ARVIN INDUSTRIES INC, S-3/A, 1999-06-23

ARVIN INDUSTRIES INC
S-3/A, 1999-06-23
MOTOR VEHICLE PARTS & ACCESSORIES

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Registration No. 333-78131

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------

FORM S-3
PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

ARVIN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

INDIANA 35-0550190
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)

ONE NOBLITT PLAZA
BOX 3000
COLUMBUS, INDIANA 47202-3000
(812) 379-3000

(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)

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

RONALD R. SNYDER
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ARVIN INDUSTRIES, INC.
ONE NOBLITT PLAZA
BOX 3000
COLUMBUS, INDIANA 47202-3000
(812) 379-3000

(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

COPY TO:

FREDERICK L. HARTMANN
SCHIFF HARDIN & WAITE
6600 SEARS TOWER
CHICAGO, ILLINOIS 60606

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM
TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If the only securities being registered on the Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X ]

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JUNE 23, 1999

PROSPECTUS

[ARVIN LOGO]

ARVIN INDUSTRIES, INC.
$400,000,000

DEBT SECURITIES
PREFERRED SHARES
DEPOSITARY SHARES
COMMON SHARES
SHARE PURCHASE CONTRACTS
SHARE PURCHASE UNITS
WARRANTS

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

WE WILL PROVIDE SPECIFIC TERMS OF THESE SECURITIES IN SUPPLEMENTS TO
THIS PROSPECTUS.

YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT CAREFULLY BEFORE
YOU INVEST.

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

THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE
ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is ___________________, 1999.

TABLE OF CONTENTS

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE SECURITIES WE MAY OFFER . . . . . . . . . . . . . . . . 1
DEBT SECURITIES . . . . . . . . . . . . . . . . . . . . . . 1
PREFERRED SHARES AND DEPOSITARY SHARES . . . . . . . . . . . 3
COMMON SHARES . . . . . . . . . . . . . . . . . . . . . . . 3
SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS . . . . . 3
WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 3

RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS . . . . . . 3

WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . 4

ARVIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 5

DESCRIPTION OF THE DEBT SECURITIES . . . . . . . . . . . . . . . 6

PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 6
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 6
REGISTRATION, TRANSFER AND EXCHANGE . . . . . . . . . . . . 8
CONSOLIDATION, MERGER AND SALE OF ASSETS . . . . . . . . . . 8
MODIFICATION AND WAIVER . . . . . . . . . . . . . . . . . . 8
SATISFACTION AND DISCHARGE OF AN INDENTURE . . . . . . . . . 9
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 10
BOOK-ENTRY DEBT SECURITIES . . . . . . . . . . . . . . . . . 12
YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . . . 15
INFORMATION CONCERNING THE TRUSTEE . . . . . . . . . . . . . 16
GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 16

PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES . . . . . 17
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 17
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 20

PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES . . 22
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . 23
CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . 24

DESCRIPTION OF CAPITAL SHARES . . . . . . . . . . . . . . . . . . 25
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 25
COMMON SHARES . . . . . . . . . . . . . . . . . . . . . . . 26
PROVISIONS WITH POSSIBLE ANTI-TAKEOVER EFFECTS . . . . . . . 26
PREFERRED SHARE PURCHASE RIGHTS . . . . . . . . . . . . . . 29
PREFERRED SHARES . . . . . . . . . . . . . . . . . . . . . . 30

DESCRIPTION OF SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS 32

DESCRIPTION OF DEPOSITARY SHARES . . . . . . . . . . . . . . . . 32
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DIVIDENDS AND OTHER DISTRIBUTIONS . . . . . . . . . . . . . 33
REDEMPTION OF DEPOSITARY SHARES . . . . . . . . . . . . . . 33
VOTING THE PREFERRED SHARES . . . . . . . . . . . . . . . . 34
AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT . . . . . 34
CHANGES OF DEPOSITARY . . . . . . . . . . . . . . . . . . . 34
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 35

DESCRIPTION OF WARRANTS . . . . . . . . . . . . . . . . . . . . . 35
DEBT WARRANTS . . . . . . . . . . . . . . . . . . . . . . . 35
EQUITY WARRANTS . . . . . . . . . . . . . . . . . . . . . . 36

PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 37

LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . 38

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

SUMMARY

This summary highlights selected information from this document
and does not contain all of the information that is important to you.
To understand the terms of our securities, you should carefully read
this document with the attached prospectus supplement. Together, these
documents will give the specific terms of the securities we are
offering. You should also read the documents we have incorporated by
reference into this prospectus for information about us and our
financial statements.

THE SECURITIES WE MAY OFFER

This prospectus is part of a registration statement that we filed
with the SEC utilizing a "shelf" registration process. Under this
shelf registration, we may offer from time to time up to $400,000,000
of any of the following securities, either separately or in units:
debt securities, preferred shares, depositary shares, common shares,
share purchase contracts relating to the common shares, share purchase
units, and warrants. This prospectus provides you with a general
description of the securities we may offer. Each time we offer
securities, we will provide you with a prospectus supplement that will
describe the specific amounts, prices and terms of the securities
being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.

DEBT SECURITIES

We may offer unsecured general obligations of Arvin, which may be
senior or subordinate. In this prospectus, we refer to the senior debt
securities and the subordinated debt securities together as the "debt
securities." The senior debt securities will have the same rank as all
of our other unsecured and unsubordinated debt. The subordinated debt
securities will be entitled to payment only after payment on our
senior indebtedness. Senior indebtedness includes all indebtedness for
money borrowed by Arvin, except indebtedness that by its terms is not
superior to, or has the same rank as, the subordinated debt
securities.

The senior debt securities will be issued under an indenture
between us and Harris Trust and Savings Bank as the trustee. The
subordinated debt securities will be issued under an indenture between
us and the trustee we name in a prospectus supplement. We have
summarized general features of the debt securities from the
indentures. We encourage you to read the indentures which are exhibits
to the registration statement and our recent periodic and current
reports filed with the SEC.

SENIOR AND SUBORDINATED DEBT SECURITIES. The indentures do not
limit the amount of debt that we may issue. The indentures do not
provide holders any protection in the event of a recapitalization or
restructuring involving Arvin. Also, neither indenture provides

holders with any special protection in the event of a highly leveraged
transaction.

The indentures allow us to merge or consolidate with another
company, or to sell all or most of our assets to another company. If
these events occur, the other company will be required to assume all
our responsibilities relating to the debt securities.

The indentures provide that holders of a majority of the
outstanding principal amount of any series of debt securities may vote
to change our obligations or your rights concerning that series.
However, to change the amount or timing of principal, interest or
other payments under the debt securities, every holder in the series
must consent.

We may discharge our obligations under the indentures by
depositing with the trustee sufficient funds or government obligations
to pay the debt securities when due.

EVENTS OF DEFAULT. Each indenture provides that the following
are events of default:

- If we do not pay interest for 30 days after its due date.

- If we do not pay principal or any premium when due.

- If we do not make any sinking fund payment when due.

- If we continue to breach a covenant or warranty for 90 days
after notice.

- If we fail to pay principal or interest on other significant
indebtedness of Arvin when due.

- If we enter bankruptcy, become insolvent or reorganize.

Upon the bankruptcy, insolvency, or reorganization of Arvin, all
unpaid principal, accrued interest and any premium on any series of
outstanding debt securities will become immediately payable without
any declaration or act of the trustee or the holders. If any other
event of default occurs with respect to any series of debt securities,
the trustee or holders of at least 25% of the outstanding principal
amount of that series may declare the principal amount of the series
immediately payable. However, holders of a majority of the principal
amount may rescind this action.

SENIOR DEBT SECURITIES. The indenture relating to the senior
debt securities contains covenants restricting our ability to incur
secured indebtedness, to enter into sale and leaseback transactions
and to transfer assets to some of our subsidiaries.

SUBORDINATED DEBT SECURITIES. All payments on the subordinated
debt securities are subordinated in right of payment to the prior
payment in full of all senior indebtedness.

PREFERRED SHARES AND DEPOSITARY SHARES

We may issue our preferred shares, no par value, in one or more
series. Our board of directors will determine the dividend, voting,
conversion and other rights of the series of preferred shares being
offered. We may also issue fractional shares of the preferred shares
that will be represented by depositary shares and depositary receipts.

COMMON SHARES

We may issue our common shares, par value $2.50 per share.
Holders of common shares are entitled to receive dividends when
declared by the board of directors, subject to the rights of holders
of preferred shares. Each holder of common shares is entitled to one
vote per share. The holders of common shares have no preemptive rights
or cumulative voting rights.

SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS

We may issue share purchase contracts for the purchase of our
common shares. We also may issue share purchase units, each of which
will consist of a share purchase contract and a debt security or a
debt obligation of a third party, including a U.S. Treasury security.
The debt security or debt obligation of a third party may be pledged
as collateral to secure the holder's obligation to purchase common
shares under the share purchase contract. Our board of directors will
determine the terms of the offering, including the terms of the share
purchase contracts and information about the security or obligation
that will secure the holder's obligation to purchase common shares.

WARRANTS

We may issue warrants for the purchase of debt securities,
preferred shares, depositary shares or common shares. We may issue
warrants independently or together with other securities.

RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDENDS

Our ratio of earnings to fixed charges and our ratio of earnings
to combined fixed charges and preferred share dividends for each of
the periods indicated are as follows:

<TABLE>
<CAPTION>
FISCAL
QUARTER ENDED FISCAL YEAR ENDED
------------- ----------------------------------------------------------
APR. 4, JAN. 3, DEC. 28, DEC. 29, DEC. 31, JAN. 1,
1999 1999 1997 1996 1995 1995
------------- ----------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 2.9 3.7 3.2 2.4 1.6 1.8
Ratio of Earnings to Combined Fixed
Charges and Preferred Dividends....... 2.9 3.7 3.2 2.4 1.6 1.8

</TABLE>

For purposes of calculating the ratios, earnings consist of
earnings from continuing operations before income taxes, adjusted for
the portion of fixed charges deducted from these earnings. Fixed
charges consist of interest on all indebtedness, including capital
lease obligations and capitalized interest, amortization of debt
expense and the percentage of rental expense on operating leases
deemed representative of the interest factor. The ratio of earnings to
fixed charges, before the restructuring and special charges, for 1995
was 1.9 and for 1994 was 2.4. No preferred shares were outstanding
during the periods, and no preferred dividends were paid.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any document
we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at (800)SEC-
0330 for further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's web site at
http://www.sec.gov.

The SEC allows us to "incorporate by reference" into this
prospectus the information we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to
be part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future
filings made with the SEC under section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until our offering is completed:

(1) Arvin's Annual Report on Form 10-K for the fiscal year ended
January 3, 1999;

(2) Arvin's Quarterly Report on Form 10-Q for the quarter ended
April 4, 1999;

(3) Arvin's Current Reports on Form 8-K dated March 4, 1999 and
March 12, 1999 and Form 8-K/A dated May 12, 1999 and June
22, 1999; and

(4) The description of the common shares contained in Arvin's
registration statement on Form 8-A, filed June 19, 1950,
supplementing Arvin's registration statement on Form 10,
filed October 25, 1939, and the description of the
associated preferred share purchase rights contained in
Arvin's registration statement on Form 8-A, dated June 10,
1986, as amended February 28, 1989, December 9, 1994 and May
10, 1996, in each case as filed under section 12 of the
Securities Exchange Act.

You may request a copy of these filings at no cost, by writing to
or telephoning us at the following address and telephone number:
Arvin Industries, Inc., Shareholder Relations, One Noblitt Plaza, Box
3000, Columbus, Indiana 47202-3000 and (812)379-3000.

You should rely only on the information incorporated by reference
or provided in this prospectus or any prospectus supplement. We have
not authorized anyone else to provide you with different information.
We are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in
this prospectus or any prospectus supplement is accurate as of any
date other than the date on the front of the document.

ARVIN

We are a focused international manufacturer and supplier of
automotive parts with more than 50 manufacturing facilities and eight
technical centers located in 21 countries. We are a worldwide leader
in automotive exhaust systems and ride control products for the
original equipment and replacement markets. Through our acquisition
of the Purolator Products automotive filter business, we are also a
North American leader in the automotive filter market. Since our
founding in 1919, we have grown through internal development,
acquisitions and international joint ventures. In recent years, our
strategy has been to strengthen our automotive parts businesses by
achieving a mix of sales to both original equipment manufacturers and
replacement market parts suppliers on a global basis.

We were incorporated in Indiana in 1921. Our principal executive
offices are located at One Noblitt Plaza, Box 3000, Columbus, Indiana
47202-3000, and our telephone number is (812) 379-3000. Our common
shares are listed on the New York Stock Exchange and the Chicago Stock
Exchange under the symbol "ARV."

USE OF PROCEEDS

Unless otherwise specified in the applicable prospectus
supplement, the net proceeds we receive from the sale of the
securities offered by this prospectus and the attached prospectus
supplement will be used for general corporate purposes. General
corporate purposes may include the repayment of debt, working capital
expenditures and acquisitions or investments in businesses and assets.

The net proceeds may be invested temporarily or applied to repay
short-term debt until they are used for their stated purpose.

DESCRIPTION OF THE DEBT SECURITIES

The following description of the debt securities sets forth
general terms that may apply to the debt securities. The particular
terms of any debt securities will be described in a prospectus
supplement relating to those debt securities.

The debt securities will be either our senior debt securities or
our subordinated debt securities. The senior debt securities will be
issued under an indenture dated as of July 3, 1990, and supplemented
on March 31, 1994, between us and Harris Trust and Savings Bank as the
trustee. This indenture is referred to as the "senior indenture." The
subordinated debt securities will be issued under an indenture to be
entered into between us and a trustee named in the prospectus
supplement. This indenture is referred to as the "subordinated
indenture." The senior indenture and the subordinated indenture are
together called the "indentures."

The following is a summary of important provisions of the
indentures. Copies of the entire indentures are exhibits to the
registration statement of which this prospectus is a part. Section
references below are to the section in the applicable indenture. The
referenced sections of the indentures are incorporated by reference.

PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES

GENERAL

Neither indenture limits the total principal amount of debt
securities that we may issue. Each indenture provides that we may
issue debt securities in one or more series from time to time up to
the total principal amount that we have authorized. The senior debt
securities will be unsecured and will have the same rank as all of our
other unsecured and unsubordinated debt. The subordinated debt
securities will be unsecured and will be subordinated and junior to
all of our senior indebtedness. Neither indenture limits the amount
of other unsecured indebtedness or securities that we may issue.

The debt securities may be issued in one or more separate series
of senior debt securities or subordinated debt securities. The
prospectus supplement relating to the particular series of debt
securities being offered will specify the particular amounts, prices
and terms of those debt securities. These terms may include:

- the title of the debt securities;

- the series of the debt securities;

- their total principal amount and denominations;

- the date or dates on which they will mature;

- their interest rate or rates, or the method of determining
those rates;

- their interest payment dates and the record dates for
interest payments;

- any premium payments, including any conditions;

- the manner of making principal, interest and any premium
payments on the debt securities;

- the places where principal, interest and any premium
payments may be made;

- the currency or currencies in which payments on the debt
securities will be payable, if other than U.S. dollars;

- the ranking of the debt securities as senior or
subordinated;

- any mandatory or optional redemption provisions;

- any sinking fund provisions;

- any conversion provisions, in the case of subordinated debt
securities;

- any additional information about book-entry procedures;

- the portion of the principal amount of any debt security
payable upon the acceleration of maturity, if other than the
full principal amount;

- the method of determining the amount of any payments on the
debt securities which are linked to an index;

- whether the debt securities will be issued in fully
registered form without coupons or in bearer form, with or
without coupons, or both, and whether they will be issued in
global form; and

- any other specific terms of the debt securities.

Principal, interest and any premium will be payable in the
manner, at the places and subject to the restrictions provided in the
applicable indenture. Unless otherwise specified in the prospectus
supplement, payment of any interest may be made at our option by check
mailed to the holders of the registered debt securities at their
registered addresses.

The indentures permit us to issue debt securities with terms
different from those previously issued and to "reopen" a previous
issue and issue additional debt securities of that series.

REGISTRATION, TRANSFER AND EXCHANGE

The debt securities will be issued in fully registered form
without coupons, unless the prospectus supplement contains provisions
relating to bearer securities. The applicable indenture, debt
securities and prospectus supplement will describe the manner in which
and the places where the debt securities may be registered for
transfer or exchanged. No service charge will be payable upon the
registration of transfer or exchange of debt securities, except for
any applicable tax or governmental charge.

CONSOLIDATION, MERGER AND SALE OF ASSETS

We may consolidate with, or sell, lease or convey all or most of
our assets to, or merge with or into, any other corporation, as long
as:

- if we are not the continuing corporation, the successor
corporation is organized and existing under U.S. or state
law;

- the successor corporation by supplemental indenture
expressly assumes the payments on the debt securities and
duly and punctually performs and observes all covenants and
conditions of the applicable indenture to be performed by
us; and

- we or the successor corporation are not in default in the
performance of any of those covenants or conditions
immediately after the merger or consolidation or the sale,
lease or conveyance.

MODIFICATION AND WAIVER

Arvin and the applicable trustee may modify and amend either
indenture with the consent of the holders of at least a majority in
total principal amount of the outstanding debt securities of each
affected series. However, no modification or amendment may, without
the consent of the holder of each affected outstanding debt security:

- change the stated maturity of the principal or any interest;

- reduce the principal amount, the interest rate or any
premium upon redemption;

- reduce the principal amount of an original issue discount
debt security that would be due and payable upon
acceleration of its maturity;

- change the currency in which any debt security or interest
or any premium on the debt security is payable;

- impair the right to enforce any payment on or after its
stated maturity or the redemption or repayment date;

- in the case of subordinated debt securities, adversely
modify any subordination provision;

- reduce the percentage in principal amount of any series of
outstanding debt securities whose holders' consent is
required for any amendment or waiver; or

- modify any of the provisions described in this paragraph,
except to increase any percentage or to provide that other
provisions of the indenture cannot be modified or waived
without the consent of the holder of each affected
outstanding debt security. (Section 902)

Except for these matters, the holders of at least a majority in
principal amount of any series of outstanding debt securities may
waive past defaults, other than defaults in payment of principal,
interest or any premium, under and waive compliance by us with
provisions of the applicable indenture. (Sections 513 and 1009)

SATISFACTION AND DISCHARGE OF AN INDENTURE

If we deposit or cause to be deposited with the trustee cash or
direct obligations of the United States or obligations guaranteed by
the United States that are sufficient, together with any income that
accrues on those obligations, to pay and discharge the entire
indebtedness on all outstanding debt securities of any series when due
in compliance with the indenture, then we will be treated as having
paid and discharged the entire indebtedness, except for any surviving
obligations, including the rights of holders to be paid amounts when
due under the debt securities.

If we make these deposits with the trustee and either:

- all debt securities authenticated and delivered under the
applicable indenture are delivered for cancellation, other
than:

(1) debt securities that have been destroyed, lost or
stolen and which have been paid or replaced,

(2) coupons pertaining to bearer securities whose surrender
is not required or has been waived, and

(3) debt securities for which we deposited or segregated
and held in trust payment and which later was repaid to
us or discharged from the trust, or

- all debt securities are or will become due and payable at
their stated maturity within one year or will be called for
redemption within one year if redeemable at our option,

and we comply with any other conditions, the indenture will be of no
further effect, except for transfer or exchange rights. (Section 401)

EVENTS OF DEFAULT

Each indenture provides that the following are events of default
with respect to any series of debt securities:

- failure for 30 days to pay interest when due;

- failure to pay principal or any premium when due;

- failure to deposit any sinking fund payment when due;

- if we continue to breach a covenant or warranty in the
indenture for 90 days after appropriate notice;

- failure to pay principal of or interest on any other
obligation for borrowed money of Arvin, including default
under any other series of debt securities and, in the case
of the senior debt securities, including default on any
guaranty of an obligation for borrowed money of a restricted
subsidiary, beyond any grace period if:

(1) the total principal amount exceeds $10,000,000,

(2) we do not contest in appropriate proceedings default in
payment, and

(3) the default in payment has not been cured or waived
before written notice was given to us;

- events of bankruptcy, insolvency or reorganization; or

- any other event of default with respect to that series of
debt securities. (Section 501)

In the case of bankruptcy, insolvency or reorganization, all
unpaid principal of and any premium and accrued interest on any series
of outstanding debt securities will become and be immediately due and
payable without any declaration or other act of the trustee or any
holder. If any other event of default occurs and continues, the
trustee or the holders of at least 25% in total principal amount of
that series of outstanding debt securities may declare the principal
to be due and payable immediately. However, after this declaration of
acceleration has been made, but before a judgment or decree based on
the acceleration has been obtained, the holders of a majority in total
principal amount of that series of outstanding debt securities may

rescind the acceleration if all events of default other than the non-
payment of accelerated principal have been cured or waived.

The prospectus supplement relating to any original issue discount
debt security will contain provisions about acceleration of the
maturity of a portion of the principal amount upon the occurrence and
the continuation of an event of default.

Each indenture requires us to file annually with the trustee an
officer's certificate as to the absence of defaults under the
indenture. Each indenture requires the trustee, within 90 days after
the occurrence of a default with respect to any series of outstanding
debt securities which is continuing, to give to the holders notice of
all uncured defaults known to it. However, except in the case of
default in the payment of principal, interest or any premium or in the
payment of any sinking fund installment, the trustee will be protected
in withholding the notice if it in good faith determines that this
withholding of notice is in the interest of the holders of the debt
securities. (Section 602)

Each indenture provides that the trustee will be under no
obligation to exercise any of its rights or powers at the request or
direction of the holders of the debt securities unless they have
offered to the trustee reasonable indemnity. (Section 603) Each
indenture provides that the holders of a majority in total principal
amount of any series of outstanding debt securities will have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any
trust or power conferred on the trustee with respect to that series of
debt securities. (Section 601)

No holder of any series of debt security will have any right to
institute any legal proceeding with respect to or for any remedy under
the indenture unless:

- the holder has previously given written notice to the
trustee of a continuing event of default with respect to
that series of debt securities;

- the holders of at least 25% in total principal amount of
that series of outstanding debt securities have made a
written request to the trustee to institute the proceeding;

- the holder or holders have offered the trustee reasonable
indemnity;

- the trustee has failed to institute the proceeding within 60
days; and

- the trustee has not received a direction inconsistent with
the written request from the holders of a majority in total

principal amount of the outstanding debt securities.
(Section 507)

However, the holder of any debt security will have an absolute
right to receive payment of principal, interest and any premium on or
after the due dates expressed in the debt security and to institute
suit to enforce any payment. (Section 508)

BOOK-ENTRY DEBT SECURITIES

A series of debt securities may be issued in whole or in part in
the form of one or more global securities that will be deposited with,
or on behalf of, a depository identified in the prospectus supplement.
Payments of principal, interest and any premium on the series of debt
securities represented by a global security will be made to the
depository.

We anticipate that any global securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York,
that the global securities will be registered in the name of DTC's
nominee, and that the following provisions will apply to the
depository arrangements with respect to the global securities. The
prospectus supplement will describe additional or differing terms of
the depository arrangement involving any series of debt securities
issued in the form of global securities.

So long as DTC or its nominee is the registered owner of a global
security, DTC or its nominee will be considered the sole holder of the
debt securities represented by the global security for all purposes
under the applicable indenture. Except as described below, owners of
beneficial interests in a global security:

- will not be entitled to have debt securities represented by
the global security registered in their names;

- will not receive or be entitled to receive physical delivery
of debt securities in the form of a certificate; and

- will not be considered the record owners or holders of debt
securities under the applicable indenture.

The laws of some states require that purchasers of securities
take physical delivery of the securities in certificated form. These
laws may limit the transferability of beneficial interests in a global
security.

If DTC is at any time unwilling or unable to continue as
depository with respect to any debt securities represented by a global
security and we do not appoint a successor depository within 60 days,
we will issue individual debt securities in certificated form in
exchange for the global security. In addition, we may at any time
determine not to have any debt securities of one or more series

represented by global securities and instead will issue the individual
debt securities in certificated form in exchange for the global
securities. In this instance, an owner of a beneficial interest in a
global security will be entitled to physical delivery of individual
debt securities in the form of a certificate equal in principal amount
to the beneficial interest and to have the debt securities in the form
of a certificate registered in its name.

We obtained the following information concerning DTC and its
book-entry system from sources, including DTC, that we believe to be
reliable, but we take no responsibility for the accuracy of this
information.

DTC will act as securities depository for the debt securities.
The debt securities will be issued as fully registered securities
registered in the name of Cede & Co., which is DTC's partnership
nominee.

One fully registered debt security certificate will be issued
with respect to up to $400,000,000 of principal amount of the series
of debt securities, and an additional certificate will be issued with
respect to any remaining principal amount of that series.

DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Commercial
Code, and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act. DTC holds securities that
its participants deposit with DTC. DTC also facilitates the
settlement among participants of securities transactions, including
transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Direct participants of DTC include securities brokers and dealers,
banks, trust companies, clearing corporations and other organizations.
A number of the direct participants and the New York Stock Exchange,
the American Stock Exchange, and the National Association of
Securities Dealers own DTC. Access to DTC's system also is available
to others, including securities brokers and dealers and banks and
trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly.
The rules applicable to DTC and its participants are on file with the
SEC.

Purchases of debt securities under the DTC system must be made by
or through direct participants, which will receive a credit for the
debt securities on DTC's records. The ownership interest of each
beneficial owner or each actual purchaser of each debt security is to
be recorded on the direct and indirect participants' records. A
beneficial owner of debt securities will not receive written
confirmation from DTC of its purchase, but is expected to receive a

written confirmation providing details of the transaction, as well as
periodic statements of its holdings, from the participant through
which the beneficial owner entered into the transaction. Transfers of
ownership interests in debt securities are to be accomplished by
entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in the debt securities, unless
the use of the book-entry system for the debt securities is
discontinued.

To facilitate subsequent transfers, any certificate representing
debt securities which is deposited with, or on behalf of, DTC is
registered in the name of its nominee, Cede & Co. The deposit of the
certificate with, or on behalf of, DTC and its registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has
no knowledge of the actual beneficial owners of the certificate
representing the debt securities; DTC's records reflect only the
identity of the direct participants to whose accounts the debt
securities are credited, which may or may not be the beneficial
owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.

Delivery of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by
direct and indirect participants to beneficial owners, will be
governed by arrangements among them and any statutory or regulatory
requirements.

Neither DTC nor Cede & Co. will consent or vote with respect to
the debt securities. Under its usual procedures, DTC mails an omnibus
proxy to Arvin as soon as possible after the record date. The omnibus
proxy assigns Cede & Co.'s consenting or voting rights to those direct
participants identified on a list attached to the omnibus proxy to
whose accounts the debt securities are credited on the record date.

Principal, interest, and premium payments on the debt securities
will be made to DTC. DTC's practice is to credit direct participants'
accounts on the payable date with respect to their holdings as shown
on DTC's records unless DTC has reason to believe that it will not
receive payment on the payment date. Payments by participants to
beneficial owners will be governed by standing instructions and
customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name,"
and will be the responsibility of the participant and not of DTC, the
trustee, or the paying agent, subject to any statutory or regulatory
requirements. Payment of principal and interest to DTC is the
responsibility of Arvin or the trustee or any paying agent.
Disbursement of payments to direct participants will be the
responsibility of DTC. Disbursement of payments to the beneficial
owners will be the responsibility of the direct and indirect
participants.

If applicable, redemption notices will be sent to Cede & Co. If
less than all of the debt securities within an issue are being
redeemed, DTC's practice is to determine by lot the amount of the
interest of each direct participant in the issue to be redeemed.

A beneficial owner will give notice of any option to elect to
have its debt securities repaid by Arvin, through its participant, to
the applicable trustee, and will effect delivery of the debt
securities by causing the direct participant to transfer the
participant's interest in the global security or securities
representing the debt securities, on DTC's records, to the trustee.
The requirement for physical delivery of debt securities in connection
with a demand for repayment will be deemed satisfied when the
ownership rights in the global security or securities representing the
debt securities are transferred by direct participants on DTC's
records.

DTC may discontinue providing its services as securities
depository with respect to the debt securities at any time by giving
reasonable notice to Arvin or the paying agent. If a successor
securities depository is not appointed, debt security certificates are
required to be printed and delivered.

Arvin may decide to discontinue use of the system of book-entry
transfers through DTC or a successor securities depository. In that
event, debt security certificates will be printed and delivered.

Unless stated otherwise in the applicable prospectus supplement,
any underwriters, dealers or agents with respect to any series of debt
securities issued as global securities will be direct participants in
DTC.

None of Arvin, any underwriter, dealer or agent, the applicable
trustee or any paying agent will have any responsibility or liability
for any aspect of the records relating to or payments made on account
of beneficial interests in a global security, or for maintaining,
supervising or reviewing any records relating to these beneficial
interests.

YEAR 2000 COMPLIANCE

DTC has advised us that its management is aware that some
computer applications, systems and the like for processing data that
are dependent upon calendar dates, including dates before, on, and
after January 1, 2000, may encounter "Year 2000 problems." DTC has
informed the industry, including direct and indirect participants and
other members of the financial community, that it has developed and is
implementing a program so that its systems, as the same relate to the
depository services, namely the timely payment of distributions,
including principal and interest payments, to security holders, book-
entry deliveries, and settlement of trades within the depository,
continue to function appropriately. This program includes a technical

assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected
to be completed within appropriate time frames.

However, DTC's ability to perform its services properly also is
dependent upon other parties, including, without limitation, issuers
and their agents, as well as the direct and indirect participants,
third party vendors from whom it licenses software and hardware, and
third party vendors on whom it relies for information or the provision
of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the industry that
it is contacting and will continue to contact third party vendors from
whom it acquires services to:

- impress upon them the importance of these services being
Year 2000 compliant; and

- determine the extent of their efforts for Year 2000
remediation and, as appropriate, testing of their services.

In addition, DTC is in the process of developing contingency plans as
it deems appropriate.

According to DTC, this information with respect to Year 2000
compliance has been provided to the industry for informational
purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.

INFORMATION CONCERNING THE TRUSTEE

Harris Trust and Savings Bank is the trustee under the senior
indenture. The trustee under the subordinated indenture will be
identified in a prospectus supplement. Each trustee may also serve as
warrant agent with respect to any debt warrants to purchase underlying
debt securities issued under the indenture with respect to which it
acts as trustee. We also maintain banking relationships in the
ordinary course of business with Harris Trust and Savings Bank, and
Harris Trust and Savings Bank participates, along with several other
banks, in credit facilities with Arvin and its subsidiaries. At the
date of this prospectus, Harris Trust and Savings Bank is the trustee
with respect to our 6 7/8% Notes due February 15, 2001, 6 3/4% Notes
due March 15, 2008, and 7 1/8% Notes due March 15, 2009. As of April
4, 1999, Harris Trust and Savings Bank also was trustee with respect
to $36,000,000 aggregate principal amount of our Medium Term Notes
issued under the senior indenture. As of April 4, 1999, we had
outstanding $361,000,000 total principal amount of our debt securities
issued under the senior indenture.

GOVERNING LAW

The indentures are, and the debt securities will be, governed by
the laws of the State of New York.

PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES

Senior debt securities will be issued under the senior indenture
and will rank pari passu with all our other unsecured and
unsubordinated debt.

COVENANTS

The senior indenture contains covenants, including those
described below with respect to the incurrence of secured debt by
Arvin and the restricted subsidiaries, sale and leaseback transactions
on the part of Arvin and the restricted subsidiaries, and the transfer
of principal facilities to unrestricted subsidiaries. Terms used in
these covenants are defined below under "Definitions." These
covenants do not focus on the amount of debt incurred in any
transaction and do not afford protection to holders of the debt
securities in the event of a highly leveraged transaction that is not
in violation of the covenants. At the date of this prospectus, we do
not intend to include any covenants or other provisions affording
protection to holders of any series of the debt securities. If we
desire to include the covenants or other provisions in the future, the
applicable prospectus supplement will describe them.

SECURED DEBT. The senior indenture provides that so long as the
senior debt securities are outstanding, we will not and will not cause
or permit a restricted subsidiary to create, incur, assume or
guarantee any secured debt or create any security interest securing
any indebtedness existing on the date of the indenture constituting
secured debt if it were secured by a security interest in a principal
facility, unless the senior debt securities will be secured equally
and ratably by that security interest. However, we and our restricted
subsidiaries may create, incur, assume or guarantee secured debt
without securing the senior debt securities in the case of
indebtedness secured by:

- security interests to secure payment of the cost of
acquisition, construction, development or improvement of
property;

- security interests on property at the time of acquisition
assumed by us or a restricted subsidiary, or on the property
or on the outstanding shares or indebtedness of a
corporation or firm when it becomes a restricted subsidiary
or is merged into or consolidated with or acquired as an
entirety or substantially as an entirety by us or a
restricted subsidiary;

- security interests arising from conditional sales agreements
or title retention agreements with respect to property
acquired by us or any restricted subsidiary;

- security interests securing indebtedness of a restricted
subsidiary owing to us or to another restricted subsidiary;

- mechanics' and other statutory liens arising in the ordinary
course of business for obligations that are not due or that
are being contested in good faith;

- liens for taxes, assessments or governmental charges not yet
due that are being contested in good faith;

- security interests, including judgment liens, arising in
connection with legal proceedings being contested in good
faith and, in the case of judgment liens, on which execution
is stayed;

- landlords' liens on fixtures;

- security interests to secure partial, progress, advance or
other payments or indebtedness that were incurred to finance
construction on or improvement of property; and

- security interests in favor, or made at the request of,
governmental bodies.

Permitted secured debt also includes, with limitations, any
extension, renewal or refunding of all or any part of any secured debt
that was permitted at the time it was originally incurred. In
addition, we and our restricted subsidiaries may incur secured debt,
without equally and ratably securing the senior debt securities, if
the sum of:

- the amount of secured debt entered into after the date of
the senior indenture and otherwise prohibited by the senior
indenture, plus

- the aggregate value of sale and leaseback transactions
entered into after the date of the senior indenture and
otherwise prohibited by the senior indenture does not exceed
ten percent of Arvin's consolidated net tangible assets.
(Section 1005)

SALE AND LEASEBACK TRANSACTIONS. The senior indenture provides
that so long as debt securities are outstanding, we will not, and will
not permit any restricted subsidiary to, enter into any sale and
leaseback transaction unless we or a restricted subsidiary:

- would be entitled to incur secured debt by reason of the
provision described in the last sentence of the preceding
paragraph equal in amount to the net proceeds of the
property sold or transferred or to be sold or transferred in
the sale and leaseback transaction and secured by a security

interest on the property to be leased, without equally and
ratably securing the debt securities, or

- will apply, within 180 days after the effective date of the
sale and leaseback transaction, an amount equal to the net
proceeds to:

(1) the acquisition, construction, development or
improvement of properties, facilities or equipment
which are, or will be, a principal facility or
facilities or a part of them;

(2) the redemption of senior debt securities; or

(3) the repayment of senior funded debt of Arvin or any
restricted subsidiary, except senior funded debt owed
to any restricted subsidiary, or in part to the
acquisition, construction, development or improvement
and in part to that redemption and/or payment.

Instead of applying an amount equal to the net proceeds to that
redemption, we may, within 180 days after that sale or transfer,
deliver to the trustee senior debt securities for cancellation and
reduce the amount to be applied to the redemption of the senior debt
securities by an amount equivalent to the total principal amount of
the senior debt securities delivered. (Section 1006)

ASSET TRANSFERS. The senior indenture provides that so long as
debt securities are outstanding, we will not, and will not cause or
permit any restricted subsidiary to, transfer any principal facility
to any unrestricted subsidiary unless, within 180 days of the
effective date of the transaction, it applies an amount equal to the
fair value of the principal facility at the time of transfer to:

- the acquisition, construction, development or improvement of
properties, facilities or equipment which are, or will be, a
principal facility or facilities or a part of them;

- the redemption of senior debt securities; or

- the repayment of senior funded debt of Arvin or any
restricted subsidiary, except senior funded debt owed to any
restricted subsidiary, or in part to the acquisition,
construction, development or improvement and in part to that
redemption and/or repayment.

Instead of applying all or any part of the amount to that
redemption, we may, within 180 days of that transfer, deliver to the
trustee senior debt securities for cancellation and reduce the amount
to be applied to the redemption of the senior debt securities by an
amount equivalent to the total principal amount of the senior debt
securities delivered. (Section 1007)

DEFINITIONS

Section 101 of the senior indenture defines the following terms,
which are used in the prospectus, substantially as follows:

"Consolidated net tangible assets" means with respect to us:

- the total amount of assets, less applicable reserves and
other properly deductible items, after deducting:

(1) all liabilities and liability items, except for
indebtedness payable, or renewable or extendable at the
option of the obligor, for more than one year from the
date of incurrence, capitalized rent, capital shares,
including redeemable preferred shares, and surplus,
surplus reserves and deferred income taxes and credits
and other non-current liabilities, and

(2) all goodwill, trade names, trademarks, patents,
unamortized debt discount, unamortized expenses
incurred in the issuance of debt, and other like
intangibles which under generally accepted accounting
principles in effect on July 3, 1990 would be included
on a consolidated balance sheet of Arvin and the
restricted subsidiaries, less:

- loans, advances, equity investments and guarantees, other
than accounts receivable arising from the sale of
merchandise in the ordinary course of business, at the time
outstanding that we and our restricted subsidiaries made or
incurred to, in or for unrestricted subsidiaries or to, in
or for corporations while they were restricted subsidiaries
and, when computed, are unrestricted subsidiaries.

"Principal facility" means any manufacturing plant, warehouse,
office building or parcel of real property, including fixtures, but
excluding leases and other contract rights which might otherwise be
deemed real property, owned by us or any restricted subsidiary,
whether owned on the date of the senior indenture or afterwards. Each
plant, warehouse, office building or parcel of real property must have
a gross book value, without deduction for any depreciation reserves,
at the date of the determination in excess of three percent of our
consolidated net tangible assets, other than any plant, warehouse,
office building or parcel of real property or portion which, in our
board of directors' opinion, is not materially important to our
business and that of our subsidiaries taken as a whole.

"Restricted subsidiary" means

- any subsidiary other than an unrestricted subsidiary, and

- any subsidiary that was an unrestricted subsidiary but
which, after the date of the applicable indenture, we
designate to be a restricted subsidiary by board resolution.

However, we may not designate any subsidiary as a restricted
subsidiary if we would breach any covenant or agreement contained in
the senior indenture as a result.

"Sale and leaseback transaction" means any sale or transfer made
by us or any restricted subsidiary of any principal facility that:

- in the case of any manufacturing plant, warehouse or office
building, has been in operation, use or commercial
production, exclusive of test and start-up periods, by us or
any restricted subsidiary for more than 190 days before the
sale or transfer, or

- in the case of a principal facility that is another parcel
of real property, has been owned by us or any restricted
subsidiary for more than 180 days before that sale or
transfer,

if that sale or transfer is made with the intention of leasing, or as
part of an arrangement involving the lease of the principal facility
to us or a restricted subsidiary, except for a lease for a period up
to 36 months made with the intention that the use of the leased
principal facility by us or a restricted subsidiary will be
discontinued on or before that period expires. Any sale or transfer
made to Arvin or any restricted subsidiary is not a sale and leaseback
transaction. Any secured debt permitted under the senior indenture
will not be deemed to create or be a sale and leaseback transaction.

"Secured debt" means any indebtedness for money borrowed by, or
evidenced by a note or other instrument of, us or a restricted
subsidiary, and any other indebtedness of us or a restricted
subsidiary on which interest is paid or payable, including obligations
evidenced or secured by leases, installment sales agreements or other
instruments in connection with private activity bonds qualified under
section 141 of the Internal Revenue Code, other than indebtedness that
a restricted subsidiary owes to us or another restricted subsidiary or
that we owe to a restricted subsidiary, secured by a security interest
in any principal facility, or a security interest in any shares that
we own directly or indirectly in a restricted subsidiary or in
indebtedness for money borrowed by a restricted subsidiary from us or
another restricted subsidiary. The securing in this manner of any
previously unsecured debt will be deemed to be the creation of secured
debt when security is given. The amount of secured debt at any time
outstanding will be the total amount then owing by us and our
restricted subsidiaries.

"Senior funded debt" means any obligation of Arvin or any
restricted subsidiary which was funded debt as of the date of creation

and that, in our case, is not subordinate and junior in right of
payment to the prior payment of the senior debt securities. "Funded
debt" means any obligation payable, or renewable or extendable at the
option of the obligor, for more than one year from the date of
incurrence, which under generally accepted accounting principles
should be shown on the balance sheet as a liability.

"Subsidiary" means any corporation of which we and/or one or more
subsidiaries own or control directly or indirectly more than 50
percent of the shares of voting stock.

"Unrestricted subsidiary" means:

- any subsidiary acquired or organized after the date of the
senior indenture, if that subsidiary is not a successor,
directly or indirectly, to and does not directly or
indirectly own any equity interest in, any restricted
subsidiary;

- any subsidiary whose principal business and assets are
located outside the United States and/or Canada or both;

- any subsidiary whose principal business consists of
financing the acquisition or disposition of machinery,
equipment, inventory, accounts receivable and other real,
personal and intangible property by persons including us or
a subsidiary;

- any subsidiary whose principal business is owning, leasing,
dealing in or developing real property for residential or
office building purposes; and

- any subsidiary, most of whose assets consist of shares or
other securities of an unrestricted subsidiary or
unrestricted subsidiaries of the character described in the
foregoing clauses of this definition, unless and until this
subsidiary has been designated a restricted subsidiary by
board resolution.

PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES

Subordinated debt securities will be issued under the
subordinated indenture and rank pari passu with our other outstanding
subordinated debt and rank junior to all of our outstanding senior
indebtedness. As described in the prospectus supplement, the
particular terms of the subordinated debt securities being offered,
including the subordination terms and the definition of senior
indebtedness, may differ from those described below.

SUBORDINATION

The payment of the principal, interest and any premium on the
subordinated debt securities is expressly subordinated, to the extent
and in the manner provided in the subordinated indenture, in right of
payment to the prior payment in full of all of our senior
indebtedness, as may be changed by the terms of the subordinated debt
securities in the prospectus supplement.

In the event of any dissolution or winding up, or total or
partial liquidation or reorganization of Arvin, whether in bankruptcy,
reorganization, insolvency, receivership or similar proceeding, the
holders of senior indebtedness will be entitled to receive payment in
full of all amounts due or to become due on all senior indebtedness
before the holders of the subordinated debt securities are entitled to
receive any payment on the subordinated debt securities, including
principal, interest or any premium. Except as indicated in the
prospectus supplement, no payment in respect of the subordinated debt
securities will be made if, at the time of payment, there is a default
in payment on any senior indebtedness, and this default has not been
cured or waived in writing or the benefits of subordination in the
subordinated indenture have not been waived in writing by or on behalf
of the holders of the senior indebtedness.

