or more intermediate transferees, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:

         THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
         BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
         AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
         DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
         AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE

                                      -9-
<PAGE>

      CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.

      Section 5. Countersignature and Registration.

            (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its Chief
Financial Officer, its President or any Vice President, either manually or by
facsimile signature, and by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal (if any) or a facsimile thereof. The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates on behalf of the Company had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.

            (b) Following the Distribution Date and receipt by the Rights Agent
of all necessary information, the Rights Agent will keep or cause to be kept, at
its office designated for such purposes, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.

      Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.

            (a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of one-thousandths (0.001) of a Preferred
Share (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until

                                      -10-
<PAGE>
the registered holder shall have properly completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request. Thereupon
the Rights Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign
and deliver to the person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment from the registered holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates. The Rights Agent shall have
no duty or obligation to take any action under any Section of this Agreement
which requires the payment by a Rights Holder of applicable taxes and
governmental charges unless and until the Rights Agent is reasonably satisfied
that all such taxes and/or charges have been paid.

            (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security satisfactory to them, and, at the Company's or the Rights Agent's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.

      Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.

            (a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date and prior to the Close of Business on the Expiration Date by
surrender of the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Exercise
Price for each one-thousandth (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be) as
to which the Rights are exercised.

            (b) The Exercise Price for each one-thousandth (0.001) of a
Preferred Share issuable pursuant to the exercise of a Right shall initially be
$50.00, shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.

            (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Exercise Price for the number of one-thousandths (0.001) of a
Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) to be purchased and an amount equal to any
applicable tax or charge required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly

                                      -11-
<PAGE>
(i) (A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent for the Preferred Shares) a
certificate or certificates for the number of one-thousandths (0.001) of a
Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests or
(B) if the Company shall have elected to deposit the total number of
one-thousandths (0.001) of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets as the case may be) issuable upon
exercise of the Rights hereunder with a depository agent, requisition from the
depository agent depository receipts representing such number of one-thousandths
(0.001) of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) as are to be purchased (in
which case certificates for the Preferred Shares (or, following a Triggering
Event, other securities, cash or other assets as the case may be) represented by
such receipts shall be deposited by the transfer agent with the depository
agent) and the Company hereby directs the depository agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depository receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder and (iv) when appropriate, after receipt thereof, deliver such
cash to or upon the order of the registered holder of such Rights Certificate.
The payment of the Exercise Price (as such amount may be reduced (including to
zero) pursuant to Section 11(a)(iii) hereof) and an amount equal to any
applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, may be made in cash or by
certified bank check, cashier's check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue securities of the
Company other than Preferred Shares, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.

            (d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate or to
his or her duly authorized assigns, subject to the provisions of Section 14
hereof.

            (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Triggering Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such (a
"POST-EVENT TRANSFEREE"), (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Company's Board of Directors has determined is part of a plan, agreement,
arrangement or understanding which has as a primary

                                      -12-
<PAGE>
purpose or effect the avoidance of this Section 7(e) (a "PRE-EVENT TRANSFEREE")
or (iv) any subsequent transferee receiving transferred Rights from a Post-Event
Transferee or a Pre-Event Transferee, either directly or through one or more
intermediate transferees, shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall notify the Rights Agent when this Section 7(e) applies and shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) hereof are complied with, but neither the Company nor the
Rights Agent shall have any liability to any holder of Rights Certificates or to
any other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any of such Acquiring Person's Affiliates,
Associates or transferees hereunder.

            (f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in Section 7 unless such registered holder shall, in
addition to having complied with the requirements of subsection 7(a), have (i)
duly and properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request.

      Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate evidencing the destruction thereof to the Company.

      Section 9. Reservation and Availability of Preferred Shares.

            (a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of its authorized and
unissued Preferred Shares not reserved for another purpose (and, following the
occurrence of a Triggering Event, out of its authorized and unissued Common
Shares and/or other securities), the number of Preferred Shares (and, following
the occurrence of the Triggering Event, Common Shares and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.

            (b) If the Company shall hereafter list any of its Preferred Shares
on a national securities exchange, then so long as the Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of

                                      -13-
<PAGE>
the Rights may be listed on such exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable (but
only to the extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.

            (c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Triggering Event in which the consideration to be delivered by the Company upon
exercise of the Rights is described in Section 11(a)(ii) or Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act with respect to
the securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the date of expiration of the
Rights. The Company may temporarily suspend, for a period not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating, and notify
the Rights Agent, that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and notification to the Rights Agent
at such time as the suspension is no longer in effect. The Company will also
take such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction, unless
the requisite qualification in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available, and until a registration statement has
been declared and remains effective.

            (d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (or other
securities of the Company) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such securities (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.

            (e) The Company further covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges which may be payable
in respect of the original issuance or delivery of the Rights Certificates or of
any Preferred Shares (or other securities of the Company) upon the exercise of
Rights. The Company shall not, however, be required to pay any tax or charge
which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of certificates
or depository receipts for the Preferred Shares (or other securities of the
Company) in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depository receipts for Preferred Shares (or other
securities of the Company) upon the exercise of any Rights until any such tax or
charge shall have been paid (any such tax or charge being payable

                                      -14-
<PAGE>
by the holder of such Rights Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax or charge is
due.

      Section 10. Record Date. Each Person in whose name any certificate for a
number of one-thousandths (0.001) of a Preferred Share (or other securities of
the Company) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of Preferred Shares (or other
securities of the Company) represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Total Exercise Price with respect to which
the Rights have been exercised (and any applicable taxes and charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of Preferred Shares (or other securities of the Company) for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.

      Section 11. Adjustment of Exercise Price, Number of Shares or Number of
Rights. The Exercise Price, the number and kind of shares or other property
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.

            (a) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of
Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification shall be adjusted so that
the Exercise Price thereafter shall equal the result obtained by dividing the
Exercise Price in effect immediately prior to such time by a fraction (the
"ADJUSTMENT FRACTION"), the numerator of which shall be the total number of
Preferred Shares (or shares of capital stock issued in such reclassification of
the Preferred Shares) outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares outstanding
immediately prior to such time; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of such Right; and (2) the number of one-thousandths (0.001) of a
Preferred Share (or share of such other capital stock) issuable upon the
exercise of each Right shall equal the number of one-thousandths (0.001) of a
Preferred Share (or share of such other capital stock) as was issuable upon
exercise of a Right immediately prior to the occurrence of the event described
in clauses (A)-(D) of this Section 11(a)(i),

                                      -15-
<PAGE>
multiplied by the Adjustment Fraction; provided, however, that, no such
adjustment shall be made pursuant to this Section 11(a)(i) to the extent that
there shall have simultaneously occurred an event described in clause (A), (B),
(C) or (D) of Section 11(n) with a proportionate adjustment being made
thereunder. Each Common Share that shall become outstanding after an adjustment
has been made pursuant to this Section 11(a)(i) shall have associated with it
the number of Rights, exercisable at the Exercise Price and for the number of
one-thousandths (0.001) of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(a)(i).

                  (i) Subject to Section 24 of this Agreement, in the event that
a Triggering Event shall have occurred, then promptly following such Triggering
Event each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive for each Right, upon exercise thereof in
accordance with the terms of this Agreement and payment of the Exercise Price in
effect immediately prior to the occurrence of the Triggering Event, in lieu of a
number of one-thousandths (0.001) of a Preferred Share, such number of Common
Shares of the Company as shall equal the quotient obtained by dividing (A) the
product obtained by multiplying (1) the Exercise Price in effect immediately
prior to the occurrence of the Triggering Event by (2) the number of
one-thousandths (0.001) of a Preferred Share for which a Right was exercisable
(or would have been exercisable if the Distribution Date had occurred)
immediately prior to the first occurrence of a Triggering Event, by (B) fifty
percent (50%) of the Current Per Share Market Price for Common Shares on the
date of occurrence of the Triggering Event; provided, however, that the Exercise
Price and the number of Common Shares of the Company so receivable upon exercise
of a Right shall be subject to further adjustment as appropriate in accordance
with Section 11(e) hereof to reflect any events occurring in respect of the
Common Shares of the Company after the occurrence of the Triggering Event.

                  (ii) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if the Company's Board of Directors
determines that such action is necessary or appropriate and not contrary to the
interest of holders of Rights and, in the event that the number of Common Shares
which are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights, or
if any necessary regulatory approval for such issuance has not been obtained by
the Company, the Company shall: (A) determine the excess of (1) the value of the
Common Shares issuable upon the exercise of a Right (the "CURRENT VALUE") over
(2) the Exercise Price (such excess, the "SPREAD") and (B) with respect to each
Right, make adequate provision to substitute for such Common Shares, upon
exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3)
other equity securities of the Company (including, without limitation, shares or
units of shares of any series of preferred stock which the Company's Board of
Directors has deemed to have the same value as Common Shares (such shares or
units of shares of preferred stock are herein called "COMMON STOCK
EQUIVALENTS")), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, (4) debt
securities of the Company, except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such issuance, (5)
other assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Company's Board of Directors based upon the advice of

                                      -16-
<PAGE>
a nationally recognized investment banking firm selected by the Company's Board
of Directors; provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Triggering Event
and (y) the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the "SECTION
11(a)(ii) TRIGGER Date"), then the Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without requiring payment of the
Exercise Price, Common Shares (to the extent available), except to the extent
that the Company has not obtained any necessary stockholder or regulatory
approval for such issuance, and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Company's Board of
Directors shall determine in good faith that it is likely that sufficient
additional Common Shares could be authorized for issuance upon exercise in full
of the Rights or that any necessary regulatory approval for such issuance will
be obtained, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares or take action to obtain such regulatory
approval (such period, as it may be extended, the "SUBSTITUTION PERIOD"). To the
extent that the Company determines that some action need be taken pursuant to
the first and/or second sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any required
regulatory approval and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the Current Per Share Market Price of the Common Shares on the Section
11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Shares on such date.

            (b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Shares entitling such holders (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares or Equivalent Shares or securities convertible into
Preferred Shares or Equivalent Shares at a price per share (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Shares) less than the then Current Per Share Market Price of the
Preferred Shares or Equivalent Shares on such record date, then, in each such
case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares and Equivalent Shares (if any) outstanding on such record date,
plus the number of Preferred Shares or Equivalent Shares, as the case may be,
which the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the
aggregate initial conversion price of the convertible securities to be offered
or issued) would purchase at such current market price, and the denominator of
which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of additional Preferred Shares
or Equivalent Shares, as the case may be,

                                      -17-
<PAGE>
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the
Company's Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Preferred Shares and Equivalent Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights, options
or warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.

            (c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders of
the Preferred Shares or of any class or series of Equivalent Shares (including
any such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend, if any, or
a dividend payable in Preferred Shares) or subscription rights, options or
warrants (excluding those referred to in Section 11(b)), then, in each such
case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Per Share
Market Price of a Preferred Share or an Equivalent Share on such record date,
less the fair market value per Preferred Share or Equivalent Share (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a Preferred
Share or Equivalent Share, as the case may be, and the denominator of which
shall be such Current Per Share Market Price of a Preferred Share or Equivalent
Share on such record date; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such record date had not been fixed.

            (d) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1.0%) of the Exercise Price;
provided, however, that any adjustments which by reason of this Section 11(d)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth (0.0001) of a Common Share
or other share or one hundred-thousandth (0.00001) of a Preferred Share, as the
case may be. Notwithstanding the first sentence of this Section 11(d), any
adjustment required by this Section 11 shall be made no later than

                                      -18-
<PAGE>
the earlier of (i) three (3) years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date.

            (e) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right and, if required, the Exercise Price thereof, shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Sections 11(a), 11(b), 11(c), 11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and
11(l), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other shares.

            (f) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one-thousandths (0.001)
of a Preferred Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.

            (g) Unless the Company shall have exercised its election as provided
in Section 11(h), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of Preferred Shares
(calculated to the nearest one hundred-thousandth (0.00001) of a share)
obtained by (i) multiplying (x) the number of Preferred Shares covered by a
Right immediately prior to this adjustment, by (y) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price, and (ii) dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.

            (h) The Company may elect on or after the date of any adjustment of
the Exercise Price as a result of the calculations made in Section 11(b) or (c)
to adjust the number of Rights, in substitution for any adjustment in the number
of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one-thousandths (0.001) of a Preferred Share for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one hundred-thousandth (0.00001)) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment of
the Exercise Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made, and shall
promptly give the Rights Agent a copy of such announcement. This record date may
be the date on which the Exercise Price is adjusted or any day thereafter, but,
if any Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(h), the Company shall, as promptly as

                                      -19-
<PAGE>
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.

            (i) Irrespective of any adjustment or change in the Exercise Price
or the number of Preferred Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Exercise Price per one one-thousandth (0. 001) of a Preferred Share and the
number of one-thousandths (0.001) of a Preferred Share which were expressed in
the initial Rights Certificates issued hereunder.

            (j) Before taking any action that would cause an adjustment reducing
the Exercise Price below the par or stated value, if any, of the number of
one-thousandths (0.001) of a Preferred Share issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue as fully paid and nonassessable shares such number of one-thousandths
(0.001) of a Preferred Share at such adjusted Exercise Price.

            (k) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer (and shall give prompt written
notice of such election to the Rights Agent) until the occurrence of such event
the issuing to the holder of any Right exercised after such record date of the
number of one-thousandths (0.001) of a Preferred Share and other capital stock
or securities of the Company, if any, issuable upon such exercise over and above
the number of one-thousandths (0.001) of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) upon the occurrence of the event requiring such
adjustment.

            (l) Anything in this Section 11 to the contrary notwithstanding,
prior to the Distribution Date, the Company shall be entitled to make such
reductions in the Exercise Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred or Common Shares, (ii) issuance wholly for cash of
any Preferred or Common Shares at less than the current market price, (iii)
issuance wholly for cash of Preferred or Common Shares or securities which by
their terms are convertible into or exchangeable for Preferred or Common

                                      -20-
<PAGE>
Shares, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred or Common Shares shall not be taxable to such stockholders.

            (m) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 or 27 hereof, take (or
permit to be taken) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.

            (n) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares (by reverse stock split or otherwise) into a smaller number of
Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, in each such event, except as otherwise
provided in this Section 11(a) and Section 7(e) hereof: (1) each Common Share
(or shares of capital stock issued in such reclassification of the Common
Shares) outstanding immediately following such time shall have associated with
it the number of Rights as were associated with one Common Share immediately
prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price thereafter shall equal the result obtained
by multiplying the Exercise Price in effect immediately prior to such time by a
fraction, the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the event described in clauses (A)-(D) above,
and the denominator of which shall be the total number of Common Shares
outstanding immediately after such event; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of one-thousandths (0.001) of a
Preferred Share (or shares of such other capital stock) issuable upon the
exercise of each Right outstanding after such event shall equal the number of
one-thousandths (0.001) of a Preferred Share (or shares of such other capital
stock) as were issuable with respect to one Right immediately prior to such
event. Each Common Share that shall become outstanding after an adjustment has
been made pursuant to this Section 11(n) shall have associated with it the
number of Rights, exercisable at the Exercise Price and for the number of
one-thousandths (0.001) of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following the
adjustment made pursuant to this Section 11(n). If an event occurs which would
require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.

      Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts and computations accounting for such
adjustment, (b) file with the Rights Agent and with each transfer

                                      -21-
<PAGE>
agent for the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or give such notice shall not affect the
validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall have no duty with
respect to and shall not be deemed to have knowledge of such adjustment unless
and until it shall have received such certificate.

      Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.

            (a) In the event that, following a Triggering Event, directly or
indirectly:

                  (i) the Company shall consolidate with, or merge with and
into, any other Person (other than a wholly-owned Subsidiary of the Company in a
transaction the principal purpose of which is to change the state of
incorporation of the Company and which complies with Section 11(m) hereof);

                  (ii) any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such merger,
all or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any other person (or the Company); or

                  (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating fifty percent (50%) or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company or one or more of
its wholly owned Subsidiaries in one or more transactions, each of which
individually (and together) complies with Section 11(m) hereof),

                        then, concurrent with and in each such case,

                        (A) each holder of a Right (except as provided in
Section 7(e) hereof) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the Total Exercise Price applicable
immediately prior to the occurrence of the Section 13 Event in accordance with
the terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable Common Shares of the Principal Party
(as hereinafter defined), free of any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by
dividing such Total Exercise Price by an amount equal to fifty percent (50%) of
the Current Per Share Market Price of the Common Shares of such Principal Party
on the date of consummation of such Section 13 Event, provided, however, that
the Exercise Price and the number of Common Shares of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof;

                        (B) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement;

                                      -22-
<PAGE>
                        (C) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event;

                        (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares) in connection with the consummation of any such transaction as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; and

                        (E) upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Total Exercise Price as
provided in this Section 13(a), such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had such holder,
at the time of such transaction, owned the Common Shares of the Principal Party
receivable upon the exercise of such Right pursuant to this Section 13(a), and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.

                        (F) For purposes hereof, the "earning power" of the
Company and its Subsidiaries shall be determined in good faith by the Company's
Board of Directors on the basis of the operating income of each business
operated by the Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any business not
operated by the Company or any Subsidiary during three full fiscal years
preceding such date, during the period such business was operated by the Company
or any Subsidiary).

            (b) For purposes of this Agreement, the term "PRINCIPAL PARTY" shall
mean:

                  (i) in the case of any transaction described in clause (i) or
(ii) of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which the Common Shares are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the Common
Shares of which have the greatest aggregate market value of shares outstanding,
or (B) if no securities are so issued, (x) the Person that is the other party to
the merger, if such Person survives said merger, or, if there is more than one
such Person, the Person the Common Shares of which have the greatest aggregate
market value of shares outstanding or (y) if the Person that is the other party
to the merger does not survive the merger, the Person that does survive the
merger (including the Company if it survives) or (z) the Person resulting from
the consolidation; and

                  (ii) in the case of any transaction described in clause (iii)
of Section 13(a) hereof, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if more than one Person that is a party to such transaction
or transactions receives the same portion of the assets or earning power so
transferred and each such portion would, were it not for the other equal
portions, constitute the greatest portion of the assets or earning power so
transferred, or if the Person receiving the greatest

                                      -23-
<PAGE>
portion of the assets or earning power cannot be determined, whichever of such
Persons is the issuer of Common Shares having the greatest aggregate market
value of shares outstanding; provided that in any such case described in the
foregoing clause (b)(i) or (b)(ii), if the Common Shares of such Person are not
at such time or have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such Person is a
direct or indirect Subsidiary of another Person the Common Shares of which are
and have been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of Common Shares having the greatest aggregate market value of
shares outstanding, or (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ration as its interest in such Person
bears to the total of such interests.

            (c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized Common Shares that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon
consummation of such Section 13 Event, assume this Agreement in accordance with
Sections 13(a) and 13(b) hereof, that all rights of first refusal or preemptive
rights in respect of the issuance of Common Shares of such Principal Party upon
exercise of outstanding Rights have been waived, that there are no rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights and that such transaction shall not result in a default by such Principal
Party under this Agreement, and further providing that, as soon as practicable
after the date of such Section 13 Event, such Principal Party will:

                  (i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with applicable
state securities laws;

                  (ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on NYSE and list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on Nasdaq; and

                  (iii) deliver to holders of the Rights historical financial
statements for such Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.

                                      -24-
<PAGE>
      In the event that at any time after the occurrence of a Triggering Event
some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).

            (d) In case the "Principal Party" for purposes of Section 13(b)
hereof has provision in any of its authorized securities or in its certificate
of incorporation or by-laws or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such Principal Party to
issue (other than to holders of Rights pursuant to Section 13 hereof), in
connection with, or as a consequence of, the consummation of a Section 13 Event,
Common Shares or Equivalent Shares of such Principal Party at less than the then
Current Per Share Market Price thereof or securities exercisable for, or
convertible into, Common Shares or Equivalent Shares of such Principal Party at
less than such then Current Per Share Market Price, or (ii) providing for any
special payment, tax or similar provision in connection with the issuance of the
Common Shares of such Principal Party pursuant to the provisions of Section 13
hereof, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with or as a consequence of, the consummation of
the proposed transaction.

            (e) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, effect or permit to occur any Section 13 Event, if
(i) at the time or immediately after such Section 13 Event there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights, (ii) prior to, simultaneously with or immediately
after such Section 13 Event, the stockholders of the Person who constitutes, or
would constitute, the "Principal Party" for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates or (iii) the form or nature of organization
of the Principal Party would preclude or limit the exercisability of the Rights.

            (f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

      Section 14. Fractional Rights and Fractional Shares.

            (a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole

                                      -25-
<PAGE>
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable, as determined pursuant to the second sentence of Section 1(j) hereof.

            (b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth (0.001) of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-thousandth (0.001) of a
Preferred Share). Interests in fractions of Preferred Shares in integral
multiples of one one-thousandth (0.001) of a Preferred Share may, at the
election of the Company, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Company and a depository selected by it;
provided, that such agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth (0.001) of a Preferred Share, the
Company shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share shall be (x) one
thousand multiplied by (y) the closing price of a Common Share (as determined
pursuant to the second sentence of Section 1(j) hereof) for the Trading Day
immediately prior to the date of such exercise.

            (c) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares
upon the exercise or exchange of Rights. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a Common Share. For purposes
of this Section 14(c), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 1(j) hereof) for the Trading Day immediately prior to the date of
such exercise.

            (d) The holder of a Right by the acceptance of the Right expressly
waives his or her right to receive any fractional Rights or any fractional
shares (other than fractions that are integral multiples of one one-thousandth
(0. 001) of a Preferred Share) upon exercise of a Right.

            (e) Whenever a payment for fractional Rights or fractional shares is
to be made by the Rights Agent, the Corporation shall (i) promptly prepare and
deliver to the Rights Agent, a certificate setting forth in reasonable detail
the facts related to such payments and the prices and/or formulas utilized in
calculating such payments, and (ii) provide sufficient monies to the Rights
Agent in the form of fully collected funds to make such payments. The Rights
Agent shall be fully protected in relying upon such a certificate and shall have
no duty with respect to, and shall not be deemed to have knowledge of any
payment for fractional Rights or fractional shares under any Section of this
Agreement relating to the payment of fractional Rights or fractional shares
unless and until the Rights Agent shall have received such a certificate and
sufficient monies.

                                      -26-
<PAGE>
      Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

      Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

              (a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;

              (b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed; and

              (c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.

      Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose to be the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as specifically provided in Section 25 hereof), or to
receive dividends or subscription rights, or

                                      -27-
<PAGE>
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.

