Document:

Exhibit 4.3

 

MORGANS HOTEL GROUP CO.

 

as Primary Obligor

 

and

 

[NAME OF TRUSTEE]

 

as Trustee

 

 

INDENTURE

 

 

Dated as of                       ,
200  

 

Subordinated Debt Securities

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE ONE
  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

  	
  1

  
	
   

  	
   

  
	
  SECTION 101. Definitions

  	
  1

  
	
  Act

  	
  2

  
	
  Additional Amounts

  	
  2

  
	
  Affiliate

  	
  2

  
	
  Authenticating Agent

  	
  2

  
	
  Authorized Newspaper

  	
  2

  
	
  Bankruptcy Law

  	
  2

  
	
  Board of Directors

  	
  2

  
	
  Board Resolution

  	
  2

  
	
  Business Day

  	
  3

  
	
  Capital Stock

  	
  3

  
	
  Clearstream

  	
  3

  
	
  Commission

  	
  3

  
	
  Common Depository

  	
  3

  
	
  Common Shares

  	
  3

  
	
  Company

  	
  3

  
	
  Company Request

  	
  3

  
	
  Company Order

  	
  3

  
	
  Conversion Event

  	
  3

  
	
  Corporate Trust Office

  	
  4

  
	
  corporation

  	
  4

  
	
  coupon

  	
  4

  
	
  currency

  	
  4

  
	
  Custodian

  	
  4

  
	
  Debt

  	
  4

  
	
  Defaulted Interest

  	
  4

  
	
  Dollar

  	
  5

  
	
  $

  	
  5

  
	
  DTC

  	
  5

  
	
  Euroclear

  	
  5

  
	
  Event of Default

  	
  5

  
	
  Exchange Act

  	
  5

  
	
  Foreign Currency

  	
  5

  
	
  GAAP

  	
  5

  
	
  Government Obligations

  	
  5

  
	
  Guarantee

  	
  5

  
	
  Guarantor

  	
  6

  
	
  Holder

  	
  6

  
	
  Indenture

  	
  6

  

 

i

 

	
  Indexed Security

  	
  6

  
	
  interest

  	
  6

  
	
  Interest Payment Date

  	
  6

  
	
  Make-Whole Amount

  	
  6

  
	
  Maturity

  	
  7

  
	
  Officers’ Certificate

  	
  7

  
	
  Opinion of Counsel

  	
  7

  
	
  Original Issue Discount Security

  	
  7

  
	
  Outstanding

  	
  7

  
	
  Paying Agent

  	
  8

  
	
  Person

  	
  8

  
	
  Place of Payment

  	
  8

  
	
  Predecessor Security

  	
  8

  
	
  Preferred Shares

  	
  9

  
	
  Recourse Indebtedness

  	
  9

  
	
  Redemption Date

  	
  9

  
	
  Redemption Price

  	
  9

  
	
  Registered Security

  	
  9

  
	
  Regular Record Date

  	
  9

  
	
  Reinvestment Rate

  	
  9

  
	
  Repayment Date

  	
  10

  
	
  Representative

  	
  10

  
	
  Responsible Officer

  	
  10

  
	
  Secured Debt

  	
  10

  
	
  Securities Act

  	
  10

  
	
  Security

  	
  10

  
	
  Security Register

  	
  10

  
	
  Security Registrar

  	
  10

  
	
  Senior Debt

  	
  11

  
	
  Significant Subsidiary

  	
  11

  
	
  Special Record Date

  	
  11

  
	
  Statistical Release

  	
  11

  
	
  Subsidiary

  	
  11

  
	
  Trust Indenture Act

  	
  11

  
	
  TIA

  	
  11

  
	
  Trustee

  	
  11

  
	
  United States

  	
  12

  
	
  United States person

  	
  12

  
	
  Yield to Maturity

  	
  12

  
	
  SECTION 102. Compliance
  Certificates and Opinions

  	
  12

  
	
  SECTION 103. Form of Documents
  Delivered to Trustee

  	
  13

  
	
  SECTION 104. Acts of Holders

  	
  13

  
	
  SECTION 105. Notices, etc., to
  Trustee and Company

  	
  15

  
	
  SECTION 106. Notice to Holders;
  Waiver

  	
  15

  
	
  SECTION 107. Effect of Headings and
  Table of Contents

  	
  16

  

 

ii

 

	
  SECTION 108. Successors and Assigns

  	
  16

  
	
  SECTION 109. Separability Clause

  	
  17

  
	
  SECTION 110. Benefits of Indenture

  	
  17

  
	
  SECTION 111. Governing Law

  	
  17

  
	
  SECTION 112. Legal Holidays

  	
  17

  
	
  SECTION 113. Judgment Currency

  	
  17

  
	
  SECTION 114. No Personal Liability

  	
  18

  
	
   

  	
   

  
	
  ARTICLE TWO
      SECURITIES FORMS

  	
  18

  
	
   

  	
   

  
	
  SECTION 202. Form of Trustee’s
  Certificate of Authentication

  	
  18

  
	
  SECTION 203. Securities Issuable in
  Global Form

  	
  19

  
	
   

  	
   

  
	
  ARTICLE THREE
  THE SECURITIES

  	
  20

  
	
   

  	
   

  
	
  SECTION 301. Amount Unlimited;
  Issuable in Series

  	
  20

  
	
  SECTION 302. Denominations

  	
  23

  
	
  SECTION 303. Execution,
  Authentication, Delivery and Dating

  	
  24

  
	
  SECTION 304. Temporary Securities

  	
  26

  
	
  SECTION 305. Registration,
  Registration of Transfer and Exchange

  	
  28

  
	
  SECTION 306. Mutilated, Destroyed,
  Lost and Stolen Securities

  	
  32

  
	
  SECTION 307. Payment of Interest;
  Interest Rights Preserved

  	
  33

  
	
  SECTION 308. Persons Deemed Owners

  	
  35

  
	
  SECTION 309. Cancellation

  	
  35

  
	
  SECTION 310. Computation of
  Interest

  	
  36

  
	
   

  	
   

  
	
  ARTICLE FOUR
  SATISFACTION AND DISCHARGE

  	
  36

  
	
   

  	
   

  
	
  SECTION 401. Satisfaction and
  Discharge of Indenture

  	
  36

  
	
  SECTION 402. Application of Trust
  Funds

  	
  37

  
	
   

  	
   

  
	
  ARTICLE FIVE
  REMEDIES

  	
  38

  
	
   

  	
   

  
	
  SECTION 501. Events of Default

  	
  38

  
	
  SECTION 502. Acceleration of
  Maturity; Rescission and Annulment

  	
  40

  
	
  SECTION 503. Collection of
  Indebtedness and Suits for Enforcement by Trustee

  	
  41

  
	
  SECTION 504. Trustee May File
  Proofs of Claim

  	
  42

  
	
  SECTION 505. Trustee May Enforce
  Claims Without Possession of Securities or Coupons

  	
  42

  
	
  SECTION 506. Application of Money
  Collected

  	
  43

  
	
  SECTION 507. Limitation on Suits

  	
  43

  
	
  SECTION 508. Unconditional Right of
  Holders to Receive Principal, Premium, if any, Interest and Additional
  Amounts

  	
  44

  
	
  SECTION 509. Restoration of Rights
  and Remedies

  	
  44

  
	
  SECTION 510. Rights and Remedies
  Cumulative

  	
  44

  
	
  SECTION 511. Delay or Omission Not
  Waiver

  	
  44

  
	
  SECTION 512. Control by Holders of
  Securities

  	
  45

  
	
  SECTION 513. Waiver of Past
  Defaults

  	
  45

  
	
  SECTION 514. Waiver of Usury, Stay
  or Extension Laws

  	
  45

  

 

iii

 

	
  SECTION 515. Undertaking for Costs

  	
  46

  
	
   

  	
   

  
	
  ARTICLE SIX THE
  TRUSTEE

  	
  46

  
	
   

  	
   

  
	
  SECTION 601. Notice of Defaults

  	
  46

  
	
  SECTION 602. Certain Rights of
  Trustee

  	
  46

  
	
  SECTION 603. Not Responsible for
  Recitals or Issuance of Securities

  	
  48

  
	
  SECTION 604. May Hold Securities

  	
  48

  
	
  SECTION 605. Money Held in Trust

  	
  48

  
	
  SECTION 606. Compensation and
  Reimbursement

  	
  48

  
	
  SECTION 607. Eligibility of
  Trustee; Conflicting Interests

  	
  49

  
	
  SECTION 608. Resignation and
  Removal; Appointment of Successor

  	
  49

  
	
  SECTION 609. Acceptance of Appointment
  by Successor

  	
  51

  
	
  SECTION 610. Merger, Conversion,
  Consolidation or Succession to Business

  	
  52

  
	
  SECTION 611. Appointment of
  Authenticating Agent

  	
  52

  
	
   

  	
   

  
	
  ARTICLE SEVEN
  HOLDERS’ LISTS AND REPORTS

  	
  54

  
	
   

  	
   

  
	
  SECTION 701. Disclosure of Names
  and Addresses of Holders

  	
  54

  
	
  SECTION 702. Reports by Trustee

  	
  54

  
	
  SECTION 703. Company to Furnish
  Trustee Names and Addresses of Holders

  	
  54

  
	
   

  	
   

  
	
  ARTICLE EIGHT
  CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE

  	
  54

  
	
   

  	
   

  
	
  SECTION 801. Consolidation or
  Merger of Company and Sale, Lease or Conveyance Permitted Subject to Certain
  Conditions

  	
  54

  
	
  SECTION 802. Rights and Duties of
  Successor Corporation

  	
  55

  
	
  SECTION 803. Officers’ Certificate
  and Opinion of Counsel

  	
  55

  
	
   

  	
   

  
	
  ARTICLE NINE
  SUPPLEMENTAL INDENTURES

  	
  56

  
	
   

  	
   

  
	
  SECTION 901. Supplemental Indentures
  Without Consent of Holders

  	
  56

  
	
  SECTION 902. Supplemental
  Indentures with Consent of Holders

  	
  57

  
	
  SECTION 903. Execution of
  Supplemental Indentures

  	
  58

  
	
  SECTION 904. Effect of Supplemental
  Indentures

  	
  58

  
	
  SECTION 905. Conformity with Trust
  Indenture Act

  	
  59

  
	
  SECTION 906. Reference in
  Securities to Supplemental Indentures

  	
  59

  
	
   

  	
   

  
	
  ARTICLE TEN
  COVENANTS

  	
  59

  
	
   

  	
   

  
	
  SECTION 1001. Payment of Principal,
  Premium, if any, Interest and Additional Amounts

  	
  59

  
	
  SECTION 1002. Maintenance of Office
  or Agency

  	
  59

  
	
  SECTION 1003. Money for Securities
  Payments to Be Held in Trust

  	
  61

  
	
  SECTION 1004. Omitted

  	
  62

  
	
  SECTION 1005. Existence

  	
  62

  
	
  SECTION 1006. Maintenance of
  Properties

  	
  62

  
	