Notwithstanding the foregoing, if the trustee or the holder of
any of the subordinated debt securities receives any payment or
distribution of any kind before all senior indebtedness is paid in
full or payment is provided for, that payment or distribution will be
applied to the payment of all senior indebtedness remaining unpaid, to
the extent necessary to pay all senior indebtedness in full, after
giving effect to any concurrent payment or distribution to or for
holders of senior indebtedness.

The subordinated indenture defines "senior indebtedness" as
indebtedness, either outstanding as of the date of the subordinated
indenture or subsequently issued, that by its terms is neither
subordinated in right of payment to any of our unsecured indebtedness,
nor is pari passu with our subordinated indebtedness.

The subordinated indenture defines "indebtedness," as applied to
any person, as all indebtedness, whether represented by bonds,
debentures, notes or other securities, created or assumed by that
person for repayment of money borrowed, and obligations, computed
according to generally accepted accounting principles, as lessee under
leases that should be treated as capital leases. All indebtedness
secured by a lien upon property owned by us or any subsidiary and upon
which indebtedness that person customarily pays interest, without
assuming or becoming liable for the payment of this indebtedness, will
be deemed to be indebtedness of that person. All indebtedness of
others guaranteed as to payment of principal by that person or in
effect guaranteed by that person through a contingent agreement to
purchase it also will be deemed to be indebtedness of that person.

If subordinated debt securities are issued under the subordinated
indenture, the total principal amount of senior indebtedness
outstanding as of a recent date will be indicated in the prospectus
supplement. The subordinated indenture does not restrict the amount of
senior indebtedness that we may incur.

CONVERSION

The prospectus supplement will describe terms of conversion of
any series of subordinated debt securities into common shares or other
securities of Arvin. Unless the prospectus supplement provides
otherwise, any right to convert subordinated debt securities called
for redemption will terminate at the close of business on the
redemption date. In the case of subordinated debt securities
convertible into common shares, the initial conversion price will be
adjusted for particular events, including:

- a dividend or distribution on the common shares in the form
of common shares;

- a subdivision or combination of the common shares;

- an issuance to all holders of common shares of rights other
than the preferred share purchase rights described below, or
warrants entitling them to subscribe for or purchase common
shares at less than the current market price; and

- a distribution on the common shares of evidences of our
indebtedness, assets other than cash dividends or
distributions from retained earnings, rights other than the
preferred share purchase rights, or warrants to subscribe
for or purchase any of its securities, other than those
referred to above.

In addition, unless the prospectus supplement indicates
otherwise, in any of the following events, the holders of subordinated
debt securities that are convertible into common shares will have the
right to convert them into the kind and amount of shares and other
securities or assets that are receivable upon this event by a holder
of the number of common shares issuable upon their conversion
immediately before that event.

- the reclassification or change of outstanding common shares,
other than changes in par value or as a result of a
subdivision or combination;

- any consolidation, merger or combination of Arvin as a
result of which holders of common shares will be entitled to
receive shares, securities or other assets with respect to
or in exchange for the common shares; or

- any sale or conveyance of our assets as, or substantially
as, an entirety to any other entity in which holders of
common shares will be entitled to receive shares, securities
or other assets with respect to or in exchange for the
common shares.

No adjustment of the conversion price is necessary until
cumulative adjustments amount to at least one percent of the current
conversion price. We reserve the right to make reductions in the
conversion price, in addition to those required in the provisions
above, as we determine to be advisable so that share-related
distributions made by us to our shareholders will not be taxable. Each
common share issued upon conversion will sometimes include preferred
share purchase rights. We will not issue fractional common shares
upon conversion of subordinated debt securities that are convertible
into common shares, but instead will pay a cash adjustment based upon
the market price of the common shares.

Unless the prospectus supplement provides otherwise, subordinated
debt securities surrendered for conversion during the period from the
close of business on any regular record date next preceding any
interest payment date to the opening of business on the interest
payment date must be accompanied by payment of an amount equal to the
interest which the registered holder is to receive. In the case of any
subordinated debt security converted after any regular record date but
on or before the next interest payment date, interest whose stated
maturity is on that interest payment date will be payable on the
interest payment date notwithstanding the conversion, and that
interest will be paid to the holder on the regular record date. Except
as described above, no interest on converted securities will be
payable by us on any interest payment date after the date of
conversion. No other payment or adjustment for interest or dividends
will be made upon conversion.

The conversion price for any subordinated debt securities
convertible into our securities other than common shares will be
subject to the adjustment as may be indicated in the prospectus
supplement.

DESCRIPTION OF CAPITAL SHARES

GENERAL

Under our Restated Articles of Incorporation, we are authorized
to issue 50,000,000 common shares, par value $2.50 per share,
25,829,909 of which were issued and outstanding as of April 4, 1999
and 8,978,058 preferred shares, without par value, none of which were
outstanding as of April 4, 1999. The common shares and the preferred
shares may be issued at any time by our board of directors in any
series with terms as may be fixed by board resolution providing for
their issuance. The number of authorized preferred shares includes
500,000 authorized Series C junior participating preferred shares

reserved for issuance upon the exercise of rights, under the rights
agreement described below, none of which were outstanding as of April
4, 1999. The number of authorized Series C preferred shares may be
increased by board resolution. We may issue the remainder of the
preferred shares in one or more series.

COMMON SHARES

Subject to the prior dividend rights of the preferred shares,
holders of the common shares are entitled to receive dividends and
other distributions upon declaration by our board. Some of our long-
term debt obligations contain covenants that may indirectly restrict
the payment of dividends on our capital shares, although none
materially limits our ability to pay dividends at the date of this
prospectus. A prospectus supplement relating to common shares will
describe any material limitations.

Holders of common shares are entitled to one vote for each share.
Except as the Indiana Business Corporation Law requires or as may be
specifically provided in an amendment to our articles of
incorporation, holders of common shares vote together with any
preferred shares having general voting rights as a single class.

After the satisfaction of creditors and the prior rights of any
preferred shares upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of Arvin, the holders of the
common shares are entitled to share ratably in our remaining assets.

The common shares have no conversion privileges or preemptive
rights and, except as described below, are not subject to redemption
at our option. The articles of incorporation, the Indiana Business
Corporation Law, and various loan agreements to which we are or may
become a party may restrict our ability to redeem or repurchase our
shares in other situations.

The common shares are listed on the New York Stock Exchange and
the Chicago Stock Exchange. Harris Trust and Savings Bank is the
transfer agent and registrar of the common shares.

PROVISIONS WITH POSSIBLE ANTI-TAKEOVER EFFECTS

Our by-laws currently provide for the classification of the board
of directors into three classes. Our articles of incorporation:

- limit the number of directors that may be elected to at
least 12 but not more than 17, excluding the number of
directors as may be elected by any class of our shares other
than common shares on account of specific dividend
arrearages in accordance with our articles of incorporation,

- permit removal of directors only for cause and only by the
affirmative vote of two-thirds of the outstanding voting
shares,

- establish the power to make, alter, amend or repeal the by-
laws exclusively in the board of directors, and

- require that any merger, dissolution or other significant
restructuring of Arvin be approved by 80% of the directors
or by 80% of the shares outstanding and entitled to vote on
this.

Our by-laws also provide that amendments require an affirmative vote
of two-thirds of the directors then in office. Our articles of
incorporation provide that the by-laws may contain provisions
requiring the disclosure to us of the names of beneficial owners of
common shares and imposing sanctions in the event of nondisclosure,
including prohibiting voting by, withholding dividends to, and
redeeming the common shares held by the non-disclosing record holders.
However, our by-laws currently do not contain these provisions.

In addition, our articles of incorporation provide that if any
person who beneficially owns more than 50% of our outstanding common
shares acquires any additional shares in a tender offer or becomes the
beneficial owner of more than 50% of our outstanding common shares in
a tender offer, not approved by a majority of the board of directors
who are unaffiliated with the person or entity making the tender
offer, then all holders of common shares and all holders of rights,
options, warrants, and securities then exercisable or convertible into
common shares are entitled for a limited period to have us repurchase
any or all of their shares at the "repurchase price." The "repurchase
price" is the greater of:

- the highest per share price paid by the person or entity
making the tender offer within the prior eighteen months,
plus the aggregate earnings per common share for the
preceding four quarters less cash dividends paid on common
shares during those four quarters, or

- the shareholder equity per common share.

These provisions can be amended by only an 80% shareholder vote,
subject to other limitations. The Indiana Business Corporation Law
limits our obligation to repurchase shares. Also, the terms and
provisions of outstanding preferred shares or loans or other
agreements to which we might be a party also could limit our
obligation.

Chapter 42 of the Indiana Business Corporation Law eliminates the
voting rights of "control shares" held by "acquiring persons" who
acquire shares giving them one-fifth, one-third or a majority of the
voting power of particular corporations, including us. Control shares

acquired in a control share acquisition retain the same voting rights
as were accorded the shares before this acquisition only to the extent
granted by resolutions approved by the disinterested shareholders. If
shareholders approve the voting rights of control shares and a
shareholder has acquired control shares with a majority or more of the
voting power, all shareholders of the corporation are entitled to
exercise statutory dissenters' rights and to demand the value of their
shares in cash from the corporation. If the control shares have no
voting rights, the corporation has the right to redeem them. In
addition, if authorized in a corporation's articles of incorporation
or by-laws, the corporation may for a period of time redeem the shares
that caused a person to become an acquiring person at their fair value
unless the acquiring person provides information specified in the
Indiana Business Corporation Law to the corporation. Our by-laws
authorize this redemption. These Indiana Business Corporation Law
provisions do not apply to acquisitions of voting power pursuant to a
merger or share exchange agreement to which the corporation is a
party.

Chapter 43 of the Indiana Business Corporation Law imposes some
restrictions on the ability of an "interested shareholder," including
a beneficial owner of at least 10% of the outstanding voting shares,
of a "resident domestic corporation," like us, to engage in a
"business combination," as defined in the statute, with the resident
domestic corporation, unless specific requirements are met. These
requirements include a five-year waiting period after the shareholder
becomes an interested shareholder, unless the corporation's board of
directors has approved the acquisition of 10% or more of the voting
shares or the business combination before the date of the acquisition
of voting shares. Following this period, a business combination may
be effected with an interested shareholder only upon:

- the approval of the business contribution by the
corporation's shareholders, excluding the interested
shareholder and any of its affiliates or associates, or

- the consideration to be received by shareholders in the
business combination meets the fairness criteria described
in chapter 43.

Chapter 43 broadly defines "business combination" to include mergers,
sales or leases of assets, transfers of shares of the corporation,
proposals for liquidation and the receipt by an interested shareholder
of any financial assistance or tax advantage from the corporation,
except proportionately as a shareholder of the corporation.

The overall effect of the above provisions may be to discourage,
or render more difficult, a merger, tender offer, proxy contest, the
assumption of control of Arvin by a holder of a large block of our
shares or other person, or the removal of incumbent management, even
if these actions may be beneficial to our shareholders generally.

PREFERRED SHARE PURCHASE RIGHTS

Each outstanding common share includes one right to purchase one
one-hundredth of a Series C preferred share. A rights agreement dated
as of May 29, 1986, as amended by amendments dated as of February 23,
1989, November 10, 1994 and May 10, 1996, between Arvin and Harris
Trust and Savings Bank governs the terms and conditions of these
rights. This description of the rights is qualified by the rights
agreement, filed as part of our current report on Form 8-K dated June
16, 1986 and the amendments filed with our current reports on Form 8-K
dated February 23, 1989 and May 10, 1996 and with our quarterly report
on Form 10-Q for the quarter ended October 2, 1994.

Currently, the rights are not exercisable, certificates
representing rights have not been issued and the rights automatically
trade with the common shares. However, ten days after an acquiring
person or group either acquires beneficial ownership of 20% or more of
the outstanding common shares or makes an offer to acquire 20% or more
of the outstanding common shares, the rights become exercisable,
certificates representing the rights will be issued as soon as
practicable afterwards and the rights will begin to trade
independently from the common shares. The rights will not have any
voting power. When the rights become exercisable, a holder becomes
entitled to buy one one-hundredth of a newly-issued Series C preferred
share for each right at an exercise price of $90, subject to anti-
dilution adjustments. Each Series C preferred share will be entitled
to one vote per share, voting together with the common shares and to
other voting rights. Holders of Series C preferred shares also have
special rights to participate in the election of two additional
directors in the event of specified dividend arrearages. Each Series C
preferred share, if and when issued upon the exercise of a right, will
be entitled to a minimum preferential quarterly dividend at the rate
of $25 per share, but subject to adjustments, will be entitled to a
total dividend of 100 times the dividend declared per common share in
the preceding quarter. The holders of the Series C preferred shares
will receive a preferred liquidation payment of $100 per share, but
will be entitled to receive an aggregate liquidation payment equal to
100 times the payment made per common share.

If any person or group becomes an acquiring person or a
transaction occurs that increases the acquiring person's proportionate
ownership of the common shares, each right, other than those held by
an acquiring person, will become exercisable at the current exercise
price of the right, for that number of common shares then having a
market value of two times the exercise price of the right. If,
following the acquisition by a person or group of 20% or more of the
outstanding common shares, Arvin is involved in a merger or other
business combination transaction or sells or transfers assets or
earnings power totaling more than 50% of its assets or earning power,
each right will become exercisable, at the current exercise price, for
that number of shares of common stock of the acquiring company then
having a market value of two times the exercise price of each right.

The board of directors may redeem the rights for $.10 per right,
subject to adjustment, until a person or group becomes an acquiring
person. Any redemption is effective at the time, on the basis, and
with the conditions that the board of directors may establish. The
rights expire on June 13, 2006, unless earlier redeemed.

The purchase price payable, and the number of Series C preferred
shares or other securities or property issuable upon exercise of the
rights are subject to adjustment to prevent dilution in some
circumstances.

So long as the rights are attached to the common shares, we will
issue one right with each new common share. All common shares issued
will have attached rights. We also will issue one right with each new
common share:

- issuable upon conversion of any convertible security issued,
and

- issued upon exercise of options to purchase the common
shares granted by Arvin,

before the time that the rights are no longer attached to the common
shares.

The rights have anti-takeover effects. The rights will cause
substantial dilution to a person who attempts to acquire Arvin without
conditioning its offer on a substantial number of the rights being
acquired. The rights also will adversely affect a person who desires
to obtain control of Arvin. The rights will not affect a transaction
approved by our board of directors before the existence of an
acquiring person, because the rights can be redeemed.

PREFERRED SHARES

The following description of preferred shares sets forth general
terms and provisions of any series of preferred shares to which any
prospectus supplement may relate. The applicable prospectus supplement
will describe the specific terms of a particular series of preferred
shares, which may differ from the following terms. The descriptions
of preferred shares below and in the prospectus supplement are
qualified in their entirety by reference to the articles of
incorporation and any applicable amendments, which are filed or
incorporated by reference as an exhibit to the registration statement
of which this prospectus is a part.

Under the articles of incorporation, our board of directors is
authorized to issue preferred shares in one or more series and with
rights, preferences, privileges and restrictions, including dividend
rights, voting rights, conversion rights, terms of redemption and
liquidation preferences that they may fix or designate without any
further vote or action by our shareholders.

The specific terms of a particular series of preferred shares
offered will be described in the applicable prospectus supplement,
including:

- the maximum number of shares of the series and their
distinctive designations;

- any annual dividend rate on the shares of the series;

- any dates that dividends begin to accrue or accumulate;

- whether the dividends will be cumulative, and any dividend
preference;

- the price and the terms and conditions of any redemption;

- any liquidation preference applicable to the shares of the
series;

- whether the shares will be subject to, and the terms and
provisions of, a retirement or sinking fund;

- any terms and conditions for conversion or exchange of the
shares of the series into or for shares of any other class
of Arvin;

- any voting rights of the shares or the series;

- whether fractional interest in a series of the shares will
be offered in the form of depositary shares; and

- any or all other preferences or other rights or restrictions
of the shares of the series.

Any prospectus supplement that specifies the terms of preferred
shares also will describe any restriction on the repurchase or
redemption of shares by Arvin while there is any arrearage in the
payment of dividends or, if applicable, sinking fund installments, or
will state that there is no restriction.

In addition to the voting rights of any series of preferred
shares established by the board of directors, under the articles of
incorporation, the holders of at least two-thirds of the total number
of outstanding preferred shares, voting together as a single class,
must approve any amendment to Arvin's articles of incorporation that
would authorize any class of shares, or of securities convertible into
shares, which would rank before the then outstanding preferred shares
as to payment of dividends, or as to distribution of assets upon
liquidation, dissolution or winding up of Arvin or any amendment to
the articles of incorporation that would change the designation,
rights or preferences of the outstanding preferred shares and
adversely affect them. No change may be made without the approval of
the holders of at least two-thirds of the then outstanding shares of
the particular series that would be affected, voting separately as a
series. Arvin's articles of incorporation also provide that
additional preferred shares of a series may not be authorized and that
a class of shares that would rank on parity with outstanding preferred
shares as to assets or dividends may not be authorized without the
consent of the holders of at least a majority of the total number of
outstanding preferred shares, voting separately as a class, without
regard to series.

The holders of preferred shares also may have the right, voting
separately as a class or series, to cast one vote per share upon
matters for which the Indiana Business Corporation Law requires a
class vote of preferred shares.

In addition to any series of preferred shares that the applicable
prospectus supplement describes, the articles of incorporation,
without regard to series, authorize 500,000 Series C preferred shares
to be issued upon exercise of the rights under the rights agreement.

DESCRIPTION OF SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS

We may issue share purchase contracts, including contracts
obligating holders to purchase from Arvin, and Arvin to sell to the
holders, a specified number of common shares at a future date or
dates. The consideration per common share may be fixed at the time the
share purchase contracts are issued or may be determined by reference
to a specific formula described in the share purchase contracts. We
may issue the share purchase contracts separately or as a part of
share purchase units consisting of a share purchase contract and
either a debt security or a debt obligation of a third party,
including a U.S. Treasury security. The debt security or debt
obligation of a third party may serve as collateral to secure the
holders' obligations to purchase the common shares under the share
purchase contracts. The share purchase contracts may require us to
make periodic payments to the holders of share purchase contracts.
These payments may be unsecured or prefunded on some basis. The share
purchase contracts may require holders to secure their obligations in
a specified manner. The applicable prospectus supplement will describe
the specific terms of any share purchase contracts or share purchase
units.

DESCRIPTION OF DEPOSITARY SHARES

The descriptions below and in any prospectus supplement regarding
provisions of any deposit agreement, depositary shares and depositary
receipts are qualified by reference to the forms of deposit agreement
and depositary receipts relating to each series of preferred shares
which are filed or incorporated by reference as exhibits to the
registration statement.

GENERAL

We may, at our option, elect to offer fractional interests in
preferred shares instead of whole preferred shares. In that event, we
expect to provide for the issuance by a depositary of receipts for
depositary shares, each of which will represent a fractional interest
in preferred shares of a particular series, as described in the
prospectus supplement.

We will deposit any series of preferred shares underlying the
depositary shares under a separate deposit agreement between us, a
depositary of our selection that is a bank or trust company whose
principal office is in the United States and which has a combined
capital and surplus of at least $50,000,000, and the holders of the
depositary shares. The prospectus supplement will show the name and
address of the depositary. Subject to the terms of the deposit

agreement, each holder of depositary shares will be entitled, in
proportion to the applicable fractional interest in the preferred
shares underlying the depositary shares, to the rights and preferences
of the underlying preferred shares, including any dividend, voting,
redemption, conversion, exchange and liquidation rights.

The depositary shares will be evidenced by depositary receipts
issued under the deposit agreement. Depositary receipts will be
distributed to those persons purchasing the fractional interests in
the related series of preferred shares, as described in the prospectus
supplement.

DIVIDENDS AND OTHER DISTRIBUTIONS

Whenever the depositary receives any cash dividend or other cash
distribution on the preferred shares, except cash received upon their
redemption, the depositary will distribute those amounts to the record
holders of the depositary receipts in proportion to the number of
depositary shares evidenced by the depositary receipts. The
depositary will not attribute to any holder of depositary shares a
fraction of one cent. The depositary will hold, without liability for
interest, any balance not distributed. This balance will be treated
as part of the next sum received by the depositary for distribution to
the record holders of the depositary receipts.

In a distribution on the preferred shares other than in cash, the
depositary will distribute amounts of the property received to the
record holders of depositary receipts, in proportion to the number of
depositary shares evidenced by the depositary receipts. If the
depositary determines, after consulting us, that this distribution
cannot be made proportionately among the holders or otherwise is not
feasible, the depositary may, with our approval, sell the property and
distribute the net proceeds to these holders instead.

The deposit agreement also will contain provisions about the
manner that any subscription or similar rights offered by us to
holders of the preferred shares will be made available to the holders
of depositary receipts.

REDEMPTION OF DEPOSITARY SHARES

If a series of preferred shares underlying the depositary shares
is subject to redemption, the depositary will use the proceeds
received from the redemption of preferred shares it holds to redeem
the corresponding depositary shares. The depositary will mail notice
of redemption at least 30 but not more than 60 days before the
redemption date to the record holders of the depositary receipts at
their addresses appearing in its books. The redemption price per
depositary share being redeemed will be equal to the applicable
fraction of the redemption price per share payable with respect to the
preferred shares being redeemed. When we redeem preferred shares held
by the depositary, the depositary will redeem as of the same
redemption date the number of depositary shares relating to the
preferred shares redeemed. If not all of the depositary shares are to
be redeemed, the depositary shares to be redeemed will be selected by
lot or pro rata, as Arvin may determine.

After the redemption date, the depositary shares called for
redemption will no longer be deemed to be outstanding and all rights
of the holders of the depositary shares, except the right to receive
the redemption price, will cease and terminate.

VOTING THE PREFERRED SHARES

Upon receipt of notice of any meeting at which the holders of the
preferred shares are entitled to vote, the depositary will mail the
information in this notice of meeting to the record holders of the
depositary receipts. Upon the written request of a holder of a
depositary receipt on that record date, the depositary will, to the
extent practicable, vote or cause to be voted the amount of preferred
shares represented by that holder's depositary shares according to the
instructions in this request. Without specific instructions from the
holder of a depositary receipt, the depositary will not vote the
preferred shares represented by the depositary shares evidenced by the
depositary receipt.

AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT

The form of depositary receipt and any provision of the deposit
agreement may be amended by agreement between Arvin and the
depositary. However, any amendment which:

- materially and adversely alters the rights of the existing
holders of depositary shares, or

- would be materially and adversely inconsistent with the
rights granted to the holders of preferred shares

requires approval by the holders of at least a majority of the
depositary shares then outstanding.

We may terminate a deposit agreement on at least 30 days' notice
to the depositary. In this case, upon surrender of depositary
receipts, the depositary will distribute to the holders the whole
number of preferred shares represented by the receipts surrendered.
The deposit agreement will terminate automatically upon:

- the redemption or conversion of all outstanding depositary
shares;

- the conversion or exchange into common shares or other
securities of each underlying preferred share, if
applicable; or

- the final distribution in respect of the underlying
preferred shares in connection with any liquidation,
dissolution or winding up of Arvin, which has been
distributed to the holders of the related depositary shares.

CHANGES OF DEPOSITARY

At any time, the depositary may resign by notice to Arvin, or
Arvin may remove the depositary. The resignation or removal of the
depository will take effect upon the appointment of and the acceptance

by a successor depositary. The successor depositary must be appointed
within 60 days after the notice of resignation or removal and must be
a bank or trust company whose principal office is in the United States
and which has a combined capital and surplus of at least $50,000,000.
If a successor depositary is not appointed within 60 days, the
resigning or removed depositary may petition a court to appoint a
successor depositary.

MISCELLANEOUS

We will pay all transfer and other taxes and governmental charges
arising solely from the depositary arrangements. We will pay charges
of the depositary for the initial deposit of the preferred shares and
any redemption of preferred shares. Holders of depositary shares will
pay transfer and other taxes and governmental charges and other
charges that the deposit agreement expressly provides are for their
accounts.

The depositary will forward to the holders of depositary receipts
all reports and notices received from Arvin and which Arvin must
furnish to the holders of the preferred shares.

Neither the depositary nor Arvin will be liable if it is
prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the deposit agreement. The
obligations of Arvin and the depositary under the deposit agreement
will be limited to performance in good faith of their duties. Neither
Arvin nor the depositary will be obligated to prosecute or defend any
legal proceeding in respect of any depositary shares or preferred
shares unless satisfactory indemnity is furnished. Arvin and the
depositary may rely upon written advice of counsel or accountants, or
information provided by persons believed to be competent and on
documents believed to be genuine.

DESCRIPTION OF WARRANTS

We may issue warrants, including debt warrants, which are
warrants to purchase debt securities, and equity warrants, which
include warrants to purchase common shares, preferred shares or
depositary shares. We may issue warrants independently of or together
with any other securities, and warrants may be attached to or separate
from those securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between Arvin and a
warrant agent. The warrant agent will act solely as our agent in
connection with a series of warrants and will not assume any
obligation or relationship of agency for or with holders or beneficial
owners of warrants. The following describes the general terms and
provisions of the warrants offered by this prospectus. The applicable
prospectus supplement will show any other terms of the warrant and the
applicable warrant agreement.

DEBT WARRANTS

The applicable prospectus supplement will describe the terms of
any debt warrants, including the following:

- the title and aggregate number of the debt warrants;

- any offering price of the debt warrants;

- whether the debt warrants are to be issued with any debt
securities and, if so, the title, total principal amount and
terms;

- the number of debt warrants to be issued with each principal
amount;

- any date on and after the debt warrants and debt securities
will be separately transferable;

- the title, total principal amount, ranking and terms,
including subordination and conversion provisions, of the
underlying debt securities that may be purchased upon
exercise of the debt warrants;

- the time or period of when the debt warrants are
exercisable, the minimum or maximum amount of debt warrants
which may be exercised at any one time, and the final date
on which the debt warrants may be exercised;

- the principal amount of underlying debt securities that may
be purchased upon exercise of each debt warrant and the
price, or the manner of determining the price, at which the
principal amount may be purchased upon exercise;

- the terms of any right to redeem or call the debt warrants;

- any book-entry procedure information;

- any currency or currency units in which the offering price
and the exercise price are payable;

- if applicable, a discussion of U.S. federal income tax
considerations; and

- any other terms of the debt warrants not inconsistent with
the provisions of the debt warrant agreement.

EQUITY WARRANTS

The applicable prospectus supplement will describe the terms of
any equity warrants, including the following:

- the title and aggregate number of the equity warrants;

- any offering price of the equity warrants;

- the designation and terms of any preferred shares that are
purchasable upon exercise of the equity warrants or that
underlie depositary shares purchasable upon this exercise;

- if applicable, the designation and terms of the securities
with which the equity warrants are issued and the number of
the equity warrants issued with each security;

- if applicable, the date from and after the equity warrants
and any securities issued with them will be separately
transferrable;

- the number of common shares, preferred shares or depositary
shares purchasable upon exercise of an equity warrant and
the price;

- the time or period when the equity warrants are exercisable
and the final date on which the equity warrants may be
exercised and terms regarding any right of Arvin to
accelerate this final date;

- if applicable, the minimum or maximum amount of the equity
warrants exercisable at any one time;

- any currency or currency units in which the offering price
and the exercise price are payable;

- any applicable anti-dilution provisions of the equity
warrants;

- if applicable, a discussion of U.S. federal income tax
considerations;

- any applicable redemption or call provisions; and

- any additional terms of the equity warrants not inconsistent
with the provisions of the equity warrant agreement.

PLAN OF DISTRIBUTION

We may sell the securities:

- through underwriting syndicates represented by one or
more managing underwriters,

- through one or more firms acting as underwriters,

- through dealers or agents, or

- directly to investors.

The prospectus supplement with respect to the securities will
describe the terms of the offering, the purchase price of the
securities and the proceeds to us from the sale, any underwriters,
dealers or agents, any delayed delivery arrangements, any fees,
underwriting discounts and other underwriters' compensation. Any
initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may change.

If the sale of securities involves underwriters, the underwriters
will acquire the securities for their own account and resell them in
one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the
time of sale. The cover of the prospectus supplement will name the
underwriter or underwriters or managing underwriters or underwriters,

with respect to an underwriting syndicate, for a particular
underwritten offering. Except as the prospectus supplement indicates,
the obligations of the underwriters to purchase the securities will be
subject to conditions precedent. The underwriters will be obligated
to purchase all the securities offered by the prospectus supplement if
any are purchased.

If the sale of securities involves dealers, we will sell the
securities to the dealers as principals. The dealers then may resell
the securities to the public at varying prices to be determined by the
dealers at the time of resale. The prospectus supplement will name
the dealers and describe the terms of the transaction.

The prospectus supplement will name any agent involved in the
offer or sale of the securities and will indicate any commissions
payable by Arvin to that agent. Unless the prospectus supplement
states otherwise, any agent will be acting on a best efforts basis for
the period of its appointment.

We will sell the securities directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of
the Securities Act of 1933 with respect to any resale. The prospectus
supplement will describe the terms of any of those sales.

We also may sell the securities in connection with a remarketing
upon their purchase, in connection with a redemption or repayment, by
a remarketing firm acting as principal for its own account or as our
agent. Remarketing firms may be deemed to be underwriters in
connection with the securities that they remarket.

If the prospectus supplement indicates, we will authorize agents,
underwriters or dealers to solicit offers from institutions to
purchase securities from us at the public offering price indicated in
the prospectus supplement through delayed delivery contracts providing
for payment and delivery on a specified date in the future. The
prospectus supplement will specify the conditions of these contracts
and the commission payable for solicitation of the contracts.

Agents, dealers and underwriters may be entitled under agreements
with Arvin to indemnification by Arvin against civil liabilities,
including those under the Securities Act, or to contribution with
respect to those payments that agents, dealers or underwriters may be
required to make. Agents, dealers and underwriters may be customers
of, engage in transactions with, or perform services for Arvin in the
ordinary course of business.

Other than the common shares, which will be approved for listing
upon notice of issuance on the New York Stock Exchange and the Chicago
Stock Exchange, the securities may or may not be listed on a national
securities exchange. There is no assurance that a market for the
securities will exist.

LEGAL OPINIONS

Schiff Hardin & Waite, Chicago, Illinois, will pass upon the
validity of the securities offered by this prospectus for Arvin. The
opinions with respect to the securities may be subject to assumptions

regarding future action to be taken by Arvin and the applicable
trustee, depositary or warrant agent in connection with the issuance
and sale of particular securities, the specific terms of the
securities and other matters that may affect the validity of
securities but that cannot be ascertained on the date of those
opinions.

EXPERTS

The financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Arvin Industries, Inc.
for the year ended January 3, 1999 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in
auditing and accounting.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following statement indicates the estimated amounts of
expenses to be borne by Arvin in connection with the offering
described in this registration statement:

Securities and Exchange Commission registration fee........ $ 111,200
Trustee's fees and expenses.............................. 20,000
Printing and engraving expenses.......................... 75,000
Rating agency fees....................................... 150,000
Accounting fees and expenses............................. 50,000
Legal fees and expenses.................................. 50,000
Blue sky fees and expenses............................... 20,000
Miscellaneous expenses................................... 23,800
-------------
Total ................................................. $ 500,000
=============

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article 8 of the Amended and Restated By-Laws of Arvin, as
amended, and Article 10 of its Restated Articles of Incorporation, as
amended, both provide for indemnification of officers and directors of
Arvin against expenses incurred by any of them in certain stated
proceedings and under certain stated conditions.

Chapter 37 of the Indiana Business Corporation Law authorizes
every Indiana corporation to indemnify its officers and directors
under certain circumstances against liability incurred in connection
with the defense of proceedings in which they are made parties, or
threatened to be made parties, by reason of such relationship to the
corporation, except where they are adjudged liable for specific types
of negligence or misconduct in the performance of their duties to the
corporation. Chapter 37 also requires every Indiana corporation to
indemnify any of its directors and, unless such corporation's articles
of incorporation provide otherwise, any of its officers who were
wholly successful, on the merits or otherwise, in the defense of any
such proceeding against reasonable expenses incurred by such director
in connection with such proceeding.

Officers and directors of Arvin are presently covered by
insurance which (with certain exceptions and within certain
limitations) indemnifies them against any losses or liabilities
arising from any alleged "wrongful act," including any breach of duty,
neglect, error, misstatement, misleading statement, omission or other
acts done or wrongfully attempted.

Section 7 of the form of Underwriting Agreement filed as Exhibit
1-1 hereto provides for indemnification by the Underwriters of
officers and directors of Arvin in certain circumstances.

ITEM 16. EXHIBITS.

1-1 Form of Underwriting Agreement.

3-1 Amended and Restated Articles of Incorporation and
amendments thereto (incorporated by reference to Exhibit
3(A) to Arvin's Form 10-K for its fiscal year ended December
30, 1990).

3-2 Amended and Restated By-Laws (incorporated by reference to
Exhibit 3(ii) to Arvin's Form 8-K dated May 10, 1996).

4-1 Amended and Restated Articles of Incorporation and
amendments thereto (See Exhibit 3-1).

4-2 Amended and Restated By-laws (See Exhibit 3-2).

4-3 Rights Agreement between the Company and Harris Trust and
Savings Bank, as amended (incorporated by reference to
Arvin's Current Report on Form 8-K dated May 10, 1996,
Arvin's Current Report on Form 8-K dated June 16, 1986 and
Arvin's Current Report on Form 8-K dated February 28, 1989).

4-4 Indenture, dated as of July 3, 1990, between Arvin and
Harris Trust and Savings Bank, as trustee, as amended by
First Supplemental Indenture dated as of March 31, 1994,
relating to the senior debt securities (incorporated by
reference to Exhibit 4-4 to Arvin's Registration Statement
on Form S-3, no. 33-53087).

4-5* Form of Indenture to be entered into between Arvin and a
trustee to be identified, relating to the subordinated debt
securities.

4-6 Form of Deposit Agreement, including form of depositary
receipt for depositary shares (incorporated by reference to
Exhibit 4-6 to Arvin's Registration Statement on Form S-3,
no. 33-53087).

4-7 Form of debt warrant agreement (incorporated by reference to
Exhibit 4-7 to Arvin's Registration Statement on Form S-3,
no. 33-53087).

4-8 Form of equity warrant agreement (incorporated by reference
to Exhibit 4-8 to Arvin's Registration Statement on Form S-
3, no. 33-53087).

4-9 Form of Purchase Contract Agreement.

4-10 Form of Pledge Agreement.

4-11 Form of Remarketing Agreement.

5-1 Opinion of Schiff Hardin & Waite.

12-1 Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Dividends.

23-1 Consent of PricewaterhouseCoopers LLP.

23-2 Consent of Schiff Hardin & Waite (included in Exhibit 5-1).

24-1* Power of Attorney.

25-1* Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of trustee for senior
indenture.
---------------

*Previously filed.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:

(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and

(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

(2) that, for the purpose of determining any liability
under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.

(3) to remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.

(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.

(d) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the
trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly

caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Columbus, State
of Indiana, on this 18th day of June, 1999.

ARVIN INDUSTRIES, INC.

By: /s/ Richard A. Smith
---------------------------------
Richard A. Smith
Vice President-Finance and Chief
Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.

SIGNATURE TITLE DATE
---------------------- ---------------------- -----------------

<S> <C> <C>
/s/ V. William Hunt* Chairman, President, Chief
----------------------- Executive Officer and Director June 18, 1999
V. William Hunt

/s/ Richard A. Smith Vice President-Finance, Chief
---------------------- Financial Officer and Director June 18, 1999
Richard A. Smith

/s/ William M. Lowe, Jr.* Controller and Chief
------------------------- Accounting Officer June 18, 1999
William M. Lowe, Jr.

/s/ Joseph P. Allen*
------------------------- Director June 18, 1999
Joseph P. Allen

/s/ Steven C. Beering*
------------------------- Director June 18, 1999
Steven C. Beering

/s/ Joseph P. Flannery*
------------------------- Director June 18, 1999
Joseph P. Flannery

/s/ Robert E. Fowler*
------------------------- Director June 18, 1999
Robert E. Fowler

/s/ William D. George*
------------------------- Director June 18, 1999
William D. George

/s/ Ivan W. Gorr*
------------------------- Director June 18, 1999
Ivan W. Gorr

/s/ Richard W. Hanselman*
------------------------- Director June 18, 1999
Richard W. Hanselman

/s/ Don J. Kacek*
------------------------- Director June 18, 1999
Don J. Kacek

/s/ Frederick R. Meyer*
------------------------- Director June 18, 1999
Frederick R. Meyer

/s/ Arthur R. Velasquez*
------------------------- Director June 18, 1999
Arthur R. Velasquez

/s/ Carolyn Y. Woo*
------------------------- Director June 18, 1999
Carolyn Y. Woo

*By: /s/ Richard A. Smith
--------------------------
Richard A. Smith
Attorney-in-fact

</TABLE>

EXHIBIT 1-1

ARVIN INDUSTRIES, INC.

(an Indiana corporation)

UNDERWRITING AGREEMENT

[Date]

[Name and address of Underwriters
or Representatives]

Dear Sirs:

Arvin Industries, Inc., an Indiana corporation (the "Company"),
proposes to sell to the underwriters named in Schedule II hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), (1) the principal amount of its senior debt
securities, if any, identified in Schedule I hereto (the "Senior
Securities"), to be issued under an Indenture dated as of July 3,
1990, and supplemented March 31, 1994, between the Company and Harris
Trust and Savings Bank, as trustee (the "Senior Trustee"), as amended
(said Indenture, the "Senior Indenture"); (2) the principal amount of
its subordinated debt securities, if any, identified in Schedule I
hereto (the "Subordinated Securities" and together with the Senior
Securities being collectively referred to herein as the "Debt
Securities") to be issued under an Indenture dated as of ___________
between the Company and ________________, as trustee (the
"Subordinated Trustee", and together with the Senior Trustee, the
"Trustees") (said Indenture, the "Subordinated Indenture") (the Senior
Indenture and the Subordinated Indenture being collectively referred
to herein as the "Indentures"); (3) warrants, if any (the "Debt
Warrants"), to purchase an aggregate principal amount of Debt
Securities, which warrants are to be issued pursuant to a Debt Warrant
Agreement (the "Debt Warrant Agreement") between the Company and a
warrant agent (the "Debt Warrant Agent"), all as specified in Schedule
I hereto; (4) the preferred shares of the Company, if any, identified
in Schedule I hereto (the "Preferred Shares"); (5) depositary
receipts, if any, evidencing an interest in depositary shares (the
"Depositary Shares") representing an interest in Preferred Shares of
the Company to be issued under a Deposit Agreement (the "Deposit
Agreement") among the Company, a U.S. bank or trust company as
depositary (the "Depositary"), and the holders from time to time of
such depositary receipts all as indicated in Schedule I hereto; (6)
the common shares, par value $2.50 per share, of the Company (the
"Common Shares"), including, if then in existence, the related
preferred share purchase rights (the "Rights") provided for in the
Rights Agreement dated as of May 29, 1986, as amended, between the
Company and Harris Trust and Savings Bank, as rights agent thereunder
(the "Rights Agreement") (all references herein to the Common Shares
shall include the Rights unless the context indicates otherwise), if
any, as indicated in Schedule I hereto, (7) the share purchase

contracts, if any, to purchase Common Shares (the "Share Purchase
Contracts"), which Share Purchase Contracts are to be issued pursuant
to a Purchase Contract Agreement (the "Purchase Agreement") between
the Company and a purchase contract agent (the "Purchase Contract
Agent"), all as specified in Schedule I hereto; (8) the share purchase
units, if any, each consisting of a Share Purchase Contract and a Debt
Security or a debt obligation of a third party, including a U.S.
Treasury security (the "Share Purchase Units") to be issued under the
Purchase Agreement, all as specified in Schedule I hereto; (9)
warrants, if any, to purchase Preferred Shares (the "Preferred Shares
Warrants") of the Company, which warrants are to be issued pursuant to
a Preferred Shares Warrant Agreement (the "Preferred Shares Warrant
Agreement") between the Company and a warrant agent (the "Preferred
Shares Warrant Agent"), all as specified in Schedule I hereto; (10)
warrants, if any, to purchase Common Shares ("Common Shares Warrants")
of the Company, which warrants are to be issued pursuant to a Common
Shares Warrant Agreement (the "Common Shares Warrant Agreement")
between the Company and a warrant agent (the "Common Shares Warrant
Agent"), all as specified in Schedule I hereto; and/or (11) warrants,
if any, to purchase Depositary Shares (the "Depositary Shares
Warrants") of the Company, which warrants are to be issued pursuant to
a Depositary Shares Warrant Agreement (the "Depositary Shares Warrant
Agreement" and together with each other warrant agreement contemplated
herein being referred to herein collectively as the "Warrant
Agreements") between the Company and a warrant agent (the "Depositary
Shares Warrant Agent" and together with each other warrant agent
contemplated herein being referred to herein collectively as the
"Warrant Agents"), all as specified in Schedule I hereto. The Debt
Securities, Debt Warrants, Preferred Shares, Depositary Shares, Common
Shares, Share Purchase Contracts, Share Purchase Units, Preferred
Shares Warrants, Common Shares Warrants and Depositary Shares Warrants
(all such warrants being referred to herein collectively as
"Warrants") may be sold either separately or as units (the "Units")
together with any of the foregoing. The Debt Securities, Debt
Warrants, Preferred Shares, Depositary Shares, Common Shares, Share
Purchase Contracts, Share Purchase Units, Preferred Shares Warrants,
Common Shares Warrants, Depositary Shares Warrants and Units described
in Schedule I hereto shall collectively be referred to herein as the
"Purchased Securities". The Company may also grant to the
Underwriters an option to purchase up to such additional number of
Purchased Securities as is specified in Schedule I hereto (the "Option
Securities"). The Purchased Securities and Option Securities shall be
collectively referred to herein as the "Securities". If the firm or
firms listed in Schedule II hereto include only the firm or firms
described above as Representatives, then the terms "Underwriters" and
"Representatives", as used herein, shall each be deemed to refer to
such firm or firms.

The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No.333-78131)
relating to the Securities and the offering thereof from time to time
in accordance with Rule 415 under the Securities Act of 1933, as

amended (the "Act") and has filed such amendments thereto as may have
been required to the date hereof. Such registration statement, as
amended, has been declared effective by the Commission, and the
Indentures have each been qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Company has filed
such post-effective amendments thereto as may be required prior to the
execution of this Agreement and each such post-effective amendment has
been declared effective by the Commission. Promptly after execution
and delivery of this Agreement, the Company will prepare and file a
basic prospectus and prospectus supplement in accordance with the
provisions of paragraph (b) of Rule 424 ("Rule 424(b)") under the Act.
Such registration statement, including the exhibits thereto, as
amended at the date of this Agreement, is hereinafter called the
"Registration Statement"; such prospectus in the form in which it
appears in the Registration Statement is hereinafter called the "Basic
Prospectus"; and such supplemented form of prospectus, in the form in
which it shall be filed with the Commission pursuant to Rule 424(b)
(including the Basic Prospectus as so supplemented) is hereinafter
called the "Final Prospectus". Any preliminary form of the Final
Prospectus which has heretofore been filed pursuant to Rule 424(b) is
hereinafter called the "Preliminary Prospectus". Any reference herein
to the Registration Statement, the Basic Prospectus, any Preliminary
Prospectus or the Final Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), on or before the date of
this Agreement, or the issue date of the Basic Prospectus, any
Preliminary Prospectus or the Final Prospectus, as the case may be;
provided that if the Company files a registration statement with the
Commission pursuant to Rule 462(b) under the Act (the "Rule 462(b)
Registration Statement"), then, after such filing, all references to
"Registration Statement" shall also be deemed to include the Rule 462
Registration Statement; and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus or the
Final Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the date of this Agreement,
or the issue date of the Basic Prospectus, any Preliminary Prospectus
or the Final Prospectus, as the case may be, deemed to be incorporated
therein by reference. For purposes of this Agreement, all references
to the Registration Statement, Final Prospectus, or Preliminary
Prospectus or to any amendment or supplement to any of the foregoing
shall be deemed to include any copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").