      Section 18. Concerning the Rights Agent.

            (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, administration, delivery and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(each as determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction), for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability hereunder. The costs and expenses incurred by the
Rights Agent in enforcing this right of indemnification shall be paid by the
Company unless it is determined by a final, non-appealable order, judgment,
decree or ruling of a court of competent jurisdiction that the Rights Agent is
not entitled to indemnification due to the Rights Agent's gross negligence, bad
faith or willful misconduct. In no event will the Rights Agent be liable for
special, indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the possibility of such
loss or damage. The provisions of this Section 18 and Section 20 below shall
survive the termination of this Agreement, the exercise or expiration of the
Rights and the resignation or removal of the Rights Agent.

            (b) The Rights Agent shall be authorized, protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with, its acceptance and administration of this Agreement in
reliance upon any Rights Certificate or certificate for the Preferred Shares or
Common Shares or for other securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document reasonably
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof. The Rights Agents shall not
be deemed to have knowledge of any event of which it was supposed to receive
notice thereof hereunder, and the Rights Agent shall be fully protected and
shall incur no liability for failing to take any action in connection therewith
unless and until it has received such notice in writing.

      Section 19. Merger or Consolidation or Change of Name of Rights Agent.

            (a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or

                                      -28-
<PAGE>
any further act on the part of any of the parties hereto; provided, however,
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.

            (b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

      Section 20. Duties of Rights Agent. The Rights Agent undertakes only the
duties and obligations expressly imposed by this Agreement (and no implied
duties and obligations) upon the following terms and conditions, by all of which
the Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:

            (a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice and opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in accordance with such opinion.

            (b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Per Share Market Price) be proved or established by the
Company prior to taking suffering or omitting to take any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken suffered or omitted to be taken by it under the provisions of
this Agreement in reliance upon such certificate.

            (c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct (each as determined by a

                                      -29-
<PAGE>
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). Any liability of the Rights Agent under this Agreement will be
limited to the amount of fees paid by the Company to the Rights Agent.

            (d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.

            (e) The Rights Agent shall not be under any responsibility or have
any liability in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3, 11,
13, 23 or 24, or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt by the Rights Agent of a
certificate furnished pursuant to Section 12 describing such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.

            (f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

            (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instruction shall be full
authorization and protection to the Rights Agent, and the Rights Agent shall not
be liable for any action taken suffered or omitted by it in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five

                                      -30-
<PAGE>
(5) Business Days after the date on which any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.

            (h) The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.

            (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
(each as determined by a final, non-appealable order, judgement, decree or
ruling of the court of competent jurisdiction), in the selection and continued
employment thereof.

            (j) No provision of this Agreement shall require the Rights 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 its rights if
it believes that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.

            (k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

      Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his or her Rights
Certificate for inspection by the Company),

                                      -31-
<PAGE>
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a Person organized and doing business under the laws of the United States or of
any state of the United States, in good standing, which is authorized under such
laws to exercise corporate trust or stockholder services powers and is subject
to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100 million, or (b) an Affiliate of a Person described in clause (a).
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares and the Common Shares, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

      Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of other securities of the Company outstanding at the
date hereof or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant risk
of or result in material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued or would create a significant
risk of or result in such options' or employee plans' or arrangements' failing
to qualify for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

      Section 23. Redemption.

            (a) The Company may, at its option and with the approval of the
Board of Directors, at any time prior to the Close of Business on the earlier of
(i) the fifth day following the Shares Acquisition Date (or such later date as
may be determined by action of the Company's Board

                                      -32-
<PAGE>
of Directors and publicly announced by the Company) and (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $0. 001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being herein referred to as the "REDEMPTION
PRICE") and the Company may, at its option, pay the Redemption Price either in
Common Shares (based on the Current Per Share Market Price thereof at the time
of redemption) or cash. Such redemption of the Rights by the Company may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. The date on which the Board of
Directors elects to make the redemption effective shall be referred to as the
"REDEMPTION DATE."

            (b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after the action of
the Board of Directors ordering the redemption of the Rights, the Company shall
give prompt written notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section 23
or in Section 24 hereof, and other than in connection with the purchase of
Common Shares prior to the Distribution Date.

      Section 24. Exchange.

            (a) Subject to applicable laws, rules and regulations, and subject
to subsection 24(c) below, the Company may, at its option, by action of the
Board of Directors, at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.

                                      -33-
<PAGE>
                   (b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection 24(a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.

                  (c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with Section 24(a), the Company
shall either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by majority vote of the Board of Directors, or
(iii) deliver any combination of cash, property, Common Shares and/or other
securities having a value equal to the Current Value in exchange for each Right.
For purposes of this Section 24(c) only, the Current Value shall mean the
product of the Current Per Share Market Price of Common Shares on the date of
the occurrence of the event described above in subsection (a), multiplied by the
number of Common Shares for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this Section 24(c), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.

                  (d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Common Share (as
determined pursuant to the second sentence of Section 1(j) hereof).

                                      -34-
<PAGE>
                  (e) The Company may, at its option, by majority vote of the
Board of Directors, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and with good faith by
the Board of Directors based upon the advice of one or more nationally
recognized investment banking firms.

                  (f) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection 24(e) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of rights in exchange therefor as has
been determined by the Board of Directors in accordance with subsection 24(e)
above. The Company shall give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common Shares
of the Company. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Rights will be
effected.

         Section 25.       Notice of Certain Events.

                  (a) In case the Company shall propose to effect or permit to
occur any Triggering Event or Section 13 Event, the Company shall give notice
thereof to each holder of Rights in accordance with Section 26 hereof at least
twenty (20) days prior to occurrence of such Triggering Event or such Section 13
Event.

                  (b) In case any Triggering Event or Section 13 Event shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Sections
11(a)(ii) and 13 hereof.

         Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) or by facsimile transmission as follows:

                                    ISTA Pharmaceuticals, Inc.
                                    15279 Alton Parkway, Suite 100
                                    Irvine, California 92618
                                    Attention: Vice President, Finance
                                    Facsimile No.: (949) 789-7744

                                      -35-
<PAGE>
                                    with a copy to:
                                    Wilson Sonsini Goodrich & Rosati
                                    Professional Corporation
                                    650 Page Mill Road
                                    Palo Alto, California 94304-1050
                                    Attention:  Issac J. Vaughn
                                    Facsimile No.: (650) 493-6811

         Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) or by facsimile transmission as
follows:

                                    Mellon Investor Services LLC
                                    400 S. Hope Street, 4th Floor
                                    Los Angeles, California 90071
                                    Attention: Mike Dzieciolowski
                                    Facsimile No.: (213) 553-9735

                                    With a copy to:
                                    Mellon Investor Services LLC
                                    85 Challenger Road
                                    Ridgefield Park, New Jersey 07660
                                    Attention: General Counsel
                                    Facsimile No.: (201) 296-4004

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

         Section 27. Supplements and Amendments. Prior to the occurrence of a
Distribution Date, the Company may supplement or amend this Agreement in any
respect without the approval of any holders of Rights and the Rights Agent
shall, if the Company so directs, but subject to other provisions of this
Section, execute such supplement or amendment. From and after the occurrence of
a Distribution Date, the Company and the Rights Agent may from time to time
supplement or amend this Agreement without the approval of any holders of Rights
in order to (i) cure any ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder or (iv)
to change or supplement the provisions hereunder in any manner that the Company
may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this

                                      -36-
<PAGE>
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of the Company that states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, and provided, such supplement or amendment does not change or
increase the Rights Agent's rights, duties or obligations, the Rights Agent
shall execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.

         Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties and
(y) not subject the Board to any liability to the holders of the Rights. The
Rights Agent shall always be entitled to assume that the Company's Board of
Directors acted in good faith and shall be fully protected and incur no
liability in reliance thereon.

         Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim pursuant to this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the Common
Shares).

         Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of

                                      -37-
<PAGE>
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated (with prompt written notice to the Rights Agent) and shall
not expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors.

         Section 32. Governing Law. This Agreement and each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.

         Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

                                      -38-
<PAGE>
         Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

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

"COMPANY"                                    ISTA Pharmaceuticals, Inc.

                                             By:

                                             Name:     J.C. MacRae

                                             Title:    Executive Vice President

"RIGHTS AGENT"                               MELLON INVESTOR SERVICES LLC

                                             By:

                                             Name:     Michael E. Dzieciolowski

                                             Title:    Assistant Vice President

                                      -39-
<PAGE>
                                    EXHIBIT A

CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES OF SERIES A
PARTICIPATING PREFERRED STOCK OF ISTA PHARMACEUTICALS, INC.

         The undersigned, [          ], does hereby certify:

         1. That he/she is duly elected and acting ________ of ISTA
Pharmaceuticals, Inc., a Delaware corporation (the "CORPORATION").

         2. That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the said
Corporation, the said Board of Directors of the Corporation on December 5, 2001
adopted the following resolutions creating a series of 1,000,000 shares of
Preferred Stock designated as Series A Participating Preferred Stock:

         "RESOLVED, that pursuant to the authority vested in the Board of
Directors of the corporation by the Amended and Restated Certificate of
Incorporation, the Board of Directors does hereby provide for the issue of a
series of Preferred Stock of the Corporation and does hereby fix and herein
state and express the designations, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions of such
series of Preferred Stock as follows:

         Section 1. Designation and Amount. The shares of such series shall be
designated as "SERIES A PARTICIPATING PREFERRED STOCK." The Series A
Participating Preferred Stock shall have a par value of $0.001 per share, and
the number of shares constituting such series shall be 1,000,000.

         Section 2. Proportional Adjustment. In the event that the Corporation
shall at any time after the issuance of any share or shares of Series A
Participating Preferred Stock (i) declare any dividend on Common Stock of the
Corporation ("COMMON Stock") payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the Corporation shall
simultaneously effect a proportional adjustment to the number of outstanding
shares of Series A Participating Preferred Stock.

         Section 3. Dividends and Distributions.

                  (a) Subject to the prior and superior right of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of January, April, July, and October in each year (each such date being referred
to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other

                                      -1-
<PAGE>
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock.

                  (b) The Corporation shall declare a dividend or distribution
on the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).

                  (c) Dividends shall begin to accrue on outstanding shares of
Series A Participating Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Participating
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Participating Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.

         Section 4. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:

                  (a) Each share of Series A Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation.

                  (b) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.

                  (c) Except as required by law, the holders of Series A
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent that they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.

                                      -2-
<PAGE>
         Section 5.        Certain Restrictions.

                  (a) The Corporation shall not declare any dividend on, make
any distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock unless
concurrently therewith it shall declare a dividend on the Series A Participating
Preferred Stock as required by Section 3 hereof.

                  (b) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 3 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not

                           (i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;

                           (ii) declare or pay dividends on, or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;

                           (iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Participating Preferred
Stock;

                           (iv) purchase or otherwise acquire for consideration
any shares of Series A Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.

                  (c) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 5, purchase or otherwise acquire such shares at such time and in
such manner.

         Section 6. Reacquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and

                                      -3-
<PAGE>
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein and in the Amended and Restated
Certificate of Incorporation, as then amended.

         Section 7. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, the holders of shares
of Series A Participating Preferred Stock shall be entitled to receive an
aggregate amount per share equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock plus an amount equal
to any accrued and unpaid dividends on such shares of Series A Participating
Preferred Stock.

         Section 8. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.

         Section 9. No Redemption. The shares of Series A Participating
Preferred Stock shall not be redeemable.

         Section 10. Ranking. The Series A Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.

         Section 11. Amendment. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preference or special rights
of the Series A Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Participating Preferred Stock, voting separately as a series.

         Section 12. Fractional Shares. Series A Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.

                                      -4-
<PAGE>
         RESOLVED FURTHER, that the President, Chief Executive Officer or any
Vice President and the Secretary or any Assistant Secretary of this corporation
be, and they hereby are, authorized and directed to prepare and file a
Certificate of Designation of Rights, Preferences and Privileges in accordance
with the foregoing resolution and the provisions of Delaware law and to take
such actions as they may deem necessary or appropriate to carry out the intent
of the foregoing resolution."

         I further declare under penalty of perjury that the matters set forth
in the foregoing Certificate of Designation are true and correct of my own
knowledge.

         Executed at _______, California on ___, 2002.

                                                     ___________________________
                                                     NAME
                                                     TITLE

                                      -5-
<PAGE>
                                    EXHIBIT B

                           FORM OF RIGHTS CERTIFICATE

Certificate No. R-                                              _________ Rights

         NOT EXERCISABLE AFTER THE EARLIER OF (i) JANUARY 25, 2012, (ii) THE
         DATE TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES
         THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
         REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE
         TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
         RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
         ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
         RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
         NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
         OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
         PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
         TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
         CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
         IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS
         AGREEMENT.]

                               RIGHTS CERTIFICATE

                           ISTA PHARMACEUTICALS, INC.

         This certifies that ______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of December 31, 2001, (the "RIGHTS
AGREEMENT"), between ISTA Pharmaceuticals, Inc., a Delaware corporation (the
"COMPANY"), and Mellon Investor Services LLC, a New Jersey limited liability
company, (the "RIGHTS AGENT"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M., New York time, on January 25, 2012 at the office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-thousandth (0.001) of a fully paid and non-assessable
share of Series A Participating Preferred Stock, par value $0.001 per share (the
"PREFERRED SHARES"), of the Company, at an Exercise Price of $50.00 per
one-thousandth (0.001) of a Preferred Share (the "EXERCISE PRICE"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Rights

                                      -1-
<PAGE>
Certificate (and the number of one-thousandths (0.001) of a Preferred Share
which may be purchased upon exercise hereof) set forth above are the number and
Exercise Price as of January 25, 2002 based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Exercise
Price and the number and kind of Preferred Shares or other securities which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.

         This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option, at
a redemption price of $0.001 per Right or (ii) may be exchanged by the Company
in whole or in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.

         This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.

         No fractional portion of less than one one-thousandth (0.001) of a
Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.

         No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.

         This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

                                      -2-
<PAGE>
         WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________, _____.

ATTEST:                                      ISTA Pharmaceuticals, Inc.

______________________________               By: ____________________________
Secretary

                                             Its: ___________________________

Countersigned:

Mellon Investor Services LLC
as Rights Agent

By: __________________________

Its: _________________________

                                      -3-
<PAGE>
                   FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate)

         FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers
unto __________________________________________________________________________

                 (Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.

Dated: _______________, ____

                                                     ___________________________
                                                                       Signature

Signature Guaranteed:

         Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>
                                   CERTIFICATE

         The undersigned hereby certifies by checking the appropriate boxes
that:

                  (1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement);

                  (2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.

Dated: _______________, ____

                                             ___________________________________
                                             Signature

Signature Guaranteed:

         Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>
             FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Rights Certificate)

To:___________________________

                  The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Rights Certificate to
purchase the number of one-thousandths (0.001) of a Preferred Share issuable
upon the exercise of such Rights and requests that certificates for such number
of one-thousandths (0.001) of a Preferred Share issued in the name of:

Please insert social security
or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

Dated: _______________, ____

                                             ___________________________________
                                             Signature

Signature Guaranteed:

         Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>
                                   CERTIFICATE

         The undersigned hereby certifies by checking the appropriate boxes
that:

         (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);

         (2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.

Dated: _______________, ____

                                             _______________________________
                                             Signature

Signature Guaranteed:

         Signatures must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.

                                      -1-
<PAGE>
             FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                                     NOTICE

                  The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.

                                      -1-
<PAGE>
                                    EXHIBIT C

                             STOCKHOLDER RIGHTS PLAN
                           ISTA PHARMACEUTICALS, INC.

                                SUMMARY OF RIGHTS

DISTRIBUTION AND                            The Board of Directors has declared
TRANSFER OF RIGHTS;                         a dividend of one Right for each
RIGHTS CERTIFICATE:                         share of Common Stock of ISTA
                                            Pharmaceuticals, Inc. (the
                                            "COMPANY") outstanding. Prior to the
                                            Distribution Date referred to below,
                                            the Rights will be evidenced by and
                                            trade with the certificates for the
                                            Common Stock. After the Distribution
                                            Date, the Company will mail Rights
                                            certificates to the Company's
                                            stockholders and the Rights will
                                            become transferable apart from the
                                            Common Stock.

DISTRIBUTION DATE:                          Rights will separate from the Common
                                            Stock and become exercisable
                                            following (a) the tenth business day
                                            (or such later date as may be
                                            determined by the Company's Board of
                                            Directors) after a person or group
                                            acquires beneficial ownership of 15%
                                            or more of the Company's Common
                                            Stock or (b) the tenth business day
                                            (or such later date as may be
                                            determined by the Company's Board of
                                            Directors) after a person or group
                                            announces a tender or exchange
                                            offer, the consummation of which
                                            would result in ownership by a
                                            person or group of 15% or more of
                                            the Company's Common Stock.

PREFERRED STOCK                             After the Distribution Date, each
PURCHASABLE UPON                            Right will entitle the holder to
EXERCISE OF RIGHTS:                         purchase for $50.00 (the "EXERCISE
                                            PRICE"), a fraction of a share of
                                            the Company's Preferred Stock with
                                            economic terms similar to that of
                                            one share of the Company's Common
                                            Stock.

FLIP-IN:                                    If an acquiror (an "ACQUIRING
                                            PERSON") obtains 15% or more of the
                                            Company's Common Stock, then each
                                            Right (other than Rights owned by an
                                            Acquiring Person or its affiliates)
                                            will entitle the holder thereof to
                                            purchase, for the Exercise Price, a
                                            number of shares of the Company's
                                            Common Stock having a then-current
                                            market value of twice the Exercise
                                            Price.

FLIP-OVER:                                  If, after an Acquiring Person
                                            obtains 15% or more of the Company's
                                            Common Stock, (a) the Company merges
                                            into another entity, (b) an
                                            acquiring entity merges into the
                                            Company or (c) the Company sells
                                            more than 50% of the Company's
                                            assets or earning power, then each
                                            Right (other than Rights owned by an
                                            Acquiring Person or its affiliates)
                                            will entitle the holder thereof to
                                            purchase, for the Exercise Price, a
                                            number of shares of Common Stock of
                                            the person engaging in the
                                            transaction having a then current
                                            market value of twice the Exercise
                                            Price.

EXCHANGE PROVISION:                         At any time after the date on which
                                            an Acquiring Person obtains 15% or
                                            more of the Company's Common Stock
                                            and prior to the acquisition by the
                                            Acquiring Person of 50% of the
                                            outstanding Common Stock, a majority
                                            of the Board of Directors and the
                                            Board of Directors of the Company
                                            may exchange the Rights (other than
                                            Rights owned by the Acquiring Person
                                            or its affiliates), in whole or in
                                            part, for shares of Common Stock of
                                            the Company at an exchange ratio of
                                            one share of Common Stock per Right
                                            (subject to adjustment).
<PAGE>
REDEMPTION OF THE                           Rights will be redeemable at the
RIGHTS:                                     Company's option for $0.001 per
                                            Right at any time on or prior to the
                                            fifth day (or such later date as may
                                            be determined by the Company's Board
                                            of Directors) after public
                                            announcement that a Person has
                                            acquired beneficial ownership of 15%
                                            or more of the Company's Common
                                            Stock (the "SHARES ACQUISITION
                                            DATE").

EXPIRATION OF THE                           The Rights expire on the earliest of
RIGHTS:                                     (a) January 25, 2012 or (b) exchange
                                            or redemption of the Rights as
                                            described above.

AMENDMENT OF TERMS OF                       The terms of the Rights and the
RIGHTS:                                     Rights Agreement may be amended in
                                            any respect without the consent of
                                            the Rights holders on or prior to
                                            the Distribution Date; thereafter,
                                            the terms of the Rights and the
                                            Rights Agreement may be amended
                                            without the consent of the Rights
                                            holders in order to cure any
                                            ambiguities or to make changes which
                                            do not adversely affect the
                                            interests of Rights holders (other
                                            than the Acquiring Person).

VOTING RIGHTS:                              Rights will not have any voting
                                            rights.

ANTI-DILUTION                               Rights will have the benefit of
PROVISIONS:                                 certain customary anti-dilution
                                            provisions.

TAXES:                                      The Rights distribution should not
                                            be taxable for federal income tax
                                            purposes. However, following an
                                            event which renders the Rights
                                            exercisable or upon redemption of
                                            the Rights, stockholders may
                                            recognize taxable income.

The foregoing is a summary of certain principal terms of the Stockholder Rights
Plan only and is qualified in its entirety by reference to the Preferred Stock
Rights Agreement dated as of December 31, 2001 between the Company and Mellon
Investor Services LLC as Rights Agent (the "RIGHTS AGREEMENT"). The Rights
Agreement may be amended from time to time. A copy of the Rights Agreement was
filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated [SEC FILE DATE], 2002. A copy of the
Rights Agreement is available free of charge from the Company.