  SECTION 1007. Insurance

  	
  63

  
	
  SECTION 1008. Payment of Taxes and
  Other Claims

  	
  63

  

 

iv

 

	
  SECTION 1009. Commission and Other
  Reports to the Trustee

  	
  63

  
	
  SECTION 1010. Statement as to
  Compliance

  	
  64

  
	
  SECTION 1011. Additional Amounts

  	
  64

  
	
  SECTION 1012. Waiver of Certain
  Covenants

  	
  65

  
	
   

  	
   

  
	
  ARTICLE ELEVEN
  REDEMPTION OF SECURITIES

  	
  65

  
	
   

  	
   

  
	
  SECTION 1101. Applicability of
  Article

  	
  65

  
	
  SECTION 1102. Election to Redeem;
  Notice to Trustee

  	
  65

  
	
  SECTION 1103. Selection by Trustee
  of Securities to Be Redeemed

  	
  66

  
	
  SECTION 1104. Notice of Redemption

  	
  66

  
	
  SECTION 1105. Deposit of Redemption
  Price

  	
  67

  
	
  SECTION 1106. Securities Payable on
  Redemption Date

  	
  68

  
	
  SECTION 1107. Securities Redeemed
  in Part

  	
  69

  
	
   

  	
   

  
	
  ARTICLE TWELVE
  SINKING FUNDS

  	
  69

  
	
   

  	
   

  
	
  SECTION 1201. Applicability of
  Article

  	
  69

  
	
  SECTION 1202. Satisfaction of
  Sinking Fund Payments with Securities

  	
  69

  
	
  SECTION 1203. Redemption of
  Securities for Sinking Fund

  	
  70

  
	
   

  	
   

  
	
  ARTICLE
  THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS

  	
  70

  
	
   

  	
   

  
	
  SECTION 1301. Applicability of
  Article

  	
  70

  
	
  SECTION 1302. Repayment of
  Securities

  	
  70

  
	
  SECTION 1303. Exercise of Option

  	
  70

  
	
  SECTION 1304. When Securities
  Presented for Repayment Become Due and Payable

  	
  71

  
	
  SECTION 1305. Securities Repaid in
  Part

  	
  72

  
	
   

  	
   

  
	
  ARTICLE
  FOURTEEN DEFEASANCE AND COVENANT DEFEASANCE

  	
  72

  
	
   

  	
   

  
	
  SECTION 1401. Applicability of
  Article; Company’s Option to Effect Defeasance or Covenant Defeasance

  	
  72

  
	
  SECTION 1402. Defeasance and
  Discharge

  	
  73

  
	
  SECTION 1403. Covenant Defeasance

  	
  73

  
	
  SECTION 1404. Conditions to
  Defeasance or Covenant Defeasance

  	
  74

  
	
  SECTION 1405. Deposited Money and
  Government Obligations to Be Held in Trust; Other Miscellaneous Provisions

  	
  75

  
	
   

  	
   

  
	
  ARTICLE FIFTEEN
  MEETINGS OF HOLDERS OF SECURITIES

  	
  76

  
	
   

  	
   

  
	
  SECTION 1501. Purposes for Which
  Meetings May Be Called

  	
  76

  
	
  SECTION 1502. Call, Notice and
  Place of Meetings

  	
  77

  
	
  SECTION 1503. Persons Entitled to
  Vote at Meetings

  	
  77

  
	
  SECTION 1504. Quorum; Action

  	
  77

  
	
  SECTION 1505. Determination of
  Voting Rights; Conduct and Adjournment of Meetings

  	
  78

  
	
  SECTION 1506. Counting Votes and
  Recording Action of Meetings

  	
  79

  
	
   

  	
   

  
	
  ARTICLE SIXTEEN
  GUARANTEE OF SECURITIES

  	
  80

  

 

v

 

	
  SECTION 1601. Guarantee

  	
  80

  
	
  SECTION 1602. Future Guarantors

  	
  83

  
	
  SECTION 1603. Delivery of Guarantee

  	
  83

  
	
   

  	
   

  
	
  ARTICLE
  SEVENTEEN SUBORDINATION

  	
  83

  
	
   

  	
   

  
	
  SECTION 1701. Agreement to
  Subordinate

  	
  83

  
	
  SECTION 1702. Liquidation; Dissolution;
  Bankruptcy

  	
  83

  
	
  SECTION 1703. Default on Senior
  Debt

  	
  84

  
	
  SECTION 1704. Acceleration of
  Securities

  	
  84

  
	
  SECTION 1705. When Distribution
  Must Be Paid Over

  	
  84

  
	
  SECTION 1706. Notice by Company

  	
  84

  
	
  SECTION 1707. Subrogation

  	
  84

  
	
  SECTION 1708. Relative Rights

  	
  84

  
	
  SECTION 1709. Subordination May Not
  Be Impaired by Company

  	
  85

  
	
  SECTION 1710. Distribution or
  Notice to Representative

  	
  85

  
	
  SECTION 1711. Rights of Trustee and
  Paying Agent

  	
  85

  
	
   

  	
   

  
	
  SIGNATURES

  	
   

  
	
  EXHIBIT A - FORMS OF
  CERTIFICATION

  	
   

  

 

vi

 

RECONCILIATION AND TIE BETWEEN

TRUST INDENTURE ACT OF 1939 (THE “1939 ACT”)
AND INDENTURE

 

	
  1939 Act Section

  	
   

  	
  Indenture Section

  
	
   

  	
   

  	
   

  
	
  Section 310(a)(1)

  	
   

  	
  607

  
	
  (a)(2)

  	
   

  	
  607

  
	
  (b)

  	
   

  	
  607, 608

  
	
  Section 312(c)

  	
   

  	
  701

  
	
  Section 313(a)

  	
   

  	
  702

  
	
  (c)

  	
   

  	
  702

  
	
  Section 314(a)

  	
   

  	
  1009

  
	
  (a)(4)

  	
   

  	
  1010

  
	
  (c)(1)

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
  102

  
	
  (e)

  	
   

  	
  102

  
	
  Section 315(b)

  	
   

  	
  601

  
	
  Section 316(a) (last
  sentence)

  	
   

  	
  101

  
	
  (“Outstanding”)

  	
   

  	
   

  
	
  (a)(1)(A)

  	
   

  	
  502, 512

  
	
  (a)(1)(B)

  	
   

  	
  513

  
	
  (b).

  	
   

  	
  508

  
	
  Section 317(a)(1)

  	
   

  	
  503

  
	
  (a)(2)

  	
   

  	
  504

  
	
  Section 318(a)

  	
   

  	
  111

  
	
  (c)

  	
   

  	
  111

  

 

NOTE: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.

 

Attention should also be directed to Section 318(c) of the 1939 Act,
which provides that the provisions of Sections 310 to and including 317 of the
1939 Act are a part of and govern every qualified indenture, whether or not
physically contained therein.

 

vii

 

INDENTURE, dated
as of                           ,
200  , among MORGANS HOTEL GROUP CO., a Delaware corporation, as
primary obligor (hereinafter called the “Company”), having its principal
office at 475 Tenth Avenue, New York, New York 10018, and [NAME OF TRUSTEE], a                 
trust company, as trustee (hereinafter called the “Trustee”), having its
Corporate Trust Office at                           ,
[New York, New York],          ,
and any Person becoming a Guarantor hereunder.

 

RECITALS

 

The Company deems
it necessary to issue from time to time for its lawful purposes subordinated
debt securities (hereinafter called the “Securities”) evidencing its
unsecured and subordinated indebtedness, and has duly authorized the execution
and delivery of this Indenture to provide for the issuance from time to time of
the Securities, unlimited as to principal amount, to bear interest at the rates
or formulas, to mature at such times and to have such other provisions as shall
be fixed as hereinafter provided.

 

This Indenture is
subject to the provisions of the Trust Indenture Act of 1939, as amended, that
are deemed to be incorporated into this Indenture and shall, to the extent
applicable, be governed by such provisions.

 

All things
necessary to make this Indenture a valid agreement of the Company and each
Guarantor, if any, in accordance with its terms, have been done.

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in
consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities, as follows:

 

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or
unless the context otherwise requires:

 

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

 

(2)           all other terms used herein which are
defined in the TIA, either directly or by reference therein, have the meanings
assigned to them therein, and the terms “cash transaction” and “self-liquidating
paper”, as used in TIA Section 311, shall have the meanings assigned to
them in the rules of the Commission adopted under the TIA;

 

 

(3)           all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP; and

 

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

 

“Act,” when
used with respect to any Holder, has the meaning specified in Section 104.

 

“Additional
Amounts” means any additional amounts which are required by a Security or
by or pursuant to a Board Resolution, under circumstances specified therein, to
be paid by the Company in respect of certain taxes imposed on certain Holders
and which are owing to such Holders.

 

“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or 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 the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.

 

“Authenticating
Agent” means any authenticating agent appointed by the Trustee pursuant to
Section 611.

 

“Authorized
Newspaper” means a newspaper, printed in the English language or in an
official language of the country of publication, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and
of general circulation in each place in connection with which the term is used
or in the financial community of each such place. Whenever successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different Authorized Newspapers in
the same city meeting the foregoing requirements and in each case on any
Business Day.

 

“Bankruptcy Law”
has the meaning specified in Section 501.

 

“Bearer
Security” means any Security established pursuant to Section 201 which is
payable to bearer.

 

“Board of
Directors” means the board of directors of the Company or a Guarantor, as
applicable, or other body with analogous authority with respect to the Company
or a Guarantor, the executive committee of that board or body or any committee
of that board or body duly authorized to act hereunder.

 

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

 

2

 

“Business Day,”
when used with respect to any Place of Payment or any other particular location
referred to in this Indenture or in the Securities, means, unless otherwise
specified with respect to any Securities pursuant to Section 301, any day other
than a Saturday, Sunday, legal holiday or other day on which banking institutions
in that Place of Payment or particular location are authorized or required by
law, regulation or executive order to close.

 

“Capital Stock” means, with respect to any
Person, any and all shares (including preferred shares), interests,
participations or other equity ownership interests (however designated, whether
voting or non-voting) in the Person and any rights (other than debt securities
convertible into or exchangeable for corporate Capital Stock), warrants or
options to purchase any thereof.

 

“Clearstream”
means Clearstream Banking, société anonyme, Luxembourg, or its successor.

 

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

 

“Common
Depositary” has the meaning specified in Section 304(b).

 

“Common Shares”
means, with respect to any Person, capital stock or shares of beneficial
interest issued by such Person other than Preferred Shares.

 

“Company”
means the Person named as the “Company” in the first paragraph of this
Indenture until a successor shall have become the primary obligor of the
Securities pursuant to the applicable provisions of this Indenture, and
thereafter “Company” shall mean such successor corporation.

 

“Company
Request” and “Company Order” mean, respectively, a written request
or order signed in the name of the Company by its Chairman of the Board, the
Chief Executive Officer, the President or a Vice President (whether or not
designated by a number or a word or words added before or after the title “vice
president”), and by its Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee.