All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or
"stated" (or other references of like import) in the Registration
Statement, Final Prospectus or Preliminary Prospectus shall be deemed
to mean and include all such financial statements and schedules and
other information which is incorporated by reference in the

Registration Statement, Prospectus or Preliminary Prospectus, as the
case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, Final Prospectus or
Preliminary Prospectus shall be deemed to mean and include the filing
of any document under the Exchange Act which is incorporated by
reference in the Registration Statement, Prospectus or Preliminary
Prospectus, as the case may be.

SECTION 1. Representations and Warranties. The Company
represents and warrants to, and agrees with, each Underwriter that:

(a) The Company meets the requirements for use of Form S-3
under the 1933 Act. The Registration Statement (including any Rule
462(b) Registration Statement) has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration
Statement (or such Rule 462(b) Registration Statement) has been issued
under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. In
addition, the Indentures have been duly qualified under the 1939 Act.

(b) On the effective date of the Registration Statement
(including any Rule 462(b) Registration Statement), as of the date
hereof, when the Final Prospectus is first filed pursuant to Rule
424(b) under the Act, when, prior to the Closing Date (as hereinafter
defined), any amendment to the Registration Statement becomes
effective (including the filing of any document incorporated by
reference in the Registration Statement), when any supplement to the
Final Prospectus is filed with the Commission and at the applicable
Closing Date, (i) the Registration Statement, as amended as of any
such time, any Final Prospectus, as amended or supplemented as of any
such time, and the Indentures will comply in all material respects
with the applicable requirements of the Act, the Trust Indenture Act
and the Exchange Act and the respective rules thereunder; (ii) the
Registration Statement, as amended as of any such time, did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (iii) the Final Prospectus, as
amended or supplemented as of any such time, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Final Prospectus or any amendment
thereof or supplement thereto made in reliance upon and in conformity
with information furnished to the Company in writing by any
Underwriter, or on behalf of any Underwriter by the Representatives,
expressly for use in the Registration Statement or the Final
Prospectus. Each Preliminary Prospectus and the Final Prospectus
delivered to the Underwriters for use in connection with the offering

of the Securities was identical to any electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to
the extent permitted by Regulation S-T under the 1933 Act Regulations.

(c) The documents incorporated by reference in the Final
Prospectus pursuant to Item 12 of Form S-3 under the Act, at the time
they were or hereafter are filed or last amended, as the case may be,
with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act and the rules and
regulations thereunder and, when read together and with the other
information in the Basic Prospectus and the Final Prospectus, at the
time the Registration Statement and any amendments thereto became or
become effective, at the date of this Agreement and at each Closing
Date, did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading.

(d) The accountants who certified the financial statements and
supporting schedules included or incorporated by reference in the
Registration Statement and the Final Prospectus are independent public
accountants as required by the Act and the rules and regulations
thereunder.

(e) The financial statements (other than quarterly or other
unaudited interim financial statements) included or incorporated by
reference in the Registration Statement and the Final Prospectus
present fairly the financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the results of
their operations for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent (except as otherwise stated
therein) basis; the supporting schedules included or incorporated by
reference in the Registration Statement present fairly the information
required to be stated therein; and the Company's ratios of earnings to
fixed charges (actual and, if any, pro forma) included in the Final
Prospectus and in Exhibit 12 to the Registration Statement have been
calculated in compliance with Item 503(d) of Regulation S-K of the
Commission. Any quarterly or other unaudited interim financial
statements, and the related notes thereto, included or incorporated by
reference in the Registration Statement and the Final Prospectus, have
been prepared in compliance with the applicable requirements of the
Act, the rules and regulations thereunder, the Exchange Act and the
rules and regulations thereunder and have been prepared on a basis
substantially consistent (except as otherwise stated therein) with
that of the applicable audited financial statements included or
incorporated by reference in the Registration Statement and the Final
Prospectus, and such unaudited interim financial statements contain
all adjustments necessary to present a fair statement of the results
of operations for the periods reported. Any financial information and
statistical data set forth in the Final Prospectus under the captions
"Selected Financial Data" and "Capitalization" or other similar

captions are fairly stated in all material respects in relation to the
consolidated financial statements of the Company from which they have
been derived.

(f) Since the respective dates as to which information is given
in the Registration Statement and the Final Prospectus, except as
otherwise stated therein (including information contained in documents
subsequently incorporated by reference in the Registration Statement
or the Final Prospectus), (1) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business; (2) there have been no transactions entered into
by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise; and (3)
except for regular dividends, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.

(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Indiana with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Final Prospectus; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not in the aggregate have a material adverse
effect on the business or assets of the Company and its subsidiaries
considered as one enterprise.

(h) Each Significant Subsidiary of the Company (as that term is
used in Rule 405 under the Act) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Final
Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not in the
aggregate have a material adverse effect on the business or assets of
the Company and its subsidiaries considered as one enterprise; all of
the issued and outstanding capital stock of each Significant
Subsidiary shown as owned by the Company on Schedule A to this
Agreement has been duly authorized and validly issued and is fully
paid and nonassessable and is owned by the Company, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or claim.
None of the outstanding shares of capital stock of any Subsidiary was

issued in violation of preemptive or other similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the
Company are (A) the subsidiaries listed on Schedule C hereto and (B)
certain other subsidiaries which, considered in the aggregate as a
single Subsidiary, do not constitute a "significant subsidiary" as
defined in Rule 1-07 of Regulation S-X.

(i) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Final Prospectus under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Final Prospectus or pursuant to the exercise of convertible securities
or options referred to in the Prospectus or except for the funding of
employee benefit plans referred to in the Final Prospectus). Such
shares of capital stock have been duly authorized and validly issued
by the Company and are fully paid and non-assessable, and none of such
shares of capital stock was issued in violation of preemptive or other
similar rights of any securityholder of the Company. The certificate
for each outstanding Common Share also represents one Right per share
(if the Rights are then in existence), and (if the Rights Agreement is
then in effect) the outstanding Rights have been duly authorized and
validly issued under the Rights Agreement and are entitled to the
benefits thereof.

(j) Neither the Company nor any of its subsidiaries is in
violation of its charter or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any material contract, indenture, joint venture
agreement, mortgage, loan agreement, note, lease or other instrument
to which it or its property may be bound; and the execution and
delivery of this Agreement, the Indentures, the Deposit Agreements,
the Purchase Agreements, the Warrant Agreements, the Delayed Delivery
Contracts, if any, and the Securities and the consummation of the
transactions contemplated herein and therein (including the issuance
and sale of the Securities and the use of the proceeds from the sale
of the Securities as described under the caption "Use of Proceeds")
and compliance by the Company with its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action
and will not conflict with or constitute a breach of, or a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, joint venture
agreement, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which
any of them may be bound, or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the charter or by-
laws of the Company or any of its subsidiaries or any applicable law,
administrative regulation or administrative or court decree.

(k) No labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is

imminent; and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its subsidiaries'
principal suppliers, manufacturers or contractors which might be
expected to result in any material adverse change in the condition,
financial or otherwise, or in the earnings, affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.

(l) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its subsidiaries, which is required to
be disclosed in the Registration Statement or the Final Prospectus
(other than as disclosed therein), or which might materially and
adversely affect the consummation of this Agreement or, except in
cases in which such consequences are remote, which might result in any
material adverse change in the condition, financial or otherwise, or
in the earnings, affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or, except in cases in
which such consequences are remote, which might materially and
adversely affect the properties or assets thereof; all pending legal
or governmental proceedings to which the Company or any subsidiary is
a party or of which any of their property is the subject which are not
described in the Registration Statement or the Final Prospectus,
including ordinary routine litigation incidental to the Company's
business, are, considered in the aggregate, not material to the
Company and its subsidiaries considered as one enterprise; and there
are no contracts or documents of the Company or any of its
subsidiaries which are required to be filed as exhibits to the
Registration Statement by the Act or by the rules and regulations
thereunder which have not been so filed.

(m) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, the "Intellectual Property") presently
employed by them in connection with the business now operated by them,
except where the failure to own or possess, or inability to so
acquire, such Intellectual Property would not result in any material
adverse change in the condition, financial or otherwise, or in the
assets, earnings, affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and neither the Company nor
any of its subsidiaries has received any notice or is otherwise aware
of any infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
result in any material adverse change in the condition, financial or
otherwise, or in the assets, earnings, affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.

(n) No authorization, approval or consent of any court or
governmental authority or agency is required for the consummation by
the Company of the transactions contemplated by this Agreement, except
such as may be required under the Act or the rules and regulations
thereunder or state securities laws for the Securities and the
qualification of the Indentures under the Trust Indenture Act.

(o) The Company and its subsidiaries possess such certificates,
authorities or permits issued by the appropriate state, federal or
foreign governmental or regulatory agencies or bodies necessary to
conduct the business now operated by them, except where the failure to
possess such certificates, authorities or permits would not materially
and adversely affect the conduct of the business, operations,
financial condition or income of the Company and its subsidiaries
considered as one enterprise; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of any
unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of the business, operations, financial
condition or income of the Company and its subsidiaries considered as
one enterprise.

(p) This Agreement and the Delayed Delivery Contracts, if any,
have been duly authorized, executed and delivered by the Company.

(q) In the case of an offering of Debt Securities (which may be
offered either separately or as Share Purchase Units together with
Share Purchase Contracts) or Debt Warrants, each of the applicable
Indenture and Debt Warrant Agreement, if any, has been duly and
validly authorized, executed and delivered by the Company and is
substantially in the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement at the time
the Registration Statement became effective; the applicable Indenture
has been duly qualified under the Trust Indenture Act; and, assuming
due authorization, execution and delivery by the Trustee and/or Debt
Warrant Agent, each of the applicable Indenture and Debt Warrant
Agreement, if any, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its
respective terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by
general equitable principles; the Debt Securities are in the form
contemplated by the applicable Indenture and the Debt Securities and
Debt Warrants have been duly and validly authorized by the Company
and, when executed by the proper officers of the Company,
countersigned by the Debt Warrant Agent under the Debt Warrant
Agreement and authenticated in accordance with the provisions of the
applicable Indenture and delivered pursuant to the Debt Warrant
Agreement, in the case of Debt Warrants, and in all cases delivered to
and paid for by the Underwriters pursuant to this Agreement, in the
case of all of the Underwriters' Securities, or by the purchasers

thereof pursuant to the Delayed Delivery Contracts, in the case of any
Contract Securities, will in each case constitute a valid and binding
obligation of the Company, be convertible (in the case of those
Subordinated Securities that by their terms are so convertible) for
Common Shares or other securities of the Company in accordance with
their terms as set forth in the Final Prospectus and will be entitled
to the benefits of the applicable Indenture enforceable against the
Company in accordance with their terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; if the Debt Securities
are convertible into Common Shares or other securities of the Company,
the Common Shares or other securities issuable upon such conversion
will have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
issued, fully paid (assuming the underlying Debt Securities have been
paid for) and nonassessable; such Common Shares or other securities
will have been duly authorized and issued, will be fully paid
(assuming the underlying Debt Securities have been paid for) and
nonassessable and will conform to the description thereof contained in
the Final Prospectus; and the stockholders of the Company have no
preemptive rights with respect to any of such Common Shares or other
securities issuable upon such conversion.

(r) In the case of an offering of Preferred Shares, including
any Preferred Shares constituting Option Securities, the Preferred
Shares being delivered and paid for at such Closing Date have been
duly authorized, validly issued and are fully paid and nonassessable;
the Contract Securities, when issued, delivered and sold pursuant to
the Delayed Delivery Contracts, will be duly issued, fully paid and
nonassessable; the Contract Securities, when so issued, delivered and
sold, will conform, to the descriptions thereof contained in the Final
Prospectus; and the stockholders of the Company have no preemptive
rights with respect to any of such Preferred Shares. If the Preferred
Shares being delivered at such Closing Date are convertible into
Common Shares or other securities of the Company, such Preferred
Shares are, and the Contract Securities, when so issued, delivered and
sold, will be, convertible into Common Shares or other securities of
the Company in accordance with their terms; the Common Shares or other
securities initially issuable upon conversion of such Preferred Shares
will have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be duly issued,
fully paid and nonassessable; such Common Shares have been duly
authorized and issued, are fully paid (assuming the underlying
Preferred Shares have been paid for) and nonassessable and conform to
the description thereof contained in the Final Prospectus.

(s) In the case of an offering of Depositary Shares, including
any Depositary Shares constituting Option Securities, the Preferred
Shares being paid for, delivered to the Depositary and represented by
the Depositary Shares at such Closing Date have been duly authorized;
the Preferred Shares delivered to the Depositary and represented by

Depositary Shares at such Closing Date, assuming that such Depositary
Shares have been issued, paid for and delivered to the Depositary
against delivery of depositary receipts evidencing the applicable
Depositary Shares to the Underwriters, have been validly issued and
are fully paid and nonassessable; the Contract Securities, when
issued, delivered and sold pursuant to the Delayed Delivery Contracts,
will be duly issued, fully paid and nonassessable; the Contract
Securities, when so issued, delivered and sold, will conform, to the
descriptions thereof contained in the Final Prospectus; and the
stockholders of the Company have no preemptive rights with respect to
any of such Depositary Shares or the Preferred Shares represented
thereby. If Preferred Shares represented by Depositary Shares being
delivered at such Closing Date are convertible into Common Shares or
other securities, such Preferred Shares are, and the Preferred Shares
represented by Depositary Shares constituting Contract Securities,
when so issued, delivered and sold, will be, convertible into Common
Shares or other securities of the Company in accordance with their
terms; the Common Shares initially issuable upon conversion of
Preferred Shares represented by Depositary Shares will have been duly
authorized and reserved for issuance upon such conversion and, when
issued upon such conversion, will be duly issued, fully paid and
nonassessable; such Common Shares have been validly authorized and
issued, are fully paid and nonassessable and conform to the
description thereof contained in the Final Prospectus.

(t) In the case of an offering of Depositary Shares, assuming
due authorization, execution and delivery of the Deposit Agreement by
the Depositary, the Deposit Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding
agreement of the Company enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles; and the depositary receipts when executed, paid for and
delivered pursuant to the Deposit Agreement upon deposit of the
Preferred Shares thereunder, will be validly issued and will entitle
the holders thereof to the rights in respect of the applicable
Depositary Shares specified therein and in the Deposit Agreement.

(u) In the case of an offering of Common Shares, including any
Common Shares constituting Option Securities, the Common Shares being
delivered and paid for at such Closing Date have been duly authorized,
validly issued and are fully paid and nonassessable; the related
Rights (if the Rights Agreement is then in effect) have been duly
authorized and validly issued under the Rights Agreement and are
entitled to the benefits thereof; the Contract Securities, when
issued, delivered and sold, pursuant to the Delayed Delivery
Contracts, will be duly issued, fully paid and nonassessable; the
Contract Securities, when so issued, delivered and sold, will conform
to the description thereof contained in the Final Prospectus; neither
the issuance of the Common Shares nor the issuance of the related
Rights is subject to preemptive rights; and the Company has reserved

one one-hundredth share of Series C Preferred for issuance upon
exercise of each Right.

(v) In the case of an offering of Share Purchase Contracts and
Share Purchase Units, the Purchase Agreement has been duly authorized,
executed and delivered by the Company; assuming due authorization,
execution and delivery by the Purchase Contract Agent, the Purchase
Agreement is a valid and binding agreement of the Company, enforceable
in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; and the Share Purchase
Contracts and the Share Purchase Units when duly authorized, executed,
authenticated, issued and delivered pursuant to the Purchase Agreement
will each constitute a valid and binding obligation of the Company
enforceable against the Company in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.

(w) In the case of an offering of Preferred Shares Warrants and
Common Shares Warrants, the applicable Warrant Agreement has been duly
authorized, executed and delivered by the Company; and, assuming due
authorization, execution and delivery by the applicable Warrant Agent,
the applicable Warrant Agreement constitutes a valid and binding
instrument enforceable against the Company in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles; the applicable Warrants have been duly and validly
authorized and, when executed by the proper officers of the Company,
countersigned by the applicable Warrant Agent under the applicable
Warrant Agreement and in all cases delivered pursuant to the
applicable Warrant Agreement and delivered to and paid for by the
Underwriters pursuant to this Agreement (or by the purchasers thereof
pursuant to the Delayed Delivery Contracts in the case of any Contract
Securities) will in each case constitute a valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or
by general equitable principles; and will be entitled to the benefits
of the applicable Warrant Agreement; and in the case of Preferred
Shares Warrants and Common Shares Warrants, the Preferred Shares or
Common Shares initially issuable upon the exercise thereof have been
duly and validly authorized and reserved for issuance upon such
exercise and such shares, when issued upon such exercise in accordance
with the terms of the respective Warrant Agreement and at the prices
therein provided for, will be duly authorized, validly issued, fully
paid and nonassessable.

(x) The Securities, the Rights, the Company's Series C Junior
Participating Preferred Shares (the "Series C Preferred") and, in the
case of an offering of Debt Securities and/or Debt Warrants, the
applicable Indenture, will conform in all material respects to the
respective statements relating thereto contained in the Final
Prospectus and the Registration Statement and will be in substantially
the respective forms filed or incorporated by reference, as the case
may be, as exhibits to the Registration Statement.

(y) The Senior Debt Securities rank and will rank on a parity
with all unsecured indebtedness (other than subordinated indebtedness)
of the Company that is outstanding on the date hereof or that may be
incurred hereafter, and senior to all subordinated indebtedness of the
Company that is outstanding on the date hereof or that may be incurred
hereafter.

(z) There are no holders of securities of the Company with
currently exercisable registration rights to have any securities so
held included in the offering contemplated by this Agreement and the
Registration Statement.

(aa) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.

(bb) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Securities.

Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in
connection with the offering and sale of the Securities pursuant to
this Agreement shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.

SECTION 2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties
herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from
the Company, at the respective purchase prices and upon the terms and
conditions set forth in Schedule I hereto the principal amount or
number of Purchased Securities set forth opposite such Underwriter's
name in Schedule II hereto, except that, if Schedule I hereto provides
for the sale of Purchased Securities pursuant to delayed delivery
arrangements, the respective principal amount or number of such
Purchased Securities to be purchased by the Underwriters, shall be as
set forth in Schedule II hereto less the respective amounts or number
of Contract Securities determined as provided below. Purchased
Securities to be purchased by the Underwriters are herein sometimes

called the "Underwriters' Securities" and Purchased Securities to be
purchased pursuant to delayed delivery contracts ("Delayed Delivery
Contracts") as hereinafter provided are herein called "Contract
Securities".

(b) If so provided in Schedule I hereto, the Underwriters are
authorized to solicit offers to purchase Purchased Securities from the
Company pursuant to Delayed Delivery Contracts, substantially in the
form of Schedule III hereto but with such changes therein as the
Company may authorize or approve. The Underwriters will endeavor to
make such arrangements and, as compensation therefor, the Company will
pay to the Representatives, for the account of the Underwriters, on
the applicable Closing Date, an amount as follows: (i) in the case of
Debt Securities, Debt Warrants and Units consisting of Debt Securities
and Debt Warrants, an amount equal to the percentage set forth in
Schedule II hereto of the principal amount of the Debt Securities or
number of Debt Warrants for which such Delayed Delivery Contracts are
made, (ii) in the case of Preferred Shares, Depositary Shares and
Units consisting of Preferred Shares and any other Securities, an
amount equal to the percentage set forth in Schedule II hereto of the
aggregate liquidation preference of Preferred Shares, including shares
represented by such Depositary Shares, for which Delayed Delivery
Contracts are made, (iii) in the case of all other Securities, an
amount as set forth in Schedule II hereto with respect to Securities
for which such Delayed Delivery Contracts are made. Delayed Delivery
Contracts are to be with institutional investors, including commercial
and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions. The Company will
enter into Delayed Delivery Contracts in all cases where sales of
Contract Securities arranged by the Underwriters, and the parties to
such Delayed Delivery Contracts, have been approved by the Company
but, except as the Company may otherwise agree, each such Delayed
Delivery Contract must (x) in the case of Debt Securities, Debt
Warrants or Units consisting of Debt Securities and Debt Warrants, be
for not less than the minimum principal amount set forth in Schedule I
hereto and the aggregate principal amount of Contract Securities may
not exceed the maximum aggregate principal amount set forth in
Schedule I hereto, (y) in the case of Preferred Shares, Depositary
Shares or Units consisting of Preferred Shares and any other
Securities, be for not less than the minimum number of Preferred
Shares set forth in Schedule I hereto and the aggregate number of
Preferred Shares, including shares represented by such Depositary
Shares, of Contract Securities may not exceed the maximum aggregate
number of Preferred Shares set forth in Schedule I hereto and (z) in
the case of all other Securities, be for not less than the minimum
number of each of such Securities respectively set forth in Schedule I
hereto and the aggregate number of each of such Securities
constituting Contract Securities may not exceed the maximum number of
each of such Securities respectively set forth in Schedule I hereto.
The Underwriters will not have any responsibility in respect of the
validity or performance of Delayed Delivery Contracts. The principal
amount or number of Purchased Securities to be purchased by each

Underwriter as set forth in Schedule II hereto shall be reduced by an
amount which shall bear the same proportion to the total principal
amount or number of Contract Securities as the principal amount or
number set forth opposite the name of such Underwriter bears to the
aggregate principal amount or number of such Purchased Securities set
forth in Schedule II hereto, except to the extent that you determine
that such reduction shall be otherwise than in such proportion and so
advise the Company in writing; provided, however, that the total
principal amount or number of the Purchased Securities to be purchased
by all Underwriters shall be the aggregate principal amount or number
set forth in Schedule II hereto less the aggregate principal amount or
number of Contract Securities. The Company will advise the
Representatives not later than the business day prior to the
applicable Closing Date of the aggregate principal amount or number,
as the case may be, of the Contract Securities.

SECTION 3. Delivery and Payment. (a) Delivery of the
Underwriters' Securities shall be made at the office of Schiff Hardin
& Waite, 6600 Sears Tower, Chicago, Illinois, or at such other place
as shall be agreed upon by the Representatives and the Company, or at
the office of The Depositary Trust Company ("DTC") if the
Underwriters' Securities are issued in book-entry form, and payment
for such Securities shall be made at the above office of Schiff Hardin
& Waite, or at such other place as shall be agreed upon by the
Representatives and the Company, on the date and at the time specified
in Schedule I hereto, which date and time may be postponed by
agreement between the Representatives and the Company or as provided
in Section 11 hereof (such date and time of delivery and payment for
the Underwriters' Securities being herein referred to in the case of
Purchased Securities as the "Purchased Securities Closing Date", in
the case of Option Securities as the "Option Securities Closing Date"
and each such date being referred to herein as a "Closing Date").
Delivery of the Underwriters' Securities (which, in the case of
Depositary Shares, shall be deemed to occur upon confirmation of
delivery of the applicable number of Preferred Shares to the
Depositary against delivery of the depositary receipts evidencing the
Depositary Shares in respect thereof) shall be made to the
Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of
the Company by certified or official bank check or checks drawn on or
by a Chicago Clearing House bank and payable in next day funds or by
such other means as are specified in Schedule I hereto.

(b) If specified in Schedule I hereto, the several Underwriters
will be compensated for their respective commitments and obligations
by separate payment to the Representatives for the respective accounts
of such Underwriters. Any such payment by the Company to the
Underwriters shall be made simultaneously with the payment by the
Underwriters to the Company of the purchase price of the Underwriters'
Securities as specified herein. Any separate payment of compensation
by the Company to the Underwriters shall be made by certified or

official bank check or checks drawn on or by a Chicago Clearing House
bank and payable in next day funds to the order of the Representatives
or by such other means as are specified in Schedule I hereto.

(c) If specified in Schedule I and the Underwriters' Securities
are issued in book-entry form, payment shall be made in immediately
available funds by fed wire. Certificates for the Underwriters'
Securities shall be registered in such names and in such denominations
as the Representatives may request not less than two full business
days in advance of the applicable Closing Date, provided that, if the
Underwriters' Securities are in book-entry form, the registration
thereof, including the determination of the denominations thereof,
shall be in accordance with the regulations of DTC.

(d) The Company agrees to have the Underwriters' Securities
available for inspection, checking or packaging by the Representatives
in New York, New York, not later than 1:00 P.M., New York City time,
on the business day prior to the applicable Closing Date, unless the
Underwriters' Securities are in book-entry form.

SECTION 4. Covenants of the Company. The Company covenants
with each Underwriter as follows:

(a) Immediately following the execution of this Agreement, the
Company will prepare a Final Prospectus setting forth the principal
amount or number of Securities covered thereby and their terms (not
otherwise specified in the applicable Indenture in the case of Debt
Securities and/or Debt Warrants), the names of the Underwriters and
the principal amount or number of Securities which each severally has
agreed to purchase, the names of the Representatives, the price at
which the Securities are to be purchased by the Underwriters from the
Company, the initial public offering price, the selling concession and
reallowance, if any, and such other information as the Representatives
and the Company deem appropriate in connection with the offering of
the Securities. The Company will promptly transmit copies of the
Final Prospectus to the Commission for filing pursuant to Rule 424 of
the Act and will furnish to the Underwriters named therein as many
copies of the Final Prospectus and any Preliminary Prospectus as such
Underwriters shall reasonably request. Each Prospectus and any
amendments or supplements thereto furnished to the Underwriters will
be identical to any electronically transmitted copy thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

(b) The Company will notify the Representatives immediately, and
promptly confirm the notice in writing, (i) of the effectiveness of
any amendment to the Registration Statement, (ii) of the mailing or
the delivery to the Commission for filing of any supplement to the
Final Prospectus or any document to be filed pursuant to the Exchange
Act which will be incorporated by reference into the Registration
Statement or Final Prospectus, (iii) of the receipt of any comments or
other communications from the Commission with respect to the

Registration Statement, the Basic Prospectus, any Preliminary
Prospectus or the Final Prospectus, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Basic Prospectus, any Preliminary
Prospectus or the Final Prospectus or for additional information, and
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest
possible moment.

(c) For so long as a Final Prospectus is required to be
delivered in connection with the sale of Securities covered by this
Agreement, the Company will give the Representatives notice of its
intention to file any amendment to the Registration Statement or any
amendment or supplement to the Final Prospectus (including through the
filing of documents under the Exchange Act or a prospectus filed
pursuant to Rule 424(b) which differs from the prospectus on file at
the Commission), whether pursuant to the Act, the Exchange Act or
otherwise, will furnish the Representatives with copies of any such
amendment or supplement or other documents proposed to be filed a
reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Representatives or counsel for
the Underwriters shall reasonably object.

(d) The Company will deliver to the Representatives as many
signed and conformed copies of the registration statement (as
originally filed) and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents
incorporated by reference in the Prospectus pursuant to Item 12 of
Form S-3 under the Act) as the Representatives may reasonably request,
and will also deliver to the Representatives a conformed copy of the
Registration Statement and each amendment thereto for each of the
Underwriters. The Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

(e) The Company will comply with the Act, the Exchange Act and
the Trust Indenture Act, and the rules and regulations under each such
Act so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Registration
Statement and the Final Prospectus. If any event shall occur or
condition exist as a result of which it is necessary, in the opinion
of counsel for the Underwriters or counsel for the Company, to further
amend or supplement the Final Prospectus in order that the Final
Prospectus will not include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein not misleading in the light of circumstances existing at the
time it is delivered to a purchaser or prospective purchaser or if it
shall be necessary, in the opinion of either such counsel, at any such

time to amend or supplement the Registration Statement or the Final
Prospectus in order to comply with the requirements of the Act or
rules and regulations thereunder, the Company will promptly prepare
and file with the Commission such amendment or supplement, whether by
filing documents pursuant to the Exchange Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement comply with such requirements.

(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities and any Debt Securities,
Common Shares or Preferred Shares which may be issuable pursuant to
the exercise or conversion, as the case may be, of Securities offered
by the Company, for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as
the Representatives may designate, and will maintain such
qualifications in effect for a period of not less than one year from
the later of the effective date of the Registration Statement and any
Rule 462(b) Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by
the laws of such jurisdiction to continue such qualification in effect
for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.

(g) The Company will timely file such reports pursuant to the
Exchange Act as are necessary in order to make generally available to
its security holders as soon as practicable an earnings statement for
the purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the Act.

(h) The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Final
Prospectus relating to such Securities under "Use of Proceeds".

(i) The Company will use its best efforts to (i) arrange for the
listing of any Common Shares constituting Securities hereunder or
issuable upon conversion or exercise of any of the Securities upon
notice of issuance on the New York Stock Exchange, Inc. or such other
national securities exchanges on which the Company's outstanding
Common Shares are then listed and (ii) list any other Securities on
the exchanges, if any, specified in Schedule I hereto.

(j) The Company, during the period when the Final Prospectus is
required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13, 14 or 15 of the Exchange Act within the time periods required by
the Exchange Act and the rules and regulations thereunder.

(k) For a period of five years after each Closing Date, the
Company will furnish to the Representatives copies of all reports and
communications delivered to shareholders or holders of any of the
Securities as a class and will also furnish copies of all reports
(excluding exhibits, unless requested by the Representatives) filed
with the Commission on Forms 8-K, 10-Q and 10-K.

(l) In the event that the Securities being issued and sold
pursuant to this Agreement are Common Shares or Common Share Warrants,
for a period of 90 days from the date of this Agreement, the Company
will not, without the Representatives' prior written consent, directly
or indirectly, sell, offer to sell, grant any option for the sale of,
enter into an agreement to sell, or otherwise dispose of, any
Securities to which this Agreement relates or securities similar to
such Securities, or any securities convertible into or exercisable for
any such Securities or any such similar securities, except for
Securities sold pursuant to this Agreement, securities issued upon
conversion of Securities issued under this Agreement, securities
issued upon conversion of securities issued by the Company that are
outstanding on the date of this Agreement, and Common Shares issued
pursuant to employee benefit, executive compensation and dividend
reinvestment plans of the Company, and the Company will not file a
registration statement under the Act with respect to any such
Securities, or securities similar to such securities of the Company,
held by others.

(m) In the event that the Securities being issued and sold
pursuant to this Agreement are Securities other than Common Shares or
Common Share Warrants, for a period of [___] days from the date of
this Agreement, the Company will not, without the Representatives'
prior written consent, directly or indirectly, sell, offer to sell,
grant any option for the sale of, enter into an agreement to sell, or
otherwise dispose of, any Securities to which this Agreement relates
or securities similar to such Securities, or any securities
convertible into or exchangeable or exercisable for any such
Securities or any such similar securities, except for Securities sold
pursuant to this Agreement and securities issued upon conversion of
Securities issued under this Agreement, and the Company will not file
a registration statement under the Act with respect to any such
Securities or securities similar to such securities of the Company
held by others.

(n) If necessary or otherwise required, the Company will comply
with all of the provisions of Section 517.075 of the Florida Statutes,
and all rules and regulations promulgated thereunder, relating to
issuers doing business in Cuba.

SECTION 5. Payment of Expenses. The Company will pay all
expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing, filing and
delivery of the registration statement (as originally filed) and all
amendments thereto, (ii) the preparation, issuance and delivery to the

Underwriters of the certificates for the Securities, (iii) the fees
and disbursements of the Company's counsel and accountants, (iv) the
qualification of the Securities under applicable state securities laws
in accordance with the provisions of Section 4(f), including filing
fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the
preparation of any Blue Sky Survey or Legal Investment Survey, (v) the
printing and delivery to the Underwriters in quantities as hereinabove
stated of copies of the registration statement (as originally filed)
and any amendments thereto, and of the Final Prospectus and any
amendments or supplements thereto, (vi) the printing and delivery to
the Underwriters of copies of the applicable Indenture and any Blue
Sky Survey or Legal Investment Survey, (vii) the fees, if any, charged
by nationally recognized statistical rating organizations for the
rating of the Securities, or (viii) if applicable, the cost of
qualifying the Securities with the Depository Trust Company, (ix) the
fees and expenses, if any, incurred in connection with the listing of
the Securities on any securities exchange, (x) the fees and expenses
of the Trustees, if any, including the fees and disbursements of
counsel for the Trustees in connection with the Indentures and the
Securities, and (xi) the fees, if any, of the National Association of
Securities Dealers, Inc.

If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 6 or Section 10(i), the
Company shall reimburse the Underwriters named in this Agreement for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.

SECTION 6. Conditions of Underwriters' Obligations. The
obligations of the Underwriters hereunder are subject to the accuracy
of the representations and warranties on the part of the Company
herein contained, to the accuracy of the statements of the Company's
officers made in any certificate furnished pursuant to the provisions
hereof, to the performance by the Company of its obligations,
covenants and agreements hereunder, and to the following further
conditions:

(a) The Final Prospectus shall have been filed with the
Commission pursuant to Rule 424 under the Act not later than 5:30
p.m., New York City time, on the second business day following the
date hereof; and at the applicable Closing Date (i) no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the Act or proceedings therefor initiated or
threatened by the Commission and any request on the part of the
Commission for additional information shall have been complied with to
the satisfaction of counsel for the Underwriters, (ii) except where
the only Securities are Common Shares or Common Shares Warrants, the
rating assigned by any nationally recognized securities rating agency
to any debt securities or preferred shares of the Company as of the
date of this Agreement shall not have been lowered since the execution
of this Agreement and no such agency shall have publicly announced

that it has placed any of such debt securities or preferred shares on
what is commonly termed a "watch list" for possible downgrading, and
(iii) there shall not have come to the attention of the
Representatives any facts that cause them, after disclosing such facts
to, and discussing them with, the Company, reasonably to believe that
the Final Prospectus, at the time it was required to be delivered to a
purchaser of the Securities, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in light of the circumstances existing
at such time, not misleading.

(b) At the applicable Closing Date, the Representatives shall
have received:

(1) The favorable opinion, dated as of the applicable
Closing Date, of Schiff Hardin & Waite, counsel for the
Company, in form and substance satisfactory to counsel for
the Underwriters, with such specificity as is necessary to
reflect particularly the Securities purchased on such
Closing Date to the effect set forth in Exhibit A hereto:

(2) The favorable opinion, dated as of the applicable
Closing Date, of Ronald R. Snyder, Esq., Vice President,
General Counsel and Secretary of the Company, in form and
substance satisfactory to counsel for the Underwriters, to
the effect set forth in Exhibit B hereto.

(3) The favorable opinion or opinions, dated as of the
applicable Closing Date, of counsel for the Underwriters,
with respect to the incorporation of the Company, the
validity of the Securities being sold at the Closing Date,
the Registration Statement, the Final Prospectus and other
related matters as the Underwriters may reasonably request,
and such counsel shall have received such papers and
information as they reasonably request to enable them to
pass upon such matters. In giving their opinion, such
counsel may rely as to matters of Indiana corporate law upon
the opinion of Schiff Hardin & Waite.

(c) At the applicable Closing Date there shall not have been,
since the date of this Agreement or since the respective dates as of
which information is given in the Registration Statement and the Final
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or
a Vice President of the Company and of the Chief Financial Officer,
Chief Accounting Officer or Treasurer of the Company, dated as of such
Closing Date, to the effect that (i) there has been no such material
adverse change; (ii) the representations and warranties in Section 1
are true and correct with the same force and effect as though

expressly made again at and as of such Closing Date; (iii) the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to such Closing Date;
and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission.

(d) At the time of the execution of this Agreement, the
Representatives shall have received from Pricewaterhouse Coopers LLP
and any other independent certified public accountants who have
reviewed financial statements included in the Registration Statement
or the Final Prospectus letters, dated as of the date of this
Agreement and as of the applicable Closing Date, in form and substance
satisfactory to the Representatives containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement
and the Final Prospectus.

(e) At the applicable Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
require for the purpose of enabling them to pass upon the issuance and
sale of the Securities as herein contemplated and related proceedings,
or in order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall
be satisfactory in form and substance to the Representatives and
counsel for the Underwriters.

(f) If any of the Securities are to be listed on the New York
Stock Exchange, Inc. or any other national stock exchange, such
Securities shall have been duly listed, subject to notice of issuance,
on such stock exchange.

(g) The Company shall have accepted Delayed Delivery Contracts
in any case where sales of Contract Securities arranged by
Underwriters, and the parties to such Delayed Delivery Contracts, have
been approved by the Company.

(h) In the case of an offering of Debt Securities, since the
time of execution of this Agreement, there shall not have occurred a
downgrading in, or withdrawal of, the rating assigned to the
Securities or any of the Company's other securities by any such rating
organization, and no such rating organization shall have publicly
announced that it has under surveillance or review its rating of the
Securities or any of the Company's other securities.

If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time
at or prior to the applicable Closing Date, and such termination shall

be without liability of any party to any other party except as
provided in Section 5.

SECTION 7. Indemnification.

(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act as follows:

(1) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any
amendment thereto), including all documents incorporated by
reference therein, or the omission or alleged omission
therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Basic
Prospectus, any Preliminary Prospectus or the Final
Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;

(2) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such
settlement is effected with the written consent of the
Company; and

(3) against any and all expense whatsoever, as
incurred (including, subject to Section 7(c) hereof, the
fees and disbursements of counsel chosen by you) reasonably
incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (1) or
(2) above;

provided, however, that this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information

furnished to the Company by any Underwriter through you expressly for
use in the Registration Statement (or any amendment thereto) or the
Basic Prospectus, any Preliminary Prospectus or the Final Prospectus
(or any amendment or supplement thereto) and provided, further, that
the foregoing indemnity with respect to any untrue statement contained
in or any omission from the Preliminary Prospectus shall not inure to
the benefit of any Underwriter (or any person controlling such
underwriter) from whom the person asserting any such loss, liability,
claim, damage or expense purchased any of the Securities that are the
subject thereof if the Company shall sustain the burden of proving
that: (i) the untrue statement or omission contained in the
Preliminary Prospectus (excluding documents incorporated by reference)
was corrected, (ii) such person was not sent or given a copy of the
Final Prospectus (excluding documents incorporated by reference) which
corrected the untrue statement or omission at or prior to the written
confirmation of the sale of such Securities to such person if required
by applicable law, and (iii) the Company satisfied its obligation
pursuant to Section 4(c) of this Agreement to provide a sufficient
number of copies of the Final Prospectus to the Underwriters.

(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Basic
Prospectus, any Preliminary Prospectus or the Final Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by such Underwriter
through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) the Basic Prospectus, Preliminary
Prospectus or the Final Prospectus (or any amendment or supplement
thereto).

(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any
event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense
of such action. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified
parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall,

without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under
this Section 7 or Section 8 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of
such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.

SECTION 8. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then
each indemnifying party shall contribute to the aggregate amount of
such losses, liabilities, claims, damages and expenses incurred by
such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company,
on the one hand, and the Underwriters, on the other hand, from the
offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand, and the Underwriters, on the other
hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any
other relevant equitable considerations.

The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, in connection with the
offering of the Securities pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before
deducting expenses) received by the Company and the total underwriting
discount received by the Underwriters, in each case as set forth on
the cover of the Final Prospectus. The relative fault of the Company,
on the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
Section 8. The aggregate amount of losses, liabilities, claims,

damages and expenses incurred by an indemnified party and referred to
above in this Section 8 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been
required to pay by reason of any such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to
contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the
same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 8 are
several in proportion to the principal amount of Securities set forth
opposite their respective names in Schedule A hereto and not joint.

SECTION 9. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements
contained in this Agreement, or contained in certificates of officers
of the Company submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or
on behalf of any Underwriter or controlling person, or by or on behalf
of the Company, and shall survive delivery of the Securities to the
Underwriters.

SECTION 10. Termination. The Representatives may terminate
this Agreement, by notice to the Company, at any time at or prior to
the applicable Closing Date (i) if there has been, since the date of
this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or any outbreak
or escalation of hostilities or other calamity or crisis or any change
or development involving a prospective change in national or
international political, financial or economic conditions, in each
case, the effect of which is such as to make it, in the judgment of
the Representatives, impracticable to market the Securities or enforce

contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by
the Commission or the New York Stock Exchange or the Chicago Stock
Exchange, or if trading generally on the New York Stock Exchange or
the American Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been
required, by either of said exchanges or by such system or by order of
the Commission, the NASD or any other governmental authority, or (iv)
a banking moratorium has been declared by either Federal or New York
authorities. In the event of any such termination, such termination
shall be without liability of any party to any other party except as
provided in Section 5. Notwithstanding any such termination, the
provisions of Sections 7 and 8 shall remain in effect.

SECTION 11. Default. If one or more of the Underwriters shall
fail at the applicable Closing Date to purchase the Securities which
it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), then the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in
such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:

(a) if the number or aggregate principal amount, as the case may
be, of Defaulted Securities does not exceed 10% of the number or
aggregate principal amount of the Securities to be purchased pursuant
to this Agreement, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations under this Agreement bear to the underwriting obligations
of all non-defaulting Underwriters, or

(b) if the number or aggregate principal amount, as the case may
be, of Defaulted Securities exceeds 10% of the number or aggregate
principal amount of the Securities to be purchased pursuant to this
Agreement, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.

No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.

In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the
Company shall have the right to postpone the applicable Closing Date
for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Final Prospectus, or in any
other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under
this Section 11.

SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to
____________________________________________________________,
Attention: ____________________. Notices to the Company shall be
directed to it at One Noblitt Plaza, Post Office Box 3000, Columbus,
Indiana 47202, Attention: Ronald R. Snyder, Vice President, General
Counsel and Secretary, with a copy to Schiff Hardin & Waite, 6600
Sears Tower, Chicago, Illinois 60606, Attention: Frederick L.
Hartmann.

SECTION 13. Parties. This Agreement shall inure to the
benefit of and be binding upon the Underwriters and the Company and
their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm
or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors
referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their
respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.

SECTION 14. Governing Law and Time. This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed in said
State. Except as otherwise set forth herein, specified times of day
refer to New York City time.

SECTION 15. Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement among the Company and the several Underwriters.

Very truly yours,

Arvin Industries, Inc.

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

Title:
----------------------------------

The foregoing Agreement is hereby
confirmed and accepted as of the
date specified in Schedule I hereto.

[Name, address and signature block
for Underwriters or Representatives.]

For themselves and the other several
Underwriters, if any, named in
Schedule II to the foregoing Agreement.