                                      -2-Exhibit 4.1
                                                               Form of Sale and
                                                            Servicing Agreement

===============================================================================

                CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,

                            as Seller and Servicer

                                      and

                    CHASE MANHATTAN AUTO OWNER TRUST 200_-_

                                   as Issuer

                         SALE AND SERVICING AGREEMENT

                        Dated as of __________ __, 200_

===============================================================================

<PAGE>

                               TABLE OF CONTENTS

                                                                           Page

                                   ARTICLE I

                                  DEFINITIONS

SECTION 1.1 Definitions ...................................................... 1
SECTION 1.2 Usage of Terms ...................................................20
SECTION 1.3 Simple Interest Method; Methods of Allocating Payments or
               Receivables; Allocations.......................................21

                                  ARTICLE II

                           CONVEYANCE OF RECEIVABLES

SECTION 2.1 Conveyance of Receivables.........................................21
SECTION 2.2 Closing ..........................................................22

                                  ARTICLE III

                                THE RECEIVABLES

SECTION 3.1  Representations and Warranties of Seller; Conditions Relating
                to Receivables.................. .............................22
SECTION 3.2  Repurchase Upon Breach or Failure of a Condition.................26
SECTION 3.3  Custody of Receivable Files......................................26
SECTION 3.4  Duties of Servicer as Custodian..................................27
SECTION 3.5  Instructions; Authority to Act...................................28
SECTION 3.6  Custodian's Indemnification......................................28
SECTION 3.7  Effective Period and Termination.................................28

                                  ARTICLE IV

                  ADMINISTRATION AND SERVICING OF RECEIVABLES

SECTION 4.1  Duties of Servicer...............................................28
SECTION 4.2  Collection of Receivable Payments; Refinancing...................30
SECTION 4.3  Realization Upon Receivables.....................................30
SECTION 4.4  Maintenance of Security Interests in Financed Vehicles...........31
SECTION 4.5  Covenants of Servicer............................................31
SECTION 4.6  Purchase of Receivables Upon Breach..............................32
SECTION 4.7  Servicing Fee ...................................................32
SECTION 4.8  Servicer's Certificate...........................................32
SECTION 4.9  Annual Statement as to Compliance................................33
SECTION 4.10 Annual Audit Report..............................................33

                                         i
<PAGE>

SECTION 4.11 Access by Holders to Certain Documentation and Information
             Regarding Receivables............................................34
SECTION 4.12 Reports to Holders and the Rating Agencies.......................34
SECTION 4.13 Reports to the Securities and Exchange Commission................35

                                   ARTICLE V

                           ACCOUNTS; DISTRIBUTIONS;
                       STATEMENTS TO CERTIFICATEHOLDERS

SECTION 5.1  Establishment of Collection Account and Note
                 Distribution Account ........................................35
SECTION 5.2  Collections......................................................36
SECTION 5.3  [Reserved].......................................................36
SECTION 5.4  Additional Deposits..............................................36
SECTION 5.5  Distributions....................................................36
SECTION 5.6  Reserve Account..................................................38
SECTION 5.7  Net Deposits.....................................................39
SECTION 5.8  Statements to Certificateholders and Noteholders.................39

                                  ARTICLE VI

                                  THE SELLER

SECTION 6.1  Representations of Seller........................................40
SECTION 6.2  Liability of Seller; Indemnities.................................41
SECTION 6.3  Merger or Consolidation of Seller................................42
SECTION 6.4  Limitation on Liability of Seller and Others.....................42
SECTION 6.5  Seller May Own Notes and Certificates............................42

                                  ARTICLE VII

                                 THE SERVICER

SECTION 7.1  Representations of Servicer......................................42
SECTION 7.2  Liability of Servicer; Indemnities...............................44
SECTION 7.3  Merger or Consolidation of Servicer..............................45
SECTION 7.4  Limitation on Liability of Servicer and Others...................45
SECTION 7.5  Servicer Not To Resign...........................................46
SECTION 7.6  Delegation of Duties.............................................46

                                 ARTICLE VIII

                        EVENTS OF SERVICING TERMINATION

SECTION 8.1  Events of Servicing Termination..................................46
SECTION 8.2  Indenture Trustee to Act; Appointment of Successor
                Servicer........................ .............................48

                                        ii

<PAGE>

SECTION 8.3  Notification to Noteholders and Certificateholders...............49
SECTION 8.4  Waiver of Past Defaults..........................................49

                                  ARTICLE IX

                                  TERMINATION

SECTION 9.1   Optional Purchase of All Receivables; Trust Termination.........49

                                   ARTICLE X

                           MISCELLANEOUS PROVISIONS

SECTION 10.1  Amendment.......................................................50
SECTION 10.2  Protection of Title to Owner Trust Estate.......................52
SECTION 10.3  GOVERNING LAW...................................................54
SECTION 10.4  Notices.........................................................54
SECTION 10.5  Severability of Provisions......................................54
SECTION 10.6  Assignment......................................................54
SECTION 10.7  Certificates and Notes Nonassessable and Fully Paid.............54
SECTION 10.8  Third-Party Beneficiaries.......................................54
SECTION 10.9  Assignment to Indenture Trustee.................................55
SECTION 10.10 Limitation of Liability of Owner Trustee and Indenture
                  Trustee ....................................................55
SECTION 10.11 No Petition ....................................................55

                                       iii

<PAGE>

                                   SCHEDULES

Schedule A  -  Schedule of Receivables
Schedule B  -  Location of Receivable Files

                                   EXHIBITS

Exhibit A   -  Form of Servicer's Certificate
Exhibit B   -  Form of Monthly Report
Exhibit C   -  Form of Collection Account Control Agreement
Exhibit D   -  Form of Reserve Account Control Agreement

                                     iv

<PAGE>

          This SALE AND SERVICING AGREEMENT, dated as of __________ __, 200_,
(as amended, supplemented or otherwise modified and in effect from time to
time, this "Agreement") is made between CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, a national banking association having its principal executive
offices located at 200 White Clay Center Drive, Newark, Delaware 19711 ("Chase
USA," the "Seller" or the "Servicer" in its respective capacities as such),
and CHASE MANHATTAN AUTO OWNER TRUST 200_-_, as issuer (the "Issuer").

                             W I T N E S S E T H :
                             - - - - - - - - - -

          In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:

                                  ARTICLE I

                                  DEFINITIONS

          SECTION 1.1 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:

          "Accrued Interest" on a Receivable, as of any date of determination,
means that amount of interest accrued on the Principal Balance at the related
Contract Rate but not paid by or on behalf of the Obligor.

          "Administration Agreement" means the Administration Agreement, dated
as of __________ __, 200_, among the Issuer, the Administrator and the
Indenture Trustee, as the same may be amended and supplemented from time to
time.

          "Administrator" means JPMorgan Chase Bank, a New York banking
corporation, as administrator, and its successors and assigns.

          "Administration Fee" means $_____, the fee payable to the
Administrator on each Payment Date pursuant to Section 5.5(c) for services
rendered pursuant to the Administration Agreement.

          "Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing. A Person shall
not be deemed to be an Affiliate of any specified Person solely because such
other Person has the contractual right or obligation to manage such specified
Person unless such other Person controls such specified Person through equity
ownership or otherwise.

          "Aggregate Net Losses" means, for any Payment Date, the amount equal
to (i) the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during the

<PAGE>

related Collection Period minus (ii) the Liquidation Proceeds allocable to
principal collected during such Collection Period with respect to any
Defaulted Receivables.

          "Amount Financed" in respect of a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed
Vehicle and related costs.

          "Assertion" has the meaning specified in Section 4.10.

          "Authenticating Agent" has the meaning specified in Section 2.13 of
the Indenture and shall initially be the corporate trust office of JPMorgan
Chase, and its successors and assigns in such capacity.

          "Authorized Officer" means any officer of the Owner Trustee,
Indenture Trustee or Servicer who is authorized to act on behalf of the Owner
Trustee, Indenture Trustee or Servicer, as applicable, and who is identified
as such on the list of authorized officers delivered by each such party on the
Closing Date.

          "Available Interest" means, for any Payment Date, the sum of (i)
that portion of Collections on the Receivables received during the related
Collection Period allocated to interest and (ii) that portion of the
Repurchase Amounts received with respect to the Repurchased Receivables
repurchased by the Seller or purchased by the Servicer during the related
Collection Period that would have been treated as Available Interest if the
Obligor thereof had prepaid such Receivables in full on the date as of which
such Receivables were repurchased or purchased.

          "Available Principal" means, for any Payment Date, the sum of (i)
that portion of Collections on the Receivables received during the related
Collection Period allocated to the principal balance of the Receivables and
(ii) that portion of the Repurchase Amounts received with respect to the
Repurchased Receivables repurchased by the Seller or purchased by the Servicer
that would have been treated as Available Principal if the Obligor thereof had
prepaid such Receivables in full on the date as of which such Receivables were
repurchased or purchased.

          "Available Reserve Account Amount" shall mean, for each Payment
Date, an amount equal to the lesser of (i) the amount on deposit in the
Reserve Account and (ii) the Specified Reserve Account Balance with respect to
such Payment Date.

          "Average Delinquency Percentage" means for any Payment Date, the
average of the Delinquency Percentages for such Payment Date and the preceding
two (2) Payment Dates.

          "Average Net Loss Ratio" means for any Payment Date, the average of
the Net Loss Ratios for such Payment Date and the preceding two (2) Payment
Dates.

          "Basic Documents" means this Agreement, the Certificate of Trust,
the Indenture, the Depository Agreements, the Securities Control Agreements,
the Trust Agreement, the Administration Agreement and other documents and
certificates delivered in connection therewith.

                                      2

<PAGE>

          "Book-Entry Certificates" means beneficial interests in the
Certificates, the ownership and transfers of which shall be made through book
entries by a Clearing Agency or Foreign Clearing Agency as described in
Section 3.10 of the Trust Agreement.

          "Book-Entry Notes" means beneficial interests in the Notes, the
ownership and transfers of which shall be made through book entries by a
Clearing Agency or Foreign Clearing Agency as described in Section 2.10 of the
Indenture.

          "Business Day" means a day, other than a Saturday or a Sunday, on
which the Indenture Trustee and banks located in New York, New York, Newark,
Delaware and __________, __________ are open for the purpose of conducting a
commercial banking business.

          "Business Trust Statute" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as amended from time to time.

          "Capital Accounts" has the meaning specified in Section 5.7 of the
Trust Agreement.

          "Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Owner Trust Estate, substantially in the form of
Exhibit A-2 to the Trust Agreement.

          "Certificate Balance" means an amount equal to $_____ as of the
Closing Date and, thereafter, shall be an amount equal to such initial
Certificate Balance, reduced by all amounts allocable to principal previously
distributed to Certificateholders. The Certificate Balance shall also be
reduced on any Payment Date by the excess, if any, of (i) the sum of (A) the
Certificate Balance and (B) the outstanding principal amount of the Notes (in
each case after giving effect to amounts in respect of principal to be
deposited in the Certificate Distribution Account and the Note Distribution
Account on such Payment Date), over (ii) the Pool Balance as of the close of
business on the last day of the preceding Collection Period. Thereafter, the
Certificate Balance shall be increased on any Payment Date to the extent that
any portion of the Total Distribution Amount on such Payment Date is available
to pay the existing Certificateholders' Principal Carryover Shortfall, but not
by more than the aggregate reductions in the Certificate Balance set forth in
the preceding sentence.

          "Certificate Depository Agreement" means the agreement among the
Issuer, the Owner Trustee, JPMorgan Chase, as agent for the Depository Trust
Company and The Depository Trust Company, as the initial Clearing Agency,
dated the Closing Date, relating to the Certificates, substantially in the
form attached as Exhibit C to the Trust Agreement, as the same may be amended
and supplemented from time to time or any similar agreement with any successor
Clearing Agency.

          "Certificate Distribution Account" has the meaning specified in
Section 5.1 of the Trust Agreement.

          "Certificate Final Scheduled Payment Date" means the __________
Payment Date on which the outstanding principal amount, if any, of the
Certificates is payable.

                                       3

<PAGE>

          "Certificate of Trust" means the Certificate of Trust in the form of
Exhibit B to the Trust Agreement to be filed for the Issuer pursuant to
Section 3810(a) of the Business Trust Statute.

          "Certificate Owner" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on
the books of the Clearing Agency or Foreign Clearing Agency or on the books of
a direct or indirect Clearing Agency Participant.

          "Certificate Pool Factor" as of the close of business on a Payment
Date means a eight-digit decimal figure equal to the Certificate Balance
(after giving effect to distributions made on such date) divided by the
initial Certificate Balance. The Certificate Pool Factor will be 1.00000000 as
of the Cutoff Date; thereafter, the Certificate Pool Factor will decline to
reflect reductions in the Certificate Balance.

          "Certificate Rate" means _____% per annum.

          "Certificate Register" and "Certificate Registrar" means the
register maintained and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.

          "Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, request, waiver or demand pursuant to any of the Basic
Documents (other than pursuant to Section 4.3 of the Trust Agreement), the
interest evidenced by any Certificate registered in the name of the Seller,
the Servicer or any Person actually known by an Authorized Officer of the
Owner Trustee to be an Affiliate of the Seller or the Servicer shall not be
taken into account in determining whether the requisite percentage necessary
to effect any such consent, request or waiver shall have been obtained.

          "Certificateholders' Distributable Amount" means for any Payment
Date, the sum of (x) the Certificateholders' Principal Distributable Amount
and (y) the Certificateholders' Interest Distributable Amount.

          "Certificateholders' Interest Carryover Shortfall" means, (a) for
the initial Payment Date, zero, and (b) for any other Payment Date, the excess
of the Certificateholders' Interest Distributable Amount for the preceding
Payment Date over the amount in respect of the interest actually deposited in
the Certificate Distribution Account on such preceding Payment Date, plus
interest on such excess, to the extent permitted by law, at the Certificate
Rate from and including such preceding Payment Date to, but excluding, the
current Payment Date.

          "Certificateholders' Interest Distributable Amount" means, for any
Payment Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Payment Date and the Certificateholders'
Interest Carryover Shortfall for such Payment Date.

          "Certificateholders' Monthly Interest Distributable Amount" means,
for any Payment Date, one month's interest (or, in the case of the first
Payment Date, interest accrued from and including the Closing Date to, but
excluding, such Payment Date) at the Certificate Rate on the Certificate
Balance on the immediately preceding Payment Date, after giving effect

                                       4

<PAGE>

to all payments of principal to the Certificateholders on or prior to such
Payment Date (or, in the case of the first Payment Date, the Certificate
Balance on the Closing Date). Interest shall be computed on the basis of a 360
day-year of twelve 30-day months for purposes of this definition.

          "Certificateholders' Monthly Principal Distributable Amount" means,
for any Payment Date, the Certificateholders' Percentage of the Principal
Distribution Amount.

          "Certificateholders' Percentage" means, for any Payment Date, 100%
minus the Noteholders' Percentage.

          "Certificateholders' Principal Carryover Shortfall" means for any
Payment Date, the sum of (a) the excess of (i) the Certificateholders'
Principal Distributable Amount for the preceding Payment Date, over (ii) the
amount in respect of principal actually deposited in the Certificate
Distribution Account on such Payment Date and (b) without duplication of
clause (a), the unreimbursed portion of the amount by which the Certificate
Balance has been reduced pursuant to the second sentence of the definition
thereof.

          "Certificateholders' Principal Distributable Amount" means, for any
Payment Date, the sum of (i) the Certificateholders' Monthly Principal
Distributable Amount for such Payment Date and (ii) the Certificateholders'
Principal Carryover Shortfall for such Payment Date; provided that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Certificate Final Scheduled Payment
Date, the principal required to be distributed to the Certificateholders will
include the lesser of (a) any payments of principal due and remaining unpaid
on each Receivable owned by the Issuer as of the last day of the immediately
preceding Collection Period and (b) the amount that is necessary (after giving
effect to the other amounts to be deposited in the Certificate Distribution
Account on such Payment Date and allocable to principal) to reduce the
Certificate Balance to zero, in either case after giving effect to any
required distribution of the Noteholders' Principal Distributable Amount to
the Note Distribution Account.

          "Chase USA" means Chase Manhattan Bank USA, National Association.

          "Class A-1 Interest Rate" means _____% per annum.

          "Class A-1 Notes" means the Class A-1 _____% Asset Backed Notes,
substantially in the form of Exhibit B to the Indenture.

          "Class A-2 Interest Rate" means _____% per annum.

          "Class A-2 Notes" means the Class A-2 _____% Asset Backed Notes,
substantially in the form of Exhibit C to the Indenture.

          "Class A-3 Interest Rate" means _____% per annum.

          "Class A-3 Notes" means the Class A-3 _____% Asset Backed Notes,
substantially in the form of Exhibit D to the Indenture.

          "Class A-4 Interest Rate" means _____% per annum.

                                       5

<PAGE>

         "Class A-4 Notes" means the Class A-4 _____% Asset Backed Notes,
substantially in the form of Exhibit E to the Indenture.

          "Class R Certificate" means the certificate evidencing the
beneficial interest of the Class R Certificateholder in the Owner Trust
Estate, substantially in the form of Exhibit A-1 to the Trust Agreement.

          "Class R Certificateholder" means the Person in whose name the Class
R Certificate is registered.

          "Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The initial Clearing
Agency shall be The Depository Trust Company.

          "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency (including a Foreign Clearing Agency).

          "Clearstream" means Clearstream Banking, societe anonyme.

          "Closing Date" means __________ __, 200_.

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

          "Collection Account" means securities account no. __________
entitled "__________, __________, as Indenture Trustee, Securities Account of
Chase Auto Owner Trust Series 200_-_" maintained by the Collection Account
Securities Intermediary pursuant to the Collection Account Control Agreement
or any successor securities account maintained pursuant to the Collection
Account Control Agreement.

          "Collection Account Control Agreement" means the agreement among the
Issuer, JPMorgan Chase, as securities intermediary, and the Indenture Trustee,
dated as of __________ __, 200_, relating to the Collection Account,
substantially in the form attached as Exhibit C, as the same may be amended
and supplemented from time to time.

          "Collection Account Securities Intermediary" means JPMorgan Chase or
any other securities intermediary that maintains the Collection Account
pursuant to the Collection Account Control Agreement.

          "Collection Period" means each calendar month beginning __________
__, 200_ until Chase Manhattan Auto Owner Trust 200_-_ shall terminate
pursuant to Article IX of the Trust Agreement.

          "Collections" means all collections in respect of Receivables.

          "Contract Rate" of a Receivable means the annual rate of interest
stated in such Receivable.

                                      6

<PAGE>

          "Corporate Trust Office" means the corporate trust office of the
Indenture Trustee or the __________, __________ office of the Owner Trustee,
as applicable.

          "Cutoff Date" means __________ __, 200_.

          "Dealer" means the dealer which sold a Financed Vehicle related to a
Dealer Receivable and which originated or assisted in the origination of such
Dealer Receivable under a Dealer Agreement.

          "Dealer Agreement" means any agreement and, if applicable,
assignment under which Dealer Receivables were originated by or through a
Dealer and sold to the Seller or an affiliate of the Seller.

          "Dealer Receivable" means each Receivable which was originated by
the Seller or an Affiliate of the Seller with the involvement of a Dealer.

          ["Debt Cancellation Policy" means a policy issued by Chase USA to
the obligor that forgives the Principal Balance of a Receivable in excess of
insurance proceeds realized upon the event of a total loss of the related
Financed Vehicle.]

          "Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.

          "Defaulted Receivable" means a Receivable (other than a Repurchased
Receivable) as to which the Servicer has determined based on its usual
collection practices and procedures, during any Collection Period, that
eventual payment in full of the Amount Financed (including accrued interest
thereon) is unlikely; provided that a Receivable shall become a Defaulted
Receivable during the calendar month in which more than 10% of any scheduled
payment becomes 240 days delinquent, regardless of whether any such
determination has been made.

          "Definitive Notes" means Notes issued in certificated, fully
registered form as provided in Section 2.12 of the Indenture.

          "Definitive Certificates" means Certificates issued in certificated,
fully registered form as provided in Section 3.12 of the Trust Agreement.

          "Delaware Trustee" has the meaning specified in Section 10.1 of the
Trust Agreement.

          "Delinquency Percentage" means, for any Payment Date, the sum of the
outstanding Principal Balances of all Receivables which were 60 days or more
delinquent (including Receivables, which are not Defaulted Receivables,
relating to Financed Vehicles that have been repossessed), as of the close of
business on the last day of the Collection Period immediately preceding such
Payment Date, determined in accordance with the Servicer's normal practices,
such sum expressed as a percentage of the Pool Balance as of the close of
business on the last day of such Collection Period.

                                      7

<PAGE>

          "Deposit Date" means the Business Day immediately preceding each
Payment Date.

          "Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.

          "Depository Agreements" means, collectively, the Certificate
Depository Agreement and the Note Depository Agreement.

          "Determination Date" means the __th calendar day of the month (or,
if such __th calendar day is not a Business Day, the Business Day preceding
the __th calendar day of the month) immediately succeeding the related
Collection Period.

          "Eligible Deposit Account" means (a) a segregated identifiable trust
account established in the trust department of a Qualified Trust Institution,
which shall, except in the case of the Reserve Account, initially be JPMorgan
Chase, and may be maintained with JPMorgan Chase so long as JPMorgan Chase is
a Qualified Trust Institution; or (b) a separately identifiable deposit
account established in the deposit taking department of a Qualified
Institution, which may be JPMorgan Chase so long as JPMorgan Chase is a
Qualified Institution.

          "Executive Officer" means, with respect to any corporation or bank,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation or bank, and with respect to any partnership,
any general partner thereof.

          "Euroclear Operator" means Euroclear Bank S.A./N.V., in its capacity
as the operator of the Euroclear system.

          "Event of Default" means an event specified in Section 5.1 of the
Indenture.

          "Event of Servicing Termination" means an event specified in Section
8.1.

          "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          "Expenses" has the meaning specified in Section 8.2 of the Trust
Agreement.

          "FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.

          "FHLMC" means the Federal Home Loan Mortgage Corporation or any
successor thereto.

          "Final Scheduled Maturity Date" means the last day of the Collection
Period immediately preceding the Certificate Final Scheduled Payment Date.

          "Financed Vehicle" means, with respect to a Receivable, the new or
used automobile or light-duty truck, together with all accessions thereto,
securing an Obligor's indebtedness under such Receivable.

                                      8

<PAGE>

          "Fitch" means Fitch, Inc. and its successors and assigns.

          "Fixed Note Percentage" means the percentage equivalent of a
fraction (rounded to the nearest one-one hundred thousandth of 1%) numerator
of which is the Outstanding Amount of the Class A-_ Notes and the Class A-_
Notes on the Payment Date on which the Class A-_ Notes have been paid in full
and the denominator of which is the sum of the Outstanding Amount of the Class
A-_ Notes and the Class A-_ Notes and the Certificate Balance on the Payment
Date on which the Class A-_ Notes have been paid in full.

          "FNMA" means the Federal National Mortgage Association or any
successor thereto.

          "Foreign Clearing Agency" means, collectively, Clearstream and the
Euroclear Operator.

          "Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to the Indenture. A Grant of the Trust Estate or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments and all other moneys payable thereunder, to
give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the
name of the Granting party or otherwise and generally to do and receive
anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.

          "Holder" or "Holders" means, unless the context otherwise requires,
both Certificateholders and Noteholders.

          "Indemnified Parties" has the meaning specified in Section 8.2 of
the Trust Agreement.

          "Indenture" means the Indenture dated as of __________ __, 200_,
between the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.

          "Indenture Trustee" means, initially, __________, as Indenture
Trustee under the Indenture, or any successor Indenture Trustee under the
Indenture.

          "Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor
upon the Notes, the Seller and any Affiliate of any of the foregoing persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Seller or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.

                                      9

<PAGE>

          "Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent engineer, appraiser or other expert
appointed by the Issuer and approved by the Indenture Trustee in the exercise
of reasonable care, and such opinion or certificate shall state that the
signer has read the definition of "Independent" in this Agreement and that the
signer is Independent within the meaning thereof.