 

“Conversion
Event” means the cessation of use of (i) a Foreign Currency other than the
Euro both by the government of the country that issued such currency and for
the settlement of transactions by a central bank or other public institutions
of or within the international banking community, (ii) the Euro both within the
member states of the European Union that have adopted the single currency in
accordance with the treaty establishing the European Community as amended by
the treaty of the European Union and for the settlement of transactions by
public institutions of or within the European Union or (iii) any currency for
the purposes for which it was established.

 

3

 

“Corporate
Trust Office” means the principal corporate trust office of the Trustee at
which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof (and for the purposes
of the Place of Payment provisions of Section 1002) is located at                        ,
[New York, New York]                 .

 

“corporation”
includes corporations, limited partnerships, limited liability companies, real
estate investment trusts, associations, companies and business trusts.

 

“coupon”
means any interest coupon appertaining to a Bearer Security.

 

“currency”
means any currency, currency unit or composite currency, including, without
limitation, the Euro, issued by the government of one or more countries or by
any recognized confederation or association of such governments.

 

“Custodian”
has the meaning specified in Section 501.

 

“Debt” of the Company or any Subsidiary means
any indebtedness of the Company or any Subsidiary, whether or not contingent,
in respect of (i) borrowed money evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness secured by any mortgage, pledge, lien,
charge, encumbrance or any security interest existing on property owned by the
Company or any Subsidiary, (iii) reimbursement obligations, contingent or
otherwise, in connection with any letters of credit or amounts representing the
balance deferred and unpaid of the purchase price of any property except any
such balance that constitutes an accrued expense or trade payable or (iv) any
lease of property by the Company or any Subsidiary as lessee which is reflected
on the Company’s consolidated balance sheet as a capitalized lease in
accordance with GAAP, in the case of items of indebtedness under (i) through
(iii) above to the extent that any such items (other than reimbursement
obligations in connection with letters of credit) would appear as a liability
on the Company’s consolidated balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any obligation by the Company
or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), indebtedness of another Person that would appear as a liability on
such Person’s consolidated balance sheet in accordance with GAAP (other than
the Company or any Subsidiary) (it being understood that “Debt” shall be deemed
to be incurred by the Company and its Subsidiaries on a consolidated basis
whenever the Company and its Subsidiaries on a consolidated basis create,
assume, guarantee or otherwise become liable in respect thereof; Debt of a
Subsidiary of the Company existing prior to the time it becomes a Subsidiary of
the Company shall be deemed to be incurred upon such Subsidiary’s becoming a
Subsidiary of the Company; and Debt of a Person existing prior to a merger or
consolidation of such Person with the Company or any Subsidiary of the Company
in which such Person is the successor of the Company or such Subsidiary shall
be deemed to be incurred upon the consummation of such merger or
consolidation).

 

“Defaulted
Interest” has the meaning specified in Section 307.

 

4

 

“Dollar” or
“$” means a dollar or other equivalent unit in such coin or currency of the
United States as at the time shall be legal tender for the payment of public
and private debts.

 

“DTC” means
The Depository Trust Company for so long as it shall be a clearing agency
registered under the Exchange Act, or such successor as the Company shall
designate from time to time in an Officer’s Certificate delivered to the
Trustee.

 

“Euroclear”
means Morgan Guaranty Trust Company of New York, Brussels Office, or its
successor as operator of the Euroclear System.

 

“Event of
Default” has the meaning specified in Article Five.

 

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

 

“Foreign
Currency” means any currency issued by the government of one or more
countries other than the United States or by any recognized confederation or
association of such governments.

 

“GAAP”
means generally accepted accounting principles, as in effect from time to time,
as used in the United States applied on a consistent basis; provided, that
solely for purposes of any calculation required by the financial covenants
contained herein, “GAAP” shall mean generally accepted accounting principles as
used in the United States on the date hereof, applied on a consistent basis.

 

“Government
Obligations” means securities which are (i) direct obligations of the
United States or the government or governments that issued the Foreign Currency
or Currencies in which the Securities of a particular series are payable, 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 or such government or governments that issued the Foreign
Currency or Currencies in which the Securities of such series are payable, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States or such other government or governments, which,
in either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository 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 depository 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 depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt.

 

“Guarantee” has the meaning set forth in
Article Sixteen hereof.

 

5

 

“Guarantor” means any Person that is liable
under a Guarantee under Article Sixteen hereof.

 

“Holder”
means, in the case of a Registered Security, the Person in whose name a
Security is registered in the Security Register and, in the case of a Bearer
Security, the bearer thereof and, when used with respect to any coupon, shall
mean the bearer thereof.

 

“Indenture”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, and shall include the terms
of particular series of Securities established as contemplated by Section 301;
provided, however, that, if at any time more than one Person is acting as
Trustee under this instrument, “Indenture” shall mean, with respect to
any one or more series of Securities for which such Person is Trustee, this
instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms
of the or those particular series of Securities for which such Person is
Trustee established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for which
such Person is Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or
more indentures supplemental hereto executed and delivered after such Person
had become such Trustee but to which such Person, as such Trustee, was not a
party.

 

“Indexed
Security” means a Security the terms of which provide that the principal
amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.

 

“interest,”
when used with respect to an Original Issue Discount Security which by its
terms bears interest only after Maturity, shall mean interest payable after
Maturity, and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1011, includes such
Additional Amounts.

 

“Interest
Payment Date,” when used with respect to any Security, means the Stated
Maturity of an installment of interest on such Security.

 

“Make-Whole Amount” means, in connection with
any optional redemption or accelerated payment of any Securities, the excess,
if any, of:  (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest
(exclusive of interest accrued to the date of redemption or accelerated
payment) that would have been payable in respect of each such dollar if such
redemption or accelerated payment had not been made, determined by discounting
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date notice of such redemption is given) from the
respective dates on which such principal and interest would have been payable
if such redemption or accelerated payment had not been made to the date of
redemption or accelerated payment; over (ii) the aggregate principal
amount of the Securities being redeemed or paid.

 

6

 

“Maturity,”
when used with respect to any Security, means the date on which the principal
of such Security or an installment of principal becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, notice of redemption, notice of option to elect repayment or
otherwise.

 

“Officers’
Certificate” means a certificate signed by the Chairman of the Board of
Directors, the Chief Executive Officer, the President or a Vice President (whether
or not designated by a number or a word or words added before or after the
title “vice president”) and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company or a Guarantor, as
applicable, and delivered to the Trustee.

 

“Opinion of
Counsel” means a written opinion of counsel, who may be counsel for the
Company or a Guarantor or who may be an employee of or other counsel for the
Company or a Guarantor and who shall be reasonably satisfactory to the Trustee.

 

“Original Issue
Discount Security” means any Security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502.

 

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

 

(i)            Securities theretofore canceled by
the Trustee or delivered to the Trustee for cancellation;

 

(ii)           Securities, or portions thereof, for
whose payment or redemption or repayment at the option of the Holder money 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 by the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities and any coupons appertaining thereto, provided that,
if such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;

 

(iii)          Securities, except to the extent
provided in Sections 1402 and 1403, with respect to which the Company has
effected defeasance and/or covenant defeasance as provided in Article Fourteen;

 

(iv)          Securities which have been paid
pursuant to Section 306 or in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this 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;
and

 

7

 

(v)           Securities converted into Common
Shares or Preferred Shares pursuant to or in accordance with this Indenture if
the terms of such Securities provide for convertibility pursuant to Section
301;

 

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 are present at a meeting of
Holders for quorum purposes, and for the purpose of making the calculations
required by TIA Section 313, (i) the principal amount of an Original Issue Discount
Security that may be counted in making such determination or calculation and
that shall be deemed to be Outstanding for such purpose shall be equal to the
amount of principal thereof that would be (or shall have been declared to be)
due and payable, at the time of such determination, upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, (ii) the
principal amount of any Security denominated in a Foreign Currency or
Currencies that may be counted in making such determination or calculation and
that shall be deemed Outstanding for such purpose shall be equal to the Dollar
equivalent, determined pursuant to Section 301 as of the date such Security is
originally issued by the Company, of the principal amount (or, in the case of
an Original Issue Discount Security, the Dollar equivalent as of such date of
original issuance of the amount determined as provided in clause (i) above) of
such Security, (iii) the principal amount of any Indexed Security that may be
counted in making such determination or calculation and that shall be deemed
outstanding for such purpose shall be equal to the principal face amount of
such Indexed Security at original issuance, unless otherwise provided with
respect to such Security pursuant to Section 301, and (iv) 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 the
Trustee 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 the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.

 

“Paying Agent”
means any Person authorized by the Company to pay the principal of (and
premium, if any) or interest on any Securities or coupons on behalf of the
Company.

 

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

 

“Place of
Payment,” when used with respect to the Securities of or within any series,
means the place or places where the principal of (and premium, if any) and
interest on such Securities are payable as specified as contemplated by
Sections 301 and 1002.

 

“Predecessor
Security” of any particular Security means every previous Security evidencing
all or a portion of the same debt as that evidenced by such particular
Security; and,

 

8

 

for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or a
Security to which a mutilated, destroyed, lost or stolen coupon appertains
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security or the Security to which the mutilated, destroyed, lost or
stolen coupon appertains.

 

“Preferred
Shares” means, with respect to any Person, shares of capital stock or of
beneficial interest issued by such Person that are entitled to a preference or
priority over any other shares of capital stock or beneficial interest issued
by such Person upon any distribution of such Person’s assets, whether by
dividend or upon liquidation, dissolution or winding up.

 

“Recourse
Indebtedness” means Debt, other than Secured Debt as to which Secured Debt
the liability of the obligor thereon is limited to its interest in the
collateral securing such Secured Debt, provided that no such Secured Debt shall
constitute Recourse Indebtedness by reason of provisions therein for imposition
of full recourse liability on the obligor for certain wrongful acts,
environmental liabilities, or other customary exclusions from the so-called “non-recourse”
provisions.

 

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

 

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

 

“Registered
Security” shall mean any Security which is registered in the Security
Register.

 

“Regular Record
Date” for the interest payable on any Interest Payment Date on the
Registered Securities of or within any series means the date specified for that
purpose as contemplated by Section 301, whether or not a Business Day.

 

“Reinvestment
Rate” means a rate per annum equal to the sum of (i) .25% (or such other
percentage specified in the terms of any Securities) plus (ii) the arithmetic
mean of the yields under the heading “Week Ending” published in the most recent
Statistical Release under the caption “Treasury Constant Maturities” for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make-Whole Amount
shall be used. If the format or content of the Statistical Release changes in a
manner that precludes determination of the Treasury yield in the above manner,
then the Treasury yield shall be determined in the manner that most closely
approximates the above manner, as reasonably

 

9

 

determined by the Company.
If the format or content of the Statistical Release changes in a manner that
precludes determination of the Treasury Yield in the above manner, then the
Treasury Yield shall be determined in the manner that most closely approximates
the above manner, as reasonably determined by the Company.

 

“Repayment Date”
means, when used with respect to any Security to be repaid at the option of the
Holder, the date fixed for such repayment by or pursuant to this Indenture.

