Exhibit
4.2


 


NAVISTAR
INTERNATIONAL CORPORATION,


 


as Issuer


 


INTERNATIONAL
TRUCK AND ENGINE CORPORATION,


 


as Guarantor,


 


AND


 


BNY MIDWEST TRUST
COMPANY,


 


as Trustee


 


 












 


FIRST SUPPLEMENTAL


 


INDENTURE


 


Dated as of
June 2, 2004


 


 












 


$250,000,000
aggregate principal amount of


 


71/2%
Senior Notes due 2011


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE I DEFINITIONS
  AND INCORPORATION BY REFERENCE

  	
   

  
	
  Section 1.1.

  	
  Definitions

  	
   

  
	
  Section 1.2.

  	
  Other Definitions

  	
   

  
	
  Section 1.3.

  	
  Incorporation by Reference of Trust
  Indenture Act

  	
   

  
	
  Section 1.4.

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE
  SECURITIES

  	
   

  
	
  Section 2.1.

  	
  Form, Dating and Terms

  	
   

  
	
  Section 2.2.

  	
  Execution and Authentication

  	
   

  
	
  Section 2.3.

  	
  Registrar and Paying Agent

  	
   

  
	
  Section 2.4.

  	
  Paying Agent To Hold Money in Trust

  	
   

  
	
  Section 2.5.

  	
  Securityholder Lists

  	
   

  
	
  Section 2.6.

  	
  Transfer and Exchange

  	
   

  
	
  Section 2.7.

  	
  [Reserved]

  	
   

  
	
  Section 2.8.

  	
  [Reserved]

  	
   

  
	
  Section 2.9.

  	
  Mutilated, Destroyed, Lost or Stolen
  Securities

  	
   

  
	
  Section 2.10.

  	
  Temporary Securities

  	
   

  
	
  Section 2.11.

  	
  Cancellation

  	
   

  
	
  Section 2.12.

  	
  Payment of Interest; Defaulted Interest

  	
   

  
	
  Section 2.13.

  	
  Computation of Interest

  	
   

  
	
  Section 2.14.

  	
  CUSIP Numbers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  COVENANTS

  	
   

  
	
  Section 3.1.

  	
  Application of Certain Covenants

  	
   

  
	
  Section 3.2.

  	
  Payment of Principal, Premium, if any, and
  Interest, if any

  	
   

  
	
  Section 3.3.

  	
  Maintenance of Office or Agency

  	
   

  
	
  Section 3.4.

  	
  Money for Securities Payments to be Held in
  Trust; Unclaimed Money

  	
   

  
	
  Section 3.5.

  	
  Corporate Existence

  	
   

  
	
  Section 3.6.

  	
  Reports by the Company

  	
   

  
	
  Section 3.7.

  	
  Annual Review Certificate; Notice of
  Defaults or Events of Default

  	
   

  
	
  Section 3.8.

  	
  Books of Record and Account

  	
   

  
	
  Section 3.9.

  	
  Limitation on Liens

  	
   

  
	
  Section 3.10.

  	
  Limitation on Incurrence of Indebtedness

  	
   

  
	
  Section 3.11.

  	
  Limitation on Preferred Stock of Restricted
  Subsidiaries

  	
   

  
	
  Section 3.12.

  	
  Limitation on Restricted Payments

  	
   

  
	
  Section 3.13.

  	
  Limitation on Certain Asset Dispositions

  	
   

  
	
  Section 3.14.

  	
  Limitation on Sale/Leaseback Transactions

  	
   

  
	
  Section 3.15.

  	
  Limitation on Payment Restrictions
  Affecting Restricted Subsidiaries

  	
   

  
	
  Section 3.16.

  	
  Limitation on Transactions with Affiliates

  	
   

  
	
  Section 3.17.

  	
  Limitation on Guarantees by Restricted
  Subsidiaries

  	
   

  



 


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  ARTICLE IV
  CONSOLIDATION, MERGER OR SALE BY THE COMPANY

  	
   

  
	
  Section 4.1.

  	
  Consolidation, Merger or Sale of Assets
  Permitted

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  REDEMPTION OF SECURITIES

  	
   

  
	
  Section 5.1.

  	
  Applicability of Article

  	
   

  
	
  Section 5.2.

  	
  Election to Redeem; Notice to Trustee

  	
   

  
	
  Section 5.3.

  	
  Selection of Securities to be Redeemed

  	
   

  
	
  Section 5.4.

  	
  Notice of Redemption

  	
   

  
	
  Section 5.5.

  	
  Deposit of Redemption Price

  	
   

  
	
  Section 5.6.

  	
  Securities Payable on Redemption Date

  	
   

  
	
  Section 5.7.

  	
  Securities Redeemed in Part

  	
   

  
	
  Section 5.8.

  	
  Optional Redemption

  	
   

  
	
  Section 5.9.

  	
  Offer to Repurchase Upon a Change of
  Control

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI DEFAULTS
  AND REMEDIES

  	
   

  
	
  Section 6.1.

  	
  Events of Default

  	
   

  
	
  Section 6.2.

  	
  Acceleration; Rescission and Annulment

  	
   

  
	
  Section 6.3.

  	
  Collection of Indebtedness and Suits for
  Enforcement by Trustee

  	
   

  
	
  Section 6.4.

  	
  Trustee May File Proofs of Claim

  	
   

  
	
  Section 6.5.

  	
  Trustee May Enforce Claims Without
  Possession of Securities

  	
   

  
	
  Section 6.6.

  	
  Delay or Omission Not Waiver

  	
   

  
	
  Section 6.7.

  	
  Waiver of Past Defaults

  	
   

  
	
  Section 6.8.

  	
  Control by Majority

  	
   

  
	
  Section 6.9.

  	
  Limitation on Suits by Holders

  	
   

  
	
  Section 6.10.

  	
  Rights of Holders to Receive Payment

  	
   

  
	
  Section 6.11.

  	
  Application of Money Collected

  	
   

  
	
  Section 6.12.

  	
  Restoration of Rights and Remedies

  	
   

  
	
  Section 6.13.

  	
  Rights and Remedies Cumulative

  	
   

  
	
  Section 6.14.

  	
  Waiver of Usury, Stay or Extension Laws

  	
   

  
	
  Section 6.15.

  	
  Undertaking for Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII TRUSTEE

  	
   

  
	
  Section 7.1.

  	
  Certain Duties and Responsibilities of the
  Trustee

  	
   

  
	
  Section 7.2.

  	
  Rights of Trustee

  	
   

  
	
  Section 7.3.

  	
  Trustee May Hold Securities

  	
   

  
	
  Section 7.4.

  	
  Money Held in Trust

  	
   

  
	
  Section 7.5.

  	
  Trustee’s Disclaimer

  	
   

  
	
  Section 7.6.

  	
  Notice of Defaults

  	
   

  
	
  Section 7.7.

  	
  Reports by Trustee to Holders

  	
   

  
	
  Section 7.8.

  	
  Securityholder Lists

  	
   

  
	
  Section 7.9.

  	
  Compensation and Indemnity

  	
   

  
	
  Section 7.10.

  	
  Replacement of Trustee

  	
   

  
	
  Section 7.11.

  	
  Acceptance of Appointment by Successor

  	
   

  
	
  Section 7.12.

  	
  Eligibility; Disqualification

  	
   

  
	
  Section 7.13.

  	
  Merger, Conversion, Consolidation or
  Succession to Business

  	
   

  
	
  Section 7.14.

  	
  Appointment of Authenticating Agent

  	
   

  



 


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  ARTICLE VIII
  DISCHARGE OF INDENTURE; DEFEASANCE

  	
   

  
	
  Section 8.1.

  	
  Termination of Company’s Obligations Under
  the Indenture

  	
   

  
	
  Section 8.2.

  	
  Application of Trust Funds

  	
   

  
	
  Section 8.3.

  	
  Company’s Option to Effect Defeasance or
  Covenant Defeasance

  	
   

  
	
  Section 8.4.

  	
  Defeasance and Discharge

  	
   

  
	
  Section 8.5.

  	
  Covenant Defeasance

  	
   

  
	
  Section 8.6.

  	
  Conditions to Defeasance or Covenant
  Defeasance

  	
   

  
	
  Section 8.7.

  	
  Deposited Money and Government Obligations
  to Be Held in Trust

  	
   

  
	
  Section 8.8.

  	
  Repayment to Company

  	
   

  
	
  Section 8.9.

  	
  Indemnity for Government Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  SUPPLEMENTAL INDENTURES

  	
   

  
	
  Section 9.1.

  	
  Supplemental Indentures Without Consent of
  Holders

  	
   

  
	
  Section 9.2.

  	
  Supplemental Indentures with Consent of Holders

  	
   

  
	
  Section 9.3.

  	
  Compliance with Trust Indenture Act

  	
   

  
	
  Section 9.4.

  	
  Execution of Supplemental Indentures

  	
   

  
	
  Section 9.5.

  	
  Effect of Supplemental Indentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X SUBSIDIARY
  GUARANTEES

  	
   

  
	
  Section 10.1.

  	
  Subsidiary Guarantees

  	
   

  
	
  Section 10.2.

  	
  Obligations of Subsidiary Guarantors
  Unconditional

  	
   

  
	
  Section 10.3.

  	
  Limitation on Subsidiary Guarantors’
  Liability

  	
   

  
	
  Section 10.4.

  	
  Releases of Subsidiary Guarantees

  	
   

  
	
  Section 10.5.

  	
  Release of International Guarantee

  	
   

  
	
  Section 10.6.

  	
  Application of Certain Terms and Provisions
  to Subsidiary Guarantors

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  MISCELLANEOUS

  	
   

  
	
  Section 11.1.

  	
  Trust Indenture Act Controls

  	
   

  
	
  Section 11.2.

  	
  Notices

  	
   

  
	
  Section 11.3.

  	
  Communication by Holders with other Holders

  	
   

  
	
  Section 11.4.

  	
  Certificate and Opinion as to Conditions
  Precedent

  	
   

  
	
  Section 11.5.

  	
  Statements Required in Certificate or
  Opinion

  	
   

  
	
  Section 11.6.

  	
  When Securities Disregarded

  	
   

  
	
  Section 11.7.

  	
  Rules by Trustee, Paying Agent and
  Registrar

  	
   

  
	
  Section 11.8.

  	
  Legal Holidays

  	
   

  
	
  Section 11.9.

  	
  GOVERNING LAW

  	
   

  
	
  Section 11.10.

  	
  No Recourse Against Others

  	
   

  
	
  Section 11.11.

  	
  Successors

  	
   

  
	
  Section 11.12.

  	
  Multiple Originals

  	
   

  
	
  Section 11.13.

  	
  Variable Provisions

  	
   

  
	
  Section 11.14.

  	
  Table of Contents; Headings

  	
   

  
	
  Section 11.15.

  	
  Separability

  	
   

  
	
  Section 11.16.

  	
  Benefits of Indenture

  	
   

  
	
  Section 11.17.

  	
  Integral Part

  	
   

  



 


iii

















 


	
  Section 11.18.

  	
  Adoption, Ratification and Confirmation

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of the Securities

  	
   

  



 


iv

















 


FIRST SUPPLEMENTAL
INDENTURE, dated as of June 2, 2004, among Navistar International
Corporation, a Delaware corporation (the “Company”), International Truck
and Engine Corporation, a Delaware corporation (the “Guarantor”) and BNY
Midwest Trust Company, an Illinois trust company, as trustee (the “Trustee”).


 


WHEREAS, the
Company and the Guarantor have heretofore entered into an Indenture, dated as
of June 2, 2004 (the “Original Indenture”), with BNY Midwest Trust
Company, as trustee;


 


WHEREAS, the
Original Indenture, as supplemented by this Supplemental Indenture, is herein
called the “Indenture”;


 


WHEREAS, under the
Original Indenture, the form and terms of a new series of Securities may at any
time be established by a supplemental indenture executed by the Company and the
Trustee;


 


WHEREAS, the
Company proposes to create under the Indenture a new series of Securities;


 


WHEREAS,
additional Securities of other series hereafter established, except as may be
limited in the Original Indenture as at the time supplemented and modified, may
be issued from time to time pursuant to the Original Indenture as at the time
supplemented and modified; and


 


WHEREAS, all
conditions necessary to authorize the execution and delivery of this
Supplemental Indenture and to make it a valid and binding obligation of the
Issuer have been done or performed.


 


NOW, THEREFORE, in
consideration of the agreements and obligations set forth herein and for other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:


 


ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE


 


Section 1.1.                                   Definitions.


 


“Acquired
Indebtedness” of any specified Person means Indebtedness of any other
Person and its Restricted Subsidiaries existing at the time such other Person
merged with or into or became a Restricted Subsidiary of such specified Person
or assumed by the specified Person in connection with the acquisition of assets
from such other Person and not incurred by the specified Person in connection
with or in anticipation of (a) such other Person and its Restricted
Subsidiaries being merged with or into or becoming a Restricted Subsidiary of
such specified Person or (b) such acquisition by the specified Person.


 


“Additional
Securities” has the meaning provided in Section 2.1 herein.


 

















 


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


 


“Agent”
means any Registrar, Paying Agent, authenticating agent or co-Registrar.


 


“Asset
Disposition” means any sale, transfer or other disposition (including,
without limitation, by merger, consolidation or sale-and-leaseback transaction)
of:


 


(1)                                  shares
of Capital Stock of a Restricted Subsidiary of the Company (other than
directors’ qualifying shares) or


 


(2)                                  property
or assets of the Company or any of its Restricted Subsidiaries.


 


Notwithstanding
the foregoing, an Asset Disposition shall not include:


 


(1)                                  any
sale, transfer or other disposition of shares of Capital Stock, property or
assets by a Restricted Subsidiary of the Company to the Company or to any
Restricted Subsidiary of the Company;


 


(2)                                  any
sale, transfer or other disposition of defaulted receivables for collection or
any sale, transfer or other disposition of property or assets in the ordinary
course of business;


 


(3)                                  dispositions
of assets in a single market transaction or series of related transactions with
an aggregate fair market value in any calendar year of less than
$10.0 million (with unused amounts in any calendar year being carried over
to the succeeding calendar years subject to a maximum of $20.0 million in
such next succeeding fiscal year);


 


(4)                                  the
grant in the ordinary course of business of any license of patents, trademarks,
registrations therefor and other similar intellectual property;


 


(5)                                  the
granting of any Lien (or foreclosure thereon) securing Indebtedness to the
extent that such Lien is granted in compliance with Section 3.9
herein;


 


(6)                                  any
sale, transfer or other disposition constituting a Permitted Investment or
Restricted Payment permitted by Section 3.12 herein or pursuant to
the Master Intercompany Agreements;


 


(7)                                  any
disposition of assets or property in the ordinary course of business to the
extent such property or assets are obsolete, worn-out or no longer useful in
the Company’s or any of its Subsidiaries’ business;


 


2

















 


(8)                                  the
sale, lease, conveyance or disposition or other transfer of all or
substantially all of the assets of the Company as permitted by Section 4.1
herein;


 


(9)                                  sales
of accounts receivable, equipment and related assets (including contract
rights) of the type specified in the definition of “Qualified Securitization
Transaction” to a Securitization Subsidiary for the fair market value thereof;


 


(10)                            transfers
of accounts receivable, equipment and related assets (including contract
rights) of the type specified in the definition of “Qualified Securitization
Transaction” (or a fractional undivided interest therein) by a Securitization
Subsidiary in a Qualified Securitization Transaction; and


 


(11)                            any
sale or other distribution of Capital Stock of, or Indebtedness or other
securities of, an Unrestricted Subsidiary.


 


“Asset Sale
Offer Trigger Date” has the meaning set forth in Section 3.13
herein.


 


An “Associate” of, or a Person “associated” with, any
Person, means:


 


(1)                                  any
trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity; and


 


(2)                                  any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person.


 


“Attributable
Indebtedness” in respect of a Sale/Leaseback Transaction involving an
operating lease means, as at the time of determination, the present value
(discounted at the implied interest rate in such transaction compounded
annually) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been extended).


 


“Authenticating
Agent” means any authenticating agent appointed by the Trustee pursuant to Section 7.14
herein.


 


“Average Life”
means, as of the date of determination, with respect to any Indebtedness for
borrowed money or Preferred Stock, the quotient obtained by dividing


 


(1)                                  the
sum of the products of the number of years from the date of determination to
the dates of each successive scheduled principal or liquidation value payments
of such Indebtedness or Preferred Stock, respectively, and the amount of such
principal or liquidation value payments, by


 


(2)                                  the
sum of all such principal or liquidation value payments.


 


“Beneficial
Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of
any particular “person” (as that term is used in Section 13(d)(3) of the
Exchange Act), such


 


3

















 


“person” shall be deemed to have beneficial ownership of all securities
that such “person” has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is exercisable only
upon occurrence of a subsequent condition (other than a condition that the
Holders waive one or more provisions of the Indenture).


 


“Board of
Directors” means (i) with respect to a corporation, the board of directors
of the corporation, (ii) with respect to a partnership, the board of directors
of the general partner of the partnership, and (iii) with respect to any other
Person, the board or committee of such Person serving a similar function.


 


“Board
Resolution” means a copy of a resolution of the Board of Directors of the
Company or the equivalent body of any Subsidiary Guarantor, as applicable,
certified by the Secretary or an Assistant Secretary of the Company, or the
equivalent officer of any Subsidiary Guarantor, as applicable, to have been
duly adopted by the Board of Directors of the Company or the equivalent body of
any Subsidiary Guarantor, as applicable, and to be in full force and effect on
the date of the certificate, and delivered to the Trustee.


 


“Book-Entry
Interest” means a depositary interest representing 100% beneficial interest
in a Global Note.


 


“Business Day,”
means a day (other than Saturday or Sunday) on which Euroclear, Clearstream and
the banks in New York are open for business.


 


“Capital Stock”
means, with respect to any Person, any and all shares, interests,
participations, rights in, or other equivalents (however designated and whether
voting or non-voting) of, such Person’s capital stock, including each class of
Common or Preferred Stock of such Person, whether outstanding on the Issue Date
or issued after the Issue Date, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.


 


“Capitalized
Lease Obligation” means obligations under a lease that are required to be
classified and accounted for as capital lease obligations under GAAP and, for
purposes of the Indenture, the amount of such obligations at any date shall be
the capitalized amount of such obligations at such date, determined in
accordance with GAAP. The Stated Maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
penalty.


 


“Cash
Equivalents” means:


 


(1)                                  United
States dollars or in the case of any Foreign Subsidiary, such local currencies
held by it from time to time in the ordinary course of business;


 


(2)                                  securities
issued or directly and fully guaranteed or insured by the United States or
Canadian government (federal or provincial) or any agency or instrumentality of
the United States or Canadian government (provided
that the full faith and credit of the United States or Canada (federal or
provincial, as the case may be), as the case may be, is pledged in support of
those securities) having maturities of not more than twenty-four months from
the date of acquisition;


 


4

















 


(3)                                  certificates
of deposit and eurodollar time deposits with maturities of twenty-four months
or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding twenty-four months and overnight bank deposits, in each case, with
any commercial bank incorporated under the laws of the United States, any state
thereof, the District of Columbia, Canada or any province or territory thereof
having capital and surplus in excess of $500.0 million and a Thomson Bank
Watch Rating of “B” or better;


 


(4)                                  repurchase
obligations or securities lending arrangements for underlying securities of the
types described in clauses (2) and (3) above entered into with any financial
institution meeting the qualifications specified in clause (3) above;


 


(5)                                  commercial
paper having a rating of at least “A-2” from S&P or “P-2” from Moody’s and
in each case maturing within 270 days after the date of acquisition or asset
backed securities having a rating of at least “A” from S&P or “A2” from
Moody’s and in each case maturing within thirty-six months after the date of
acquisition;


 


(6)                                  with
respect to any Foreign Subsidiary having its principal operations in Mexico
only, (i) Certificados de la Tesoreria de la Federacion (Cetes), Bonos de
Desarrollo del Gobierno Federal (Bondes) or Bonos Adjustables del Gobierno
Federal (Adjustabonos), in each case, issued by the Mexican government; and
(ii) any other instruments issued or guaranteed by Mexico and denominated
and payable in pesos; provided,
that, in each case, such investments under this clause (6) are made in the
ordinary course of business for cash management purposes;


 


(7)                                  demand
or time deposit accounts used in the ordinary course of business with overseas
branches of commercial banks incorporated under the laws of the United States
of America, any state thereof, the District of Columbia, Canada or any province
or territory thereof, provided
that such commercial bank has, at the time of the Company’s or such Restricted
Subsidiary’s Investment therein, (1) capital, surplus and undivided
profits (as of the date of such institution’s most recently published financial
statements) in excess of $100 million and (2) the long-term unsecured
debt obligations (other than such obligations rated on the basis of the credit
of a Person other than such institution) of such institution, at the time of
the Company’s or any Restricted Subsidiary’s Investment therein, are rated at
least “A” from S&P or “A2” from Moody’s;


 


(8)                                  obligations
(including, but not limited to demand or time deposits, bankers’ acceptances
and certificates of deposit) issued or guaranteed by a depository institution
or trust company incorporated under the laws of the United States of America,
any state thereof, the District of Columbia, Canada or any province or
territory thereof, provided that
(A) such instrument has a final maturity not more than one year from the date
of purchase thereof by the Company or any Restricted Subsidiary of the Company
and (B) such depository institution or trust company has at the time of
the Company’s or such Restricted Subsidiary’s Investment therein or contractual
commitment providing for such Investment, (x) capital, surplus and


 


5

















 


undivided profits (as of the date of such institution’s most recently
published financial statements) in excess of $100 million and (y) the
long-term unsecured debt obligations (other than such obligations rated on the
basis of the credit of a Person other than such institution) of such
institution, at the time of the Company’s or such Restricted Subsidiary’s
Investment therein or contractual commitment providing for such Investment, are
rated at least “A” from S&P or “A2” from Moody’s;


 


(9)                                  in
the case of any Foreign Subsidiary, demand or time deposit accounts used in the
ordinary course of business with reputable commercial banks located in the
jurisdiction of organization of such Foreign Subsidiary; and


 


(10)                            money
market funds at least 95% of the assets of which constitute Cash Equivalents of
the kinds described in clauses (1) through (5) of this definition.


 


Notwithstanding the foregoing, Investments which would otherwise
constitute Cash Equivalents of the kinds described in clauses (2), (3),
(4) and (5) that are permitted to have maturities in excess of twelve months
shall only be deemed to be Cash Equivalents under this definition if and only
if the total weighted average maturity of all Cash Equivalents of the kinds
described in clauses (2), (3), (4) and (5) does not exceed twelve months
on an aggregate basis.


 


“Change of
Control” means the occurrence of one or more of the following events:


 


(1)                                  any
“person” or “group” (as such terms are used in Section 13(d) and 14(d) of
the Exchange Act), other than employee or retiree benefit plans or trusts sponsored
or established by the Company or the Guarantor, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 35% or more of the
combined voting power of the Company’s then outstanding Voting Stock;


 


(2)                                  the
following individuals cease for any reason to constitute more than a majority
of the number of directors then serving on the Board of Directors of the
Company: individuals who, on the Issue Date, constitute the Board of Directors
and any new director (other than a director whose initial assumption of the
office is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board of
Directors or nomination for election by the Company’s stockholders was approved
(a) by the vote of at least a majority of the directors then still in
office or whose appointment, election or nomination was previously so approved
or recommended or (b) with respect to directors whose appointment of
election to the Board of Directors was made by the holders of the Company’s
nonconvertible junior preference stock, series B, by the holders of such
preference stock;


 


(3)                                  the
shareholders of the Company shall approve any Plan of Liquidation (whether or
not otherwise in compliance with the provisions of the Indenture);


 


6

















 


(4)                                  the
Company consolidates with or merges with or into another Person, other than a
merger or consolidation of the Company in which the holders of the Common Stock
of the Company outstanding immediately prior to the consolidation or merger
hold, directly or indirectly, at least a majority of the Common Stock of the
surviving corporation immediately after such consolidation or merger; or


 


(5)                                  the
Company or any Restricted Subsidiary of the Company, directly or indirectly,
sells, assigns, conveys, transfers, leases or otherwise disposes of, in one
transaction or a series of related transactions, all or substantially all of
the property or assets of the Company and the Restricted Subsidiaries of the
Company (determined on a consolidated basis) to any Person (other than a
Permitted Joint Venture in a transaction entered into in compliance with Section 3.12
herein); provided, that neither
(a) the merger of a Restricted Subsidiary of the Company into the Company
or into any Restricted Subsidiary of the Company nor (b) a series of
transactions involving the sale of Receivables or interests therein in the
ordinary course of business by a Securitization Subsidiary in connection with a
Qualified Securitization Transaction, shall be deemed to be a Change of
Control.


 


For purposes of
the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of transactions) of all or substantially all of
the properties or assets of one or more Restricted Subsidiaries of the Company,
the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.


 


“Clearstream”
means Clearstream Banking, société anonyme, and any successor thereto.


 


“Commission”
means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of the
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.


 


“Commodity
Agreement” means any future contract or similar agreement or arrangement
designed to protect, hedge or manage against fluctuations in prices of commodities
used by the Company or any of its Restricted Subsidiaries in the ordinary
course of business.


 


“Common Stock”
of any Person means any and all shares, interests or other participations in,
and other equivalents (however designated and whether voting or non-voting) of
such Person’s common stock, whether outstanding on the Issue Date or issued
after the Issue Date, and includes, without limitation, all series and classes
of such common stock.


 


“Company”
means Navistar International Corporation, a Delaware corporation, or a
successor Person.


 


7

















 


“Company Order”
and “Company Request” mean, respectively, a written order or request
signed in the name of the Company by two Officers, one of whom must be the Chairman
of the Board, the President, the Chief Financial Officer, any Executive Vice
President, Senior Vice President or Vice President, the Treasurer, any
Assistant Treasurer or the Controller of the Company.