SCHEDULE I

Debt Securities

Debt Warrants

Underwriting Agreement dated

Trustee:

Title, Purchase Price and Description of Debt Securities:
Title:

Principal amount:

Interest rate:

Interest payable:

Commencing:

Date of maturity:

Public offering price:

Purchase price:

Form of payment:

Form of Securities:

Redemption provisions:

Sinking fund requirements:

Lockup provisions:

Convertibility into other Securities:

Other provisions:

Other Provisions of or Amendments to Underwriting Agreement:

Description of Debt Warrants:

Title of Debt Warrant Agreement:

Debt Warrant Agent:

Debt Warrant exercise price and currency:

I-1

Principal amount and currency of Debt Warrant:

Securities issuable upon exercise of one Debt Warrant:

Date after which Debt Warrants may be exercised:

Expiration date:

Detachable date (if applicable):

Description of Debt Warrant Securities:

Title:

Trustee:

Principal amount and currency:

Purchase price and currency:

Sinking fund provisions:

Redemption provisions:

Other provisions:

Purchased Securities Closing Date, Time and Location:

Delayed Delivery Arrangement:

Fee:

Minimum principal amount of each contract:

Maximum aggregate principal amount of all contracts:

Modification of items to be covered by the letter from Pricewaterhouse
Coopers LLP delivered pursuant to Section 6(d) at the Closing Date:

I-2

PREFERRED SHARES

Underwriting Agreement dated

Designation, Purchase Price and Description of Preferred Shares:

Designation:

Liquidation preference per share:

Number of shares:

Purchase price per share (include accrued
dividends, if any):

Other provisions:

Over-allotment option:

Other Provisions of or Amendments to Underwriting Agreement:

Deposit Agreement: Terms and Conditions

Purchased Securities Closing Date, Time and Location:

Delayed Delivery Arrangements:

Fee:

Minimum principal amount of each contract:

Maximum aggregate principal amount of all contracts:

Convertibility into Common Shares or other securities:

Modification of items to be covered by the letter from Pricewaterhouse
Coopers LLP delivered pursuant to Section 6(d) at the Closing Date:

I-3

DEPOSITARY SHARES REPRESENTING PREFERRED SHARES

Underwriting Agreement dated

Designation, Purchase Price and Description of Preferred Shares:

Designation:

Liquidation preference per share:

Number of shares:

Purchase price per share (include accrued
dividends, if any):

Other provisions:

Over-allotment option:

Other Provisions of or Amendments to Underwriting Agreement:

Purchased Securities Closing Date, Time and Location:

Delayed Delivery Arrangements:

Fee:

Minimum principal amount of each contract:

Maximum aggregate principal amount of all contracts:

Modification of items to be covered by the letter from Pricewaterhouse
Coopers LLP delivered pursuant to Section 6(d) at the Closing Date:

I-4

PREFERRED SHARES WARRANTS

Number of Preferred Shares Warrants to be issued:

Warrant Agreement:

Form of Preferred Shares Warrants: [Registered] [Bearer]

Issuable jointly with other Securities: [Yes] [No]
[Number of Preferred Shares Warrants issued with each ________
amount or $__________ principal amount of other Securities]
[Detachable Date:]

Date from which Preferred Shares Warrants are exercisable:

Date on which Preferred Shares Warrants expire:

Exercise price(s) of Preferred Shares Warrants:

Public offering price: $______________

Purchase price: $______________

Title and terms of Preferred Shares:

Principal Amount of Preferred Shares purchasable upon exercise of one
Warrant:

Other Provisions of or Amendments to the Underwriting Agreement:

Purchased Securities Closing Date, Time and Location:

Delayed Delivery Arrangements:

I-5

COMMON SHARES

Underwriting Agreement dated

Number of shares:

Purchase price per share:

Over-allotment option:

Other Provisions of or Amendments to Underwriting Agreement:

Purchased Securities Closing Date, Time and Location:

Delayed Delivery Arrangements:

Fee:

Minimum principal amount of each contract:

Maximum principal amount of each contract:

Modification of items to be covered by the letter from Pricewaterhouse
Coopers LLP delivered pursuant to Section 6(d) at the Closing Date:

I-6

COMMON SHARES WARRANTS

Number of Common Shares Warrants to be issued:

Warrant Agreement:

Form of Common Shares Warrants: [Registered] [Bearer]

Issuable jointly with other Securities: [Yes] [No]
[Number of Common Shares Warrants issued with each _______ amount

or $__________ principal amount of other Securities]
[Detachable Date:]

Date from which Common Shares Warrants are exercisable:

Date on which Common Shares Warrants expire:

Exercise price(s) of Common Shares Warrants:

Public offering price: $______________

Purchase price: $________________

Principal Amount of Common Shares purchasable upon exercise of one
Warrant:

Other Provisions of or Amendments to the Underwriting Agreement:

Purchased Securities Closing Date, Time and Location:

Delayed Delivery Arrangements:

Fee:

Minimum principal amount of each contract:

Maximum aggregate principal amount of all contracts:

I-7

SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS

Underwriting Agreement dated

Purchase Agreement:

Share Purchase Units each consisting of a Share Purchase Contract and
a Debt Security:

Designation:

Aggregate Stated Amount:

Purchase Price:

Public Offering Price:

Share Purchase Units each consisting of a Share Purchase Contract and
a debt obligation of a third party, including a U.S. Treasury
security:

Designation:

Aggregate Stated Amount:

Purchase Price:

Public Offering Price:

Other provisions:

I-8

UNITS

Title and principal amount of Debt Securities or title and number of
Preferred Shares or Common Shares and title and number of Warrants
included in one Unit:

Purchase Price and currency:

Detachable Date:

Other provisions:

I-9

SCHEDULE II

Debt Securities/Debt Warrants

Firm Name $Amount<*>
------------- -------------------

Total ______________

$_____________

ALL OTHER SECURITIES

Firm Name Participation*
----------- -------------------

Total ______________

$______________

<*> If Option Securities are offered, should include the minimum
and maximum principal amount or number of Securities, as the
case may be.

II-1

SCHEDULE III

FORM OF DELAYED DELIVERY CONTRACT

__________________, 19__

[Name and address of Underwriters
or Representatives]

Dear Sirs:

The undersigned hereby agrees to purchase from Arvin Industries,
Inc. (the "Company"), and the Company agrees to sell to the
undersigned, on ____________, 19__, (the "Delivery Date"),
____________ [aggregate principal amount] [number of
[shares][warrants]] of the Company's [title of securities] (the
"Securities") offered by the Company's Prospectus, dated
______________, 19__, and Prospectus Supplement, dated __________,
19__, receipt of a copy of which is hereby acknowledged, at a purchase
price of [____% of the] [principal amount thereof, plus accrued
interest (amortization of original issue discount), if any, thereon
from ___________, 19__ to the date of payment and delivery]
[liquidation preference thereof or shares represented thereby, plus
accrued dividends, if any, thereon from _____________, 19__ to the
date of payment and delivery] [_________ per Debt Warrant, Preferred
Shares Warrant or Common Shares Warrant] [$_____ per share] [other
terms], and on the further terms and conditions set forth in this
contract. Payment for the Securities to be purchased by the
undersigned shall be made on or before 11:00 A.M., New York City time,
on the Delivery Date to or upon the order of the Company by certified
or official bank check in New York Clearing House (next day) funds, at
your office or at such other place as shall be agreed between the
Company and the undersigned, upon delivery to the undersigned of the
Securities in definitive fully registered form [and in such authorized
denominations] and registered in such names [and for such number of
[shares] [warrants]] as the undersigned may request by written,
telegraphic or facsimile communication addressed to the Company not
less than five full business days prior to the Delivery Date. If no
request is received, the Securities will be registered in the name of
the undersigned and issued [for the total number of [shares]
[warrants]] [in a denomination equal to the aggregate principal amount
of Securities] to be purchased by the undersigned on the Delivery
Date.

The obligation of the undersigned to take delivery of and make
payment for Securities on the Delivery Date, and the obligation of the
Company to sell and deliver Securities on the Delivery Date, shall be
subject to the conditions (and neither party shall incur any liability
by reason of the failure thereof) that (1) the purchase of Securities
to be made by the undersigned, which purchase the undersigned

III-1

represents is not prohibited on the date hereof, shall not on the
Delivery Date be prohibited under the laws of the jurisdiction to
which the undersigned is subject, and (2) the Company, on or before
the Delivery Date, shall have sold to certain underwriters (the
"Underwriters") such [number of [shares] [warrants]] [principal
amount] of the Securities as is to be sold to them pursuant to the
Underwriting Agreement referred to in the Prospectus and Prospectus
Supplement mentioned above. Promptly after completion of such sale to
the Underwriters, the Company will mail or deliver to the undersigned
at its address set forth below notice to such effect, accompanied by a
copy of the opinion of counsel for the Company delivered to the
Underwriters in connection therewith. The obligation of the
undersigned to take delivery of and make payment for the Securities,
and the obligation of the Company to cause the Securities to be sold
and delivered, shall not be affected by the failure of any purchaser
to take delivery of and make payment for the Securities pursuant to
other contracts similar to this contract.

This contract will inure to the benefit of and be binding upon
the parties hereto and their respective successors, but will not be
assignable by either party hereto without the written consent of the
other.

It is understood that acceptance of this contract and other
similar contracts is in the Company's sole discretion and, without
limiting the foregoing, need not be on a first come, first served
basis. If this contract is acceptable to the Company, it is required
that the Company sign the form of acceptance below and mail or deliver
one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company
and the undersigned, as of the date first above written, when such
counterpart is so mailed or delivered.

This agreement shall be governed by and construed in accordance
with the laws of the State of New York.

Very truly yours,

[Name of Purchaser]

By: ______________________
[Title of Officer]
[Address]

Accepted:

Arvin Industries, Inc.

By: ____________________________
[Authorized Signature]

III-2

EXHIBIT 4-9

ARVIN INDUSTRIES, INC.

AND

_________________________

AS PURCHASE CONTRACT AGENT

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

FORM OF PURCHASE CONTRACT AGREEMENT

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

DATED AS OF
------------

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

TABLE OF CONTENTS

Page
----
RECITALS

ARTICLE I Definitions and Other Provisions of General Applications. 1
Section 1.1. Definitions. . . . . . . . . . . . .. . . . . . 1
Section 1.2. Compliance Certificates and Opinions. . . . . . 6
Section 1.3. Form of Documents Delivered to Agent. . . . . . 6
Section 1.4. Acts of Holders; Record Dates . . . . . . . . . 6
Section 1.5. Notices . . . . . . . . . . . . . . . . . . . . 7
Section 1.6. Notice to Holders; Waiver . . . . . . . . . . . 7
Section 1.7. Effect of Headings and Table of Contents . . . 8
Section 1.8. Successors and Assigns . . . . . . . . . . . . 8
Section 1.9. Separability Clause . . . . . . . . . . . . . . 8
Section 1.10. Benefits of Agreement . . . . . . . . . . . . . 8
Section 1.11. Governing Law . . . . . . . . . . . . . . . . . 8
Section 1.12. Legal Holidays . . . . . . . . . . . . . . . . 8
Section 1.13. Counterparts . . . . . . . . . . . . . . . . . 8
Section 1.14. Inspection of Agreement . . . . . . . . . . . . 8

ARTICLE II Certificate Forms . . . . . . . . . . . . . . . . . . . 9
Section 2.1. Forms of Certificates Generally . . . . . . . . 9
Section 2.2. Form of Agent's Certificate of Authentication . 9

ARTICLE III The Securities . . . . . . . . . . . . . . . . . . . . 9
Section 3.1. Title and Terms; Denominations . . . . . . . . 9
Section 3.2. Rights and Obligations Evidenced by the
Certificates . . . . . . . . . . . . . . . . . 9
Section 3.3. Execution, Authentication, Delivery and Dating 10
Section 3.4. Temporary Certificates . . . . . . . . . . . . 10
Section 3.5. Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . 11
Section 3.6. Book-Entry Interests . . . . . . . . . . . . . 11
Section 3.7. Notices to Holders . . . . . . . . . . . . . . 12
Section 3.8. Appointment of Successor Clearing Agency . . . 12
Section 3.9. Definitive Certificates . . . . . . . . . . . . 12
Section 3.10. Mutilated, Destroyed, Lost and Stolen
Certificates . . . . . . . . . . . . . . . . . 12
Section 3.11. Persons Deemed Owners . . . . . . . . . . . . . 13
Section 3.12. Cancellation . . . . . . . . . . . . . . . . . 13
Section 3.13. Establishment or Reestablishment of Type B
Securities . . . . . . . . . . . . . . . . . . 13
Section 3.14. Establishment or Reestablishment of Type A
Securities . . . . . . . . . . . . . . . . . . 14
Section 3.15. Transfer of Collateral upon Occurrence of
Termination Event . . . . . . . . . . . . . . . 15
Section 3.16. No Consent to Assumption . . . . . . . . . . . 15

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ARTICLE IV The Debt Securities . . . . . . . . . . . . . . . . . . 16
Section 4.1. Payment of Interest; Rights to Interest Preserved
Interest Rate Reset Notice . . . . . . . . . . 16
Section 4.2. Notice and Voting . . . . . . . . . . . . . . . 16
Section 4.3. Tax Event Redemption . . . . . . . . . . . . . 17

ARTICLE V The Purchase Contracts . . . . . . . . . . . . . . . . . 17
Section 5.1. Purchase of Common Shares . . . . . . . . . . . 17
Section 5.2. Contract Adjustment Payments . . . . . . . . . 18
Section 5.3. Deferral of Payment Dates For Contract Adjustment
Payments . . . . . . . . . . . . . . . . . . . 18
Section 5.4. Payment of Purchase Price . . . . . . . . . . . 19
Section 5.5. Issuance of Common Shares . . . . . . . . . . . 21
Section 5.6. Adjustment of Settlement Rate . . . . . . . . . 21
Section 5.7. Notice of Adjustments and Certain Other Events 24
Section 5.8. Termination Event; Notice . . . . . . . . . . . 25
Section 5.9. Early Settlement . . . . . . . . . . . . . . . 25
Section 5.10. No Fractional Shares . . . . . . . . . . . . . 26
Section 5.11. Charges and Taxes . . . . . . . . . . . . . . . 26

ARTICLE VI Remedies . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.1. Unconditional Right of Holders to Receive Contract
Adjustment Payments and to Purchase Common Shares
26
Section 6.2. Restoration of Rights and Remedies . . . . . . 26
Section 6.3. Rights and Remedies Cumulative . . . . . . . . 27
Section 6.4. Delay or Omission Not Waiver . . . . . . . . . 27
Section 6.5. Undertaking for Costs . . . . . . . . . . . . . 27
Section 6.6. Waiver of Stay or Extension Laws . . . . . . . 27

ARTICLE VII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.1. Certain Duties and Responsibilities . . . . . . 27
Section 7.2. Notice of Default . . . . . . . . . . . . . . . 28
Section 7.3. Certain Rights of Agent . . . . . . . . . . . . 28
Section 7.4. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . 28
Section 7.5. May Hold Securities . . . . . . . . . . . . . . 28
Section 7.6. Money Held in Custody . . . . . . . . . . . . . 29
Section 7.7. Compensation and Reimbursement . . . . . . . . 29
Section 7.8. Corporate Agent Required; Eligibility . . . . . 29
Section 7.9. Resignation and Removal; Appointment of Successor
29
Section 7.10. Acceptance of Appointment by Successor . . . . 30
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . 30
Section 7.12. Preservation of Information; Communications to
Holders . . . . . . . . . . . . . . . . . . . . 30
Section 7.13. No Obligations of Agent . . . . . . . . . . . . 30
Section 7.14. Tax Compliance . . . . . . . . . . . . . . . . 31

ARTICLE VIII Supplemental Agreements . . . . . . . . . . . . . . . 31
Section 8.1. Supplemental Agreements Without Consent of
Holders . . . . . . . . . . . . . . . . . . . . 31
Section 8.2. Supplemental Agreements with Consent of Holders 31

-ii-

Section 8.3. Execution of Supplemental Agreements . . . . . 32
Section 8.4. Effect of Supplemental Agreements . . . . . . . 32
Section 8.5. Reference to Supplemental Agreements . . . . . 32

ARTICLE IX Consolidation, Merger, Sale or Conveyance . . . . . . . 32
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions . . . 32
Section 9.2. Rights and Duties of Successor Corporation . . 32
Section 9.3. Opinion of Counsel Given to Agent . . . . . . . 33

ARTICLE X Covenants . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.1. Performance Under Purchase Contracts . . . . . 33
Section 10.2. Maintenance of Office or Agency . . . . . . . . 33
Section 10.3. Company to Reserve Common Shares . . . . . . . 33
Section 10.4. Covenants as to Common Shares . . . . . . . . . 33

EXHIBIT A Form of Type A Certificate
EXHIBIT B Form of Type B Certificate
EXHIBIT C Instruction to Collateral Agent
EXHIBIT D Instruction to Purchase Contract Agent
EXHIBIT E Notice to Settle with Separate Cash

-iii-

FORM OF PURCHASE CONTRACT AGREEMENT, dated as of ______, ____,
between Arvin Industries, Inc., an Indiana corporation (the
"Company"), and _______________________________, acting as purchase
contract agent for the Holders of Securities from time to time (the
"Agent").

RECITALS

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

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

WITNESSETH:

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

ARTICLE I

Definitions and Other Provisions
of General Applications

Section 1.1.Definitions.

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

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

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

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

(d) the following terms have the meanings given to them in the
Officer's Certificate: (i) Applicable Ownership Interest; (ii)
Applicable Principal Amount; (iii) Purchase Contract Settlement Date;
(iv) Redemption Amount; (v) Redemption Price; (vi) Reset Announcement
Date; (vii) Reset Rate; (viii) Reset Spread; (ix) Tax Event; (x) Tax
Event Redemption; (xi) Tax Event Redemption Date; (xii) Two-Year
Benchmark Treasury; and (xiii) Treasury Portfolio; and

(e) the following terms have the meanings given to them in this
Section 1.1(e).

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

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

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

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

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

"Authorized Officer" means the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer,
or any other officer or agent of the Company duly authorized by the
Board of Directors to act in respect of matters relating to this
Agreement.

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

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

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

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

"Book-Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be

-2-

maintained and made through book entries by a Clearing Agency as
described in Section 3.6.

"Business Day" means any day other than a Saturday, Sunday
or any other day on which banking institutions in ____________________
(in the State of ___________________) are permitted or required by any
applicable law to close.

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

"Certificate" means a Type A Certificate or a Type B
Certificate.

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

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

"Closing Price" has the meaning specified in Section 5.1.

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

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

"Collateral Substitution" has the meaning specified in
Section 3.13.

"Common Shares" means the Common Shares, $2.50 par value, of
the Company.

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

"Company Certificate" means a certificate signed by an
Authorized Officer and delivered to the Agent.

-3-

"Contract Adjustment Payments" means the fee payable by the
Company in respect of each Purchase Contract issued in connection with
Type B Securities, equal to % per annum of the Stated ___________
Amount, computed on the basis of a 360 day year of twelve 30 day
months, plus any Deferred Contract Adjustment Payments accrued
pursuant to Section 5.2.

"Corporate Trust Office" means the principal corporate trust
office of the Agent at which, at any particular time, its corporate
trust business shall be administered, which office at the date hereof
is located at _______________________________.

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

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

"Debt Securities" means the series of debt securities of the
Company designated the _________% Senior Notes due _________, to be
issued under the Indenture as of the date hereof.

"Deferred Contract Adjustment Payments" has the meaning
specified in Section 5.3.

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

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

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

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

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

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

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

"Expiration Date" has the meaning specified in Section 1.4.

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

-4-

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

"Global Debt Security Certificate" means a certificate
evidencing the rights and obligations of a Holder in respect of the
number of Debt Securities specified on such certificate and which is
registered in the name of a Clearing Agency or a nominee thereof.

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

"Holder," when used with respect to a Security, means the
Person in whose name the Security evidenced by an Type A Certificate
and/or a Type B Certificate is registered in the related Type A
Register and/or the Type B Register, as the case may be.

"Indenture" means _______________________________.

"Indenture Trustee" means___________________, as trustee
under the Indenture, or any successor thereto.

"Issuer Order" or "Issuer Request" means a written order or
request signed in the name of the Company by an Authorized Officer and
delivered to the Agent.

"NYSE" has the meaning specified in Section 5.1.

"Officer's Certificate" means a certificate signed by an
authorized signatory of the Company establishing the terms of the debt
securities of any series pursuant to the Indenture.

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

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

(i) If a Termination Event has occurred, (A) Type B
Securities and (B) Type A Securities for which the Stated Amount of
the related Debt Security or the appropriate Applicable Ownership
Interest of the Treasury Portfolio has been theretofore deposited with
the Agent in trust for the Holders of such Type A Securities;

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

-5-

(iii) Type A Securities and Type B Securities evidenced
by Certificates in exchange for or in lieu of which other Certificates
have been authenticated, executed on behalf of the Holder and
delivered pursuant to this Agreement, other than any such Certificate
in respect of which there shall have been presented to the Agent proof
satisfactory to it that such Certificate is held by a bona fide
purchaser in whose hands the Type A Securities or Type B Securities
evidenced by such Certificate are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite number of the Type A Securities or Type B Securities have
given any request, demand, authorization, direction, notice, consent
or waiver hereunder, Type A Securities or Type B Securities owned by
the Company or any Affiliate of the Company shall be disregarded and
deemed not to be outstanding, except that, in determining whether the
Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Type A
Securities or Type B Securities which a Responsible Officer of the
Agent knows to be so owned shall be so disregarded. Type A Securities
or Type B Securities so owned which have been pledged in good faith
may be regarded as Outstanding Securities if the pledgee establishes
to the satisfaction of the Agent the pledgee's right so to act with
respect to such Type A Securities or Type B Securities and that the
pledgee is not the Company or any Affiliate of the Company.

"Payment Date" means each _________________________,
commencing ________________, ____.

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

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

"Pledge" means the pledge under the Pledge Agreement of the
Debt Securities, the Treasury Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, in each case
constituting a part of the Securities.

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

"Predecessor Certificate" means a Predecessor Type A
Certificate or a Predecessor Type B Certificate.

"Predecessor Type A Certificate" of any particular Type A
Certificate means every previous Type A Certificate evidencing all or

-6-

a portion of the rights and obligations of the Company and the Holder
under the Type A Security evidenced thereby; and, for the purposes of
this definition, any Type A Certificate authenticated and delivered
under Section 3.10 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Type A Certificate shall be deemed to
evidence the same rights and obligations of the Company and the Holder
as the mutilated, destroyed, lost or stolen Type A Certificate.

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

"Proceeds" has the meaning set forth in Section 1 of the
Pledge Agreement.

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

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

"Purchase Price" has the meaning specified in Section 5.1.

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

"Record Date" for the distribution and Contract Adjustment
Payments payable on any Payment Date means, as to any Global
Certificate, the Business Day next preceding such Payment Date, and as
to any other Certificate, a day selected by the Company which shall be
more than one Business Day but less than 60 Business Days prior to
such Payment Date.

"Register" means the Type A Register and the Type B
Register.

"Registrar" means the Type A Registrar and the Type B
Registrar.

"Remarketing Agent" has the meaning specified in Section
5.4.

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"Remarketing Agreement" means the Remarketing Agreement
dated _____________, ____ by and between the Company, the Trust, the
Remarketing Agent and the Purchase Contract Agent.

"Remarketing Fee" has the meaning specified in Section 5.4.

"Remarketing Underwriting Agreement" has the meaning
specified in the Remarketing Agreement.

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

"Responsible Officer," when used with respect to the Agent,
means any officer of the Agent assigned by the Agent to administer its
corporate trust matters.

"Security" means a Type A Security or a Type B Security.

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

"Settlement Rate" has the meaning specified in Section 5.1.

"Stated Amount" means $___________.

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

"Termination Event" means the occurrence of any of the
following events: (i) at any time on or prior to the Purchase Contract
Settlement Date, a judgment, decree or court order shall have been
entered granting relief under the Bankruptcy Code, adjudicating the
Company to be insolvent, or approving as properly filed a petition
seeking reorganization or liquidation of the Company or any other
similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the
Purchase Contract Settlement Date, such decree or order shall have
continued undischarged and unstayed for a period of 60 days; or (ii)
at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the
Company or of its property, or for the winding up or liquidation of
its affairs, shall have been entered, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the
Purchase Contract Settlement Date, such judgment, decree or order
shall have continued undischarged and unstayed for a period of 60
days; or (iii) at any time on or prior to the Purchase Contract
Settlement Date the Company shall file a petition for relief under the
Bankruptcy Code, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent

-8-

seeking reorganization or liquidation under the Bankruptcy Code or any
other similar applicable Federal or State law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or shall make an assignment for
the benefit of creditors, or shall admit in writing its inability to
pay its debts generally as they become due.

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

"TIA" means the Trust Indenture Act of 1939, as amended, or
any successor statute.

"Trading Day" has the meaning specified in Section 5.1.

"Treasury Security" means zero-coupon U.S. Treasury
Securities (CUSIP Number _________________) which are the principal
strip of the U.S. Treasury Securities which mature on
__________________.

"Type A Certificate" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Type A
Securities specified on such certificate.

"Type A Register" and "Type A Registrar" have the respective
meanings specified in Section 3.5.

"Type A Security" means the collective rights and
obligations of a Holder of a Type A Certificate in respect of a Debt
Security or an appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, subject in each case to the
Pledge thereof, and the related Purchase Contract.

"Type B Certificate" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Type B
Security specified on such certificate.

"Type B Register" and "Type B Registrar" have the respective
meanings specified in Section 3.5.

"Type B Security" means, following the substitution of one
or more Treasury Securities for Debt Securities or for the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, as
collateral to secure a holder's obligations under a Purchase Contract,
the collective rights and obligations of a holder of a Type B
Certificate in respect of such Treasury Securities, subject in each
case to the Pledge thereof, and the related Purchase Contract.

"Underwriting Agreement" means the Underwriting Agreement
dated ______________, ____ among the Company,
______________________________ and _______________________________.

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

Section 1.2. Compliance Certificates and Opinions.

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

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

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

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

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

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

Section 1.3. Form of Documents Delivered to Agent.

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

Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or

-10-

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

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

Section 1.4. Acts of Holders; Record Dates.

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

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

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

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

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

Section 1.5. Notices.

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

(1) the Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to the

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Agent at __________________, Attention: _________________, or at any
other address previously furnished in writing by the Agent to the
Holders and the Company; or

(2) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to the
Company at Arvin Industries, Inc., One Noblitt Plaza, Box 3000,
Columbus, Indiana 47202, Attention: Secretary, or at any other address
previously furnished in writing to the Agent by the Company; or

(3) the Collateral Agent by the Agent, the Company or any Holder
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or filed in
writing and personally delivered or mailed, first-class postage
prepaid, addressed to the Collateral Agent at _______________________,
or at any other address previously furnished in writing by the Collateral
Agent to the Agent, the Company and the Holders; or

(4) the Indenture Trustee by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing and personally delivered
or mailed, first-class postage prepaid, addressed to the Indenture
Trustee at ___________________________, Attention: -------------------
other address previously furnished in writing by the Indenture Trustee
to the Company.

Section 1.6. Notice to Holders; Waiver.

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

In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the

-13-

approval of the Agent shall constitute a sufficient notification for
every purpose hereunder.

Section 1.7. Effect of Headings and Table of Contents.

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

Section 1.8. Successors and Assigns.

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

Section 1.9. Separability Clause.

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

Section 1.10. Benefits of Agreement.

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

Section 1.11. Governing Law.

THIS AGREEMENT AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF _____________.

Section 1.12. Legal Holidays.

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

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In any case where any Purchase Contract Settlement Date shall not
be a Business Day, then (notwithstanding any other provision of th^G50
is Agreement, the Type A Certificates or the Type B Certificates), the
Purchase Contracts shall not be performed on such date, but the
Purchase Contracts shall be performed on the immediately following
Business Day with the same force and effect as if performed on the
Purchase Contract Settlement Date.

Section 1.13. Counterparts.

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

Section 1.14. Inspection of Agreement.

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

ARTICLE II

Certificate Forms

Section 2.1. Forms of Certificates Generally.

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

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

The Type B Certificates (including the form of Purchase Contracts
forming part of the Type B Securities evidenced thereby) shall be in
substantially the form set forth in Exhibit B hereto, with such
letters, numbers or other marks of identification or designation and
such legends or endorsements printed, lithographed or engraved thereon
as may be required by the rules of any securities exchange on which
the Type B Securities may be listed or any depositary therefor, or as

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may, consistently herewith, be determined by the officers of the
Company executing such Type B Certificates, as evidenced by their
execution of the Type B Certificates.

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

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

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

Section 2.2. Form of Agent's Certificate of Authentication.

The form of the Agent's certificate of authentication of the Type
A Securities shall be in substantially the form set forth on the form
of the Type A Certificates.

The form of the Agent's certificate of authentication of the Type
B Securities shall be in substantially the form set forth on the form
of the Type B Certificates.

ARTICLE III

The Securities

Section 3.1. Title and Terms; Denominations.

The aggregate number of Type A Securities and Type B Securities
evidenced by Certificates authenticated, executed on behalf of the
Holders and delivered hereunder is limited to except for Certificates
authenticated, executed and delivered upon registration of transfer
of, in exchange for, or in lieu of, other Certificates pursuant to
Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9 or 8.5.

The Certificates shall be issuable only in registered form and
only in denominations of a single Type A Security or Type B Security
and any integral multiple thereof.

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Section 3.2. Rights and Obligations Evidenced by the Certificates.

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

Each Type B Certificate shall evidence the number of Type B
Securities specified therein, with each such Type B Security
representing the ownership by the Holder thereof of a 1/100 undivided
beneficial interest in a Treasury Security with a principal amount
equal to $1,000 subject to the Pledge of such Treasury Security by
such Holder pursuant to the Pledge Agreement, and the rights and
obligations of the Holder thereof and the Company under one Purchase
Contract.

Section 3.3. Execution, Authentication, Delivery and Dating.

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

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

Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication

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and delivery of such Certificates or did not hold such offices at the
date of such Certificates.

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

Each Certificate shall be dated the date of its authentication.

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

Section 3.4. Temporary Certificates.

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

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

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Securities, as the case may be, evidenced thereby as definitive
Certificates.

Section 3.5. Registration; Registration of Transfer and Exchange.

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

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

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

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

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

No service charge shall be made for any registration of transfer
or exchange of a Certificate, but the Company and the Agent may
require payment from the Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with
any registration of transfer or exchange of Certificates, other than

-19-

any exchanges pursuant to Sections 3.6 and 8.5 not involving any
transfer.

Notwithstanding the foregoing, the Company shall not be obligated
to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder and deliver
any Certificate presented or surrendered for registration of transfer
or for exchange on or after the Business Day immediately preceding the
earlier of the Purchase Contract Settlement Date or the Termination
Date. In lieu of delivery of a new Certificate, upon satisfaction of
the applicable conditions specified above in this Section and receipt
of appropriate registration or transfer instructions from such Holder,
the Agent shall (i) if the Purchase Contract Settlement Date has
occurred, deliver the Common Shares issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate, (ii) in the case of Type A Securities, if a Termination
Event shall have occurred prior to the Purchase Contract Settlement
Date, transfer the aggregate Stated Amount of the Debt Securities or
the Treasury Portfolio, as applicable, evidenced thereby, or (iii) in
the case of Type B Securities, if a Termination Event shall have
occurred prior to the Purchase Contract Settlement Date, transfer the
Treasury Securities evidenced thereby, in each case subject to the
applicable conditions and in accordance with the applicable provisions
of Article Five hereof.

Section 3.6. Book-Entry Interests.

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

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

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

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

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(d) the rights of the Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Beneficial Owners and the Clearing
Agency and/or the Clearing Agency Participants. The Clearing Agency
will make book entry transfers among Clearing Agency Participants and
receive and transmit payments of Contract Adjustment Payments to such
Clearing Agency Participants.

Section 3.7. Notices to Holders.

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

Section 3.8. Appointment of Successor Clearing Agency.

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

Section 3.9. Definitive Certificates.

If (i) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities and a successor
Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 3.8, (ii) the Company elects to
terminate the book-entry system through the Clearing Agency with
respect to the Securities, or (iii) there shall have occurred and be
continuing a default by the Company in respect of its obligations
under one or more Purchase Contracts, then upon surrender of the
Global Certificates representing the Book-Entry Interests with respect
to the Securities by the Clearing Agency, accompanied by registration
instructions, the Company shall cause definitive Certificates to be
delivered to Beneficial Owners in accordance with the instructions of
the Clearing Agency. The Company shall not be liable for any delay in
delivery of such instructions and may conclusively rely on and shall
be protected in relying on, such instructions.

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

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

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

Notwithstanding the foregoing, the Company shall not be obligated
to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder, and
deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earlier of the Purchase Contract Settlement
Date or the Termination Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified
above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the
Purchase Contract Settlement Date has occurred, deliver the Common
Shares issuable in respect of the Purchase Contracts forming a part of
the Securities evidenced by such Certificate, or (ii) if a Termination
Event shall have occurred prior to the Purchase Contract Settlement
Date, transfer the Debt Securities, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or the Treasury
Securities, as the case may be, evidenced thereby, in each case
subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.

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

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

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

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Section 3.11. Persons Deemed Owners.

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

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

Section 3.12. Cancellation.

All Certificates surrendered for delivery of Common Shares on or
after the Purchase Contract Settlement Date, upon the transfer of Debt
Securities, the appropriate Applicable Ownership Interest of the
Treasury Portfolio or Treasury Securities, as the case may be, after
the occurrence of a Termination Event or pursuant to an Early
Settlement, or upon the registration of a transfer or exchange of a
Security, or a Collateral Substitution or the re-establishment of a
Type A Security shall, if surrendered to any Person other than the
Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to
the Agent for cancellation any Certificates previously authenticated,
executed and delivered hereunder which the Company may have acquired
in any manner whatsoever, and all Certificates so delivered shall,
upon Issuer Order, be promptly cancelled by the Agent. No Certificates
shall be authenticated, executed on behalf of the Holder and delivered
in lieu of or in exchange for any Certificates cancelled as provided
in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates held by the Agent shall upon written request be
returned to the Company.

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

Section 3.13. Establishment or Reestablishment of Type B Securities.

A Holder may separate the Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as
applicable, from the related Purchase Contracts in respect of a Type A
Security by substituting for such Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, Treasury Securities in an aggregate principal amount equal to
the aggregate principal amount of such Debt Securities or for the
aggregate Stated Amount of the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as applicable (a "Collateral
Substitution"), at any time from and after the date of this Agreement
and on or prior to the fifth Business Day immediately preceding the
Purchase Contract Settlement Date in the case of the Debt Securities
and on or prior to the second Business Day immediately preceding the
Purchase Contract Settlement Date in the case of the appropriate
Applicable Ownership Interest of the Treasury Portfolio, in each case
by (a) depositing with the Collateral Agent Treasury Securities having
an aggregate principal amount equal to the aggregate principal amount
of the Debt Securities comprising part of such Type A Securities or
for the aggregate Stated Amount of the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio comprising part of such Type A
Securities, as the case may be, and (b) (i) by delivering cash in an
amount equal to the excess of the Contract Adjustment Payments that
would have accrued since the last Payment Date through the date of
substitution on the Type B Securities being created by the holder,
over the Contract Adjustment Payments that have accrued over the same
time period on the related Type A Securities, which amount the Agent
shall promptly remit to the Company, and (ii) transferring the related
Type A Securities to the Agent accompanied by a notice to the Agent,
substantially in the form of Exhibit D hereto, stating that the Holder
has transferred the relevant amount of Treasury Securities to the
Collateral Agent and requesting that the Agent instruct the Collateral
Agent to release the Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,
underlying such Type A Securities, whereupon the Agent shall promptly
give such instruction to the Collateral Agent, substantially in the
form of Exhibit C hereto. Upon receipt of the Treasury Securities
described in clause (a) above and the instruction described in clause
(b) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release to the Agent, on behalf of the Holder,
Debt Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, having a corresponding
aggregate principal amount of such Debt Securities or aggregate Stated
Amount of the appropriate Applicable Ownership Interest (as specified

-24-

in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, from the Pledge, free and clear of the
Company's security interest therein, and upon receipt thereof the
Agent shall promptly:

(i) cancel the related Type A Securities;

(ii) transfer the Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, to the Holder; and

(iii) authenticate, execute on behalf of such Holder and
deliver a Type B Certificate executed by the Company in accordance
with Section 3.3 evidencing the same number of Purchase Contracts as
were evidenced by the cancelled Type A Securities.

Holders who elect to separate the Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, from the related Purchase Contract and to
substitute Treasury Securities for such Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, shall be responsible for any fees or expenses
payable to the Collateral Agent for its services as Collateral Agent
in respect of the substitution, and the Company shall not be
responsible for any such fees or expenses.

Holders may make Collateral Substitutions (i) only in integral
multiples of ______ Type A Securities if Debt Securities are being
substituted by Treasury Securities, or (ii) only in integral multiples
of _______ Type A Securities if the appropriate Applicable Ownership
Interests of the Treasury Portfolio are being substituted by Treasury
Securities.

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

Except as described in this Section 3.13, for so long as the
Purchase Contract underlying a Type A Security remains in effect, such

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Type A Security shall not be separable into its constituent parts, and
the rights and obligations of the Holder in respect of the Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, and Purchase Contract
comprising such Type A Security may be acquired, and may be
transferred and exchanged, only as a Type A Security.

Section 3.14. Establishment or Reestablishment of Type A Securities.

A Holder of a Type B Security may create or recreate Type A
Securities at any time on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, if a Tax
Event Redemption has not occurred, and (ii) on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement
Date, if a Tax Event Redemption has occurred, in each case by (a)
depositing with the Collateral Agent Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, having an aggregate principal amount in the case
of the Debt Securities, or an aggregate Stated Amount of the
appropriate Applicable Ownership Interest (as defined in clause (A) of
the definition of such term) of the Treasury Portfolio, as the case
may be, equal to the aggregate principal amount of the Treasury
Securities comprising part of the Type B Securities and (b)
transferring the related Type B Securities to the Agent accompanied by
a notice to the Agent, substantially in the form of Exhibit D hereto,
stating that the Holder has transferred the relevant amount of Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, to the Collateral Agent and
requesting that the Agent instruct the Collateral Agent to release the
Treasury Securities underlying such Type B Securities, whereupon the
Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit C hereto. Upon receipt of the
Debt Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, described in clause (a)
above and the instruction described in clause (b) above, in accordance
with the terms of the Pledge Agreement, the Collateral Agent will
effect the release of the Treasury Securities having a corresponding
aggregate principal amount from the Pledge to the Agent free and clear
of the Company's security interest therein, and upon receipt thereof
the Agent shall promptly:

(i) cancel the related Type B Security;

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

(iii) authenticate, execute on behalf of such Holder and
deliver an Type A Certificate executed by the Company in accordance
with Section 3.3 evidencing the same number of Purchase Contracts as
were evidenced by the cancelled Type B Securities.

Holders who elect to separate Treasury Securities from the
related Purchase Contract and to substitute Debt Securities for such

-26-

Treasury Securities shall be responsible for any fees or expenses
payable to the Collateral Agent for its services as Collateral Agent
in respect of the substitution, and the Company shall not be
responsible for any such fees or expenses.

Holders of Type B Securities may establish or reestablish Type A
Securities in integral multiples of _______ Type B Securities for
_______ Type A Securities if a Tax Event Redemption has not occurred,
and in integral multiples of ________ Type B Securities for _______
Type A Securities if a Tax Event Redemption has occurred.

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

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

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

Upon the occurrence of a Termination Event and the transfer to
the Agent of the Debt Securities, the appropriate Applicable Ownership
Interest of the Treasury Portfolio or the Treasury Securities, as the
case may be, underlying the Type A Securities and the Type B
Securities pursuant to the terms of the Pledge Agreement, the Agent
shall request transfer instructions with respect to such Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio or Treasury Securities, as the case may be, from
each Holder by written request mailed to such Holder at its address as
it appears in the Type A Register or the Type B Register, as the case
may be. Upon book-entry transfer of the Type A Securities or Type B
Securities or delivery of a Type A Certificate or Type B Certificate
to the Agent with such transfer instructions, the Agent shall transfer
the Debt Securities, the Treasury Portfolio or Treasury Securities, as
the case may be, underlying such Type A Securities or Type B
Securities, as the case may be, to such Holder by book-entry transfer,
or other appropriate procedures, in accordance with such instructions.

-27-

In the event a Holder of Type A Securities or Type B Securities fails
to effect such transfer or delivery, the Debt Securities, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or
Treasury Securities, as the case may be, underlying such Type A
Securities or Type B Securities, as the case may be, and any interest
thereon, shall be held in the name of the Agent or its nominee in
trust for the benefit of such Holder, until such Type A Securities or
Type B Securities are transferred or the Type A Certificate or Type B
Certificate is surrendered or such Holder provides satisfactory
evidence that such Type A Certificate or Type B Certificate has been
destroyed, lost or stolen, together with any indemnity that may be
required by the Agent and the Company.

Section 3.16. No Consent to Assumption.

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

ARTICLE IV

The Debt Securities

Section 4.1. Payment of Interest; Rights to Interest Preserved;
Interest Rate Reset; Notice.

A payment of interest on any Debt Securities or distribution with
respect to the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, which is paid on any Payment
Date shall, subject to receipt thereof by the Agent from the
Collateral Agent as provided by the terms of the Pledge Agreement, be
paid to the Person in whose name the Type A Certificate (or one or
more Predecessor Type A Certificates) of which such Debt Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, is a part is registered at the close of
business on the Record Date for such Payment Date.

Each Type A Certificate evidencing Debt Securities delivered
under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Type A Certificate shall carry the rights
to payment of interest accrued and unpaid, and to accrue interest,
which is carried by the Debt Securities underlying such other Type A
Certificate.

In the case of any Type A Security with respect to which Cash
Settlement of the underlying Purchase Contract is effected on the
Business Day immediately preceding the Purchase Contract Settlement
Date pursuant to prior notice, or with respect to which Early

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

The applicable Coupon Rate on the Debt Securities on and after
the Purchase Contract Settlement Date will be reset on the third
Business Day immediately preceding the Purchase Contract Settlement
Date to the Reset Rate (such Reset Rate to be in effect on and after
the Purchase Contract Settlement Date). On the Reset Announcement Date
the Reset Spread and the Two-Year Benchmark Treasury to be used to
determine the Reset Rate will be announced by the Company. On the
Business Day immediately following the Reset Announcement Date, the
Debt Securities Holders will be notified of such Reset Spread and
Two-Year Benchmark Treasury by the Company. Such notice shall be
sufficiently given to Holders of Debt Securities if published in the
____________ newspaper in ______________.

Not later than 7 calendar days nor more than 15 calendar days
prior to the Reset Announcement Date, the Company will notify the DTC
or its nominee (or any successor Clearing Agency or its nominee) by
first-class mail, postage prepaid, to notify the Beneficial Owners or
Clearing Agency Participants holding Type A Securities or Type B
Securities, of such Reset Announcement Date and the procedures to be
followed by such Holders of Type Securities A who intend to settle
their obligation under the Purchase Contract with separate cash on the
Purchase Contract Settlement Date.

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Section 4.2. Notice and Voting.

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

Section 4.3. Tax Event Redemption.

Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable on the
Tax Event Redemption Date with respect to the Applicable Principal
Amount of Debt Securities shall be delivered to the Collateral Agent
in exchange for the Pledged Debt Securities. Thereafter, pursuant to
the terms of the Pledge Agreement, the Collateral Agent will apply an
amount equal to the Redemption Amount of such Redemption Price to
purchase on behalf of the Holders of Type A Securities the Treasury
Portfolio and promptly remit the remaining portion of such Redemption
Price to the Agent for payment to the Holders of such Type A
Securities. The Treasury Portfolio will be substituted for the Pledged
Debt Securities, and will be held by the Collateral Agent in
accordance with the terms of the Pledge Agreement to secure the
obligation of each Holder of a Type A Security to purchase the Common
Shares of the Company under the Purchase Contract constituting a part
of such Type A Security. Following the occurrence of a Tax Event
Redemption prior to the Purchase Contract Settlement Date, the Holders
of Type A Securities and the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury
Portfolio as the Holder of Type A Securities and the Collateral Agent

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had in respect of the Debt Security subject to the Pledge thereof as
provided in Articles II, III, IV, V, and VI of the Pledge Agreement,
and any reference herein to the Debt Securities shall be deemed to be
reference to such Treasury Portfolio. The Company may cause to be made
in any Type A Certificates thereafter to be issued such change in
phraseology and form (but not in substance) as may be appropriate to
reflect the liquidation of the Trust and the substitution of the
Treasury Portfolio for Debt Securities as collateral.

ARTICLE V

The Purchase Contracts

Section 5.1. Purchase of Common Shares.

Each Purchase Contract shall, unless an Early Settlement has
occurred in accordance with Section 5.9 hereof, obligate the Holder of
the related Security to purchase, and the Company to sell, on the
Purchase Contract Settlement Date at a price equal to the Stated
Amount (the "Purchase Price"), a number of newly issued Common Shares
equal to the Settlement Rate unless, on or prior to the Purchase
Contract Settlement Date, there shall have occurred a Termination
Event with respect to the Security of which such Purchase Contract is
a part. The "Settlement Rate" is equal to (a) if the Applicable Market
Value (as defined below) is equal to or greater than $_______________
(the "Threshold Appreciation Price"), ______ Common Shares per
Purchase Contract, (b) if the Applicable Market Value is less than the
Threshold Appreciation Price, but is greater than $_______, the number
of Common Shares equal to the Stated Amount divided by the Applicable
Market Value and (c) if the Applicable Market Value is less than or
equal to $_________, _____Common Shares per Purchase Contract, in each
case subject to adjustment as provided in Section 5.6 (and in each
case rounded upward or downward to the nearest 1/10,000th of a share).
As provided in Section 5.10, no fractional Common Shares will be
issued upon settlement of Purchase Contracts.

The "Applicable Market Value" means the average of the Closing
Price per Common Share on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Purchase
Contract Settlement Date. The "Closing Price" of the Common Shares on
any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common
Shares on the New York Stock Exchange (the "NYSE") on such date or, if
the Common Shares are not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the NYSE. A
"Trading Day" means a day on which the Common Shares (A) are not
suspended from trading on any national or regional securities exchange
or association and (B) has traded at least once on the national or
regional securities exchange or association that is the primary market
for the trading of the Common Shares.

-31-

Each Holder of a Type A Security or a Type B Security, by its
acceptance thereof, irrevocably authorizes the Agent to enter into and
perform the related Purchase Contract on its behalf as its
attorney-in-fact (including the execution of Certificates on behalf of
such Holder), agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase
Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent as its attorney-in-fact to enter into and perform
the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Debt
Securities, the Treasury Portfolio or the Treasury Securities pursuant
to the Pledge Agreement; provided that upon a Termination Event, the
rights of the Holder of such Security under the Purchase Contract may
be enforced without regard to any other rights or obligations. Each
Holder of a Type A Security or a Type B Security, by its acceptance
thereof, further covenants and agrees, that, to the extent and in the
manner provided in Section 5.4 and the Pledge Agreement, but subject
to the terms thereof, payments in respect of the Stated Amount of the
Debt Securities or the Proceeds of the Treasury Securities or the
Treasury Portfolio on the Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of such
Holder's obligations under such Purchase Contract and such Holder
shall acquire no right, title or interest in such payments.

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

Section 5.2. Contract Adjustment Payments.

Subject to Section 5.3 herein, the Company shall pay, on each
Payment Date, the Contract Adjustment Payments payable in respect of
each Purchase Contract to the Person in whose name a Certificate (or
one or more Predecessor Certificates) is registered at the close of
business on the Record Date next preceding such Payment Date. The
Contract Adjustment Payments will be payable at the office of the
Agent in _____________________ maintained for that purpose or, at the
option of the Company, by check mailed to the address of the Person
entitled thereto at such Person's address as it appears on the Type A
Register or Type B Register.

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

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Each Certificate delivered under this Agreement upon registration
of transfer of or in exchange for or in lieu of (including as a result
of a Collateral Substitution or the re-establishment of a Type A
Security) any other Certificate shall carry the rights to Contract
Adjustment Payments accrued and unpaid, and to accrue Contract
Adjustment Payments, which were carried by the Purchase Contracts
underlying such other Certificates.

Subject to Section 5.9, in the case of any Security with respect
to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date that is after any Record Date and
on or prior to the next succeeding Payment Date, Contract Adjustment
Payments, if any, otherwise payable on such Payment Date shall be
payable on such Payment Date notwithstanding such Early Settlement,
and such Contract Adjustment Payments shall be paid to the Person in
whose name the Certificate evidencing such Security (or one or more
Predecessor Certificates) is registered at the close of business on
such Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security with
respect to which Early Settlement of the underlying Purchase Contract
is effected on an Early Settlement Date, Contract Adjustment Payments
that would otherwise be payable after the Early Settlement Date with
respect to such Purchase Contract shall not be payable.

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

Section 5.3. Deferral of Payment Dates For Contract Adjustment
Payments.

The Company shall have the right, at any time prior to the
Purchase Contract Settlement Date, to defer the payment of any or all
of the Contract Adjustment Payments otherwise payable on any Payment
Date, but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the
amount to be deferred) at least ten Business Days prior to the earlier
of (i) the next succeeding Payment Date or (ii) the date the Company
is required to give notice of the Record Date or Payment Date with
respect to payment of such Contract Adjustment Payments to the NYSE or
other applicable self-regulatory organization or to Holders of the
Securities, but in any event not less than one Business Day prior to
such Record Date. Any Contract Adjustment Payments so deferred shall
bear additional Contract Adjustment Payments thereon at the rate of
% per annum (computed on the basis of 360 day year of twelve --- 30
day months), compounding on each succeeding Payment Date, until paid
in full (such deferred installments of Contract Adjustment Payments
together with the additional Contract Adjustment Payments accrued
thereon, being referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments shall be due on the
next succeeding Payment Date except to the extent that payment is
deferred pursuant to this Section. No Contract Adjustment Payments may

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be deferred to a date that is after the Purchase Contract Settlement
Date. If the Purchase Contracts are terminated upon the occurrence of
a Termination Event, the Holder's right to receive Contract Adjustment
Payments and Deferred Contract Adjustment Payments will terminate.

In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
Purchase Contract Settlement Date, each Holder will receive on the
Purchase Contract Settlement Date in lieu of a cash payment a number
of Common Shares (in addition to a number of Common Shares equal to
the Settlement Rate) equal to (x) the aggregate amount of Deferred
Contract Adjustment Payments payable to such Holder divided by (y) the
Applicable Market Value.

No fractional Common Shares will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the
Purchase Contract Settlement Date. In lieu of fractional shares
otherwise issuable with respect to such payment of Deferred Contract
Adjustment Payments, the Holder will be entitled to receive an amount
in cash as provided in Section 5.10.

In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred
Contract Adjustment Payments have been paid, the Company shall not
declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital shares or make guarantee payments with
respect to the foregoing (other than (i) purchases or acquisitions of
capital shares of the Company in connection with the satisfaction by
the Company of its obligations under any employee benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event requiring
the Company to purchase capital shares of the Company, (ii) as a
result of a reclassification of the Company's capital shares or the
exchange or conversion of one class or series of the Company's capital
shares for another class or series of the Company's capital shares,
(iii) the purchase of fractional interests in the Company's capital
shares pursuant to the conversion or exchange provisions of such
capital shares or the security being converted or exchanged, (iv)
dividends or distributions in capital shares of the Company (or rights
to acquire capital shares) or repurchases or redemptions of capital
shares solely from the issuance or exchange of capital shares or (v)
redemptions or repurchases of any rights outstanding under a
shareholder rights plan or the declaration thereunder of a dividend of
rights in the future).

Section 5.4. Payment of Purchase Price.

(a) (i) Unless a Tax Event Redemption has occurred or a Holder
settles the underlying Purchase Contract through the early delivery of
cash to the Purchase Contract Agent in the manner described in Section
5.9, each Holder of a Type A Security must notify the Agent by use of

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a notice in substantially the form of Exhibit E hereto of its
intention to pay in cash ("Cash Settlement") the Purchase Price for
the Common Shares to be purchased pursuant to a Purchase Contract.
Such notice shall be made on or prior to 5:00 p.m., __________________
time, on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date. The Agent shall promptly notify the Collateral
Agent of the receipt of such a notice from a Holder intending to make a
Cash Settlement.

(ii) A Holder of a Type A Security who has so notified the
Agent of its intention to make a Cash Settlement is required to pay
the Purchase Price to the Collateral Agent prior to 11:00 a.m.,
______________________ time, on the Business Day immediately preceding
the Purchase Contract Settlement Date in lawful money of the United
States by certified or cashiers' check or wire transfer, in each case
in immediately available funds payable to or upon the order of the
Company. Any cash received by the Collateral Agent will be invested
promptly by the Collateral Agent in Permitted Investments and paid to
the Company on the Purchase Contract Settlement Date in settlement of
the Purchase Contract in accordance with the terms of this Agreement
and the Pledge Agreement. Any funds received by the Collateral Agent
in respect of the investment earnings from the investment in such
Permitted Investments, will be distributed to the Agent when received
for payment to the Holder.

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

(b) In order to dispose of the Debt Securities of Type A
Security Holders who have not notified the Agent of their intention to
effect a Cash Settlement as provided in paragraph (a)(i) above, the
Company shall engage a nationally recognized investment bank (the
"Remarketing Agent") pursuant to the Remarketing Agreement to sell
such Debt Securities. In order to facilitate the remarketing, the
Agent shall notify, by 10:00 a.m., ____________________ time, on the
fourth Business Day immediately preceding the Purchase Contract
Settlement Date, the Remarketing Agent of the aggregate number of Debt
Securities to be remarketed. Concurrently, the Collateral Agent,
pursuant to the terms of the Pledge Agreement, will present for
remarketing such Debt Securities to the Remarketing Agent. Upon

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receipt of such notice from the Agent and such Debt Securities from
the Collateral Agent, the Remarketing Agent will, on the third
Business Day immediately preceding the Purchase Contract Settlement
Date, use its reasonable efforts to remarket such Debt Securities on
such date at a price of approximately ________% (but not less than
100%) of the aggregate principal amount of such Debt Securities, plus
accrued and unpaid interest (including deferred interest), if any,
thereon. After deducting as the remarketing fee ("Remarketing Fee") an
amount not exceeding ______ basis points of the aggregate principal
amount of the remarketed Debt Securities from any amount of such
proceeds in excess of the aggregate principal amount of the remarketed
Debt Securities plus accrued and unpaid interest (including any
deferred interest), if any, then the Remarketing Agent will remit the
entire amount of the proceeds from such remarketing to the Collateral
Agent. Such portion of the proceeds, equal to the aggregate principal
amount of such Debt Securities, will automatically be applied by the
Collateral Agent, in accordance with the Pledge Agreement to satisfy
in full such Type A Security holders' obligations to pay the Purchase
Price for the Common Shares under the related Purchase Contracts on
the Purchase Contract Settlement Date. Any proceeds in excess of those
required to pay the Purchase Price and the Remarketing Fee will be
remitted to the Agent for payment to the Holders of the related Type A
Security. Type A Security Holders whose Debt Securities are so
remarketed will not otherwise be responsible for the payment of any
Remarketing Fee in connection therewith. If, in spite of using its
reasonable efforts, the Remarketing Agent cannot remarket the related
Debt Securities of such Holders of Type A Securities at a price not
less than 100% of the aggregate principal amount of such Debt
Securities plus accrued and unpaid interest (including deferred
interest), if any, the remarketing will be deemed to have failed (a
"Failed Remarketing") and in accordance with the terms of the Pledge
Agreement the Collateral Agent for the benefit of the Company will
exercise its rights as a secured party with respect to such Debt
Securities, including those actions specified in paragraph (c) below;
provided, that if upon a Failed Remarketing the Collateral Agent
exercises such rights for the benefit of the Company with respect to
such Debt Securities, any accrued and unpaid interest (including any
deferred interest) on such Debt Securities will become payable by the
Company to the Agent for payment to the Holder of the Type A
Securities to which such Debt Securities relates. Such payment will be
made by the Company on or prior to 11 a.m. ________________________
time on the Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire transfer in
immediately available funds payable to or upon the order of the Agent.
The Company will cause a notice of such Failed Remarketing to be
published on the Second Business Day immediately preceding the
Purchase Contract Settlement Date in a daily newspaper in the English
language of general circulation in _________________________, which is
expected to be The Wall Street Journal.

(c) With respect to any Debt Securities beneficially owned by
Holders who have elected Cash Settlement but failed to deliver cash as

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required in (a)(ii) above, or with respect to Debt Securities which
are subject to a Failed Remarketing, the Collateral Agent for the
benefit of the Company reserves all of its rights as a secured party
with respect thereto and, subject to applicable law and paragraph (h)
below, may, among other things, (i) retain the Debt Securities in full
satisfaction of the Holders obligations under the Purchase Contracts
or (ii) sell the Debt Securities in one or more public or private
sales.

(d) (i) Unless a Holder of Type B Securities or Type A
Securities (if a Tax Event Redemption has occurred) settles the
underlying Purchase Contract through the early delivery of cash to the
Purchase Contract Agent in the manner described in Section 5.9, each
Holder of a Type B Security or Type A Security (if a Tax Event
Redemption has occurred) must notify the Agent by use of a notice in
substantially the form of Exhibit E hereto of its intention to pay in
cash the Purchase Price for the Common Shares to be purchased pursuant
to a Purchase Contract on or prior to 5:00 p.m., _______________________
time, on the second Business Day immediately preceding the Purchase
Contract Settlement Date.

(ii) A Holder of a Type B Security or Type A Security (if a
Tax Event Redemption has occurred) who has so notified the Agent of
its intention to make a Cash Settlement in accordance with paragraph
(d)(i) above is required to pay the Purchase Price to the Collateral
Agent prior to 11:00 a.m., ___________________________ time, on the
Business Day immediately preceding the Purchase Contract Settlement
Date in lawful money of the United States by certified or cashiers'
check or wire transfer, in each case in immediately available funds
payable to or upon the order of the Company. Any cash received by the
Collateral Agent will be invested promptly by the Collateral Agent in
Permitted Investments and paid to the Company on the Purchase Contract
Settlement Date in settlement of the Purchase Contract in accordance
with the terms of this Agreement and the Pledge Agreement. Any funds
received by the Collateral Agent in respect of the investment earnings
from the investment in such Permitted Investments will be distributed
to the Agent when received for payment to the Holder.

(iii) If a Holder of a Type B Security fails to notify
the Agent of its intention to make a Cash Settlement in accordance
with paragraph (d)(i) above, or if a Holder of a Type A Security (if
a Tax Event Redemption has occurred) does notify the Agent as provided
in paragraph (d)(i) above its intention to pay the Purchase Price in
cash, but fails to make such payment as required by paragraph (d)(ii)
above, then upon the maturity of the Pledged Treasury Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, held by the Collateral Agent on the
Business Day immediately prior to the Purchase Contract Settlement
Date, the principal amount of the Treasury Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, received by the Collateral Agent will be invested
promptly in overnight Permitted Investments. On the Purchase Contract

-37-

Settlement Date an amount equal to the Purchase Price will be remitted
to the Company as payment thereof without receiving any instructions
from the Holder. In the event the sum of the proceeds from the related
Pledged Treasury Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, and the
investment earnings earned from such investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled
thereby, the Collateral Agent will distribute such excess to the Agent
for the benefit of the Holder of the related Type B Security or Type A
Security when received.

(e) Any distribution to Holders of excess funds and interest
described above, shall be payable at the office of the Agent in
______________________ maintained for that purpose or, at the option
of the Holder, by check mailed to the address of the Person entitled
thereto at such address as it appears on the Register.

(f) Unless a Holder settles the underlying Purchase Contract
through the early delivery of cash to the Collateral Agent in the
manner described herein, the Company shall not be obligated to issue
any Common Shares in respect of a Purchase Contract or deliver any
certificate therefor to the Holder unless it shall have received
payment in full of the Purchase Price for the Common Shares to be
purchased thereunder in the manner herein set forth.

(g) Upon Cash Settlement of any Purchase Contract, (i) the
Collateral Agent will in accordance with the terms of the Pledge
Agreement cause the Pledged Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, or the Pledged Treasury Securities underlying the relevant
Security to be released from the Pledge by the Collateral Agent free
and clear of any security interest of the Company and transferred to
the Agent for delivery to the Holder thereof or its designee as soon
as practicable and (ii) subject to the receipt thereof from the
Collateral Agent, the Agent shall, by book-entry transfer, or other
appropriate procedures, in accordance with instructions provided by
the Holder thereof, transfer such Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, or such Treasury Securities (or, if no such instructions are
given to the Agent by the Holder, the Agent shall hold such Debt
Securities or the Treasury Portfolio, as the case may be, or such
Treasury Securities, and any distribution thereon, in the name of the
Agent or its nominee in trust for the benefit of such Holder).

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

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Section 5.5. Issuance of Common Shares.

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

Section 5.6. Adjustment of Settlement Rate.

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

(1) In case the Company shall pay or make a dividend or
other distribution on the Common Shares in Common Shares, the
Settlement Rate, as in effect at the opening of business on the day
following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be
increased by dividing such Settlement Rate by a fraction of which the
numerator shall be the number of Common Shares outstanding at the
close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution,

-39-

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

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

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

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

(5) In case the Company shall, (I) by dividend or
otherwise, distribute to all holders of its Common Shares cash
(excluding any cash that is distributed in a Reorganization Event to
which Section 5.6(b) applies or as part of a distribution referred to
in paragraph (4) of this Section) in an aggregate amount that,
combined together with (II) the aggregate amount of any other
distributions to all holders of its Common Shares made exclusively in
cash within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to this
paragraph (5) or paragraph (6) of this Section has been made and (III)
the aggregate of any cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) of consideration payable in respect
of any tender or exchange offer by the Company or any of its
subsidiaries for all or any portion of the Common Shares concluded
within the 12 months preceding the date of payment of the distribution
described in clause (I) above and in respect of which no adjustment
pursuant to this paragraph (5) or paragraph (6) of this Section has
been made, exceeds 15% of the product of the Current Market Price per
Common Share on the date for the determination of holders of Common
Shares entitled to receive such distribution times the number of
Common Shares outstanding on such date, then, and in each such case,
immediately after the close of business on such date for
determination, the Settlement Rate, shall be increased so that the
same shall equal the rate determined by dividing the Settlement Rate
in effect immediately prior to the close of business on the date fixed
for determination of the shareholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal
to the Current Market Price per Common Share on the date fixed for

-41-

such determination less an amount equal to the quotient of (x) the
combined amount distributed or payable in the transactions described
in clauses (I), (II) and (III) above and (y) the number of Common
Shares outstanding on such date for determination and (ii) the
denominator of which shall be equal to the Current Market Price per
Common Share on such date for determination.

(6) In case (I) a tender or exchange offer made by the
Company or any subsidiary of the Company for all or any portion of the
Common Shares shall expire and such tender or exchange offer (as
amended upon the expiration thereof) shall require the payment to
shareholders (based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of Purchased Shares) of an
aggregate consideration having a fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and
described in a Board Resolution), as of the expiration of such tender
or exchange offer, of consideration payable in respect of any other
tender or exchange offer, by the Company or any subsidiary of the
Company for all or any portion of the Common Shares expiring within
the 12 months preceding the expiration of such tender or exchange
offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the
aggregate amount of any distributions to all holders of the Company's
Common Shares made exclusively in cash within the 12 months preceding
the expiration of such tender or exchange offer and in respect of
which no adjustment pursuant to paragraph (5) of this Section or this
paragraph (6) has been made, exceeds 15% of the product of the Current
Market Price per Common Share as of the last time (the "Expiration
Time") tenders could have been made pursuant to such tender or
exchange offer (as it may be amended) times the number of Common
Shares outstanding (including any tendered shares) on the Expiration
Time, then, and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the
Settlement Rate, shall be adjusted so that the same shall equal the
rate determined by dividing the Settlement Rate immediately prior to
the close of business on the date of the Expiration Time by a fraction
(i) the numerator of which shall be equal to (A) the product of (I)
the Current Market Price per Common Share on the date of the
Expiration Time and (II) the number of Common Shares outstanding
(including any tendered shares) on the Expiration Time less (B) the
amount of cash plus the fair market value (determined as aforesaid) of
the aggregate consideration payable to shareholders based on the
transactions described in clauses (I), (II) and (III) above (assuming
in the case of clause (I) the acceptance, up to any maximum specified
in the terms of the tender or exchange offer, of Purchased Shares),
and (ii) the denominator of which shall be equal to the product of (A)
the Current Market Price per Common Share as of the Expiration Time
and (B) the number of Common Shares outstanding (including any
tendered shares) as of the Expiration Time less the number of all

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

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

(8) The "Current Market Price" per Common Share on any day
means the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing not more than 30
Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex date" with respect to the
issuance or distribution requiring such computation. For purposes of
this paragraph, the term "ex date", when used with respect to any
issuance or distribution, shall mean the first date on which the
Common Shares trade in a regular way on such exchange or in such
market without the right to receive such issuance or distribution.

(9) All adjustments to the Settlement Rate, shall be
calculated to the nearest 1/10,000th of a Common Share (or if there is
not a nearest 1/10,000th of a share to the next lower 1/10,000th of a
share). No adjustment in the Settlement Rate shall be required unless
such adjustment would require an increase or decrease of at least one
percent therein; provided, however, that any adjustments which by
reason of this subparagraph are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
If an adjustment is made to the Settlement Rate pursuant to paragraph
(1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an
adjustment shall also be made to the Applicable Market Value solely to
determine which of clauses (a), (b) or (c) of the definition of
Settlement Rate in Section 5.1 will apply on the Purchase Contract
Settlement Date. Such adjustment shall be made by multiplying the
Applicable Market Value by a fraction of which the numerator shall be
the Settlement Rate immediately after such adjustment pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section
5.6(a) and the denominator shall be the Settlement Rate immediately

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before such adjustment; provided, however, that if such adjustment to
the Settlement Rate is required to be made pursuant to the occurrence
of any of the events contemplated by paragraph (1), (2), (3), (4),
(5), (7) or (10) of this Section 5.6(a) during the period taken into
consideration for determining the Applicable Market Value, appropriate
and customary adjustments shall be made to the Settlement Rate.

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

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

In the event of (i) any consolidation or merger of the
Company with or into another Person (other than a merger or
consolidation in which the Company is the continuing corporation and
in which the Common Shares outstanding immediately prior to the merger
or consolidation are not exchanged for cash, securities or other
property of the Company or another corporation), (ii) any sale,
transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any
statutory exchange of securities of the Company with another Person
(other than in connection with a merger or acquisition) or (iv) any
liquidation, dissolution or winding up of the Company other than as a
result of or after the occurrence of a Termination Event (any such
event, a "Reorganization Event"), the Settlement Rate will be adjusted
to provide that each Holder of Securities will receive on the Purchase
Contract Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities, cash and
other property receivable upon such Reorganization Event (without any
interest thereon, and without any right to dividends or distribution
thereon which have a record date that is prior to the Purchase
Contract Settlement Date) by a Holder of the number of Common Shares
issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date had occurred immediately prior to such Reorganization
Event assuming such Holder of Common Shares is not a Person with which
the Company consolidated or into which the Company merged or which
merged into the Company or to which such sale or transfer was made, as
the case may be (any such Person, a "Constituent Person"), or an
Affiliate of a Constituent Person to the extent such Reorganization
Event provides for different treatment of Common Shares held by
Affiliates of the Company and non-affiliates and such Holder failed to
exercise its rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such
Reorganization Event (provided that if the kind or amount of
securities, cash and other property receivable upon such
Reorganization Event is not the same for each Common Share held

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immediately prior to such Reorganization Event by other than a
Constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Section the kind and amount of
securities, cash and other property receivable upon such
Reorganization Event by each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the
non-electing shares). In the event of such a Reorganization Event, the
Person formed by such consolidation, merger or exchange or the Person
which acquires the assets of the Company or, in the event of a
liquidation or dissolution of the Company, the Company or a
liquidating trust created in connection therewith, shall execute and
deliver to the Agent an agreement supplemental hereto providing that
the Holders of each Outstanding Security shall have the rights
provided by this Section 5.6. Such supplemental agreement shall
provide for adjustments which, for events subsequent to the effective
date of such supplemental agreement, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section.
The above provisions of this Section shall similarly apply to
successive Reorganization Events.

Section 5.7. Notice of Adjustments and Certain Other Events.

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

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

(ii) within 10 Business Days following the occurrence of an
event that requires an adjustment to the Settlement Rate pursuant to
Section 5.6 (or if the Company is not aware of such occurrence, as
soon as practicable after becoming so aware), provide a written notice
to the Holders of the Securities of the occurrence of such event and a
statement in reasonable detail setting forth the method by which the
adjustment to the Settlement Rate was determined and setting forth the
adjusted Settlement Rate.

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

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deliver any Common Shares pursuant to a Purchase Contract or to comply
with any of the duties, responsibilities or covenants of the Company
contained in this Article.

Section 5.8. Termination Event; Notice.

The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without limitation, the
rights of the Holders to receive and the obligation of the Company to
pay any Contract Adjustment Payments or Deferred Contract Adjustment
Payments, if the Company shall have such obligation, and the rights
and obligations of Holders to purchase Common Shares, shall
immediately and automatically terminate, without the necessity of any
notice or action by any Holder, the Agent or the Company, if, on or
prior to the Purchase Contract Settlement Date, a Termination Event
shall have occurred. Upon and after the occurrence of a Termination
Event, the Securities shall thereafter represent the right to receive
the Debt Securities or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, forming a part of such
Securities in the case of Type A Securities, or Treasury Securities in
the case of Type B Securities, in accordance with the provisions of
Section 4.3 of the Pledge Agreement. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event later
than two Business Days thereafter give written notice to the Agent,
the Collateral Agent and to the Holders, at their addresses as they
appear in the Register.

Section 5.9. Early Settlement.

(a) Subject to and upon compliance with the provisions of this
Section 5.9, at the option of the Holder thereof, Purchase Contracts
underlying Securities, having an aggregate Stated Amount equal to
$1,000 or an integral multiple thereof, may be settled early ("Early
Settlement") in the case of Type A Securities (unless a Tax Event
Redemption has occurred) on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date and in the
case of Type B Securities on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, in each
case, as provided herein; provided however, that if a Tax Event
Redemption has occurred and the Treasury Portfolio has become a
component of the Type A Securities, Purchase Contracts underlying Type
A Securities may be settled early, on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date, but
only in an aggregate amount of $____________ or in an integral
multiple thereof. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts, the Holder of the
Certificate evidencing Securities shall deliver such Certificate to
the Agent at the Corporate Trust Office duly endorsed for transfer to
the Company or in blank with the form of Election to Settle Early on
the reverse thereof duly completed and accompanied by payment (payable
to the Company in immediately available funds in an amount (the "Early
Settlement Amount") equal to (i) the product of (A) the Stated Amount

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times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement plus (ii) if such
delivery is made with respect to any Purchase Contracts during the
period from the close of business on any Record Date next preceding
any Payment Date to the opening of business on such Payment Date, an
amount equal to the sum of (x) the Contract Adjustment Payments
payable on such Payment Date with respect to such Purchase Contracts
plus (y) in the case of Type A Certificate, the payment of interest on
the related Debt Securities payable on such Payment Date. Except as
provided in the immediately preceding sentence and subject to the
second to last paragraph of Section 5.2, no payment or adjustment
shall be made upon Early Settlement of any Purchase Contract on
account of any Contract Adjustment Payments accrued on such Purchase
Contract or on account of any dividends on the Common Shares issued
upon such Early Settlement. If the foregoing requirements are first
satisfied with respect to Purchase Contracts underlying any Securities
at or prior to 5:00 p.m., ________________ time, on a Business Day,
such day shall be the "Early Settlement Date" with respect to such
Securities and if such requirements are first satisfied after 5:00
p.m., _______________ time, on a Business Day or on a day that is not
a Business Day, the "Early Settlement Date" with respect to such
Securities shall be the next succeeding Business Day.

(b) Upon Early Settlement of Purchase Contracts by a Holder of
the related Securities, the Company shall issue, and the Holder shall
be entitled to receive, Common Shares on account of each Purchase
Contract as to which Early Settlement is effected (the "Early
Settlement Rate"); provided, however, that upon the Early Settlement
of the Purchase Contracts, the Holder of such related Securities will
forfeit the right to receive any Deferred Contract Adjustment
Payments. The Early Settlement Rate shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted. As
promptly as practicable after Early Settlement of Purchase Contracts
in accordance with the provisions of this Section 5.9, the Company
shall issue and shall deliver to the Agent at the Corporate Trust
Office a certificate or certificates for the full number of Common
Shares issuable upon such Early Settlement together with payment in
lieu of any fraction of a share, as provided in Section 5.10.

(c) No later than the third Business Day after the applicable
Early Settlement Date the Company shall cause (i) the Common Shares
issuable upon Early Settlement of Purchase Contracts to be issued and
delivered, and (ii) the related Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, in the case
of Type A Securities, or the related Treasury Securities, in the case
of Type B Securities, to be released from the Pledge by the Collateral
Agent and transferred, in each case to the Agent for delivery to the
Holder thereof or its designee.

(d) Upon Early Settlement of any Purchase Contracts, and subject
to receipt of Common Shares from the Company and the Debt Securities,
the appropriate Applicable Ownership Interest of the Treasury

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Portfolio or Treasury Securities, as the case may be, from the
Collateral Agent, as applicable, the Agent shall, in accordance with
the instructions provided by the Holder thereof on the applicable form
of Election to Settle Early on the reverse of the Certificate
evidencing the related Securities, (i) transfer to the Holder the Debt
Securities, Treasury Portfolio or Treasury Securities, as the case may
be, forming a part of such Securities, and (ii) deliver to the Holder
a certificate or certificates for the full number of Common Shares
issuable upon such Early Settlement together with payment in lieu of
any fraction of a share, as provided in Section 5.10.

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

Section 5.10. No Fractional Shares.

No fractional shares or scrip representing fractional Common
Shares shall be issued or delivered upon settlement on the Purchase
Contract Settlement Date or upon Early Settlement of any Purchase
Contracts. If Certificates evidencing more than one Purchase Contract
shall be surrendered for settlement at one time by the same Holder,
the number of full Common Shares which shall be delivered upon
settlement shall be computed on the basis of the aggregate number of
Purchase Contracts evidenced by the Certificates so surrendered.
Instead of any fractional Common Shares which would otherwise be
deliverable upon settlement of any Purchase Contracts on the Purchase
Contract Settlement Date or upon Early Settlement, the Company,
through the Agent, shall make a cash payment in respect of such
fractional interest in an amount equal to the value of such fractional
shares times the Applicable Market Value. The Company shall provide
the Agent from time to time with sufficient funds to permit the Agent
to make all cash payments required by this Section 5.10 in a timely
manner.

Section 5.11. Charges and Taxes.

The Company will pay all share and similar taxes attributable to
the initial issuance and delivery of the Common Shares pursuant to the
Purchase Contracts and in payment of any Deferred Contract Adjustment
Payments; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any
exchange of or substitution for a Certificate evidencing a Security or
any issuance of a Common Share in a name other than that of the
registered Holder of a Certificate surrendered in respect of the
Securities evidenced thereby, other than in the name of the Agent, as
custodian for such Holder, and the Company shall not be required to
issue or deliver such share certificates or Certificates unless or

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until the Person or Persons requesting the transfer or issuance
thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has
been paid.

ARTICLE VI

Remedies

Section 6.1. Unconditional Right of Holders to Receive Contract
Adjustment Payments and to Purchase Common Shares.

In the event that Contract Adjustment Payments shall constitute a
component of Type A Securities or Type B Securities, the Holder of any
Type A Security or Type B Security shall have the right, which is
absolute and unconditional (subject to the right of the Company to
defer payment thereof pursuant to Section 5.3, the prepayment of
Contract Adjustment Payments pursuant to Section 5.9(a) and to the
forfeiture of any Deferred Contract Adjustment Payments upon Early
Settlement pursuant to Section 5.9(b) or upon the occurrence of a
Termination Event), to receive payment of each installment of the
Contract Adjustment Payments with respect to the Purchase Contract
constituting a part of such Security on the respective Payment Date
for such Security and to purchase Common Shares pursuant to such
Purchase Contract and, in each such case, to institute suit for the
enforcement of any such payment and right to purchase Common Shares,
and such rights shall not be impaired without the consent of such
Holder.

Section 6.2. Restoration of Rights and Remedies.

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

Section 6.3. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates in the
last paragraph of Section 3.10, no right or remedy herein conferred
upon or reserved to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or

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remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

Section 6.4. Delay or Omission Not Waiver.

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

Section 6.5. Undertaking for Costs.

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

Section 6.6. Waiver of Stay or Extension Laws.

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

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ARTICLE VII

THE AGENT

Section 7.1. Certain Duties and Responsibilities.

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

(2) The Agent may, with respect to the Securities,
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Agent and conforming to the requirements of
this Agreement, but in the case of any certificates or opinions which
by any provision hereof are specifically required to be furnished to
the Agent, the Agent shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Agreement.

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

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

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

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

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

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

Section 7.2. Notice of Default.

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

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Section 7.3. Certain Rights of Agent.

Subject to the provisions of Section 7.1:

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

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

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

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

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

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

Section 7.4. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Certificates shall be
taken as the statements of the Company and the Agent assumes no
responsibility for their accuracy. The Agent makes no representations

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as to the validity or sufficiency of either this Agreement or of the
Securities, or of the Pledge Agreement or the Pledge. The Agent shall
not be accountable for the use or application by the Company of the
proceeds in respect of the Purchase Contracts.

Section 7.5. May Hold Securities.

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

Section 7.6. Money Held in Custody.

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

Section 7.7. Compensation and Reimbursement.

The Company agrees:

(1) to pay to the Agent from time to time such compensation for
all services rendered by it hereunder as the parties shall agree from
time to time;

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

(3) to indemnify the Agent and any predecessor Agent for, and to
hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

Section 7.8. Corporate Agent Required; Eligibility.

There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having

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(or being a member of a bank holding company having) a combined
capital and surplus of at least $_____________ and subject to
supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published. If at any time the Agent shall cease to be
eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.

Section 7.9. Resignation and Removal; Appointment of Successor.

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

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

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

(d) if at any time

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

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

(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case,
(i) the Company by a Board Resolution may remove the Agent, or (ii)
any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly

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

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

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

Section 7.10. Acceptance of Appointment by Successor.

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

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

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

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

Any corporation into which the Agent may be merged or converted
or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Agent shall

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

Section 7.12. Preservation of Information; Communications to Holders.

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

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

Section 7.13. No Obligations of Agent.

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

Section 7.14. Tax Compliance.

(a) The Agent, on its own behalf and on behalf of the Company,
will comply with all applicable certification, information reporting
and withholding (including "backup" withholding) requirements imposed

-56-

by applicable tax laws, regulations or administrative practice with
respect to (i) any payments made with respect to the Securities or
(ii) the issuance, delivery, holding, transfer, redemption or exercise
of rights under the Securities. Such compliance shall include, without
limitation, the preparation and timely filing of required returns and
the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.

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

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

ARTICLE VIII

Supplemental Agreements

Section 8.1. Supplemental Agreements Without Consent of Holders.

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

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

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

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

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

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

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Section 8.2. Supplemental Agreements with Consent of Holders.

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

(1) change any Payment Date;

(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's Obligations under the Purchase Contract,
impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral (except for the rights of
Holders of Type A Securities to substitute the Treasury Securities for
the Pledged Debt Securities or the rights of holders of Type B
Securities to substitute Debt Securities for the Pledged Treasury
Securities) or otherwise adversely affect the Holder's rights in or to
such Collateral or adversely alter the rights in or to such
Collateral;

(3) reduce any Contract Adjustment Payments or any Deferred
Contract Adjustment Payment, or change any place where, or the coin or
currency in which, any Contract Adjustment Payment is payable;

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

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

(6) reduce the percentage of the outstanding Purchase Contracts
the consent of whose Holders is required for any such supplemental
agreement; provided, that if any amendment or proposal referred to
above would adversely affect only the Type A Securities or the Type B
Securities, then only the affected class of Holder as of the record
date for the Holders entitled to vote thereon will be entitled to vote
on such amendment or proposal, and such amendment or proposal shall
not be effective except with the consent of Holders of not less than a
majority of such class.

It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental

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agreement, but it shall be sufficient if such Act shall approve the
substance thereof.

Section 8.3. Execution of Supplemental Agreements.

In executing, or accepting the additional agencies created by,
any supplemental agreement permitted by this Article or the
modifications thereby of the agencies created by this Agreement, the
Agent shall be entitled to receive and (subject to Section 7.1) shall
be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental agreement is authorized or
permitted by this Agreement. The Agent may, but shall not be obligated
to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or
otherwise.

Section 8.4. Effect of Supplemental Agreements.

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

Section 8.5. Reference to Supplemental Agreements.

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

ARTICLE IX

Consolidation, Merger, Sale or Conveyance

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

The Company covenants that it will not merge or consolidate with
any other Person or sell, assign, transfer, lease or convey all or
substantially all of its properties and assets to any Person or group
of affiliated Persons in one transaction or a series of related
transactions, unless (i) either the Company shall be the continuing
corporation, or the successor (if other than the Company) shall be a

-59-

corporation organized and existing under the laws of the United States
of America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of the Company
under the Purchase Contracts, this Agreement and the Pledge Agreement
by one or more supplemental agreements in form reasonably satisfactory
to the Agent and the Collateral Agent, executed and delivered to the
Agent and the Collateral Agent by such corporation, and (ii) the
Company or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale,
assignment, transfer, lease or conveyance, be in default in the
performance of any covenant or condition hereunder, under any of the
Securities or under the Pledge Agreement.

Section 9.2. Rights and Duties of Successor Corporation.

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

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

Section 9.3. Opinion of Counsel Given to Agent.

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

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ARTICLE X

Covenants

Section 10.1. Performance Under Purchase Contracts.

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

Section 10.2. Maintenance of Office or Agency.

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

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

Section 10.3. Company to Reserve Common Shares.

The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common Shares the full
number of Common Shares issuable against tender of payment in respect

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of all Purchase Contracts constituting a part of the Securities
evidenced by Outstanding Certificates.

Section 10.4. Covenants as to Common Shares.

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

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

ARVIN INDUSTRIES, INC.

By:
--------------------------

Name:
Title:

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

-----------------------------
as Purchase Contract Agent

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

-62-

EXHIBIT A

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

-63-

Form of Face of Type A Certificate

% Type A Securities

----------

This Type A Certificate certifies that ___________ is the __________
registered Holder of the number of Type A Securities set forth above.
Each Type A Security represents (i) either (a) one ____% Debt Security
due __________ (the "Debt Security") of Arvin Industries, Inc.
(the "Company"), in an aggregate principal amount of $___________,
subject to the Pledge of such Debt Securities by such Holder pursuant
to the Pledge Agreement or (b) upon the occurrence of a Tax Event
Redemption prior to the Purchase Contract Settlement Date, the appropriate
Applicable Ownership Interest of the Treasury Portfolio, subject to the
Pledge of such Applicable Ownership Interest of the Treasury Portfolio by
such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with the
Company. All capitalized terms used herein which are defined in the
Purchase Contract Agreement have the meaning set forth therein.

Pursuant to the Pledge Agreement, the Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, constituting part of each Type A Securities
evidenced hereby have been pledged to the Collateral Agent, for the
benefit of the Company, to secure the obligations of the Holder under
the Purchase Contract comprising a portion of such Type A Securities.

The Pledge Agreement provides that all payments of the Stated
Amount of or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, or payments of interest on,
any (as defined in the Pledge Agreement) or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,
constituting part of the Type A Securities received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer in same
day funds (i) in the case of (A) cash distributions with respect to
Pledged Debt Securities or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and (B) any payments of
the Stated Amount or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such terms) of the
Treasury Portfolio, as the case may be, with respect to any Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that have been released from
the Pledge pursuant to the Pledge Agreement, to the Agent to the
account designated by the Agent, no later than 2:00 p.m.,
_____________________ time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., ____________________________ time,

-64-

on a Business Day, then such payment shall be made no later than 10:30
a.m., ___________________________ time, on the next succeeding
Business Day) and (ii) in the case of payments of the Stated Amount or
the appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, as the
case may be, of any Pledged Debt Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may
be, to the Company on the Purchase Contract Settlement Date (as
defined herein) in accordance with the terms of the Pledge Agreement,
in full satisfaction of the respective obligations of the Holders of
the Type A Securities of which such Pledged Debt Securities or the
Treasury Portfolio, as the case may be, are a part under the Purchase
Contracts forming a part of such Type A Securities. Payment of
interest on any Debt Security or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, forming part of a Type
A Security evidenced hereby which are payable quarterly in arrears on
_______________________ and each year, commencing __________________,
___________________ (a "Payment Date"), shall, subject to receipt
thereof by the Agent from the Collateral Agent, be paid to the Person
in whose name this Type A Certificate (or a Predecessor Type A
Certificate) is registered at the close of business on the Record Date
for such Payment Date.

Each Purchase Contract evidenced hereby obligates the Holder of
this Type A Certificate to purchase, and the Company to sell, on
_____________(the "Purchase Contract Settlement Date"), at a price
equal to $_________ (the "Stated Amount"), a number of Common Shares,
$2.50 par value ("Common Shares"), of the Company, equal to the
Settlement Rate, unless on or prior to the Purchase Contract
Settlement Date there shall have occurred a Termination Event or an
Early Settlement with respect to the Type A Securities of which such
Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase
price (the "Purchase Price") for the Common Shares purchased pursuant
to each Purchase Contract evidenced hereby, if not paid earlier, shall
be paid on the Purchase Contract Settlement Date by application of
payment received in respect of the Stated Amount or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may
be, of the Pledged Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,
pledged to secure the obligations under such Purchase Contract of the
Holder of the Type A Security of which such Purchase Contract is a
part.