 

“Repayment
Price” means, when used with respect to any Security to be repaid at the
option of the Holder, the price at which it is to be repaid by or pursuant to
this Indenture.

 

“Representative”
means the indenture trustee or other trustee, agent or representative for an
issue of Senior Debt.

 

“Responsible
Officer,” when used with respect to the Trustee, means any senior vice
president, vice president (whether or not designated by a number or a word or
words added before or after the title “vice president”), or assistant vice
president, the secretary, any assistant secretary, or any other officer working
in its Corporate Trust Department and customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of such officer’s knowledge and familiarity with the
particular subject.

 

“Secured Debt”
means, without duplication, Debt that is secured by a mortgage, trust deed,
deed of trust, deed to secure Debt, security agreement, pledge, conditional
sale or other title retention agreement, capitalized lease, or other like agreement
granting or conveying security title to or a security interest in real property
or other tangible asset(s). Secured Debt shall be deemed to be incurred (i) on
the date the obligor thereon creates, assumes, guarantees or otherwise becomes
liable in respect thereof if it is secured in the manner described in the
preceding sentence on such date or (ii) on the date the obligor thereon first
secures such Debt in the manner described in the preceding sentence if such
Debt was not so secured on the date it was incurred.

 

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

 

“Security”
has the meaning stated in the first recital of this Indenture and, more
particularly, means any Security or Securities authenticated and delivered
under this Indenture; provided, however, that, if at any time there is more
than one Person acting as Trustee under this Indenture, “Securities” with
respect to the Indenture as to which such Person is Trustee shall have the
meaning stated in the first recital of this Indenture and shall more
particularly mean Securities authenticated and delivered under this Indenture,
exclusive, however, of Securities of any series as to which such Person is not
Trustee.

 

“Security
Register” and “Security Registrar” have the respective meanings
specified in Section 305.

 

10

 

“Senior Debt”
means Debt; but excluding, however, (1) any such indebtedness, obligation or
liability included as Debt as to which, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such Debt is not superior in right of payment to the Securities,
or ranks pari passu with the Securities, (2) any such Debt which is
subordinated to Debt of the Company to substantially the same extent as or to a
greater extent than the Securities are subordinated, (3) any trade accounts
payable and (4) the Securities. Notwithstanding anything to the contrary in the
foregoing, Senior Debt shall not include (x) any Debt of the Company to any of
its Subsidiaries or other Affiliates and (y) any Debt incurred for the purchase
of goods or materials or for services obtained in the ordinary course of
business (other than with the proceeds of revolving credit borrowings permitted
hereby).

 

“Significant
Subsidiary” means any Subsidiary which is a “significant subsidiary” (as
defined in Article I, Rule 1-02 of Regulation S-X, promulgated under the
Securities Act) of the Company.

 

“Special Record
Date” for the payment of any Defaulted Interest on the Registered
Securities of or within any series means a date fixed by the Trustee pursuant
to Section 307.

 

“Stated
Maturity,” when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such
Security or a coupon representing such installment of interest as the fixed
date on which the principal of such Security or such installment of principal
or interest is due and payable.

 

“Statistical
Release” means the statistical release designated “H.15(519)” or any
successor publication which is published weekly by the Board of Governors of
the Federal Reserve System and which reports yields on actively traded United
States government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any determination under the
Indenture, then such other reasonably comparable index which shall be
designated by the Company.

 

“Subsidiary”
means, with respect to the Company or a Guarantor, a corporation or general
partnership a majority of the outstanding voting stock of which is owned or
controlled, directly or indirectly, by the Company or the Guarantor, as
applicable, or by one or more other Subsidiaries of the Company or the
Guarantor. For the purposes of this definition, “voting stock” means having
voting power for the election of directors, general partners, trustees,
managing members or Persons performing similar functions, whether at all times
or only so long as no senior class of securities has such voting power by
reason of any contingency.

 

“Trust
Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as
amended and as in force at the date as of which this Indenture was executed,
except as provided in Section 905.

 

“Trustee”
means the Person named as the “Trustee” in the first paragraph of this
Indenture until a successor Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Trustee” shall mean or include
each Person who is then a

 

11

 

Trustee hereunder;
provided, however, that if at any time there is more than one such Person, “Trustee”
as used with respect to the Securities of any series shall mean only the
Trustee with respect to Securities of that series.

 

“United States”
means, unless otherwise specified with respect to any Securities pursuant to
Section 301, the United States of America (including the states and the
District of Columbia), its territories, its possessions and other areas subject
to its jurisdiction.

 

“United States
person” means, unless otherwise specified with respect to any Securities
pursuant to Section 301, an individual who is a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source.

 

“Yield to
Maturity” means the yield to maturity, computed at the time of issuance of
a Security (or, if applicable, at the most recent redetermination of interest
on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.

 

SECTION 102. Compliance
Certificates and Opinions. Upon any application or request by the Company
to the Trustee to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee an Officers’ Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.

 

Every certificate
or opinion with respect to compliance with a condition or covenant provided for
in this Indenture (including certificates delivered pursuant to Section 1010)
shall include:

 

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

 

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

 

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

 

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

 

12

 

SECTION 103. Form
of Documents Delivered to Trustee. In any case where several matters are
required to be certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion as to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.

 

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

 

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

 

SECTION 104. Acts
of Holders. (a)  Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders of the Outstanding Securities of
all series or one or more series, as the case may be, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agents duly appointed in writing. If Securities of
a series are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders of Securities of such series may,
alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act” of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and conclusive in favor of the Trustee and the Company and
any agent of the Trustee or the Company, if made in the manner provided in this
Section. The record of any meeting of Holders of Securities shall be proved in
the manner provided in Section 1506.

 

13

 

Without limiting
the generality of this Section 104, unless otherwise provided in or pursuant to
this Indenture, a Holder, including a U.S. depository that is a Holder of a
global Security, may make, give or take, by a proxy or proxies duly appointed
in writing, any request, demand, authorization, direction, notice, consent,
waiver or other action provided in or pursuant to this Indenture to be made,
given or taken by Holders, and a U.S. depository that is a Holder of a global
Security may provide its proxy or proxies to the beneficial owners of interests
in any such global Security through such U.S. depository’s standing
instructions and customary practices.

 

The Trustee shall
fix a record date for the purpose of determining the Persons who are beneficial
owners of interests in any permanent global Security held by a U.S. depository
entitled under the procedures of such U.S. depository to make, give or take, by
a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
or pursuant to this Indenture to be made, given or taken by Holders. If such a
record date is fixed, the Persons who are beneficial owners of interests on
such record date or their duly appointed proxy or proxies, and only such
Persons, shall be entitled to make, give or take such request, demand,
authorization, direction, notice, consent, waiver or other Act, whether or not
such Persons remain beneficial owners after such record date.

 

(b)           The fact and date of the execution by
any Person of any such instrument or writing may be proved by the affidavit of
a witness of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than
his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other reasonable manner which the Trustee deems
sufficient.

 

(c)           The ownership of Registered
Securities shall be proved by the Security Register.

 

(d)           The ownership of Bearer Securities
may be proved by the production of such Bearer Securities or by a certificate
executed, as depositary, by any trust company, bank, banker or other
depositary, wherever situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate or
affidavit is deemed by the Trustee to be reasonably satisfactory. The Trustee
and the Company may assume that such ownership of any Bearer Security continues
until (1) another certificate or affidavit bearing a later date issued in
respect of the same Bearer Security is produced, or (2) such Bearer Security is
produced to the Trustee by some other Person, or (3) such Bearer Security is
surrendered in exchange for a Registered Security, or (4) such Bearer Security
is no longer Outstanding. The ownership of Bearer Securities may also be proved
in any other reasonable manner which the Trustee deems sufficient.

 

(e)           If the Company shall solicit from the
Holders of Registered Securities any request, demand, authorization, direction,
notice, consent, waiver or other Act, the Company may, at its

 

14

 

option, in or pursuant to
a Board Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no obligation
to do so. Notwithstanding TIA Section 316(c), such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.

 

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

 

SECTION 105. Notices,
etc., to Trustee and Company. Any request, demand, authorization,
direction, notice, consent, waiver or Act of Holders or other document provided
or permitted by this Indenture to be made upon, given or furnished to, or filed
with,

 

(1)           the Trustee by any Holder or by the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, Attention: Corporate Trust Department, or

 

(2)           the Company by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, to
the Company addressed to it at the address of its principal office specified in
the first paragraph of this Indenture, Attention:  Chief Legal Officer, or at any other address
previously furnished in writing to the Trustee by the Company.

 

SECTION 106. Notice
to Holders; Waiver. Where this Indenture provides for notice of any event
to Holders of Registered Securities by the Company or the Trustee, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each such Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Holders of Registered
Securities is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other 

 

15

 

Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice.

 

If by reason of
the suspension of or irregularities in regular mail service or by reason of any
other cause it shall be impracticable to give such notice by mail, then such
notification to Holders of Registered Securities as shall be made with the
approval of the Trustee shall constitute a sufficient notification to such
Holders for every purpose hereunder.

 

Except as
otherwise expressly provided herein or otherwise specified with respect to any
Securities pursuant to Section 301, where this Indenture provides for notice to
Holders of Bearer Securities of any event, such notice shall be sufficiently
given if published in an Authorized Newspaper in The City of New York and in
such other city or cities as may be specified in such Securities on a Business
Day, such publication to be not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. Any such
notice shall be deemed to have been given on the date of such publication or,
if published more than once, on the date of the first such publication.

 

If by reason of
the suspension of publication of any Authorized Newspaper or Authorized
Newspapers or by reason of any other cause it shall be impracticable to publish
any notice to Holders of Bearer Securities as provided above, then such
notification to Holders of Bearer Securities as shall be given with the
approval of the Trustee shall constitute sufficient notice to such Holders for
every purpose hereunder. Neither the failure to give notice by publication to
Holders of Bearer Securities as provided above, nor any defect in any notice so
published, shall affect the sufficiency of any notice to Holders of Registered
Securities given as provided herein.

 

Any request,
demand, authorization, direction, notice, consent or waiver required or
permitted under this Indenture shall be in the English language, except that
any published notice may be in an official language of the country of
publication.

 

Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.

 

SECTION 107. Effect
of Headings and Table of Contents. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

 

SECTION 108. Successors
and Assigns. All covenants and agreements in this Indenture by the Company
or a Guarantor shall bind their respective successors and assigns, whether so
expressed or not.

 

16

 

SECTION 109. Separability
Clause. In case any provision in this Indenture or in any Security or
coupon 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 110. Benefits
of Indenture. Nothing in this Indenture or in the Securities or coupons,
express or implied, shall give to any Person, other than the parties hereto,
any Security Registrar, any Paying Agent, any Authenticating Agent and their
successors hereunder and the Holders any benefit or any legal or equitable
right, remedy or claim under this Indenture.

 

SECTION 111. Governing
Law. This Indenture and the Securities and coupons shall be governed by and
construed in accordance with the law of the State of New York applicable to agreements
made or instruments entered into and performed in said state. This Indenture is
subject to the provisions of the TIA that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.