 


“Consolidated
Cash Flow Available For Fixed Charges” of any Person means for any period
the Consolidated Net Income of such Person for such period plus (to the extent
Consolidated Net Income for such period has been reduced thereby):


 


(1)                                  Consolidated
Interest Expense of such Person for such period; plus


 


(2)                                  Consolidated
Tax Expense of such Person for such period; plus


 


(3)                                  the
consolidated depreciation and amortization expense included in the income
statement of such Person prepared in accordance with GAAP for such period; plus


 


(4)                                  any
non-recurring fees, expenses or charges related to any offering of Qualified
Capital Stock, Permitted Investment, acquisition, recapitalization or
incurrence of Indebtedness permitted under the Indenture (in each case, whether
or not successful); plus


 


(5)                                  any
other non-cash charges to the extent deducted from or reflected in Consolidated
Net Income except for any non-cash charges that represent accruals of, or
reserves for, cash disbursements to be made in any future accounting period;
minus


 


(6)                                  any
non-cash items increasing Consolidated Net Income for such period (other than
the reversal of a prior accrual or reserve for cash items previously excluded
from Consolidated Cash Flow Available For Fixed Charges); minus


 


(7)                                  all
cash payments during such period relating to non-cash charges that were added
back in determining Consolidated Cash Flow Available For Fixed Charges in any
prior period.


 


“Consolidated
Cash Flow Ratio” of any Person means, for any period, the ratio of


 


(1)                                  Consolidated
Cash Flow Available for Fixed Charges of such Person for such period to


 


(2)                                  Consolidated
Fixed Charges for such period; provided,
however, that all incurrences and
repayments of Indebtedness (including the incurrence giving rise to such
calculation and any repayments in connection therewith) and all dispositions
(including discontinued operations) or acquisition of assets (other than in the
ordinary course of business) made during or after such period and on or prior
to the date of determination shall be given pro forma effect as if they
occurred on the first day of such four-quarter period.


 


8

















 


Calculations of
pro forma amounts in accordance with this definition shall be done in
accordance with Article 11 of Regulation S-X under the Securities Act
or any successor provision.


 


“Consolidated
Fixed Charges” means, with respect to any Person for any period, the sum
of, without duplication, the amounts for such period, taken as a single
accounting period, of:


 


(1)                                  Consolidated
Interest Expense; and


 


(2)                                  the
product of (a) the amount of all dividend requirements (whether or not
declared) on Preferred Stock of such Person, whether in cash or otherwise
(except dividends payable in shares of Qualified Capital Stock) paid, accrued
or scheduled to be paid or accrued during such period times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated Federal, state, local and foreign
tax rate (expressed as a decimal number between 1 and 0) of such Person
(as reflected in the audited consolidated financial statements of such Person
for the most recently completed fiscal year).


 


In calculating
“Consolidated Fixed Charges” for purposes of determining the denominator (but
not the numerator) of this “Consolidated Fixed Charge Coverage Ratio,”


 


(1)                                  interest
on Indebtedness determined on a fluctuating basis as of the date of
determination and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the date of determination;


 


(2)                                  if
interest on any Indebtedness actually incurred on the date of determination may
be optionally determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate or other rates, then the
interest rate in effect on the date of determination will be deemed to have
been in effect during the relevant four-quarter period reference; and


 


(3)                                  notwithstanding
the foregoing, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to interest swap
agreements, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.


 


“Consolidated
Interest Expense” means, with respect to any Person for any period, the
aggregate of the net interest expense of such Person and its Consolidated
Subsidiaries for such period (after giving effect to any interest income), on a
consolidated basis, as determined in accordance with GAAP, including:


 


(1)                                  all
amortization of original issue discount;


 


(2)                                  the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person during such period;


 


9

















 


(3)                                  net
cash costs paid under all Interest Rate Protection Agreements (including
amortization of fees);


 


(4)                                  all
capitalized interest; and


 


(5)                                  the
interest portion of any deferred payment obligations for such period.


 


“Consolidated
Net Income” means, with respect to any Person for any period, the
consolidated net income (or deficit) of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, as determined in
accordance with GAAP and before any reduction in respect of dividends accrued
or paid on any Preferred stock, if any; provided,
that any amounts received from any other Person (other than a Restricted
Subsidiary) shall be included in Consolidated Net Income for that period to the
extent of the amount that has been actually received by the referent Person or
a Restricted Subsidiary of the referent Person in the form of cash dividends or
other cash distributions (other than payments in respect of debt obligations),
and provided, further, that there shall be excluded:


 


(1)                                  any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date;


 


(2)                                  any
gain or loss, together with any related provisions for taxes, realized upon the
sale or other disposition (including, without limitation, dispositions pursuant
to sale-leaseback transactions) of any property or assets which are not sold or
otherwise disposed of in the ordinary course of business (provided that sales of Receivables or
interests therein pursuant to Qualified Securitization Transactions shall be
deemed to be in the ordinary course of business) and upon the sale or other
disposition of any Capital Stock of any Subsidiary of the referent Person;


 


(3)                                  any
extraordinary gain or extraordinary loss together with any related provision
for taxes and any one time gains or losses (including, without limitation,
those related to the adoption of new accounting standards) realized by the
referent Person or any of its Restricted Subsidiaries during the period for
which such determination is made;


 


(4)                                  income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued);


 


(5)                                  in
the case of a successor to the referent Person by consolidation or merger or as
a transferee of the referent Person’s assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets;


 


(6)                                  the
net income of any Restricted Subsidiary of such Person which is subject to
restrictions which prevent or limit the payment of dividends or the making of
distributions to such Person to the extent of such restrictions (except to the
extent of the amount of dividends or distributions that have been paid to such
Person or one


 


10

















 


or more Restricted Subsidiary not subject to any such restriction
during the relevant period);


 


(7)                                  any
non-cash goodwill or other asset impairment charges incurred subsequent to the
Issue Date; and


 


(8)                                  non-cash
compensation charges, including any such charges resulting from stock options,
restricted stock grants or other equity-incentive programs.


 


“Consolidated
Net Tangible Assets” as of any date of determination means the total amount
of assets of the Company and its consolidated subsidiaries after deducting
therefrom all current liabilities (excluding any current liabilities that by
their terms are extendable or renewable at the option of the obligor thereon to
a time more than twelve months after the time as of which the amount thereof is
being computed); total prepaid expenses and deferred charges; and all goodwill,
trade names, trademarks, patents, licenses, copyrights and other intangible
assets, all as set forth, or on a pro forma basis would be set forth, on the
consolidated balance sheet of the Company and its consolidated subsidiaries for
the Company’s most recently completed fiscal quarter, prepared in accordance
with GAAP.


 


“Consolidated
Stockholders’ Equity” as of any date means with respect to any Person the
amount, determined in accordance with GAAP, by which the assets of such Person
and of its Restricted Subsidiaries on a consolidated basis exceed the sum of
(1) the total liabilities of such Person and of its Restricted
Subsidiaries on a consolidated basis, plus (2) any redeemable Preferred
Stock of such Person.


 


“Consolidated
Subsidiary” of any Person means a Restricted Subsidiary which for financial
reporting purposes is or, in accordance with GAAP, should be, accounted for by
such Person as a consolidated Subsidiary.


 


“Consolidated
Tax Expense” means, with respect to any Person for any period, the
aggregate of the U.S. Federal, state and local tax expense attributable to
taxes based on income and foreign income tax expenses of such Person and its
Consolidated Subsidiaries for such period (net of any income tax benefit),
determined in accordance with GAAP other than taxes (either positive or
negative) attributable to extraordinary or unusual gains or losses or taxes
attributable to sales or dispositions of assets.


 


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


 


“Currency
Agreement” means any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect, hedge or manage the
Company or any of its Restricted Subsidiaries against fluctuations in currency
values to or under which the Company or any of its Restricted Subsidiaries is a
party or a beneficiary on the date of the Indenture or becomes a party or a
beneficiary thereafter.


 


11

















 


“DealCor
Subsidiaries” means Cedar River International Trucks, Inc.; City
International Trucks, Inc.; Rocky Mountain International Trucks, Inc.; J. Price
International Truck, Inc.; KCR International Trucks, Inc.; Freedom
International Trucks, Inc. of New Jersey; Garden State International Trucks,
Inc.; Prairie International Trucks, Inc.; and Co-Van International Trucks, Ltd;
and their respective Subsidiaries, and any Subsidiaries acquired by the Company
or one of its Restricted Subsidiaries after the Issue Date whose principal
business is a dealership of the Guarantor.


 


“Default”
means any event which is, or after notice or passage of time or both would be,
an Event of Default.


 


“Depositary
Interest” means a certificate or depositary interest representing 100%
beneficial interest in a Global Security.


 


“Disqualified
Capital Stock” means any Capital Stock that, other than solely at the
option of the issuer thereof, by its terms (or by the terms of any security
into which it is convertible or exchangeable) is, or upon the happening of an
event or the passage of time would be, required to be redeemed or repurchased,
in whole or in part, prior to the first anniversary of the Maturity Date or
has, or upon the happening of an event or the passage of time would have, a
redemption or similar payment due on or prior to the first anniversary of the
Maturity Date, or is convertible into or exchangeable for debt securities at
the option of the holder thereof at any time prior to the first anniversary of
the Maturity Date.


 


“DTC” means
the Depository Trust Company, its nominees and their respective successors and
assigns, or such other depositary institution hereinafter appointed by the
Company.


 


“Euroclear”
means Euroclear Bank S.A./N.V., as operator of the Euroclear system, and any
successor thereto.


 


“Event of Default” has the meaning set forth in Section 6.1
herein.


 


“Exchange Act” means the Securities Exchange Act of 1934, as
amended.


 


“Foreign Subsidiary” means any Restricted Subsidiary of the
Company that is not organized under the laws of the United States, any state
thereof or the District of Columbia.


 


“4.75%
Subordinated Exchangeable Notes” means the $220 million aggregate
principal amount of 4.75% Subordinated Exchangeable Notes due 2009 of NFC
originally issued under the Indenture, dated as of March 25, 2002, between
NFC, as issuer, the Company and BNY Midwest Trust Company, as trustee.


 


“GAAP”
means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession of the
United States, which are in effect as of the Issue Date.


 


12

















 


“Government
Obligations” means securities which are (i) direct obligations of the
United States, for the payment of which its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States, which are not callable or redeemable at the option of the issuer
thereof, and shall also include a depositary receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depositary receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Government Obligation evidenced by such depositary
receipt.


 


“guarantee”
means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Indebtedness of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect, contingent
or otherwise, of such Person:


 


(1)                                  to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keepwell, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or


 


(2)                                  entered
into for purposes of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided
that the term “guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business. The term “guarantee” used as a verb
has a corresponding meaning.


 


“Guarantor”
means International Truck and Engine Corporation, a Delaware corporation, or a
successor Person.


 


“Holder” or
“Securityholder” means the Person in whose name a Security is registered
in the Security  Register.


 


“incur”
means, with respect to any Indebtedness or other obligation of any Person, to
create, issue, incur (by conversion, exchange or otherwise), assume, guarantee
or otherwise become liable in respect of such Indebtedness or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such
Indebtedness or other obligation on the balance sheet of such Person (and
“incurrence,” “incurred,” “incurable” and “incurring” shall have meanings
correlative to the foregoing); provided
that the accrual of interest (whether such interest is payable in cash or in
kind) and the accretion of original issue discount shall not be deemed an
incurrence of Indebtedness; provided,
further, that:


 


(1)                                  any
Indebtedness or Capital Stock of a Person existing at the time such Person
becomes (after the Issue Date) a Restricted Subsidiary (whether by merger,


 


13

















 


consolidation, acquisition or otherwise) of the Company shall be deemed
to be incurred or issued, as the case may be, by such Restricted Subsidiary at
the time it becomes a Restricted Subsidiary of the Company; and


 


(2)                                  any
amendment, modification or waiver of any document pursuant to which
Indebtedness was previously incurred shall not be deemed to be an incurrence of
Indebtedness unless and then only to the extent such amendment, modification or
waiver increases the principal or premium thereof or interest rate thereon
(including by way of original issue discount).


 


“Indebtedness”
means, with respect to any Person, at any date, any of the following, without
duplication:


 


(1)                                  any
liability, contingent or otherwise, of such Person (a) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (b) evidenced by a note, bond,
debenture or similar instrument or letters of credit (including a purchase
money obligation) or (c) for the payment of money relating to a
Capitalized Lease Obligation or other obligation (whether issued or assumed)
relating to the deferred purchase price of property, but excluding trade
accounts payable of such Person arising in the ordinary course of business;


 


(2)                                  all
conditional sale obligations and all obligations under any title retention
agreement (even if the rights and remedies of the seller under such agreement
in the event of default are limited to repossession or sale of such property),
but excluding trade accounts payable of such Person arising in the ordinary
course of business;


 


(3)                                  all
obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction entered into in the ordinary
course of business;


 


(4)                                  all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
(other than in connection with property subject to a Qualified Securitization
Transaction) on any asset or property (including, without limitation, leasehold
interests and any other tangible or intangible property) of such Person,
whether or not such Indebtedness is assumed by such Person or is not otherwise
such Person’s legal liability; provided,
that if the obligations so secured have not been assumed by such Person or are
otherwise not such Person’s legal liability, the amount of such Indebtedness
for the purposes of this definition shall be limited to the lesser of the
amount of such Indebtedness secured by such Lien or the fair market value of
the assets or property securing such Lien;


 


(5)                                  all
Indebtedness of others (including all dividends of other Persons the payment of
which is) guaranteed, directly or indirectly, by such Person or that is
otherwise its legal liability or which such Person has agreed to purchase or
repurchase


 


14

















 


or in respect of which such Person has agreed contingently to supply or
advance funds;


 


(6)                                  all
Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends if any;


 


(7)                                  all
net amounts owing under Interest Rate Protection Agreements; and


 


(8)                                  all
Attributable Indebtedness in respect of Sale/Leaseback Transactions entered
into by such person.


 


For purposes
hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Capital Stock,
such fair market value shall be determined reasonably and in good faith by the
Board of Directors of the issuer of such Disqualified Capital Stock.  Indebtedness shall not include any
guarantees of obligations of suppliers to the Company or any Restricted
Subsidiary that ensure timely delivery of products, tooling and other materials
used in the production process.


 


The amount of
Indebtedness of any Person at any date shall be the outstanding balance without
duplication at such date of all unconditional obligations as described above
and the maximum liability, upon the occurrence of the contingency giving rise
to the obligation, of any contingent obligations at such date; provided that the amount outstanding at
any time of any Indebtedness issued with original issue discount is the full
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
accordance with GAAP.


 


“Indenture”
means the Original Indenture, as supplemented by this Supplemental Indenture,
as originally executed or as amended or supplemented from time to time and
shall include the forms and terms of the Securities established as contemplated
hereunder.


 


“Indirect
Participant” means a person who holds an interest through a Participant.


 


“Initial
Securities” means the Company’s 71/2 % Senior Notes
due 2011.


 


“Interest Rate
Protection Agreement” means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement (whether from fixed to floating or from floating to fixed),
interest rate cap agreement, interest rate collar agreement, interest rate
hedge agreement or other similar agreement or arrangement designed to protect,
hedge or manage a Person or any Restricted Subsidiary against fluctuations in
interest rates to or under which such Person or any Restricted Subsidiary of such
Person is a party or a beneficiary on the Issue Date or becomes a party or a
beneficiary thereafter.


 


15

















 


“International
Guarantee” means the guarantee of the Securities by the Guarantor pursuant
to Article X herein.


 


“Investment” by any Person means any direct or indirect:


 


(1)                                  loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property (valued at the fair market value thereof as
of the date of transfer) to others or payments for property or services for the
account or use of others, or otherwise other than in the ordinary course of
business) and any guarantee of Indebtedness of any other Person;


 


(2)                                  purchase
or acquisition of Capital Stock, bonds, notes, debentures or other securities
or evidences of Indebtedness issued by any other Person (whether by merger,
consolidation, amalgamation or otherwise and whether or not purchased directly
from the issuer of such securities or evidences of Indebtedness); and


 


(3)                                  all
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person prepared in accordance with GAAP.


 


Investments shall
exclude (a) transactions pursuant to the Master Intercompany Agreements
and (b) extensions of loans, trade credit and advances to customers and
suppliers to the extent made in the ordinary course of business.


 


For purposes of
the definition of “Unrestricted Subsidiary” and Section 3.12 herein
only,


 


(1)                                  “Investment”
shall include the portion (proportionate to the Company’s equity interest in
such Subsidiary) of the fair market value of the net assets of any Subsidiary
of the Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, that if
such designation is made in connection with the acquisition of such Subsidiary
or the assets owned by such Subsidiary, the “Investment” in such Subsidiary
shall be deemed to be the consideration paid in connection with such
acquisition; provided, further, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if
positive) equal to (a) the Company’s “Investment” in such Subsidiary at
the time of such redesignation less (b) the portion (proportionate to the
Company’s equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation and


 


(2)                                  any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.


 


“Investment Grade” means:


 


16

















 


(1)                                  with
respect to S&P, any of the rating categories from and including AAA to and
including BBB-; and


 


(2)                                  with
respect to Moody’s, any of the rating categories from and including Aaa to and
including Baa3.


 


“Issue Date”
means the date on which the Initial Securities are originally issued under the
Indenture.


 


“Lien”
means, with respect to any Person, any mortgage, pledge, lien, encumbrance,
easement, restriction, covenant, right-of-way, charge or adverse claim
affecting tide or resulting in an encumbrance against real or personal property
of such Person, or a security interest of any kind, including any conditional
sale or other title retention agreement, any lease in the nature thereof, any option,
right of first refusal or other similar agreement to sell, in each case
securing obligations of such Person and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute or
statutes) of any jurisdiction but excluding any such filing or agreement which
reflects ownership by a third party of


 


(1)                                  property
leased to the referent Person or any of its Restricted Subsidiaries under a
lease that is not in the nature of a conditional sale or title retention
agreement or


 


(2)                                  accounts,
general intangibles or chattel paper sold to the referent Person.


 


“Master
Intercompany Agreements” means (i) the Master Intercompany Agreement
dated as of April 26, 1993 between Navistar Financial Corporation and
International Truck and Engine Corporation (formerly known as Navistar
International Transportation Corp.), as amended and as it may be amended,
modified, supplemented or restated form time to time; and (ii) one or more
similar agreements entered into after the Issue Date among the Company or one
of its Restricted Subsidiaries and one or more Unrestricted Subsidiary that
comprise of the Company’s financial services operations, as such agreements may
be amended, modified, supplemented or restated from time to time.


 


“Material
Subsidiary” means, at any date of determination, any Subsidiary of the
Company that, together with its Subsidiaries,


 


(1)                                  for
the most recent fiscal year of the Company accounted for more than 5% of the
consolidated revenues of the Company or


 


(2)                                  as
of the end of such fiscal year, was the owner of more than 5% of the
consolidated assets of the Company, all as set forth on the most recently
available consolidated financial statements of the Company and its Consolidated
Subsidiaries for such fiscal year prepared in conformity with GAAP.


 


“Maturity Date” means June 15, 2011.


 


17

















 


“Moody’s” means Moody’s Investors Service Inc., and its
successors.


 


“Net Available
Proceeds” from any Asset Disposition by any Person means cash or readily
marketable cash equivalents received (including by way of sale or discounting
of a note, installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquirer of
Indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form) therefrom by such Person, including any
cash received by way of deferred payment or upon the monetization or other
disposition of any non-cash consideration (including notes or other securities)
received in connection with such Asset Disposition, net of:


 


(1)                                  all
legal, title and recording tax expenses, commissions and other fees and
expenses incurred (including, without limitation, fees and expenses of
accountants, brokers, printers and other similar entities) and all federal,
state, foreign and local taxes required to be accrued as a liability as a
consequence of such Asset Disposition;


 


(2)                                  all
payments made by such Person or its Restricted Subsidiaries on any Indebtedness
which is secured by such assets in accordance with the terms of any Lien upon
or with respect to such assets or which must by the terms of such Lien, or in
order to obtain a necessary consent to such Asset Disposition or by applicable
law, be repaid out of the proceeds from such Asset Disposition;


 


(3)                                  all
payments made with respect to liabilities associated with the assets which are
the subject of the Asset Disposition, including, without limitation, trade
payables and other accrued liabilities;


 


(4)                                  appropriate
amounts to be provided by such Person or any Restricted Subsidiary thereof, as
the case may be, as a reserve in accordance with GAAP against any liabilities
associated with such assets and retained by such Person or any Restricted
Subsidiary thereof, as the case may be, after such Asset Disposition,
including, without limitation, liabilities under any indemnification
obligations and severance and other employee termination costs associated with
such Asset Disposition, until such time as such amounts are no longer reserved
or such reserve is no longer necessary (at which time any remaining amounts
will become Net Available Proceeds to be allocated in accordance with the
provisions of paragraph (c) of Section 3.13 herein; and


 


(5)                                  all
distributions and other payments made to minority interest holders, if any, in
Restricted Subsidiaries of such Person or joint ventures as a result of such
Asset Disposition.


 


“Net Cash
Proceeds” with respect to any issuance or sale of Capital Stock, means the
cash proceeds of such issuance or sale net of attorneys’ fees, accountants’
fees, underwriters’ or placement agents’ fees, listing fees, discounts or
commissions and brokerage, consultant and other fees and charges actually
incurred in connection with such issuance or sale and net


 


18

















 


of taxes paid or payable as a result of such issuance or sale (after
taking into account any available tax credit or deductions and any tax sharing
arrangements).


 


“NFC” means
Navistar Financial Corporation, a Delaware corporation, or a successor Person.


 


“Obligations”
means any principal, premiums, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any indebtedness.


 


“Offer to
Purchase” means a written offer (the “Offer”) sent by the Company by
first class mail, postage prepaid, to each Holder at its address appearing in
the register for the Securities on the date of the Offer, offering to purchase
up to the principal amount of the Securities in such Offer at the purchase
price specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the “Expiration Date”) of the Offer to Purchase which shall be not less
than 30 days nor more than 60 days after the date of such Offer and a
settlement date (the “Purchase Date”) for purchase of such Securities
within five Business Days after the Expiration Date.  The Company shall notify the Trustee at least 15 Business Days
(or such shorter period as is acceptable to such Trustee) prior to the mailing
of the Offer of the Company’s obligation to make an Offer to Purchase, and the
Offer shall be mailed by the Company or, at the Company’s request, by the
Trustee in the name and at the expense of the Company. The Offer shall contain
all the information required by applicable law to be included therein. The
Offer shall contain all instructions and materials necessary to enable such
Holders to tender such Securities pursuant to the Offer to Purchase. The Offer
shall also state:


 


(1)                                  the
section of the Indenture pursuant to which the Offer to Purchase is being
made;


 


(2)                                  the
Expiration Date and the Purchase Date;


 


(3)                                  the
aggregate principal amount of the outstanding Securities offered to be
purchased by the Company pursuant to the Offer to Purchase (including, if less
than 100%, the manner by which such amount has been determined pursuant to Section 3.13
of this Supplemental Indenture) (the “Purchase Amount”);


 


(4)                                  the
purchase price to be paid by the Company for each $1,000 aggregate principal
amount of Securities accepted for payment (as specified pursuant to the
Indenture) (the “Purchase Price”);


 


(5)                                  that
the Holder may tender all or any portion of the Securities registered in the
name of such Holder and that any portion of a Security tendered must be
tendered in an integral multiple of $1,000 principal amount;


 


(6)                                  the
place or places where Securities are to be surrendered for tender pursuant to
the Offer to Purchase;


 


19

















 


(7)                                  that
interest on any Security not tendered or tendered but not purchased by the
Company pursuant to the Offer to Purchase will continue to accrue;


 


(8)                                  that
on the Purchase Date the Purchase Price will become due and payable upon each
Security being accepted for payment pursuant to the Offer to Purchase and that
interest thereon shall cease to accrue on and after the Purchase Date;


 


(9)                                  that
each Holder electing to tender all or any portion of a Security pursuant to the
Offer to Purchase will be required to surrender such Security at the place or
places specified in the Offer prior to the close of business on the Expiration
Date (such Security being, if the Company or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by the Holder thereof
or his attorney duly authorized in writing);


 


(10)                            that
Holders will be entitled to withdraw all or any portion of Securities tendered
if the Company (or its Paying Agent) receives, not later than the close of
business on the fifth Business Day next preceding the Expiration Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Securities the Holder tendered, the
certificate number of the Security the Holder tendered and a statement that
such Holder is withdrawing all or a portion of his tender;


 


(11)                            that
(I) if Securities in an aggregate principal amount less than or equal to
the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer
to Purchase, the Company shall purchase all such Securities and (II) if
Securities in an aggregate principal amount in excess of the Purchase Amount
are tendered and not withdrawn pursuant to the Offer to Purchase, the Company
shall purchase Securities having an aggregate principal amount equal to the
Purchase Amount on a pro rata basis (with such adjustments as may be deemed
appropriate so that only Securities in denominations of $1,000 or integral
multiples thereof shall be purchased); and


 


(12)                            that
in the case of any Holder whose Security is purchased only in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities of any
authorized denomination as requested by such Holder, in all aggregate principal
amount equal to and in exchange for the unpurchased portion of the Security or
Securities so tendered.


 


An Offer to
Purchase shall be governed by and effected in accordance with the provisions
above pertaining to any Offer.


 


“Officer”
means the Chairman of the Board, the President, the Chief Financial Officer,
any Executive Vice President, Senior Vice President or Vice President, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary.


 


20

















 


“Officer’s
Certificate,” when used with respect to the Company, means a certificate
signed by the Chairman of the Board, the President, the Chief Financial
Officer, any Executive Vice President, Senior Vice President or Vice President,
the Treasurer, any Assistant Treasurer or the Controller of the Company.


 


“Opinion of
Counsel” means a written opinion from legal counsel.  Such other counsel may be an employee of or
counsel to the Company.


 


“Outstanding,”
when used with respect to Securities, means, as of the date of determination,
all Securities theretofore authenticated and delivered under the Indenture,
except:


 


(1)                                  Securities
theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation;


 


(2)                                  Securities,
or portions thereof, for whose payment or redemption money or  Government Obligations in the necessary
amount has been theretofore  deposited
with the Trustee or any Paying Agent (other than the Company) in trust or set
aside and segregated in trust (if the Company shall act as its own Paying
Agent) for the Holders of such Securities; provided
that, if such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to the Indenture or provisions therefor satisfactory to the
Trustee have been made;


 


(3)                                  Securities,
except to the extent provided in Section 8.4 and Section 8.5
herein, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article VIII herein; and


 


(4)                                  Securities
which have been paid pursuant to Section 2.12 herein or in exchange
for  or in lieu of which other
Securities have been authenticated and delivered pursuant to the Indenture,
other than any such Securities in respect of 
which there shall have been presented to the Trustee proof satisfactory
to  it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid obligations of
the Company; provided, however, that in determining whether the
Holders of the requisite principal amount of the Outstanding Securities have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, or whether sufficient funds are available for redemption or for any
other purpose and for the purpose of making the calculations required by
Section 313 of the Trust Indenture Act, Securities owned by the Company or
any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in making
such calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Securities and that the pledgee is not


 


21

















 


the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor.