          "Insolvency Event" means, for a specified Person, (a) the filing of
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for
any substantial part of its property, or ordering the winding-up or
liquidation of such Person's affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or (b) the
commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by such Person to the entry of an order for relief in
an involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for
any substantial part of its property, or the making of such Person of any
general assignment for the benefit of creditors, or the failure by such Person
generally to pay its debts as such debts become due, or the taking of action
by such Person in furtherance of any of the foregoing.

          "Interest Rate" means the rate of interest borne by the Notes of any
class.

          "Investment Earnings" means, with respect to any Payment Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Collection Account.

          "Issuer" means Chase Manhattan Auto Owner Trust 200_-_, a Delaware
business trust, until a successor replaces it and, thereafter, means such
successor and, for purposes of any provision contained in the Indenture and
required by the TIA, each other obligor on the Notes.

          "Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any of its authorized officers and
delivered to the Indenture Trustee.

          "JPMorgan Chase" means JPMorgan Chase Bank, a New York banking
corporation and its successors.

          "Late Fees" means any late charges, credit related extension fees,
non-credit related extension fees or other administrative fees or similar
charges allowed by applicable law with respect to the Receivables.

          "Lien" means a security interest, lien, charge, pledge or
encumbrance of any kind other than tax liens, mechanics' liens or any other
liens that attach by operation of law.

                                      10

<PAGE>

          "Liquidation Proceeds" means, with respect to any Receivable, (i)
insurance proceeds, (ii) the monies collected during a Collection Period from
whatever source on a Defaulted Receivable and (iii) proceeds of a Financed
Vehicle sold after repossession, in each case net of any liquidation expenses
and payments required by law to be remitted to the Obligor.

          "Moody's" means Moody's Investors Service and its successors and
assigns.

          "Net Loss Ratio" means, for any Payment Date, the ratio, expressed
as an annualized percentage, of (i) the Aggregate Net Losses for such Payment
Date to (ii) the average of the Pool Balances on each of the related
Settlement Date and the last day of the related Collection Period.

          "Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or
a Class A-4 Note.

          "Note Depository Agreement" means the agreement among the Issuer,
the Indenture Trustee, JPMorgan Chase, as agent for The Depository Trust
Company and The Depository Trust Company, as the initial Clearing Agency,
dated the Closing Date, relating to the Notes, substantially in the form of
Exhibit F to the Indenture, as the same may be amended or supplemented from
time to time or any similar agreement with any successor Clearing Agency.

          "Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1(b).

          "Note Final Scheduled Payment Date" means for (a) the Class A-1
Notes, the __________ Payment Date, (b) the Class A-2 Notes, the __________
Payment Date, (c) the Class A-3 Notes, the __________ Payment Date, and (d)
the Class A-4 Notes, the __________ Payment Date.

          "Note Owner" means, with respect to a Book-Entry Note, the person
who is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or Foreign Clearing Agency, or on the books of a direct or
indirect Clearing Agency Participant.

          "Note Pool Factor" for each class of Notes as of the close of
business on a Payment Date means an eight-digit decimal figure equal to the
Outstanding Amount of such class of Notes divided by the Outstanding Amount as
of the Closing Date of such class of Notes. The Note Pool Factor for each
class of Notes will be 1.00000000 as of the Cutoff Date; thereafter, the Note
Pool Factor for each class of Notes will decline to reflect reductions in the
Outstanding Amount of such class of Notes.

          "Noteholder" means the Person in whose name a Note is registered on
the Note Register.

          "Noteholders' Distributable Amount" means, for any Payment Date, the
sum of the Noteholders' Principal Distributable Amount and the Noteholders'
Interest Distributable Amount for all classes of Notes.

                                      11
<PAGE>

          "Noteholders' Interest Carryover Shortfall" means, for any class of
Notes, (a) for the initial Payment Date, zero, and (b) for any other Payment
Date, the excess of (x) the Noteholders' Interest Distributable Amount for the
preceding Payment Date for such class of Notes, over (y) the amount in respect
of interest actually deposited in the Note Distribution Account on such
preceding Payment Date with respect to such class of Notes, plus interest on
the amount of interest due but not paid to the Noteholders of such class on
the preceding Payment Date, to the extent permitted by law, at the applicable
Interest Rate from such preceding Payment Date through the current Payment
Date.

          "Noteholders' Interest Distributable Amount" means, for any Payment
Date for any class of Notes, the sum of (x) the Noteholders' Monthly Interest
Distributable Amount for such class of Notes for such Payment Date and (y) the
Noteholders' Interest Carryover Shortfall for such class of Notes for such
Payment Date.

          "Noteholders' Monthly Interest Distributable Amount" means, for any
Payment Date for each class of Notes, one month's interest (or, in the case of
the first Payment Date, interest accrued from and including the Closing Date
to but excluding such Payment Date) at the related Interest Rate on the
Outstanding Amount of the Notes of such class on such Payment Date (or, in the
case of the first Payment Date, on the Closing Date). Interest for purposes of
this definition (i) on the Class A-1 Notes shall be computed on the basis of a
360-day year for the actual number of days elapsed and (ii) on the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes shall be computed on the
basis of a 360-day year of twelve 30-day months.

          "Noteholders' Monthly Principal Distributable Amount" means, for any
Payment Date, the Noteholders' Percentage of the Principal Distribution
Amount.

          "Noteholders' Percentage" means (i) 100% for each Payment Date
occurring before the Payment Date on which the Class A-_ Notes have been paid
in full, (ii) the Fixed Note Percentage or such greater percentage as would be
necessary to pay the Class A-_ Notes in full) on such Payment Date, (iii) the
Fixed Note Percentage after such Payment Date until all of the Notes have been
paid in full and (iv) zero thereafter; provided, however, that (x) if the
amount on deposit in the Reserve Account on any Payment Date would be, after
giving effect to distributions on such Payment Date, less than _____% of the
Original Pool Balance, the Noteholders' Percentage will be 100% for such
Payment Date and each Payment Date thereafter until the Notes have been paid
in full or the amount on deposit in the Reserve Account equals or exceeds the
Specified Reserve Account Balance and (y) if the Notes have been accelerated
after the occurrence of an Event of Default, the Noteholders' Percentage will
be 100% for each Payment Date thereafter until the Notes have been paid in
full.

          "Noteholders' Principal Carryover Shortfall" means for any Payment
Date, the excess of (x) the Noteholders' Principal Distributable Amount for
the preceding Payment Date over (y) the amount in respect of principal
actually deposited in the Note Distribution Account on such Payment Date.

          "Noteholders' Principal Distributable Amount" means, for any Payment
Date, the sum of (i) the Noteholders' Monthly Principal Distributable Amount
for such Payment Date and (ii) the Noteholders' Principal Carryover Shortfall
for such Payment Date; provided that the

                                      12
<PAGE>

Noteholders' Principal Distributable Amount shall not exceed the Outstanding
Amount of the Notes. In addition, on the Note Final Scheduled Payment Date of
each class of Notes, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect to
the other amounts to be deposited in the Note Distribution Account on such
Payment Date and allocable to principal) to reduce the Outstanding Amount of
such class of Notes to zero.

          "Note Register" and "Note Registrar" means the register maintained
and the registrar appointed pursuant to Section 2.4 of the Indenture.

          "Obligor" on a Receivable means the purchaser or the co-purchasers
of the Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable or any other Person who owes or may be liable for
payments under such Receivable.

          "Officer's Certificate" means a certificate signed by the chairman
of the board, the president, the treasurer, the controller, any executive or
senior vice president or any vice president of the Seller or Servicer, as
appropriate, meeting the requirements of Section 11.1 of the Indenture.

          "Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Servicer) reasonably acceptable in form and
substance to the Indenture Trustee, meeting the requirements of Section 11.1
of the Indenture (or in the case of an Opinion of Counsel delivered to the
Owner Trustee, reasonably acceptable in form and substance to the Owner
Trustee).

          "Optional Purchase Percentage" shall be _____%.

          "Original Pool Balance" shall be $__________.

          "Outstanding" means, when used with respect to Notes, as of any date
of determination, all Notes theretofore authenticated and delivered under the
Indenture except:

          (a) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;

          (b) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent in trust for the Holders of such Notes (provided that if such
Notes are to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor, satisfactory to the Indenture
Trustee, has been made); and

          (c) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;

provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned
by the Issuer, any other obligor upon the

                                      13
<PAGE>

Notes, the Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that an Authorized Officer of the Indenture Trustee either actually
knows to be so owned or has received written notice that such Note is so owned
shall be so disregarded. Notes so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.

          "Outstanding Amount" means, when used with respect to Notes, as of
any date of determination, the aggregate principal amount of all Notes, or a
class of Notes, as applicable, Outstanding as of such date.

          "Owner Trust Estate" means all right, title and interest of the
Issuer in and to the property and rights assigned to the Issuer pursuant to
Article II of this Agreement, all funds on deposit from time to time in the
Trust Accounts (other than the Note Distribution Account) and the Certificate
Distribution Account and all other property of Issuer from time to time,
including any rights of the Owner Trustee and the Issuer pursuant to this
Agreement.

          "Owner Trustee" means __________, a __________ banking corporation,
not in its individual capacity but solely as owner trustee under the Trust
Agreement, and any successor Owner Trustee thereunder.

          "Paying Agent" means: (a) when used in the Indenture or otherwise
with respect to the Notes, the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 of the Indenture and is authorized by the Indenture Trustee to make the
payments to and distributions from the Collection Account and the Note
Distribution Account, including payment of principal of or interest on the
Notes on behalf of the Issuer; and (b) when used in the Trust Agreement or
otherwise with respect to the Certificates, the Owner Trustee or any other
paying agent or co-paying agent appointed pursuant to Section 3.9 of the Trust
Agreement, and in the case of the Indenture with respect to the Notes, and the
Trust Agreement with respect to the Certificates, such Paying Agent shall
initially be the corporate trust office of JPMorgan Chase.

          "Payment Date" means, in the case of the first Collection Period,
__________ __, 200_, and in the case of every Collection Period thereafter,
the __th day of the following month, or if the __th day is not a Business Day,
the next following Business Day.

          "Permitted Investments" means, at any time, any one or more of the
following obligations, securities (certificated or uncertificated) or
instruments (excluding any security with the "r" symbol attached to its
rating):

          (i) obligations of the United States of America or any agency
     thereof; provided such obligations are backed by the full faith
     and credit of the United States of America;

                                      14
<PAGE>

          (ii) general obligations of or obligations guaranteed as to the
     timely payment of interest and principal by any state of the United
     States of America or the District of Columbia then rated "A-1+" or "AAA"
     by Standard & Poor's, "F1+" or "AAA" by Fitch (if rated by Fitch) and
     "P-1" or Aaa by Moody's;

          (iii) commercial paper, other than commercial paper issued by
     JPMorgan Chase or any of its Affiliates, which is then rated P-1 by
     Moody's, "F1+" by Fitch (if rated by Fitch) and "A-1+" by Standard &
     Poor's;

          (iv) certificates of deposit, demand or time deposits, federal funds
     or banker's acceptances, other than banker's acceptances issued by
     JPMorgan Chase or any of its Affiliates, issued by any depository
     institution or trust company (including the Indenture Trustee acting in
     its commercial banking capacity) incorporated under the laws of the
     United States or of any state thereof or incorporated under the laws of a
     foreign jurisdiction with a branch or agency located in the United States
     of America and subject to supervision and examination by federal or state
     banking authorities which short term unsecured deposit obligations of
     such depository institution or trust company are then rated P-1 by
     Moody's, "F1+" by Fitch (if rated by Fitch) and "A-1+" by Standard &
     Poor's;

          (v) demand or time deposits of, or certificates of deposit issued
     by, any bank, trust company, savings bank or other savings institution;
     provided such deposits or certificates of deposit are fully insured by
     the FDIC;

          (vi) guaranteed reinvestment agreements issued by any bank,
     insurance company or other corporation the short term unsecured debt or
     deposits of which are rated P-1 by Moody's, "F1+" by Fitch (if rated by
     Fitch) and "A-1+" by Standard & Poor's or the long-term unsecured debt of
     which are rated Aaa by Moody's, "AAA" by Fitch (if rated by Fitch) and
     "AAA" by Standard & Poor's;

          (vii) repurchase obligations with respect to any security described
     in clauses (i) or (ii) herein or any other security issued or guaranteed
     by the FHLMC, FNMA or any other agency or instrumentality of the United
     States of America which is backed by the full faith and credit of the
     United States of America, in either case entered into with a federal
     agency or a depository institution or trust company (acting as principal)
     described in (iv) above;

          (viii) investments in money market funds, which funds (A) are not
     subject to any sales, load or other similar charge; and (B) are rated at
     least "AAAM" or "AAAM-G" by Standard & Poor's, "AAAV-1+" by Fitch (if
     rated by Fitch) and Aaa by Moody's; and

          (ix) such other investments, other than investments in JPMorgan
     Chase or any of its affiliates, where either (A) the short-term unsecured
     debt or deposits of the obligor on such investments are rated "A-1+" by
     Standard & Poor's, "F1+" by Fitch (if rated by Fitch) and P-1 by Moody's.

                                      15
<PAGE>

Permitted Investments may include money market mutual funds (so long as such
fund has the ratings specified in clause (viii) hereof), including, without
limitation, the VISTA U.S. Government Money Market Fund or any other fund for
which JPMorgan Chase, the Indenture Trustee or an Affiliate thereof serves as
an investment advisor, administrator, shareholder servicing agent, and/or
custodian or subcustodian, notwithstanding that (i) JPMorgan Chase,
__________, ___________ or an Affiliate thereof charges and collects fees and
expenses from such funds for services rendered, (ii) JPMorgan Chase,
__________, __________ or an Affiliate thereof charges and collects fees and
expenses for services rendered pursuant to this Agreement, and (iii) services
performed for such funds and pursuant to this Agreement may converge at any
time. The Indenture Trustee specifically authorizes JPMorgan Chase,
__________, __________ or an Affiliate thereof to charge and collect all fees
and expenses from such funds for services rendered to such funds (but not to
exceed investment earnings), in addition to any fees and expenses JPMorgan
Chase, __________ or __________, as applicable, may charge and collect for
services rendered pursuant to this Agreement.

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

          "Pool Balance" as of any date of determination means, the aggregate
Principal Balance of the Receivables as of the close of business on the last
day of the preceding Collection Period, after giving effect to all payments
received from Obligors and Repurchase Amounts to be remitted by the Servicer
or the Seller, as the case may be, for such Collection Period and all losses
realized on Receivables liquidated during such Collection Period.

          "Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.

          "Prepayment Date" means in the case of a prepayment of the Notes
pursuant to Section 10.1 of the Indenture, the Payment Date specified by the
Servicer pursuant to such Section 10.1.

          "Principal Balance" of a Receivable, as of the close of business on
the last day of any Collection Period, means the Amount Financed minus that
portion of all payments received on or prior to such date allocable to
principal. The Principal Balance of a Defaulted Receivable or a Repurchased
Receivable shall be deemed to be zero, in each case, as of such date.

          "Principal Distribution Amount" means, for any Payment Date, the sum
of the following amounts, without duplication: (i) Available Principal and
(ii) Aggregate Net Losses.

          "Principal Prepayment" means a payment or other recovery of
principal on a Receivable (including insurance proceeds and Liquidation
Proceeds applied to principal on a Receivable) which is received in advance of
its due date.

                                      16
<PAGE>

          "Proceeding" means any suit in equity, action or law or other
judicial or administrative proceeding.

          "Qualified Institution" means a depository institution organized
under the laws of the United States of America or any State thereof or
incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or any State thereof and subject to
supervision and examination by federal or state banking authorities which at
all times has the Required Deposit Rating and, in the case of any such
institution organized under the laws of the United States of America, whose
deposits are insured by the FDIC.

          "Qualified Trust Institution" means an institution organized under
the laws of the United States of America or any State thereof or incorporated
under the laws of a foreign jurisdiction with a branch or agency located in
the United States of America or any State thereof and subject to supervision
and examination by federal or state banking authorities which at all times (i)
is authorized under such laws to act as a trustee or in any other fiduciary
capacity, (ii) has not less than one billion dollars in assets under fiduciary
management, and (iii) has a long term deposits rating of not less than "BBB-"
by Standard & Poor's, Baa3 by Moody's and "BBB-" by Fitch (if rated by Fitch).

          "Rating Agency" means any of Standard & Poor's, Moody's or Fitch.

          "Rating Agency Condition" means, with respect to any action or
event, that each Rating Agency shall have notified the Seller, the Servicer,
the Indenture Trustee and the Owner Trustee, in writing, that such action or
event will not result in reduction or withdrawal of any then outstanding
rating of any outstanding Note or Certificate with respect to which it is the
Rating Agency.

          "Receivable" means a retail installment sale contract or purchase
money promissory note or other promissory note and security agreement executed
by an Obligor in respect of a Financed Vehicle, and all proceeds thereof and
payments thereunder (other than interest accrued and unpaid as of the opening
of business on the Cutoff Date), which Receivable shall be identified in the
Schedule of Receivables.

          "Receivable Files" means the documents specified in Section 3.3.

          "Receivables Pool" means the pool of Receivables included in the
Trust Estate and all monies received thereunder on or after the Cutoff Date.

          "Record Date" means, with respect to any Payment Date, the Business
Day prior to such Payment Date unless Definitive Notes or Definitive
Certificates are issued, in which case, Record Date, with respect to such
Definitive Notes or Definitive Certificates, as applicable, shall mean the
last day of the immediately preceding calendar month.

          "Relevant UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.

          "Repurchase Amount" of a Repurchased Receivable or any Receivable
purchased by the Servicer pursuant to Section 9.1, means the sum, as of the
last day of the Collection

                                      17
<PAGE>

Period on which such Receivable becomes such, of the Principal Balance thereof
plus the Accrued Interest thereon.

          "Repurchased Receivable" means a Receivable repurchased by the
Seller pursuant to Section 3.2 or purchased by the Servicer pursuant to
Section 4.6.

          "Required Deposit Rating" shall be a short-term certificate of
deposit rating from Moody's of P-1, from Fitch of "F1+" (if rated by Fitch)
and from Standard & Poor's of "A-1+," and a long-term unsecured debt rating of
not less than Aa3 by Moody's, "AA" by Fitch (if rated by Fitch) and "AA-" by
Standard & Poor's.

          "Reserve Account" means securities account no. __________ entitled
"__________, __________, as Indenture Trustee, Securities Account of Chase
Auto Owner Trust Series 200_-_" maintained by the Reserve Account Securities
Intermediary pursuant to the Reserve Account Control Agreement or any
successor securities account maintained pursuant to the Reserve Account
Control Agreement.

          "Reserve Account Control Agreement" means the agreement among the
Issuer, __________, as securities intermediary, and the Indenture Trustee,
dated as of __________ __, 200_, relating to the Reserve Account,
substantially in the form attached as Exhibit D, as the same may be amended
and supplemented from time to time.

          "Reserve Account Initial Deposit" means an amount equal to
$__________.

          "Reserve Account Securities Intermediary" means __________ or any
other securities intermediary that maintains the Reserve Account pursuant to
the Reserve Account Control Agreement.

          "Reserve Account Transfer Amount" means, for any Payment Date, an
amount equal to the lesser of (a) the amount of cash or other immediately
available funds on deposit in the Reserve Account on such Payment Date
(excluding amounts to be paid to the Seller pursuant to clause (i) of Section
5.6(d), but before giving effect to any other withdrawals therefrom relating
to such Payment Date) and (b) the amount, if any, by which the sum of the
amounts set forth in clauses (i) through (vi) of Section 5.5(c), inclusive,
exceeds the Total Distribution Amount for such Payment Date.

          "Responsible Officer" means, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary, or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.

          "Sale Proceeds" has the meaning specified in Section 9.1(b).

          "Schedule of Receivables" means the list of Receivables attached
hereto as Schedule A.

                                      18
<PAGE>

          "SFAS 140" means the Statement of Financial Accounting Standard No.
140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Securities Control Agreements" means, collectively, the Collection
Account Control Agreement and the Reserve Account Control Agreement.

          "Securities Intermediaries" means, collectively, JPMorgan Chase,
acting as securities intermediary under the Collection Account Control
Agreement or any successor thereto thereunder and __________, acting as
securities intermediary under the Reserve Account Control Agreement or any
successor thereto thereunder.

          "Seller" means Chase Manhattan Bank USA, National Association, a
national banking association with its principal executive offices in Newark,
Delaware, in its capacity as the seller of the Receivables under this
Agreement, and each successor to Chase Manhattan Bank USA, National
Association (in the same capacity) pursuant to Section 6.3.

          "Servicer" means Chase Manhattan Bank USA, National Association, a
national banking association with its principal offices in Newark, Delaware,
in its capacity as the servicer of the Receivables under this Agreement, and
each successor to Chase Manhattan Bank USA, National Association (in the same
capacity) pursuant to Section 7.3, and each successor servicer pursuant to
Section 8.2.

          "Servicer's Certificate" means a certificate, substantially in the
form of Exhibit A attached hereto, completed and executed by the Servicer by
its chairman of the board, the president, treasurer, controller or any
executive, senior vice president or vice president pursuant to Section 4.8.

          "Servicing Fee" with regard to a Collection Period means the fee
payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 4.7.

          "Servicing Fee Rate" means ____% per annum.

          "Settlement Date" means, with respect to any Collection Period, the
last day of the Collection Period immediately preceding such Collection
Period, and with respect to any Payment Date, the last day of the second
Collection Period preceding the Collection Period in which such Payment Date
occurs.

          "Simple Interest Method" means the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid Principal Balance multiplied by the
period of time elapsed since the preceding payment of interest was made, and
the remainder of such payment is allocable to principal.

          "Simple Interest Receivable" means any Receivable providing for the
allocation of payments made thereunder to principal and interest in accordance
with the Simple Interest Method.

                                      19
<PAGE>

          "Specified Reserve Account Balance" with respect to any Payment
Date, means _____% of the Pool Balance as of the related Settlement Date, but
in any event will not be less than the lesser of (i) $__________ and (ii) such
Pool Balance; provided that the Specified Reserve Account Balance will be
calculated using a percentage of _____% for any Payment Date (beginning with
the __________ Payment Date) for which the Average Net Loss Ratio exceeds
_____% or the Average Delinquency Percentage exceeds _____%. Upon written
notification to the Indenture Trustee by the Seller, the Specified Reserve
Account Balance may be reduced to a lesser amount as determined by the Seller
so long as such reduction satisfies the Rating Agency Condition.

          "Standard & Poor's" means Standard & Poor's Ratings Services and its
successors and assigns.