 

SECTION 112. Legal
Holidays. In any case where any Interest Payment Date, Redemption Date,
Repayment Date, sinking fund payment date, Stated Maturity or Maturity of any
Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or any Security or
coupon other than a provision in the Securities of any series which
specifically states that such provision shall apply in lieu hereof), payment of
interest or any Additional Amounts or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date, Repayment Date or
sinking fund payment date, or at the Stated Maturity or Maturity, provided that
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.

 

SECTION 113. Judgment
Currency. To the fullest extent permitted by applicable law, (a) if for the
purpose of obtaining judgment in any court it is necessary to convert the
amount due in respect of the principal of, or premium or interest, if any, on,
or Additional Amounts with respect to, the Securities of any series from the
currency in which it is due (the “Required Currency”) into a currency in which
the judgment will be rendered (the “Judgment Currency”), the rate of exchange
used shall be the rate at which in accordance with normal banking procedures
the Trustee could purchase in The City of New York the Required Currency with
the Judgment Currency on the New York Banking Day preceding the day on which
such judgment is given, and (b) the Company’s obligations under this Indenture
to make payments in the Required Currency shall, despite any judgment in the
Judgment Currency, be discharged by a payment on account thereof in the
Judgment Currency only to the extent that, on the New York Banking Day
following receipt of such payment in the Judgment Currency, the Trustee may, in
accordance with normal banking procedures, purchase in The City of New York the
Required Currency with the amount of the Judgment Currency so paid; and if the
amount of the Required Currency that may be so purchased is less than the
amount originally due in the Required Currency, the Company shall have a
separate and independent obligation, despite any such payment or judgment, to
indemnify the payee against such deficiency. For purposes of the foregoing, “New

 

17

 

York Banking Day” means
any day other than a Saturday, Sunday, legal holiday or other day on which
banking institutions in The City of New York are authorized or required by law,
regulation or executive order to close.

 

SECTION 114. No
Personal Liability. No recourse under or upon any obligation, covenant or
agreement contained in this Indenture, in any Security or coupon appertaining
thereto, or because of any indebtedness evidenced thereby, shall be had against
any promoter, as such, or against any past, present or future shareholder,
officer or director, as such, of the Company or any Guarantor or of any
successor thereof, either directly or through the Company or any Guarantor or
any successor thereof, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and released
by the acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.

 

ARTICLE TWO

SECURITIES FORMS

 

SECTION 201. Forms
of Securities. The Registered Securities, if any, of each series and the
Bearer Securities, if any, of each series and related coupons shall be in
substantially the forms as shall be established in one or more indentures
supplemental hereto or approved from time to time by or pursuant to a Board
Resolution in accordance with Section 301, shall have such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture or any indenture supplemental hereto, and may have
such letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any stock exchange on which the Securities
may be listed, or to conform to usage.

 

Unless otherwise
specified as contemplated by Section 301, Bearer Securities shall have interest
coupons attached.

 

The definitive
Securities and coupons shall be printed, lithographed or engraved or produced
by any combination of these methods on a steel engraved border or steel
engraved borders or may be produced in any other manner, all as determined by
the officers executing such Securities or coupons, as evidenced by their
execution of such Securities or coupons.

 

SECTION 202. Form
of Trustee’s Certificate of Authentication. Subject to Section 611, the
Trustee’s certificate of authentication shall be in substantially the following
form:

 

This is one of the
Securities of the series designated therein referred to in the within-mentioned
Indenture.

 

[NAME OF
TRUSTEE]

as Trustee

 

18

 

	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  

 

SECTION 203. Securities
Issuable in Global Form. If Securities of or within a series are issuable
in global form, as specified as contemplated by Section 301, then,
notwithstanding clause (8) of Section 301 and the provisions of Section 302,
any such Security shall represent such of the Outstanding Securities of such
series as shall be specified therein and may provide that it shall represent
the aggregate amount of Outstanding Securities of such series from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities of
such series represented thereby may from time to time be increased or decreased
to reflect exchanges. Any endorsement of a Security in global form to reflect
the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee (or pursuant to its
direction) in such manner and upon instructions given by such Person or Persons
as shall be specified therein or in the Company Order to be delivered to the
Trustee pursuant to Section 303 or 304. Subject to the provisions of Section
303 and, if applicable, Section 304, the Trustee shall deliver and redeliver
any Security in permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable Company Order. If
a Company Order pursuant to Section 303 or 304 has been, or simultaneously is,
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but need
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel.

 

The provisions of
the last sentence of Section 303 shall apply to any Security represented by a
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of Section 303.

 

Notwithstanding
the provisions of Section 307, unless otherwise specified as contemplated by
Section 301, payment of principal of and any premium and interest on any
Security in permanent global form shall be made to the Person or Persons
specified therein.

 

Notwithstanding
the provisions of Section 308 and except as provided in the preceding
paragraph, the Company, the Trustee and any agent of the Company and the
Trustee shall treat as the Holder of such principal amount of Outstanding
Securities represented by a permanent global Security (i) in the case of a
permanent global Security in registered form, the Holder of such permanent global
Security in registered form, or (ii) in the case of a permanent global Security
in bearer form, Euroclear or Clearstream.

 

19

 

ARTICLE THREE

THE SECURITIES

 

SECTION 301. Amount
Unlimited; Issuable in Series. The aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture is unlimited.

 

The Securities may
be issued in one or more series. There shall be established in one or more
Board Resolutions or pursuant to authority granted by one or more Board
Resolutions and, subject to Section 303, set forth, or determined in the manner
provided, in an Officers’ Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series, any or
all of the following, as applicable (each of which (except for the matters set
forth in clauses (1), (2) and (15) below), if so provided, may be determined
from time to time by the Company with respect to unissued Securities of the series
when issued from time to time):

 

(1)           the title of the Securities of the
series (which shall distinguish the Securities of such series from all other
series of Securities);

 

(2)           any limit upon the aggregate
principal amount of the Securities of the series that may be authenticated and
delivered under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or
1305);

 

(3)           the date or dates, or the method by
which such date or dates will be determined, on which the principal of the
Securities of the series shall be payable;

 

(4)           the rate or rates at which the
Securities of the series shall bear interest, if any, or the method by which
such rate or rates shall be determined, the date or dates from which such
interest shall accrue or the method by which such date or dates shall be
determined, the Interest Payment Dates on which such interest will be payable
and the Regular Record Date, if any, for the interest payable on any Registered
Security on any Interest Payment Date, or the method by which such date shall
be determined, and the basis upon which interest shall be calculated if other
than that of a 360-day year of twelve 30-day months;

 

(5)           the place or places, if any, other
than or in addition to the Borough of Manhattan, The City of New York, where
the principal of and premium, if any, and interest on, and any Additional
Amounts payable in respect of, Securities of the series shall be payable, any
Registered Securities of the series may be surrendered for registration of
transfer, Securities of the series may be surrendered for exchange or
conversion and notices or demands to or upon the Company in respect of
Securities of the series and this Indenture may be served;

 

(6)           the period or periods within which,
or the date or dates on which, the price or prices at which, the currency in
which, and other terms and conditions upon which Securities of

 

20

 

the series may be
redeemed, in whole or in part, at the option of the Company, if the Company is
to have the option;

 

(7)           the obligation, if any, of the
Company to redeem, repay or purchase Securities of the series pursuant to any
sinking fund or analogous provision or at the option of a Holder thereof, and
the period or periods within which or the date or dates on which, the price or
prices at which, the currency or currencies in which, and other terms and conditions
upon which Securities of the series shall be redeemed, repaid or purchased, in
whole or in part, pursuant to such obligation;

 

(8)           if other than denominations of $1,000
and any integral multiple thereof, the denominations in which any Registered
Securities of the series shall be issuable and, if other than the denomination
of $5,000, the denomination or denominations in which any Bearer Securities of
the series shall be issuable;

 

(9)           if other than the Trustee, the
identity of each Security Registrar and/or Paying Agent;

 

(10)         if other than the principal amount
thereof, the portion of the principal amount of Securities of the series that
shall be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or, if applicable, the portion of the principal amount
of Securities of the series that is convertible in accordance with the
provisions of this Indenture, or the method by which such portion shall be
determined;

 

(11)         if other than Dollars, the Foreign
Currency or Currencies in which payment of the principal of (and premium, if
any) or interest or Additional Amounts, if any, on the Securities of the series
shall be payable or in which the Securities of the series shall be denominated;

 

(12)         whether the amount of payments of principal
of (and premium, if any) or interest, if any, on the Securities of the series
may be determined with reference to an index, formula or other method (which
index, formula or method may be based, without limitation, on one or more
currencies, commodities, equity indices or other indices), and the manner in
which such amounts shall be determined;

 

(13)         whether the principal of (and premium,
if any) or interest or Additional Amounts, if any, on the Securities of the
series are to be payable, at the election of the Company or a Holder thereof,
in a currency or currencies other than that in which such Securities are
payable in the absence of the making of such an election, the period or periods
within which or the date or dates on which, and the terms and conditions upon
which, such election may be made, and the time and manner of, and identity of
the exchange rate agent with responsibility for, determining the exchange rate
between the currency or currencies in which such Securities are payable in the absence
of the making of such an election and the currency or currencies in which such
Securities are to be payable upon the making of such an election;

 

21

 

(14)         provisions, if any, granting special
rights to the Holders of Securities of the series upon the occurrence of such
events as may be specified;

 

(15)         any deletions from, modifications of or
additions to the Events of Default or covenants of the Company with respect to
Securities of the series, whether or not such Events of Default or covenants
are consistent with the Events of Default or covenants set forth herein;

 

(16)         whether Securities of the series are to
be issuable as Registered Securities, Bearer Securities (with or without
coupons) or both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities and the terms upon which Bearer Securities of the series may
be exchanged for Registered Securities of the series and vice versa (if
permitted by applicable laws and regulations), whether any Securities of the
series are to be issuable initially in temporary global form and whether any
Securities of the series are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in any such
permanent global Security may exchange such interests for Securities of such
series and of like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other than in the
manner provided in Section 305, and, if Registered Securities of the series are
to be issuable as a global Security, the identity of the depositary for such
series;

 

(17)         the date as of which any Bearer
Securities of the series and any temporary global Security representing Outstanding
Securities of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;

 

(18)         the Person to whom any interest on any
Registered Security of the series shall be payable, if other than the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer Security of
the series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the extent to
which, or the manner in which, any interest payable on a temporary global
Security on an Interest Payment Date will be paid if other than in the manner
provided in Section 304;

 

(19)         the applicability, if any, of Sections
1402 and/or 1403 to the Securities of the series and any provisions in
modification of, in addition to or in lieu of any of the provisions of Article
Fourteen;

 

(20)         if the Securities of such series are to
be issuable in definitive form (whether upon original issue or upon exchange of
a temporary Security of such series) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, then the form and/or
terms of such certificates, documents or conditions;

 

(21)         if the Securities of the series are to
be issued upon the exercise of warrants, the time, manner and place for such
Securities to be authenticated and delivered;

 

22

 

(22)         whether and under what circumstances
the Company will pay Additional Amounts as contemplated by Section 1011 on the
Securities of the series to any Holder who is not a United States person (including
any modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have the
option to redeem such Securities rather than pay such Additional Amounts (and
the terms of any such option);

 

(23)         the terms and conditions, if any, upon
which the Securities may be convertible or exchangeable into Common Shares or
other Capital Stock of the Company and the terms and conditions upon which such
conversion or exchange may be effected, including, without limitation, the
initial conversion or exchange price or rate (or manner of calculation
thereof), the portion that is convertible or exchangeable or the method by
which any such portion shall be determined, the conversion or exchange period,
provisions as to whether conversion or exchange will be at the option of the
holders or the Company’s option, the events requiring an adjustment of the
conversion or exchange price and provisions affecting conversion or exchange in
the event of the redemption of such Securities;

 

(24)         whether and to what extent the
Securities of such series will be guaranteed by a Guarantor and the identity of
such Guarantor; and

 

(25)         any other terms of the series (which
terms shall not be inconsistent with the provisions of this Indenture).