 


“Participant”
means, with respect to DTC, a Person who has an account with DTC.


 


“Paying Agent”
has the meaning provided in Section 2.3 herein, except that, for
the purposes of Article VIII, the Paying Agent shall not be the
Company or a Subsidiary of the Company or an Affiliate of any of them.


 


“Permitted Investments” means:


 


(1)                                  Investments
in Cash Equivalents;


 


(2)                                  guarantees
otherwise permitted by the terms of the Indenture;


 


(3)                                  any
Investment by the Company or any Restricted Subsidiary in a Securitization
Subsidiary;


 


(4)                                  deposits,
including interest-bearing deposits, maintained in the ordinary course of
business in banks;


 


(5)                                  any
acquisition of the Capital Stock of any Person and any Investment in another
Person if as a result of such Investment such other Person is merged with or
consolidated into, or transfers or conveys all or substantially all of its
assets to, the Company or a Restricted Subsidiary of the Company; provided, that after giving effect to any
such acquisition or investment such Person shall become a Restricted Subsidiary
of the Company or another Restricted Subsidiary of the Company;


 


(6)                                  trade
receivables and prepaid expenses, in each case arising in the ordinary course
of business; provided, that such
receivables and prepaid expenses would be recorded as assets of such Person in
accordance with GAAP;


 


(7)                                  endorsements
for collection or deposit in the ordinary course of business by such Person of
bank drafts and similar negotiable instruments of such other Person received as
payment for ordinary course of business trade receivables;


 


(8)                                  any
interest swap or hedging obligation with an unaffiliated Person otherwise
permitted by the Indenture (including, without limitation, any Currency
Agreement, Commodity Agreement and any Interest Rate Protection Agreement
otherwise permitted by the Indenture);


 


(9)                                  Investments
received as consideration for an Asset Disposition in compliance with Section 3.13
herein;


 


(10)                            Investments
for which the sole consideration provided is Qualified Capital Stock of the
Company; provided, that the
issuance of such Qualified Capital Stock is not included in the calculation set
forth in clause (iii) of the first paragraph of Section 3.12
herein;


 


22

















 


(11)                            loans
and advances to employees made in the ordinary course of business in an
aggregate amount not to exceed $10.0 million at any one time outstanding;


 


(12)                            Investments
outstanding on the Issue Date;


 


(13)                            Investments
in the Company or a Restricted Subsidiary;


 


(14)                            Investments
in securities of trade creditors, suppliers or customers received pursuant to
any plan of reorganization, restructuring, workout or similar arrangement of
such trade creditor, supplier or customer or upon the compromise of any debt
created in the ordinary course of business owning to the Company or a
Subsidiary, whether through litigation, arbitration or otherwise;


 


(15)                            Investments
in any Person after the Issue Date having an aggregate fair market value
(measured on the date each Investment was made without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (15) that are at that time outstanding not to
exceed the greater of (i) $75.0 million or (ii) 2.0% of
Consolidated Net Tangible Assets;


 


(16)                            Investments
in publicly traded equity or publicly traded Investment Grade debt obligations
issued by a corporation (other than the Company or an affiliate of the Company)
organized under the laws of any State of the United States of America and
subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act in an aggregate amount not in excess of $100.0 million at any
one time outstanding; and


 


(17)                            Investments
in Navistar Financial Corporation, Arrendadora Financiera Navistar S.A. de
C.V., Servicios Financieros Navistar S.A. de C.V., Servicios Financieros NFC,
S.A. de C.V. or Navistar Commercial, S.A. de C.V. having an aggregate fair
market value (measured on the date each Investment was made without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (17) that are at that time
outstanding not to exceed $100.0 million.


 


“Permitted
Joint Venture” means any Person which is, directly or indirectly, through
its subsidiaries or otherwise, engaged principally in any business in which the
Company is engaged, or a reasonably related business, and the Capital Stock of
which is owned by the Company or a Restricted Subsidiary and one or more
Persons other than the Company or any affiliate of the Company.


 


“Permitted Liens” mean:


 


(1)                                  Liens
for taxes, assessments and governmental charges (other than any Lien imposed by
the Employee Retirement Income Security Act of 1974, as amended) that are not
yet delinquent or are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and for which


 


23

















 


adequate reserves have been established or other provisions have been
made in accordance with generally accepted accounting principles;


 


(2)                                  statutory
mechanics’, workmen’s, materialmen’s, operators’ or similar Liens imposed by
law and arising in the ordinary course of business for sums which are not yet
due or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and for which adequate reserves have been
established or other provisions have been made in accordance with generally
accepted accounting principles;


 


(3)                                  minor
imperfections of, or encumbrances on, title that do not impair the value of
property for its intended use;


 


(4)                                  Liens
(other than any Lien under the Employee Retirement Income Security Act of 1974,
as amended) incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types
of social security;


 


(5)                                  Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory or regulatory obligations, bankers’ acceptances, surety and appeal
bonds, government contracts, performance and return of money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);


 


(6)                                  easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or of any of its
Restricted Subsidiaries;


 


(7)                                  Liens
(including extensions and renewals thereof) upon real or tangible personal
property acquired after the Issue Date; provided,
that


 


(a)                                  such
Lien is created solely for the purpose of securing Indebtedness that is
incurred in accordance with the Indenture to finance the cost (including the
cost of improvement or construction) of the item of property or assets subject
thereto and such Lien is created prior to, at the time of or within
180 days after the later of the acquisition, the completion of
construction or the commencement of full operation of such property,


 


(b)                                 the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost and


 


(c)                                  any
such Lien shall not extend to or cover any property or assets of the Company or
of any Restricted Subsidiary of the Company other than such item of property or
assets and any improvements on such item;


 


24



















 


(8)                                  leases
or subleases granted to others that do not materially interfere with the
ordinary course of business of the Company or of any Restricted Subsidiary of
the Company;


 


(9)                                  any
interest or title of a lessor in the property subject to any Capitalized Lease
Obligation; provided that any
transaction related thereto otherwise complies with the Indenture;


 


(10)                            Liens
arising from filing Uniform Commercial Code financing statements regarding
leases;


 


(11)                            Liens
arising from the rendering of a final judgment or order against the Company or
any Restricted Subsidiary of the Company that does not give rise to an Event of
Default;


 


(12)                            Liens
securing reimbursement obligations with respect to letters of credit incurred
in accordance with the Indenture that encumber documents and other property
relating to such letters of credit and the products and proceeds thereof;


 


(13)                            Liens
in favor of the Trustee arising under the Indenture;


 


(14)                            any
lien existing on property, shares of stock or Indebtedness of a Person at the
time such Person becomes a Restricted Subsidiary of the Company or is merged
with or consolidated into the Company or a Restricted Subsidiary of the Company
or at the time of sale, lease or other disposition of the properties of any
Person as an entirety or substantially as an entirety to the Company or any
Restricted Subsidiary of the Company;


 


(15)                            Liens
on property of any Subsidiary of the Company to secure Indebtedness for
borrowed money owed to the Company or to another Restricted Subsidiary of the
Company;


 


(16)                            Liens
in favor of the Company;


 


(17)                            Liens
existing on the Issue Date;


 


(18)                            Liens
in favor of custom and revenue authorities arising as a matter of law to secure
payment of nondelinquent customs duties in connection with the importation of
goods;


 


(19)                            Liens
encumbering customary initial deposits and margin deposits, and other Liens
incurred in the ordinary course of business that are within the general
parameters customary in the industry, in each case securing Indebtedness under
any Interest Rate Protection Agreement;


 


(20)                            Liens
encumbering deposits made in the ordinary course of business to secure
nondelinquent obligations arising from statutory, regulatory, contractual or
warranty requirements of the Company or its Restricted Subsidiaries for which a


 


25

















 


reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made; and


 


(21)                            Liens
arising out of consignment or similar arrangements for the sale of goods
entered into by the Company or any Restricted Subsidiary in the ordinary course
of business in accordance with industry practice.


 


“Person”
means any individual, corporation, partnership, joint venture, trust, estate,
unincorporated organization, or government or any agency or political
subdivision thereof.


 


“Place of
Payment,” when used with respect to the Securities, means the place or
places where the principal of, premium, if any, and interest, if any, and any
other payments on such Securities are payable as specified as contemplated by Section 2.3
herein.


 


“Plan of
Liquidation” means, with respect to any Person, a plan (including by
operation of law) that provides for, contemplates or the effectuation of which
is preceded or accompanied by (whether or not substantially contemporaneously):


 


(1)                                  the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the referent Person; and


 


(2)                                  the
distribution of all or substantially all of the proceeds of such sale, lease,
conveyance or other disposition and all or substantially all of the remaining
assets of the referent Person to holders of Capital Stock of the referent
Person.


 


“Preferred
Stock” means, as applied to the Capital Stock of any Person, the Capital
Stock of such Person (other than the Common Stock of such Person) of any class
or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding-up of such Person, to shares of Capital
Stock of any other class of such Person.


 


“Public Equity
Offering” means a public offering for cash by the Company of its Qualified
Capital Stock, other than public offerings with respect to the Company’s
Qualified Capital Stock registered on Forms S-4 or S-8.


 


“Qualified
Capital Stock” means, with respect to any Person, any Capital Stock of such
Person that is not Disqualified Capital Stock or convertible into or
exchangeable or exercisable for Disqualified Capital Stock.


 


“Qualified
Securitization Transaction” means any transaction or series of transactions
that have been or may be entered into by any of the Restricted Subsidiaries of
the Company in connection with or reasonably related to a transaction or series
of transactions in which any of the Restricted Subsidiaries of the Company may
sell, convey or otherwise transfer to


 


(1)                                  a
Securitization Subsidiary or


 


(2)                                  any
other Person, or may grant a security interest in, any Receivables or interests
therein secured by the merchandise or services financed thereby (whether


 


26

















 


such Receivables are then existing or arising in the future) of any of
the Restricted Subsidiaries of the Company, and any assets related thereto including,
without limitation, all security or ownership interests in merchandise or
services financed thereby, the proceeds of such Receivables, and other assets
which are customarily sold or in respect of which security interests are
customarily granted in connection with securitization transactions involving
such assets.


 


“Rating Agency” means each of (1) S&P and
(2) Moody’s.


 


“Receivables”
means any right of payment from or on behalf of any obligor, whether
constituting an account, chattel paper, instrument, general intangible or
otherwise, arising from the financing by any Restricted Subsidiary of the
Company of merchandise or services, and monies due thereunder, security or
ownership interests in the merchandise and services financed thereby, records
related thereto, and the right to payment of any interest or finance charges
and other obligations with respect thereto, proceeds from claims on insurance
policies related thereto, any other proceeds related thereto, and any other
related rights.


 


“Redemption Date,”
when used with respect to any Security to be redeemed, means the date fixed for
such redemption by or pursuant to the Indenture.


 


“Redemption
Price,” when used with respect to any Security to be redeemed, in whole or
in part, means the price at which it is to be redeemed pursuant to the
Indenture.


 


“Responsible
Officer,” when used with respect to the Trustee, shall mean any officer
within the corporate trust department of the Trustee, including any vice
president, any assistant vice president, any assistant treasurer, any trust
officer, or any other officer of the Trustee customarily performing functions
similar to those performed by the persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred because
of such officer’s knowledge of and familiarity with a particular subject and
who shall have direct responsibility for the administration of the Indenture.


 


“Restricted
Subsidiary” means any Subsidiary of the Company that is not an Unrestricted
Subsidiary.


 


“S&P” means Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors.


 


“Sale/Lease-back
Transaction” means an arrangement relating to property now owned or
hereafter acquired whereby the Company or a Restricted Subsidiary transfers
such property to a Person and the Company or a Restricted Subsidiary leases it
from such Person.


 


“Securities”
means the collective reference to the Initial Securities and any Additional
Securities.


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“Securitization
Subsidiary” means a Subsidiary of the Company which engages in no
activities other than those reasonably related to or in connection with the
entering into of


 


27

















 


securitization transactions and which is designated by the Board of
Directors of the Company (as provided below) as a Securitization Subsidiary:


 


(1)                                  no
portion of the Indebtedness or any other obligations (contingent or otherwise)
of which


 


(a)                                  is
guaranteed by the Company or any Restricted Subsidiary of the Company,


 


(b)                                 is
recourse to or obligates the Company or any Restricted Subsidiary of the
Company in any way other than pursuant to representations, warranties and
covenants (including those related to servicing) entered into in the ordinary
course of business in connection with a Qualified Securitization Transaction or


 


(c)                                  subjects
any property or asset of the Company or any Restricted Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to any Lien or to
the satisfaction thereof, other than pursuant to representations, warranties
and covenants (including those related to servicing) entered into in the
ordinary course of business in connection with a Qualified Securitization
Transaction;


 


(2)                                  with
which neither the Company nor any Restricted Subsidiary of the Company


 


(a)                                  provides
any credit support or


 


(b)                                 has
any contract, agreement, arrangement or understanding other than on terms that
are fair and reasonable and that are no less favorable to the Company or such
Restricted Subsidiary than could be obtained from an unrelated Person (other
than, in the case of subclauses (a) and (b) of this clause (2),
representations, warranties and covenants (including those relating to
servicing) entered into in the ordinary course of business in connection with a
Qualified Securitization Transaction and intercompany notes relating to the
sale of Receivables to such Securitization Subsidiary); and


 


(3)                                  with
which neither the Company nor any Restricted Subsidiary of the Company has any
obligation to maintain or preserve such Subsidiary’s financial condition or to
cause such Subsidiary to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolutions of the
Board of Directors of the Company giving effect to such designation.


 


“Security
Register” means the register of Securities, maintained by the Registrar,
pursuant to Section 2.3 herein.


 


“Stated
Maturity” means, with respect to any security or Indebtedness of a Person,
the date specified therein as the fixed date on which any principal of such
security or


 


28

















 


Indebtedness is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
thereof at the option of the holder thereof).


 


“Subsidiary” of any Person means


 


(1)                                  a
corporation a majority of whose Voting Stock is at the time, directly or
indirectly, owned by such Person, by one or more Restricted Subsidiaries of
such Person or by such Person and one or more Restricted Subsidiaries of such
Person or


 


(2)                                  any
other Person (other than a trust formed in connection with a Qualified
Securitization Transaction) in which such Person, a Restricted Subsidiary of
such Person or such Person and one or more Restricted Subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, have at
least a majority ownership interest.


 


“Subsidiary
Guarantee” means the International Guarantee and each additional guarantee
of the Securities by a Restricted Subsidiary of the Company pursuant to Article X
herein.


 


“Subsidiary
Guarantor” means the Guarantor and each Restricted Subsidiary of the
Company that becomes a guarantor of the Securities pursuant to Article X
herein.


 


“Support
Agreement” means the Parent’s Side Agreement dated as of December 12,
2000, between the Company and International Truck and Engine Corporation,
formerly known as Navistar International Transportation Corp., as it may be
amended, modified, supplemented or restricted from time to time.


 


“Tax Allocation
Agreement” means the Tax Allocation Agreement among the Company and its
subsidiaries, effective as of October 1, 1981, as it has been and may be
amended and/or supplemented from time to time.


 


“TIA” or “Trust
Indenture Act” means the Trust Indenture Act of 1939 as in effect on the
date of this Supplemental Indenture, except as provided in Section 9.3
herein.


 


“Trustee”
means the party named as such in the first paragraph of the Indenture until a
successor Trustee replaces it pursuant to the applicable provisions of the
Indenture, and thereafter means such successor Trustee.


 


“2008 Senior
Subordinated Notes” means the $250 million aggregate principal amount
of 8% Senior Subordinated Notes due 2008 originally issued under the indenture
dated as of February 4, 1998, as amended, among the Company, as issuer,
and BNY Midwest Trust Company (as successor to Harris Trust and Savings Bank),
as trustee.


 


“United States”
means the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its jurisdiction.


 


29

















 


“U.S. Paying
Agent” means BNY Midwest Trust Company and any successor U.S. Paying Agent.


 


“Unrestricted
Subsidiary” means:


 


(1)                                  each
of NFC, Arrendadora Financiera Navistar S.A. de C.V., Servicios Financieros
Navistar S.A. de C.V., Servicios Financieros NFC, S.A. de C.V., Navistar
Comercial, S.A. de C.V., Harbour Assurance Company of Bermuda Limited, Navistar
Acceptance Corporation Limited, Navistar Comercial, S.A. de C.V.; International
Truck and Engine Corporation US Holding Company, LLC; International Truck and
Engine Corporation Cayman Islands Holding Corporation; International Truck and
Engine Investments Corporation, all the DealCor Subsidiaries, and their
respective Subsidiaries until such time as it is designated a Restricted
Subsidiary pursuant to the second succeeding sentence;


 


(2)                                  any
Subsidiary of the Company (other than the Guarantor as long as the
International Guarantee is in effect) that at the time of determination shall
be designated an Unrestricted Subsidiary by the Board of Directors in the
manner provided below; and


 


(3)                                  any
Subsidiary of an Unrestricted Subsidiary.


 


The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Capital Stock of, or holds
any Lien on any property of, the Company or any other Restricted Subsidiary of
the Company; provided, that
either


 


(1)                                  the
Subsidiary to be so designated has total assets of $100,000 or less or


 


(2)                                  if
such Subsidiary has assets greater than $100,000, such designation would be
permitted under Section 3.12 herein.


 


The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, that
immediately after giving effect to such designation (a) if such
Unrestricted Subsidiary at such time has Indebtedness, the Company could incur
$1.00 of additional Indebtedness under paragraph (a) of Section 3.10
herein and (b) no Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced by the Company to the
Trustee by promptly filing with the Trustee a copy of the board resolution
giving effect to such designation and an Officer’s Certificate certifying that
such designation complied with the foregoing provisions.


 


“Voting Stock”
means, with respect to any Person, securities of any class or classes of
Capital Stock in such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock has voting power by reason of
any contingency) to vote in the election of members of the Board of Directors
or other governing body of such Person.


 


30

















 


Section 1.2.                                   Other Definitions.


 


	
  Term

  	
   

  	
  Defined in
  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Affiliate Transactions”

  	
   

  	
  3.16

  	
   

  
	
  “Agent Members”

  	
   

  	
  2.1(d)

  	
   

  
	
  “Bankruptcy Law”

  	
   

  	
  6.1

  	
   

  
	
  “Benefited Party”

  	
   

  	
  10.1(c)(i)

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  5.9

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  5.9

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.5

  	
   

  
	
  “Custodian”

  	
   

  	
  6.1

  	
   

  
	
  “Defaulted Interest”

  	
   

  	
  2.12

  	
   

  
	
  “Defeasance”

  	
   

  	
  8.4

  	
   

  
	
  “Definitive Securities”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Global Security”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Legal Holiday”

  	
   

  	
  11.8

  	
   

  
	
  “Registrar”

  	
   

  	
  2.3

  	
   

  
	
  “Special Record Date”

  	
   

  	
  2.12(a)

  	
   

  
	
  “Standard No. 76”

  	
   

  	
  8.8

  	
   

  
	
  “Unutilized Net Available Proceeds”

  	
   

  	
  3.13

  	
   

  



 


Section 1.3.                                   Incorporation by
Reference of Trust Indenture Act. 
This Supplemental Indenture is subject to the mandatory provisions of
the TIA which are incorporated by reference in and made a part of this
Supplemental Indenture. The following TIA terms have the following meanings:


 


“indenture
securities” means the Securities.


 


“indenture
security holder” means a Securityholder.


 


“indenture to be
qualified” means the Indenture.


 


“indenture
trustee” or “institutional trustee” means the Trustee.


 


“obligor” on the
indenture securities means the Company and any other obligor on the indenture
securities.


 


All other TIA
terms used in this Supplemental Indenture that are defined by the TIA, defined
in the TIA by reference to another statute or defined by the Commission rules
have the meanings assigned to them by such definitions.


 


Section 1.4.                                   Rules of
Construction.  For all
purposes of this Supplemental Indenture, except as otherwise expressly provided
or unless the context otherwise requires:


 


(a)                                  a
term has the meaning assigned to it;


 


31

















 


(b)                                 an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;


 


(c)                                  “or”
is not exclusive;


 


(d)                                 “including”
means including without limitation;


 


(e)                                  words
in the singular include the plural and words in the plural include the
singular;


 


(f)                                    the
words “herein,” “hereof” and “hereunder” and other words of similar import refer
to this Supplemental Indenture as a whole and not to any particular Article,
Section or other subdivision; and


 


(g)                                 if
and to the extent provisions of the Original Indenture are duplicative of, or
in contradiction with, the provisions of this Supplemental Indenture, the
provisions of this Supplemental Indenture shall govern.


 


ARTICLE II

THE SECURITIES


 


Section 2.1.                                   Form, Dating and
Terms.


 


(a)                                  There
is hereby established a new series of Securities to be issued under the
Indenture to be designated as the Company’s 71/2 % Senior
Notes due 2011 in an initial aggregate principal amount of $250,000,000.  In addition, the Company may issue, from
time to time in accordance with the provisions of this Supplemental Indenture,
an unlimited amount of additional Securities (the “Additional Securities”).  On the Issue Date, a global Security to
represent the Initial Securities  will
be issued in the form of a single global Security, without interest coupons,
substantially in the form set forth in Exhibit A hereto (the “Global
Security”), which is hereby incorporated by reference and made a part of
this Supplemental Indenture.  The
aggregate amount of the Global Security may from time to time be increased or
decreased by adjustments made on the records of DTC as hereinafter
provided.  Securities issued pursuant to
Section 2.1(a) herein in exchange for or upon transfer of
beneficial interests in a Global Security may be in the form of permanent
certificated Securities, without interest coupons, in substantially the form set
forth in Exhibit A, without the legend provided for in Section 2.1(c)
and other appropriate changes to reflect that it is not a Global Security (the
“Definitive Securities”).  The
terms of the Securities set forth in Exhibit A hereto are part of the terms
of this Supplemental Indenture and, to the extent applicable, the Company and
the Trustee, by their execution and delivery of the Indenture, expressly agree
to be bound by such terms.  The
Securities shall be dated the date of their authentication.


 


(b)                                 Denominations.  The Securities  shall be issuable only in fully registered form, without interest
coupons, and in denominations of $1,000 and integral multiples of $1,000 in
excess thereof.


 


32

















 


(c)                                  Legend.  The Global Securities shall bear the
following legend on the face thereof:


 


“UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), 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 IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


TRANSFERS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.”


 


(d)                                 Book-Entry
Provisions for Global Securities.


 


(i)                                     This
Section 2.1(d) shall apply only to Global Securities deposited with
the Trustee, as custodian for DTC.


 


(ii)                                  Each
Global Security initially shall (i) be registered in the name of DTC for such
Global Security or the nominee of DTC (ii) be delivered to the Trustee as
custodian for DTC and (iii) bear the legend as required by Section 2.1(c)
herein.


 


Members of, or participants in, DTC (“Agent Members”)
shall have no rights under the Indenture with respect to any Global Security
and DTC will be treated by the Company, the Trustee and any agent of any of
them as the absolute owner of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of any of them from
(A) giving effect to any written certification, proxy or other authorization
furnished by DTC or (B) impairing, as between DTC and the Agent Members, the
operation of customary practices governing the exercise of the rights of a
beneficial owner of any Security.


 


33

















 


(iii)                               Definitive
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in the Global Security, (A) if DTC notifies the Company
that it is unwilling or unable to continue to act as a clearing agency and a
successor clearing agency is not appointed within 120 days, or (B) if DTC so requests
following an Event of Default, or (C) if, in the case of (A) or (B), the owner
of a Book-Entry Interest requests such exchange in writing delivered through
DTC (including following an Event of Default). 
In connection with a transfer of an entire Global Security to beneficial
owners pursuant to this paragraph (iii), the applicable Global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by DTC in exchange for its beneficial interest in
the applicable Global Security, an equal aggregate principal amount of
Definitive Securities, as the case may be, of authorized denominations.


 


(iv)                              Any
beneficial interest in one of the Global Securities that is transferred to a
person who takes delivery in the form of an interest in another Global Security
will, upon transfer, cease to be an interest in such Global Security and become
an interest in the other Global Security and, accordingly, will thereafter be
subject to all transfer restrictions, if any, and other procedures applicable
to beneficial interests in such other Global Security for as long as it remains
such an interest.


 


(e)                                  Definitive
Securities.  Except as provided in Section 2.1(d)
herein, owners of beneficial interests in Global Securities will not be
entitled to receive Definitive Securities.


 


Section 2.2.                                   Execution and
Authentication.  One Officer
shall sign the Securities for the Company by manual or facsimile signature.   If an Officer whose signature is on a
Security no longer holds that office at the time the Trustee authenticates the
Security, the Security shall be valid nevertheless, after giving effect to any
exchange of Initial Securities for Exchange Securities.


 


A Security shall
not be valid until an authorized signatory of the Trustee manually
authenticates the Security.  The
signature of the Trustee on a Security shall be conclusive evidence that such
Security has been duly and validly authenticated and issued under the
Indenture.


 


At any time and
from time to time after the execution and delivery of this Supplemental
Indenture, the Trustee shall authenticate and make available for delivery: (1)
the Securities for issue on the Issue Date in an aggregate principal amount of
$250,000,000, and (2) from time to time, the Additional Securities, in each
case upon a Company Order.  Such Company
Order shall specify the amount of the Securities to be authenticated and the date
on which the original issue of Securities are to be authenticated and whether
the Securities are to be Initial Securities or Additional Securities.


 


34

















 


With respect to
any Additional Securities, the Company shall set forth in a resolution of its
Board of Directors and an Officer’s Certificate, the following information:


 


(i)                                     the
aggregate principal amount of such Additional Securities to be authenticated
and delivered pursuant to this Supplemental Indenture; and


 


(ii)                                  the
issue price and the issue date of the Additional Securities.


 


The aggregate
principal amount of Securities which may be authenticated and delivered under
this Supplemental Indenture is unlimited. 
All Securities issued under this Supplemental Indenture (whether
Additional Securities) will be treated as a single class for all purposes under
this Supplemental Indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase.