          "Total Distribution Amount" means, for any Payment Date, the sum of
Available Interest and Available Principal for such Payment Date. The Total
Distribution Amount on any Payment Date shall exclude all payments and
proceeds (including any Liquidation Proceeds and any amounts received from
Dealers with respect to Receivables) of any Receivables the Repurchase Amount
of which has been included in the Total Distribution Amount for a prior
Payment Date.

          "Treasury Regulations" means, the treasury regulations promulgated
under Code.

          "Trust Accounts" means, collectively, the Collection Account, the
Note Distribution Account and the Reserve Account.

          "Trust Agreement" means the Amended and Restated Trust Agreement
dated as of __________ __, 200_, between the Seller and the Owner Trustee, as
the same may be amended and supplemented from time to time.

          "Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all
proceeds thereof and the Reserve Account.

          "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.

          SECTION 1.2 Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a
visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
term "including" means "including without limitation." All references herein
to Articles, Sections, Subsections and Exhibits are references to Articles,
Sections, Subsections and Exhibits contained in or attached to this Agreement
unless otherwise specified, and each such Exhibit is part of the terms of this
Agreement.

                                      20
<PAGE>

          SECTION 1.3 Simple Interest Method; Methods of Allocating Payments
or Receivables; Allocations. All allocations of payments to principal and
interest and determinations of periodic charges and the like on the
Receivables shall be based on a year with the actual number of days in such
year and twelve months with the actual number of days in each such month. Each
payment on a Receivable shall be applied first, to the payment of accrued and
unpaid interest on such Receivable, second, to reduce the scheduled principal
amount outstanding on the Receivable to the extent of the remaining scheduled
payment, third, to any outstanding fees and Late Fees under the terms of the
Receivable and fourth, to reduce the principal amount outstanding on the
Receivable. Amounts paid by the Seller or the Servicer in respect of
Repurchased Receivables shall be allocated as if the Obligor thereof had
prepaid such Receivable in full on the date as of which such Receivable was
repurchased by the Seller pursuant to Section 3.2 or purchased by the Servicer
pursuant to Section 4.6 or 9.1.

                                  ARTICLE II

                           CONVEYANCE OF RECEIVABLES

          SECTION 2.1 Conveyance of Receivables. In consideration of the
Issuer's delivery of the Notes, the Certificates and the Class R Certificate
to and upon the order of the Seller, the Seller does hereby sell, transfer,
assign, and otherwise convey to the Issuer, without recourse (subject to the
Seller's obligations herein):

          (i) all right, title, and interest of the Seller in, to and under
     the Receivables listed in the Schedule of Receivables, which is
     incorporated by reference herein, all proceeds thereof and all amounts
     and monies received thereon on or after the Cutoff Date (including
     proceeds of the repurchase of Receivables by the Seller pursuant to
     Section 3.2 or the purchase of Receivables by the Servicer pursuant to
     Section 4.6 or 9.1), together with the interest of the Seller in the
     security interests in the Financed Vehicles granted by the Obligors
     pursuant to the Receivables and in any repossessed Financed Vehicles;

          (ii) all right, title and interest of the Seller in any Liquidation
     Proceeds and in any proceeds of any extended warranties, theft and
     physical damage, guaranteed auto protection, credit life or credit
     disability policies relating to the Financed Vehicles or the Obligors;

          (iii) all right, title and interest of the Seller in any proceeds
     from Dealer repurchase obligations relating to the Receivables; and

          (iv) all proceeds (as defined in the Relevant UCC) of the foregoing.

          In connection with such sale, the Seller agrees to record and file,
at its own expense, financing statements (and continuation statements with
respect to such financing statements when applicable) with respect to the
Receivables for the sale of accounts and chattel paper meeting the
requirements of applicable state law in such manner and in such jurisdictions
as are necessary to perfect the sale and assignment of the Receivables to the
Issuer.

          It is the intention of the Seller and the Issuer that (a) the
assignment and transfer herein contemplated constitute a sale of the
Receivables, conveying good title thereto free and

                                      21
<PAGE>

clear of any liens and encumbrances, from the Seller to the Issuer and (b) the
Receivables not be part of the Seller's estate in the event of an insolvency.
In the event that such conveyance is deemed to be a pledge to secure a loan,
the Seller hereby grants to the Issuer a first priority perfected security
interest in all of the Seller's right, title and interest in, to and under the
items of property listed in clauses (i) through (iii) above, and in all
proceeds (as defined in the Relevant UCC) of the foregoing, to secure the loan
deemed to be made in connection with such pledge and, in such event, this
Agreement shall constitute a security agreement under applicable law.

          SECTION 2.2 Closing. The conveyance of the Receivables shall take
place at the offices of __________, New York, New York on the Closing Date,
simultaneously with the closing of the transactions contemplated by the
underwriting agreements related to the Notes and the Certificates and the
other Basic Documents. Upon the acceptance by the Seller of the Notes, the
Certificates and the Class R Certificate, the ownership of each Receivable and
the contents of the related Receivable File will be vested in the Issuer,
subject only to the lien of the Indenture.

                                 ARTICLE III

                                THE RECEIVABLES

          SECTION 3.1 Representations and Warranties of Seller; Conditions
Relating to Receivables.

          (a) The Seller makes the following representations and warranties as
to the Receivables on which the Issuer shall rely in acquiring the
Receivables. Such representations and warranties shall speak as of the Cutoff
Date unless otherwise specified, but shall survive the sale, transfer, and
assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.

          (i) Schedule of Receivables. The Schedule of Receivables identifies
     the Receivables by account number, name of Obligor and remaining
     principal balance of the Receivables as of the Cutoff Date and the
     information set forth in the Schedule of Receivables with respect to each
     Receivable is true and correct in all material respects, and no selection
     procedures materially adverse to the Holders has been utilized in
     selecting the Receivables from all receivables owned by the Seller which
     meet the selection criteria specified herein.

          (ii) No Sale or Transfer. No Receivable has been sold, transferred,
     assigned or pledged by the Seller to any Person other than the Issuer.

          (iii) Good Title. Immediately prior to the transfer and assignment
     of the Receivables to the Issuer herein contemplated, the Seller has good
     and marketable title to each Receivable free and clear of all Liens and
     rights of others; and, immediately upon the transfer thereof, the Issuer
     has either (i) good and marketable title to each Receivable, free and
     clear of all Liens and rights of others, other than the Lien of the
     Indenture Trustee under the Indenture, and the transfer has been
     perfected under applicable law or (ii) a first priority perfected
     security interest in each Receivable and the proceeds thereof.

                                      22
<PAGE>

          (b) Each Receivable satisfies the following conditions as of the
Cutoff Date unless otherwise specified and such conditions shall survive the
sale, transfer and assignment of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.

          (i) Acquisition. Each Receivable is a Dealer Receivable acquired
     directly or indirectly from or made through a Dealer located
     in the United States (including the District of Columbia);

          (ii) Security. Each Receivable is secured by a new or used
     automobile or light-duty truck;

          (iii) Maturity of Receivables. Each Receivable had a remaining
     maturity of not less than _____ months and not greater than _____ months,
     and (A) in the case of each Receivable secured by new Financed Vehicles,
     had an original maturity of at least _____ months and not more than _____
     months, or (B) in the case of each Receivable secured by used Financed
     Vehicles, had an original maturity of at least _____ months and not more
     than _____ months.

          (iv) Contract Rate. Each Receivable is a fully-amortizing fixed rate
     simple interest contract or note that provides for level scheduled
     monthly payments over its remaining term, has a Contract Rate of not more
     than _____%;

          (v) No Repossessions. Each Receivable is secured by a Financed
     Vehicle that had not been repossessed without
     reinstatement of such Receivable;

          (vi) Obligor Not Subject to Bankruptcy Proceedings. Each Receivable
     has been entered into by an Obligor who had not been identified on the
     computer files of the Seller as in bankruptcy proceedings;

          (vii) No Overdue Payments. Each Receivable had no payment that was
     more than 30 days past due;

          (viii) Remaining Principal Balance. Each Receivable had a remaining
     Principal Balance of at least $_____ and not greater than $_____;

          (ix) No Force Placed Insurance. Each Receivable was secured by a
     Financed Vehicle that was not insured by a force placed insurance policy
     or any vendor's single interest and non-filing insurance policy;

          (x) Receivable Files. The Receivable Files were kept at one or more
     of the locations specified in Schedule B hereto;

          (xi) Characteristics of Receivables. Each Receivable (a) has been
     originated in the form of a credit sales transaction by a Dealer or a
     purchase money loan or other note through a Dealer located in one of the
     States of the United States (including the District of Columbia) for the
     retail financing of a Financed Vehicle and has been fully and properly
     executed by the parties thereto, (b) if a retail installment sales
     contract, has been

                                      23
<PAGE>

     purchased by the Seller from the originating Dealer or an Affiliate
     of the Seller and has been validly assigned by such Dealer or an
     Affiliate of the Seller to the Seller in accordance with its terms; (c)
     contains customary and enforceable provisions such that the rights and
     remedies of the holder thereof are adequate for realization against the
     collateral of the benefits of the security; and (d) provides for fully
     amortizing level scheduled monthly payments (provided that the payment in
     the last month in the life of the Receivable may be different from the
     level scheduled payment) and for accrual of interest at a fixed rate
     according to the Simple Interest Method;

          (xii) Compliance with Laws. Each Receivable and each sale of the
     related Financed Vehicle complied at the time it was originated or made,
     and complied on and after the Cutoff Date, in all material respects with
     all requirements of applicable federal, state, and local laws, and
     regulations thereunder, including usury laws, the Federal
     Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
     Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss
     Warranty Act, Federal Reserve Board Regulations B and Z, state
     adaptations of the National Consumer Act and of the Uniform Consumer
     Credit Code, and any other consumer credit, equal opportunity, and
     disclosure laws applicable to such Receivable and sale thereof;

          (xiii) Binding Obligation. Each Receivable constitutes the legal,
     valid, and binding payment obligation in writing of the Obligor,
     enforceable by the holder thereof in all material respects in accordance
     with its terms, subject, as to enforcement, to applicable bankruptcy,
     insolvency, reorganization, liquidation and other similar laws and
     equitable principles relating to or affecting the enforcement of
     creditors' rights;

          (xiv) No Government Obligor. Each Receivable is not due from the
     United States of America or any State or from any agency, department,
     instrumentality or political subdivision of the United States of America
     or any State or local municipality, and each Receivable is not due from a
     business except to the extent that such Receivable has a personal
     guaranty;

          (xv) Security Interest in Financed Vehicle. Immediately prior to the
     sale and assignment thereof to the Issuer as herein contemplated, each
     Receivable was secured by a validly perfected first priority security
     interest in the related Financed Vehicle in favor of or for the benefit
     of the Seller as secured party (subject to administrative delays and
     clerical errors on the part of the applicable governmental agency and to
     any statutory or other lien arising by operation of law after the Closing
     Date which is prior to such security interest), the Seller's security
     interest (or beneficial interest therein) is assignable, and has been so
     assigned by the Seller to the Issuer, and at such time as enforcement of
     such security interest is sought, each Receivable shall be secured by a
     validly perfected first priority security interest in the related
     Financed Vehicle for the benefit of the Issuer (subject to administrative
     delays and clerical errors on the part of the applicable governmental
     agency and to any statutory or other lien arising by operation of law
     after the Closing Date which is prior to such security interest);

                                      24
<PAGE>

          (xvi) Receivables in Force. No Receivable has been satisfied,
     subordinated, or rescinded, nor has any Financed Vehicle been released
     from the Lien granted by the related Receivable, in whole or in part;

          (xvii) No Waiver. No provision of a Receivable has been waived in
     such a manner that such Receivable fails either to meet all of the
     representations and warranties made by the Seller herein with respect
     thereto or to meet all of the conditions with respect thereto pursuant to
     this Section 3.1(b);

          (xviii) No Amendments. No Receivable has been amended except
     pursuant to either instruments included in the Receivable Files or
     instruments to be included in the Receivable Files pursuant to Section
     4.2 (or otherwise maintained by the Seller in the ordinary course of its
     business), and no such amendment has caused such Receivable either to
     fail to meet all of the representations and warranties made by the Seller
     herein with respect thereto or to fail to meet all of the conditions with
     respect thereto pursuant to this Section 3.1(b);

          (xix) No Defenses. The Seller had no knowledge either of any facts
     which would give rise to any right of rescission, setoff, counterclaim,
     or defense, or of the same being asserted or threatened, with respect to
     any Receivable;

          (xx) No Liens. The Seller had no knowledge of any Liens or claims
     that have been filed, including liens for work, labor, materials or
     unpaid taxes relating to a Financed Vehicle, that would be liens prior
     to, or equal or coordinate with, the lien granted by the Receivable;

          (xxi) No Default. Except for payment defaults continuing for a
     period of not more than 30 days as of the close of business on the Cutoff
     Date, the Seller has no knowledge that a default, breach, violation, or
     event permitting acceleration under the terms of any Receivable exists;
     the Seller has no knowledge that a continuing condition that with notice
     or lapse of time would constitute a default, breach, violation, or event
     permitting acceleration under the terms of any Receivable exists; and the
     Seller has not waived any of the foregoing;

          (xxii) Insurance. Each Receivable requires that the Obligor
     thereunder maintain comprehensive, liability, theft and physical damage
     insurance covering the related Financed Vehicle;

          (xxiii) Lawful Assignment. No Receivable has been originated in, or
     is subject to the laws of, any jurisdiction under which the sale,
     transfer, and assignment of such Receivable under this Agreement or
     pursuant to transfers of the Certificates or the Notes is unlawful, void
     or voidable;

          (xxiv) All Filings Made. No filings (other than filings under the
     Relevant UCC which have been made) or other actions are necessary in any
     jurisdiction to give the Issuer a first perfected security interest in
     the Receivables;

                                      25
<PAGE>

          (xxv) One Original. There is no more than one original executed copy
     of each Receivable which, immediately prior to the delivery
     thereof to the Servicer (as custodian for the Issuer), was in the
     possession of the Seller;

          (xxvi) [Excluded Loans. Each Receivable is not a Receivable
     originated by or through a Dealer located in the State of Alabama or the
     State of Maryland;] and

          (xxvii) [No Debt Cancellation Policy. No Receivable is subject to a
     Debt Cancellation Policy.]

          SECTION 3.2 Repurchase Upon Breach or Failure of a Condition. The
Seller, the Servicer, the Indenture Trustee or the Owner Trustee, as the case
may be, shall inform the other parties in writing, upon the discovery by the
Seller, the Servicer or an Authorized Officer of the Indenture Trustee or the
Owner Trustee, as the case may be, of either any breach of the Seller's
representations and warranties set forth in Section 3.1(a) or the failure of
any Receivable to satisfy any of the conditions set forth in Section 3.1(b)
which materially and adversely affects the Holders' interest in any
Receivable. Unless the breach or failed condition shall have been cured by the
last day of the Collection Period following the Collection Period in which
such discovery occurred (or, at the Seller's option, the last day of the
Collection Period in which such discovery occurred), the Seller shall
repurchase any Receivable the Holders' interest in which was materially and
adversely affected by the breach or failed condition, as of such last day. In
consideration of the repurchase of a Receivable, the Seller shall remit the
Repurchase Amount of such Receivable as of such last day (less any Liquidation
Proceeds deposited, or to be deposited, by the Servicer in the Collection
Account with respect to such Receivable pursuant to Section 4.3) in the manner
specified in Section 5.4. The sole remedy of the Issuer, the Indenture Trustee
or the Holders with respect either to a breach of the Seller's representations
and warranties set forth in Section 3.1(a) or to a failure of any of the
conditions set forth in Section 3.1(b) shall be to require the Seller to
repurchase Receivables pursuant to this Section 3.2. The obligation of the
Seller to repurchase under this Section 3.2 shall not be dependent upon the
actual knowledge of the Seller of any breached representation or warranty and
shall exist without regard to any limitation set forth in any representation
or warranty concerning the knowledge of the Seller as to the facts stated
therein. The Owner Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase
of any Receivable pursuant to this Section 3.2 or the eligibility of any
Receivable for purposes of this Agreement.

          SECTION 3.3 Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer,
upon the execution and delivery of this Agreement, agrees to have the Servicer
act as custodian of the following documents or instruments (the "Receivable
Files") which are hereby constructively delivered to the Issuer with respect
to each Receivable:

          (i) The original executed Receivable; and

          (ii) Any and all other documents or records that the Seller or the
     Servicer, as the case may be, shall keep on file, in accordance with its
     customary procedures, relating to a Receivable, an Obligor or a Financed
     Vehicle.

                                      26
<PAGE>

          The Servicer hereby agrees to act as custodian and as agent for the
Issuer hereunder. The Servicer acknowledges that it holds the documents and
instruments relating to the Receivables for the benefit of the Issuer. The
Issuer shall have no responsibility to monitor the Servicer's performance as
custodian and shall have no liability in connection with the Servicer's
performance of such duties hereunder.

          SECTION 3.4 Duties of Servicer as Custodian.

          (a) Safekeeping. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Issuer, and maintain such accurate
and complete accounts, records (either original execution documents or copies
of such originally executed documents shall be sufficient) and computer
systems pertaining to the Receivables as shall enable the Issuer to comply
with its obligations pursuant to this Agreement. In performing its duties as
custodian, the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the receivable
files of comparable new or used automobile receivables that the Servicer
services for itself. The Servicer shall conduct, or cause to be conducted,
periodic audits of the files of all receivables owned or serviced by the
Servicer which shall include the Receivable Files held by it under this
Agreement and the related accounts, records and computer systems, in such a
manner as shall enable the Owner Trustee or the Indenture Trustee to identify
all Receivable Files and such related accounts, records and computer systems
and to verify, if the Owner Trustee or the Indenture Trustee so elects, the
accuracy of the Servicer's recordkeeping. The Servicer shall promptly report
to the Owner Trustee or the Indenture Trustee any failure on its part to hold
the Receivable Files and maintain its accounts, records, and computer systems
as herein provided, and promptly take appropriate action to remedy any such
failure.

          (b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of the locations specified in Schedule B
to this Agreement, or at such other location as shall be specified to the
Owner Trustee and the Indenture Trustee by 30 days' prior written notice. The
Servicer shall make available to the Owner Trustee, the Indenture Trustee or
their respective duly authorized representatives, attorneys or auditors, the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times during normal operating hours as the
Owner Trustee or Indenture Trustee shall reasonably instruct which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations.

          (c) Release of Documents. Upon instruction from the Indenture
Trustee (or, if the Notes have been paid in full, from the Owner Trustee), the
Servicer shall release any document in the Receivable Files to the Indenture
Trustee or Owner Trustee, or their respective agents or designee, as the case
may be, at such place or places as such Person may reasonably designate as
soon as reasonably practicable to the extent it does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations. The Servicer shall not be responsible for any loss occasioned by
the failure of the Owner Trustee or Indenture Trustee, or their respective
agents or designees, to return any document or any delay in doing so.

          (d) Title to Receivables. The Servicer agrees that, in respect of
any Receivable held by it as custodian hereunder, (i) the Servicer will not at
any time have or in any way attempt

                                      27
<PAGE>

to assert any interest in such Receivable or the related Receivable File,
other than solely for the purpose of collecting or enforcing the Receivable
for the benefit of the Issuer and (ii) the related Receivable File shall at
all times be property of the Issuer.

          SECTION 3.5 Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by an Authorized Officer
of the Indenture Trustee (or, if the Notes have been paid in full, of the
Owner Trustee). A certified copy of a by-law or of a resolution of the Board
of Directors of the Owner Trustee or the Indenture Trustee, as the case may
be, shall constitute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full force and effect
until receipt by the Servicer of written notice to the contrary given by the
Owner Trustee or the Indenture Trustee, as the case may be.

          SECTION 3.6 Custodian's Indemnification. The Servicer, as custodian,
shall indemnify the Issuer, the Owner Trustee and the Indenture Trustee for
any and all liabilities, obligations, losses, damages, payments, costs, or
expenses of any kind whatsoever that may be imposed on, incurred or asserted
against the Issuer, the Owner Trustee or the Indenture Trustee as the result
of any act or omission in any way relating to the maintenance and custody by
the Servicer, as custodian, of the Receivable Files; provided, however, that
the Servicer shall not be liable for any portion of any such amount resulting
from the willful misfeasance, bad faith, or negligence of the Issuer, the
Owner Trustee or the Indenture Trustee.

          SECTION 3.7 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and
shall continue in full force and effect until terminated pursuant to this
Section 3.7 or until this Agreement shall be terminated. If the Servicer shall
resign as Servicer under Section 7.5 or if all of the rights and obligations
of the Servicer shall have been terminated under Section 8.1, the appointment
of the Servicer as custodian may be terminated by the Indenture Trustee or by
the Holders of Notes evidencing not less than a majority of the aggregate
Outstanding Amount of the Notes (or, if there are no Notes outstanding, the
Holders of Certificates representing not less than a majority of the
Certificate Balance), in the same manner as the Indenture Trustee or such
Holders may terminate the rights and obligations of the Servicer under Section
8.1. As soon as practicable after any termination of such appointment, the
Servicer shall, at its expense, deliver the Receivable Files to the Issuer or
the Issuer's agent at such place or places as the Issuer may reasonably
designate. Notwithstanding the termination of the Servicer as custodian, the
Owner Trustee agrees that upon any such termination, the Issuer shall provide,
or cause its agent to provide, access to the Receivable Files to the Servicer
for the purpose of carrying out its duties and responsibilities with respect
to the servicing of the Receivables hereunder.

                                  ARTICLE IV

                  ADMINISTRATION AND SERVICING OF RECEIVABLES

          SECTION 4.1 Duties of Servicer. The Servicer is hereby authorized to
act as agent for the Issuer and in such capacity shall manage, service,
administer and make collections on the Receivables (other than Repurchased
Receivables) with reasonable care, using that degree of skill and attention
that the Servicer exercises with respect to comparable new or used

                                      28
<PAGE>

automobile receivables that it services for itself. The Servicer's duties
shall include collection and posting of all payments, responding to inquiries
by Obligors or by federal, state, or local governmental authorities with
respect to the Receivables, investigating delinquencies, reporting tax
information to Obligors in accordance with its customary practices, advancing
costs of disposition of defaults, monitoring Receivables in cases of Obligor
defaults, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee with respect to distributions. The Servicer shall
follow its customary standards, policies, and procedures in performing its
duties as Servicer hereunder; provided that the Servicer shall be permitted to
take or to refrain from taking any action not specified in this Agreement with
respect to servicing the Receivables if such action or inaction would not
contravene any material term of this Agreement or materially and adversely
affect the interests of Holders and is not outside customary or normal
servicing procedures. Without limiting the generality of the foregoing, the
Servicer shall be authorized and empowered by the Issuer to execute and
deliver, on behalf of itself, the Owner Trustee, the Indenture Trustee and the
Holders, or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, without recourse to the Issuer, with respect to the
Receivables or with respect to the Financed Vehicles. If the Servicer shall
commence a legal proceeding to enforce a Receivable or a Defaulted Receivable,
the Issuer shall thereupon be deemed to have automatically assigned such
Receivable and the related property conveyed to the Issuer with respect to
such Receivable to the Servicer, solely for the purpose of collection. The
Owner Trustee shall furnish the Servicer with such documents as have been
prepared by the Servicer for execution by the Owner Trustee and as are
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.