 

All Securities of
any one series and the coupons appertaining to any Bearer Securities of such
series shall be substantially identical except, in the case of Registered
Securities, as to denomination and except as may otherwise be provided in or
pursuant to such Board Resolution (subject to Section 303) and set forth in
such Officers’ Certificate or in any such indenture supplemental hereto. All
Securities of any one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the
Holders, for issuances of additional Securities of such series.

 

If any of the
terms of the Securities of any series are established by action taken pursuant
to one or more Board Resolutions, a copy of an appropriate record of such
action(s) shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers’ Certificate setting forth the terms of the Securities of such series.

 

SECTION 302. Denominations.
The Securities of each series shall be issuable in such denominations as shall
be specified as contemplated by Section 301. With respect to Securities of any
series denominated in Dollars, in the absence of any such provisions with
respect to the Securities of any series, the Registered Securities of such
series, other than Registered Securities issued in global form (which may be of
any denomination), shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Bearer Securities of such series, other than Bearer
Securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000.

 

23

 

SECTION 303. Execution,
Authentication, Delivery and Dating. The Securities and any coupons
appertaining thereto shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its President or one of its Vice
Presidents, and attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities and coupons may be manual
or facsimile signatures of the present or any future such authorized officer
and may be imprinted or otherwise reproduced on the Securities.

 

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

 

At any time and
from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series, together with any coupon
appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities; provided, however, that,
in connection with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and provided further that,
unless otherwise specified with respect to any series of Securities pursuant to
Section 301, a Bearer Security may be delivered in connection with its original
issuance only if the Person entitled to receive such Bearer Security shall have
furnished a certificate to Euroclear or Clearstream, as the case may be, in the
form set forth in Exhibit A-1 to this Indenture or such other certificate as
may be specified with respect to any series of Securities pursuant to Section
301, dated no earlier than 15 days prior to the earlier of the date on which
such Bearer Security is delivered and the date on which any temporary Security
first becomes exchangeable for such Bearer Security in accordance with the
terms of such temporary Security and this Indenture. If any Security shall be
represented by a permanent global Bearer Security, then, for purposes of this
Section and Section 304, the notation of a beneficial owner’s interest therein
upon original issuance of such Security or upon exchange of a portion of a temporary
global Security shall be deemed to be delivery in connection with its original
issuance of such beneficial owner’s interest in such permanent global Security.
Except as permitted by Section 306, the Trustee shall not authenticate and
deliver any Bearer Security unless all appurtenant coupons for interest then
matured have been detached and canceled.

 

If all the
Securities of any series are not to be issued at one time and if the Board
Resolution or supplemental indenture establishing such series shall so permit,
such Company Order may set forth procedures acceptable to the Trustee for the
issuance of such Securities and determining the terms of particular Securities
of such series, such as interest rate or formula, maturity date, redemption or
repayment provisions, currency of denomination and payment, date of issuance
and date from which interest shall accrue. In authenticating such Securities,
and accepting the additional responsibilities under this Indenture in relation
to such Securities and any coupons appertaining thereto, the Trustee shall be
entitled to receive, and (subject to TIA Section 315(a) through 315(d)) shall
be fully protected in relying upon,

 

24

 

(i)            an Opinion of Counsel stating that

 

(a)           the form or forms of such Securities
and any coupons have been established in conformity with the provisions of this
Indenture;

 

(b)           the terms of such Securities and any
coupons have been established in conformity with the provisions of this
Indenture; and

 

(c)           such Securities, together with any
coupons appertaining thereto, when completed by appropriate insertions and
executed and delivered by the Company to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the Trustee in
accordance with this Indenture and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will constitute
legal, valid and binding obligations of the Company, enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or affecting the
enforcement of creditors’ rights generally and to general equitable principles,
and will entitle the Holders thereof to the benefits of this Indenture and any
related Guarantee issued pursuant hereto; and

 

(ii)           an Officers’ Certificate stating that
all conditions precedent provided for in this Indenture relating to the
issuance of the Securities have been complied with and that, to the best of the
knowledge of the signers of such certificate, no Event of Default with respect
to any of the Securities shall have occurred and be continuing.

 

If such form or
terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant to this
Indenture will affect the Trustee’s own rights, duties, obligations or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

 

Notwithstanding
the provisions of Section 301 and of the second preceding paragraph, if all the
Securities of any series are not to be issued at one time, it shall not be
necessary to deliver an Officers’ Certificate otherwise required pursuant to
Section 301 or a Company Order, or an Opinion of Counsel or an Officers’
Certificate otherwise required pursuant to the second preceding paragraph at
the time of issuance of each Security of such series, but such order, opinion
and certificates, with appropriate modifications to cover such future
issuances, shall be delivered at or before the time of issuance of the first
Security of such series. After any such first delivery, any separate request by
the Company that the Trustee authenticate Securities of such series for
original issue will be deemed to be a certification by the Company that all
conditions precedent provided for in this Indenture relating to authentication
and delivery of such Securities continue to have been complied with.

 

Each Registered
Security shall be dated the date of its authentication and each Bearer Security
shall be dated as of the date specified as contemplated by Section 301.

 

25

 

No Security or
coupon shall be entitled to any benefit under this Indenture or any related
Guarantee or be valid or obligatory for any purpose unless there appears on
such Security or Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture and any related
Guarantee. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 309 together with a written statement (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
stating that such Security has never been issued and sold by the Company, the
Trustee shall be fully justified in relying thereon and in cancelling such
Security and for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture and any related Guarantee.

 

SECTION 304. Temporary
Securities. (a)  Pending the
preparation of definitive Securities of any series, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued, in registered
form, or, if authorized, in bearer form with one or more coupons or without
coupons, and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities. In the case of
Securities of any series, such temporary Securities may be in global form.

 

Except in the case
of temporary Securities in global form (which shall be exchanged in accordance
with Section 304(b) or as otherwise provided in or pursuant to a Board
Resolution), if temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series (accompanied by any non-matured
coupons appertaining thereto), the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations; provided,
however, that no definitive Bearer Security shall be delivered in exchange for
a temporary Registered Security; and provided further that a definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in Section 303. Until so exchanged,
the temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series.

 

(b)           Unless otherwise provided in or
pursuant to a Board Resolution, this Section 304(b) shall govern the exchange
of temporary Securities issued in global form other than

 

26

 

through the facilities of
DTC. If any such temporary Security is issued in global form, then such
temporary global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the “Common
Depositary”), for the benefit of Euroclear and Clearstream, for credit to
the respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).

 

Without
unnecessary delay but in any event not later than the date specified in, or
determined pursuant to the terms of, any such temporary global Security (the “Exchange
Date”), the Company shall deliver to the Trustee definitive Securities, in
aggregate principal amount equal to the principal amount of such temporary
global Security, executed by the Company. On or after the Exchange Date, such
temporary global Security shall be surrendered by the Common Depositary to the
Trustee, as the Company’s agent for such purpose, to be exchanged, in whole or
from time to time in part, for definitive Securities without charge, and the
Trustee shall authenticate and deliver (subject to the Trustee’s receipt of
sufficient delivery instructions from, or provided by or on behalf of, the
Common Depositary), in exchange for each portion of such temporary global
Security, an equal aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of
such temporary global Security to be exchanged. The definitive Securities to be
delivered in exchange for any such temporary global Security shall be in bearer
form, registered form, permanent global bearer form or permanent global
registered form, or any combination thereof, as specified as contemplated by
Section 301, and, if any combination thereof is so specified, as requested by
the beneficial owner thereof (as identified or provided to the Trustee by the
Common Depositary, or by Euroclear or Clearstream, as applicable); provided,
however, that, unless otherwise specified in such temporary global Security,
upon such presentation by the Common Depositary, such temporary global Security
shall be accompanied by a certificate dated the Exchange Date or a subsequent
date and signed by Euroclear as to the portion of such temporary global
Security held for its account then to be exchanged and a certificate dated the
Exchange Date or a subsequent date and signed by Clearstream as to the portion
of such temporary global Security held for its account then to be exchanged,
each in the form set forth in Exhibit A-2 to this Indenture or in such other
form as may be established pursuant to Section 301; and provided further that
definitive Bearer Securities shall be delivered in exchange for a portion of a
temporary global Security only in compliance with the requirements of Section
303.

 

Unless otherwise
specified in such temporary global Security, the interest of a beneficial owner
of Securities of a series in a temporary global Security shall be exchanged for
definitive Securities of the same series and of like tenor following the
Exchange Date when the account holder instructs Euroclear or Clearstream, as
the case may be, to request such exchange on his behalf and delivers to Euroclear
or Clearstream, as the case may be, a certificate in the form set forth in
Exhibit A-1 to this Indenture (or in such other form as may be established
pursuant to Section 301), dated no earlier than 15 days prior to the Exchange
Date, copies of which certificate shall be available from the offices of
Euroclear and Clearstream, the Trustee, any Authenticating Agent appointed for
such series of Securities and each Paying Agent. Unless otherwise specified in
such temporary global Security, any such exchange shall be made free of charge
to the beneficial owners of such temporary global Security, except that a
Person receiving definitive Securities must bear the cost of insurance,
postage, transportation and the like unless

 

27

 

such Person takes
delivery of such definitive Securities in person at the offices of Euroclear or
Clearstream. Definitive Securities in bearer form to be delivered in exchange
for any portion of a temporary global Security shall be delivered only outside
the United States.