 


In case the
Company, pursuant to Article IV herein, shall be consolidated or
merged with or into any other Person or shall transfer or lease all or
substantially all of its assets to any Person, and the successor Person formed
by or surviving any such consolidation or any such merger, or to which such
transfer or lease shall have been made, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article IV herein,
any of the Securities authenticated or delivered prior to such consolidation,
merger, conveyance, transfer or lease may, from time to time, at the request of
the successor Person, be exchanged for other Securities executed in the name of
the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Order of the successor Person, shall authenticate and deliver
Securities as specified in such order for the purpose of such exchange.  If Securities shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 herein in exchange or substitution for or upon
registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.


 


Section 2.3.                                   Registrar and
Paying Agent.  The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the “Registrar”) and an office
or agency where Securities may be presented for payment (the “Paying Agent”).  The Registrar shall keep a register of the
Securities and of their transfer and exchange (the “Security Register”).  The Company may have one or more
co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any
additional paying agent.


 


The Company shall
enter into an appropriate agency agreement with any Registrar, Paying Agent or
co-registrar not a party to this Supplemental Indenture, which shall
incorporate the terms of the TIA.  The
agreement shall implement the provisions of this Supplemental Indenture that
relate to such agent.  The Company shall
notify the Trustee of the name and address of each such agent.  If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation


 


35

















 


therefor pursuant to Section 7.9.  The Company or any wholly owned Subsidiary may act as Paying
Agent, Registrar, co-registrar or transfer agent.


 


The Company
initially appoints the Trustee as the Paying Agent and Registrar in connection
with the Securities.


 


Section 2.4.                                   Paying Agent To
Hold Money in Trust.  Prior
to each due date of the principal of or interest on any Security, the Company
shall deposit with the Paying Agent a sum sufficient to pay such principal or
interest when due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that such Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by such Paying Agent
for the payment of principal of or interest on the Securities and shall notify
the Trustee in writing of any default by the Company in making any such
payment. If the Company acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the
Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect
to the Company, the Trustee shall serve as Paying Agent for the Securities .


 


Section 2.5.                                   Securityholder
Lists.  The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders.  If the Trustee is not the Registrar, or to
the extent otherwise required under the TIA, the Company shall furnish to the
Trustee, in writing at least seven Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders.


 


Section 2.6.                                   Transfer and
Exchange.


 


(a)                                  Obligations
with Respect to Transfers and Exchanges of Securities.


 


(i)                                     To
permit registrations of transfers and exchanges, the Company shall, subject to
the other terms and conditions of this Article II, execute and the
Trustee shall authenticate Definitive Securities and Global Securities at the
Registrar’s or co-registrar’s request.


 


(ii)                                  No
service charge shall be made to a Holder for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax, assessments, or similar governmental charge payable in connection
therewith (other than any such transfer taxes, assessments or similar
governmental charges payable upon exchange or transfer).


 


(iii)                               The
Registrar or co-registrar shall not be required to register the transfer of or
exchange of any Security for a period beginning (1) 15 days before the mailing
of a notice of an offer to repurchase or redeem Securities


 


36

















 


and ending at the
close of business on the day of such mailing or (2) 15 days before an interest
payment date and ending on such interest payment date.


 


(iv)                              Prior
to the due presentation for registration of transfer of any Security, the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may
deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.


 


(v)                                 All
Securities issued upon any transfer or exchange pursuant to the terms of the
Indenture shall evidence the same debt and shall be entitled to the same
benefits under the Indenture as the Securities surrendered upon such transfer
or exchange.


 


(b)                                 No
Obligation of the Trustee.


 


(i)                                     The
Trustee shall have no responsibility or obligation to any beneficial owner of a
Global Security, a member of, or a participant in, DTC or other Person with
respect to the accuracy of the records of DTC or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than DTC) or any notice (including any
notice of redemption) or the payment of any amount or delivery of any
Securities (or other security or property) under or with respect to such
Securities.  All notices and
communications to be given to the Holders and all payments to be made to
Holders in respect of the Securities shall be given or made only to or upon the
order of the registered Holders (which shall be DTC or its nominee in the case
of a Global Security).  The rights of
beneficial owners in any Global Security shall be exercised only through DTC subject
to the applicable rules and procedures of DTC. 
The Trustee may rely and shall be fully protected in relying upon
information furnished by DTC with respect to its members, participants and any
beneficial owners.


 


(ii)                                  The
Trustee shall have no obligation or duty to monitor, determine or inquire as to
compliance with any restrictions on transfer imposed under the Indenture or
under applicable law with respect to any transfer of any interest in any
Security (including any transfers between or among DTC participants, members or
beneficial owners in any Global Security) other than to require delivery of
such certificates and other documentation or evidence as are expressly required
by, and to do so if and when expressly required by, the terms of the Indenture,
and to examine the same to determine substantial compliance as to form with the
express requirements hereof.


 


37

















 


Section 2.7.                                   [Reserved].


 


Section 2.8.                                   [Reserved].


 


Section 2.9.                                   Mutilated,
Destroyed, Lost or Stolen Securities.  If a mutilated Security is surrendered to the Registrar or if the
Holder of a Security claims that such Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of Section 8-405 of the Uniform
Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee.  If
required by the Trustee or the Company, such Holder shall furnish an indemnity
bond sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Security is replaced, and, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon Company
Order the Trustee shall authenticate and make available for delivery, in
exchange for any such mutilated Security or in lieu of any such destroyed, lost
or stolen Security, a new Security of like tenor and principal amount, bearing
a number not contemporaneously outstanding.


 


In case any such
mutilated, destroyed, lost or stolen Security has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new
Security, pay such Security.


 


Upon the issuance
of any new Security under this Section, the Company may require the payment 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 Trustee) in connection therewith.


 


Every new Security
issued pursuant to this Section in lieu of any mutilated, destroyed, lost
or stolen Security shall constitute an original additional contractual obligation
of the Company, any Subsidiary Guarantor (if applicable) and any other obligor
upon the Securities, whether or not the mutilated, destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to
all benefits of the Indenture equally and proportionately with any and all
other Securities duly issued 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 Securities.


 


Section 2.10.                             Temporary Securities.  Until Definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Securities.  Temporary Securities shall
be substantially in the form of Definitive Securities but may have variations
that the Company considers appropriate for temporary Securities.  Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities.  After the preparation of Definitive
Securities, the temporary Securities shall be exchangeable for such Definitive
Securities upon surrender of such temporary Securities at any office or agency
maintained by the Company for that purpose and such exchange shall be


 


38

















 


without charge to
the Holder.  Upon surrender for
cancellation of any one or more temporary Securities, the Company shall
execute, and the Trustee shall authenticate and make available for delivery in
exchange therefor, one or more Definitive Securities representing an equal
principal amount of Securities. Until so exchanged, the Holder of temporary
Securities shall in all respects be entitled to the same benefits under the
Indenture as a holder of Definitive Securities.


 


Section 2.11.                             Cancellation.  The Company at any time may deliver
Securities to the Trustee for cancellation. 
The Registrar and the Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment.  The Trustee and no one else
shall cancel and return to the Company all Securities surrendered for
registration of transfer, exchange, payment or cancellation.  The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation for
any reason other than in connection with a transfer or exchange.


 


Section 2.12.                             Payment of Interest;
Defaulted Interest.  The
principal of (and premium, if any) and interest on the Securities shall be
payable at the office or agency of the Company maintained for such purpose in
the Borough of Manhattan in the City of New York, or at such other office or
agency of the Company as may be maintained for such purpose pursuant to Section 2.3
herein; provided, however, that, at the option of the
Company, each installment of interest may be paid by check mailed to addresses
of the Persons entitled thereto as such addresses shall appear on the Security
Register and; provided, further, that all payments with respect to
the Securities, the Holders of which have given wire transfer instructions to
the Company and the Paying Agent prior to the applicable record date for such
payment, will be required to be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof.  Payments in respect of Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by DTC.


 


Interest on any
Security which is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name such Security
(or one or more predecessor Securities) is registered at the close of business
on the regular record date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 2.3 herein.


 


Any interest on
any Security which is payable, but is not punctually paid or duly provided for
when the same becomes due and payable, shall forthwith cease to be payable to
the Holder on the relevant regular record date by virtue of having been such a
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Securities (such defaulted interest
and interest thereon herein collectively called “Defaulted Interest”)
shall be paid by the Company, at its election in each case, as provided in paragraph
(a) or (b) below:


 


(a)                                  The
Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities (or their respective predecessor Securities) are
registered at the close of business on a Special Record Date (as defined below)
for the payment of such Defaulted Interest, which shall be fixed in the
following manner.  The


 


39

















 


Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as provided in this paragraph
(a).  Thereupon the Trustee shall
fix a record date (the “Special Record Date”) for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the
Company of such Special Record Date, and in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given in the manner provided for in Section 11.2
herein, not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so given, such Defaulted Interest shall be paid to the
Persons in whose names the Securities (or their respective predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following paragraph (b).


 


(b)                                 The
Company may make payment of such Defaulted Interest to the Persons in whose
names such Securities are registered at the close of business on a specified
date in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.


 


(c)                                  Subject
to the foregoing provisions of this Section, each Security delivered under the
Indenture upon registration of, transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Security.


 


Section 2.13.                             Computation of Interest.  Interest on the Securities shall be computed
on the basis of a 360-day year of twelve 30-day months.


 


Section 2.14.                             CUSIP Numbers.  The Company in issuing the Securities may
use “CUSIP,” “ISIN” or “Common Code” numbers (if then generally in use) and, if
so, the Trustee shall use “CUSIP,” “ISIN” or “Common Code” numbers in notices
of redemption as a convenience to Holders; provided,
however, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.  The Company shall promptly notify the
Trustee of any change in the “CUSIP,” “ISIN” or “Common Code” numbers.


 


ARTICLE III

COVENANTS


 


Section 3.1.                                   Application of
Certain Covenants.  After
such time as:


 


40

















 


(a)                                  the
Securities have been assigned an Investment Grade rating by both Rating
Agencies; and


 


(b)                                 no
Default under the Indenture has occurred and is continuing, and notwithstanding
that the Securities may later cease to have an Investment Grade Rating by
either or both Rating Agencies, the Company and its Restricted Subsidiaries
will not be subject to Sections 3.10,  3.11, 3.12, 3.13,
3.15 and 3.16, paragraphs (a) and (c) of Section 3.14
and Section 4.1(a)(ii) herein.


 


A change in the
rating on the Securities by either Rating Agency shall be deemed to have
occurred on the date that such Rating Agency shall have publicly announced the
change.


 


Section 3.2.                                   Payment of
Principal, Premium, if any, and Interest, if any.  The Company covenants and agrees for the
benefit of the Holders of Outstanding Securities that it will duly and
punctually pay the principal of, premium, if any, and interest, if any, on the
Securities in accordance with the terms of the Securities and the
Indenture.  An installment of principal,
premium, if any, or interest, if any, shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date money designated for
and sufficient to pay the installment.


 


Section 3.3.                                   Maintenance of
Office or Agency.  The
Company will maintain in each Place of Payment for the Securities an office or
agency where the Securities may be presented or surrendered for payment, where
the Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and the Indenture may be served.  The
Corporate Trust Office of the Trustee shall be such an office or agency of the
Company, unless the Company may designate and maintain some other office or
agency for one or more of such purposes. 
The Company will give prompt written notice to the Trustee of any change
in the location of any 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 Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee 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 the
Securities may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; 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 each Place of Payment for
the Securities for such purposes.  The
Company will give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such other office or
agency.


 


Section 3.4.                                   Money for
Securities Payments to be Held in Trust; Unclaimed Money.  If the Company shall at any time act as its
own Paying Agent with respect to the Securities, it will, on or before each due
date of the principal of, premium, if any, or interest,


 


41

















 


if any, on the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee in writing
of its action or failure so to act.


 


The Company will
cause each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section, that such Paying Agent will:


 


(a)                                  hold
all sums held by it for the payment of the principal of, premium, if any, or
interest, if any, on the Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;


 


(b)                                 give
the Trustee notice of any default by the Company or any Subsidiary Guarantor
(or any other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest, if any, on the Securities; and


 


(c)                                  at
any time during the continuance of any such default, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held in trust by such
Paying Agent.


 


The Company may at
any time, for the purpose of obtaining the satisfaction and discharge or
defeasance of the Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
terms as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.


 


Any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of any principal, premium or interest on any
Security  and remaining unclaimed for
two years after such principal, premium, if any, or interest, if any, has
become due and payable shall be paid to the Company on Company Request or (if
then held by the Company) shall be discharged from such trust, unless otherwise
required by certain provisions of applicable law; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of New York, or cause to be mailed to such Holder,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.


 


42

















 


Section 3.5.                                   Corporate
Existence.  Subject to Article IV
herein, the Company will at all times do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and its rights and franchises; provided,
that nothing in this Section 3.5 shall prevent the abandonment or
termination of any right or franchise of the Company if, in the opinion of the
Company, such abandonment or termination is in the best interests of the
Company and does not materially adversely affect the ability of the Company to
fulfill its obligations hereunder.


 


Section 3.6.                                   Reports by the
Company.  The Company
covenants:


 


(a)                                  so
long as any of the Securities are outstanding, the Company will file with the
Commission and, within 15 days after it files them with the Commission, file
with the Trustee and mail or cause the Trustee to mail to the Holders at their
addresses as set forth in the registers of the Securities, copies of the annual
reports and of the information, documents and other reports which the Company
is required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act or which the Company would be required to file with the
Commission if the Company then had a class of securities registered under the
Exchange Act.


 


(b)                                 to
file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants provided for in the Indenture, as may be
required from time to time by such rules and regulations;


 


(c)                                  to
comply with Sections 313(b) and  313(d)
of the Trust Indenture Act, to the extent applicable.


 


Delivery of such
reports, information and documents to the Trustee is for informational purposes
only, and the Trustee’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information
contained therein, including information concerning the Company’s compliance
with any of its covenants hereunder; provided
that the foregoing shall not relieve the Trustee of any of its responsibilities
hereunder.


 


Section 3.7.                                   Annual Review
Certificate; Notice of Defaults or Events of Default.


 


(a)                                  The
Company covenants and agrees to deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company (beginning with the fiscal year next
following the Issue Date), a certificate from an executive officer as to his or
her knowledge of the Company’s compliance with all conditions and covenants
under the Indenture.  For purposes of
this Section 3.7, such compliance shall be determined without
regard to any period of grace or requirement of notice provided under the
Indenture.


 


(b)                                 The
Company covenants and agrees to deliver to the Trustee, within a reasonable
time (and in any event within five Business Days) after the Company becomes
aware of the occurrence of a Default or an Event of Default of the character
specified in Section 6.1(d) herein, written notice of the
occurrence of such Default or Event of Default.


 


43

















 


Section 3.8.                                   Books of Record
and Account.  The Company
will keep proper books of record and account, either on a consolidated or
individual basis.  The Company shall
cause its books of record and account to be examined either on a consolidated
or individual basis, by one or more firms of independent public accountants not
less frequently than annually.  The
Company shall prepare its financial statements in accordance with generally
accepted accounting principles.


 


Section 3.9.                                   Limitation on
Liens.  The Company will not,
and will not cause or permit any of its Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Liens upon any of their respective
properties or assets (including, without limitation, any asset in the form of
the right to receive payments, fees or other consideration or benefits) whether
owned on the Issue Date or acquired after the Issue Date, other than:


 


(a)                                  Liens
granted by the Company or a Subsidiary Guarantor on property or assets of the
Company securing Indebtedness of the Company or a Subsidiary Guarantor that is
permitted by the Indenture and that is pari passu with the Securities or the
Subsidiary Guarantee; provided,
that the Securities or the Subsidiary Guarantee are secured on an equal and
ratable basis with the Indebtedness secured by such Liens for so long as such
Indebtedness is so secured;


 


(b)                                 Liens
granted by the Company or a Subsidiary Guarantor on property or assets of the
Company or a Subsidiary Guarantor securing Indebtedness of the Company or a
Subsidiary Guarantor that is permitted by the Indenture and that is
subordinated to the Securities or the Subsidiary Guarantee; provided, that the Securities or the
Subsidiary Guarantee, as the case may be, are secured by Liens ranking prior to
such Liens;


 


(c)                                  Permitted
Liens;


 


(d)                                 Liens
in respect of Acquired Indebtedness permitted by the Indenture; provided, that the Liens in respect of
such Acquired Indebtedness secured such Acquired Indebtedness at the time of
the incurrence of such Acquired Indebtedness and such Liens and the Acquired
Indebtedness were not incurred by the Company or by the Person being acquired
or from whom the assets were acquired in connection with, or in anticipation
of, the incurrence of such Acquired Indebtedness by the Company, and provided, further
that such Liens in respect of such Acquired Indebtedness do not extend to or
cover any property or assets of the Company or of any Restricted Subsidiary of
the Company other than the property or assets that secured the Acquired
Indebtedness prior to the time such Indebtedness became Acquired Indebtedness
of the Company;


 


(e)                                  Liens
granted in connection with any Qualified Securitization Transaction;


 


(f)                                    Liens
arising from claims of holders of Indebtedness against funds held in a
defeasance trust for the benefit of such holders; and


 


(g)                                 Liens
on property or assets of the Company or any Restricted Subsidiary securing Indebtedness
permitted by the Indenture not to exceed the greater of
(A) $200.0 million and (B) the sum of (1) 85.0% of the
total book value of accounts


 


44

















 


receivable and
(2) 50.0% of the total book value of inventory, in each case as reflected
on the Company’s most recent consolidated financial statements prepared in
accordance with GAAP.


 


Section 3.10.                             Limitation on
Incurrence of Indebtedness. 
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to incur, directly or indirectly, any Indebtedness, except:


 


(a)                                  Indebtedness
of the Company, if immediately after giving effect to the incurrence of such
Indebtedness and the receipt and application of the net proceeds thereof, the Consolidated
Cash Flow Ratio of the Company for the four full fiscal quarters for which
quarterly or annual financial statements are available next preceding the
incurrence of such Indebtedness would be greater than 2.0 to 1.0;


 


(b)                                 Indebtedness
outstanding on the Issue Date;


 


(c)                                  [Reserved];


 


(d)                                 Indebtedness
owed by the Company to any Restricted Subsidiary of the Company or Indebtedness
owed by a Subsidiary of the Company to the Company or a Restricted Subsidiary
of the Company; provided, that,
upon either


 


(i)                                     the
transfer or other disposition by such Restricted Subsidiary or the Company of
any Indebtedness so permitted under this paragraph (d) to a Person
other than the Company or another Restricted Subsidiary of the Company or


 


(ii)                                  the
issuance (other than directors’ qualifying shares), sale, transfer or other
disposition of shares of Capital Stock or other ownership interests (including
by consolidation or merger) of such Restricted Subsidiary to a Person other
than the Company or another such Restricted Subsidiary of the Company, the
provisions of this paragraph (d) shall no longer be applicable to
such Indebtedness and such Indebtedness shall be deemed to have been incurred
at the time of any such issuance, sale, transfer or other disposition, as the case
may be;


 


(e)                                  Indebtedness
of the Company or its Restricted Subsidiaries under any Interest Rate
Protection Agreement or Currency Agreement;


 


(f)                                    Acquired
Indebtedness to the extent the Company could have incurred such Indebtedness in
accordance with paragraph (a) above on the date such Indebtedness became
Acquired Indebtedness;


 


(g)                                 Indebtedness
incurred by the Company or any of its Restricted Subsidiaries constituting
reimbursement obligations with respect to letters of credit issued in the
ordinary course of business, including, without limitation, letters of credit
in response to worker’s compensation claims or self-insurance;


 


45

















 


(h)                                 Indebtedness
arising from agreements of the Company or a Restricted Subsidiary of the
Company providing for indemnification, adjustment of purchase price, earn-out
or other similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or a Subsidiary of the Company;


 


(i)                                     Obligations
in respect of performance and surety bonds and completion guarantees provided
by the Company or any Restricted Subsidiary of the Company in the ordinary
course of business;


 


(j)                                     Indebtedness
consisting of notes issued to employees, officers or directors in connection
with the redemption or repurchase of Capital Stock held by such Persons in an
aggregate amount not in excess of $10.0 million at any time outstanding;


 


(k)                                  Indebtedness
consisting of take-or-pay obligations contained in supply agreements entered
into by the Company or its Restricted Subsidiaries in the ordinary course;


 


(l)                                     the
guarantees by the Company or any of its Restricted Subsidiaries of Indebtedness
of the Company or any Restricted Subsidiary permitted to be incurred under another
provision of the covenant;


 


(m)                               Indebtedness
incurred to renew, extend, refinance or refund (collectively for purposes of
this paragraph (m) to “refund”) any Indebtedness incurred pursuant to paragraphs
(a) and (b) above, this paragraph (m) or
paragraphs (n) or (o) below; provided, that:


 


(i)                                     such
Indebtedness does not exceed the principal amount (or accreted amount, if less)
of Indebtedness so refunded plus the amount of any premium required to be paid
in connection with such refunding pursuant to the terms of the Indebtedness
refunded or the amount of any premium reasonably determined by the Company as
necessary to accomplish such refunding by means of a tender offer, exchange
offer, or privately negotiated repurchase, plus the expenses of the Company or
such Restricted Subsidiary incurred in connection therewith and


 


(ii)                                  (A)                              in
the case of any refunding of Indebtedness that is pari passu with the
Securities, such refunding Indebtedness is made pari passu with or subordinate
in right of payment to such Securities, and, in the case of any refunding of
Indebtedness that is subordinate in right of payment to the Securities, such
refunding Indebtedness is subordinate in right of payment to such Securities on
terms no less favorable to the Holders than those contained in the Indebtedness
being refunded,


 


(B)                                in
either case, the refunding Indebtedness by its terms, or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued does not
have an Average Life that is less than the remaining Average Life of the
Indebtedness being refunded (in the event that any portion of such refunding
Indebtedness has a scheduled


 


46

















 


maturity prior to the Securities) and does not permit
redemption or other retirement (including pursuant to any required offer to
purchase to be made by the Company or any of its Restricted Subsidiaries) of
such Indebtedness at the option of the holder thereof prior to the final stated
maturity of the Indebtedness being refunded, other than a redemption or other
retirement at the option of the holder of such Indebtedness (including pursuant
to a required offer to purchase made by the Company or any of its Restricted
Subsidiaries) which is conditioned upon a change of control of the Company
pursuant to provisions substantially similar to those contained in Section 5.9
herein and


 


(C)                                Indebtedness
of a Restricted Subsidiary that is not a Subsidiary Guarantor may not be
incurred to refund any Indebtedness of the Company;


 


(n)                                 Indebtedness
of the Company under the Securities and Indebtedness of the Guarantor under the
International Guarantee;


 


(o)                                 Indebtedness
of the Company relating to the assumption of the 4.75% Subordinated
Exchangeable Notes originally issued by NFC;


 


(p)                                 the
consummation of any Qualified Securitization Transaction;


 


(q)                                 Attributable
Indebtedness relating to any Sale/Leaseback Transaction with respect to the
purchase of tooling and related manufacturing equipment in the ordinary course
of business consistent with past practices;


 


(r)                                    the
incurrence by the Company or any Restricted Subsidiary of Indebtedness
(including Capital Lease Obligations) to finance the purchase, lease or
improvement of property (real or personal) or equipment (whether through the
direct purchase of assets or the Capital Stock of any Person owning such
assets) in an aggregate principal amount outstanding not to exceed the greater
of (a) $75.0 million or (b) 2.0% of Consolidated Net Tangible
Assets at the time of any incurrence thereof;


 


(s)                                  the
accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, and the payment of dividends on Disqualified Capital Stock
or Preferred Stock in the form of additional shares of the same class of
Disqualified Capital Stock or Preferred Stock; provided
in each such case that the amount thereof is included in Consolidated Fixed
Charges of the Company as accrued; and


 


(t)                                    Indebtedness
of the Company or its Restricted Subsidiaries, not otherwise permitted to be
incurred pursuant to paragraph (a) through (s) above, which,
together with any other outstanding Indebtedness incurred pursuant to this paragraph (t),
has an aggregate principal mount not in excess of $250.0 million at any
time outstanding.


 


47

















 


For purposes of
determining compliance with this covenant, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Indebtedness described in paragraphs (a) through (t) above,
the Company shall, in its sole discretion, classify such item of Indebtedness
and may divide and classify such Indebtedness in more than one of the types of
Indebtedness described, and may later reclassify any item of Indebtedness
described in paragraphs (a) through (t) (provided that at the time of
reclassification it meets the criteria in such category or categories).  In addition, for purposes of determining any
particular amount of Indebtedness under this covenant, guarantees, Liens or
letter of credit obligations supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included so long as
incurred by a Person that could have incurred such Indebtedness.


 


Section 3.11.                             Limitation on Preferred
Stock of Restricted Subsidiaries. 
The Company will not cause or permit any of its Restricted Subsidiaries
to issue any Preferred Stock other than to the Company or to another Restricted
Subsidiary; provided that a
Guarantor may issued Preferred Stock to any other Person if at the time of
issuance of such Preferred Stock, the Company after giving pro forma effect to
such issuance treating the aggregate liquidation preference of such Preferred
Stock as Indebtedness, would have been able to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of Section 3.10
herein.


 


Section 3.12.                             Limitation on
Restricted Payments.