The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Type A Security evidenced hereby
an amount (the "Contract Adjustment Payments") equal to _____% per
annum of the Stated Amount, computed on the basis of a 360 day year of
twelve 30 day months, subject to deferral at the option of the Company

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as provided in the Purchase Contract Agreement and more fully
described on the reverse hereof. Such Contract Adjustment Payments
shall be payable to the Person in whose name this Type A Certificate
(or a Predecessor Type A Certificate) is registered at the close of
business on the Record Date for such Payment Date.

Payment of interest on the Debt Securities or the appropriate
Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may
be, and Contract Adjustment Payments will be payable at the office of
the Agent in ____________________________ or, at the option of the
Company, by check mailed to the address of the Person entitled thereto
as such address appears on the Type A Register.

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

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

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

ARVIN INDUSTRIES, INC.

By:
---------------------------------

Name:
Title:

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

By:
---------------------------------

not individually but solely as
Attorney-in-Fact of such Holder

By:
--------------------------------

Name:
Title:

-66-

Dated: ,
------- ----

AGENT'S CERTIFICATE OF AUTHENTICATION

This is one of the Type A Certificates referred to in the within
mentioned Purchase Contract Agreement.

By:
---------------------------------
as Purchase Contract Agent

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

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(Form of Reverse of Type A Certificate)

Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of ___________, ____ (as may be
supplemented from time to time, the "Purchase Contract Agreement"),
between the Company and _____________, as Purchase Contract Agent
(herein called the "Agent"), to which Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a
description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Agent, the
Company, and the Holders and of the terms upon which the Type A
Certificates are, and are to be, executed and delivered.

Each Purchase Contract evidenced hereby obligates the Holder of
this Type A Certificate to purchase, and the Company to sell, on the
Purchase Contract Settlement Date at a price equal to the Stated
Amount (the "Purchase Price"), a number of Common Shares of the
Company equal to the Settlement Rate, unless, on or prior to the
Purchase Contract Settlement Date, there shall have occurred a
Termination Event or Early Settlement with respect to the Security of
which such Purchase Contract is a part. The "Settlement Rate" is equal
to (a) if the Applicable Market Value (as defined below) is equal to
or greater than $___________ (the "Threshold Appreciation Price"),
______ Common Shares per Purchase Contract, (b) if the Applicable
Market Value is less than the Threshold Appreciation Price but is
greater than $___________, the number of Common Shares per Purchase
Contract equal to the Stated Amount divided by the Applicable Market
Value and (c) if the Applicable Market Amount is less than or equal to
$_________ Common Shares per Purchase Contract, in each case subject
to adjustment as provided in the Purchase Contract Agreement. No
fractional Common Shares will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.

Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder
of the related Type A Securities to purchase at the Purchase Price,
and the Company to sell, a number of newly issued Common Shares equal
to the Early Settlement Rate or the Settlement Rate, as applicable.

The "Applicable Market Value" means the average of the Closing
Price per Common Share on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Purchase
Contract Settlement Date. The "Closing Price" of the Common Shares on
any date of determination means the closing sale price (or, if no
closing price is reported, the last reported sale price) of the Common
Shares on the New York Stock Exchange (the "NYSE") on such date or, if
the Common Shares are not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal
United States securities exchange on which the Common Shares are so
listed, or if the Common Shares are not so listed on a United States
national or regional securities exchange, the last quoted bid price

-68-

for the Common Shares in the over-the-counter market as reported on
the NYSE, if such bid price is not available, the market value of the
Common Shares on such. A "Trading Day" means a day on which the Common
Shares (A) are not suspended from trading on any national or regional
securities exchange or association at the close of business and (B)
have traded at least once on the national or regional securities
exchange or association that is the primary market for the trading of
the Common Shares.

In accordance with the terms of the Purchase Contract Agreement,
the Holder of this Type A Certificate shall pay the Purchase Price for
the Common Shares purchased pursuant to each Purchase Contract
evidenced hereby by effecting a Cash Settlement, an Early Settlement
or from the proceeds of a remarketing of the related Pledged Debt
Securities of such holders. A Holder of Type A Securities who does not
elect, on or prior to 5:00 p.m. ____________ time on the fifth
Business Day immediately preceding the Purchase Contract Settlement
Date, to make an effective Cash Settlement or an Early Settlement,
shall pay the Purchase Price for the Common Shares to be issued under
the related Purchase Contract from the Proceeds of the sale of the
related Pledged Debt Securities held by the Collateral Agent. Such
sale will be made by the Remarketing Agent pursuant to the terms of
the Remarketing Agreement and the Remarketing Underwriting Agreement
on the third Business Day immediately preceding the Purchase Contract
Settlement Date. If, as provided in the Purchase Contract Agreement,
upon the occurrence of a Failed Remarketing the Collateral Agent, for
the benefit of the Company, exercises its rights as a secured creditor
with respect to the Pledged Debt Securities related to this Type A
Certificate, any accrued and unpaid interest (including deferred
interest) on such Pledged Debt Securities will become payable by the
Company to the holder of this Type A Security Certificate in the
manner provided for in the Purchase Contract Agreement.

Each Purchase Contract evidenced hereby and all obligations and
rights of the Company and the Holder thereunder shall terminate if a
Termination Event shall have occurred. Upon the occurrence of a
Termination Event, the Company shall give written notice to the Agent
and to the Holders, at their addresses as they appear in the Type A
Register. Upon and after the occurrence of a Termination Event, the
Collateral Agent shall release the Pledged Debt Security (as defined
in the Pledge Agreement) or the appropriate Applicable Ownership
Interest of the Treasury Portfolio forming a part of each Type A
Security from the Pledge. A Type A Security shall thereafter represent
the right to receive the Debt Security or the appropriate Applicable
Ownership Interest of the Treasury Portfolio forming a part of such

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Type A Security in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement.

Under the terms of the Pledge Agreement, the Agent will be
entitled to exercise the voting and any other consensual rights
pertaining to the Pledged Debt Securities. Upon receipt of notice of
any meeting at which holders of Debt Securities are entitled to vote
or upon the solicitation of consents, waivers or proxies of holders of
Debt Securities, the Agent shall, as soon as practicable thereafter,
mail to the Type A Security holders a notice (a) containing such
information as is contained in the notice or solicitation, (b) stating
that each Type A Security holder on the record date set by the Agent
therefor (which, to the extent possible, shall be the same date as the
record date for determining the holders of Debt Securities entitled to
vote) shall be entitled to instruct the Agent as to the exercise of
the voting rights pertaining to the Debt Securities constituting a
part of such holder's Type A Securities and (c) stating the manner in
which such instructions may be given. Upon the written request of the
Type A Security Holders on such record date, the Agent shall endeavor
insofar as practicable to vote or cause to be voted, in accordance
with the instructions set forth in such requests, the maximum number
of Debt Securities as to which any particular voting instructions are
received. In the absence of specific instructions from the Holder of a
Type A Security, the Agent shall abstain from voting the Debt Security
evidenced by such Type A Securities.

Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable on the
Tax Event Redemption Date with respect to the Debt Securities shall be
delivered to the Collateral Agent in exchange for the Pledged Debt
Securities. Thereafter, pursuant to the terms of the Pledge Agreement,
the Collateral Agent for the benefit of the Company will apply an
amount equal to the Redemption Amount of such Redemption Price to
purchase, the Treasury Portfolio and promptly remit the remaining
portion of such Redemption Price to the Agent for payment to the
Holders of such Type A Securities.

Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Holders of Type A Securities
and the Collateral Agent shall have such security interests rights and
obligations with respect to the Treasury Portfolio as the Holder of
Type A Securities and the Collateral Agent had in respect of the Debt
Securities, as the case may be, subject to the Pledge thereof as
provided in Articles II, III, IV, V and VI, of the Pledge Agreement
and any reference herein to the Debt Securities shall be deemed to be
reference to such Treasury Portfolio.

The Type A Certificates are issuable only in registered form and
only in denominations of a single Type A Security and any integral
multiple thereof. The transfer of any Type A Certificate will be
registered and Type A Certificates may be exchanged as provided in the
Purchase Contract Agreement. The Type A Registrar may require a

-70-

Holder, among other things, to furnish appropriate endorsements and
transfer documents permitted by the Purchase Contract Agreement. No
service charge shall be required for any such registration of transfer
or exchange, but the Company and the Agent may require payment of a
sum sufficient to cover any tax or other governmental charge payable
in connection therewith. A holder who elects to substitute Treasury
Securities for Debt Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, thereby creating Type B
Securities, shall be responsible for any fees or expenses payable in
connection therewith. Except as provided in the Purchase Contract
Agreement, for so long as the Purchase Contract underlying a Type A
Security remains in effect, such Type A Security shall not be
separable into its constituent parts, and the rights and obligations
of the Holder of such Type A Security in respect of Debt Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, and Purchase Contract constituting such
Type A Security may be transferred and exchanged only as a Type A
Security. The holder of an Type A Securities may substitute for the
Pledged Debt Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio securing its obligation under the
related Purchase Contract, Treasury Securities in an aggregate
principal amount equal to the aggregate Stated Amount of the Pledged
Debt Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) in the
Treasury Portfolio in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. From and after such
Collateral Substitution, the Security for which such Pledged Treasury
Securities secures the holder's obligation under the Purchase Contract
shall be referred to as a "Type B Security." A Holder may make such
Collateral Substitution only in integral multiples of _____ Type A
Securities for _____ Type B Securities; provided, however, that if a
Tax Event Redemption has occurred and the Treasury Portfolio has
become a component of the Type A Securities, a Holder may make such
Collateral Substitutions only in integral multiples of ______________
Type A Securities for ________________ Type B Securities. Such
Collateral Substitution may cause the equivalent aggregate principal
amount of this Certificate to be increased or decreased; provided,
however, the equivalent aggregate principal amount outstanding under
this Type A Certificate shall not exceed $______________. All such
adjustments to the equivalent aggregate principal amount of this Type
A Certificate shall be duly recorded by placing an appropriate
notation on the Schedule attached hereto.

A Holder of Type B Securities may create or recreate Type A
Securities by delivering to the Collateral Agent Debt Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, with a Stated Amount, in the case of such Debt Securities,
or with the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio,
in the case of such appropriate Applicable Ownership Interest of the
Treasury Portfolio, equal to the aggregate principal amount of the
Pledged Treasury Securities in exchange for the release of such

-71-

Pledged Treasury Securities in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement.

Subject to the next succeeding paragraph, the Company shall pay,
on each Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name the Type
A Certificate evidencing such Purchase Contract is registered at the
close of business on the Record Date for such Payment Date. Contract
Adjustment Payments will be payable at the office of the Agent in
___________________________ or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such address
as it appears on the Type A Register.

The Company shall have the right, at any time prior to the
Purchase Contract Settlement Date, to defer the payment of any or all
of the Contract Adjustment Payments otherwise payable on any Payment
Date, but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the
amount to be deferred) as provided in the Purchase Contract Agreement.
Any Contract Adjustment Payments so deferred shall bear additional
Contract Adjustment Payments thereon at the rate of ___________ % per
annum (computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid in
full (such deferred installments of Contract Adjustment Payments, if
any, together with the additional Contract Adjustment Payments accrued
thereon, are referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments, if any, shall be
due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after
the Purchase Contract Settlement Date.

In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
Purchase Contract Settlement Date, the Holder of this Type A
Certificate will receive on the Purchase Contract Settlement Date, in
lieu of a cash payment, a number of Common Shares equal to (x) the
aggregate amount of Deferred Contract Adjustment Payments payable to
the Holder of this Type A Certificate divided by (y) the Applicable
Market Value.

In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then until the Deferred
Contract Adjustment Payments have been paid, the Company shall not
declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital shares or make guarantee payments with
respect to the foregoing (other than (i) purchases or acquisitions of
capital shares of the Company in connection with the satisfaction by
the Company of its obligations under any employee benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event requiring

-72-

the Company to purchase capital shares of the Company, (ii) as a
result of a reclassification of the Company's capital shares or the
exchange or conversion of one class or series of the Company's capital
shares for another class or series of the Company's capital shares,
(iii) the purchase of fractional interests in the Company's capital
shares pursuant to the conversion or exchange provisions of such
capital shares or the security being converted or exchanged, (iv)
dividends or distributions in capital shares of the Company (or rights
to acquire capital shares) or repurchases or redemptions of capital
shares solely from the issuance or exchange of capital shares or (v)
redemptions or repurchases of any rights outstanding under a
shareholder rights plan or a declaration thereunder of a dividend of
rights in the future.

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

Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, at the option of the Holder thereof,
Purchase Contracts underlying Securities having an aggregate Stated
Amount equal to $1,000 or an integral multiple thereof may be settled
early ("Early Settlement") as provided in the Purchase Contract
Agreement; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Type
A Securities, Holders may early settle Type A Securities only in
integral multiples of _____________ Type A Securities. In order to
exercise the right to effect Early Settlement with respect to any
Purchase Contracts evidenced by this Type A Certificate, the Holder of
this Type A Certificate shall deliver this Type A Certificate to the
Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early set
forth below duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company in an
amount (the "Early Settlement Amount") equal to (i) the product of (A)
the Stated Amount times (B) the number of Purchase Contracts with
respect to which the Holder has elected to effect Early Settlement,
plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record

-73-

Date for any Payment Date to the opening of business on such Payment
Date, an amount equal to the Contract Adjustment Payments payable on
such Payment Date with respect to such Purchase Contracts. Upon Early
Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio underlying such
Securities shall be released from the Pledge as provided in the Pledge
Agreement and the Holder shall be entitled to receive a number of
Common Shares on account of each Purchase Contract forming part of a
Type A Security as to which Early Settlement is effected equal to the
Early Settlement Rate; provided however, that upon the Early
Settlement of the Purchase Contracts, the Holder thereof will forfeit
the right to receive any Deferred Contract Adjustment Payments, if
any, on such Purchase Contracts. The Early Settlement Rate shall
initially be equal to Common Shares and shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted as
provided in the Purchase Contract Agreement.

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

The Holder of this Type A Certificate, by its acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Type A Securities evidenced hereby on
his behalf as his attorney-in-fact, expressly withholds any consent to
the assumption (i.e., affirmance) of the Purchase Contracts by the
Company or its trustee in the event that the Company becomes the
subject of a case under the Bankruptcy Code, agrees to be bound by the
terms and provisions thereof, covenants and agrees to perform its
obligations under such Purchase Contracts, consents to the provisions
of the Purchase Contract Agreement, authorizes the Agent to enter into
and perform the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Debt Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, underlying this Type A Certificate
pursuant to the Pledge Agreement. The Holder further covenants and
agrees, that, to the extent and in the manner provided in the Purchase
Contract Agreement and the Pledge Agreement, but subject to the terms
thereof, payments in respect to the Stated Amount of the Pledged Debt
Securities, or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the
Treasury Portfolio, on the Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of such

-74-

Holder's obligations under such Purchase Contract and such Holder
shall acquire no right, title or interest in such payments.

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

The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of
________________.

The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Type A
Certificate is registered as the owner of the Type A Securities
evidenced hereby for the purpose of receiving payments of interest
payable quarterly on the Debt Securities, receiving payments of
Contract Adjustment Payments and any Deferred Contract Adjustment
Payments, performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither
the Company, the Agent nor any such agent shall be affected by notice
to the contrary.

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

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

-75-

ABBREVIATIONS

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

TEN COM - as tenants in common

______________ ______________ Custodian ________________
(cust) (minor)

UNIF GIFT MIN ACT - Under Uniform Gifts to Minors Act (State)
-----------------------------------------

TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common

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

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

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
---------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other Identifying
Number of Assignee)
---------------------------------------------------------------------

---------------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip Code of
Assignee) the within Type A Certificates and all rights thereunder,
hereby irrevocably constituting and appointing

-------------------------------------------------- attorney to
transfer said Type A Certificates on the books of Arvin Industries,
Inc. with full power of substitution in the premises.

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

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

-76-

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

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

SETTLEMENT INSTRUCTIONS

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

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

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

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

-77-

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

Please print name and address
of Registered Holder:

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

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

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

-------------------------
Social Security or other
Taxpayer Identification
Number, if any

-78-

ELECTION TO SETTLE EARLY

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

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

Signature Guarantee:
-----

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

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

If Common Shares or Type A Certificates are to be registered in
the name of and delivered to and Pledged Debt Securities, or the
Treasury Portfolio, as the case may be, are to be transferred to a
Person other than the Holder, please print such Person's name and
address:

Please print name and address of Registered Holder:

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

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

---------------------------------
Social Security or other Taxpayer
Identification Number, if any

Transfer Instructions for Pledged Debt Securities, or the
Treasury Portfolio, as the case may be, Transferable Upon Early
Settlement or a Termination Event:

[TO BE ATTACHED TO GLOBAL CERTIFICATES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

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

============================================================================================================
<S> <C> <C> <C>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized
Principal Principal Certificate officer of
Amount Amount following such Trustee or
of the Global of the Global decrease or Securities Date
Certificate Certificate increase Custodian

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

</TABLE>

-80-

EXHIBIT B

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

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, AND ANY
PAYMENT THEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST THEREIN.

-81-

No.___________ Number of Type B Securities __________ CUSIP
No. ___________

Form of Face of Type B Certificate

This Type B Certificate certifies that ___________________is the
registered Holder of the number of Type B Securities set forth above.
Each Type B Security represents (i) a 1/100 undivided beneficial
ownership interest, of a Treasury Security having a principal amount
at maturity equal to $1,000, subject to the Pledge of such Treasury
Security by such Holder pursuant to the Pledge Agreement, and (ii) the
rights and obligations of the Holder under one Purchase Contract with
Arvin Industries, Inc., an Indiana corporation (the "Company"). All
capitalized terms used herein which are defined in the Purchase
Contract Agreement have the meaning set forth therein.

Pursuant to the Pledge Agreement, the Treasury Securities
constituting part of each Type B Securities evidenced hereby have been
pledged to the Collateral Agent, for the benefit of the Company, to
secure the obligations of the Holder under the Purchase Contract
comprising a portion of such Type B Securities.

Each Purchase Contract evidenced hereby obligates the Holder of
this Type B Certificate to purchase, and the Company, to sell, on
_______________ (the "Purchase Contract Settlement Date"), at a price
equal to $_______ (the "Stated Amount"), a number of Common Shares,
$2.50 par value per share ("Common Shares"), of the Company equal to
the Settlement Rate, unless on or prior to the Purchase Contract
Settlement Date there shall have occurred a Termination Event or an
Early Settlement with respect to the Type B Securities of which such
Purchase Contract is a part, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase
price for the Common Shares purchased pursuant to each Purchase
Contract evidenced hereby will be paid by application of the Proceeds
from the Treasury Securities pledged to secure the obligations under
such Purchase Contract in accordance with the terms of the Pledge
Agreement.

The Company shall pay on each Payment Date in respect of each
Purchase Contract evidenced hereby an amount (the "Contract Adjustment
Payments") equal to ____% per annum of the Stated Amount, computed on
the basis of the actual number of days elapsed in a year of 360 day
year of twelve 30 day months, as the case may be, subject to deferral
at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. Such
Contract Adjustment Payments shall be payable to the Person in whose
name this Type B Certificate (or a Predecessor Type B Certificate) is
registered at the close of business on the Record Date for such
Payment Date.

Contract Adjustment Payments will be payable at the office of the
Agent in __________________________ or, at the option of the Company,

-82-

by check mailed to the address of the Person entitled thereto as such
address appears on the Type B Register.

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

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

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

ARVIN INDUSTRIES, INC.

By:_____________________________________

Name:
Title:

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

By:_____________________________________
not individually but solely as
Attorney-in-Fact of such
Holder

By:__________________________________
Name:
Title:

Dated: ______________, ____

-83-

AGENT'S CERTIFICATE OF AUTHENTICATION

This is one of the Type B Securities referred to in the
within-mentioned Purchase Contract Agreement.

By: ,
---------------------------
as Purchase Contract Agent

By:
---------------------
Authorized Signatory

(Reverse of Type B Certificate)

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

Each Purchase Contract evidenced hereby obligates the Holder of
this Type B Certificate to purchase, and the Company to sell, on the
Purchase Contract Settlement Date at a price equal to the Stated
Amount (the "Purchase Price") a number of Common Shares of the Company
equal to the Settlement Rate, unless on or prior to the Purchase
Contract Settlement Date, there shall have occurred a Termination
Event or an Early Settlement with respect to the Security of which
such Purchase Contract is a part. The "Settlement Rate" is equal to
(a) if the Applicable Market Value (as defined below) is equal to or
greater than $__________ (the "Threshold Appreciation Price"), _______
Common Shares per Purchase Contract, (b) if the Applicable Market
Value is less than the Threshold Appreciation Price but is greater
than $_________, the number of Common Shares per Purchase Contract
equal to the Stated Amount divided by the Applicable Market Value and
(c) if the Applicable Market Amount is less than or equal to
$___________, then Common Shares per Purchase Contract, in each case
subject to adjustment as provided in the Purchase Contract Agreement.
No fractional Common Shares will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.

The "Applicable Market Value" means the average of the Closing
Prices per Common Share on each of the twenty consecutive Trading Days
ending on the third Trading Day immediately preceding the Purchase
Contract Settlement Date. The "Closing Price" of the Common Shares on
any date of determination means the closing sale price (or, if no

-84-

closing price is reported, the last reported sale price) of the Common
Shares on the New York Stock Exchange (the "NYSE") on such date or, if
the Common Shares are not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal
United States securities exchange on which the Common Shares are so
listed, or if the Common Shares are not so listed on a United States
national or regional securities exchange, the last quoted bid price
for the Common Shares in the over-the-counter market as reported by
the National Quotation Bureau or similar organization, or, if such bid
price is not available, the market value of the Common Shares on such
date as determined by a nationally recognized independent investment
banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Shares (A) are not suspended from
trading on any national or regional securities exchange or association
or over-the-counter market at the close of business and (B) have
traded at least once on the national or regional securities exchange
or association or over-the-counter market that is the primary market
for the trading of the Common Shares.

In accordance with the terms of the Purchase Contract Agreement,
the Holder of this Type B Certificate shall pay the Purchase Price for
the Common Shares purchased pursuant to each Purchase Contract
evidenced hereby by effecting either an Early Settlement of each such
Purchase Contract or by applying a principal amount of the Pledged
Treasury Securities underlying such Holder's Type B Securities equal
to the Stated Amount of such Purchase Contract to the purchase of the
Common Shares.

The Company shall not be obligated to issue any Common Shares in
respect of a Purchase Contract or deliver any certificates therefor to
the Holder unless it shall have received payment in full of the
aggregate purchase price for the Common Shares to be purchased
thereunder in the manner herein set forth. Each Purchase Contract
evidenced hereby and all obligations and rights of the Company and the
Holder thereunder shall terminate if a Termination Event shall have
occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Agent and to the Holders, at their
addresses as they appear in the Type B Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release
the Pledged Treasury Securities (as defined in the Pledge Agreement)
forming a part of each Type B Certificate.

The Type B Certificates are issuable only in registered form and
only in denominations of a single Type B Security and any integral
multiple thereof. The transfer of any Type B Certificate will be
registered and Type B Certificates may be exchanged as provided in the
Purchase Contract Agreement. The Type B Registrar may require a
Holder, among other things, to furnish appropriate endorsements and
transfer documents permitted by the Purchase Contract Agreement. No
service charge shall be required for any such registration of transfer
or exchange, but the Company and the Agent may require payment of a
sum sufficient to cover any tax or other governmental charge payable

-85-

in connection therewith. A Holder who elects to substitute Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, for Treasury Securities,
thereby recreating Type A Securities, shall be responsible for any
fees or expenses associated therewith. Except as provided in the
Purchase Contract Agreement, for so long as the Purchase Contract
underlying a Type B Security remains in effect, such Type B Security
shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such Type B Security in respect of the
Treasury Security and the Purchase Contract constituting such Type B
Security may be transferred and exchanged only as a Type B Security. A
Holder of Type B Securities may create or recreate Type A Securities
by delivering to the Collateral Agent Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
with a Stated Amount, in the case of such Debt Securities, or with the
appropriate Applicable Ownership Interest (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio, in the case
of such appropriate Applicable Ownership Interest of the Treasury
Portfolio, equal to the aggregate principal amount of the Pledged
Treasury Securities in exchange for the release of such Pledged
Treasury Securities in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. From and after such
substitution, the Holder's Security shall be referred to as a "Type A
Security." Such substitution may cause the equivalent aggregate
principal amount of this Certificate to be increased or decreased;
provided, however, the equivalent aggregate principal amount
outstanding under this Type B Certificate shall not exceed
$_____________. All such adjustments to the equivalent aggregate
principal amount of this Type B Certificate shall be duly recorded by
placing an appropriate notation on the Schedule attached hereto.

A Holder of a Type A Security may create or recreate a Type B
Security by delivering to the Collateral Agent Treasury Securities in
an aggregate principal amount equal to the aggregate principal amount
of the Pledged Debt Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, in exchange for the
release of such Pledged Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, in
accordance with the terms of the Purchase Contract Agreement and the
Pledge Agreement. Any such recreation of a Type B Security may be
effected only in multiples of _____ Type A Securities for _______ Type
B Securities; provided, however, if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Type
A Securities, a Holder may make such Collateral Substitution in
integral multiples of ______________ Type A Securities for
_____________ Type B Securities.

-86-

close of business on the Record Date for such Payment Date. Contract
Adjustment Payments will be payable at the office of the Agent in
______________________ or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such address
as it appears on the Type B Register.

The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the
Contract Adjustment Payments otherwise payable on any Payment Date,
but only if the Company shall give the Holders and the Agent written
notice of its election to defer such payment (specifying the amount to
be deferred) as provided in the Purchase Contract Agreement. Any
Contract Adjustment Payments so deferred shall bear additional
Contract Adjustment Payments thereon at the rate of __________% per
annum (computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid in
full (such deferred installments of Contract Adjustment Payments
together with the additional Contract Adjustment Payments accrued
thereon, are referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments, if any, shall be
due on the next succeeding Payment Date except to the extent that
payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after
the Purchase Contract Settlement Date.

In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
Purchase Contract Settlement Date, the Holder of this Type B
Certificate will receive on the Purchase Contract Settlement Date, in
lieu of a cash payment, a number of Common Shares equal to (x) the
aggregate amount of Deferred Contract Adjustment Payments payable to
the Holder of the Type B Certificate divided by (y) the Applicable
Market Value.

In the event the Company exercises its option to defer the payment
of Contract Adjustment Payments, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or
pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to,
any of its capital shares or make guarantee payments with respect to
the foregoing (other than (i) purchases or acquisitions of capital
shares of the Company in connection with the satisfaction by the
Company of its obligations under any employee benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event requiring
the Company to purchase capital shares of the Company, (ii) as a
result of a reclassification of the Company's capital shares or the
exchange or conversion of one class or series of the Company's capital
shares for another class or series of the Company's capital shares,
(iii) the purchase of fractional interests in the Company's capital
shares pursuant to the conversion or exchange provisions of the
Company's capital shares or the security being converted or exchanged,

-87-

(iv) dividends or distributions in capital shares of the Company (or
rights to acquire capital shares) or repurchases or redemptions of
capital shares solely from the issuance or exchange of capital shares
or (v) redemptions or repurchases of any rights outstanding under a
shareholder rights plan or the declaration thereunder of a dividend of
rights in the future).

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

Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase
Contracts underlying Securities having an aggregate Stated Amount
equal to $1,000 or an integral multiple thereof may be settled early
("Early Settlement") as provided in the Purchase Contract Agreement.
In order to exercise the right to effect Early Settlement with respect
to any Purchase Contracts evidenced by this Type B Certificate, the
Holder of this Type B Certificate shall deliver this Type B
Certificate to the Agent at the Corporate Trust Office duly endorsed
for transfer to the Company or in blank with the form of Election to
Settle Early set forth below duly completed and accompanied by payment
in the form of immediately available funds payable to the order of the
Company in an amount (the "Early Settlement Amount") equal to (i) the
product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement, plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any
Record Date for any Payment Date to the opening of business on such
Payment Date, an amount equal to the Contract Adjustment Payments
payable, if any, on such Payment Date with respect to such Purchase
Contracts. Upon Early Settlement of Purchase Contracts by a Holder of
the related Securities, the Pledged Treasury Securities underlying
such Securities shall be released from the Pledge as provided in the
Pledge Agreement and the Holder shall be entitled to receive, a number
of Common Shares on account of each Purchase Contract forming part of
a Type B Security as to which Early Settlement is effected equal to
_______ Common Shares per Purchase Contract (the "Early Settlement
Rate"); provided however, that upon the Early Settlement of the
Purchase Contracts, the Holder thereof will forfeit the right to

-88-

receive any Deferred Contract Adjustment Payments on such Purchase
Contracts. The Early Settlement Rate shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted as
provided in the Purchase Contract Agreement.

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

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

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

The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of ______________.

The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Type B
Certificate is registered as the owner of the Type B Securities
evidenced hereby for the purpose of receiving payments of interest on
the Treasury Securities, receiving payments of Contract Adjustment
Payments and any Deferred Contract Adjustment Payments, performance of
the Purchase Contracts and for all other purposes whatsoever, whether

-89-

or not any payments in respect thereof be overdue and notwithstanding
any notice to the contrary, and neither the Company, the Agent nor any
such agent shall be affected by notice to the contrary.

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

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

-90-

ABBREVIATIONS

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

TEN COM - as tenants in common
Custodian
---------- ----------- ---------------
(cust) (minor)

UNIF GIFT MIN ACT - Under Uniform Gifts to Minors Act (State)
-----------------------------------------

TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common

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

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

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
--------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or
other Identifying Number of Assignee)

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

the within Type B Certificates and all rights thereunder, hereby
irrevocably constituting and appointing
---------------------------
attorney to transfer said Type B Certificates on the books of Arvin
Industries, Inc. with full power of substitution in the premises.

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

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

-91-

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

-92-

SETTLEMENT INSTRUCTIONS

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

Dated: __________________ ______________________________
Signature
Signature Guarantee:

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

If shares are to be registered in the name of and delivered to a
Person other than the Holder, please print such Person's name and
address:

Please print name and address
of Registered Holder:

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

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

------------------------
Social Security or other
Taxpayer Identification
Number, if any

-93-

ELECTION TO SETTLE EARLY

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

Date: By:
-------------- ---------------------------
Name:
Title:
Signature Guarantee:
-------------

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

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

If Common Shares of Type B Certificates are to be registered in the
name of and delivered to and Pledged Treasury Securities are to be
transferred to a Person other than the Holder, please print such
Person's name and address:

-94-

Please print name and address
of Registered Holder:

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

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

--------------------------
Social Security or other
Taxpayer Identification
Number, if any

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

-95-

[TO BE ATTACHED TO GLOBAL CERTIFICATES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

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

==================================================================================================================
<S> <C> <C> <C>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized
Principal Principal Certificate officer of
Amount Amount following such Trustee or
of the Global of the Global decrease or Securities Date
Certificate Certificate increase Custodian

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</TABLE>

-96-

EXHIBIT C

INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT
Attention:

Re: Securities of Arvin Industries, Inc. (the "Company")

We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of ___________, ____, among the Company,
yourselves, as Collateral Agent, and ourselves, as Purchase Contract
Agent and as attorney-in-fact for the holders of [Type A Securities]
[Type B Securities] from time to time, that the holder of securities
listed below (the "Holder") has elected to substitute [$___________
aggregate [principal amount] of Treasury Securities] [$_____________
aggregate principal amount of Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] in exchange for the [Pledged Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be,] [Pledged Treasury Securities] held by you in
accordance with the Pledge Agreement and has delivered to us a notice
stating that the Holder has Transferred [Treasury Securities] [Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be,] to you, as Collateral Agent.
We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be], and
upon the payment by such Holder of any applicable fees, to release the
[Debt Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be,] [Treasury Securities]
related to such [Type A Securities] [Type B Securities] to us in
accordance with the Holder's instructions.

Date: By:
--------------- ---------------------------------
Name:
Title:
Signature Guarantee:
---------------

Please print name and address of Registered Holder electing to
substitute [Treasury Securities] [Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] for the [Pledged Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Pledged Treasury Securities]:

-97-

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

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

-98-

EXHIBIT D

INSTRUCTION TO PURCHASE CONTRACT AGENT
Attention:
Re: Securities of Arvin Industries, Inc. (the "Company")

The undersigned Holder hereby notifies you that it has delivered to
______________________, as Collateral Agent, $__________________
aggregate principal amount of [Treasury Securities] [Debt Securities
or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] in exchange for the [Pledged Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be,] [Pledged Treasury Securities]
held by the Collateral Agent, in accordance with Section [4.1][4.2] of
the Pledge Agreement, dated ______________, ____, between you, the
Company and the Collateral Agent. The undersigned Holder has paid the
Collateral Agent all applicable fees relating to such exchange. The
undersigned Holder hereby instructs you to instruct the Collateral
Agent to release to you on behalf of the undersigned Holder the
[Pledged Debt Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] [Pledged
Treasury Securities] related to such [Type A Securities] [Type B
Securities].

Date:___________________ By:______________________________
Name:
Title:
Signature Guarantee: ___________________

Please print name and address of Registered Holder:

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

_____________________________________

-99-

EXHIBIT E

NOTICE TO SETTLE BY SEPARATE CASH
Attention:
Re: Securities of Arvin Industries, Inc. (the "Company")

The undersigned Holder hereby irrevocably notifies you in
accordance with Section 5.4 of the Purchase Contract Agreement, dated
as of _____________, ____ among the Company, yourselves, as Purchase
Contract Agent and as Attorney-in-Fact for the Holders of the Purchase
Contracts, that such Holder has elected to pay to the Collateral
Agent, on or prior to 11:00 a.m. ____________________ time, on the
Business Day immediately preceding the Purchase Contract Settlement
Date, (in lawful money of the United States by [certified or cashiers
check or] wire transfer, in each case in immediately available funds),
$-------------- as the Purchase Price for the Common Shares issuable
to such Holder by the Company under the related Purchase Contract on
the Purchase Contract Settlement Date. The undersigned Holder hereby
instructs you to notify promptly the Collateral Agent of the
undersigned Holders election to make such cash settlement with respect
to the Purchase Contracts related to such Holder's [Type A Securities]
[Type B Securities].

Date: By:
--------------- ---------------------------------
Name:
Title:
Signature Guarantee:
------------

Please print name and address of Registered Holder:

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

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

-100-

EXHIBIT 4-10

ARVIN INDUSTRIES, INC.

_________________,

as Collateral Agent, Custodial Agent
and Securities Intermediary

AND

________________,

as Purchase Contract Agent

FORM OF PLEDGE AGREEMENT

Dated as of __________, ____

TABLE OF CONTENTS

PAGE
PLEDGE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 1

RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . 1

Section 2. Pledge; Control and Perfection. . . . . . . . . . . . . 3
Section 2.1. The Pledge . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Control and Perfection . . . . . . . . . . . . . 4

Section 3. Distributions on Pledged Collateral . . . . . . . . . . 5

Section 4. Substitution, Release, Repledge and Settlement of Debt
Securities . . . . . . . . . . . . . . . . . . . . . 6
Section 4.1. Substitution for Debt Securities and the Creation
of Type B Securities . . . . . . . . . . . . . 6
Section 4.2. Substitution of Treasury Securities and the
Creation of Type A Securities . . . . . . . . 6
Section 4.3. Termination Event . . . . . . . . . . . . . . . 7
Section 4.4. Cash Settlement . . . . . . . . . . . . . . . . 7
Section 4.5. Early Settlement . . . . . . . . . . . . . . . . 8
Section 4.6. Application of Proceeds Settlement . . . . . . . 8

Section 5. Voting Rights -- Debt Securities . . . . . . . . . . . 9

Section 6. Rights and Remedies; Distribution of the Debentures;
Tax Event Redemption . . . . . . . . . . . . . . . . 9
Section 6.1. Rights and Remedies of the Collateral Agent . . 9
Section 6.2. Tax Event Redemption . . . . . . . . . . . . . . 10
Section 6.3. Substitutions . . . . . . . . . . . . . . . . . 10

Section 7. Representations and Warranties; Covenants . . . . . . . 11
Section 7.1. Representations and Warranties . . . . . . . . . 11
Section 7.2. Covenants . . . . . . . . . . . . . . . . . . . 11

Section 8. The Collateral Agent . . . . . . . . . . . . . . . . . 11
Section 8.1. Appointment, Powers and Immunities . . . . . . . 11
Section 8.2. Instructions of the Company . . . . . . . . . . 12
Section 8.3. Reliance by Collateral Agent . . . . . . . . . . 12
Section 8.4. Rights in Other Capacities . . . . . . . . . . . 12
Section 8.5. Non-Reliance on Collateral Agent . . . . . . . . 12
Section 8.6. Compensation and Indemnity . . . . . . . . . . . 13
Section 8.7. Failure to Act . . . . . . . . . . . . . . . . . 13
Section 8.8. Resignation of Collateral Agent . . . . . . . . 13
Section 8.9. Right to Appoint Agent or Advisor . . . . . . . 13
Section 8.10. Survival . . . . . . . . . . . . . . . . . . . . 14
Section 8.11. Exculpation . . . . . . . . . . . . . . . . . . 14

Section 9. Amendment . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9.1. Amendment Without Consent of Holders . . . . . . 14

Section 9.2. Amendment with Consent of Holders . . . . . . . 14
Section 9.3. Execution of Amendments . . . . . . . . . . . . 14
Section 9.4. Effect of Amendments . . . . . . . . . . . . . . 15
Section 9.5. Reference to Amendments . . . . . . . . . . . . 15

Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . 15
Section 10.1. No Waiver . . . . . . . . . . . . . . . . . . . 15
Section 10.2. Governing Law . . . . . . . . . . . . . . . . . 15
Section 10.3. Notices . . . . . . . . . . . . . . . . . . . . 15
Section 10.4. Successors and Assigns . . . . . . . . . . . . 15
Section 10.5. Counterparts . . . . . . . . . . . . . . . . . 15
Section 10.6. Severability . . . . . . . . . . . . . . . . . 15
Section 10.7. Expenses, etc. . . . . . . . . . . . . . . . . 16
Section 10.8. Security Interest Absolute . . . . . . . . . . 16

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

PLEDGE AGREEMENT

FORM OF PLEDGE AGREEMENT, dated as of ___________, ____
(this "Agreement"), among Arvin Industries, Inc., an Indiana
corporation (the "Company"), __________________, not individually but
solely as collateral agent (in such capacity, together with its
successors in such capacity, the "Collateral Agent") as custodial
agent (in such capacity, together with its successors in such
capacity, the "Custodial Agent") and in its capacity as a "securities
intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors in
such capacity, the "Securities Intermediary"), and ____________________,
not individually but solely as purchase contract agent and as
attorney-in-fact of the Holders (as defined in the Purchase Contract
Agreement) from time to time of the Securities (as hereinafter defined)
(in such capacity, together with its successors in such capacity, the
"Purchase Contract Agent") under the Purchase Contract Agreement (as
hereinafter defined).

RECITALS

The Company and the Purchase Contract Agent are parties to
the Purchase Contract Agreement, dated as of the date hereof (as
modified and supplemented and in effect from time to time, the
"Purchase Contract Agreement"), pursuant to which there may be issued
up to ______________ New Securities of the Company, having a stated
amount of $____ (the "Stated Amount") per New Security.

The New Securities will initially consist of (A) _________
units (referred to as "Type A Securities") with a face amount, per
Type A Security, equal to the Stated Amount and (B) _________ units
(referred to as "Type B Securities" and, together with the Type A
Securities, the "Securities") with a face amount, per Type B Security,
equal to the Stated Amount. Each Type A Security will initially be
comprised of (a) a share purchase contract (a "Purchase Contract")
under which the holder will purchase from the Company on
________________ (the "Purchase Contract Settlement Date"), for an
amount of cash equal to the Stated Amount, a number of newly issued
common shares, $2.50 par value (the "Common Shares"), of the Company
equal to the Settlement Rate (as defined below) and (b) either
beneficial ownership of a Debt Security (as defined below) or upon the
occurrence of a Tax Event Redemption the Applicable Ownership Interest
of the Treasury Portfolio. Each Type B Security will initially be
comprised of (a) a Purchase Contract under which (i) the holder will
purchase from the Company on the Purchase Contract Settlement Date,
for an amount in cash equal to the Stated Amount, a number of newly
issued Common Shares of the Company, equal to the Settlement Rate, and
(ii) the Company will pay the Holder Contract Adjustment Payments (as
defined below) at the rate of ___% of the Stated Amount per annum, and
(b) a 1/100 undivided beneficial interest in a zero-coupon U.S.
Treasury Security (CUSIP No. _________) having a principal amount
equal to $1,000 and maturing on ___________ (the "Treasury
Securities").

Pursuant to the terms of the Indenture (as defined below),
the Company will issue ____% Senior Notes due ________ (the "Debt
Securities") in an aggregate principal amount equal to the aggregate
Stated Amount of all Type A Securities.

Pursuant to the terms of the Purchase Contract Agreement and
the Purchase Contracts, the Holders, from time to time, of the
Securities have irrevocably authorized the Purchase Contract Agent, as
attorney-in-fact of such Holders, among other things, to execute and
deliver this Agreement on behalf of such Holders and to grant the
pledge provided hereby of the Debt Securities, any Applicable
Ownership Interest in the Treasury Portfolio and any Treasury
Securities to secure each Holder's obligations under the related
Purchase Contract, as provided herein and subject to the terms hereof.
Upon such pledge, the Debt Securities will be beneficially owned by
the Holders but will be owned of record by the Purchase Contract Agent
subject to the Pledge hereunder.

Accordingly, the Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Purchase Contract
Agent, on its own behalf and as attorney-in-fact of the Holders from
time to time of the Securities, agree as follows:

Section 1. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:

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

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

(c) the following terms have the meanings assigned to
them in the Purchase Contract Agreement: (i) Act, (ii)
Agent, (iii) Board Resolution, (iv) Cash Settlement, (v)
Certificate, (vi) Contract Adjustment Payments, (vii) Early
Settlement, (viii) Early Settlement Amount, (ix) Early
Settlement Date, (x) Failed Remarketing, (xi) Holder, (xii)
Opinion of Counsel, (xiii) Outstanding Securities, (xiv)
Purchase Contract, (xv) Purchase Contract Settlement Date,
(xvi) Remarketing Agent, (xvii) Remarketing Agreement,
(xviii) Remarketing Underwriting Agreement, (xix) Settlement
Rate, and (xx) Termination Event; and

(d) the following terms have the meanings assigned to
them in the Officer's Certificate establishing the terms of
the new Securities: (i) Applicable Ownership Interest, (ii)
Applicable Principal Amount, (iii) Quotation Agent, (iv)

Redemption Amount, (v) Redemption Price, (vi) Tax Event,
(vii) Tax Event Redemption, (viii) Tax Event Redemption
Date, and (ix) Treasury Portfolio.

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

"Business Day" means any day other than a Saturday, a Sunday
or any other day on which banking institutions in
_________________________ (in the State of ________________) are
permitted or required by any applicable law to close.

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

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

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

"Collateral Account" means the securities account (number
_______) maintained at ________________ in the name ___________, as
Purchase Contract Agent on behalf of the holders of Securities subject
to the security interest of the Pledge Agreement, of _____________ as
Collateral Agent, for the benefit of Arvin Industries, Inc., as
pledgee and any successor account.