 

Until exchanged in
full as hereinabove provided, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as
definitive Securities of the same series and of like tenor authenticated and
delivered hereunder, except that, unless otherwise specified as contemplated by
Section 301, interest payable on a temporary global Security on an Interest
Payment Date for Securities of such series occurring prior to the applicable
Exchange Date shall be payable to Euroclear and Clearstream on such Interest
Payment Date upon delivery by Euroclear and Clearstream to the Trustee of a
certificate or certificates in the form set forth in Exhibit A-2 to this
Indenture (or in such other forms as may be established pursuant to Section
301), for credit without further interest on or after such Interest Payment
Date to the respective accounts of Persons who are the beneficial owners of
such temporary global Security on such Interest Payment Date and who have each
delivered to Euroclear or Clearstream, as the case may be, a certificate dated
no earlier than 15 days prior to the Interest Payment Date occurring prior to
such Exchange Date in the form set forth as Exhibit A-1 to this Indenture (or
in such other forms as may be established pursuant to Section 301). Notwithstanding
anything to the contrary herein contained, the certifications made pursuant to
this paragraph shall satisfy the certification requirements of the preceding
two paragraphs of this Section 304(b) and of the third paragraph of Section 303
of this Indenture (in each case, without delivery of a certificate in the form
of Exhibit A-1) and the interests of the Persons who are the beneficial owners
of the temporary global Security with respect to which such certification was
made will be exchanged for definitive Securities of the same series and of like
tenor on the Exchange Date or the date of certification if such date occurs
after the Exchange Date, without further act or deed by such beneficial owners.
Except as otherwise provided in this paragraph, no payments of principal or
interest owing with respect to a beneficial interest in a temporary global
Security will be made unless and until such interest in such temporary global
Security shall have been exchanged for an interest in a definitive Security. Any
interest so received by Euroclear and Clearstream and not paid as herein
provided shall be returned to the Trustee prior to the expiration of two years
after such Interest Payment Date in order to be repaid to the Company (subject,
however, to any abandoned property laws that may be applicable).

 

SECTION 305. Registration,
Registration of Transfer and Exchange. The Company shall cause to be kept
at the Corporate Trust Office of the Trustee or in any office or agency of the
Company in a Place of Payment a register for each series of Securities (the
registers maintained in such office or in any such office or agency of the
Company in a Place of Payment being herein sometimes referred to collectively
as the “Security Register”) in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Registered Securities and of transfers of Registered Securities. The
Security Register shall be in written form or any other form capable of being
converted into written form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby initially appointed “Security Registrar”
for the purpose of registering Registered Securities and transfers of
Registered Securities on such Security Register as herein provided. In the
event that the Trustee shall cease

 

28

 

to be Security Registrar,
it shall have the right to examine the Security Register at all reasonable
times.

 

Subject to the
provisions of this Section 305, upon surrender for registration of transfer of
any Registered Security of any series at any office or agency of the Company in
a Place of Payment for that series, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized denominations and of a like aggregate principal amount, bearing a
number not contemporaneously outstanding, and containing identical terms and
provisions.

 

Subject to the
provisions of this Section 305, at the option of the Holder, Registered
Securities of any series may be exchanged for other Registered Securities of
the same series, of any authorized denomination or denominations and of a like
aggregate principal amount, containing identical terms and provisions, upon
surrender of the Registered Securities to be exchanged at any such office or
agency. Whenever any such Registered Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Securities which the Holder making the exchange is
entitled to receive. Unless otherwise specified with respect to any series of
Securities as contemplated by Section 301, Bearer Securities may not be issued
in exchange for Registered Securities.

 

If (but only if)
permitted by the applicable Board Resolution and (subject to Section 303) set
forth in the applicable Officers’ Certificate, or in any indenture supplemental
hereto, delivered as contemplated by Section 301, at the option of the Holder,
Bearer Securities of any series may be exchanged for Registered Securities of
the same series of any authorized denominations and of a like aggregate
principal amount and tenor, upon surrender of the Bearer Securities to be
exchanged at any such office or agency, with all unmatured coupons and all
matured coupons in default thereto appertaining. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, any such permitted exchange may be effected if
the Bearer Securities are accompanied by payment in funds acceptable to the
Company in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by
the Company and the Trustee if there is furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the amount of such
payment; provided, however, that, except as otherwise provided in Section 1002,
interest represented by coupons shall be payable only upon presentation and
surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such office or agency in a permitted exchange for a
Registered Security of the same series and like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at
such office or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon relating
to such Interest Payment

 

29

 

Date or proposed date for
payment, as the case may be, and interest or Defaulted Interest, as the case may
be, will not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture. Whenever
any Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.

 

Notwithstanding
the foregoing, except as otherwise specified as contemplated by Section 301,
any permanent global Security shall be exchangeable only as provided in this
paragraph. If the depositary for any permanent global Security is DTC, then,
unless the terms of such global Security expressly permit such global Security
to be exchanged in whole or in part for definitive Securities, a global
Security may be transferred, in whole but not in part, only to a nominee of
DTC, or by a nominee of DTC to DTC, or to a successor to DTC for such global
Security selected or approved by the Company or to a nominee of such successor
to DTC. If at any time DTC notifies the Company that it is unwilling or unable
to continue as depositary for the applicable global Security or Securities or
if at any time DTC ceases to be a clearing agency registered under the Exchange
Act if so required by applicable law or regulation, the Company shall appoint a
successor depositary with respect to such global Security or Securities. If (x)
a successor depositary for such global Security or Securities is not appointed
by the Company within 90 days after the Company receives such notice or becomes
aware of such unwillingness, inability or ineligibility, (y) an Event of
Default has occurred and is continuing and the beneficial owners representing a
majority in principal amount of the applicable series of Securities represented
by such global Security or Securities advise DTC to cease acting as depositary
for such global Security or Securities or (z) the Company, in its sole
discretion, determines at any time that all Outstanding Securities (but not
less than all) of any series issued or issuable in the form of one or more
global Securities shall no longer be represented by such global Security or
Securities, then the Company shall execute, and the Trustee shall authenticate
and deliver definitive Securities of like series, rank, tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such global Security or Securities. If any beneficial owner of an interest
in a permanent global Security is otherwise entitled to exchange such interest
for Securities of such series and of like tenor and principal amount of another
authorized form and denomination, as specified as contemplated by Section 301
and provided that any applicable notice provided in the permanent global
Security shall have been given, then without unnecessary delay but in any event
not later than the earliest date on which such interest may be so exchanged,
the Company shall execute, and the Trustee shall authenticate and deliver
(subject to receipt of adequate instructions as to such beneficial ownership
from DTC or the Company) definitive Securities in aggregate principal amount
equal to the principal amount of such beneficial owner’s interest in such
permanent global Security. On or after the earliest date on which such
interests may be so exchanged, such permanent global Security shall be
surrendered for exchange by DTC or such other depositary as shall be specified
in the Company Order with respect thereto to the Trustee, as the Company’s
agent for such purpose; provided, however, that no such exchanges may occur
during a period beginning at the opening of business 15 days before any selection
of Securities to be redeemed and ending on the relevant Redemption Date if the
Security for which exchange is requested may be among those selected for

 

30

 

redemption; and provided
further that no Bearer Security delivered in exchange for a portion of a
permanent global Security shall be mailed or otherwise delivered to any
location in the United States. If a Registered Security is issued in exchange
for any portion of a permanent global Security after the close of business at
the office or agency where such exchange occurs on (i) any Regular Record Date
and before the opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and before the opening
of business at such office or agency on the related proposed date for payment
of Defaulted Interest, interest or Defaulted Interest, as the case may be, will
not be payable on such Interest Payment Date or proposed date for payment, as
the case may be, in respect of such Registered Security, but will be payable on
such Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such
permanent global Security is payable in accordance with the provisions of this
Indenture.

 

All Securities
issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.

 

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

 

No service charge
shall be made for any registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 906, 1107 or 1305 not involving any transfer.

 

The Company or the
Trustee, as applicable, shall not be required (i) to issue, register the
transfer of or exchange any Security if such Security may be among those
selected for redemption during a period beginning at the opening of business 15
days before selection of the Securities to be redeemed under Section 1103 and
ending at the close of business on (A) if such Securities are issuable only as
Registered Securities, the day of the mailing of the relevant notice of
redemption and (B) if such Securities are issuable as Bearer Securities, the
day of the first publication of the relevant notice of redemption or, if such
Securities are also issuable as Registered Securities and there is no
publication, the mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Registered Security so selected for
redemption in whole or in part, except, in the case of any Registered Security
to be redeemed in part, the portion thereof not to be redeemed, or (iii) to
exchange any Bearer Security so selected for redemption except that such a
Bearer Security may be exchanged for a Registered Security of that series and
like tenor, provided that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.

 

31

 

SECTION 306. Mutilated,
Destroyed, Lost and Stolen Securities. If any mutilated Security or a
Security with a mutilated coupon appertaining to it is surrendered to the
Trustee or the Company, together with, in proper cases, such security or
indemnity as may be required by the Company or the Trustee to save each of them
or any agent of either of them harmless, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of
the same series and principal amount, containing identical terms and provisions
and bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the surrendered Security.

 

If there shall be
delivered to the Company and to the Trustee (i) evidence to their satisfaction
of the destruction, loss or theft of any Security or coupon, and (ii) such
security or indemnity as may be reasonably required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security or coupon has been acquired by
a bona fide purchaser, the Company shall execute and upon its request the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security or in exchange for the Security to which a destroyed, lost or
stolen coupon appertains (with all appurtenant coupons not destroyed, lost or
stolen), a new Security of the same series and principal amount, containing
identical terms and provisions and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such destroyed,
lost or stolen coupon appertains.

 

Notwithstanding
the provisions of the previous two paragraphs, in case any such mutilated,
destroyed, lost or stolen Security or coupon has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new
Security, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains, pay such Security or coupon; provided,
however, that payment of principal of (and premium, if any), any interest on
and any Additional Amounts with respect to, Bearer Securities shall, except as
otherwise provided in Section 1002, be payable only at an office or agency
located outside the United States and, unless otherwise specified as
contemplated by Section 301, any interest on Bearer Securities shall be payable
only upon presentation and surrender of the coupons appertaining thereto.

 

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) connected therewith.

 

Every new Security
of any series with its coupons, if any, issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security, or in exchange for a Security to
which a destroyed, lost or stolen coupon appertains, shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security and its coupons, if any, or the destroyed,
lost or stolen coupon shall be at any time enforceable by anyone, and

 

32

 

shall be entitled to all
the benefits of this Indenture and any related Guarantees equally and
proportionately with any and all other Securities of that series and their
coupons, if any, 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 or coupons.

 

SECTION 307. Payment
of Interest; Interest Rights Preserved. Except as otherwise specified with
respect to a series of Securities in accordance with the provisions of Section
301, interest on any Registered Security that is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that 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 1002; provided, however, that each installment of interest
on any Registered Security may at the Company’s option be paid by (i) mailing a
check for such interest, payable to or upon the written order of the Person
entitled thereto pursuant to Section 308, to the address of such Person as it
appears on the Security Register or (ii) transfer to an account maintained by
the payee located inside the United States.

 

Unless otherwise
provided as contemplated by Section 301 with respect to the Securities of any
series, payment of interest may be made, in the case of a Bearer Security and
at the Company’s option, by transfer to an account maintained by the payee with
a bank located outside the United States.