 


(a)                                  The
Company will not, and will not cause or permit any of its Restricted
Subsidiaries to directly or indirectly:


 


(i)                                     declare
or pay any dividend, or make any distribution of any kind or character (whether
in cash, property or securities), in respect of any class of its Capital Stock
or to the holders thereof in their capacity as stockholders, excluding any
(A) dividend or distributions payable solely in shares of its Qualified
Capital Stock or in options, warrants or other rights to acquire its Qualified
Capital Stock or (B) in the case of any Restricted Subsidiary of the
Company, dividends or distributions payable to the Company or a Restricted
Subsidiary of the Company;


 


(ii)                                  purchase,
redeem, or otherwise acquire or retire for value shares of Capital Stock of the
Company, or any options, warrants or rights to purchase or acquire shares of
Capital Stock of the Company (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock of the Company), excluding
any such shares of Capital Stock, options, warrants, rights or securities which
are owned by the Company or a Restricted Subsidiary of the Company;


 


(iii)                               make
any Investment (other than a Permitted Investment); or


 


(iv)                              redeem,
defease, repurchase, retire or otherwise acquire or retire for value, prior to
any scheduled maturity, repayment or sinking fund


 


48

















 


payment,
Indebtedness which is subordinate in right of payment to the Securities (each
of the transactions described in clauses (i) through (iv) above
(other than any exception to any such clause) being a “Restricted Payment”),


 


if at the time
thereof:


 


(i)                                     an
Event of Default, or an event that with the passing of time or giving of
notice, or both, would constitute an Event of Default, shall have occurred and
be continuing, or


 


(ii)                                  upon
giving effect to such Restricted Payment, the Company could not incur at least
$1.00 of additional Indebtedness pursuant to the terms of paragraph (a)
of Section 3.10 herein, or


 


(iii)                               upon
giving effect to such Restricted Payment, the aggregate of all Restricted
Payments made on or after the Issue Date exceeds the sum (without duplication)
of:


 


(A)                              50%
of cumulative Consolidated Net Income of the Company (or, in the case
cumulative Consolidated Net Income of the Company shall be negative, less 100%
of such deficit) for the period (treated as a single accounting period) from
May 1, 2004 through the last day of the Company’s most recently ended
fiscal quarter for which financial statements are available; plus


 


(B)                                100%
of the aggregate net cash proceeds and the fair market value of property or
marketable securities received after the Issue Date from the issuance of
Qualified Capital Stock of the Company and warrants, rights or options on
Qualified Capital Stock of the Company (other than in respect of any such
issuance to a Subsidiary of the Company) and the principal amount of
Indebtedness of the Company or a Subsidiary of the Company that has been
converted into or exchanged for Qualified Capital Stock of the Company after
the Issue Date; plus


 


(C)                                in
the case of the disposition or repayment of any Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to the return of
capital with respect to such Investment, less the cost of the disposition of
such Investment; plus


 


(D)                               100%
of the aggregate net cash proceeds and the fair market value of property or
marketable securities received after the Issue Date from Unrestricted
Subsidiaries resulting from the receipt of dividends or other distributions or
payments, repayments of loans or advances or other transfers of assets or
proceeds form the disposition of Capital Stock, in each case to the Company or
any Restricted Subsidiary from, or with respect to, interests in Unrestricted
Subsidiaries; provided that any
such amounts included in this


 


49

















 


subparagraph (D)
shall not be include in Consolidated Net Income of the Company for purposes of subparagraph (A)
above; plus


 


(E)                                 the
portion (proportionate to the Company’s equity interest in such Subsidiary) of
the fair market value of the net assets of an Unrestricted Subsidiary at the
time such Unrestricted Subsidiary is designated a Restricted Subsidiary not to
exceed the amount of Investments made by the Company or any Restricted Subsidiary
(and treated as a Restricted Payment) in such Unrestricted Subsidiary.


 


For purposes of
determining the amount expended for Restricted Payments under this Section 3.12,
property other than cash shall be valued at its fair market value.


 


(b)                                 Notwithstanding
the foregoing, the provisions set forth in paragraph (a) above will not
prohibit:


 


(i)                                     any
dividend on any class of Capital Stock of the Company paid within 60 days
after the declaration thereof if, on the date when the dividend was declared,
the Company could have paid such dividend in accordance with the provisions of
the Indenture;


 


(ii)                                  the
renewal, extension, refunding or refinancing of any Indebtedness otherwise
permitted pursuant to the terms of the Indenture;


 


(iii)                               the
exchange or conversion of any Indebtedness of the Company or any of its
Restricted Subsidiaries for or into Qualified Capital Stock of the Company;


 


(iv)                              any
Restricted Payments, including loans or other advances made pursuant to any
employee benefit plans (including plans for the benefit of directors) or
employment agreements or other compensation arrangements, in each case as
approved by the Board of Directors of the Company in its good faith judgment;


 


(v)                                 so
long as no Default or Event of Default has occurred and is continuing, any
Investment made with the proceeds of a substantially concurrent sale of
Qualified Capital Stock of the Company; provided,
that the proceeds of such sale of Qualified Capital Stock shall not be (and
have not been) included in clause (iii) of paragraph (a) above;


 


(vi)                              the
redemption, repurchase, retirement or other acquisition of any Capital Stock of
the Company in exchange for or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of Qualified Capital Stock of the Company; provided, that the proceeds of such sale of Capital Stock
shall not be (and have not been) included in clause (iii) of paragraph
(a) above;


 


50

















 


(vii)                           so
long as no Event of Default has occurred and is continuing, the redemption,
repurchase, retirement or other acquisition of any Subordinated Indebtedness of
the Company in exchange for or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Qualified Capital Stock of the Company; provided,
that the proceeds of such sale of Qualified Capital Stock shall not be (and
have not been) included in clause (iii) of paragraph (a)
above;


 


(viii)                        Investments
in NFC made pursuant to the Support Agreement to the extent required by the
Support Agreement;


 


(ix)                                the
declaration and payment of dividends to holders of any class of Preferred Stock
issued after the Issue Date; provided,
that at the time of the issuance of such Preferred Stock, the Company, after
giving pro forma effect to such issuance treating the aggregate liquidation
preference of such Preferred Stock as Indebtedness, would have been able to
incur at least $1.00 of additional Indebtedness pursuant to the terms of paragraph
(a) of Section 3.10 herein;


 


(x)                                   so
long as no Event of Default has occurred and is continuing, any purchase or
redemption or other retirement for value of Capital Stock of the Company
required pursuant to any shareholders agreement, management agreement or
employee stock option agreement in accordance with the provisions of any such
arrangement in an amount not to exceed $20.0 million in the aggregate;


 


(xi)                                repurchases
of Capital Stock deemed to occur upon the exercise of stock options if such
Capital Stock represents a portion of the exercise price thereof or tax
withholding related to the exercise of such stock options;


 


(xii)                             payments
not to exceed $10.0 million per annum in the aggregate to enable the
Company to make payments to holders of its Capital Stock in lieu of issuance of
fractional shares of its Capital Stock;


 


(xiii)                          so
long as no Event of Default has occurred and is continuing, (a) the
redemption or repurchase of the 2008 Senior Subordinated Notes,
(b) redemption or repurchase of the 4.75% Subordinated Exchangeable
Notes, or (c) the redemption of any other stock purchase rights under a
rights plan in an aggregate amount not to exceed $2.5 million;


 


(xiv)                         so
long as no Event of Default has occurred and is continuing, Investments in
Permitted Joint Ventures and designations of Restricted Subsidiaries as
Unrestricted Subsidiaries; provided,
that after giving pro forma effect to such Investment or designation, the
Company could incur at least $1.00 of additional Indebtedness pursuant to the
terms of paragraph (a) of Section 3.10 herein; and


 


51

















 


(xv)                            so
long as no Event of Default has occurred and is continuing, the repurchase,
redemption, acquisition or retirement of subordinated Indebtedness with
Unutilized Net Available Proceeds remaining after an Asset Sale Offer pursuant
to Section 3.13;


 


(xvi)                         so
long as no Event of Default has occurred and is continuing, the repurchase,
redemption, acquisition or retirement of any subordinated Indebtedness at a
price not greater than 101% of the principal amount thereof (together with
accrued and unpaid interest) following a “change of control” (defined in a
manner comparable to the definition of Change of Control) after the Company
shall have complied with the provisions of Section 5.9 and has
purchased all Securities validly tendered and not withdrawn; and


 


(xvii)                      if
no Default of Event shall have occurred and be continuing or would occur as a
consequence thereof, any other Restricted Payment which, together with all
other Restricted Payments made pursuant to this clause (xvii), does
not to exceed $200.0 million in aggregate since the Issue Date.


 


Each Restricted
Payment described in clauses (i), (iv), (viii), (x), (xv)
and (xvi) of this paragraph (b) shall be taken into account (and
the Restricted Payments described in the remaining clauses shall not be taken
into account) for purposes of computing the aggregate amount of all Restricted
Payments made pursuant to clause (iii) of  paragraph (a) above.


 


Section 3.13.                             Limitation on Certain
Asset Dispositions.  The
Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, make one or more Asset Dispositions
unless:


 


(a)                                  the
Company or the Restricted Subsidiary, as the case may be, receives
consideration for such Asset Disposition at least equal to the fair market
value of the assets sold or disposed of (as determined in good faith by the
Company);


 


(b)                                 not
less than 75% of the consideration for the disposition consists of cash or
readily marketable cash equivalents or the assumption of Indebtedness (other
than non-recourse Indebtedness or any Indebtedness subordinated to the
Securities) of the Company or such Restricted Subsidiary or other obligations relating
to such assets (and release of the Company or such Restricted Subsidiary from
all liability on the Indebtedness or other obligations assumed); and


 


(c)                                  all
Net Available Proceeds, less any amounts invested or committed to be invested
within 360 days of such Asset Disposition in assets related to the
business of the Company (including capital expenditures or the Capital Stock of
another Person (other than the Company or any Person that is a Restricted
Subsidiary of the Company immediately prior to such investment); provided, that immediately after giving
effect to any such investment (and not prior thereto) such Person shall be a
Restricted Subsidiary of the Company), are applied, on or prior to the 360th
day after such Asset Disposition (unless and to the extent that the Company
shall determine to make an Offer to Purchase), either to


 


52



















 


(i)                                     the
permanent reduction and prepayment of any Indebtedness of the Company (other
than Indebtedness which is expressly subordinate to the applicable issue of
Securities) then outstanding (including a permanent reduction of commitments in
respect thereof) or


 


(ii)                                  the
permanent reduction and repayment of any Indebtedness of any Restricted
Subsidiary of the Company then outstanding (including a permanent reduction of
commitments in respect thereof).


 


The 361st day
after such Asset Disposition shall be deemed to be the “Asset Sale Offer
Trigger Date,” and the amount of Net Available Proceeds from Asset
Dispositions otherwise subject to the preceding provisions not so applied or as
to which the Company has determined not to so apply shall be referred to as the
“Unutilized Net Available Proceeds.” Within fifteen days after the Asset
Sale Offer Trigger Date, the Company shall make an Offer to Purchase the
outstanding applicable issue of Securities at a purchase price in cash equal to
100% of their principal amount plus any accrued and unpaid interest thereon to
the Purchase Date. Notwithstanding the foregoing, the Company may defer making
any Offer to Purchase outstanding Securities until there are aggregate
Unutilized Net Available Proceeds equal to or in excess of $25.0 million
(at which time, the entire Unutilized Net Available Proceeds, and not just the
amount in excess of $25.0 million, shall be applied as required pursuant
to this paragraph). Pending application of the Unutilized Net Available Proceeds
pursuant to this covenant, such Unutilized Net Available Proceeds shall be
invested in Permitted Investments of the types described in clauses (1),
(2) and (3) of the definition of “Permitted
Investments.”


 


If any
Indebtedness of the Company or any of its Restricted Subsidiaries ranking pari
passu with the Securities requires that prepayment of, or an offer to prepay,
such Indebtedness be made with any Net Available Proceeds, the Company may
apply such Net Available Proceeds pro rata (based on the aggregate principal
amount of the Securities then outstanding and the aggregate principal amount
(or accreted value, if less) of all such other Indebtedness then outstanding)
to the making of an Offer to Purchase the Securities in accordance with the
foregoing provisions and the prepayment or the offer to prepay such pari passu
Indebtedness. Any remaining Net Available Proceeds following the completion of
the required Offer to Purchase may be used by the Company for any other purpose
(subject to the other provisions of the Indenture) and the amount of Net
Available Proceeds then required to be otherwise applied in accordance with
this covenant shall be reset to zero, subject to any subsequent Asset
Disposition. These provisions will not apply to a transaction consummated in
compliance with the provisions of the Indenture.


 


Notwithstanding
the foregoing, the provisions of this covenant shall not apply to any
Sale/Leaseback Transaction with respect to the purchase of tooling and related
manufacturing equipment in the ordinary course of business consistent with past
practices.


 


In the event that
the Company makes an Offer to Purchase the Securities, the Company shall comply
with any applicable securities laws and regulations, including any applicable
requirements of Section 14(e) of, and Rule 14e-1 under, the Exchange
Act and any violation of the provisions of the Indenture relating to such Offer
to Purchase occurring as a


 


53

















 


result of such compliance shall not be deemed an Event of Default or an
event that with the passing of time or giving of notice, or both, would
constitute an Event of Default.


 


Section 3.14.                             Limitation on
Sale/Leaseback Transactions. 
The Company shall not, and shall not cause or permit any Restricted Subsidiary
to, enter into any Sale/Leaseback Transaction with respect to any property
unless:


 


(a)                                  the
Company or such Restricted Subsidiary would be entitled to incur Indebtedness
in an amount equal to the Attributable Indebtedness with respect to such Sale/Leaseback
Transaction pursuant to Section 3.10;


 


(b)                                 the
net proceeds received by the Company or any Restricted Subsidiary in connection
with such Sale/Leaseback Transaction are at least equal to the fair value (as
determined by the Board of Directors) of such property; and


 


(c)                                  the
Company or such Restricted Subsidiary applies the proceeds of such transaction
in compliance with Section 3.13 herein.


 


Notwithstanding
the foregoing, the provisions of this covenant shall not prohibit the Company
or any Restricted Subsidiary from entering into any Sale/Leaseback Transaction
with respect to the purchase of tooling and related manufacturing equipment in
the ordinary course of business consistent with past practices.


 


Section 3.15.                             Limitation on Payment
Restrictions Affecting Restricted Subsidiaries.


 


(a)                                  The
Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or suffer to exist or allow to
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Restricted Subsidiary to:


 


(i)                                     pay
dividends, in cash or otherwise, or make other payments or distributions on its
Capital Stock or any other equity interest or participation in, or measured by,
its profits, owned by the Company or by any Restricted Subsidiary of the
Company, or make payments on any Indebtedness owed to the Company or to any
Restricted Subsidiary of the Company;


 


(ii)                                  make
loans or advances to the Company or to any Restricted Subsidiary of the
Company; or


 


(iii)                               transfer
any of their respective property or assets to the Company or to any Restricted
Subsidiary of the Company.


 


(b)                                 The
restrictions in paragraph (a) above, however, will not apply to
encumbrances or restrictions existing under or by reason of:


 


(i)                                     applicable
law, regulations or order;


 


54

















 


(ii)                                  customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of any Restricted Subsidiary of the Company;


 


(iii)                               Indebtedness
or any other contractual requirements (including pursuant to any corporate
governance documents in the nature of a charter or by-laws) of a Securitization
Subsidiary arising in connection with a Qualified Securitization Transaction, provided, that any such encumbrances and
restrictions apply only to such Securitization Subsidiary;


 


(iv)                              any
agreement in effect on the Issue Date as any such agreement is in effect on
such date;


 


(v)                                 any
agreement relating to any Indebtedness incurred by such Restricted Subsidiary
prior to the date on which such Restricted Subsidiary became a Subsidiary of
the Company and outstanding on such date and not incurred in anticipation or
contemplation of becoming a Subsidiary of the Company; provided that such encumbrance or
restriction shall not apply to any assets of the Company or its Restricted
Subsidiaries other than such Restricted Subsidiary;


 


(vi)                              the
Indenture, the Securities and the International Guarantee or any other
Subsidiary Guarantee.


 


(vii)                           restrictions
relating to any Lien permitted under the Indenture imposed by the holder of
such Lien;


 


(viii)                        restrictions
imposed under any agreement to sell assets permitted under the Indenture to any
Person pending the closing of such sale;


 


(ix)                                any
other agreement governing Indebtedness entered into after the Issue Date that
contains encumbrances and restrictions that are not materially more restrictive
with respect to any Restricted Subsidiary than those in effect on the Issue
Date with respect to that Restricted Subsidiary pursuant to agreements in
effect on the Issue Date;


 


(x)                                   customary
provisions in partnership agreements, limited liability company organizational
governance documents, joint venture agreements and other similar agreements
entered into in the ordinary course of business that restrict the transfer of
ownership interests in such partnership, limited liability company, joint
venture or similar Person;


 


(xi)                                Indebtedness
incurred in compliance with paragaph (r) of Section 3.10
that impose restrictions of the nature described in clause (v)
above on the assets acquired;


 


55

















 


(xii)                             restrictions
on cash or other deposits or net worth imposed by suppliers or landlords under
contracts entered into in the ordinary course of business;


 


(xiii)                          encumbrances
or restrictions contained in Indebtedness of Restricted Subsidiaries permitted
to be incurred under paragraph (t) of Section 3.10; provided that any such encumbrances or
restrictions are ordinary and customary with respect to the type of
Indebtedness being incurred under the relevant circumstances and do not
materially impair the Company’s ability to make payment or the Securities when
due; and


 


(xiv)                         any
encumbrances or restrictions imposed by any amendments or refinancings of the
contracts, instruments or obligations referred to in clauses (i)
through (xiii) above; provided
that such amendments or refinancings are no more materially restrictive with
respect to such encumbrances and restrictions than those prior to such
amendment or refinancing.


 


Section 3.16.                             Limitation on
Transactions with Affiliates.


 


(a)                                  The
Company will not, and will not cause or permit any of its Restricted
Subsidiaries to:


 


(i)                                     sell,
lease, transfer or otherwise dispose of any of its property or assets to,


 


(ii)                                  purchase
any property or assets from,


 


(iii)                               make
any Investment in, or


 


(iv)                              enter
into or amend or extend any contract, agreement or understanding with or for
the benefit of, any Affiliate of the Company or of any Subsidiary (an “Affiliate
Transaction”),


 


other than
Affiliate Transactions that are on terms that are fair and reasonable to the
Company or such Restricted Subsidiary of the Company and that are no less
favorable to the Company or such Restricted Subsidiary of the Company than
those that could be obtained in a comparable arm’s length transaction by the
Company or such Restricted Subsidiary of the Company from an unaffiliated
party; provided, that if the
Company or any Restricted Subsidiary of the Company enters into an Affiliate
Transaction or series of Affiliate Transactions involving or having an
aggregate value of more than $30.0 million, a majority of the
disinterested members of the Board of Directors of the Company or a committee
thereof shall, prior to the consummation of such Affiliate Transaction, have
determined (as evidenced by a resolution thereof) that such Affiliate
Transaction meets the foregoing standard.


 


(b)                                 The
restrictions in paragraph (a) above shall not apply to:


 


56

















 


(i)                                     any
transaction between Restricted Subsidiaries of the Company, or between the
Company and any Restricted Subsidiary of the Company if such transaction is not
otherwise prohibited by the terms of the Indenture;


 


(ii)                                  transactions
entered into pursuant to the terms of the Master Intercompany Agreements, the
Tax Allocation Agreement or the Support Agreement;


 


(iii)                               transactions
entered into in the ordinary course of business;


 


(iv)                              Qualified
Securitization Transactions;


 


(v)                                 reasonable
fees and compensation paid to and advances of expenses to and indemnity
provided on behalf of officers, directors, employees or consultants of the
Company or any Subsidiary as determined in good faith by the Company’s Board of
Directors or senior management;


 


(vi)                              any
agreement as in effect as of the Issue Date or any amendment thereto or any
transaction contemplated thereby (including pursuant to any amendment thereto)
or in any replacement agreement thereto so long as any such amendment or
replacement agreement is not more disadvantageous to the Holders in any
material respect than the original agreement as in effect on the Issue Date;


 


(vii)                           Restricted
Payments and Permitted Investments permitted by this Supplemental Indenture;


 


(viii)                        loans
or advances to employees or consultants in the ordinary course of business and
consistent with past practices in an aggregate amount outstanding at any time
not to exceed $10.0 million;


 


(ix)                                joint
venture partners or purchasers or sellers of goods or services, in each case in
the ordinary course of business (including, without limitation, pursuant to
joint venture agreements) and otherwise in compliance with the terms of the
Indenture which are fair to the Company or its Restricted Subsidiaries, in the
reasonable determination of the senior management of the Company, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party; and


 


(x)                                   any
employment or compensation arrangement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business that is not
otherwise prohibited by the Indenture.


 


Section 3.17.                             Limitation on
Guarantees by Restricted Subsidiaries.


 


(a)                                  The
Company shall not cause or permit any of its Restricted Subsidiaries, directly
or indirectly, to guarantee the payment of any Indebtedness of the


 


57

















 


Company, which, in the
aggregate, together with all other Indebtedness of the Company that is
guaranteed by Restricted Subsidiaries, does not exceed $35.0 million,
unless such Restricted Subsidiary of the Company simultaneously executes and
delivers a supplemental indenture to the Indenture providing for the guarantee
of payment of the Securities by such Restricted Subsidiary of the Company; provided that any guarantee by a
Subsidiary Guarantor of such other Indebtedness:


 


(i)                                     (A)                              (1) is
unsecured or (2) is secured and (I) in the case of any such guarantee
of Indebtedness of the Company ranking pari passu with the Securities, the
Subsidiary Guarantees are secured equally and ratably with any Liens securing
such guarantee and (II) in the case of any such guarantee of Indebtedness
of the Company subordinated to the Securities, the relevant Subsidiary
Guarantees are secured on a basis ranking prior to the Liens securing such
guarantee and


 


(B)                                (1) in
the case of any such guarantee of Indebtedness of the Company subordinated or
junior to the Securities (whether pursuant to its terms or by operation of
law), such guarantee is subordinated pursuant to a written agreement to the
relevant Subsidiary Guarantees at least to the same extent and in the same
manner as such other Indebtedness is subordinated to the Securities, or
(2) the Subsidiary Guarantees are not subordinated or junior to any
Indebtedness of such Subsidiary Guarantor; and


 


(ii)                                  such
Subsidiary Guarantor waives, and agrees it will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Subsidiary of the Company as a result of any payment by it under such
Subsidiary Guarantees.


 


(b)                                 Notwithstanding
the foregoing, any Subsidiary Guarantee shall provide by its terms that it
shall be automatically and unconditionally released and discharged upon either
(i) the unconditional release or discharge of such Subsidiary Guarantor’s
guarantees of all other Indebtedness of the Company (other than a release
resulting from payment under such Subsidiary Guarantor’s guarantees) or
(ii) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of the Capital Stock of such Subsidiary Guarantor, such that such
Subsidiary Guarantor ceases to be a Subsidiary of the Company, or all or
substantially all of the assets of such Subsidiary Guarantor, pursuant to a
transaction which is in compliance with all of the terms of the Indenture.


 


(c)                                  The
Company shall cause each Restricted Subsidiary of the Company that guarantees
the payment of any Indebtedness of the Company, which, in the aggregate,
together with all other Indebtedness of the Company that is guaranteed by
Restricted Subsidiaries of the Company, exceeds $35 million, after the Issue
Date, to execute and deliver to the Trustee, promptly upon any such formation
or acquisition (i)  a supplemental
indenture in form and substance satisfactory to the Trustee which subjects such
subsidiary to the provisions of the Indenture as a Subsidiary Guarantor, and
(ii) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such


 


58

















 


subsidiary and
constitutes the legal, valid, binding and enforceable obligation of such
subsidiary (subject to such customary exceptions concerning fraudulent
conveyance laws, creditors’ rights and equitable principles as may be
acceptable to the Trustee in its discretion).


 


ARTICLE IV

CONSOLIDATION, MERGER OR SALE BY THE COMPANY


 


Section 4.1.                                   Consolidation,
Merger or Sale of Assets Permitted.


 


(a)                                  The
Company will not, in a single transaction or series of related transactions,
consolidate or merge with or into, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the Company’s and its
Restricted Subsidiaries’ assets (determined on a consolidated basis) to any
Person or adopt a Plan of Liquidation unless:


 


(i)                                     either
(A) the Company shall be the surviving or continuing corporation or
(B) the Person (if other than the Company) formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Company and its Restricted
Subsidiaries substantially as an entirety (1) shall be a corporation,
limited liability company or partnership organized and validly existing under
the laws of the United States or any State thereof or the District of Columbia
and (2) shall expressly assume, by supplemental indenture (in form and
substance satisfactory to the Trustee), executed and delivered to the Trustee,
the due and punctual payment of the principal of, and premium, if any, and
interest on all of the Securities and the performance of every covenant of the
Securities and the Indenture on the part of the Company to be performed or
observed;


 


(ii)                                  immediately
after giving effect to such transaction and the assumption contemplated by clause (i)(B)(2) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction), the Company (in the case of clause (A) of the
foregoing clause (i)) or such Person (in the case of clause (2)
thereof) could incur at least $1.00 of additional Indebtedness pursuant to paragraph (a)
of Section 3.10 herein;


 


(iii)                               immediately
before and after giving effect to such transaction and the assumption
contemplated by clause (i)(B)(2) above (including giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred in connection with or in respect of the transaction) no Default and
no Event of Default shall have occurred or be continuing; and


 


(iv)                              the
Company or such Person shall have delivered to the Trustee (A) an
Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease or Plan of Liquidation


 


59

















 


and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this provision of the Indenture and that
all conditions precedent in the Indenture relating to such transaction have
been satisfied.


 


(b)                                 Notwithstanding
paragraph (a) above:


 


(i)                                     a
Restricted Subsidiary of the Company may consolidate with, or merge with or into,
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, the Company or another Restricted
Subsidiary of the Company;


 


(ii)                                  a
series of transactions involving the sale of Receivables or interests therein
by a Securitization Subsidiary in connection with a Qualified Securitization
Transaction shall not be deemed to be the sale of all or substantially all of
the Company’s assets to the extent such transactions are consummated in the
ordinary course of business;


 


(iii)                               the
provisions of clause (i) of paragraph (a) above shall not
prohibit the Company or any Restricted Subsidiary from selling, assigning,
transferring, leasing, conveying or otherwise disposing of all or substantially
all of its assets to a Permitted Joint Venture in a transaction entered into in
compliance with Section 3.12 herein; and


 


(iv)                              the
provisions of paragraph (a)(ii) above shall not apply to the Company and
its Restricted Subsidiaries after such time as the conditions set forth in Section 3.1
herein are satisfied.


 


For purposes of
the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of transactions) of all or substantially all of
the properties or assets of one or more Restricted Subsidiaries of the Company,
the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.


 


Upon any such consolidation,
merger, conveyance, lease or transfer in accordance with this Section 4.1,
the successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made will succeed to,
and be substituted for, and may exercise every right and power of, the Company
under the Indenture with the same effect as if such successor had been named as
the Company therein, and thereafter (except in the case of a sale, assignment,
transfer, lease, conveyance or other disposition) the predecessor corporation
will be relieved of all further obligations and covenants under the Indenture
and the Securities.


 


60

















 


ARTICLE V

REDEMPTION OF SECURITIES


 


Section 5.1.                                   Applicability of
Article.  The Securities
shall be redeemable in accordance with their terms and in accordance with this Article V.