                                      29
<PAGE>

          SECTION 4.2 Collection of Receivable Payments; Refinancing. (a) The
Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables and of this Agreement as and
when the same shall become due, and shall follow such collection procedures as
it follows with respect to comparable new or used automobile receivables that
it services for itself and that are consistent with prudent industry
standards. In connection therewith, the Servicer may grant extensions, rebates
or adjustments on a Receivable without the consent of the Issuer; provided,
however, that if the Servicer extends the date for final payment by the
Obligor of any Receivable beyond the Final Scheduled Maturity Date, it shall
promptly repurchase such Receivable pursuant to Section 4.6. The Servicer is
authorized in its discretion to waive any Late Fees that may be due in the
ordinary course of collecting a Receivable; provided, further, that the
Servicer shall not agree to any change in the underlying Contract Rate on any
Receivable, to any change in the Principal Balance thereof (except with
respect to a prepayment of a scheduled payment that does not result in a
deferral of any other scheduled payment), to any reduction of the total number
of payments due thereunder or, subject to the foregoing, to any reduction of
the amount of any scheduled payment on a Receivable. In the event that at the
end of the scheduled term of any Receivable, the outstanding principal amount
thereof is such that the final payment to be made by the related Obligor is
larger than the regularly scheduled payment of principal and interest made by
such Obligor, the Servicer may permit such Obligor to pay such remaining
principal amount in more than one payment of principal and interest; provided,
however, that the last such payment shall be due on or prior to the Final
Scheduled Maturity Date.

          (b) Notwithstanding anything in this Agreement to the contrary, the
Servicer may refinance any Receivable by accepting a new promissory note from
the related Obligor and applying the proceeds of such refinancing to pay all
obligations in full of such Obligor under such Receivable. The receivable
created by the refinancing shall not be property of the Issuer.

          SECTION 4.3 Realization Upon Receivables. The Servicer shall use
reasonable efforts, consistent with its customary servicing procedures, to
repossess or otherwise take possession of the Financed Vehicle securing any
Receivable during the calendar month in which more than 10% of any scheduled
payment thereunder becomes 90 days delinquent; provided, however that the
Servicer may repossess or otherwise take possession of the Financed Vehicle
securing a Receivable (i) earlier if (A) such Receivable becomes a Defaulted
Receivable, (B) the Servicer determines that such Financed Vehicle is in
danger of being damaged, destroyed or otherwise made unavailable for
repossession or (C) the related Obligor voluntarily surrenders such Financed
Vehicle or (ii) later if (A) the Servicer is unable to locate such Financed
Vehicle, (B) the related Obligor is the subject of a bankruptcy proceeding or
(C) the Servicer otherwise defers repossession of such Financed Vehicle in
accordance with its normal and customary servicing practices and procedures.
After repossession of a Financed Vehicle, the Servicer shall in accordance
with its customary and usual practices and procedures sell such Financed
Vehicle in an auction or consign such Financed Vehicle to a Dealer for resale
as soon as is practicable after repossession, subject to any applicable laws.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in determining when and if to exercise
reasonable efforts to realize upon any recourse to Dealers. The Servicer shall
be entitled to recover from proceeds all reasonable expenses incurred by it in
the course of converting the Financed Vehicle into cash proceeds. The
Liquidation Proceeds with respect to a Receivable shall be deposited by the
Servicer in the Collection Account in the manner specified

                                      30
<PAGE>

in Section 5.2 and shall be applied to reduce (or to satisfy, as the case may
be) the Repurchase Amount of the Receivable, if such Receivable is to be
repurchased by the Seller pursuant to Section 3.2, or is to be purchased by
the Servicer pursuant to Section 4.6. The foregoing shall be subject to the
provision that, in any case in which a Financed Vehicle shall have suffered
damage, the Servicer shall not expend funds in connection with the repair or
the repossession of such Financed Vehicle unless it shall determine in its
sole discretion that such repair and/or repossession will increase the
Liquidation Proceeds of the related Receivable by an amount equal to or
greater than the amount of such expenses.

          SECTION 4.4 Maintenance of Security Interests in Financed Vehicles.
The Servicer, in accordance with its customary servicing procedures, shall
take such steps as are necessary to maintain perfection of the first priority
security interest of the Seller created in any Financed Vehicle which secures
a Receivable. The Owner Trustee, on behalf of the Issuer, and the Indenture
Trustee hereby authorize the Servicer, and the Servicer hereby agrees, to take
such steps as are necessary to re-perfect such security interest in the event
of the relocation of a Financed Vehicle or for any other reason, in either
case, when the Servicer has knowledge of the need for such re-perfection. In
the event that the assignment of a Receivable to the Issuer and by the Issuer
to the Indenture Trustee pursuant to the Indenture is insufficient without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
State in which the Financed Vehicle is located, to grant to the Indenture
Trustee a perfected security interest in the related Financed Vehicle, the
Seller and Servicer hereby agree that the Seller's listing as the secured
party on the certificate of title is deemed to be in its capacity as agent of
the Indenture Trustee and the Servicer further agrees to hold such certificate
of title as the Indenture Trustee's agent and custodian; provided, however,
that the Servicer shall not, nor shall the Owner Trustee, the Indenture
Trustee or Holders have the right to require that the Servicer, make any such
notation on the related Financed Vehicles' certificate of title or fulfill any
such additional administrative requirement of the laws of the State in which a
Financed Vehicle is located.

          SECTION 4.5 Covenants of Servicer. The Servicer hereby makes the
following covenants on which the Issuer will rely in accepting the
Receivables:

          (i) Security Interest to Remain in Force. The Financed Vehicle
     securing each Receivable shall not be released from the security interest
     granted by the Receivable in whole or in part except if such Financed
     Vehicle is substituted in whole by the manufacturer, dealer or seller as
     a result of mechanical defects or a total loss of the Financed Vehicle
     because of accident or theft or as otherwise contemplated herein;

          (ii) No Impairment. The Servicer shall not impair the rights of the
     Issuer, the Indenture Trustee or any Holder in the Receivables; and

          (iii) Extensions; Defaulted Receivables. The Servicer shall not
     increase the number of payments under a Receivable, nor increase the
     Amount Financed under a Receivable, nor extend or forgive payments on a
     Receivable or otherwise amend the terms of any Receivable, except as
     provided in Section 4.2.

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<PAGE>

          SECTION 4.6 Purchase of Receivables Upon Breach. The Seller, the
Servicer, the Indenture Trustee or the Owner Trustee, as the case may be,
shall inform the other parties promptly, in writing, upon the discovery by the
Seller, the Servicer or an Authorized Officer of the Indenture Trustee or the
Owner Trustee, as the case may be, of any breach by the Servicer of its
covenants under Section 4.5 which materially and adversely affects the
interest of the Holders in any Receivable (for this purpose, any breach of the
covenant set forth in Section 4.5(iii) shall be deemed to materially and
adversely affect the interest of the Holders in a Receivable). Except as
otherwise specified in Section 4.2, unless the breach shall have been cured by
the last day of the Collection Period following the Collection Period in which
such discovery occurred (or, at the Servicer's election, the last day of the
Collection Period in which such discovery occurred), the Servicer shall
purchase any Receivable materially and adversely affected by such breach as of
such last day. In consideration of the purchase of such Receivable, the
Servicer shall remit the Repurchase Amount (less any Liquidation Proceeds
deposited, or to be deposited, by the Servicer in the Collection Account with
respect to such Receivable pursuant to Section 4.3) in the manner specified in
Section 5.4. The sole remedy of the Issuer, the Owner Trustee, the Indenture
Trustee or the Holders against the Servicer with respect to a breach pursuant
to Section 4.2 or 4.5 shall be to require the Servicer to purchase Receivables
pursuant to this Section 4.6. The Owner Trustee shall have no duty to conduct
any affirmative investigation as to the occurrence of any condition requiring
the repurchase of any Receivable pursuant to this Section 4.6 or the
eligibility of any Receivable for purposes of this Agreement.

          SECTION 4.7 Servicing Fee. The Servicing Fee for a Collection Period
shall be payable on the related Payment Date pursuant to Section 5.5 and shall
equal the sum of (i) the product of one-twelfth of the Servicing Fee Rate and
the Pool Balance as of the related Settlement Date and (ii) Late Fees received
from Obligors during such Collection Period. In addition, as part of the
Servicing Fee, the Servicer shall be entitled to receive on each Payment Date
Investment Earnings when and as paid on amounts on deposit in the Collection
Account or earned on collections pending deposit in the Collection Account.
The Servicer shall be required to pay from its own account all expenses
incurred by it in connection with its activities hereunder (including fees and
disbursements of independent accountants and auditors, taxes imposed on the
Servicer, and other costs incurred in connection with administering and
servicing the Receivables) and the fees and disbursements of the Issuer, the
Administrator, the Owner Trustee, the Indenture Trustee, the Owner Trustee's
and the Indenture Trustee's respective counsel, the Securities Intermediaries,
the Paying Agent, the Authenticating Agent, the Note Registrar and the
Certificate Registrar except for United States federal, state and local income
and franchise taxes, if any, imposed on the Issuer or any Holder or any
expenses in connection with realizing upon Receivables under Section 4.3.

          SECTION 4.8 Servicer's Certificate. On or before each Determination
Date, the Servicer shall deliver to the Indenture Trustee, the Owner Trustee,
the Paying Agent and the Rating Agencies a Servicer's Certificate,
substantially in the form of Exhibit A, for the Collection Period preceding
such Determination Date, containing all information necessary to make the
distributions pursuant to Section 5.5, and all information necessary for the
Paying Agent to send statements to Holders pursuant to Section 5.8. The
Servicer shall deliver to the Rating Agencies any information, to the extent
it is available to the Servicer, that the Rating Agencies reasonably request
in order to monitor the Issuer. The Servicer shall also specify each
Receivable which the Seller or the Servicer is required to repurchase or
purchase, as the case

                                      32
<PAGE>

may be, as of the last day of the preceding Collection Period and each
Receivable which the Servicer shall have determined to be a Defaulted
Receivable during the preceding Collection Period. Subsequent to the Closing
Date, the form of Servicer's Certificate may be revised or modified to cure
any ambiguities or inconsistencies between such form and this Agreement;
provided, however, that no material information shall be deleted from the form
of Servicer's Certificate. In the event that the form of Servicer's
Certificate is revised or modified in accordance with the preceding sentence,
a form thereof, as so revised or modified, shall be provided to the Owner
Trustee, the Paying Agent, the Indenture Trustee and each Rating Agency.

          SECTION 4.9 Annual Statement as to Compliance. (a) The Servicer
shall deliver to a firm of independent certified public accountants, on or
before March 31 of each year commencing March 31, 200_, a certificate signed
by the chairman of the board, the president, the treasurer, the controller,
any executive or senior vice president or any vice president of the Servicer,
stating that (a) a review of the activities of the Servicer during the year
ended the preceding December 31 (or the period since the Cutoff Date in the
case of the first such certificate) and of its performance under this
Agreement has been made under such officer's supervision and (b) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all its obligations in all material respects under this Agreement throughout
such year (or the period since the Cutoff Date in the case of the first such
certificate), or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.

          (b) The Servicer shall deliver to the Indenture Trustee, the Owner
Trustee and each Rating Agency promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, an
Officer's Certificate specifying any event which with the giving of notice or
lapse of time, or both, would become an Event of Servicing Termination under
Section 8.1. The Seller shall deliver to the Indenture Trustee and the Owner
Trustee, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, an Officer's Certificate specifying
any event which with the giving of notice or lapse of time, or both, would
become an Event of Servicing Termination under Section 8.1.

          SECTION 4.10 Annual Audit Report. The Servicer shall cause a firm of
independent public accountants (which may provide other services to the
Servicer or the Seller) to prepare a report (with a copy of the certificate
described in Section 4.9(a) attached) addressed to the Board of Directors of
the Servicer, for the information and use of the Indenture Trustee, the Owner
Trustee and the Rating Agencies on or before March of each year, beginning
March 31, 200_, to the effect that, with respect to the twelve months ended
the preceding December 31 (or the period since the Cutoff Date, in the case of
the first such certificate), such firm has either (A) examined a written
assertion by the Servicer about the effectiveness of the Servicer's internal
control structure over the processing and reporting of transactions relating
to securitized automobile loans with respect to the criteria set forth by the
Servicer (the "Assertion") and that, on the basis of such examination, such
firm is of the opinion that the Servicer's Assertion is fairly stated in all
material respects except for such exceptions as shall be set forth in such
firm's report, or (B) such firm has performed the following procedures:

1.       For a sample of daily cash receipts during the preceding calendar year:

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<PAGE>

         a.  Trace total cash receipts to deposits on bank statements.
         b.  Agree cash receipts for securitized loans to computer reports.
         c.  Trace cash receipts for securitized loans to disbursements to the
             Owner Trustee and the Indenture Trustee.

2.       For a sample of monthly cash receipt reports:

         a.  Agree total cash receipts per the cash receipt reports to
             "Total Payments From Obligors Applied to Collection Period"
             per monthly Servicer Certificates.

          b. Agree total principal payments per the cash receipt reports to
             "Principal Payments" per monthly Servicer Certificates.

3.       For a sample of loans delinquent 30 days or more and for a sample of
         loans in repossession status, selected from the loan delinquency
         report or a new repossession report, as applicable, at a point in
         time, trace loan number to inclusion in the loan collection system.

The determination of which of the two alternative reports to be prepared and
delivered, and the size of each sample to be tested, shall be decided in the
sole discretion of the Servicer. The report of the independent certified
public accountants shall also indicate that such accounting firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.

          SECTION 4.11 Access by Holders to Certain Documentation and
Information Regarding Receivables. The Servicer shall provide to the Holders
access to the Receivable Files in such cases where the Holders shall be
required by applicable statutes or regulations to have access to such
documentation. Access by the Holders shall be afforded without charge, but
only upon reasonable request and during normal business hours which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Nothing in this Section 4.11 shall affect the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to provide
access to information as a result of such obligation shall not constitute a
breach of this Section 4.11.

          SECTION 4.12 Reports to Holders and the Rating Agencies. (a) The
Indenture Trustee or the Owner Trustee, as applicable, shall provide to any
Holder who so requests in writing (addressed to the Corporate Trust Office of
such trustee) a copy of any Servicer's Certificate described in Section 4.8,
of the annual statement described in Section 4.9(a), or of the annual report
described in Section 4.10. The Indenture Trustee or the Owner Trustee, as
applicable, may require the Holder to pay a reasonable sum to cover the cost
of the Indenture Trustee's or the Owner Trustee's complying with such request,
as applicable.

          (b) The Indenture Trustee or the Owner Trustee, as applicable, shall
forward to the Rating Agencies the statement to Holders described in Section
5.8 and any other reports it may receive pursuant to this Agreement to (i)
Standard & Poor's, Standard & Poor's Ratings Service, 55 Water Street, New
York, New York 10041, (ii) Moody's, ABS Monitoring Dept., 99 Church Street,
4th Floor, New York, New York 10007 and (iii) to Fitch, One State Street
Plaza, 32nd Floor, New York, New York 10004.

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<PAGE>

          SECTION 4.13 Reports to the Securities and Exchange Commission. The
Servicer shall, on behalf of the Issuer, cause to be filed with the Commission
any periodic reports required to be filed under the provisions of the Exchange
Act and the rules and regulations of the Securities and Exchange Commission
thereunder.

                                  ARTICLE V

                           ACCOUNTS; DISTRIBUTIONS;
                       STATEMENTS TO CERTIFICATEHOLDERS

          SECTION 5.1 Establishment of Collection Account and Note
Distribution Account.(a) On or prior to the Closing Date, the Issuer, the
Collection Account Securities Intermediary and the Indenture Trustee shall
have entered into the Collection Account Control Agreement pursuant to which
the Collection Account shall be established and maintained for the benefit of
the Noteholders and the Certificateholders. If the depositary of the
Collection Account ceases to be either a Qualified Institution or a Qualified
Trust Institution, as applicable, the Issuer shall cause the Collection
Account to be moved to a Qualified Institution or a Qualified Trust
Institution and the Indenture Trustee shall cause the depositary maintaining
the new Collection Account to assume the obligations of the existing
Collection Account Securities Intermediary under the Collection Account
Control Agreement unless the Rating Agency Condition is satisfied in
connection with such depositary's ceasing to be a Qualified Institution or a
Qualified Trust Institution, as the case may be. All amounts held in the
Collection Account shall be invested in accordance with the Collection Account
Control Agreement at the written direction of the Servicer to the extent
provided in Section 8.3(a) and Section 8.3(c) of the Indenture in Permitted
Investments that mature not later than the Deposit Date next succeeding the
date of investment except, if the Collection Account Securities Intermediary
and the Indenture Trustee are the same Person, investments on which the
Indenture Trustee is the obligor (including repurchase agreements on which the
Indenture Trustee, in its commercial capacity, is liable as principal) may
mature on the next succeeding Payment Date; provided, however, that once such
amounts have been invested in Permitted Investments, such Permitted
Investments must be held or maintained until they mature on or before the
dates described above.

          (b) On or prior to the Closing Date, the Servicer shall establish
and maintain for the benefit of the Noteholders, in the name of the Indenture
Trustee, an Eligible Deposit Account for the deposit of distributions to the
Noteholders (the "Note Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders. The Note Distribution Account shall be established initially at
JPMorgan Chase. Should any depositary of the Note Distribution Account or the
Certificate Distribution Account (including JPMorgan Chase (or an Affiliate
thereof)) cease to be either a Qualified Institution or a Qualified Trust
Institution, as applicable, then the Servicer shall, with the Seller's
assistance as necessary, cause the related account to be moved to a Qualified
Institution or a Qualified Trust Institution, unless the Rating Agency
Condition is satisfied in connection with such depositary's ceasing to be a
Qualified Institution or a Qualified Trust Institution, as the case may be.
Amounts on deposit in the Note Distribution Account shall not be invested.

                                      35
<PAGE>

          (c) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Note Distribution
Account and in all proceeds thereof and all such funds, investments, proceeds
and income shall be part of the Owner Trust Estate.

          SECTION 5.2 Collections. (a) The Servicer shall remit daily within
forty-eight hours of receipt to the Collection Account all Collections
collected during the Collection Period. Chase USA has requested that, so long
as it is acting as the Servicer, the Servicer be permitted to make remittances
of Collections on a less frequent basis than that specified in the immediately
preceding sentence. It is understood that such less frequent remittances may
be made only on the specific terms and conditions set forth below in this
Section 5.2 and only for so long as such terms and conditions are fulfilled.
Accordingly, notwithstanding the provisions of the first sentence of this
Section 5.2, the Servicer shall remit such collections to the Collection
Account in Automated Clearinghouse Corporation next-day funds or immediately
available funds no later than 11:00 a.m., New York City time, on the Deposit
Date, but only for so long as (i) the short-term certificate of deposit
ratings of the Servicer are at least P-1 by Moody's, "F1" by Fitch (if rated
by Fitch) and "A-1" by Standard & Poor's, or the Rating Agency Condition is
satisfied as a result of Collections being remitted on a monthly, rather than
daily, basis and (ii) the Servicer shall be Chase USA or JPMorgan Chase. Upon
remittance by the Servicer of Collections to the Collection Account pursuant
to the preceding sentence, the Paying Agent shall provide written notice to
the Indenture Trustee and the Owner Trustee no later than 11 a.m., New York
City time, on each Deposit Date, setting forth the amounts remitted by the
Servicer on such date and, if the Paying Agent fails to provide the Indenture
Trustee and the Owner Trustee, with such written notice by 12 noon, New York
City time, on such Deposit Date, then the Indenture Trustee and the Owner
Trustee shall assume that no deposits were made to the Collection Account
pursuant to this Section 5.2. For purposes of this Section 5.2 the phrase
"payments made on behalf of the Obligors" shall mean payments made by Persons
other than the Seller or the Servicer.

          (b) Notwithstanding anything in this Agreement to the contrary, if
the Servicer inadvertently deposits amounts that it mistakenly believes are
Collections resulting in the payment in full of a Receivable, and (i) the
Servicer discovers its error prior to the Payment following such deposit, the
Indenture Trustee, at the written direction of the Servicer, shall withdraw
such amounts and pay them to the Servicer or (ii) the Servicer shall be deemed
to have purchased such Receivable pursuant to Section 4.6 as of the last day
of the Collection Period during which such error shall have occurred.

          SECTION 5.3 [Reserved]

          SECTION 5.4 Additional Deposits. The Servicer, or the Seller, as the
case may be, shall deposit into the Collection Account the aggregate
Repurchase Amount pursuant to Sections 3.2, 4.6 and 9.1(a), as applicable. All
remittances shall be made to the Collection Account, in Automated
Clearinghouse Corporation next-day funds or immediately available funds, no
later than 11 a.m., New York City time, on the Deposit Date.

          SECTION 5.5 Distributions. (a) No later than 12 noon, New York City
time, on each Determination Date, the Servicer shall calculate all amounts
required to determine the amounts to be withdrawn from the Reserve Account (if
any) and deposited into the Collection

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<PAGE>

Account and the amounts to be withdrawn from the Collection Account and paid
to the Servicer and the Administrator, deposited into the Note Distribution
Account and the Certificate Distribution Account and/or paid to the Seller
pursuant to Section 5.6(d) with respect to the next succeeding Payment Date.

          (b) On each Deposit Date, the Servicer shall instruct the Indenture
Trustee in writing (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
4.8) to withdraw from the Reserve Account and deposit in the Collection
Account the Reserve Account Transfer Amount (if any) for the related Payment
Date, and the Indenture Trustee shall so withdraw and deposit the Reserve
Account Transfer Amount for such Payment Date.