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

"Common Shares" has the meaning specified in the Recitals.

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

"Custodial Agent" has the meaning specified in the Recitals.

"Debt Securities" has the meaning specified in the Recitals.

"Indenture" means the Indenture, dated _____________,
between the Company and the Trustee with respect to the Debt
Securities.

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

"Officer's Certificate" means the instrument setting forth
the terms of the Debt Securities pursuant to the Indenture.

"Permitted Investments" means any one of the following which
shall mature not later than the next succeeding Business Day (i) any
evidence of indebtedness with an original maturity of 365 days or less
issued, or directly and fully guaranteed or insured, by the United
States of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America is
pledged in support thereof or such indebtedness constitutes a general
obligation of it); (ii) deposits, certificates of deposit or
acceptances with an original maturity of 365 days or less of any
institution which is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than US
$_______ at the time of deposit; (iii) investments with an original
maturity of 365 days or less of any Person that is fully and
unconditionally guaranteed by a bank referred to in clause (ii); (iv)
investments in commercial paper, other than commercial paper issued by
the Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which commercial
paper has a rating at the time of purchase at least equal to "A-1" by
Standard & Poor's Ratings Services ("S&P") or at least equal to "P-1"
by Moody's Investors Service, Inc. ("Moody's"); and (v) investments in
money market funds registered under the Investment Company Act of
1940, as amended, rated in the highest applicable rating category by
S&P or Moody's.

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

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

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

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

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

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

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

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

"Securities" has the meaning specified in the Recitals.

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

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

"Separate Debt Securities" means any Debt Securities that
are not Pledged Debt Securities.

"Stated Amount" has the meaning specified in the Recitals.

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

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

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

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

(ii) in the case of Collateral consisting of
securities maintained in book-entry form by
causing a "securities intermediary" (as
defined in Section 8-102(a)(14) of the Code)
to (i) credit a "security entitlement" (as
defined in Section 8-102(a)(17) of the Code)
with respect to such securities to a
"securities account" (as defined in Section
8-501(a) of the Code) maintained by or on

behalf of the recipient and (ii) to issue a
confirmation to the recipient with respect to
such credit. In the case of Collateral to be
delivered to the Collateral Agent, the
securities intermediary shall be the
Securities Intermediary and the securities
account shall be the Collateral Account.

"Treasury Security" means a zero-coupon U.S. Treasury
Security (Cusip Number ______) which are the principal strips of the
U.S. Treasury Securities which mature on ____________.

"Trustee" means ________________, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.

"Value" with respect to any item of Collateral on any date
means, as to (i) Debt Securities, the aggregate principal amount
thereof, (ii) Cash, the face amount thereof and (iii) Treasury
Securities, the aggregate principal amount thereof at maturity.

Section 2. Pledge; Control and Perfection.

Section 2.1. The Pledge. The Holders from time to time
acting through the Purchase Contract Agent, as their attorney-in-fact,
hereby pledge and grant to the Collateral Agent, for the benefit of
the Company, as collateral security for the performance when due by
such Holders of their respective obligations under the related
Purchase Contracts, a security interest in (i) all of the right, title
and interest of such Holders (a) in the Debt Securities and Treasury
Securities constituting a part of the Securities and any Treasury
Securities delivered in exchange for any Debt Securities, and any Debt
Securities delivered in exchange for any Treasury Securities, in
accordance with Section 4 hereof, in each case that have been
Transferred to or received by the Collateral Agent and not released by
the Collateral Agent to such Holders under the provisions of this
Agreement; (b) in payments made by Holders pursuant to Section 4.4;
(c) in the Collateral Account and all securities, financial assets,
Cash and other property credited thereto and all Security Entitlements
related thereto; (d) in the Treasury Portfolio purchased on behalf of
the Holders of Type A Securities by the Collateral Agent upon the
occurrence of a Tax Event Redemption as provided in Section 6.2 and
(e) all Proceeds of the foregoing (all of the foregoing, collectively,
the "Collateral"). Prior to or concurrently with the execution and
delivery of this Agreement, the Purchase Contract Agent, on behalf of
the initial Holders of the Securities, shall cause the Debt Securities
comprising a part of the Type A Securities, and the Treasury
Securities comprising a part of the Type B Securities, to be
Transferred to the Collateral Agent for the benefit of the Company.
Such Debt Securities shall be Transferred by physically delivering
such Securities to the Securities Intermediary endorsed in blank and
causing the Securities Intermediary to credit the Collateral Account

with such Securities and sending the Collateral Agent a confirmation
of the deposit of such Securities. In the event a Holder of Type A
Securities so elects, such Holder may Transfer Treasury Securities to
the Collateral Agent for the benefit of the Company in exchange for
the release by the Collateral Agent on behalf of the Company of Debt
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, with an aggregate stated
liquidation amount equal to the aggregate principal amount of the
Treasury Securities so Transferred, in the case of Debt Securities, or
with an appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio
equal to the aggregate principal amount of the Treasury Securities so
transferred, in the event that a Tax Event Redemption has occurred, to
the Purchase Contract Agent on behalf of such Holder. Treasury
Securities and the Treasury Portfolio, as applicable, shall be
Transferred to the Collateral Account maintained by the Collateral
Agent at the Securities Intermediary by book-entry transfer to the
Collateral Account in accordance with the TRADES Regulations and other
applicable law and by the notation by the Securities Intermediary on
its books that a Security Entitlement with respect to such Treasury
Securities or Treasury Portfolio, has been credited to the Collateral
Account. For purposes of perfecting the Pledge under applicable law,
including, to the extent applicable, the TRADES Regulations or the
Uniform Commercial Code as adopted and in effect in any applicable
jurisdiction, the Collateral Agent shall be the agent of the Company
as provided herein. The pledge provided in this Section 2.1 is herein
referred to as the "Pledge" and the Debt Securities or Treasury
Securities subject to the Pledge, excluding any Debt Securities or
Treasury Securities released from the Pledge as provided in Section 4
hereof, are hereinafter referred to as "Pledged Debt Securities" or
the "Pledged Treasury Securities," respectively. Subject to the
Pledge and the provisions of Section 2.2 hereof, the Holders from time
to time shall have full beneficial ownership of the Collateral.
Whenever directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to
reregister the Debt Securities or any other Securities held in
physical form in its name.

Except as may be required in order to release Debt
Securities in connection with a Holder's election to convert its
investment from Type A Securities to Type B Securities, or except as
otherwise required to release Securities as specified herein, neither
the Collateral Agent nor the Securities Intermediary shall relinquish
physical possession of any certificate evidencing Debt Securities or
Treasury Securities prior to the termination of this Agreement. If it
becomes necessary for the Securities Intermediary to relinquish
physical possession of a certificate in order to release a portion of
the Debt Securities evidenced thereby from the Pledge, the Securities
Intermediary shall use its best efforts to obtain physical possession
of a replacement certificate evidencing any Debt Securities remaining
subject to the Pledge hereunder registered to it or endorsed in blank
within fifteen days of the date it relinquished possession. The

Securities Intermediary shall promptly notify the Company and the
Collateral Agent of the Securities Intermediary's failure to obtain
possession of any such replacement certificate as required hereby.

Section 2.2. Control and Perfection. (a) In connection
with the Pledge granted in Section 2.1, and subject to the other
provisions of this Agreement, the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, hereby
authorize and direct the Securities Intermediary (without the
necessity of obtaining the further consent of the Purchase Contract
Agent or any of the Holders),and the Securities Intermediary agrees,
to comply with and follow any instructions and entitlement orders (as
defined in Section 8-102(a)(8) of the Code) that the Collateral Agent
on behalf of the Company may give in writing with respect to the
Collateral Account, the Collateral credited thereto and any security
entitlements with respect to any thereof. Such instructions and
entitlement orders may, without limitation, direct the Securities
Intermediary to transfer, redeem, sell, liquidate, assign, deliver or
otherwise dispose of the Debt Securities, the Treasury Securities, the
Treasury Portfolio, and any Security Entitlements with respect thereto
and to pay and deliver any income, proceeds or other funds derived
therefrom to the Company. The Holders from time to time acting
through the Purchase Contract Agent hereby further authorize and
direct the Collateral Agent, as Agent of the Company, to itself issue
instructions and entitlement orders, and to otherwise take action,
with respect to the Collateral Account, the Collateral credited
thereto and any security entitlements with respect thereto, pursuant
to the terms and provisions hereof, all without the necessity of
obtaining the further consent of the Purchase Contract Agent or any of
the Holders. The Collateral Agent shall be the Agent of the Company
and shall act as directed in writing by the Company. Without limiting
the generality of the foregoing, the Collateral Agent shall issue
entitlement orders to the Securities Intermediary when and as directed
by the Company.

(b) The Securities Intermediary hereby confirms and agrees
that: (i) all securities or other property underlying any financial
assets credited to the Collateral Account shall be registered in the
name of the Securities Intermediary, indorsed to the Securities
Intermediary or in blank or credited to another Collateral Account
maintained in the name of the Securities Intermediary and in no case
will any financial asset credited to the Collateral Account be
registered in the name of the Purchase Contract Agent, the Collateral
Agent, the Company or any Holder, payable to the order of, or
specially indorsed to, the Purchase Contract Agent, the Collateral
Agent, the Company or any Holder except to the extent the foregoing
have been specially indorsed to the Securities Intermediary or in
blank; (ii) all property delivered to the Securities Intermediary
pursuant to this Pledge Agreement (including, without limitation, any
Debt Securities, the Treasury Portfolio or Treasury Securities) will
be promptly credited to the Collateral Account; (iii) the Collateral
Account is an account to which financial assets are or may be

credited, and the Securities Intermediary shall, subject to the terms
of this Agreement, treat the Purchase Contract Agent as entitled to
exercise the rights of any financial asset credited to the Collateral
Account; (iv) the Securities Intermediary has not entered into, and
until the termination of the this Agreement will not enter into, any
agreement with any other person relating to the Collateral Account
and/or any financial assets credited thereto pursuant to which it has
agreed to comply with entitlement orders (as defined in Section
8-102(a)(8) of the Code) of such other person; and (v) the Securities
Intermediary has not entered into, and until the termination of this
Agreement will not enter into, any agreement with the debtor or the
secured party purporting to limit or condition the obligation of the
Securities Intermediary to comply with entitlement orders as set forth
in this Section 2.2 hereof.

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

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

Section 3. Distributions on Pledged Collateral. So long as
the Purchase Contract Agent is the registered owner of the Pledged
Debt Securities, it shall receive all payments thereon. If the Pledged
Debt Securities are reregistered, such that the Collateral Agent
becomes the registered holder, all payments of the Stated Amount or,
if applicable, the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the
Treasury Portfolio, or payments of interest on, the Pledged Debt
Securities or distributions on the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and all payments of the
principal of, or cash distributions on, any Pledged Treasury
Securities received by the Collateral Agent that are properly payable
hereunder shall be paid by the Collateral Agent by wire transfer in
same day funds:

(i) In the case of (A) payment of interest with
respect to the Pledged Debt Securities or
cash distributions on the appropriate
Applicable Ownership Interest (as specified
in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may
be, and (B) any payments of the Stated Amount
or, if applicable, the appropriate Applicable
Ownership Interest (as specified in clause
(A) of the definition of such term) of the
Treasury Portfolio with respect to any Debt

Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio,
as the case may be, that have been released
from the Pledge pursuant to Section 4.3
hereof, to the Purchase Contract Agent, for
the benefit of the relevant Holders of
Securities, to the account designated by the
Purchase Contract Agent for such purpose, no
later than 2:00 p.m., ________________ time,
on the Business Day such payment is received
by the Collateral Agent (provided that in the
event such payment is received by the
Collateral Agent on a day that is not a
Business Day or after 12:30 p.m.,
_____________________ time, on a Business
Day, then such payment shall be made no later
than 10:30 a.m., ________________ time, on
the next succeeding Business Day);

(ii) In the case of any principal payments with
respect to any Treasury Securities that have
been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the
Type B Securities to the accounts designated
by them in writing for such purpose no later
than 2:00 p.m., ___________________ time, on
the Business Day such payment is received by
the Collateral Agent (provided that in the
event such payment is received by the
Collateral Agent on a day that is not a
Business Day or after 12:30 p.m.,
___________________ time, on a Business Day,
then such payment shall be made no later than
10:30 a.m., time, on the next succeeding
Business Day); and

(iii) In the case of payments of the principal
of any Pledged Debt Securities or the
Stated Amount of the appropriate
Applicable Ownership Interest (as
specified in clause (A) of the
definition of such term) of the Treasury
Portfolio, as the case may be, or the
principal of any Pledged Treasury
Securities, to the Company on the
Purchase Contract Settlement Date in
accordance with the procedure set forth
in Section 4.6(a) or 4.6(b) hereof, in
full satisfaction of the respective
obligations of the Holders under the
related Purchase Contracts.

All payments received by the Purchase Contract Agent as provided
herein shall be applied by the Purchase Contract Agent pursuant to the
provisions of the Purchase Contract Agreement. If, notwithstanding the
foregoing, the Purchase Contract Agent shall receive any payments of
the Stated Amount or, if applicable, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of
such term) on account of any Debt Security or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as applicable
that, at the time of such payment, is a Pledged Debt Security or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, or a Holder of a Type B Securities shall receive
any payments of principal on account of any Treasury Securities that,
at the time of such payment, are Pledged Treasury Securities, the
Purchase Contract Agent or such Holder shall hold the same as trustee
of an express trust for the benefit of the Company (and promptly
deliver the same over to the Company) for application to the
obligations of the Holders under the related Purchase Contracts, and
the Holders shall acquire no right, title or interest in any such
payments of Stated Amount or principal so received.

Section 4. Substitution, Release, Repledge and Settlement
of Debt Securities.

Section 4.1. Substitution for Debt Securities and the
Creation of Type B Securities. At any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement
Date (unless a Tax Event Redemption has occurred), a Holder of Type A
Securities shall have the right to substitute Treasury Securities for
the Pledged Debt Securities securing such Holder's obligations under
the Purchase Contract(s) comprising a part of its Type A Securities in
integral multiples of _______ Type A Securities by (a) Transferring to
the Collateral Agent Treasury Securities having a Value equal to the
aggregate Stated Amount of the Pledged Debt Securities to be released
and (b)(i) in the event that Contract Adjustment Payments are at a
higher rate for Type B Securities than for Type A Securities,
delivering to the Purchase Contract Agent Cash in an amount equal to
the excess of the Contract Adjustment Payments that would have accrued
since the last Payment Date through the date of substitution on the
Type B Securities being created by the Holder, over the Contract
Adjustment Payments that have accrued over the same time period on the
related Type A Securities, which amount the Purchase Contract Agent
shall promptly remit to the Company, and (ii) delivering the related
Type A Securities to the Purchase Contract Agent, accompanied by a
notice, substantially in the form of Exhibit B hereto, to the Purchase
Contract Agent stating that such Holder has Transferred Treasury
Securities to the Collateral Agent pursuant to clause (a) above
(stating the Value of the Treasury Securities Transferred by such
Holder) and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Debt
Securities related to such Type A Securities. The Purchase Contract
Agent shall instruct the Collateral Agent in the form provided in
Exhibit A; provided, however, that if a Tax Event Redemption has

occurred and the Treasury Portfolio has become a component of the Type
A Securities, Holders of Type A Securities may make such substitution
only in integral multiples of ____________ Type A Securities at any
time on or prior to the second Business Day immediately preceding the
Purchase Contract Settlement Date. Upon receipt of Treasury
Securities from a Holder of Type A Securities and the related
instruction from the Purchase Contract Agent, the Collateral Agent
shall release the Pledged Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, and shall promptly Transfer such Pledged Debt Securities or
the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, free and clear of any lien, pledge or
security interest created hereby, to the Purchase Contract Agent.

Section 4.2. Substitution of Treasury Securities and the
Creation of Type A Securities. At any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement
Date (unless a Tax Event Redemption has occurred), a Holder of Type B
Securities shall have the right to establish or reestablish Type A
Securities consisting of the Purchase Contracts and Debt Securities in
integral multiples of ____ Type A Securities by (a) Transferring to
the Collateral Agent Debt Securities having a Value equal to the Value
of the Pledged Treasury Securities to be released and (b) delivering
the related Type B Securities to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B
hereto, to the Purchase Contract Agent stating that such Holder has
transferred Debt Securities to the Collateral Agent pursuant to clause
(a) above and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Treasury
Securities related to such Type B Securities. The Purchase Contract
Agent shall instruct the Collateral Agent in the form provided in
Exhibit A; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Type
A Securities, Holders of Type B Securities may make such substitution
only in integral multiples of _________ Type B Securities, at any time
on or prior to the Business Day immediately preceding the Purchase
Contract Settlement Date. Upon receipt of the Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, from such Holder and the instruction from the
Purchase Contract Agent, the Collateral Agent shall release the
Treasury Securities and shall promptly Transfer such Treasury
Securities, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent.

Section 4.3. Termination Event. Upon receipt by the
Collateral Agent of written notice from the Company or the Purchase
Contract Agent that there has occurred a Termination Event, the
Collateral Agent shall release all Collateral from the Pledge and
shall promptly Transfer any Pledged Debt Securities (or the Applicable
Ownership Interest of the Treasury Portfolio if a Tax Event Redemption
has occurred) and Pledged Treasury Securities to the Purchase Contract
Agent for the benefit of the Holders of the Type A Securities and the

Type B Securities, respectively, free and clear of any lien, pledge or
security interest or other interest created hereby.

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

Section 4.4. Cash Settlement. (a) Upon receipt by the
Collateral Agent of (i) a notice from the Purchase Contract Agent
promptly after the receipt by the Purchase Contract Agent of such
notice that a Holder of an Type A Securities or Type B Securities has
elected, in accordance with the procedures specified in Section
5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively,
to settle its Purchase Contract with Cash and (ii) payment by such
Holder on or prior to 11:00 a.m., ___________________ time, on the
Business Day immediately preceding the Purchase Contract Settlement
Date in lawful money of the United States by certified or cashiers'
check or wire transfer in immediately available funds payable to or
upon the order of the Company, then the Collateral Agent shall,
promptly invest any Cash received from a Holder in connection with a
Cash Settlement in Permitted Investments. Upon receipt of the
proceeds upon the maturity of the Permitted Investments on the
Purchase Contract Settlement Date, the Collateral Agent shall pay the
portion of such proceeds and deliver any certified or cashiers' checks
received, in an aggregate amount equal to the Purchase Price, to the
Company on the Purchase Contract Settlement Date, and shall distribute
any funds in respect of the interest earned from the Permitted

Investments to the Purchase Contract Agent for payment to the relevant
Holders.

(b) If a Holder of Type A Securities fails to notify the
Purchase Contract Agent of its intention to make a Cash Settlement in
accordance with Section 5.4(a)(i) of the Purchase Contract Agreement,
such failure shall constitute an event of default under the Purchase
Contract Agreement and hereunder, and the Holder shall be deemed to
have consented to the disposition of the pledged Debt Securities
pursuant to the remarketing as described in Section 5.4(b) of the
Purchase Contract Agreement, which is incorporated herein by
reference. If a Holder of Type A Securities does notify the Agent as
provided in Section 5.4(a)(i) of the Purchase Contract Agreement of
its intention to make a Cash Settlement, but fails to make such
payment as required by Section 5.4(a)(ii) of the Purchase Contract
Agreement, the Debt Securities of such a Holder will not be remarketed
but instead the Collateral Agent, for the benefit of the Company, will
exercise its rights as a secured party with respect to such Debt
Securities at the direction of the Company to retain or dispose of the
Collateral in accordance with applicable law. In addition, in the
event of a Failed Remarketing as described in Section 5.4(b) of the
Purchase Contract Agreement, such Failed Remarketing shall constitute
an event of default hereunder by such Holder and the Collateral Agent,
for the benefit of the Company, will also exercise its rights as a
secured party with respect to such Debt Securities at the direction of
the Company to retain or dispose of the Collateral in accordance with
applicable law.

(c) If a Holder of a Type B Securities fails to notify the
Purchase Contract Agent of such Holder's intention to make a Cash
Settlement in accordance with Section 5.4(d)(i) of the Purchase
Contract Agreement, or if a Holder of a Type B Securities does notify
the Agent as provided in paragraph 5.4(d)(i) of the Purchase Contract
Agreement of its intention to make a Cash Settlement, but fails to
make such payment as required by paragraph 5.4(d)(ii) of the Purchase
Contract Agreement, such failure shall constitute an event of default
hereunder by such Holder and upon the maturity of any Pledged Treasury
Securities or the Treasury Portfolio, if any, held by the Collateral
Agent on the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount of the Pledged Treasury
Securities or the Treasury Portfolio received by the Collateral Agent
shall, upon written direction of the Company, be invested promptly in
Permitted Investments. On the Purchase Contract Settlement Date, an
amount equal to the Purchase Price will be remitted to the Company as
payment thereof. In the event the sum of the proceeds from the
related Pledged Treasury Securities or the Treasury Portfolio, as the
case may be, and the investment earnings earned from such investments
is in excess of the aggregate Purchase Price of the Purchase Contracts
being settled thereby, the Collateral Agent will distribute such
excess to the Purchase Contract Agent for the benefit of the Holder of
the related Type B Securities or Type A Securities when received.

Section 4.5. Early Settlement. Upon written notice to the
Collateral Agent by the Purchase Contract Agent that one or more
Holders of Securities have elected to effect Early Settlement of their
respective obligations under the Purchase Contracts forming a part of
such Securities in accordance with the terms of the Purchase Contracts
and the Purchase Contract Agreement (setting forth the number of such
Purchase Contracts as to which such Holders have elected to effect
Early Settlement), and that the Purchase Contract Agent has received
from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the
terms of the Purchase Contracts and the Purchase Contract Agreement
and that all conditions to such Early Settlement have been satisfied,
then the Collateral Agent shall release from the Pledge, (a) Pledged
Debt Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio in the case of a Holder of Type A Securities or
(b) Pledged Treasury Securities in the case of a Holder of Type B
Securities in each case with a principal amount equal to the product
of (i) the Stated Amount times (ii) the number of such Purchase
Contracts as to which such Holders have elected to effect Early
Settlement and shall Transfer all such Pledged Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio or
Pledged Treasury Securities, as the case may be, free and clear of the
Pledge created hereby, to the Purchase Contract Agent for the benefit
of the Holders.

Section 4.6. Application of Proceeds Settlement. (a) In
the event a Holder of Type A Securities (if a Tax Event Redemption has
not occurred) has not elected to make an effective Cash Settlement by
notifying the Purchase Contract Agent in the manner provided for in
paragraph 5.4(a)(i) in the Purchase Contract Agreement or has not made
an Early Settlement of the Purchase Contract(s) underlying its Type A
Securities, such Holder shall be deemed to have elected to pay for the
Common Shares to be issued under such Purchase Contract(s) from the
Proceeds of the related Pledged Debt Securities. The Collateral Agent
shall, by 10:00 a.m. ______________ time, on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date, without
any instruction from such Holder of Type A Securities, present the
related Pledged Debt Securities to the Remarketing Agent for
remarketing. Upon receiving such Pledged Debt Securities, the
Remarketing Agent, pursuant to the terms of the Remarketing Agreement
and the Remarketing Underwriting Agreement, will use its reasonable
efforts to remarket such Pledged Debt Securities on such date at a
price not less than approximately _____% of the aggregate Value of
such Pledged Debt Securities, plus accrued and unpaid distributions
(including deferred distributions), if any, thereon. After deducting
as the Remarketing Fee an amount not exceeding ___ basis points of the
aggregate Value of the Pledged Debt Securities from any amount of such
Proceeds in excess of the aggregate Value, plus such accrued and
unpaid distributions (including deferred distributions) of the
remarketed Pledged Debt Securities, the Remarketing Agent will remit
the entire amount of the Proceeds of such remarketing to the
Collateral Agent. On the Purchase Contract Settlement Date, the

Collateral Agent shall apply that portion of the Proceeds from such
remarketing equal to the aggregate Value, plus such accrued and unpaid
distributions (including deferred distributions) of such Pledged Debt
Securities, to satisfy in full the obligations of such Holders of Type
A Securities to pay the Purchase Price to purchase the Common Shares
under the related Purchase Contracts. The remaining portion of such
Proceeds, if any, shall be distributed by the Collateral Agent to the
Purchase Contract Agent for payment to the Holders. If the
Remarketing Agent advises the Collateral Agent in writing that it
cannot remarket the related Pledged Debt Securities of such Holders of
Type A Securities at a price not less than 100% of the aggregate Value
of such Pledged Debt Securities plus any accrued and unpaid
distributions (including deferred distributions), thus resulting in a
Failed Remarketing and an event of default under the Purchase Contract
Agreement and hereunder, the Collateral Agent, for the benefit of the
Company will, at the written direction of the Company, retain or
dispose of the Pledged Debt Securities in accordance with applicable
law and satisfy in full, from any such disposition or retention, such
Holder's obligation to pay the Purchase Price for the Common Shares.

(b) In the event a Holder of Type B Securities or Type A
Securities (if a Tax Event Redemption has occurred) has not made an
Early Settlement of the Purchase Contract(s) underlying its Type B
Securities or Type A Securities, such Holder shall be deemed to have
elected to pay for the Common Shares to be issued under such Purchase
Contract(s) from the Proceeds of the related Pledged Treasury
Securities or the Treasury Portfolio, as the case may be. On the
Business Day immediately prior to the Purchase Contract Settlement
Date, the Collateral Agent shall, at the written direction of the
Purchase Contract Agent, invest the Cash proceeds of the maturing
Pledged Treasury Securities or the Treasury Portfolio, as the case may
be, in overnight Permitted Investments. Without receiving any
instruction from any such Holder of Type B Securities or Type A
Securities, the Collateral Agent shall apply the Proceeds of the
related Pledged Treasury Securities or Treasury Portfolio to the
settlement of such Purchase Contracts on the Purchase Contract
Settlement Date.

In the event the sum of the Proceeds from the related
Pledged Treasury Securities or Treasury Portfolio and the investment
earnings from the investment in overnight Permitted Investments is in
excess of the aggregate Purchase Price of the Purchase Contracts being
settled thereby, the Collateral Agent shall distribute such excess,
when received, to the Purchase Contract Agent for the benefit of the
Holders.

(c) Pursuant to the Remarketing Agreement and subject to the
terms of the Remarketing Underwriting Agreement, on or prior to the
fifth Business Day immediately preceding the Purchase Contract
Settlement Date, but no earlier than the Payment Date immediately
preceding the Purchase Contract Settlement Date, holders of Separate
Debt Securities may elect to have their Separate Debt Securities

remarketed by delivering their Separate Debt Securities, together with
a notice of such election, substantially in the form of Exhibit C
hereto, to the Custodial Agent. The Custodial Agent will hold such
Separate Debt Securities in an account separate from the Collateral
Account. A holder of Separate Debt Securities electing to have its
Separate Debt Securities remarketed will also have the right to
withdraw such election by written notice to the Custodial Agent,
substantially in the form of Exhibit D hereto, on or prior to the
fifth Business Day immediately preceding the Purchase Contract
Settlement Date, upon which notice the Custodial Agent will return
such Separate Debt Securities to such holder. On the fourth Business
Day immediately preceding the Purchase Contract Settlement Date, the
Custodial Agent will deliver to the Remarketing Agent for remarketing
all separate Debt Securities delivered to the Custodial Agent pursuant
to this Section 4.6(c) and not withdrawn pursuant to the terms hereof
prior to such date. The portion of the proceeds from such remarketing
equal to the aggregate Value of such Separate Debt Securities will
automatically be remitted by the Remarketing Agent to the Custodial
Agent for the benefit of the holders of such Separate Debt Securities.
In addition, after deducting as the Remarketing Fee an amount not
exceeding ___ basis points of the Value of the remarketed Separate
Debt Securities, from any amount of such proceeds in excess of the
aggregate Value of the remarketed Separate Debt Securities plus any
accrued and unpaid distributions (including deferred distributions, if
any), the Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds, if any, for the benefit of such
holders. If, despite using its reasonable efforts, the Remarketing
Agent advises the Custodial Agent in writing that it cannot remarket
the related Separate Debt Securities of such holders at a price not
less than 100% of the aggregate Value of such Separate Debt Securities
plus accrued and unpaid distributions (including deferred
distributions) and thus resulting in a Failed Remarketing, the
Remarketing Agent will promptly return such Separate Debt Securities
to the Custodial Agent for redelivery to such holders.

Section 5. Voting Rights -- Debt Securities. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all
voting and other consensual rights pertaining to the Pledged Debt
Securities or any part thereof for any purpose not inconsistent with
the terms of this Agreement and in accordance with the terms of the
Purchase Contract Agreement; provided, that the Purchase Contract
Agent shall not exercise or, as the case may be, shall not refrain
from exercising such right if, in the judgment of the Company, such
action would impair or otherwise have a material adverse effect on the
value of all or any of the Pledged Debt Securities; and provided,
further, that the Purchase Contract Agent shall give the Company and
the Collateral Agent at least five days' prior written notice of the
manner in which it intends to exercise, or its reasons for refraining
from exercising, any such right. Upon receipt of any notices and
other communications in respect of any Pledged Debt Securities,
including notice of any meeting at which holders of Debt Securities
are entitled to vote or solicitation of consents, waivers or proxies

of holders of Debt Securities, the Collateral Agent shall use
reasonable efforts to send promptly to the Purchase Contract Agent
such notice or communication, and as soon as reasonably practicable
after receipt of a written request therefor from the Purchase Contract
Agent, execute and deliver to the Purchase Contract Agent such proxies
and other instruments in respect of such Pledged Debt Securities (in
form and substance satisfactory to the Collateral Agent) as are
prepared by the Purchase Contract Agent with respect to the Pledged
Debt Securities.

Section 6. Rights and Remedies; Distribution of the
Debentures; Tax Event Redemption

Section 6.1. Rights and Remedies of the Collateral Agent.
(a) In addition to the rights and remedies specified in Section 4.4
hereof or otherwise available at law or in equity, after an event of
default hereunder, the Collateral Agent shall have all of the rights
and remedies with respect to the Collateral of a secured party under
the Uniform Commercial Code as in effect in the State of
________________ (the "Code") (whether or not the Code is in effect in
the jurisdiction where the rights and remedies are asserted) and the
TRADES Regulations and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted. Without
limiting the generality of the foregoing, such remedies may include,
to the extent permitted by applicable law, (i) retention of the
Pledged Debt Securities or other Collateral in full satisfaction of
the Holders' obligations under the Purchase Contracts or (ii) sale of
the Pledged Debt Securities or other Collateral in one or more public
or private sales.

(b) Without limiting any rights or powers otherwise granted
by this Agreement to the Collateral Agent, in the event the Collateral
Agent is unable to make payments to the Company on account of the
appropriate Applicable Ownership Interest (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio or on
account of principal payments of any Pledged Treasury Securities as
provided in Section 3 hereof in satisfaction of the obligations of the
Holder of the Securities of which such Pledged Treasury Securities, or
the appropriate Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, as
applicable, is a part under the related Purchase Contracts, the
inability to make such payments shall constitute an event of default
hereunder and the Collateral Agent shall have and may exercise, with
reference to such Pledged Treasury Securities, or such appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as applicable, and
such obligations of such Holder, any and all of the rights and
remedies available to a secured party under the Code and the TRADES
Regulations after default by a debtor, and as otherwise granted herein
or under any other law.

(c) Without limiting any rights or powers otherwise granted
by this Agreement to the Collateral Agent, the Collateral Agent is
hereby irrevocably authorized to receive and collect all payments of
(i) the Stated Amount of, or cash distributions on, the Pledged Debt
Securities, (ii) the principal amount of the Pledged Treasury
Securities, or (iii) the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the
Treasury Portfolio, subject, in each case, to the provisions of
Section 3, and as otherwise granted herein.

(d) The Purchase Contract Agent and each Holder of
Securities, in the event such Holder becomes the Holder of Type B
Securities, agree that, from time to time, upon the written request of
the Collateral Agent, the Purchase Contract Agent or such Holder shall
execute and deliver such further documents and do such other acts and
things as the Collateral Agent may reasonably request in order to
maintain the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Collateral Agent hereunder. The Purchase
Contract Agent shall have no liability to any Holder for executing any
documents or taking any such acts requested by the Collateral Agent
hereunder, except for liability for its own negligent act, its own
negligent failure to act or its own willful misconduct.

Section 6.2. Tax Event Redemption. Upon the occurrence of
a Tax Event Redemption prior to the Purchase Contract Settlement Date,
the Redemption Price payable on the Tax Event Redemption Date with
respect to the Applicable Principal Amount of Debt Securities shall be
delivered to the Collateral Agent by the Trustee on or prior to 12:30
p.m., _____________________ time, by check or wire transfer in
immediately available funds at such place and at such account as may
be designated by the Collateral Agent in exchange for the Pledged Debt
Securities. In the event the Collateral Agent receives such
Redemption Price, the Collateral Agent will, at the written direction
of the Company, apply an amount equal to the Redemption Amount of such
Redemption Price to purchase from the Quotation Agent, the Treasury
Portfolio and promptly remit the remaining portion of such Redemption
Price to the Purchase Contract Agent for payment to the Holders of
Type A Securities. The Collateral Agent shall Transfer the Treasury
Portfolio to the Collateral Account in the manner specified herein for
Pledged Debt Securities to secure the obligation of all Holders of
Type A Securities to purchase Common Shares of the Company under the
Purchase Contracts constituting a part of such Type A Securities, in
substitution for the Pledged Debt Securities. Thereafter the
Collateral Agent shall have such security interests, rights and
obligations with respect to the Treasury Portfolio as it had in
respect of the Pledged Debt Securities, as provided in Sections 2, 3,
4, 5 and 6, and any reference herein to the Pledged Debt Securities
shall be deemed to be a reference to such Treasury Portfolio.

Section 6.3. Substitutions. Whenever a Holder has the
right to substitute Treasury Securities, Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,

as the case may be, for Collateral held by the Collateral Agent, such
substitution shall not constitute a novation of the security interest
created hereby.

Section 7. Representations and Warranties; Covenants.

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

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

(b) such Holder is the sole beneficial owner of
the Collateral and, in the case of Collateral
delivered in physical form, is the sole
holder of such Collateral and is the sole
beneficial owner of, or has the right to
Transfer, the Collateral it Transfers to the
Collateral Agent, free and clear of any
security interest, lien, encumbrance, call,
liability to pay money or other restriction
other than the security interest and lien
granted under Section 2 hereof;

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

(d) the execution and performance by the Holder
of its obligations under this Agreement will
not result in the creation of any security
interest, lien or other encumbrance on the
Collateral other than the security interest
and lien granted under Section 2 hereof or
violate any provision of any existing law or
regulation applicable to it or of any

mortgage, charge, pledge, indenture, contract
or undertaking to which it is a party or
which is binding on it or any of its assets.

Section 7.2. Covenants. The Holders from time to time,
acting through the Purchase Contract Agent as their attorney-in-fact
(it being understood that the Purchase Contract Agent shall not be
liable for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the Collateral
remains subject to the Pledge:

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

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

Section 8. The Collateral Agent. It is hereby agreed as
follows:

Section 8.1. Appointment, Powers and Immunities. The
Collateral Agent shall act as Agent for the Company hereunder with
such powers as are specifically vested in the Collateral Agent by the
terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Each of the Collateral Agent, the
Custodial Agent and the Securities Intermediary: (a) shall have no
duties or responsibilities except those expressly set forth in this
Agreement and no implied covenants or obligations shall be inferred
from this Agreement against any of them, nor shall any of them be
bound by the provisions of any agreement by any party hereto beyond
the specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other
document referred to or provided for in, or received by it under, this
Agreement, the Securities or the Purchase Contract Agreement, or for
the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement (other than as against the Collateral
Agent), the Securities or the Purchase Contract Agreement or any other
document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as the case
may be) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required hereby,
maintenance of any security interest created hereunder; (c) shall not

be required to initiate or conduct any litigation or collection
proceedings hereunder (except in the case of the Collateral Agent,
pursuant to directions furnished under Section 8.2 hereof, subject to
Section 8.6 hereof); (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection
herewith or therewith, except for its own negligence or willful
misconduct; and (e) shall not be required to advise any party as to
selling or retaining, or taking or refraining from taking any action
with respect to, the Securities or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the
Collateral Agent shall take all reasonable action in connection with
the safekeeping and preservation of the Collateral hereunder.

No provision of this Agreement shall require the Collateral
Agent, the Custodial Agent or the Securities Intermediary to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the
Collateral Agent, the Custodial Agent or the Securities Intermediary
be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, the Collateral Agent, the Custodial
Agent and Securities Intermediary, each in its individual capacity,
hereby waive any right of setoff, bankers lien, liens or perfection
rights as securities intermediary or any counterclaim with respect to
any of the Collateral.

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

Section 8.3. Reliance by Collateral Agent. Each of the
Securities Intermediary, the Custodial Agent and the Collateral Agent
shall be entitled conclusively to rely upon any certification, order,
judgment, opinion, notice or other communication (including, without
limitation, any thereof by telephone, telecopy, telex or facsimile)
believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons (without being
required to determine the correctness of any fact stated therein), and

upon advice and statements of legal counsel and other experts selected
by the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be. As to any matters not expressly
provided for by this Agreement, the Collateral Agent, the Custodial
Agent and the Securities Intermediary shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in
accordance with instructions given by the Company in accordance with
this Agreement.

Section 8.4. Rights in Other Capacities. The Collateral
Agent, the Custodial Agent and the Securities Intermediary and their
affiliates may (without having to account therefor to the Company)
accept deposits from, lend money to, make their investments in and
generally engage in any kind of banking, trust or other business with
the Purchase Contract Agent and any Holder of Securities (and any of
their respective subsidiaries or affiliates) as if it were not acting
as the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the
Custodial Agent and the Securities Intermediary and their affiliates
may accept fees and other consideration from the Purchase Contract
Agent and any Holder of Securities without having to account for the
same to the Company; provided that each of the Securities
Intermediary, the Custodial Agent and the Collateral Agent covenants
and agrees with the Company that it shall not accept, receive or
permit there to be created in favor of itself and shall take no
affirmative action to permit there to be created in favor of any other
Person, any security interest, lien or other encumbrance of any kind
in or upon the Collateral.

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

Section 8.6. Compensation and Indemnity. The Company
agrees: (i) to pay each of the Collateral Agent and the Custodial
Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent or the Custodial
Agent, as the case may be, for all services rendered by each of them
hereunder and (ii) to indemnify the Collateral Agent, the Custodial
Agent and the Securities Intermediary for, and to hold each of them

harmless from and against, any loss, liability or reasonable
out-of-pocket expense incurred without negligence, willful misconduct
or bad faith on its part, arising out of or in connection with the
acceptance or administration of its powers and duties under this
Agreement, including the reasonable out-of-pocket costs and expenses
(including reasonable fees and expenses of counsel) of defending
itself against any claim or liability in connection with the exercise
or performance of such powers and duties.

Section 8.7. Failure to Act. In the event of any ambiguity
in the provisions of this Agreement or any dispute between or
conflicting claims by or among the parties hereto or any other Person
with respect to any funds or property deposited hereunder, the
Collateral Agent and the Custodial Agent shall be entitled, after
prompt notice to the Company and the Purchase Contract Agent, at its
sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such
dispute or conflict shall continue, and neither the Collateral Agent
nor the Custodial Agent shall be or become liable in any way to any of
the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent and
the Custodial Agent shall be entitled to refuse to act until either
(i) such conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by
agreement between the conflicting parties as evidenced in a writing,
satisfactory to the Collateral Agent or the Custodial Agent, as the
case may be, or (ii) the Collateral Agent or the Custodial Agent, as
the case may be, shall have received security or an indemnity
satisfactory to the Collateral Agent or the Custodial Agent, as the
case may be, sufficient to save the Collateral Agent or the Custodial
Agent, as the case may be, harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which the Collateral
Agent or the Custodial Agent, as the case may be, may incur by reason
of its acting. The Collateral Agent or the Custodial Agent may in
addition elect to commence an interpleader action or seek other
judicial relief or orders as the Collateral Agent or the Custodial
Agent, as the case may be, may deem necessary. Notwithstanding
anything contained herein to the contrary, neither the Collateral
Agent nor the Custodial Agent shall be required to take any action
that is in its opinion contrary to law or to the terms of this
Agreement, or which would in its opinion subject it or any of its
officers, employees or directors to liability.

Section 8.8. Resignation of Collateral Agent. Subject to
the appointment and acceptance of a successor Collateral Agent or
Custodial Agent as provided below, (a) the Collateral Agent and the
Custodial Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-in-fact for the
Holders of Securities, (b) the Collateral Agent and the Custodial
Agent may be removed at any time by the Company and (c) if the
Collateral Agent or the Custodial Agent fails to perform any of its
material obligations hereunder in any material respect for a period of

not less than 20 days after receiving written notice of such failure
by the Purchase Contract Agent and such failure shall be continuing,
the Collateral Agent or the Custodial Agent may be removed by the
Purchase Contract Agent. The Purchase Contract Agent shall promptly
notify the Company of any removal of the Collateral Agent pursuant to
clause (c) of the immediately preceding sentence. Upon any such
resignation or removal, the Company shall have the right to appoint a
successor Collateral Agent or Custodial Agent, as the case may be. If
no successor Collateral Agent or Custodial Agent, as the case may be,
shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Collateral Agent's or Custodial
Agent's giving of notice of resignation or such removal, then the
retiring Collateral Agent or Custodial Agent, as the case may be, may
petition any court of competent jurisdiction for the appointment of a
successor Collateral Agent or Custodial Agent, as the case may be.
Each of the Collateral Agent and the Custodial Agent shall be a bank
which has an office in ___________________________________ with a
combined capital and surplus of at least $_____________. Upon the
acceptance of any appointment as Collateral Agent or Custodial Agent,
as the case may be, hereunder by a successor Collateral Agent or
Custodial Agent, as the case may be, such successor shall thereupon
succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent or Custodial Agent, as the
case may be, and the retiring Collateral Agent or Custodial Agent, as
the case may be, shall take all appropriate action to transfer any
money and property held by it hereunder (including the Collateral) to
such successor. The retiring Collateral Agent or Custodial Agent
shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent or Custodial Agent hereunder. After
any retiring Collateral Agent's or Custodial Agent's resignation
hereunder as Collateral Agent or Custodial Agent, the provisions of
this Section 8 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as
the Collateral Agent or Custodial Agent. Any resignation or removal
of the Collateral Agent hereunder shall be deemed for all purposes of
this Agreement as the simultaneous resignation or removal of the
Custodial Agent and the Securities Intermediary.

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

Section 8.10. Survival. The provisions of this Section 8
shall survive termination of this Agreement and the resignation or
removal of the Collateral Agent or the Custodial Agent.

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

Section 9. Amendment.