 


Section 5.2.                                   Election to
Redeem; Notice to Trustee. 
The election of the Company to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. 
In the case of any redemption at the election of the Company of less
than all the Securities, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory
to the Trustee), notify the Trustee of such Redemption Date and Redemption
Price, of the principal amount of Securities 
to be redeemed.


 


Section 5.3.                                   Selection of
Securities to be Redeemed. 
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed will be selected not more than 60 days prior to the
redemption date by the Trustee in compliance with any applicable rules of the
principal U.S. securities exchange, if any, on which the Securities are listed
or, if the Securities are not listed on a U.S. securities exchange or if there
are no applicable rules, on a pro rata basis, by lot or by such other method as
such Trustee will deem appropriate; provided
that the unredeemed portion of the principal amount of any Security shall be in
an authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. The Trustee shall make the selection from the
Securities that are Outstanding that have not previously been called for redemption
and may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for the Securities, or any integral multiple of
$1,000 in excess thereof) of the principal amount of the Securities of a
denomination larger than the minimum authorized denomination for Securities.


 


The Trustee shall
promptly notify the Company in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed. 
If the Company shall so direct, Securities registered in the name of the
Company, any Affiliate of the Company or any Subsidiary of the Company thereof
shall not be included in the Securities selected for redemption.


 


For purposes of
the Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Securities shall relate, in the case of any Securities
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities which has been or is to be redeemed.


 


Section 5.4.                                   Notice of
Redemption.  At least 35 but
no more than 60 days before any redemption date the Company will deliver
written notice of such redemption to the Trustee and mail a notice of
redemption first-class postage prepaid to each holder of Securities to be
redeemed at its registered address.


 


All notices of
redemption shall state:


 


(a)                                  the
Redemption Date;


 


61

















 


(b)                                 the
Redemption Price;


 


(c)                                  if
less than all of the Outstanding Securities are to be redeemed, the
identification (and in the case of partial redemption, the principal amounts)
of the particular Security or Securities to be redeemed;


 


(d)                                 in
case any Security is to be redeemed in part only, the notice which relates to
such Security shall state that on and after the Redemption Date, upon surrender
of such Security, the Holder will receive, without charge, a new Security or
Securities of authorized denominations for the principal amount thereof
remaining unredeemed;


 


(e)                                  the
Place of Payment where such Securities are to be surrendered for payment for
the Redemption Price;


 


(f)                                    that
Securities called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price;


 


(g)                                 that,
on the Redemption Date, the Redemption Price will become due and payable upon
each such Security, or the portion thereof, to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date; and


 


(h)                                 the
CUSIP, ISIN or Common Code number, if any, of the Securities.


 


Notice of
redemption of Securities to be redeemed shall be given by the Company or, at
the Company’s request, by the Trustee in the name and at the expense of the
Company.


 


Section 5.5.                                   Deposit of
Redemption Price.  On or
prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 2.4 herein) an
amount of money sufficient to pay on the Redemption Date the Redemption Price
of, and (unless the Redemption Date shall be an interest payment date) interest
accrued to the Redemption Date on, all Securities or portions thereof which are
to be redeemed on that date.


 


Section 5.6.                                   Securities
Payable on Redemption Date. 
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest.  Upon surrender of any such Security, for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more predecessor Securities,
registered as such at the close of business on the relevant record dates
according to their terms.


 


If any Security
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.


 


62

















 


Section 5.7.                                   Securities
Redeemed in Part.  Upon
surrender of a Security that is redeemed in part at the office or agency of the
Company maintained for such purpose pursuant to Section 2.3 herein
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of that Security, without service charge, a new Security
or Securities, having the same form, terms and Stated Maturity, in any
authorized denomination equal in aggregate principal amount to the unredeemed
portion of the principal amount of the Security surrendered.


 


Section 5.8.                                   Optional
Redemption.  Except as
described in this Section 5.8, the Securities are not redeemable
until June 15, 2008.  On and after
June 15, 2008, the Company may redeem all or, from time to time, a part of
the Securities, at the following Redemption Prices (expressed as a percentage
of principal amount) plus accrued and unpaid interest on the Securities, if
any, to the applicable Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), if redeemed during the twelve-month period beginning on
June 15 of the years indicted below:


 


	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  103.75

  	
  %

  
	
  2009

  	
   

  	
  101.875

  	
  %

  
	
  2010 and thereafter

  	
   

  	
  100.00

  	
  %

  



 


Prior to
June 15, 2007, the Company may on any one or more occasions redeem up to
35% of the original principal amount of the Securities with the Net Cash
Proceeds of one or more Public Equity Offerings at a redemption price of 107.5%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date); provided that


 


(1)                                  at
least 65% of the original principal amount of the Securities remains
outstanding after each such redemption; and


 


(2)                                  the
redemption occurs within 60 days after the closing of such Public Equity
Offering.


 


If the optional
redemption date is on or after an interest record date and on or before the
related interest payment date, the accrued and unpaid interest, if any, will be
paid to the Person in whose name the Security is registered at the close of
business, on such record date, and no additional interest will be payable to
holders whose Security will be subject to redemption by the Company.  Any redemption pursuant to this Section 5.8
shall be made pursuant to the provisions of Section 5.1 through 5.7
herein.


 


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Section 5.9.                                   Offer to
Repurchase Upon a Change of Control.


 


(a)                                  If
a Change of Control occurs, each Holder shall have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral multiple of
$1,000) of that Holder’s Securities pursuant to the Change of Control offer on
the terms set forth in this Supplemental Indenture (a “Change of Control
Offer”).  In the Change of Control
Offer, the Company shall offer a Change of Control Payment in cash equal to
101% of the aggregate principal amount of Securities repurchased plus accrued
and unpaid interest on the Securities repurchased to the date of purchase.  Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder stating:


 


(i)                                     the
transaction or transactions that constitute the Change of Control and Ratings
Event;


 


(ii)                                  that
the Change of Control Offer is being made pursuant to this Section 5.9
and that all Securities tendered shall be accepted for payment;


 


(iii)                               the
purchase price and the purchase date, which date shall be no earlier than 30
days and no later than 60 days from the date the notice is mailed (the “Change
of Control Payment Date”);


 


(iv)                              that
any Security not tendered shall continue to accrue interest;


 


(v)                                 that,
unless the Company defaults in the payment of the Change of Control Payment,
all Securities accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;


 


(vi)                              that
Holders electing to have any Securities purchased pursuant to a Change of
Control Offer shall be required to surrender the Securities, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of the Securities
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date;


 


(vii)                           that
Holders shall be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Securities delivered for purchase, and a statement that such Holder
is withdrawing his election to have the Securities purchased; and


 


(viii)                        that
Holders whose Securities are being purchased only in part shall be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.


 


The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent those laws and
regulations are applicable in connection with the repurchase of the Securities
as a result of a Change of


 


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Control.  To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions
of the Indenture, the Company shall comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under
the Change of Control provisions of the Indenture by virtue of such conflict.


 


(b)                                 On
the Change of Control Payment Date, the Company shall, to the extent lawful:


 


(i)                                     accept
for payment all Securities or portions of Securities properly tendered pursuant
to the Change of Control offer;


 


(ii)                                  deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Securities or portions of Securities properly tendered; and


 


(iii)                               deliver
or cause to be delivered to the Trustee the Securities so accepted together
with an Officer’s Certificate stating the aggregate principal amount of
Securities or portions of Securities being purchased by the Company.


 


The Paying Agent
shall promptly mail to each Holder of Securities properly tendered the Change
of Control Payment for such Securities, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Security equal in principal amount to any unpurchased portion of the
Securities surrendered, if any; provided
that each new Security will be in a principal amount of $1,000 or an integral
multiple of $1,000.


 


The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.


 


The provisions
described above that require the Company to make a Change of Control Offer
following a Change of Control will be applicable regardless of whether any
other provisions of this Supplemental Indenture are applicable.


 


The Company shall
not be required to make a Change of Control Offer upon a Change of Control if a
third party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this Supplemental
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Securities properly tendered and not withdrawn under such Change
of Control Offer.


 


ARTICLE VI

DEFAULTS AND REMEDIES


 


Section 6.1.                                   Events of Default.  An “Event of Default” occurs with respect to
the Securities if (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or


 


65

















 


order of any court
or any order, rule or regulation of any administrative or governmental body):


 


(a)                                  default
in the payment of principal of, or premium, if any, on any Security when due at
maturity, upon repurchase, upon acceleration or otherwise, including, without
limitation, failure of the Company to repurchase any Security on the date
required following a Change of Control; or


 


(b)                                 default
in the payment of any installment of interest on any Security  when due and continuance of such Default for
30 days or more; or


 


(c)                                  failure
to observe, perform or comply with Section 4.1; or


 


(d)                                 default
(other than a default set forth in paragraphs (a), (b) and (c) above)
in the performance of, or breach of, any other covenant or warranty of the
Company or of any Restricted Subsidiary in the Indenture, or in the Securities
and failure to remedy such default or breach within a period of 30 days
after written notice from the Trustee or the Holders of at least 25% in aggregate
principal amount of the then outstanding Securities; or


 


(e)                                  default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any Subsidiary of the Company (or the payment of which is
guaranteed by the Company or any Restricted Subsidiary of the Company), which
default is caused by a failure to pay principal of or premium, if any, on such
Indebtedness upon its stated maturity or which default results in the
acceleration of such Indebtedness prior to its express maturity and the
principal amount of any such Indebtedness, together with the principal amount
of any other such Indebtedness the maturity of which has been so accelerated,
aggregates $50.0 million or more and such acceleration has not been
rescinded or annulled or such Indebtedness discharged in full within
30 days; or


 


(f)                                    the
entry by a court of competent jurisdiction of one or more judgments, orders or
decrees against the Company or any Subsidiary of the Company or any of their
respective property or assets in an aggregate amount in excess of
$50.0 million, which judgments, orders or decrees have not been vacated,
discharged, satisfied or stayed pending appeal within 30 days from the
entry thereof and with respect to which legal enforcement proceedings have been
commenced;


 


(g)                                 the
Company or a Material Subsidiary, pursuant to or within the meaning of any
Bankruptcy Law, (i) commences a voluntary case or proceeding, (ii) consents to
the entry of an order for relief against it in an involuntary case or
proceeding, (iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property, (iv) makes a general assignment for the
benefit of its creditors, (v) makes an admission in writing of its inability to
pay its debts generally as they become due or (vi) takes corporate action in
furtherance of any such action; or


 


(h)                                 a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (i) is for relief against the Company or a Material Subsidiary, in an


 


66

















 


involuntary case, (ii)
adjudges the Company or a Material Subsidiary as bankrupt or insolvent, or
approves as properly filed a petition seeking reorganization, arrangement, and
adjustment or composition of or in respect of the Company or a Material
Subsidiary, or appoints a Custodian of the Company or a Material
Subsidiary,  or for all or substantially
all of its property, or (iii) orders the liquidation of the Company or a
Material Subsidiary and the decree remains unstayed and in effect for 60 days.


 


The Company shall
deliver to the Trustee, as soon as practicable (and in any event within five
Business Days), written notice in the form of an Officer’s Certificate with an
executive officer of any Default, its status and what action the Company is
taking or proposes to take with respect thereto.


 


As used in the
Indenture, the term “Bankruptcy Law” means Title 11, U.S. Code, or any
similar federal or state bankruptcy, insolvency, reorganization or other law
for the relief of debtors.  As used in
the Indenture, the term “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.


 


Section 6.2.                                   Acceleration;
Rescission and Annulment.  If
an Event of Default (other than an Event of Default specified in Section 6.1(g)
or (h) above involving the Company) occurs and is continuing, then and
in every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the then outstanding Securities may, and the Trustee shall
upon the request of Holders of not less than 25% in aggregate principal amount
of the Securities then outstanding, declare the unpaid principal of, premium,
if any, and accrued and unpaid interest on all the Securities then outstanding
to be due and payable, by a notice in writing to the Company (and to the
Trustee, if given by Holders) and upon such declaration such principal amount,
premium, if any, and accrued and unpaid interest will become immediately due
and payable, notwithstanding anything contained in the Indenture or the
Securities to the contrary. If an Event of Default specified in Section 6.1(g)
or (h) above involving the Company occurs, all unpaid principal of, and
premium, if any, and accrued and unpaid interest on the Securities then
outstanding will ipso facto become due and payable.


 


The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may rescind an acceleration of the Securities and its
consequences if all existing Events of Default (other than the nonpayment of
principal of and premium, if any, and interest on the Securities which has
become due solely by virtue of such acceleration) have been cured or waived and
if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.


 


Section 6.3.                                   Collection of
Indebtedness and Suits for Enforcement by Trustee.


 


The Company
covenants that if:


 


(a)                                  default
is made in the payment of any interest on any Security, if any, when such
interest becomes due and payable and such default continues for a period of 30
days, or


 


67

















 


(b)                                 default
is made in the payment of the principal of (or premium, if any, on) any
Security at the Maturity thereof, the Company will, upon demand of the Trustee,
pay to it, for the benefit of the Holder of such Security, the whole amount
then due and payable on such Security for principal, premium, if any, and
interest, if any, and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal, premium, if any, and on
any overdue interest, if any, at the rate or rates prescribed therefor in such
Security and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.


 


If an Event of
Default with respect to the Securities occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders of Securities by such appropriate judicial proceedings as the
Trustee shall deem necessary to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in the Indenture or
in aid of the exercise of any power granted herein, or to secure any other
proper remedy.


 


Section 6.4.                                   Trustee May File
Proofs of Claim.  The Trustee
may file such proofs of claim and other papers or documents and take such
actions authorized under the Trust Indenture Act as may be necessary or
advisable in order to have the claims of the Trustee and the Holders of
Securities allowed in any judicial proceedings relating to the Company (or any
other obligor upon the Securities), its creditors or its property.  In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.9 herein.


 


Section 6.5.                                   Trustee May
Enforce Claims Without Possession of Securities.  All rights of action and claims under the
Indenture or the Securities may be prosecuted and enforced by the Trustee, in
its own name as an express trust, without the possession of any of the
Securities or the production thereof in any proceeding relating thereto and any
recovery of judgment shall, after provision for the reasonable fees and
expenses of the Trustee and its counsel, be for the ratable benefit of the
Holders of the Securities in respect to which judgment was recovered.


 


Section 6.6.                                   Delay or Omission
Not Waiver.  No delay or
omission by the Trustee or any Holder of any Securities to exercise any right
or remedy accruing upon an Event of Default shall impair any such right or
remedy or constitute a waiver of or acquiescence in any such Event of Default.


 


Section 6.7.                                   Waiver of Past
Defaults.  In addition to the
provisions of Section 6.2 herein, the Holders of a majority in
aggregate principal amount of Outstanding Securities by written notice to the
Trustee may waive on behalf of the Holders of all Securities a past


 


68

















 


Default or Event
of Default and its consequences except (a) a Default or Event of Default in the
payment of the principal of, or premium, if any, or interest, if any, on any
Security or (b) an Event of Default resulting from the breach of a covenant or
provision hereof which pursuant to Section 9.2 herein cannot be
amended or modified without the consent of the Holder of each Outstanding
Security adversely affected.  Upon any
such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Supplemental Indenture.


 


Section 6.8.                                   Control by
Majority.  The Holders of a
majority in aggregate principal amount of the Outstanding Securities shall 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 it with respect to the Securities; provided,
however, that (a) the Trustee may
refuse to follow any direction that conflicts with law or the Indenture (b) the
Trustee may refuse to follow any direction that is prejudicial to the rights of
the Holders of Securities not consenting or that would in the good faith
judgment of the Trustee have a substantial likelihood of involving the Trustee
in personal liability and (c) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction. Prior to
the taking of any action hereunder, the Trustee shall be entitled to reasonable
indemnification satisfactory to the Trustee against all losses and expenses
caused by taking or not taking such action. 
This paragraph shall be in lieu of Section 316(a)(1)(A) of the
Trust Indenture Act and such Section 316(a)(1)(A) is hereby expressly
excluded from the Indenture, as permitted by the Trust Indenture Act.


 


Section 6.9.                                   Limitation on
Suits by Holders.  No Holder
of any Security shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:


 


(a)                                  the
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities;


 


(b)                                 the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities have made a written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as Trustee hereunder;


 


(c)                                  such
Holder or Holders have offered to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense to be, or which may be, incurred
by the Trustee in pursuing the remedy;


 


(d)                                 the
Trustee for 60 days after its receipt of such notice, request and the offer of
indemnity has failed to institute any such proceedings; and


 


(e)                                  during
such 60 day period, the Holders of a majority in aggregate principal amount of
the Outstanding Securities have not given to the Trustee a direction
inconsistent with such written request.


 


No one or more
Holders shall have any right in any manner whatever by virtue of, or by
availing of, any provision of the Indenture to affect, disturb or prejudice the
rights of any other of such Holders, or to obtain or to seek to obtain priority
or preference over any other


 


69

















 


of such Holders or to enforce any right under the Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.


 


Section 6.10.                             Rights of Holders to Receive
Payment.  Notwithstanding any
other provision of the Indenture, but subject to Section 3.2
herein, the right of any Holder of a Security to receive payment of principal
of, premium, if any, and, subject to Sections 2.1, 2.3 and 2.12
herein, interest, if any, on the Security, on or after the respective due dates
expressed in the Security (or, in case of redemption, on the redemption dates),
or, subject to Section 6.9 herein, to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.


 


Section 6.11.                             Application of Money
Collected.  If the Trustee
collects any money pursuant to this Article, it shall pay out the money in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium, if any, or
interest, if any, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:


 


First: to the
Trustee for amounts due under Section 7.9 herein;


 


Second:  to Holders of Securities in respect of which
or for the benefit of which such money has been collected for amounts due and
unpaid on such Securities for principal of, premium, if any, and interest, if
any, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if any, and
interest, if any, respectively; and


 


Third:  to the Company.


 


The Trustee may
fix a record date and payment date for any payment to Holders pursuant to this Section 6.11.  At least 15 days before such record date,
the Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and the amount to be paid.


 


Section 6.12.                             Restoration of Rights
and Remedies.  If the Trustee
or any Holder has instituted any proceeding to enforce any right or remedy
under the Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.


 


Section 6.13.                             Rights and Remedies
Cumulative.  Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 2.9
herein, no right or remedy herein conferred upon or reserved to the Trustee or
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 existing right or remedy hereunder,
or


 


70

















 


otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.


 


Section 6.14.                             Waiver of Usury, 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 usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of the Indenture; 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 Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.


 


Section 6.15.                             Undertaking for Costs.  In any suit for the enforcement of any right
or remedy under the Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs of
the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees and expenses, against any party litigant
in the suit having due regard to the merits and good faith of the claims or
defenses made by the party litigant.


 


ARTICLE VII

TRUSTEE


 


Section 7.1.                                   Certain Duties
and Responsibilities of the Trustee.


 


(a)                                  Except
during the continuance of an Event of Default, the Trustee’s duties and
responsibilities under the Indenture shall be governed by Section 315(a)
of the Trust Indenture Act.


 


(b)                                 In
case an Event of Default has occurred and is continuing with respect to the
Securities, the Trustee shall exercise the rights and powers vested in it by
this Supplemental Indenture with respect to the Securities, and shall use the
same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.


 


(c)                                  No
provision of this Supplemental Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that this subsection shall
not be construed to limit the effect of paragraph (a) of this Section 7.1;
the Trustee shall not be liable for any error of judgment made in good faith by
a Responsible Officer, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders in accordance with Section 6.8
herein relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under the Indenture.


 


71

















 


Section 7.2.                                   Rights of Trustee.  Subject to the provisions of the Trust
Indenture Act:


 


(a)                                  the
Trustee may conclusively rely and shall be protected in acting or refraining
from acting upon any document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the proper
party or parties.  The Trustee need not
investigate any fact or matter stated in the document;


 


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


 


(c)                                  whenever
in the administration of the Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, conclusively rely
upon an Officer’s Certificate;


 


(d)                                 the
Trustee 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
Trustee may act through agents or attorneys and shall not be responsible for
the misconduct or negligence of any agent or attorney appointed with due care;


 


(f)                                    the
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers;


 


(g)                                 the
Trustee shall not be required to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers;


 


(h)                                 the
Trustee 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 Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney at the
expense of the Company and shall incur no liability of any kind by reason of
such inquiry or investigation;


 


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


 


72

















 


(j)                                     whether
or not therein expressly so provided, every provision of the Indenture relating
to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section 7.2; and


 


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


 


Section 7.3.                                   Trustee May Hold
Securities.  The Trustee, any
Paying Agent, any Registrar or any other agent of the Company in its individual
or any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise
deal with the Company, an Affiliate of the Company or Subsidiary of the Company
with the same rights it would have if it were not Trustee, Paying Agent,
Registrar or such other agent.


 


Section 7.4.                                   Money Held in
Trust.  Money held by the
Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law.  The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed upon in writing with the Company.


 


Section 7.5.                                   Trustee’s
Disclaimer.  The recitals
contained herein and in the Securities, except the Trustee’s certificate of
authentication, shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness.  The Trustee makes no representation as to
the validity or adequacy of the Indenture or the Securities or any coupon.  The Trustee shall not be accountable for the
Company’s use of the proceeds from the Securities or for monies paid over to
the Company pursuant to the Indenture.


 


Section 7.6.                                   Notice of
Defaults.  If a Default
occurs and is continuing with respect to the Securities and if it is actually known
to a Responsible Officer of the Trustee, the Trustee shall, within 90 days
after it occurs, transmit by mail to the Holders of Securities, in the manner
and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all Defaults known to it unless such Default shall have been cured or
waived; provided, however, that except in the case of a
Default in payment on the Securities, the Trustee may withhold the notice if
and so long as its board of directors, its executive committee or a committee
of its Responsible Officers in good faith determines that withholding such
notice is in the interests of Holders of Securities; and provided, further,
that in the case of any Default of the character specified in Section 6.1(b)
herein with respect to Securities, no such notice to Holder shall be given
until at least 30 days after the occurrence thereof.


 


Section 7.7.                                   Reports by
Trustee to Holders.  Within
60 days after each May 15 of each year commencing with the first May 15 after
the Issue Date, the Trustee shall transmit by mail to all Holders of Securities
as provided in Section 313(c) of the Trust Indenture Act a brief report
dated as of such May 15 if required by and in compliance with
Section 313(a) of the Trust Indenture Act. The Trustee shall also comply
with Section 313(b) of the Trust Indenture Act, if applicable.  A copy of each such report required pursuant
to Section 313(a) or 313(b) of the Trust Indenture Act shall, at the time
of such transmission to Holders, be


 


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filed by the
Trustee with each stock exchange, if any, upon which the Securities are listed,
with the Commission and with the Company. 
The Company will promptly notify the Trustee when the Securities are
listed on, or delisted from, any stock exchange.


 


Section 7.8.                                   Securityholder
Lists.  The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Holders of the Securities.  If the Trustee is not the Registrar, the
Company shall furnish to the Trustee semiannually on or before the last day of
June and December in each year, and at such other times as the
Trustee may request in writing, a list, in such form and as of such date as the
Trustee may reasonably require containing all the information in the possession
or control of the Registrar, the Company or any of its Paying Agents other than
the Trustee as to the names and addresses of Holders of the Securities.


 


Section 7.9.                                   Compensation and
Indemnity.


 


(a)                                  Each
of the Company and the Guarantor, jointly and severally, shall pay to the
Trustee from time to time such reasonable compensation for its services as the
Company and the Trustee shall agree in writing from time to time. The Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it in connection with the
performance of its duties under the Indenture. 
Such expenses shall include the reasonable compensation and expenses of
the Trustee’s agents and counsel.


 


(b)                                 Each
of the Company and the Guarantor, jointly and severally, shall fully indemnify
the Trustee or any Predecessor Trustee and their agents for, and hold them
harmless against, any and all loss, liability, damage, claim or reasonable
expense including legal fees and expenses and taxes (other than taxes based
upon or determined or measured by the income of the Trustee) incurred by it
arising out of or in connection with its acceptance or administration of the
trust or trusts hereunder, including the reasonable 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.  The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity.  The Company shall defend the claim and the
Trustee shall cooperate in the defense. 
The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.


 


(c)                                  The
Company need not reimburse any expense or indemnify against any loss,
liability, damage or claim incurred by the Trustee as determined by a court of
competent jurisdiction to have been caused by its own negligence or bad faith
or willful misconduct.


 


(d)                                 To
secure the payment obligations of the Company pursuant to this Section, the
Trustee shall have a lien prior to the Securities  on all money or property held or collected by the Trustee, except
that held in trust to pay principal, premium, if any, and interest, if any, on
particular Securities.


 


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When the Trustee
incurs expenses or renders services in connection with an Event of Default
specified in Section 6.1(g) or (h) herein, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.


 


The provisions of
this Section shall survive the termination of the Indenture.


 


Section 7.10.                             Replacement of Trustee.


 


(a)                                  The
resignation or removal of the Trustee and the appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in Section 7.11 herein.


 


(b)                                 The
Trustee may resign at any time with respect to the Securities by giving written
notice thereof to the Company.


 


(c)                                  The
Holders of a majority in aggregate principal amount of the Outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company
and may appoint a successor Trustee with the Company’s consent.


 


(d)                                 If
at any time:


 


(i)                                     the
Trustee fails to comply with Section 310(b) of the Trust Indenture Act
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


 


(ii)                                  the
Trustee shall cease to be eligible under Section 7.12 herein or
Section 310(a) of the Trust Indenture Act and shall fail to resign after
written request therefor by the Company or by any Holder of a Security who has
been a bona fide Holder of a Security for at least six months; or


 


(iii)                               the
Trustee becomes incapable of acting, is adjudged a bankrupt or an insolvent or
a receiver or public officer takes charge of the Trustee or its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then,
in any such case, (A) the Company by or pursuant to a Board Resolution may
remove the Trustee with respect to all Securities, or (B) subject to
Section 315(e) of the Trust Indenture Act, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the appointment
of a successor Trustee or Trustees.


 


(e)                                  If
the instrument of acceptance by a successor Trustee required by Section 7.11
herein shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation or removal, the Trustee resigning or being
removed may petition at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities.


 


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(f)                                    If
the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company, by or pursuant to a Board Resolution,
shall promptly appoint a successor Trustee and shall comply with the applicable
requirements of Section 7.11 herein.  If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment
in accordance with the applicable requirements of Section 7.11
herein, become the successor Trustee with respect to the Securities and to that
extent supersede the successor Trustee appointed by the Company.  If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 7.11 herein, 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 Trustee.