          (c) Not later than 11:00 a.m., New York City time, on each Payment
Date, at the Servicer's direction, the Indenture Trustee, or the Paying Agent
on behalf of the Indenture Trustee, shall cause to be made the following
distributions, to the extent of the Total Distribution Amount then on deposit
in the Collection Account and amounts withdrawn from the Reserve Account and
deposited in the Collection Account by wire transfer of immediately available
funds, in the following order of priority and in the amounts set forth in the
Servicer's Certificate for such Payment Date:

          (i) to the Servicer, the sum of (x) the Servicing Fee for the
     preceding Collection Period, plus (y) the amount of any Servicing Fee
     previously due but not paid, if any, to the extent such amounts are not
     deducted from the Servicer's remittance to the Collection Account
     pursuant to Section 5.7;

          (ii) to the Administrator, the sum of (x) the Administration Fee for
     such Payment Date, plus (y) the amount of any Administration Fee
     previously due but not paid, if any;

          (iii) to the Note Distribution Account, the Noteholders' Interest
     Distributable Amount;

          (iv) except as set forth in Section 5.5(d), to the Owner Trustee for
     deposit in the Certificate Distribution Account, the Certificateholders'
     Interest Distributable Amount;

          (v) except as set forth in Section 5.5(d), to the Note Distribution
     Account, the Noteholders' Principal Distributable Amount; and

          (vi) except as set forth in Section 5.5(d), to the Owner Trustee for
     deposit in the Certificate Distribution Account, the Certificateholders'
     Principal Distributable Amount; and

          (vii) except as set forth in Section 5.5(d), to the Reserve Account,
     any remaining portion of the Total Distribution Amount.

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<PAGE>

          In the event that the Collection Account is maintained with an
institution other than the Indenture Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to this
Section 5.5(c) on the related Deposit Date.

          (d) If the Notes have been declared immediately due and payable as
provided in Section 5.2 of the Indenture following the occurrence of an Event
of Default described in clause (a) or (b) of Section 5.2 of the Indenture, any
amounts remaining in the Collection Account after the distributions described
in clauses (i), (ii) and (iii) of Section 5.5(c) shall be distributed as
follows: (1) an amount equal to the Outstanding Amount of the Notes will be
deposited in the Note Distribution Account, and (2) any remaining amounts will
be applied pursuant to clauses (iv), (v), (vi) and (vii) of Section 5.5(c).

          SECTION 5.6 Reserve Account. (a) On or prior to the Closing Date, the
Issuer, the Reserve Account Securities Intermediary and the Indenture Trustee
shall have entered into the Reserve Account Control Agreement pursuant to
which the Reserve Account shall be established and maintained for the benefit
of the Noteholders and the Certificateholders. Pursuant to Section 2.5 of the
Trust Agreement, on the Closing Date, the Owner Trustee shall deposit the
Reserve Account Initial Deposit into the Reserve Account.

          (b) If the depositary of the Reserve Account ceases to be either a
Qualified Institution or a Qualified Trust Institution, as applicable, the
Issuer shall cause the Reserve Account to be moved to a Qualified Institution
or a Qualified Trust Institution and the Indenture Trustee shall cause the
depositary maintaining the new Reserve Account to assume the obligations of
the existing Reserve Account Securities Intermediary under the Reserve Account
Control Agreement unless the Rating Agency Condition is satisfied in
connection with such depositary's ceasing to be a Qualified Institution or a
Qualified Trust Institution, as the case may be.

          (c) All amounts held in the Reserve Account shall be invested in
accordance with the Reserve Account Control Agreement at the written direction
of the Class R Certificateholder to the extent provided in Section 8.3(a) and
Section 8.3(c) of the Indenture in Permitted Investments that mature not later
than the Deposit Date next succeeding the date of investment except, if the
Reserve Account Securities Intermediary and the Indenture Trustee are the same
Person, investments on which the Indenture Trustee is the obligor (including
repurchase agreements on which the Indenture Trustee, in its commercial
capacity, is liable as principal) may mature on the next succeeding Payment
Date; provided, however, that amounts on deposit in the Reserve Account may be
invested in Permitted Investments that mature later than the next succeeding
Deposit Date, but in no event that mature later than 90 days after the date of
investment, if the Rating Agency Condition is satisfied. Once amounts on
deposit in the Reserve Account are invested in Permitted Investments, such
Permitted Investments must be held or maintained until they mature on or
before the dates described above.

          (d) On each Payment Date, the Indenture Trustee shall withdraw from
the Reserve Account and pay to the Class R Certificateholder the sum of (i)
all investment earnings (net of losses and investment expenses) credited to
the Reserve Account since the prior Payment Date and (ii) the excess, if any,
of the amount on deposit in the Reserve Account over the Specified Reserve
Account Balance with respect to such Payment Date (after giving effect to all

                                      38
<PAGE>

deposits therein or withdrawals therefrom on such Payment Date). Upon any
distribution to the Class R Certificateholder of amounts from the Reserve
Account, the Holders will have no rights in, or claims, to, such amounts.
Amounts properly distributed to the Class R Certificateholder from the Reserve
Account shall not be available under any circumstances to the Indenture
Trustee, and the Class R Certificateholder shall not in any event thereafter
be required to refund any such distributed amounts.

          SECTION 5.7 Net Deposits. Chase USA (in its capacity as the Seller
or the Servicer) may make the remittances pursuant to Sections 5.2 and 5.4
above, net of amounts to be retained by it or distributed to it (also in any
such capacity) pursuant to Section 4.7 (if applicable) and Section 5.5, if (a)
it shall be the Servicer and (b) it is entitled, pursuant to Section 5.2, to
make deposits on a monthly basis, rather than a daily basis. Nonetheless, the
Servicer shall account for all of the above-described amounts as if such
amounts were deposited and distributed separately.

          SECTION 5.8 Statements to Certificateholders and Noteholders. (a) On
each Payment Date, the Servicer shall provide to the Indenture Trustee and the
Paying Agent (for the Paying Agent to forward to each Noteholder of record
pursuant to the Indenture) and to the Owner Trustee (for the Owner Trustee to
forward to each Certificateholder of record pursuant to the Trust Agreement) a
statement substantially in the form of Exhibit B (or such other form that is
acceptable to the Indenture Trustee, the Owner Trustee and the Servicer), with
a copy to the Rating Agencies, setting forth at least the following
information as to the Notes (separately stating such information as to the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes) and the Certificates, to the extent applicable:

          (i) the amount of such distribution allocable to principal on each
     class of Notes and the Certificates;

          (ii) the amount of such distribution allocable to interest on each
     class of Notes and the Certificates;

          (iii) the amount of the Servicing Fee paid to the Servicer pursuant
     to Section 5.5(c);

          (iv) the amount of the Administration Fee paid to the Administrator
     on such Payment Date;

          (v) the Outstanding Amount of each class of the Notes, the Class A-1
     Note Pool Factor, the Class A-2 Note Pool Factor, the Class A-3 Note Pool
     Factor, the Class A-4 Note Pool Factor, the Certificate Balance and the
     Certificate Pool Factor, in each case after giving effect to payments
     allocated to principal reported under (i) above;

          (vi) the Pool Balance as of the last day of the preceding Collection
     Period;

          (vii) the aggregate amount of the Repurchase Amounts for Repurchased
     Receivables with respect to the related Collection Period paid by each of
     the Seller and the Servicer (accounted for separately);

                                      39
<PAGE>

          (viii) the amount of Aggregate Net Losses, if any, for such Payment
     Date;

          (ix) the balance of the Reserve Account on such Payment Date, after
     giving effect to deposits into and withdrawals from the Reserve Account
     on such Payment Date;

          (x) the Specified Reserve Account Balance for such Payment Date;

          (xi) the Total Distribution Amount for such Payment Date;

          (xii) the Noteholders' Distributable Amount and the components
     thereof;

          (xiii) the Certificateholders' Distributable Amount and the
     components thereof; and

          (xiv) the Reserve Account Transfer Amount, if any, for such Payment
     Date.

          Each amount set forth pursuant to subclause (i), (ii), (iii), (iv),
(xii) or (xiii) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Note or a Certificate, as applicable.

                                  ARTICLE VI

                                  THE SELLER

          SECTION 6.1 Representations of Seller. The Seller makes the
following representations on which the Issuer shall rely in acquiring the
Receivables. The representations shall speak as of the execution and delivery
of this Agreement, and shall survive the sale of the Receivables to the Issuer
and pledge thereof to the Indenture Trustee pursuant to the Indenture.

          (i) Organization and Good Standing. The Seller has been duly
     organized and is validly existing as a national banking association in
     good standing under the laws of the United States of America, with power
     and authority to own its properties and to conduct its business as such
     properties are currently owned and such business is presently conducted,
     and had at all relevant times, and has, power, authority, and legal right
     to acquire and own the Receivables.

          (ii) Power and Authority. The Seller has the power and authority to
     execute and deliver this Agreement and the other Basic Documents to which
     it is a party and to carry out their respective terms, the Seller has
     full power and authority to sell and assign the property to be sold and
     assigned to the Issuer as the Owner Trust Estate and has duly authorized
     such sale and assignment to the Issuer by all necessary corporate action;
     and the execution, delivery, and performance of this Agreement and the
     other Basic Documents to which it is a party has been duly authorized by
     the Seller by all necessary action.

          (iii) Valid Sale; Binding Obligations. This Agreement effects a
     valid sale, transfer, and assignment of the Receivables, enforceable
     against creditors of and purchasers from the Seller; this Agreement and
     each of the other Basic Documents to

                                      40
<PAGE>

     which it is a party constitutes a legal, valid, and binding obligation of
     the Seller enforceable in accordance with its terms, except as
     enforceability may be limited by bankruptcy, insolvency, reorganization,
     or other similar laws affecting the enforcement of creditors' rights in
     general and by general principles of equity, regardless of whether such
     enforceability is considered in a proceeding in equity or at law.

          (iv) No Violation. The consummation of the transactions contemplated
     by this Agreement and the other Basic Documents and the fulfillment of
     the terms hereof and thereof do not conflict with, result in any breach
     of any of the terms and provisions of, nor constitute (with or without
     notice or lapse of time) a default under, the articles of association or
     bylaws of the Seller, or conflict with or breach any of the material
     terms or provisions of, or constitute (with or without notice or lapse of
     time) a default under, any indenture, agreement, or other instrument to
     which the Seller is a party or by which it is bound; nor result in the
     creation or imposition of any lien upon any of its properties pursuant to
     the terms of any such indenture, agreement, or other instrument; nor
     violate any law or, to the best of the Seller's knowledge, any order,
     rule, or regulation applicable to the Seller of any court or of any
     federal or state regulatory body, administrative agency, or other
     governmental instrumentality having jurisdiction over the Seller or its
     properties.

          (v) No Proceedings. There are no proceedings or investigations
     pending, or, to the Seller's best knowledge, threatened, before any
     court, regulatory body, administrative agency, or other governmental
     instrumentality having jurisdiction over the Seller or its properties:
     (a) asserting the invalidity of this Agreement, any other Basic Document,
     the Notes or the Certificates, (b) seeking to prevent the issuance of the
     Notes or the Certificates or the consummation of any of the transactions
     contemplated by this Agreement or any other Basic Document, (c) seeking
     any determination or ruling that might materially and adversely affect
     the performance by the Seller of its obligations under, or the validity
     or enforceability of, this Agreement, any other Basic Document, or the
     Notes or the Certificates, or (d) relating to the Seller and which might
     adversely affect the federal or state income tax attributes of the Notes
     or the Certificates.

          SECTION 6.2 Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller in such capacity under this Agreement
and shall have no other obligations or liabilities hereunder.

          The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against any taxes that may at
any time be asserted against any such Person with respect to, and as of the
date of, the sale of the Receivables to the Issuer or the issuance and
original sale of the Notes and the Certificates, including any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to ownership of the Receivables or federal or other income taxes, including
franchise taxes measured by net income), arising out of the transactions
contemplated by this Agreement and the other Basic Documents, and costs and
expenses in defending against the same.

                                      41
<PAGE>

          The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any loss,
liability or expense incurred by reason of (i) the Seller's willful
misfeasance, bad faith, or gross negligence in the performance of its duties
hereunder, or by reason of reckless disregard of the obligations and duties
hereunder and (ii) the Seller's violation of federal or state securities laws
in connection with the registration of the sale of the Notes and the
Certificates.

          Indemnification under this Section 6.2 shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Seller shall have
made any indemnity payments to the Issuer, the Owner Trustee or the Indenture
Trustee, respectively, pursuant to this Section 6.2 and the Issuer, the Owner
Trustee or the Indenture Trustee, respectively, thereafter shall collect any
of such amounts from others, the Issuer, the Owner Trustee or the Indenture
Trustee, respectively, shall repay such amounts to the Seller, without
interest.

          SECTION 6.3 Merger or Consolidation of Seller. Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Seller shall be a party, or (iii) which may succeed to all or substantially
all of the business of the Seller, which corporation or other entity shall be
bound to perform every obligation of the Seller under this Agreement, shall be
the successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement. The
Seller shall give prompt written notice of any merger or consolidation to the
Issuer, the Owner Trustee, the Indenture Trustee, the Servicer and the Rating
Agencies.

          SECTION 6.4 Limitation on Liability of Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder or under any other Basic Documents. The Seller shall not be under
any obligation under this Agreement to appear in, prosecute, or defend any
legal action that shall be unrelated to its obligations under this Agreement
or any other Basic Document, and that in its opinion may involve it in any
expense or liability.

          SECTION 6.5 Seller May Own Notes and Certificates. The Seller or any
of its Affiliates may in its individual or any other capacity become the owner
or pledgee of Notes or Certificates with the same rights as it would have if
it were not the Seller or an Affiliate thereof, except as otherwise provided
in the definition of "Outstanding" specified in Section 1.1. Notes or
Certificates so owned by or pledged to the Seller or any Affiliate thereof
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Notes or Certificates, as applicable.

                                 ARTICLE VII

                                 THE SERVICER

          SECTION 7.1 Representations of Servicer. The Servicer makes the
following representations on which the Issuer shall rely in acquiring the
Receivables. The representations shall speak as of the execution and delivery
of this Agreement (or as of a date a Person (other

                                      42
<PAGE>

than the Indenture Trustee) becomes Servicer pursuant to Section 7.3 or
Section 8.2), and shall survive the sale of the Receivables to the Issuer and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.

          (i) Organization and Good Standing. The Servicer has been duly
     organized and is validly existing as a national banking association or
     corporation and is in good standing under the laws of the United States
     of America or the jurisdiction of its incorporation, with power and
     authority to own its properties and to conduct its business as such
     properties are currently owned and such business is presently conducted,
     and had at all relevant times, and has, power, authority, and legal right
     to acquire, own, sell, and service the Receivables and to hold the
     Receivable Files as custodian on behalf of the Issuer.

          (ii) Power and Authority. The Servicer has the power and authority
     to execute and deliver this Agreement and the Basic Documents to which it
     is a party and to carry out the terms thereof; and the execution,
     delivery, and performance of this Agreement and the other Basic Documents
     has been duly authorized by the Servicer by all necessary action.

          (iii) Binding Obligations. This Agreement and the other Basic
     Documents to which it is a party constitute legal, valid, and binding
     obligations of the Servicer enforceable in accordance with their
     respective terms subject, as to enforcement, to applicable bankruptcy,
     insolvency, reorganization, liquidation or other similar laws and
     equitable principles relating to or affecting the enforcement of
     creditors' rights, whether considered in a proceeding at law or in
     equity.

          (iv) No Violation. The consummation of the transactions contemplated
     by this Agreement and the other Basic Documents and the fulfillment of
     the terms hereof and thereof do not conflict with, result in any breach
     of any of the terms and provisions of, nor constitute (with or without
     notice or lapse of time) a default under, the articles of association or
     bylaws of the Servicer, or conflict with or breach any of the material
     terms or provisions of, or constitute (with or without notice or lapse of
     time) a default under, any indenture, agreement, or other instrument to
     which the Servicer is a party or by which it is bound; nor result in the
     creation or imposition of any lien upon any of its properties pursuant to
     the terms of any such indenture, agreement, or other instrument; nor
     violate any law or, to the best of the Servicer's knowledge, any order,
     rule, or regulation applicable to the Servicer of any court or of any
     federal or state regulatory body, administrative agency, or other
     governmental instrumentality having jurisdiction over the Servicer or its
     properties.

          (v) No Proceedings. There are no proceedings or investigations
     pending, or to the Servicer's best knowledge, threatened, before any
     court, regulatory body, administrative agency, or other governmental
     instrumentality having jurisdiction over the Servicer or its properties:
     (a) asserting the invalidity of this Agreement, the Notes or the
     Certificates, (b) seeking to prevent the issuance of the Notes or the
     Certificates or the consummation of any of the transactions contemplated
     by this Agreement or any other Basic Document, (c) seeking any
     determination or ruling that might materially and

                                      43
<PAGE>

     adversely affect the performance by the Servicer of its obligations
     under, or the validity or enforceability of, this Agreement, any other
     Basic Document, the Notes or the Certificates, or (d) relating to the
     Servicer and which might adversely affect the federal or state income tax
     attributes of the Notes or the Certificates.

          (vi) Fidelity Bond. The Servicer maintains a fidelity bond in such
     form and amount as is customary for banks acting as custodian of funds
     and documents in respect of retail automotive installment sales
     contracts.

          SECTION 7.2 Liability of Servicer; Indemnities. The Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement and shall have no
other obligations or liabilities hereunder.

          (i) The Servicer shall defend, indemnify, and hold harmless the
     Issuer, the Owner Trustee, the Indenture Trustee and the Holders from and
     against any and all costs, expenses, losses, damages, claims, and
     liabilities, arising out of or resulting from the use, ownership, or
     operation by the Servicer or any Affiliate thereof of a Financed Vehicle.

          (ii) The Servicer shall indemnify, defend, and hold harmless the
     Issuer, the Owner Trustee and the Indenture Trustee from and against any
     taxes that may at any time be asserted against the Issuer with respect to
     the transactions contemplated in this Agreement, including, without
     limitation, any sales, gross receipts, general corporation, tangible or
     intangible personal property, privilege, or license taxes (but not
     including any taxes asserted with respect to, and as of the date of, the
     sale of the Receivables to the Issuer or the issuance and original sale
     of the Notes or the Certificates, or asserted with respect to ownership
     of the Receivables or federal, state or other income taxes, including
     franchise taxes measured by net income) arising out of distributions on
     the Notes or the Certificates and costs and expenses in defending against
     the same.

          (iii) The Servicer shall indemnify, defend, and hold harmless the
     Issuer, the Owner Trustee, the Indenture Trustee and the Holders from and
     against any and all costs, expenses, losses, claims, damages, and
     liabilities to the extent that such cost, expense, loss, claim, damage,
     or liability arose out of, or was imposed upon the Issuer, the Owner
     Trustee, the Indenture Trustee or the Holders through the willful
     misfeasance, gross negligence, or bad faith of the Servicer in the
     performance of its duties under this Agreement or by reason of reckless
     disregard of its obligations and duties under this Agreement.

          Indemnification under this Section 7.2 shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section 7.2 and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest. The
indemnification obligations of the Servicer set forth in this Section 7.2
shall survive the termination of such Servicer with respect to any act or
failure to act which occurs prior to such Servicer's termination. The
provisions of Section 6.7 of the Indenture and Sections 8.1 and 8.2 of the
Trust Agreement with respect to the Servicer's obligations are incorporated by
reference herein.

                                      44
<PAGE>

          SECTION 7.3 Merger or Consolidation of Servicer. Any corporation or
other entity (i) into which the Servicer may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Servicer shall be a party, or (iii) which may succeed to all or substantially
all of the business of the Servicer, which corporation or other entity shall
be bound to perform every obligation of the Servicer hereunder, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any document or any further act on the part of any of the parties to this
Agreement. The Servicer shall promptly inform the Issuer, the Owner Trustee,
the Indenture Trustee, the Seller and the Rating Agencies in writing of any
such merger or consolidation.

          SECTION 7.4 Limitation on Liability of Servicer and Others. (a)
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer, the Owner
Trustee, the Indenture Trustee or the Holders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, gross negligence,
or bad faith in the performance of duties or by reason of reckless disregard
of obligations and duties under this Agreement. The Servicer and any director
or officer or employee or agent of the Servicer may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising under this
Agreement.

          (b) The Servicer, and any director, or officer, employee or agent of
the Servicer, shall be indemnified by the Issuer and held harmless against any
loss, liability, or expense (including reasonable attorneys' fees and
expenses) incurred in connection with any legal action relating to the
performance of the Servicer's duties under this Agreement, other than (i) any
loss or liability otherwise reimbursable pursuant to this Agreement or the
Basic Documents; (ii) any loss, liability, or expense incurred solely by
reason of the Servicer's willful misfeasance, negligence, or bad faith in the
performance of its duties hereunder or by reason of reckless disregard of its
obligations and duties under this Agreement or the Basic Documents; and (iii)
any loss, liability, or expense for which the Issuer is to be indemnified by
the Servicer under this Agreement or the Basic Documents. Any amounts due the
Servicer pursuant to this Section 7.4 shall be payable on a Payment Date from
amounts distributable to the Seller from the Reserve Account pursuant to
Section 5.6(d).

          (c) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its obligations under this Agreement, and that in
its opinion may involve it in any expense or liability; provided, however,
that the Servicer may undertake any reasonable action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties
of the parties to this Agreement and the interests of the Holders under this
Agreement. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs, and liabilities of the
Issuer, and the Servicer shall be entitled to be reimbursed therefor. Any
amounts due the Servicer pursuant to this Section 7.4 shall be payable on a
Payment Date from amounts distributable to the Seller from the Reserve Account
pursuant to Section 5.6(d).

                                      45
<PAGE>

          The Person to be indemnified shall provide the Issuer, the Owner
Trustee and the Indenture Trustee with a certificate and accompanying Opinion
of Counsel requesting indemnification and setting forth the basis for such
request.

          SECTION 7.5 Servicer Not To Resign. Except as permitted by Section
7.3, the Servicer shall not resign from its obligations and duties under this
Agreement except (i) upon determination that the performance of its duties
shall no longer be permissible under applicable law or (ii) in the event of
the appointment of a successor Servicer, upon satisfaction of the Rating
Agency Condition. Notice of any such determination permitting the resignation
of the Servicer shall be communicated to the Issuer, the Indenture Trustee,
the Owner Trustee and the Rating Agencies at the earliest practicable time
(and, if such communication is not in writing, shall be confirmed in writing
at the earliest practicable time) and any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Issuer, the Indenture Trustee and the Owner
Trustee concurrently with such notice. No such resignation shall become
effective until the Indenture Trustee (which shall not be obligated to act as
successor Servicer if the Servicer has resigned for a reason other than that
the performance of its duties are no longer permissible under applicable law)
or a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer hereunder in accordance with Section 8.2.