Section 9.1. Amendment Without Consent of Holders. Without
the consent of any Holders or the holders of any Separate Debt
Securities, the Company, the Collateral Agent, the Custodial Agent,
the Securities Intermediary and the Purchase Contract Agent, at any
time and from time to time, may amend this Agreement, in form
satisfactory to the Company, the Collateral Agent, the Custodial
Agent, the Securities Intermediary and the Purchase Contract Agent,
for any of the following purposes:

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

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

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

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

Section 9.2. Amendment with Consent of Holders. With the
consent of the Holders of not less than a majority of the Purchase
Contracts at the time outstanding, by Act of said Holders delivered to
the Company, the Purchase Contract Agent or the Collateral Agent, as
the case may be, the Company, when duly authorized, the Purchase
Contract Agent, the Collateral Agent, the Custodial Agent and the

Securities Intermediary may amend this Agreement for the purpose of
modifying in any manner the provisions of this Agreement or the rights
of the Holders in respect of the Securities; provided, however, that
no such supplemental agreement shall, without the consent of the
Holder of each Outstanding Security adversely affected thereby,

(1) change the amount or type of Collateral underlying
a Security (except for the rights of holders of Type A
Securities to substitute the Treasury Securities for the
Pledged Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case
may be, or the rights of Holders of Type B Securities to
substitute Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as applicable,
for the Pledged Treasury Securities), impair the right of
the Holder of any Security to receive distributions on the
underlying Collateral or otherwise adversely affect the
Holder's rights in or to such Collateral; or

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

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

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

Section 9.3. Execution of Amendments. In executing any
amendment permitted by this Section, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract
Agent shall be entitled to receive and (subject to Section 6.1 hereof,
with respect to the Collateral Agent, and Section 7.1 of the Purchase
Contract Agreement, with respect to the Purchase Contract Agent) shall
be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent, if any, to the execution
and delivery of such amendment have been satisfied.

Section 9.4. Effect of Amendments. Upon the execution of
any amendment under this Section 9, this Agreement shall be modified
in accordance therewith, and such amendment shall form a part of this
Agreement for all purposes; and every Holder of Certificates
theretofore or thereafter authenticated, executed on behalf of the
Holders and delivered under the Purchase Contract Agreement shall be
bound thereby.

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

Section 10. Miscellaneous.

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

Section 10.2. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
___________________. Without limiting the foregoing, the above choice
of law is expressly agreed to by the Company, the Securities
Intermediary, the Custodial Agent, the Collateral Agent and the
Holders from time to time acting through the Purchase Contract Agent,
as their attorney-in-fact, in connection with the establishment and
maintenance of the Collateral Account. The Company, the Collateral
Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby
submit to the nonexclusive jurisdiction of the United States District
Court for the ________________________ and of any ____________________
state court sitting in _________________________ for the purposes of
all legal proceedings arising out of or relating to this Agreement or
the transactions contemplated hereby. The Company, the Collateral
Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact,
irrevocably waive, to the fullest extent permitted by applicable law,
any objection which they may now or hereafter have to the laying of
the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in
an inconvenient forum.

Section 10.3. Notices. All notices, requests, consents and
other communications provided for herein (including, without
limitation, any modifications of, or waivers or consents under, this

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

Section 10.4. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the respective successors
and assigns of the Company, the Collateral Agent, the Custodial Agent,
the Securities Intermediary and the Purchase Contract Agent, and the
Holders from time to time of the Securities, by their acceptance of
the same, shall be deemed to have agreed to be bound by the provisions
hereof and to have ratified the agreements of, and the grant of the
Pledge hereunder by, the Purchase Contract Agent.

Section 10.5. Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto
may execute this Agreement by signing any such counterpart.

Section 10.6. Severability. If any provision hereof is
invalid and unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, (i) the other provisions hereof shall remain
in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not
affect the validity or enforceability of such provision in any other
jurisdiction.

Section 10.7. Expenses, etc. The Company agrees to
reimburse the Collateral Agent and the Custodial Agent for: (a) all
reasonable out-of-pocket costs and expenses of the Collateral Agent
and the Custodial Agent (including, without limitation, the reasonable
fees and expenses of the necessary services of a Securities
Intermediary and of counsel to the Collateral Agent and the Custodial
Agent), in connection with (i) the negotiation, preparation, execution
and delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this
Agreement; (b) all reasonable costs and expenses of the Collateral
Agent (including, without limitation, reasonable fees and expenses of
counsel) in connection with (i) any enforcement or proceedings
resulting or incurred in connection with causing any Holder of
Securities to satisfy its obligations under the Purchase Contracts
forming a part of the Securities and (ii) the enforcement of this
Section 10.7; and (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document

referred to herein and all costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration,
recording or perfection of any security interest contemplated hereby.

Section 10.8. Security Interest Absolute. All rights of
the Collateral Agent and security interests hereunder, and all
obligations of the Holders from time to time hereunder, shall be
absolute and unconditional irrespective of:

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

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

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

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

ARVIN INDUSTRIES, INC.

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

Address for Notices:

Arvin Industries, Inc.
One Noblitt Plaza, Box 3000
Columbus, Indiana 47202
Attention: Treasurer
Telecopy:

---------------------------
as Purchase Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities

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

Address for Notices:

,
--------------------
as Collateral Agent, Custodial
Agent and as Securities Intermediary

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

Address for Notices:

EXHIBIT A

INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT

Re: Securities of Arvin Industries, Inc. (the "Company")

We hereby notify you in accordance with Section [4.1] [4.2]
of the Pledge Agreement, dated as of _________, ____, (the "Pledge
Agreement") among the Company, yourselves, as Collateral Agent,
Custodial Agent and Securities Intermediary and ourselves, as Purchase
Contract Agent and as attorney-in-fact for the holders of [Type A
Securities] [Type B Securities] from time to time, that the holder of
Securities listed below (the "Holder") has elected to substitute
[$____ principal amount of Treasury Securities] [$________ principal
amount of Debt Securities or Stated Amount of the appropriate
Applicable Ownership Interest of the Treasury Portfolio] in exchange
for an equal Value of [Pledged Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] [Pledged
Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such
[Pledged Treasury Securities] [Pledged Debt Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio],
to release the [Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Treasury Securities]
related to such [Type A Securities] [Type B Securities] to us in
accordance with the Holder's instructions. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge
Agreement.

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

By:
------------------------------

Name:
Title:
Signature Guarantee:
---------------

Please print name and address of Registered Holder electing to
substitute [Treasury Securities] [Debt Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] for the
[Pledged Debt Securities or the Treasury Portfolio] [Pledged Treasury
Securities]:

------------------------- ------------------------------
Name Social Security or other Taxpayer
Identification Number, if any

Address

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

EXHIBIT B

INSTRUCTION TO PURCHASE CONTRACT AGENT

Re: Securities of Arvin Industries, Inc. (the "Company")

The undersigned Holder hereby notifies you that it has delivered to
_______________________________, as Collateral Agent, [$ principal
amount of Treasury Securities] [$_____________ principal amount of
Debt Securities or Stated Amount of the appropriate Applicable
Ownership Interest of the Treasury Portfolio] in exchange for an equal
Value of [Pledged Debt Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Pledged Treasury
Securities] held by the Collateral Agent, in accordance with Section
4.1 of the Pledge Agreement, dated _________, ____ (the "Pledge
Agreement"), between you, the Company and the Collateral Agent. The
undersigned Holder hereby instructs you to instruct the Collateral
Agent to release to you on behalf of the undersigned Holder the
[Pledged Debt Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio] [Pledged Treasury Securities]
related to such [Type A Securities] [Type B Securities]. Capitalized
terms used herein but not defined shall have the meaning set forth in
the Pledge Agreement.

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

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

Please print name and address of Registered Holder:

------------------- ----------------------------------
Name Social Security or other Taxpayer
Identification Number, if any

Address

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

EXHIBIT C

INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING

Re: Securities of Arvin Industries, Inc. (the "Company")

The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of _______, ____ (the
"Pledge Agreement"), among the Company, yourselves, as Collateral
Agent, Securities Intermediary and Custodial Agent, and ____________,
as Purchase Contract Agent and as attorney-in-fact for the Holders of
Type A Securities and Type B Securities from time to time, that the
undersigned elects to deliver $_______ principal amount of Debt
Securities for delivery to the Remarketing Agent on the fourth
Business Day immediately preceding the Purchase Contract Settlement
Date for remarketing pursuant to Section 4.6(c) of the Pledge
Agreement. The undersigned will, upon request of the Remarketing
Agent, execute and deliver any additional documents deemed by the
Remarketing Agent or by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Debt Securities
tendered hereby.

The undersigned hereby instructs you, upon receipt of the
Proceeds of such remarketing from the Remarketing Agent to deliver
such Proceeds to the undersigned in accordance with the instructions
indicated herein under "A. Payment Instructions". The undersigned
hereby instructs you, in the event of Failed Remarketing, upon receipt
of the Debt Securities tendered herewith from the Remarketing Agent,
to deliver such Debt Securities to the person(s) and the address(es)
indicated herein under "B. Delivery Instructions."

With this notice, the undersigned hereby (i) represents and
warrants that the undersigned has full power and authority to tender,
sell, assign and transfer the Debt Securities tendered hereby and that
the undersigned is the record owner of any Debt Securities tendered
herewith in physical form or a participant in The Depositary Trust
Company ("DTC") and the beneficial owner of any Debt Securities
tendered herewith by book-entry transfer to your account at DTC and
(ii) agrees to be bound by the terms and conditions of Section 4.6(c)
of the Pledge Agreement. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.

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

By:
---------------------------
Name:
Title:
Signature Guarantee:
-----------

Please print name and address:

------------------- ---------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any

Address

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

-------------------------
34

<S> <C>
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS

Proceeds of the remarketing should be paid In the event of a Failed Remarketing, Debt
by check in the name of the person(s) set Securities which are in physical form should
forth below and mailed to the address set be delivered to the person(s) set forth below
forth below. and mailed to the address set forth below,

Name(s) Name(s)

------------------------------------------- ------------------------------------------
(Please Print) (Please Print)
Address Address

------------------------------------------ ------------------------------------------
Tax Identification Social Security Number Tax Identification Social Security Number

In the event of a Failed Remarketing, Debt
Securities which are in book-entry form should
be credited to the account at The Depositary
Trust Company set forth below.
-------------------------
DTC Account Number

Name of Account Party:
-------------------------

EXHIBIT D

INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING

Re: Securities of Arvin Industries, Inc. (the "Company")

The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of ____, ____ (the
"Pledge Agreement") among the Company, yourselves, as Collateral
Agent, Securities Intermediary and Custodial Agent and ____________,
as Purchase Contract Agent and as attorney-in-fact for the Holders of
Type A Securities and Type B Securities from time to time, that the
undersigned elects to withdraw the $___, principal amount of Debt
Securities delivered to the Custodial Agent on ______ for remarketing
pursuant to Section 4.6(c) of the Pledge Agreement. The undersigned
hereby instructs you to return such Debt Securities to the undersigned
in accordance with the undersigned's instructions. With this notice,
the Undersigned hereby agrees to be bound by the terms and conditions
of Section 4.6(c) of the Pledge Agreement. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge
Agreement.

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

By:
-------------------------
Name:
Title:
Signature Guarantee:
-----

Please print name and address:

------------------------------ ----------------------------------
Name Social Security or other Taxpayer
Identification Number, if any

Address

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

</TABLE>

EXHIBIT 4-11

FORM OF REMARKETING AGREEMENT

FORM OF REMARKETING AGREEMENT, dated as of ___________, ____ (the
"Remarketing Agreement") by and between Arvin Industries, Inc., an
Indiana corporation (the "Company"), and ______ not individually but
solely as Purchase Contract Agent and as attorney-in-fact of the
holders of Purchase Contracts (each as defined in the Purchase
Contract Agreement (as defined herein)), and _____________________
(the "Remarketing Agent").

WITNESSETH:

WHEREAS, the Company will issue an aggregate Stated Amount
$_________ of its Securities (the "Securities") under the Purchase
Contract Agreement, dated as of ______________, ____, by and between
the Purchase Contract Agent and the Company (the "Purchase Contract
Agreement"); and

WHEREAS, the Securities will initially consist of ________ units
referred to as "Type A Securities," each such security consisting of a
___% Senior Note due _______ issued by the Company in the principal
amount of $______ (a "Debt Security") and a Purchase Contract issued
by the Company ("Purchase Contract") pursuant to the Purchase Contract
Agreement and _____ units referred to as "Type B Securities," each
such security consisting of certain U.S. Treasury Securities and a
Purchase Contract.

WHEREAS, the Debt Securities will be pledged pursuant to the
Pledge Agreement (the "Pledge Agreement"), dated as of _________,
____, by and between the Company, ______________________, as
Collateral Agent, Securities Intermediary and Custodial Agent (the
"Collateral Agent") and the Purchase Contract Agent, to secure a Type
A Security holder's obligations under the related Purchase Contract on
the Purchase Contract Settlement Date; and

WHEREAS, the Debt Securities of such holders electing to have
their Debt Securities that are not pledged pursuant to the Pledge
Agreement remarketed, or of such Type A Security holders who have
elected not to settle the Purchase Contracts related to their Type A
Security from the proceeds of a Cash Settlement and who have not early
settled their Purchase Contracts, will be remarketed by the
Remarketing Agent on the third Business Day immediately preceding the
Purchase Contract Settlement Date; and

WHEREAS, the applicable interest rate on the Debt Securities that
remain outstanding on and after the Purchase Contract Settlement Date
will be reset on the third Business Day immediately preceding the
Purchase Contract Settlement Date, to the Reset Rate to be determined
by the Reset Agent as the rate that such Debt Securities should bear
in order to have an approximate market value of ____% of the
aggregate principal amount of the Debt Securities on the third
Business Day immediately preceding the Purchase Contract Settlement

Date, provided that in the determination of such Reset Rate, the
Company may limit the Reset Spread (a component of the Reset Rate) to
be no higher than ____ basis points; and

WHEREAS, the Company has requested _________________
("__________________") to act as the Reset Agent and as the
Remarketing Agent and as such to perform the services described
herein; and

WHEREAS, ________________ is willing to act as Reset Agent and
Remarketing Agent and as such to perform such duties on the terms and
conditions expressly set forth herein;

NOW, THEREFORE, for and in consideration of the covenants herein
made, and subject to the conditions herein set forth, the parties
hereto agree as follows:

Section 1. DEFINITIONS. Capitalized terms used and not
defined in this Agreement shall have the meanings assigned to them in
the Purchase Contract Agreement or, if not therein stated, the Pledge
Agreement.

Section 2. APPOINTMENT AND OBLIGATIONS OF RESET AGENT AND
REMARKETING AGENT. The Company hereby appoints _____________, and
________ hereby accepts such appointment, (i) as the Reset Agent to
determine, and in consultation with the Company and in the manner
provided for in the Indenture, the Reset Rate, that in the opinion of
the Reset Agent, will, when applied to the Debt Securities, enable the
Debt Securities, to have an approximate market value of approximately
____% of the aggregate principal amount of such Debt Securities,
provided that the Company may limit such Reset Rate to be no higher
than the rate on the Two-Year Benchmark Treasury plus ____ basis
points, and (ii) as the exclusive Remarketing Agent to remarket the
Debt Securities (a) of Debt Securities holders electing to have their
Debt Securities remarketed, or (b) of Type A Security holders who have
not early settled the related Purchase Contracts and have failed to
notify the Purchase Contract Agent, on or prior to the fifth Business
Day immediately preceding the Purchase Contract Settlement Date, of
their intention to settle the related Purchase Contracts through Cash
Settlement, for settlement on the Purchase Contract Settlement Date,
pursuant to the Remarketing Underwriting Agreement attached hereto as
Exhibit A, among the Company, the Purchase Contract Agent and the
Remarketing Agent (with such changes as the Company, the Purchase
Contract Agent and the Remarketing Agent may agree upon, it being
understood that changes may be necessary in the representations,
warranties, covenants and other provisions of the Remarketing
Underwriting Agreement due to changes in law or facts and
circumstances). Pursuant to the Remarketing Underwriting Agreement,
the Remarketing Agent, either as the sole remarketing underwriter or
as the representative of a syndicate including the Remarketing Agent
and one or more other remarketing underwriters designated by the
Remarketing Agent, will agree, subject to the terms and conditions set

forth therein, that the Remarketing Agent and any such other
remarketing underwriters will purchase, severally, the Debt Securities
to be sold by the holder or holders of Debt Securities or Type A
Securities on the third Business Day immediately preceding the
Purchase Contract Settlement Date and will use their reasonable
efforts to remarket such Debt Securities (such purchase and
remarketing being hereinafter referred to as the "Remarketing"), at a
price of approximately _______% of the aggregate principal amount of
such Debt Securities plus any accrued and unpaid interest (including
any deferred interest). Notwithstanding the preceding sentence, the
Remarketing Agent shall not remarket any Debt Securities for a price
less than 100% of the aggregate principal amount of such Debt
Securities, plus accrued and unpaid interest and shall not be required
to purchase any Debt Securities not remarketed. The proceeds of such
remarketing shall be paid to the Collateral Agent in accordance with
Section 4.6 of the Pledge Agreement and Section 5.4 of the Purchase
Contract Agreement (both of which Sections are incorporated herein by
reference).

Section 3. FEES. With respect to the Remarketing, the
Remarketing Agent shall retain as Remarketing Fee an amount not
exceeding ____ basis points, of the aggregate principal amount of the
remarketed securities from any amount received in connection with such
Remarketing in excess of aggregate principal amount of such remarketed
Debt Securities plus any accrued and unpaid interest (including any
deferred interest). In addition, the Reset Agent shall receive from
the Company a reasonable and customary fee for acting as the Reset
Agent (the "Reset Agent Fee"); provided, however, that if the
Remarketing Agent shall also act as the Reset Agent, then the Reset
Agent shall not be entitled to receive any such Reset Agent Fee.
Payment of such Reset Agent Fee shall be made by the Company on the
third Business Day immediately preceding the Purchase Contract
Settlement Date in immediately available funds or, upon the
instructions of the Reset Agent, by certified or official bank check
or checks or by wire transfer.

Section 4. REPLACEMENT AND RESIGNATION OF REMARKETING AGENT
AND RESET AGENT. (a) The Company may in its absolute discretion
replace _____________ as the Remarketing Agent and/or as the Reset
Agent in its capacity hereunder by giving notice prior to 3:00 p.m.,
__________________ time, on the eleventh Business Day immediately
prior to the Purchase Contract Settlement Date. Any such replacement
shall become effective upon the Company's appointment of a successor
to perform the services that would otherwise be performed hereunder by
the Remarketing Agent and/or the Reset Agent. Upon providing such
notice, the Company shall use all reasonable efforts to appoint such a
successor and to enter into a remarketing agreement with such
successor as soon as reasonably practicable.

(b) _____________ may resign at any time and be discharged from
its duties and obligations hereunder as the Remarketing Agent and/or
as the Reset Agent by giving notice prior to 3:00 p.m.,

_________________________ time, on the eleventh Business Day
immediately prior to the Purchase Contract Settlement Date. Any such
resignation shall become effective upon the Company's appointment of a
successor to perform the services that would otherwise be performed
hereunder by the Remarketing Agent and/or the Reset Agent. Upon
receiving notice from the Remarketing Agent and/or the Reset Agent
that it wishes to resign hereunder, the Company shall appoint such a
successor and enter into a remarketing agreement with it as soon as
reasonably practicable.

Section 5. DEALING IN THE SECURITIES. The Remarketing Agent,
when acting hereunder or under the Remarketing Underwriting Agreement
or acting in its individual or any other capacity, may, to the extent
permitted by law, buy, sell, hold or deal in any of the Debt
Securities. With respect to any Debt Securities owned by it, the
Remarketing Agent may exercise any vote or join in any action with
like effect as if it did not act in any capacity hereunder. The
Remarketing Agent, in its individual capacity, either as principal or
agent, may also engage in or have an interest in any financial or
other transaction with the Company as freely as if it did not act in
any capacity hereunder.

Section 6. REGISTRATION STATEMENT AND PROSPECTUS. In
connection with the Remarketing, if and to the extent required (in the
opinion of counsel for either the Remarketing Agent or the Company) by
applicable law, regulations or interpretations in effect at the time
of such Remarketing, the Company shall use its reasonable efforts to
have a registration statement relating to the Debt Securities
effective under the Securities Act of 1933 by the third Business Day
immediately preceding the Purchase Contract Settlement Date, shall
furnish a current prospectus and/or prospectus supplement to be used
in such Remarketing by the remarketing underwriter or underwriters
under the Remarketing Underwriting Agreement, and shall pay all
expenses relating thereto.

Section 7. CONDITIONS TO THE REMARKETING AGENT'S OBLIGATIONS.
(a) The obligations of the Remarketing Agent and any other remarketing
underwriters to purchase and remarket the Debt Securities, as the case
may be, shall be subject to the terms and conditions of the
Remarketing Underwriting Agreement.

(b) If at any time during the term of this Agreement, any Event
of Default (as defined therein) under the Indenture, or event that
with the passage of time or the giving of notice or both would become
an Event of Default under the Indenture, has occurred and is
continuing, then the obligations and duties of the Remarketing Agent
under this Agreement shall be suspended until such default or event
has been cured. The Company will cause the Trustee to give the
Remarketing Agent notice of all such defaults and events of which the
Trustee is aware.

Section 8. TERMINATION OF REMARKETING AGREEMENT. This
Agreement shall terminate as to the Remarketing Agent on the effective
date of its replacement pursuant to Section 4(a) hereof or pursuant to
Section 4(b) hereof. Notwithstanding any such termination, the
obligations set forth in Section 3 hereof shall survive and remain in
full force and effect until all amounts payable under said Section 3
shall have been paid in full.

Section 9. REMARKETING AGENT'S PERFORMANCE; DUTY OF CARE.
The duties and obligations of the Remarketing Agent hereunder shall be
determined solely by the express provisions of this Agreement and the
Remarketing Underwriting Agreement.

Section 10. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
____________________.

Section 11. TERM OF AGREEMENT. Unless otherwise terminated in
accordance with the provisions hereof and except as otherwise provided
herein, this Agreement shall remain in full force and effect from the
date hereof until the first day thereafter on which no Debt Securities
are outstanding.

Section 12. SUCCESSORS AND ASSIGNS. The rights and
obligations of the Company hereunder may not be assigned or delegated
to any other person without the prior written consent of
______________________ as the Remarketing Agent and the Purchase
Contract Agent. The rights and obligations of ___________ as the
Remarketing Agent and/or as the Reset Agent hereunder may not be
assigned or delegated to any other person without the prior written
consent of the Company. This Agreement shall inure to the benefit of
and be binding upon the Company and as the ____________ Remarketing
Agent and/or as the Reset Agent and their respective successors and
assigns. The terms "successors" and "assigns" shall not include any
purchaser of Securities merely because of such purchase.

Section 13. HEADINGS. Section headings have been inserted in
this Agreement as a matter of convenience of reference only, and it is
agreed that such section headings are not a part of this Agreement and
will not be used in the interpretation of any provision of this
Agreement.

Section 14. SEVERABILITY. If any provision of this Agreement
shall be held or deemed to be or shall, in fact, be invalid,
inoperative or unenforceable as applied in any particular case in any
or all jurisdictions because it conflicts with any provisions of any
constitution, statute, rule or public policy or for any other reason,
such circumstances shall not have the effect of rendering the
provision in question invalid, inoperative or unenforceable in any
other case, circumstances or jurisdiction, or of rendering any other
provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.

Section 15. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be regarded as an original and all
of which shall constitute one and the same document.

Section 16. AMENDMENTS. This Agreement may be amended by any
instrument in writing signed by the parties hereto.

Section 17. NOTICES. Unless otherwise specified, any notices,
requests, consents or other communications given or made hereunder or
pursuant hereto shall be made in writing or transmitted by any
standard form of telecommunication, including telephone, telegraph or
telecopy, and confirmed in writing. All written notices and
confirmations of notices by telecommunication shall be deemed to have
been validly given or made when delivered or mailed, registered or
certified mail, return receipt requested and postage prepaid. All
such notices, requests, consents or other communications shall be
addressed as follows: if to the Company, to Arvin Industries, Inc.,
One Noblitt Plaza, Box 3000, Columbus, Indiana 47202, Attention:
Treasurer; if to the Remarketing Agent or Reset Agent,
___________________; and if to the _________________ Purchase Contract
Agent, _____________________, or to such other address as any of the
above shall specify to the other in writing.

IN WITNESS WHEREOF, each of the Company, the Remarketing Agent
and the Purchase Contract Agent has caused this Agreement to be
executed in its name and on its behalf by one of its duly authorized
officers as of the date first above written.

ARVIN INDUSTRIES, INC.

By:___________________________
Name:
Title:

CONFIRMED AND ACCEPTED:

____________________________________________

By:_________________________________________
Authorized Signatory

_______________________________________
not individually but solely as Purchase Contract Agent and as
attorney-in-fact for the holders of the Purchase Contracts

By:_____________________________________
Name:
Title:

Exhibit A to
Remarketing Agreement

FORM OF REMARKETING UNDERWRITING AGREEMENT

________________________________________________ (the
"Remarketing Underwriter") hereby agrees, subject to the terms and
conditions herein set forth or incorporated herein, to purchase the
Debt Securities as set forth in Schedule I hereto, that have been
tendered by the holders of the Type A Securities for sale on
____________________.

1. Definitions. Capitalized terms used and not defined in this
Agreement shall have the meanings assigned to them in the purchase
contract agreement (the "Purchase Contract Agreement"), the pledge
agreement (the "Pledge Agreement"), the underwriting agreement, dated
_______________, between the Company and _______________________, as
underwriters with respect to the issuance and sale of the Securities
(the "Underwriting Agreement"), and the Indenture (For Unsecured Debt
Securities__________________), dated ______________________, between
______________ and the Company (the "Indenture").

2. REGISTRATION STATEMENT AND PROSPECTUS. If required (in the
opinion of counsel to either the Remarketing Underwriter or the
Company) by applicable law, the Company has filed with the Securities
and Exchange Commission, and there has become effective, a
registration statement on Form S-3 (No. 333-___), including a
prospectus, relating to the Debt Securities. Such registration
statement, as amended to the date of this Agreement, is hereinafter
referred to as the "Registration Statement", the prospectus included
in the Registration Statement is hereinafter referred to as the "Basic
Prospectus" and the Basic Prospectus, as amended or supplemented to
the date of this Agreement to relate to the Debt Securities and to the
remarketing of the Debt Securities, is hereinafter referred to as the
"Final Prospectus" (including in each case all documents incorporated
by reference).

3. PROVISIONS INCORPORATED BY REFERENCE.

(a) Subject to Section 3(b), the provisions of Sections
____ and ____ of the Underwriting Agreement shall be incorporated, as
applicable into this Agreement and made applicable to the obligations
of the Remarketing Underwriter, except as explicitly amended hereby.

(b) With respect to the provisions of the Underwriting
Agreement incorporated herein, for the purposes hereof, (i) all
references therein to the "Underwriter" or "Underwriters" or the
"Representative" or "Representatives", as the case may be, shall be
deemed to refer to the Remarketing Underwriter; (ii) all references
therein to the "Securities" which are the subject thereof shall be
deemed to refer to the Debt Securities as defined herein; (iii) all
references therein to the "Closing Date" shall be deemed to refer to
the Remarketing Closing Date specified in Schedule I hereto (the

"Remarketing Closing Date"); and (iv) all references therein to the
"Registration Statement", the "Basic Prospectus" and the "Final
Prospectus" shall be deemed to refer to the Registration Statement,
the Basic Prospectus and the Final Prospectus, respectively, as
defined herein.

4. PURCHASE AND SALE; REMARKETING UNDERWRITING FEE. Subject to
the terms and conditions and in reliance upon the representations and
warranties herein set forth or incorporated herein, the Remarketing
Underwriter agrees to purchase from the registered holder or holders
thereof in the manner specified in Section 5 hereof, the principal
amount of remarketed Debt Securities set forth in Schedule I hereto at
a purchase price not less than 100% of the aggregate principal amount
of such Debt Securities, plus any accrued and unpaid interest thereon.
In connection therewith, the registered holder or holders thereof
agree, in the manner specified in Section 5 hereof, to pay to the
Remarketing Underwriter a Remarketing Underwriting Fee equal to an
amount not exceeding _____ basis points of the aggregate principal
amount of the remarketed Debt Securities, from any amount received
from such Remarketing in excess of the aggregate principal amount of
such remarketed Debt Securities, plus any accrued and unpaid interest.

5. DELIVERY AND PAYMENT. Delivery of payment for the
remarketed Debt Securities and payment of the Remarketing
Underwriting Fee shall be made on the Remarketing Closing Date at the
location and time specified in Schedule I hereto (or such later date
not later than five business days after such date as the Remarketing
representatives shall designate), which date and time may be postponed
by agreement between the Remarketing Underwriter, the Company, and the
registered holder or holders thereof. Delivery of the remarketed Debt
Securities and payment of the Remarketing Underwriting Fee shall be
made to the Remarketing Underwriter [to or upon the order of the
[registered holder or holders of the remarketed Debt Securities] by
certified or official bank check or checks drawn on or by a New York
Clearing House bank and payable in immediately available funds] [in
immediately available funds by wire transfer to an account or accounts
designated by the [Company] [registered holder or holders of the
remarketed Debt Securities]] or, if the remarketed Debt Securities are
represented by a Global Security, by any method of transfer agreed
upon by the Remarketing Underwriter and the Depositary for the Debt
Securities under the Indenture.

[It is understood that any registered holder or, if the Debt
Securities are represented by a Global Security, any beneficial owner,
that has an account at the Remarketing Underwriter and tenders its
Debt Securities through such account will not be required to pay any
fee or commission to the Remarketing Underwriter.]

If the Debt Securities are not represented by a Global Security,
certificates for the Debt Securities shall be registered in such names
and denominations as the Remarketing Underwriter may request not less
than three full business days in advance of the Remarketing Closing
Date, and the Company, and the [registered holder or holders thereof]
agree to have such certificates available for inspection, packaging

and checking by the Remarketing Underwriter in ____________________
not later than 1:00 p.m. on the Business Day prior to the Remarketing
Closing Date.

6. NOTICES. Unless otherwise specified, any notices, requests,
consents or other communications given or made hereunder or pursuant
hereto shall be made in writing or transmitted by any standard form of
telecommunication, including telephone, telegraph or telecopy, and
confirmed in writing. All written notices and confirmations of
notices by telecommunication shall be deemed to have been validly
given or made when delivered or mailed, registered or certified mail,
return receipt requested and postage prepaid. All such notices,
requests, consents or other communications shall be addressed as
follows: if to the Company, to Arvin Industries, Inc., One Noblitt
Plaza, Box 3000, Columbus, Indiana 47202, Attention: Treasurer; if to
the Remarketing Agent or Reset Agent, to __________; and if to the
Purchase Contract Agent, to __________________, or to such other
address as any of the above shall specify to the other in writing.

Very truly yours,

ARVIN INDUSTRIES, INC.

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

CONFIRMED AND ACCEPTED:

____________________________________________

By:_________________________________________
Authorized Signatory

_________________________________________ not individually but solely
as Purchase Contract Agent and as attorney-in-fact for the holders of
the Purchase Contracts

By:__________________________________________
Name:
Title:

SCHEDULE I

Title of Securities: ____% Senior Notes due _____

Principal Amount of Securities: $___________________

Underwriting Agreement, dated as of ______________, ____, between the
Company and ___________________________________________

Remarketing [Underwriting] Fee:_____% ($______________)

Remarketing Closing Date, Time and Location: _____________________

EXHIBIT 5-1

____________, ____

Arvin Industries, Inc.
One Noblitt Plaza, Box 3000
Columbus, IN 47202-3000

RE: ARVIN INDUSTRIES, INC. REGISTRATION STATEMENT ON FORM S-3

Gentlemen:

We have acted as counsel to Arvin Industries, Inc., an
Indiana corporation (the "Company"), in connection with the filing of
a Registration Statement on Form S-3 (the "Registration Statement")
with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"). The Registration Statement
relates to the registration under the Act of up to $400,000,000 of (i)
the Company's unsecured, senior and subordinated debt securities,
consisting of debentures, notes or other evidences of indebtedness in
one or more series ("Debt Securities"); (ii) Preferred Shares, no par
value, of the Company in one or more series ("Preferred Shares"),
which may be issued in the form of depositary shares ("Depositary
Shares") evidenced by depositary receipts; (iii) Common Shares, $2.50
par value ("Common Shares"), of the Company and related rights to
purchase Series C Junior Participating Preferred Shares of the
Company; (iv) share purchase contracts to purchase Common Shares
("Share Purchase Contracts"); (v) share purchase units, each
consisting of a Share Purchase Contract and a Debt Security or debt
obligation of a third party, including a U.S. Treasury security,
pledged to secure the holder's obligation to purchase Common Shares
under a Share Purchase Contract ("Share Purchase Units"), (vi)
warrants ("Warrants") to purchase any of the Debt Securities,
Preferred Shares, Depositary Shares and Common Shares as designated by
the Company; and (vii) any such Debt Securities, Preferred Shares and
Common Shares as may be issuable on conversion of subordinated Debt
Securities or Preferred Shares. The Debt Securities, Preferred
Shares, Depositary Shares, Common Shares, Share Purchase Contracts,
Share Purchase Units and Warrants are collectively referred to as the
"Securities."

The senior Debt Securities are to be issued under an
indenture, dated as of July 3, 1990, and supplemented on March 31,
1994, between the Company and Harris Trust and Savings Bank, as
trustee. The subordinated Debt Securities are to be issued under an
indenture, to be entered into between the Company and the trustee to
be named therein. (Each such indenture is referred to as an
"Indenture" and, together, as the "Indentures.") The Depositary
Shares are to be issued under one or more deposit agreements among the
Company, the depositary named therein and the holders from time to
time of the depositary receipts described therein (a "Deposit
Agreement"). The Share Purchase Contracts and the Share Purchase

Units are to be issued under one or more purchase contract agreements
to be entered into between the Company and the purchase contract agent
named therein (a "Purchase Contract Agreement"). The Warrants are to
be issued pursuant to either a warrant agreement relating to warrants
to purchase Debt Securities or a warrant agreement relating to
warrants to purchase Common Shares, Preferred Shares or Depositary
Shares, each such warrant agreement to be between the Company, as
issuer, and a warrant agent (collectively, the "Warrant Agreements").
The Securities may be offered and sold pursuant to one or more
underwriting agreements (each, together with any related schedule of
terms, an "Underwriting Agreement") between the Company and the
underwriters named therein, or as otherwise provided pursuant to the
Registration Statement.

In this regard, we have reviewed the Registration Statement
and the exhibits thereto and have examined such other documents and
made such investigation as we have deemed necessary in order to enable
us to render the opinions set forth below. In rendering such
opinions, we have assumed that (i) the Registration Statement will
have become effective under the Act and the Indentures will have been
qualified under the Trust Indenture Act of 1939, as amended, (ii) a
Prospectus Supplement (a "Prospectus Supplement") relating to the
Securities to be offered and sold as contemplated by the Registration
Statement will be prepared, delivered and filed as contemplated by the
Act, (iii) the Indenture with respect to the subordinated Debt
Securities will have been authorized, executed and delivered by the
trustee named therein, in substantially the form filed as an exhibit
to the Registration Statement, (iv) each of the Indentures will
represent the valid and binding obligation of the respective trustee,
(v) each Deposit Agreement, Purchase Contract Agreement, Warrant
Agreement and Underwriting Agreement, as applicable, will be executed
and delivered in substantially the respective form filed as an exhibit
to the Registration Statement, (vi) each Deposit Agreement will be
authorized, executed and delivered by the depositary named therein and
will represent a valid and binding obligation of the depositary, (vii)
each Purchase Contract Agreement will be authorized, executed and
delivered by the purchase contract agent named therein and will
represent a valid and binding obligation of the purchase contract
agent, (viii) each Warrant Agreement will be authorized, executed and
delivered by the warrant agent named therein and will represent a
valid and binding obligation of the warrant agent, and (ix) each
Underwriting Agreement will be authorized, executed and delivered by
or on behalf of the underwriters named therein and will represent a
valid and binding obligation of each such underwriter.

Based on the foregoing, we are of the opinion that:

1. The Company is a corporation duly incorporated and
validly existing under the laws of the State of Indiana.

2. The Debt Securities will be valid and binding
obligations of the Company, enforceable in accordance with their terms
(except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or

affecting enforcement of creditors' rights generally or by general
equity principles and except that a claim in respect of any Debt
Securities denominated other than in U.S. dollars may be converted
into U.S. dollars at a rate of exchange prevailing at a date
determined by applicable law), at such time as: (a) the board of
directors of the Company or a duly authorized committee thereof (the
"Board of Directors") shall have established by resolution, not
inconsistent with the applicable Indenture, a series in which such
Debt Securities are to be issued and the terms of such Debt
Securities, and such series and terms shall have been set forth in an
officers' certificate or established in a supplemental indenture in
accordance with the requirements of the Indenture; and (b) the
issuance and sale of such Debt Securities shall have been duly
authorized by the Board of Directors, and such Debt Securities shall
have been duly executed, authenticated, issued and delivered pursuant
to the provisions of the applicable Indenture and, if applicable, in
accordance with a duly authorized, completed and executed Underwriting
Agreement, as contemplated in the Registration Statement and the
related Prospectus Supplement, against payment of the agreed
consideration therefor.

3. At such time as: (a) the Board of Directors shall have
established by resolution a series in which such Preferred Shares are
to be issued and the terms of such Preferred Shares in accordance with
the Indiana Business Corporation Law and the Company's Restated
Articles of Incorporation, and an amendment to the Company's Restated
Articles of Incorporation setting forth such terms shall have been
filed with the Secretary of State of Indiana; and (b) such Preferred
Shares are issued and sold pursuant to resolutions of the Board of
Directors and, if applicable, in accordance with a duly authorized,
completed and executed Underwriting Agreement, as contemplated in the
Registration Statement and the related Prospectus Supplement, against
payment of the consideration fixed therefor by the Board of Directors,
the Preferred Shares covered by the Registration Statement will be
duly authorized, legally issued, fully paid and non-assessable.

4. When duly issued, authenticated and delivered pursuant
to a Deposit Agreement that has been duly authorized, executed and
delivered by the Company, against payment of the consideration fixed
therefor by the Board of Directors and, if applicable, in accordance
with a duly authorized, completed and executed Underwriting Agreement,
as contemplated in the Registration Statement and the related
Prospectus Supplement, the Depositary Shares covered by the
Registration Statement will be duly authorized, legally issued, fully
paid and non-assessable.

5. When duly issued and sold pursuant to resolutions of
the Board of Directors and, if applicable, in accordance with a duly
authorized, completed and executed Underwriting Agreement, as
contemplated in the Registration Statement and the related Prospectus
Supplement, against payment of the consideration fixed therefor by the
Board of Directors, the Common Shares covered by the Registration
Statement will be duly authorized, legally issued, fully paid and non-
assessable and the related rights to purchase Series C Junior

Participating Preferred Shares will be entitled to the benefits of the
amended Rights Agreement incorporated by reference as an exhibit to
the Registration Statement.

6. The Share Purchase Contracts and the Share Purchase
Units covered by the Registration Statement will be valid and binding
obligations of the Company, enforceable in accordance with their terms
(except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights generally or by general
equity principles) at such time as: (a) the Board of Directors shall
have established by resolution the terms of the Share Purchase
Contracts and the Share Purchase Units; (b) a Purchase Contract
Agreement shall have been duly authorized, executed and delivered by
the Company; and (c) the issuance and delivery of the Share Purchase
Contracts and the Share Purchase Units shall have been duly authorized
by the Board of Directors and the Share Purchase Contracts and the
Share Purchase Units shall have been duly executed, authenticated,
issued and delivered pursuant to a Purchase Contract Agreement and, if
applicable, in accordance with a duly authorized, completed and
executed Underwriting Agreement, as contemplated in the Registration
Statement and the related Prospectus Supplement, against payment of
the consideration therefor fixed by the Board if Directors.

7. When duly issued, authenticated and delivered pursuant
to a Warrant Agreement that has been duly authorized, executed and
delivered by the Company, against payment of the consideration fixed
therefor by the Board of Directors and, if applicable, in accordance
with a duly authorized, completed and executed Underwriting Agreement,
as contemplated in the Registration Statement and the related
Prospectus Supplement, the Warrants covered by the Registration
Statement will be duly authorized, legally issued, fully paid and non-
assessable.

We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name under
the caption "Legal Opinions" in the prospectus constituting a part of
the Registration Statement.

Very truly yours,

SCHIFF HARDIN & WAITE

By: /s/ Frederick L. Hartmann
----------------------------
Frederick L. Hartmann

EXHIBIT 12-1

Computation of Ratio of Earnings to Fixed Charges (Unaudited)
-------------------------------------------------------------------------------------------------------------------
First
Quarter
(Dollars in millions) 1999 1998 1997 1996 1995 1994
-------------------- --------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Profit before tax $ 21.9 $ 112.7 $ 97.9 $ 64.0 $ 29.4 $ 38.8
Income (loss) of 50% owned subsidiaries 1.2 3.6 2.9 1.3 (0.8) 0.3
Dividends received from less than 50% owned subsidiaries 0.0 2.3 1.2 2.7 2.6 1.6

Interest expense 10.5 35.8 39.5 38.8 42.5 42.8
25% of rent expense 1.3 4.6 4.0 3.9 3.9 3.2
------ ------ ------ ------ ------ ------
Total fixed charges 12.3 43.1 46.9 49.4 48.8 48.1

Total fixed charges and preferred dividends 12.3 43.1 46.9 49.4 48.8 48.1
====== ====== ====== ====== ====== ======

Earnings before income taxes and fixed charges 35.3 161.4 148.7 117.4 79.5 88.8
====== ====== ====== ====== ====== ======

Ratio of earnings to fixed charges 2.9 3.7 3.2 2.4 1.6 1.8

Ratio of earnings to fixed
charges and preferred dividends 2.9 3.7 3.3 2.4 1.6 1.8

Note 1: For purposes of calculating the ratio of earnings to fixed charges, "earnings" consist of earnings from
continuing operations before income taxes, adjusted for the portion of fixed charges deducted from such
earnings. "Fixed charges" consist of interest on all indebtedness (including capital lease obligations,
capital securities and capitalized interest), amortization of debt expense and the percentage of rental
expense on operating leases deemed representative of the interest factor.
Note 2: Interest expense includes amortization of debt issuance costs.
Note 3: The interest factor of 25% is management's estimate of the portion of rental expense representative of
interest.
Note 4: The ratios of earnings to fixed charges, before special charges, for the nine months ended 9/29/96 was
2.5 to 1. The ratios of earnings to fixed charges, before the restructuring and special charges, for
1995 and 1994 were 1.9 to 1 and 2.4 to 1, respectively.
</TABLE>

EXHIBIT 23-1

CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------

We hereby consent to the incorporation by reference in Pre-Effective
Amendment No. 1 to this Registration Statement on Form S-3 of our
report dated January 29, 1999, except as to Note 15, which is as of
February 26, 1999, relating to the financial statements and financial
statement schedules, which appears in Arvin Industries, Inc.'s Annual
Report on Form 10-K for the year ended January 3, 1999. We also
consent to the reference to us under the heading Experts in such
Registration Statement.

PricewaterhouseCoopers LLP
Indianapolis, Indiana
June 22, 1999