 


Section 7.11.                             Acceptance of
Appointment by Successor.


 


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


 


(b)                                 Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to the
successor Trustee all such rights, powers and trusts referred to in paragraph
(a) of this Section 7.11.


 


(c)                                  No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under the
Trust Indenture Act.


 


(d)                                 The
Company shall give notice of each resignation and each removal of the Trustee
and each appointment of a successor Trustee in the manner provided for notices
to the Holders of Securities in Section 11.2 herein.  Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.


 


Section 7.12.                             Eligibility;
Disqualification.  There
shall at all times be a Trustee hereunder which shall be eligible to act as
Trustee under Section 310(a)(1) of the Trust Indenture Act and shall have
a combined capital and surplus of at least $75,000,000.  If such corporation publishes reports of
condition at least annually, pursuant to law or the requirements of Federal,
State, Territorial or District of Columbia supervising or examining


 


76

















 


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 Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect heretofore specified in this Article.


 


Section 7.13.                             Merger, Conversion,
Consolidation or Succession to Business.  Any corporation into which the Trustee 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 Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee 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
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.


 


Section 7.14.                             Appointment of
Authenticating Agent.  The
Trustee may appoint an Authenticating Agent with respect to the Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities  issued upon original issue,
exchange, registration of transfer or partial redemption thereof, and
Securities so authenticated shall be entitled to the benefits of the Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder.  Any such appointment
shall be evidenced by an instrument in writing signed by a Responsible Officer
of the Trustee, a copy of which instrument shall be promptly furnished to the
Company.  Wherever reference is made in
the Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee’s certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company.


 


Any corporation
into which an Authenticating 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 such Authenticating Agent shall be a party, or any
corporation succeeding to the corporate agency or corporate trust business of
an Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or further act on the part of the Trustee or the
Authenticating Agent.


 


An Authenticating
Agent may at any time resign by giving written notice of resignation to the
Trustee  and to the Company.  The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice of termination to
such Authenticating Agent and to the Company. 
Upon receiving such notice of resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee  may appoint a successor Authenticating Agent
which shall be acceptable to the Company and shall give


 


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notice of such appointment to all Holders of Securities with respect to
which such Authenticating Agent will serve in the manner set forth in Section 11.2
herein.  Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent herein.  No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.


 


The Company agrees
to pay to each Authenticating Agent from time to time reasonable compensation
including reimbursement of its reasonable expenses (including legal fees) for
its services under this Section.


 


If an appointment
is made pursuant to this Section, the Securities  may have endorsed thereon, in addition to or in lieu of the Trustee’s
certificate of authentication, an alternate certificate of authentication
substantially in the following form:


 


This is one of the
Securities described in the within-mentioned Indenture.


 


 


	
   

  	
   

  	
   

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  as Authenticating Agent

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  



 


ARTICLE VIII

DISCHARGE OF SUPPLEMENTAL INDENTURE; DEFEASANCE


 


Section 8.1.                                   Termination of
Company’s Obligations Under this Supplemental Indenture.  This Supplemental Indenture shall upon a
Company Request cease to be of further effect with respect to the Securities
(except as to any surviving rights of registration of transfer or exchange of
such Securities and replacement of such Securities which may have been lost,
stolen or mutilated as herein expressly provided for) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of the Indenture with respect to such Securities
when either


 


(a)


 


(i)                                     all
such Securities previously authenticated and delivered (other than (A) such
Securities which have been lost, stolen or destroyed and which have been
replaced or paid, as provided in Section 2.9 herein, and
(B) such Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter repaid
to the Company or discharged from such trust as provided in Section 3.4
herein) have been delivered to the Trustee for cancellation, or


 


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(ii)                                  all
Securities not theretofore delivered to the Trustee for cancellation have
become due and payable and the Company has irrevocably deposited or caused to
be deposited with the Trustee funds in an amount sufficient to pay and
discharge the entire Indebtedness of the Securities issued hereunder not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Securities issued hereunder to the date of
deposit together with irrevocable instructions from the Company directing the Trustee
to apply such funds to the payment thereof at maturity;


 


or


 


(b)


 


(i)                                     the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and


 


(ii)                                  the
Company delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of the Indenture have been complied
with.


 


Notwithstanding
the satisfaction and discharge of this Supplemental  Indenture, the obligation of the Company to the Trustee and any
predecessor Trustee under Section 7.9 herein, the obligations of
the Company to any Authenticating Agent under Section 7.14 herein
and, if money shall have been deposited with the Trustee pursuant to clause (ii)
of paragraph (a) of this Section, the obligations of the Trustee under Section 7.1
herein and the last paragraph of Section 3.4 herein shall survive
such satisfaction and discharge.


 


Section 8.2.                                   Application of
Trust Funds.  Subject to the
provisions of the last paragraph of Section 3.4 herein, all money
deposited with the Trustee pursuant to Section 8.1 herein shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Supplemental Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Persons entitled thereto, of the
principal, premium, if any, and interest, if any, for whose payment such money
has been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.


 


Section 8.3.                                   Company’s Option
to Effect Defeasance or Covenant Defeasance.  The Company may at its option by or pursuant
to Board Resolution, at any time, elect to have Sections 8.4 or 8.5
herein be applied to such Outstanding Securities upon compliance with the
conditions set forth below in this Article.


 


Section 8.4.                                   Defeasance and
Discharge.  Upon the
Company’s exercise of the option specified in Section 8.3 above
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to such Securities on and after the date the
conditions set forth in Section 8.6 herein are satisfied (hereinafter
“defeasance”).  For this purpose, such
defeasance means that the Company shall be deemed


 


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to have paid and
discharged the entire indebtedness represented by such Securities which shall
thereafter be deemed to be “Outstanding” only for the purposes of Section 8.7
herein and the other Sections of this Supplemental Indenture referred to in
clause (b) of this Section, and to have satisfied all its other obligations
under such Securities and the Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company, shall on a Company
Order execute proper instruments acknowledging the same), except the following,
which shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of such Securities to receive, solely from the trust funds
described in Section 8.6(a) herein and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest, if any, on such Securities when such payments are due; (b) the
Company’s obligations with respect to such Securities under Sections 2.3,
2.5, 2.9, 3.3 and 3.4 herein; (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (d) this Article VIII.
Subject to compliance with this Article VIII, the Company may
exercise its option under this Section notwithstanding the prior exercise
of its option under Section 8.5 herein with respect to such
Securities.  Following a defeasance,
payment of such Securities may not be accelerated because of an Event of
Default.


 


Section 8.5.                                   Covenant
Defeasance.  Upon the
Company’s exercise of the option specified in Section 8.3 herein
applicable to this Section, the Company shall be released from its obligations
under Article III (except as otherwise provided in Section 8.4
herein), Article IV and Section 5.9 herein (and with
respect to Section 3.7, shall be required to certify only with
respect to those covenants  not
defeased pursuant to  this  Section 8.5) with respect to
such Securities on and after the date the conditions set forth in Section 8.6
herein are satisfied (hereinafter, “covenant defeasance”), and such Securities
shall thereafter be deemed to be not “Outstanding” for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with Article III (except
as otherwise provided in Section 8.4 herein), Article IV
and Section 5.9 herein, but shall continue to be deemed
“Outstanding” for all other purposes hereunder.  For this purpose, such covenant defeasance means that the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such Section or such other
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such Section or such other covenant or by reason of
reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1(c)
herein or otherwise, but, except as specified above, the remainder of the
Indenture and such Securities shall be unaffected thereby.


 


Section 8.6.                                   Conditions to
Defeasance or Covenant Defeasance. 
The following shall be the conditions to the application of Sections
8.4 or 8.5 herein to any Securities:


 


(a)                                  The
Company shall have deposited or caused to be deposited irrevocably with the
Trustee (or another trustee satisfying the requirements of Section 7.12
herein who shall agree to comply with, and shall be entitled to the benefits
of, the provisions of Sections 8.3 through 8.9 inclusive
applicable to the Trustee, for purposes of such Sections also a “Trustee”) as
trust funds in trust for the purpose of making the payments referred to in this
Section 8.6(a), specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, with instructions to
the Trustee as to the application thereof,


 


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(A) money in an amount,
or (B) Government Obligations which through the payment of interest, if any,
and principal in respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment referred to in this Section 8.6(a),
money in an amount or (C) a combination thereof in an amount sufficient,
without reinvestment, to pay and discharge, and which shall be applied by the
Trustee to pay and discharge the principal of, premium, if any, and interest,
if any, on such Securities on the Maturity of such principal or installment of
principal or interest, if any. Before such a deposit the Company may make
arrangements satisfactory to the Trustee for the redemption or purchase of
Securities at a future date or dates in accordance with Article V
which shall be given effect in applying the foregoing.


 


(b)                                 Such
defeasance or covenant defeasance shall not result in a breach or violation of,
or constitute a Default or Event of Default under, this Supplemental Indenture
or result in a breach or violation of, or constitute a default under, any other
material agreement or instrument to which the Company is a party or by which it
is bound, in each case, on the date of such deposit pursuant to Section 8.6(a)
above (other than in each case a Default or default resulting solely from the
borrowing of funds to be applied to such deposit).


 


(c)                                  In
the case of an election under Section 8.4 herein, the Company shall
have delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel to the effect that the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that, and
based thereon such opinion shall confirm that, the Holders of such Securities
will not recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times, as would have been the
case if such deposit, defeasance and discharge had not occurred.


 


(d)                                 In
the case of an election under Section 8.5 herein, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not occurred.


 


(e)                                  The
Company shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance under Section 8.4 herein or the covenant defeasance
under Section 8.5 herein (as the case may be) have been complied
with.


 


(f)                                    No
Default or Event of Default under Sections 6.1(g) or (h) herein
with respect to such Securities shall have occurred and be continuing on the
date of such deposit and the Company shall have delivered to the Trustee an
Officer’s Certificate stating that the deposit was not made by it with the
intent of preferring the Holders over any of its creditors or with the intent
of defeating, hindering, delaying or defrauding any of its other creditors.


 


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(g)                                 Such
Defeasance or Covenant Defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the
Investment Company Act of 1940 unless such trust shall be registered under such
Act or exempt from registration thereunder.


 


Notwithstanding
the foregoing, no Opinion of Counsel requested by paragraphs (c) or
(d) need be delivered if at such time all outstanding Securities have
been irrevocably called for redemption.


 


Section 8.7.                                   Deposited Money
and Government Obligations to Be Held in Trust.  Subject to the provisions of the last
paragraph of Section 3.4 herein, all money and Government
Obligations (including the proceeds thereof) deposited with the Trustee in
respect of any Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and the Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in respect of
principal, premium, if any, and interest, if any, but such money need not be
segregated from other funds except to the extent required by law.


 


Section 8.8.                                   Repayment to
Company.  To the extent
permitted by the Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 76, as amended or interpreted by the Financial
Accounting Standards Board from time to time, or any successor thereto (“Standard
No. 76”), or to the extent permitted by the Commission, the Trustee
shall, from time to time, take one or more of the following actions as
specified in a Company Request: (a) retransfer, reassign and deliver to the
Company any securities deposited with the Trustee pursuant to Section 8.6(a)
herein; provided that the Company
shall, in substitution therefor, simultaneously transfer, assign and deliver to
the Trustee other Governmental Obligations appropriate to satisfy the Company’s
obligations in respect of the relevant Securities; and (b) the Trustee and
Paying Agent shall promptly pay to the Company upon Company Request any excess
money or securities held by them at any time, including, without limitation,
any assets deposited with the Trustee pursuant to Section 8.6(a)
exceeding those necessary for the purposes of Section 8.6(a)
herein.  The Trustee shall not take the
actions described in subsections (a) and (b) of this Section 8.8
herein unless it shall have first received a written report of Deloitte &
Touche LLP, or another nationally recognized independent public accounting
firm, (i) expressing their opinion that the contemplated action is permitted by
Standard No. 76 or the Commission for transactions accounted for as
extinguishment of debt under the circumstances described in paragraph 3.c of
Standard No. 76 or any successor provision, and (ii) verifying the accuracy,
after giving effect to such action or actions, of the computations which
demonstrate that the amounts remaining to be earned on the Government
Obligations deposited with the Trustee pursuant to Section 8.6(a)
will be sufficient for purposes of Section 8.6(a) herein.


 


Section 8.9.                                   Indemnity for
Government Obligations.  The
Company shall pay, and shall indemnify the Trustee against, any tax, fee or
other charge imposed on or assessed against Government Obligations deposited
pursuant to this Article or the principal and interest, if any, and any
other amount received on such Government Obligations.


 


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ARTICLE IX

SUPPLEMENTAL INDENTURES


 


Section 9.1.                                   Supplemental
Indentures Without Consent of Holders.  Without the consent of any Holders, the Company, when authorized
by or pursuant to a Board Resolution and the Trustee at any time and from time
to time, may enter into indentures supplemental hereto, in form reasonably
satisfactory to the Trustee, for any of the following purposes:


 


(a)                                  to
evidence the succession of another corporation to the Company and the
assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities; or


 


(b)                                 to
add to the covenants of the Company for the benefit of the Holders of the
Securities or to surrender any right or power herein conferred upon the
Company; provided, however, that in respect of any such
additional covenant such supplemental indenture may provide for a particular
period of grace after Default (which period may be shorter or longer than that
allowed in the case of other Defaults) or may limit the remedies available to
the Trustee upon such Default; or


 


(c)                                  to
add any additional Events of Default with respect to the Securities; or


 


(d)                                 to
secure the Securities; or


 


(e)                                  to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee and to add to or change any of the provisions of the Indenture as shall
be necessary to provide for or facilitate the administration of the trust
hereunder by the Trustee, pursuant to the requirements of Section 7.11
herein; or


 


(f)                                    if
allowed without penalty under applicable laws and regulations, to permit
payment in respect of the Securities in bearer form in the United States; or


 


(g)                                 to
correct or supplement any provision herein which may be inconsistent with any
other provision herein or to make any other provisions with respect to matters
or questions arising under the Indenture, provided
such action shall not adversely affect the interests of the Holders of
Securities affected thereby; or


 


(h)                                 to
cure an ambiguity or correct any mistake, provided
such action shall not adversely affect the interests of the Holders of
Securities; or


 


(i)                                     to
add a Subsidiary Guarantor or remove a Subsidiary Guarantor, which, in
accordance with the terms of the Indenture, ceases to be liable in respect of
its Subsidiary Guarantee.


 


Section 9.2.                                   Supplemental
Indentures with Consent of Holders. 
With the written consent of the Holders of a majority of the aggregate
principal amount of the Outstanding Securities adversely affected by such
supplemental indenture, the Company, when authorized by or pursuant to a Board
Resolution, and the Trustee may enter into an indenture or


 


83

















 


indentures
supplemental hereto to add any provisions to or to change or eliminate any
provisions of this Supplemental Indenture or of any other indenture
supplemental hereto or to modify the rights of the Holders of such Securities; provided, however,
that without the consent of the Holder of each Outstanding Security affected
thereby, a supplemental indenture under this Section may not:


 


(a)                                  change
the Stated Maturity of the principal of, or premium, if any, on, or any
installment of principal of or premium, if any, or interest, if any, on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption, repurchase or repayment
thereof, or change the manner in which the amount of any principal thereof or
premium, if any, or interest, if any, thereon is determined, or change the
Place of Payment where or the currency in which any Security or any premium or
the interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date);


 


(b)                                 reduce
the percentage in principal amount of the Outstanding Securities, the consent
of whose Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver (of compliance with certain
provisions of the Indenture or certain defaults hereunder and their
consequences) provided for in the Indenture;


 


(c)                                  change
any obligation of the Company to maintain an office or agency in the places and
for the purposes specified in Section 3.3 herein;


 


(d)                                 make
any change in Section 6.7 herein or this Section 9.2
except to increase any percentage or to provide that certain other provisions
of the Indenture cannot be modified or waived without the consent of the
Holders of each Outstanding Security affected thereby.


 


It is not
necessary under this Section 9.2 for the Holders to consent to the
particular form of any proposed supplemental indenture, but it is sufficient if
they consent to the substance thereof.


 


Upon the request
of the Company, accompanied by an Officer’s Certificate and a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Holders as aforesaid, the
Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee’s own rights,
duties or immunities under the Indenture or otherwise, in which case the
Trustee may, but shall not be obligated to, enter into such supplemental
indenture.


 


Section 9.3.                                   Compliance with
Trust Indenture Act. Every amendment to this Supplemental Indenture
or the Securities shall be set forth in a supplemental indenture that complies
with the Trust Indenture Act as then in effect.


 


Section 9.4.                                   Execution of
Supplemental Indentures.  In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the


 


84

















 


modification
thereby of the trusts created by this Supplemental Indenture, the Trustee shall
be provided with and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Supplemental Indenture. 
The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or
immunities under the Indenture or otherwise.


 


Section 9.5.                                   Effect of
Supplemental Indentures. 
Upon the execution of any supplemental indenture under this Article,
this Supplemental Indenture shall be modified in accordance therewith and such
supplemental indenture shall form a part of this Supplemental Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and of any coupon appertaining thereto
shall be bound thereby.


 


ARTICLE X

SUBSIDIARY GUARANTEES


 


Section 10.1.                             Subsidiary Guarantees.


 


(a)                                  Subject
to the provisions of this Article X, each Subsidiary Guarantor,
jointly and severally, hereby irrevocably and unconditionally guarantees to
each Holder of Securities and to the Trustee on behalf of the Holders (i) the
due and punctual payment of principal of, premium, if any, and interest in full
on each Security when and as the same shall become due and payable whether at
Stated Maturity, by declaration of acceleration or otherwise, (ii) the due and
punctual payment of interest on the overdue principal of, premium, if any, and
interest in full on the Securities, to the extent permitted by law, and (iii)
the due and punctual performance of all other Obligations of the Company and
the other Subsidiary Guarantors to the Holders or the Trustee, including
without limitation the payment of fees, expenses, indemnification or other
amounts, all in accordance with the terms of the Securities and the Indenture.
In case of the failure of the Company punctually to make any such principal or
interest payment or the failure of the Company or any other Subsidiary
Guarantor to perform any such other Obligation, each Subsidiary Guarantor
hereby agrees to cause any such payment to be made punctually when and as the
same shall become due and payable, whether at Stated Maturity, by declaration
of acceleration or otherwise, and as if such payment were made by the Company
and to perform any such other Obligation of the Company immediately. Each
Subsidiary Guarantor hereby further agrees to pay any and all expenses
(including reasonable counsel fees and expenses) incurred by the Trustee or the
Holders in enforcing any rights under these Subsidiary Guarantees. The
Subsidiary Guarantees under this Article X are guarantees of
payment and not of collection.


 


(b)                                 Each
of the Company and the Subsidiary Guarantors hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger,
insolvency or bankruptcy of the Company or any other Subsidiary Guarantor, any
right to require a proceeding first against the Company or any other Subsidiary
Guarantor, protest or notice with respect to the Securities or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that these
Subsidiary Guarantees will not be discharged


 


85

















 


except by complete performance
of the Obligations contained in the Securities and in the Indenture, or as
otherwise specifically provided therein and herein.


 


(c)                                  Each
Subsidiary Guarantor hereby waives and relinquishes:


 


(i)                                     any
right to require the Trustee, the Holders or the Company (each, a “Benefited
Party”) to proceed against the Company, the Subsidiaries of the Company or
any other Person or to proceed against or exhaust any security held by a
Benefited Party at any time or to pursue any other remedy in any secured party’s
power before proceeding against the Subsidiary Guarantors;


 


(ii)                                  any
defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other Person or Persons or the failure of a Benefited Party
to file or enforce a claim against the estate (in administration, bankruptcy or
any other proceeding) of any other Person or Persons;


 


(iii)                               demand,
protest and notice of any kind (except as expressly required by this
Supplemental Indenture), including but not limited to notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or of
any action or non-action on the part of the Subsidiary Guarantors, the Company,
the Subsidiaries of the Company, any Benefited Party, any creditor of the
Subsidiary Guarantors, the Company or the Subsidiaries of the Company or on the
part of any other Person whomsoever in connection with any obligations the
performance of which are hereby guaranteed;


 


(iv)                              any
defense based upon an election of remedies by a Benefited Party, including but
not limited to an election to proceed against the Subsidiary Guarantors for
reimbursement;


 


(v)                                 any
defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal;


 


(vi)                              any
defense arising because of a Benefited Party’s election, in any proceeding
instituted under the Bankruptcy Law, of the application of
Section 1111(b)(2) of the Bankruptcy Law; and


 


(vii)                           any
defense based on any borrowing or grant of a security interest under
Section 364 of the Bankruptcy Law.


 


(d)                                 Each
Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor,
on the one hand, and Holders and the Trustee, on the other hand, (i) for
purposes of the relevant Subsidiary Guarantee, the maturity of the Obligations
guaranteed by such Subsidiary Guarantee may be accelerated as provided in Article VI
herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed thereby, and (ii) in
the event of any acceleration of


 


86

















 


such Obligations (whether
or not due and payable) such Obligations shall forthwith become due and payable
by such Subsidiary Guarantor for purposes of such Subsidiary Guarantee.


 


(e)                                  The
Subsidiary Guarantees shall continue to be effective or shall be reinstated, as
the case may be, if at any time any payment, or any part thereof, of principal
of, premium, if any, or interest on any of the Securities is rescinded or must
otherwise be returned by the Holders or the Trustee upon the insolvency,
bankruptcy or reorganization of the Company or any of the Subsidiary
Guarantors, all as though such payment had not been made.


 


(f)                                    Each
Subsidiary Guarantor shall be subrogated to all rights of the Holders against
the Company in respect of any amounts paid by such Subsidiary Guarantor
pursuant to the provisions of the Subsidiary Guarantees or the Indenture; provided, however,
that a Subsidiary Guarantor shall not be entitled to enforce or to receive any
payments until the principal of, premium, if any, and interest on all
Securities issued hereunder shall have been paid in full.


 


Section 10.2.                             Obligations of
Subsidiary Guarantors Unconditional.  Each Subsidiary Guarantor hereby agrees that its Obligations
hereunder shall be Subsidiary Guarantees of payment and shall be unconditional,
irrespective of and unaffected by the validity, regularity or enforceability of
the Securities or the Indenture, or of any amendment thereto or hereto, the
absence of any action to enforce the same, the waiver or consent by any Holder
or by the Trustee with respect to any provisions thereof or of the Indenture,
the entry of any judgment against the Company or any other Subsidiary Guarantor
or any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Subsidiary
Guarantor.


 


Section 10.3.                             Limitation on Subsidiary
Guarantors’ Liability.  Each
Subsidiary Guarantor and by its acceptance hereof each Holder, hereby confirms
that it is the intention of all such parties that the Subsidiary Guarantee by
such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the
Holders and such Subsidiary Guarantor hereby irrevocably agree that the
Obligations of such Subsidiary Guarantor under this Article X shall
be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the Obligations of such other Subsidiary
Guarantor under this Article X, result in the Obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance under applicable federal or state law.


 


Section 10.4.                             Releases of Subsidiary
Guarantees.


 


(a)                                  If
the Securities are defeased in accordance with the terms of Article VIII
herein, then each Subsidiary Guarantor shall be deemed to have been released
from and


 


87

















 


discharged of its
obligations under its Subsidiary Guarantee as provided in Article VIII
herein, subject to the conditions stated therein.


 


(b)                                 In
the event an entity that is a Subsidiary Guarantor is sold or disposed of
(whether by merger, consolidation, the sale of its Capital Stock such that the
Subsidiary Guarantor is no long a Subsidiary or the sale of all or
substantially all of its assets (other than by lease)) and whether or not such
Subsidiary Guarantor is the surviving corporation in such transaction to a
Person which is not the Company or a Restricted Subsidiary, then such entity
shall cease to be a Subsidiary Guarantor, whether or not a Default has occurred
and is continuing if the sale or other disposition is in compliance with Section 3.13
herein.


 


(c)                                  Any
Subsidiary Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of, premium, if
any, and interest on the Securities and for the other obligations of the
Company, such Subsidiary Guarantor and any other Subsidiary Guarantor under the
Indenture as provided in this Article X.


 


Section 10.5.                             Release of
International Guarantee. 
Notwithstanding other provisions of the Indenture, the Guarantor shall
be deemed to have been released from and discharged of its obligations under
the International Guarantee if, after giving effect to such release:


 


(a)                                  each
Security will continue to be assigned an Investment Grade rating by both Rating
Agencies;


 


(b)                                 no
Default has occurred and is continuing; and


 


(c)                                  the
Company has outstanding no other Indebtedness, which at such time has an
aggregate outstanding principal amount in excess of $35 million that is
guaranteed by the Guarantor (other than the Securities and any other
Indebtedness whose guarantee by the Guarantor will be automatically released if
the International Guarantee is released).


 


Section 10.6.                             Application of Certain
Terms and Provisions to Subsidiary Guarantors.


 


(a)                                  For
purposes of any provision of the Indenture which provides for the delivery by
any Subsidiary Guarantor of an Officer’s Certificate or an Opinion of Counsel
or both, the definitions of such terms in Section 1.1 shall apply
to such Subsidiary Guarantor as if references therein to the Company were
references to such Subsidiary Guarantor.


 


(b)                                 Any
request, direction, order or demand which by any provision of the Indenture is
to be made by any Subsidiary Guarantor shall be sufficient if evidenced by a
Company Order; provided that the
definition of such term in Section 1.1 herein shall apply to such
Subsidiary Guarantor as if references therein to the Company were references to
such Subsidiary Guarantor.


 


(c)                                  Any
notice or demand which by any provision of the Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Securities
to or on any Subsidiary Guarantor may be given or served as described in Section 11.2
herein.


 


88

















 


(d)                                 Upon
any demand, request or application by any Subsidiary Guarantor to the Trustee
to take any action under the Indenture, such Subsidiary Guarantor shall furnish
to the Trustee such certificates and opinions as are required in Section 7.2
herein as if all references therein to the Company were references to such
Subsidiary Guarantor.


 


ARTICLE XI

MISCELLANEOUS


 


Section 11.1.                             Trust Indenture Act
Controls.  If any provision of
this Supplemental Indenture limits, qualifies or conflicts with another
provision which is required to be included in the Indenture by the TIA, the
provision required by the TIA shall control. 
Each Subsidiary Guarantor in addition to performing its obligations
under its Subsidiary Guarantee shall perform such other obligations as may be
imposed upon it with respect to this Supplemental Indenture under the TIA.