          SECTION 7.6 Delegation of Duties. So long as Chase USA acts as
Servicer, the Servicer shall have the right, in the ordinary course of its
business, to delegate any of its duties under this Agreement to any Person.
The Servicer shall pay any compensation payable to such Person from its own
funds and none of the Issuer, the Owner Trustee, the Indenture Trustee or the
Holders shall have any liability to such Person with respect thereto.
Notwithstanding any delegation of duties by the Servicer pursuant to this
Section 7.6, the Servicer shall not be relieved of its liability and
responsibility with respect to such duties, and any such delegation shall not
constitute a resignation within the meaning of Section 7.5. Any agreement that
may be entered into by the Servicer and a Person that provides for any
delegation of the Servicer's duties hereunder to such Person shall be deemed
to be between the Servicer and such Person alone, and the Issuer, the Owner
Trustee, the Indenture Trustee and Holders shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect thereto.

                                 ARTICLE VIII

                        EVENTS OF SERVICING TERMINATION

          SECTION 8.1 Events of Servicing Termination. Any one of the
following events which shall occur and be continuing shall constitute an event
of servicing termination hereunder (each, an "Event of Servicing
Termination"):

          (i) Any failure by the Servicer to deliver to the Indenture Trustee
     the Servicer's Certificate for the related Collection Period, or any
     failure by the Servicer to deliver to the Indenture Trustee, for deposit
     in any of the Trust Accounts or the Certificate Distribution Account, any
     proceeds or payment required to be so delivered under the terms of the
     Certificates or the Notes and this Agreement (or, in the case of a
     payment or deposit to be made not later than the Deposit Date, the
     failure to make such

                                      46
<PAGE>

     payment or deposit on such Deposit Date), which failure continues
     unremedied for a period of five Business Days after (A) discovery by an
     officer of the Servicer or (B) written notice (1) to the Servicer by the
     Indenture Trustee or the Owner Trustee or (2) to the Indenture Trustee or
     the Owner Trustee, as applicable, and the Servicer by the Holders of
     Notes evidencing not less than 25% of the Outstanding Amount of the Notes
     (or, if the Notes have been paid in full, by Holders of the Certificates
     evidencing not less than 25% of the Certificate Balance);

          (ii) Failure on the part of the Servicer duly to observe or to
     perform in any material respect any other covenants or agreements of the
     Servicer set forth in this Agreement or the Indenture, which failure
     shall (a) materially and adversely affect the rights of the Issuer or the
     Holders, and (b) continue unremedied for a period of 60 days after the
     date on which written notice of such failure, requiring the same to be
     remedied, shall have been given (1) to the Servicer by the Indenture
     Trustee or the Owner Trustee, or (2) to the Indenture Trustee or the
     Owner Trustee, as applicable, and the Servicer by the Holders of Notes
     evidencing not less than 25% of the Outstanding Amount of the Notes (or,
     if the Notes have been paid in full, by Holders of the Certificates
     evidencing not less than 25% of the Certificate Balance);

          (iii) The entry of a decree or order by a court or agency or
     supervisory authority having jurisdiction in the premises for the
     appointment of a conservator, receiver, or liquidator for the Servicer in
     any insolvency, readjustment of debt, marshalling of assets and
     liabilities, or similar proceedings, or for the winding up or liquidation
     of its affairs, and the continuance of any such decree or order unstayed
     and in effect for a period of 60 consecutive days; or

          (iv) The consent by the Servicer to the appointment of a conservator
     or receiver or liquidator in any insolvency, readjustment of debt,
     marshalling of assets and liabilities, or similar proceedings of or
     relating to the Servicer or of or relating to substantially all of its
     property; or the Servicer shall admit in writing its inability to pay its
     debts generally as they become due, file a petition to take advantage of
     any applicable insolvency or reorganization statute, make an assignment
     for the benefit of its creditors, or voluntarily suspend payment of its
     obligations.

Upon the occurrence of any Event of Servicing Termination as described above,
and in each and every case and for so long as such Event of Servicing
Termination shall not have been remedied, either the Indenture Trustee or the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes (or, if the Notes have been paid in full and the Indenture has
been discharged in accordance with its terms, by the Owner Trustee or the
Holders of Certificates evidencing not less than a majority of the Certificate
Balance), by notice given in writing to the Servicer (and to the Indenture
Trustee or the Owner Trustee, as applicable, if given by Holders) may
terminate all of the rights and obligations of the Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates, the Notes or the Receivables or otherwise, shall pass to
and be vested in the Indenture Trustee pursuant to this Section 8.1; and,
without limitation, the Indenture Trustee shall be hereby authorized and
empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or

                                      47
<PAGE>

otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivable Files, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer and the Indenture Trustee in
effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, shall have been
deposited by the predecessor Servicer in the Collection Account, or shall
thereafter be received with respect to a Receivable. All reasonable costs and
expenses (including attorneys' fees and disbursements) incurred in connection
with transferring the Receivable Files to the successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this Section
8.1 shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. The Indenture Trustee and the Owner
Trustee shall give written notice of any termination of the Servicer to their
related Holders, and the Indenture Trustee shall give such notice to the
Rating Agencies. Neither the Indenture Trustee nor any successor Servicer
shall be deemed to be in default hereunder by reason of its failure to make,
or any delay in making, any distribution hereunder or any portion thereof
which was caused by (i) the failure of the predecessor Servicer to deliver, or
any delay in delivering cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the predecessor
Servicer.

          SECTION 8.2 Indenture Trustee to Act; Appointment of Successor
Servicer. Upon the Servicer's receipt of notice of termination pursuant to
Section 8.1 or resignation pursuant to Section 7.5, the Indenture Trustee
shall be the successor in all respects to the Servicer in its capacity as
Servicer under this Agreement, and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the Servicer by the terms and provisions of this Agreement. As
compensation therefor, the Indenture Trustee shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) as
the Servicer would have been entitled to under this Agreement if no such
notice of termination or resignation had been given. Notwithstanding the
above, the Indenture Trustee may, if it shall be unwilling so to act, or
shall, if it shall be legally unable so to act, appoint, or petition a court
of competent jurisdiction to appoint, any established financial institution
(x) having a net worth of not less than $100,000,000 as of the last day of the
most recent fiscal quarter for such institution and (y) whose regular business
shall include the servicing of automobile receivables, as successor Servicer
under this Agreement; provided, that the appointment of any such successor
Servicer is required to satisfy the Rating Agency Condition. In connection
with such appointment, the Indenture Trustee may make such arrangements for
the compensation of such successor Servicer out of payments on Receivables as
it and such successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer under this
Agreement. The Indenture Trustee and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. Unless the Indenture Trustee shall be prohibited by law
from so acting, the Indenture Trustee shall not be relieved of its duties as
successor Servicer under this Section 8.2 until the newly appointed successor
Servicer shall have assumed the responsibilities and obligations of the
Servicer under this Agreement.

                                      48
<PAGE>

          SECTION 8.3 Notification to Noteholders and Certificateholders. Upon
any Event of Servicing Termination, or appointment of a successor Servicer
pursuant to this Article VIII, the Owner Trustee shall give prompt written
notice thereof to Certificateholders and the Indenture Trustee shall give
prompt written notice thereof to the Noteholders, at their respective
addresses of record, and to the Rating Agencies.

          SECTION 8.4 Waiver of Past Defaults. The Holders of Notes evidencing
at least a majority of the Outstanding Amount of the Notes (or, the Holders of
Certificates evidencing not less than a majority of the Certificate Balance,
in the case of any Event of Servicing Termination that does not adversely
affect the Indenture Trustee or the Noteholders) may, on behalf of all such
Holders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in the failure to
make any required deposits to or payments from any of the Trust Accounts or
the Certificate Distribution Account in accordance with this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Event of Servicing Termination arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived. The Servicer shall give prompt written
notice of any waiver to the Rating Agencies; provided, however, that the
Indenture Trustee or the Owner Trustee shall only be required to give such
notice if a Responsible Officer thereof has actual knowledge of the related
event.

                                  ARTICLE IX

                                  TERMINATION

          SECTION 9.1 Optional Purchase of All Receivables; Trust Termination.
(a) As of the last day of any Collection Period as of which the Pool Balance
shall be equal to or less than the Optional Purchase Percentage of the
Original Pool Balance, the Servicer shall have the option to purchase the
Owner Trust Estate, other than the Trust Accounts and the Certificate
Distribution Account. To exercise such option, the Servicer shall notify the
Indenture Trustee, the Owner Trustee, the Note Registrar and the Certificate
Registrar in writing, no later than the 25th day of the Collection Period
following which purchase is to be effected, shall pay the aggregate Repurchase
Amount for the Receivables (including Defaulted Receivables) and shall succeed
to all interests in, to and under such property. The payment shall be made in
the manner specified in Section 5.4, and shall be distributed pursuant to
Section 5.5. The Indenture Trustee shall not permit the purchase of the Owner
Trust Estate pursuant to this Section 9.1 unless (i) the Servicer's long-term
unsecured debt is rated at the time of such purchase at least "BBB-" by
Standard & Poor's and Fitch (if rated by Fitch) and Baa3 by Moody's or (ii)
the Servicer provides to the Indenture Trustee an Opinion of Counsel in form
and substance satisfactory to the Rating Agencies to the effect that such
purchase will not constitute a fraudulent transfer under applicable state and
federal law.

          (b) Upon any sale of the assets of the Issuer pursuant to Article V
of the Indenture, the Servicer shall instruct the Indenture Trustee in writing
to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the "Sale
Proceeds") in the Collection Account. On the Payment Date on which the Sale
Proceeds are deposited in the Collection Account (or, if such proceeds are not
so

                                      49
<PAGE>

deposited on a Payment Date, on the Payment Date immediately following such
deposit), the Servicer shall instruct the Indenture Trustee in writing to
make, and the Indenture Trustee shall make, the following deposits and
distributions (after the application on such Payment Date of the Total
Distribution Amount pursuant to Section 5.5) from the Sale Proceeds and any
funds remaining on deposit in the Reserve Account (including the proceeds of
any sale of investments therein):

          (i) to the Note Distribution Account, any portion of the
     Noteholders' Interest Distributable Amount not otherwise deposited into
     the Note Distribution Account on such Payment Date;

          (ii) to the Note Distribution Account, the Outstanding Amount of the
     Notes (after giving effect to the reduction in the Outstanding Amount of
     the Notes resulting from the deposits made in the Note Distribution
     Account on such Payment Date);

          (iii) to the Certificate Distribution Account, any portion of the
     Certificateholders' Interest Distributable Amount not otherwise deposited
     into the Certificate Distribution Account on such Payment Date; and

          (iv) to the Certificate Distribution Account, the Certificate
     Balance and any Certificateholders' Principal Carryover Shortfall (after
     giving effect to the reduction in the Certificate Balance resulting from
     the deposits made in the Certificate Distribution Account on such Payment
     Date).

Any Sale Proceeds remaining after the deposits described above shall be paid
to the Class R Certificateholder.

          (c) Notice of any termination of the Issuer shall be given by the
Servicer to the Owner Trustee, the Indenture Trustee and the Rating Agencies
as soon as practicable after the Servicer has received notice thereof.

          (d) After the payment to the Indenture Trustee, the Owner Trustee,
the Holders and the Servicer of all amounts required to be paid under this
Agreement, the Indenture and the Trust Agreement, any amounts on deposit in
the Reserve Account or the Collection Account shall be paid to the Class R
Certificateholder, and any other assets remaining in the Owner Trust Estate
shall be distributed to the Class R Certificateholder.

                                  ARTICLE X

                           MISCELLANEOUS PROVISIONS

          SECTION 10.1 Amendment. This Agreement may be amended by the Seller,
the Servicer and the Owner Trustee, on behalf of the Issuer, with the prior
consent of the Indenture Trustee and prior notice to the Rating Agencies but
without prior notice to or the consent of any of the Holders, (i) to cure any
ambiguity, to correct or supplement any provisions in this Agreement which may
be inconsistent with any other provisions herein, to evidence a succession to
the Servicer or the Seller pursuant to this Agreement or to add any other
provisions with respect to matters or questions arising under this Agreement
that shall not be inconsistent

                                      50
<PAGE>

with the provisions of this Agreement; provided, however, that such action
shall not, as evidenced by an Officer's Certificate and/or an Opinion of
Counsel reasonably acceptable and delivered to the Owner Trustee and the
Indenture Trustee, adversely and materially affect the interests of the Issuer
or any of the Holders; provided, further, that the Servicer shall deliver
written notice of such changes to each Rating Agency prior to the execution of
any such amendment, or (ii) to effect a transfer or assignment in compliance
with Section 10.6(a) of this Agreement. Notwithstanding the foregoing, no
amendment modifying the provisions of Section 5.5 shall become effective
without satisfaction of the Rating Agency Condition.

          This Agreement may also be amended from time to time by the Seller,
the Servicer and the Owner Trustee, on behalf of the Issuer, with the consent
of the Indenture Trustee, the Holders of Certificates evidencing at least a
majority of the Certificate Balance of the Certificates and the consent of the
Holders of Notes evidencing at least a majority of the Outstanding Amount of
the Notes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Noteholders or the Certificateholders
(including effecting a transfer or assignment in compliance with Section
10.6(a) of this Agreement); provided, however, that no such amendment, except
with the consent of the Holders of all Certificates or Notes, as applicable,
then outstanding, shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments of Receivables, or
distributions that shall be required to be made on any Certificate or Note, or
(b) reduce the aforesaid percentage of the Certificate Balance of the
Certificates or the Outstanding Amount of the Notes required to consent to any
such amendment.

          Promptly after the execution of any amendment or consent referred to
in this Section 10.1, the Owner Trustee shall furnish a copy of such amendment
or consent to each Certificateholder and the Indenture Trustee, who shall
promptly furnish a copy to each Noteholder and to the Rating Agencies.

          It shall not be necessary for the consent of the Indenture Trustee,
the Certificateholders or the Noteholders pursuant to this Section 10.1 to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner
of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders or Noteholders shall be subject to
such reasonable requirements as the Indenture Trustee or the Owner Trustee may
prescribe.

          Prior to the execution of any amendment to this Agreement, the
Indenture Trustee and the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee and the Owner
Trustee shall not be obligated to enter into any such amendment which affects
the Indenture Trustee's and the Owner Trustee's own rights, duties or
immunities under this Agreement.

          Satisfaction of the Rating Agency Condition is required prior to the
execution of any amendment to this Agreement, other than an amendment
permitted pursuant to clause (i) of the first paragraph of this Section 10.1.

                                      51
<PAGE>

          SECTION 10.2 Protection of Title to Owner Trust Estate. (a) The
Seller shall execute and file such financing statements and cause to be
executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interests of the Issuer and the Indenture Trustee in the Receivables and
in the proceeds thereof. The Servicer shall deliver (or cause to be delivered)
to the Owner Trustee and the Indenture Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as
available following such filing. In addition, the Seller hereby authorizes the
Issuer at any time and from time to time to file any financing statements and
amendments thereto in any jurisdiction as may be necessary or desirable to
preserve, maintain, and protect the interests of the Issuer and the Indenture
Trustee in the Receivables and the proceeds thereof.

          (b) Neither the Seller nor the Servicer shall change its name in any
manner that would, could, or might make any financing statement or
continuation statement filed by the Seller in accordance with paragraph (a)
above seriously misleading within the meaning of ss. 9-506 (or any comparable
section) of the Relevant UCC, unless it shall have given the Owner Trustee and
the Indenture Trustee at least 30 days prior written notice thereof.

          (c) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least 60 days prior written notice of any change in the
jurisdiction of its organization or the State designated as its location in
its Articles of Association if, as a result of such change in jurisdiction or
the State designated as its location in its Articles of Association, the
applicable provisions of the Relevant UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of
any new financing statement. The Servicer shall at all times maintain each
office from which it shall service Receivables or at which the Receivable
Files are located within the United States of America.

          (d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account in respect of such Receivable.

          (e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including archives) that shall
refer to a Receivable indicate clearly, by numerical code or otherwise, that
such Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and Indenture Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable shall have been paid in full,
repurchased or assigned pursuant hereto.

          (f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in a new or
used automobile receivable to any prospective purchaser, creditor, or other
transferee, the Seller or the Servicer, as the case may be, shall give to such
prospective purchaser, creditor, or other transferee computer tapes, records,
or print-outs (including any restored from archives) that, if they shall refer
in any manner

                                      52
<PAGE>

whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.

        (g) The Servicer shall permit the Indenture Trustee and the Owner
Trustee and their respective agents upon reasonable notice at any time during
normal business hours which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
the Receivables.

          (h) Upon request, the Servicer shall furnish to the Owner Trustee or
the Indenture Trustee, within five Business Days, a list of all Receivables by
account number and name of Obligor then held by the Issuer, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer Certificates indicating removal of Receivables from the Owner Trust
Estate.

          (i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:

          (i) upon the execution and delivery of this Agreement, an Opinion of
     Counsel either (a) stating that, in the opinion of such counsel, all
     financing statements and continuation statements have been executed and
     filed that are necessary fully to preserve and protect the interest of
     the Issuer and the Indenture Trustee in the Receivables, and reciting the
     details of such filings or referring to prior Opinions of Counsel in
     which such details are given, or (b) stating that, in the opinion of such
     counsel, no such action shall be necessary to preserve and protect such
     interest; and

          (ii) on or before March 31 of each year, commencing with March 31,
     _____, an Opinion of Counsel, dated as of such date, either (a) stating
     that, in the opinion of such counsel, all financing statements and
     continuation statements have been executed and filed that are necessary
     fully to preserve and protect the interest of the Issuer and the
     Indenture Trustee in the Receivables, and reciting the details of such
     filings or referring to prior opinions of Counsel in which such details
     are given, or (b) stating that, in the opinion of such counsel, no such
     action shall be necessary to preserve and protect such interest.
     Notwithstanding the provisions of Section 10.4, such Opinion of Counsel
     may be sent by regular non-certified mail, and such mailed
     opinion shall be deemed delivered when so mailed.

          (j) The Seller shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the Securities and
Exchange Commission pursuant to Section 12(b) or Section 12(g) of the Exchange
Act within the time periods specified in such sections.

          (k) For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.

                                      53
<PAGE>

          SECTION 10.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

          SECTION 10.4 Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been
duly given upon receipt (a) in the case of the Seller, c/o Chase Automotive
Finance Corporation, 900 Stewart Avenue, Garden City, New York 11530
Attention: Financial Controller, or at such other address as shall be
designated by the Seller in a written notice to the Indenture Trustee, (b) in
the case of the Servicer, c/o Chase Manhattan Automotive Finance Corporation,
900 Stewart Avenue, Garden City, New York 11530, Attention: Financial
Controller, or at such other address as shall be designated by the Servicer in
a written notice to the Indenture Trustee, (c) in the case of the Indenture
Trustee, at __________, __________,
__________________________________________________, Attention: __________ and
(d) in the case of the Issuer and the Owner Trustee, at c/o
____________________, __________________________________________________,
Attention: __________. Any notice required or permitted to be mailed to a
Holder shall be given by first class mail, postage prepaid, at the address of
record of such Holder. Any notice to a Holder so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Holder shall receive such notice.

          SECTION 10.5 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or of the Notes or the rights of the Holders thereof.

          SECTION 10.6 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.3, 7.3, 7.5 and 8.2,
neither the Seller nor the Servicer may assign all, or a portion of, its
rights, obligations and duties under this Agreement unless such transfer or
assignment satisfies the Rating Agency Condition. In the event of a transfer
or assignment pursuant to this Section 10.6, the Rating Agencies shall be
provided with notice of such transfer or assignment.

          SECTION 10.7 Certificates and Notes Nonassessable and Fully Paid.
The interests represented by the Certificates and Notes shall be nonassessable
for any losses or expenses of the Issuer or for any reason whatsoever, and,
upon authentication thereof by the Indenture Trustee and the Owner Trustee
pursuant to the Trust Agreement and the Indenture, respectively, each
Certificate and Note shall be deemed fully paid.

          SECTION 10.8 Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns. The Administrator, the Owner Trustee,
individually and on behalf of the Certificateholders and the Class R
Certificateholder, and the Indenture Trustee, individually and on behalf of
the Noteholders are third-party beneficiaries to this Agreement and are
entitled to the rights and benefits hereunder and may enforce the provisions
hereof as it were a party hereto.

                                      54
<PAGE>

Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.

          SECTION 10.9 Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest
of the Issuer in, to and under the Receivables and the other property
constituting the Owner Trust Estate and/or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee and agrees
that the enforcement of a right or remedy hereunder by the Indenture Trustee
shall have the same force and effect as if such right or remedy had been
enforced or executed by the Issuer.

          SECTION 10.10 Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by ____________________ not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall ____________________ in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee of the Issuer have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.

          (b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by __________ not in its
individual capacity but solely as Indenture Trustee, and in no event shall
__________ have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.

          SECTION 10.11 No Petition. The Seller and Servicer, by entering into
this Agreement hereby covenant and agree that they will not at any time
institute against the Issuer or join in any institution against the Issuer of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to this
Agreement or any of the other Basic Documents.

                                      55
<PAGE>

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

                                     CHASE MANHATTAN BANK USA,
                                      NATIONAL ASSOCIATION, as Seller
                                      and Servicer

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

                                     CHASE MANHATTAN AUTO OWNER TRUST,
                                       200_-_, as Issuer

                                     By: [____________________],
                                         not in its individual capacity but
                                         solely as Owner Trustee on behalf of
                                         the Issuer

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

Acknowledged and Accepted:

[--------------------]
   not in its individual capacity,
   but solely in its capacity
   as Indenture Trustee

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

<PAGE>

                                                                     SCHEDULE A

                              LIST OF RECEIVABLES

           Delivered to the Owner Trustee and the Indenture Trustee
                             on the Closing Date.

<PAGE>

                                                                     SCHEDULE B

                         Location of Receivable Files

<PAGE>

                                                                      EXHIBIT A

                        FORM OF SERVICER'S CERTIFICATE

<PAGE>

                                                                      EXHIBIT B

                FORM OF CERTIFICATEHOLDER AND NOTEHOLDER REPORT

<PAGE>

                                                                      EXHIBIT C

                 FORM OF COLLECTION ACCOUNT CONTROL AGREEMENT

<PAGE>

                                                                      EXHIBIT D

                   FORM OF RESERVE ACCOUNT CONTROL AGREEMENT

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