 


Section 11.2.                             Notices.  Any notice or communication shall be in
writing, in the English language and delivered in person or mailed by
first-class mail or transmitted by facsimile (with written confirmation of
receipt) addressed as follows:


 


if to the Company:


 


Navistar International Corporation


4201 Winfield Road


Warrenville, Illinois  60555


Attention:  Vice President and
Treasurer


Facsimile:  (630) 753-2305


 


if to the Trustee:


 


BNY Midwest Trust Company


2 North LaSalle Street, Suite 1020


Chicago, Illinois  60602


Attention: Corporate Trust Administration


Facsimile:  (312) 827-8542


 


The Company or the
Trustee by notice to the other may designate additional or different addresses
for subsequent notices or communications.


 


Where this
Supplemental Indenture provides for notice to Securityholders 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
Securityholder affected by such event, at his address as it appears in the
Security Register, not later than the latest date (if any), and not earlier than
the earliest date (if any), prescribed for the giving of such notice.


 


In any case where
notice to Securityholders is given by mail, neither the failure to mail a
notice or communication to a Securityholder nor any defect in any notice so
mailed shall affect its sufficiency with respect to other Securityholders.  If a notice or


 


89

















 


communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it. If by reason of the suspension of
regular mail service or by reason of any other cause it shall be impracticable
to give such notice as provided above, then such notification as shall be made
with the approval of the Trustee shall constitute a sufficient notification for
every purpose hereunder.


 


Section 11.3.                             Communication by
Holders with other Holders Securityholders may communicate pursuant
to TIA §3l2(b) with other Securityholders with respect to their rights under
this Supplemental Indenture or the Securities. 
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA §312(c).


 


Section 11.4.                             Certificate and Opinion
as to Conditions Precedent. 
Upon any request or application by the Company to the Trustee to take or
refrain from taking any action under the Indenture, the Company shall furnish
to the Trustee:


 


(a)                                  an
Officer’s Certificate in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in the Indenture relating to the proposed action have been
complied with; and


 


(b)                                 an
Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of such counsel, all such conditions precedent
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 the Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.


 


Section 11.5.                             Statements Required in
Certificate or Opinion.  Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in the Indenture shall include:


 


(a)                                  a
statement that the individual making such certificate or opinion has read such
covenant or condition;


 


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


 


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


 


(d)                                 a
statement as to whether or not, in the opinion of such individual, such
covenant or condition has been complied with.


 


In giving such
Opinion of Counsel, counsel may rely as to factual matters on an Officer’s
Certificate or on certificates of public officials.


 


90

















 


Section 11.6.                             When Securities
Disregarded.  In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded.  Also, subject to the
foregoing, only Securities Outstanding at the time shall be considered in any
such determination.


 


Section 11.7.                             Rules by Trustee,
Paying Agent and Registrar. 
The Trustee may make reasonable rules for action by, or a meeting of,
Securityholders.  The Registrar and the
Paying Agent may make reasonable rules for their functions.


 


Section 11.8.                             Legal Holidays.  In any case where any interest payment date,
Redemption Date, Stated Maturity or Maturity of any Security shall not be a
Business Day (each, a “Legal Holiday”), then (notwithstanding any other
provision of the Indenture or of any Security) payment of principal, premium,
if any, or interest, if any, need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such date; provided that no interest shall accrue on the amount so payable for
the period from and after such interest payment date, Redemption Date, Stated
Maturity or Maturity, as the case may be, if the payment is made on the next
succeeding Business Day.


 


Section 11.9.                             GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE, THE SECURITIES
AND THE SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.  THE COMPANY AND EACH SUBSIDIARY GUARANTOR AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE,
THE SECURITIES AND THE SUBSIDIARY GUARANTEES.


 


Section 11.10. No Recourse Against Others.  An incorporator, director, officer,
employee, stockholder or controlling person, as such, of each of the Company or
any Subsidiary Guarantors shall not have any liability for any obligations of
the Company under the Securities, this Supplemental Indenture or the Subsidiary
Guarantees or for any claim based on, in respect of or by reason of such
obligations or their creation.  By
accepting a Security, each Securityholder shall waive and release all such
liability.  The waiver and release shall
be part of the consideration for the issue of the Securities.


 


Section 11.11. Successors.  All agreements of the Company and the
Subsidiary Guarantors in this Supplemental Indenture and the Securities shall
bind their respective successors.  All
agreements of the Trustee in this Supplemental Indenture shall bind its
successors.


 


91

















 


Section 11.12. Multiple
Originals.  The
parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  One signed copy is enough to prove this Supplemental Indenture.


 


Section 11.13. Variable Provisions.  The Company initially appoints the Trustee
as U.S. Paying Agent and Registrar with respect to any Global Securities.


 


Section 11.14. Table of Contents;
Headings.  The
table of contents, cross-reference sheet and headings of the Articles and
Sections of this Supplemental Indenture have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.


 


Section 11.15. Separability.  In case any provision of this Supplemental
Indenture or the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.


 


Section 11.16. Benefits of Indenture.  Nothing in this Supplemental Indenture or in
the Securities, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Supplemental
Indenture.


 


Section 11.17. Integral
Part.  This
Supplemental Indenture constitutes an integral part of the Indenture.


 


Section 11.18. Adoption, Ratification and
Confirmation.  The
Original Indenture, as supplemented and amended by this Supplemental Indenture,
is in all respects hereby adopted, ratified and confirmed.


 


*     *    
*     *


 


92

















 


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


 


	
   

  	
  ISSUER:

  
	
   

  	
   

  
	
   

  	
  NAVISTAR INTERNATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terry M. Endsley

  	
   

  
	
   

  	
  Name:

  	
  Terry M. Endsley

  
	
   

  	
  Title:

  	
  Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRUSTEE:

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. G. Donovan

  	
   

  
	
   

  	
  Name:

  	
  D. G. Donovan

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL TRUCK AND ENGINE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Terry M. Endsley

  	
   

  
	
   

  	
  Name:

  	
  Terry M. Endsley

  
	
   

  	
  Title:

  	
  Vice President and Treasurer

  
					



 


93

















 


EXHIBIT A


 


THIS SECURITY IS
HELD BY THE BOOK-ENTRY DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS
NOTE) IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6
OF THE SUPPLEMENTAL INDENTURE, (2) THIS GLOBAL SECURITY MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.1(d) OF THE
SUPPLEMENTAL INDENTURE, (3) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
SUPPLEMENTAL INDENTURE AND (4) THIS GLOBAL SECURITY MAY BE DELIVERED TO A
SUCCESSOR BOOK-ENTRY DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.


 


UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), 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 IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.


 


TRANSFERS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OR PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.


 


A-1

















 


NAVISTAR
INTERNATIONAL CORPORATION


 


71/2%
Senior Note due 2011


 


No. 1

$250,000,000


 


ISIN:  US63934EAH18


CUSIP:  63934EAH1


 


NAVISTAR
INTERNATIONAL CORPORATION, a Delaware corporation (the “Company,” which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay Cede & Co., or its registered assigns, the
principal sum indicated on the Schedule of Increases or Decreases in
Security attached hereto, on June 15, 2011.  This is a Global Security under the Indenture hereinafter
referred to.


 


Interest Payment
Dates: June 15 and December 15, commencing December 15, 2004.


 


Regular Record
Dates: June 1 and December 1.


 


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


 


A-2

















 


IN WITNESS
WHEREOF, the Company has caused this Security to be executed manually or by
facsimile by its duly authorized officers.


 


	
  Dated:   June 2, 2004

  	
  NAVISTAR INTERNATIONAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Terry M. Endsley

  
	
   

  	
  Title:

  	
  Vice President
  and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Certificate of
  Authentication:

  	
   

  
	
   

  	
   

  
	
  This is one of
  the Securities described in the within-mentioned Indenture.

  
	
   

  	
   

  
	
  Dated:   June 2, 2004

  	
  BNY MIDWEST
  TRUST

  COMPANY, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					



 


A-3

















 


[REVERSE SIDE OF
SECURITY]


 


NAVISTAR
INTERNATIONAL CORPORATION


 


71/2%
Senior Note due 2011


 


Capitalized terms
used herein but not defined shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.


 


1.                                       Principal
and Interest.


 


Navistar
International Corporation, a Delaware corporation (such corporation and its
successors and assigns under the Indenture hereinafter referred to, being
herein called the “Company”), promises to pay interest on the principal
amount of this Security at a rate of 71/2% per annum from
the date of issuance until repayment at maturity or redemption. The Company
will pay interest semiannually on June 15 and December 15 of each
year (each, an “Interest Payment Date”), commencing December 15,
2004.  Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issue Date. 
Interest will be computed on the basis of a 360-day year of twelve
30-day months.


 


The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand, to the extent permitted by law, at the rate borne by this Security; it
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent permitted by law.


 


2.                                       Method
of Payment.


 


The Company will
pay interest on the principal amount of the Securities as provided above on
each Interest Payment Date, commencing December 15, 2004, to the persons
which are Holders (as reflected in the Register at the close of business on the
June 1 or December 1 immediately preceding the Interest Payment
Date), in each case, even if the Security is canceled on registration of transfer
or registration of exchange after such record date; provided that, with respect
to the payment of principal, the Company will make payment to the Holder that
surrenders this Security to a Paying Agent on or after June 15, 2011.


 


The Company will
pay principal, premium, if any, and interest in U.S. Dollars.  If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.


 


Principal of, and
premium, if any, and interest on, Definitive Securities will be payable, and
Definitive Securities may be presented for registration of transfer or
exchange, at the office or agency of the Company maintained for such purpose.  Principal of, and premium, if any,


 


A-4

















 


and interest on,
Global Securities will be payable by the Company through the Trustee to the
Book-Entry Depositary in immediately available funds.  Holders of Definitive Securities will be entitled to receive
interest payments by wire transfer in immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 days prior to the applicable Interest Payment
Date.  Such wire instructions, upon
receipt by the Trustee, shall remain in effect until revoked by such
Holder.  If wire instructions have not
been received by the Trustee with respect to any Holder of a Definitive
Security, payment of interest may be made by check in immediately available
funds mailed to such Holder at the address set forth upon the Register
maintained by the Registrar.


 


3.                                       Paying
Agent and Registrar.


 


Initially, BNY
Midwest Trust Company, the Trustee under the Indenture, will act as Trustee,
Paying Agent and Registrar.  The Company
may appoint and change the Paying Agent or transfer agent without notice to any
Holder; provided that it will at
all times maintain a Paying Agent in The City of New York.  The Company or any wholly owned Subsidiary
may act as a Paying Agent, Registrar, co-registrar or transfer agent, subject
to certain limitations.


 


4.                                       Indenture.


 


The Company issued
the Initial Securities under an Indenture, dated as of June 2, 2004 (the “Original
Indenture”), as supplemented by the First Supplemental Indenture dated as
of the same date (the “Supplemental Indenture” and together with the
Original Indenture, the “Indenture”) among the Company, International
Truck and Engine Corporation (the “Guarantor”) and BNY Midwest Trust
Company, as trustee (the “Trustee”). 
The terms of the Initial Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (“TIA”).  The Initial Securities are subject to all such terms, and Holders
are referred to the Indenture and the TIA for a statement of all such
terms.  To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this
Security and the terms of the Indenture, the terms of the Indenture shall
control.


 


5.                                       Subsidiary
Guarantees.


 


The Securities are
guaranteed by the Guarantor, subject to the release of such guarantees under
certain circumstances, as provided in the Indenture.  The Securities may after the date hereof be entitled to certain
additional Subsidiary Guarantees made for the benefit of the Holders.


 


6.                                       [Reserved]


 


7.                                       Optional
Redemption.


 


Except as
described in this Section 7, the Securities are not redeemable until
June 15, 2008.  On and after
June 15, 2008, the Company may redeem all or, from time to time, a part of
the Securities upon not less than 30 nor more than 60 days’ notice, at the
following Redemption


 


A-5

















 


Prices (expressed
as a percentage of principal amount) plus accrued and unpaid interest on the
Securities, if any, to the applicable Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant Interest Payment Date), if redeemed during the twelve-month period
beginning on June 15 of the years indicated below:


 


	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  103.75

  	
  %

  
	
  2009

  	
   

  	
  101.875

  	
  %

  
	
  2010 and thereafter

  	
   

  	
  100.00

  	
  %

  



 


Prior to
June 15, 2007, the Company may on any one or more occasions redeem up to
35% of the original principal amount of the Securities with the Net Cash
Proceeds of one or more Public Equity Offerings at a redemption price of 107.5%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date); provided that


 


(1)                                  at
least 65% of the original principal amount of the Securities remains
outstanding after each such redemption; and


 


(2)                                  the
redemption occurs within 60 days after the closing of such Public Equity
Offering.


 


If the optional
redemption date is on or after an interest record date and on or before the
related Interest Payment Date, the accrued and unpaid interest, if any, will be
paid to the Person in whose name the Securities is registered at the close of
business, on such record date, and no additional interest will be payable to
holders whose Securities will be subject to redemption by the Company.


 


In the case of any
partial redemption, selection of the Securities for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed or, if the
Securities are not so listed, then on a pro
rata basis, by lot or by such other method as the Trustee shall deem
to be fair and appropriate (and in such manner as complies with applicable
legal requirements) provided that (i) Securities and portions thereof that the
Trustee selects shall be in amounts of $1,000 or an integral multiple of $1,000
and (ii) no such partial redemption shall reduce the portion of the principal
amount of a Security not redeemed to less than $1,000.  If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the
portion of the principal amount thereof to be redeemed.  A new Security in principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. 
On and after the Redemption Date, interest will cease to accrue on
Securities or portions thereof called for redemption as long as the Company has
deposited with the Trustee or with a Paying Agent (or, if applicable, segregated
and held in trust) money sufficient to pay the Redemption Price of, and accrued
interest on, all the Securities which are to be redeemed on such date.


 


A-6

















 


8.                                       Mandatory
Redemption.


 


Except as set
forth in Section 9 below, the Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Securities.


 


9.                                       Repurchase
at Option of Holder.


 


If a Change of
Control occurs, each Holder shall have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple of $1,000)
of that Holder’s Securities pursuant to the Change of Control offer on the
terms set forth in the Supplemental Indenture (a “Change of Control Offer”).  In the Change of Control Offer, the Company
shall offer a Change of Control Payment in cash equal to 101% of the aggregate
principal amount of Securities repurchased plus accrued and unpaid interest and
liquidated damages, if any, on the Securities repurchased to the date of
purchase.  Within 30 days following any
Change of Control, the Company shall mail a notice to each Holder as set forth
in the Supplemental Indenture.


 


In the event of
certain Asset Dispositions and subject to certain limitations set forth in the
Supplemental Indenture, the Company shall make an Offer to Purchase the
outstanding applicable issue of Securities at a purchase price in cash equal to
100% of their principal amount plus any accrued and unpaid interest thereon to
the Purchase Date.


 


10.                                 Denominations;
Transfer; Exchange.


 


The Securities are
in registered form without coupons in denominations of $1,000 of principal
amount and integral multiples of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Securities in accordance with the
Supplemental Indenture.  The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and the Company may require a Holder to pay any taxes
and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer
or exchange of any Securities selected for redemption.  Also, it need not register the transfer or
exchange of any Securities for a period beginning at the opening of 15 calendar
days before the day of any selection of Securities for redemption under
Section 7 hereof and ending at the close of business on the day of
selection.


 


11.                                 Persons
Deemed Owners.


 


The registered
Holder of a Security shall be treated as its owner for all purposes.


 


12.                                 Unclaimed
Money.


 


If money for the
payment of principal, premium, if any, or interest remains unclaimed for two
years, the Trustee and the Paying Agent will pay the money back to the Company
at its request.  After that, Holders
entitled to the money must look to the Company for payment, unless an abandoned
property law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.


 


A-7

















 


13.                                 Discharge
Prior to Redemption or Maturity.


 


Subject to certain
conditions contained in the Supplemental Indenture, at any time some or all of
the obligations under the Securities, the Subsidiary Guarantees and the
Supplemental Indenture may be terminated if the Company deposits with the
Trustee money and/or Government Obligations sufficient to pay the principal of,
and premium, if any, and interest on, the Securities to redemption or stated
maturity, as the case may be.


 


14.                                 Amendment;
Supplement; Waiver.


 


Subject to certain
exceptions as set forth in the Indenture, with the written consent of the
Holders of a majority of the aggregate principal amount of the Outstanding
Securities adversely affected by such supplemental indenture, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee may enter into
an indenture or supplemental indentures to add any provisions to or to change
or eliminate any provisions of the Indenture or of any other supplemental
indenture or to modify the rights of the Holders of such Securities.  Without the consent of any Holders, the
Company, when authorized by or pursuant to a Board Resolution and the Trustee
at any time and from time to time, may enter into supplemental indentures, in
form reasonably satisfactory to the Trustee, to, among other things, cure any
ambiguity, omission, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.  The Holders of a majority in aggregate
principal amount of Outstanding Securities by written notice to the Trustee may
waive on behalf of the Holders of all Securities a past Default or Event of
Default and its consequences except (i) a Default or Event of Default in the
payment of the principal of, or premium, if any, or interest, if any, on any
Security or (ii) an Event of Default resulting from the breach of a covenant or
provision hereof which pursuant to the Indenture cannot be amended or modified
without the consent of the Holder of each Outstanding Security adversely
affected.


 


15.                                 Restrictive
Covenants.


 


The Supplemental
Indenture imposes certain limitations on the ability of the Company and its
Restricted Subsidiaries, among other things, to create Liens, incur
Indebtedness, make Restricted Payments and make Asset Dispositions. In addition,
the Supplemental Indenture imposes certain limitations on the ability of the
Company to engage in mergers and consolidations or transfers of all or
substantially all of its assets. The Supplemental Indenture requires the
Company to deliver to the Trustee, within 120 days after the end of each fiscal
year of the Company (beginning with the fiscal year next following the Issue
Date), a certificate from an executive officer, as to his or her knowledge of
the Company’s compliance with all conditions and covenants under the Indenture.


 


After such time
as: (i) the Securities have been assigned an Investment Grade rating by both
Rating Agencies; and (ii) no Default under the Indenture has occurred and is
continuing, and notwithstanding that the Securities may later cease to have an
Investment Grade rating by either or both Rating Agencies the Company and its
Restricted Subsidiaries will not be subject to certain covenants.


 


A-8

















 


16.                                 Defaults
and Remedies.


 


The Supplemental
Indenture provides that each of the following events constitutes an Event of
Default with respect to this Security: (i) default in the payment of principal
of, or premium, if any, on any Security when due at maturity, upon repurchase,
upon acceleration or otherwise, including, without limitation, failure of the
Company to repurchase any Security on the date required following a Change of
Control; (ii) default in the payment of any installment of interest on any
Security when due and continuance of such Default for 30 days or more;
(iii) failure to observe, perform or comply with any of the provisions of the
covenant imposing certain limitations on the ability of the Company to engage
in mergers and consolidations or transfers of all or substantially all of its
assets; (iv) default (other than a default set forth in clauses (i),
(ii) and (iii) above) in the performance of, or breach of, any other
covenant or warranty of the Company or of any Restricted Subsidiary in the
Indenture, or in the Notes and failure to remedy such default or breach within
a period of 30 days after written notice from the Trustee or the Holders
of at least 25% in aggregate principal amount of the then outstanding Notes;
(v) default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any Subsidiary of the Company (or the payment
of which is guaranteed by the Company or any Restricted Subsidiary of the Company),
which default is caused by a failure to pay principal of or premium, if any, on
such Indebtedness upon its stated maturity or which default results in the
acceleration of such Indebtedness prior to its express maturity and the
principal amount of any such Indebtedness, together with the principal amount
of any other such Indebtedness the maturity of which has been so accelerated,
aggregates $50.0 million or more and such acceleration has not been
rescinded or annulled or such Indebtedness discharged in full within
30 days; (vi) the entry by a court of competent jurisdiction of one or
more judgments, orders or decrees against the Company or any Subsidiary of the
Company or any of their respective property or assets in an aggregate amount in
excess of $50.0 million, which judgments, orders or decrees have not been
vacated, discharged, satisfied or stayed pending appeal within 30 days
from the entry thereof and with respect to which legal enforcement proceedings
have been commenced; or (vii) certain events of bankruptcy, insolvency or
reorganization involving the Company or any Material Subsidiary of the Company.


 


If an Event of
Default occurs and is continuing, the principal amount hereof may be declared
due and payable in the manner and with the effect provided in the
Indenture.  Upon such a declaration,
such principal amount, premium, if any, and accrued and unpaid interest will
become immediately due and payable.


 


If an Event of
Default described in clause (vii) above occurs, all unpaid principal of, premium,
if any, and accrued and unpaid interest on the Securities then outstanding will
ipso facto become  due and payable.


 


17.                                 Trustee
Dealings with the Company.


 


Subject to certain
limitations set forth in the Indenture, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from and
perform


 


A-9

















 


services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.


 


18.                                 No
Recourse Against Others.


 


An incorporator,
director, officer, employee, stockholder or controlling person, as such, of
each of the Company or any Subsidiary Guarantors shall not have any liability
for any obligations of the Company under the Securities, the Indenture or the
Subsidiary Guarantees or for any claim based on, in respect of or by reason of
such obligations or their creation.  By
accepting a Security, each Securityholder shall waive and release all such
liability.  The waiver and release shall
be part of the consideration for the issue of the Securities.


 


19.                                 Authentication.


 


This Security
shall not be valid until the Trustee (or authenticating agent) executes the
certificate of authentication on the other side of this Security.


 


20.                                 Abbreviations.


 


Customary
abbreviations may be used in the name of a Holder or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).


 


21.                                 CUSIP
Numbers.


 


Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures the Company has caused CUSIP numbers to be printed on the Securities
and has directed the Trustee to use CUSIP numbers in notices of redemption as a
convenience to Securityholders.  No
representation is made as to the accuracy of such numbers either as printed on the
Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.


 


22.                                 GOVERNING
LAW.


 


THIS
SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK.  THE
COMPANY AND EACH SUBSIDIARY GUARANTOR AGREES TO SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK, COUNTY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY.


 


23.                                 Successor
Corporation.


 


In the event a
successor corporation assumes all the obligations of the Company under the
Securities and the Indenture, pursuant to the terms thereof, the Company will
be released from all such obligations.


 


A-10

















 


The Company will
furnish to any Holder upon written request and without charge to the Holder a
copy of the Indenture which has in it the text of this Security.  Requests may be made to:


 


Navistar International Corporation

4201 Winfield Road

Warrenville, Illinois 60555

Attn: Vice President and Treasurer


 


A-11

















 


NOTATION OF
GUARANTEE


 


For value
received, the Guarantor (which term includes any successor Person under the
Supplemental Indenture) has unconditionally guaranteed, to the extent set forth
in the Indenture and subject to the provisions in the Indenture, dated as of
June 2, 2004 (the “Original Indenture”), as supplemented by the
First Supplemental Indenture dated as of the same date (the “Supplemental
Indenture,” and together with the Original Indenture, the “Indenture”)
among Navistar International Corporation, the Guarantor party thereto and BNY
Midwest Trust Company, as trustee (the “Trustee”), (i) the due and
punctual payment of the principal of, premium, if any, and interest in full on
the Securities (as defined in the Indenture), when and as the same shall become
due and payable whether at Stated Maturity, by declaration of acceleration or
otherwise, (ii) the due and punctual payment of interest on overdue
principal of, premium, if any, and interest in full on the Securities, to the
extent permitted by law, and (iii) the due and punctual performance of all
other Obligations of the Company and the Guarantor to the Holders or the
Trustee, including, without limitation, the payment of fees, expenses,
indemnification or other amounts, all in accordance with the terms of the
Securities and the Indenture.  In case
of the failure of the Company to punctually to make any such principal or
interest payment or the failure of the Company to perform any such other
Obligation, the Guarantor hereby agrees to cause any such payment to be made
punctually when and as the same shall become due and payable, whether at Stated
Maturity, by acceleration or otherwise. 
The Obligations of the Guarantor to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article X of the Supplemental Indenture and reference is hereby made to
the Indenture for the precise terms of the Guarantee.  The obligations of the Guarantor will be released only in
accordance with the provisions of Article X of the Supplemental Indenture.


 


	
   

  	
  INTERNATIONAL TRUCK AND ENGINE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Terry M. Endsley

  
	
   

  	
  Title:

  	
  Vice President and Treasurer

  
					



 


A-12

















 


ASSIGNMENT FORM


 


To assign this
Security, fill in the form below and have your signature guaranteed: (I) or
(we) assign and transfer this Security to:


 


(Insert assignee’s
soc. sec. or tax I.D. no.)


 


(Print or type
assignee’s name, address and zip code)


 


and irrevocably
appoint to transfer this Security on the books of the Company.  The agent may substitute another to act for
him.


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Your Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Print your name
  exactly as it appears on the

  face of this Security)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Sign your name
  exactly as it appears on the

  face of this Security)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  	
   

  	
   

  
									



 












*                                         Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).


 


A-13

















 


OPTION OF HOLDER
TO ELECT PURCHASE


 


If you want to
elect to have this Security purchased by the Company pursuant to
Section 3.13 or Section 5.9 of the Supplemental Indenture, please
check the appropriate box:


 


	
  o  Section 3.13

  	
   

  	
  o  Section 5.9

  



 


If you want to
elect to have only part of the Security purchased by the Company pursuant to
Section 3.13 or Section 5.9 of the Supplemental Indenture, state the
amount you elect to have purchased:


 


	
   

  	
  $

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
  (Sign exactly as your name appears on

  the face of this Note)

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax
  Identification No.:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guarantee*:

  	
   

  	
   

  
						



 












*                                         Participant
in a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).


 


A-14

















 


SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY


 


The initial
principal amount of this Global Security is $250,000,000.00.  The following increases or decreases in this
Global Security have been made:


 


	
  Date of

  Exchange

  	
   

  	
  Amount of
  decrease in

  Principal Amount of

  this Global Security

  	
   

  	
  Amount of
  increases in

  Principal Amount of

  this Global Security

  	
   

  	
  Principal
  Amount of

  this Global Security

  following such

  decrease (or increase)

  	
   

  	
  Signature
  of

  authorized officer of

  Trustee or

  Depositary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


A-15