 

Unless otherwise
provided as contemplated by Section 301, every permanent global Security will
provide that interest, if any, payable on any Interest Payment Date will be
paid to DTC, Euroclear and/or Clearstream, as the case may be, with respect to
that portion of such permanent global Security held for its account by Cede
& Co. or the Common Depositary, as the case may be, for the purpose of
permitting such party to credit the interest received by it in respect of such
permanent global Security to the accounts of the beneficial owners thereof.

 

In case a Bearer
Security of any series is surrendered in exchange for a Registered Security of
such series after the close of business (at an office or agency in a Place of
Payment for such series) on any Regular Record Date and before the opening of
business (at such office or agency) on the next succeeding Interest Payment
Date, such Bearer Security shall be surrendered without the coupon relating to
such Interest Payment Date and interest will not be payable on such Interest
Payment Date in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such coupon when due
in accordance with the provisions of this Indenture.

 

Except as
otherwise specified with respect to a series of Securities in accordance with
the provisions of Section 301, any interest on any Registered Security of any
series that is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the Holder thereof on the relevant

 

33

 

Regular Record Date by
virtue of having been such Holder, and such Defaulted Interest may be paid by
the Company, at its election in each case, as provided in clause (1) or (2)
below:

 

(1)           The Company may elect to make payment
of any Defaulted Interest to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Registered Security of such series and the date of
the proposed payment (which shall not be less than 20 days after such notice is
received by the Trustee), and at the same time the Company shall deposit with
the Trustee an amount of money in the currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series) 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 on or 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 in this
clause provided. Thereupon the Trustee shall fix a 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 mailed, first-class postage prepaid, to each Holder of
Registered Securities of such series at his address as it appears in the
Security Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense of the Company,
cause a similar notice to be published at least once in an Authorized Newspaper
in each Place of Payment, but such publications shall not be a condition
precedent to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names the Registered Securities of such series (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 clause (2). In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series in
exchange for a Registered Security of such series after the close of business
at such office or agency on any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the
coupon relating to such proposed date of payment and Defaulted Interest will
not be payable on such proposed date of payment in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such coupon when due in accordance with the provisions of this
Indenture.

 

(2)           The Company may make payment of any
Defaulted Interest on the Registered Securities of any series in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which such 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

 

34

 

payment pursuant to this
clause, such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the
foregoing provisions of this Section and Section 305, each Security delivered
under this 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 308. Persons
Deemed Owners. Prior to due presentment of a Registered Security for registration
of transfer, the Company, any Guarantor, the Trustee and any agent of the
Company, any Guarantor or the Trustee may treat the Person in whose name such
Registered Security is registered as the owner of such Security for the purpose
of receiving payment of principal of (and premium, if any), and (subject to
Sections 305 and 307) interest on, such Registered Security and for all other
purposes whatsoever, whether or not such Registered Security be overdue, and
neither the Company, any Guarantor, the Trustee nor any agent of the Company,
any Guarantor or the Trustee shall be affected by notice to the contrary.

 

Title to any
Bearer Security and any coupons appertaining thereto shall pass by delivery. The
Company, any Guarantor, the Trustee and any agent of the Company, any Guarantor
or the Trustee may treat the Holder of any Bearer Security and the Holder of
any coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Security or coupon be overdue, and neither the
Company, any Guarantor, the Trustee nor any agent of the Company, any Guarantor
or the Trustee shall be affected by notice to the contrary.

 

None of the
Company, any Guarantor, the Trustee, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Security in global form or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

 

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

 

SECTION 309. Cancellation.
All Securities and coupons surrendered for payment, redemption, repayment at
the option of the Holder, registration of transfer or exchange or for credit
against any sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee, and any such Securities and coupons
and Securities and coupons surrendered directly to the Trustee for any such
purpose shall be promptly canceled by it. The Company may at any time deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any

 

35

 

manner whatsoever, and
may deliver to the Trustee (or to any other Person for delivery to the Trustee)
for cancellation any Securities previously authenticated hereunder which the
Company has not issued and sold, and all Securities so delivered shall be
promptly canceled by the Trustee. If the Company shall so acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and
until the same are surrendered to the Trustee for cancellation. No Securities
shall be authenticated in lieu of or in exchange for any Securities canceled as
provided in this Section, except as expressly permitted by this Indenture. Canceled
Securities and coupons held by the Trustee shall be destroyed by the Trustee
and the Trustee shall deliver a certificate of such destruction to the Company,
unless by a Company Order the Company directs their return to it.

 

SECTION 310. Computation
of Interest. Except as otherwise specified as contemplated by Section 301
with respect to Securities of any series, interest on the Securities of each
series shall be computed on the basis of a 360-day year consisting of twelve
30-day months.

 

ARTICLE FOUR

 

SATISFACTION AND DISCHARGE

 

SECTION 401. Satisfaction
and Discharge of Indenture. This Indenture shall upon Company Request cease
to be of further effect with respect to any series of Securities specified in
such Company Request (except as to any surviving rights of registration of
transfer or exchange of Securities of such series herein expressly provided
for, any right to receive Additional Amounts, as provided in Section 1011, and
any right to convert or exchange Securities in accordance with their terms),
and the Trustee, upon receipt of a Company Order, and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture as to such series when

 

(1)           either

 

(A)          all
Securities of such series theretofore authenticated and delivered and all
coupons, if any, appertaining thereto (other than (i) coupons appertaining to
Bearer Securities surrendered for exchange for Registered Securities and
maturing after such exchange, whose surrender is not required or has been
waived as provided in Section 305, (ii) Securities and coupons of such series
which have been mutilated, destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306, (iii) coupons appertaining to
Securities called for redemption and maturing after the relevant Redemption
Date, whose surrender has been waived as provided in Section 1106, and (iv)
Securities and coupons of such series 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 1003) have been delivered to the Trustee for cancellation; or

 

(B)           all
Securities of such series and, in the case of (i) or (ii) below, any coupons
appertaining thereto not theretofore delivered to the Trustee for cancellation

 

36

 

(i)            have
become due and payable, or

 

(ii)           will
become due and payable at their Stated Maturity within one year, or

 

(iii)          if
redeemable at the option of the Company, are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company,

 

and the Company, in the
case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose an amount in
the currency or currencies in which the Securities of such series are payable,
sufficient to pay and discharge the entire indebtedness on such Securities and
such coupons not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, and any Additional Amounts with
respect thereto, to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be;

 

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

 

(3)           the Company has delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture as to such series have been complied with.

 

Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee and any predecessor Trustee under Section 606, the
obligations of the Company to any Authenticating Agent under Section 611 and,
if money shall have been deposited with and held by the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 shall survive.

 

SECTION 402. Application
of Trust Funds. Subject to the provisions of the last paragraph of Section
1003, all money deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities, the coupons and this 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
(and premium, if any), and any interest and Additional Amounts 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.

 

37

 

ARTICLE FIVE

REMEDIES

 

SECTION 501. Events
of Default. “Event of Default”, wherever used herein with respect to
any particular series of Securities, means any one of the following events with
respect to such series of Securities (whatever the reason for such Event of
Default and whether or not it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body),
it being understood that an Event of Default with respect to a particular
series of Securities does not automatically constitute an Event of Default with
respect to any other series of Securities:

 

(1)           default in the payment of any
interest upon or any Additional Amounts payable in respect of any Security of
that series or of any coupon appertaining thereto, when such interest,
Additional Amounts or coupon becomes due and payable, and continuance of such
default for a period of 30 days; or

 

(2)           default in the payment of the
principal of (or premium, if any, on) any Security of that series when it
becomes due and payable at its Maturity; or

 

(3)           default in the deposit of any sinking
fund payment, when and as due by the terms of any Security of that series; or

 

(4)           default in the performance, or
breach, of any covenant or warranty of the Company or a Guarantor in this
Indenture with respect to any Security of that series (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified
mail, to the Company and each Guarantor by the Trustee or to the Company, each
Guarantor and the Trustee by the Holders of at least 25% in principal amount of
the Outstanding Securities of that series a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a “Notice of Default” hereunder; or

 

(5)           default
under any evidence of Recourse Indebtedness of the Company or a Guarantor (or
of any Subsidiary, the repayment of which the Company or Guarantor has
guaranteed or for which the Company or Guarantor is directly responsible or
liable as obligor or guarantor), or any mortgage, indenture or other instrument
of the Company or a Guarantor (including a default with respect to Securities
of any series other than that series) under which there may be issued or by
which there may be secured any Recourse Indebtedness of the Company or
Guarantor (or of any Subsidiary, the repayment of which the Company or
Guarantor has guaranteed or for which the Company or Guarantor is directly
responsible or liable as obligor or guarantor), whether such Recourse Indebtedness
now exists or shall hereafter be created, which default shall constitute a
failure to pay an aggregate principal amount exceeding $5,000,000 of such
Recourse Indebtedness when due and payable after the expiration of any
applicable notice and grace periods with respect thereto and shall have
resulted in such Recourse Indebtedness in an aggregate principal amount
exceeding $5,000,000 becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without such
Recourse Indebtedness having been discharged or such acceleration having been

 

38

 

rescinded
or annulled, within a period of 30 days after there shall have been given, by
registered or certified mail, to the Company and Guarantor by the Trustee or to
the Company, the Guarantor and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written notice
specifying such default and requiring the Company or Guarantor to cause such
Recourse Indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a “Notice of Default”
hereunder; or

 

(6)           the Company, any Significant
Subsidiary or a Guarantor pursuant to or within the meaning of any Bankruptcy
Law:

 

(A)          commences
a voluntary case or files a petition, answer or consent seeking reorganization
or relief,

 

(B)           consents
to the entry of a decree or an order for relief against it in an involuntary case
or to the commencement of any such case against it,

 

(C)           consents
to the appointment of or taking possession by a Custodian of it or for all or
substantially all of its property, or

 

(D)          makes
a general assignment for the benefit of its creditors; or

 

(7)           a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that:

 

(A)          is
for relief against the Company, any Significant Subsidiary or a Guarantor in an
involuntary case,

 

(B)           adjudges
the Company, any Significant Subsidiary or a Guarantor to be insolvent or
approves a petition seeking reorganization, arrangement, adjustment or
composition of any of the foregoing,

 

(C)           appoints
a Custodian of the Company, any Significant Subsidiary or a Guarantor, or for
all or substantially all of its property, or

 

(D)          orders
the winding up or liquidation of the Company, any Significant Subsidiary or a
Guarantor,

 

and the order or
decree remains unstayed and in effect for 60 days, or

 

(8)           default in the conversion of the
Securities of that series, and continuance of such default for a period of 15
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by a Holder of
Securities of that series a written notice specifying such default and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or

 

39

 

(9)           a Guarantee, if issued, ceases to be,
or is asserted in writing by the Company or any Guarantor not to be, in full
force or effect or enforceable in accordance with its terms with respect to
Securities of that series, except as otherwise provided herein; or

 

(10)         any other Event of Default provided
with respect to Securities of that series.

 

As used in this
Section 501, the term “Bankruptcy Law” means title 11, U.S. Code or any
similar Federal or State law for the relief of debtors and the term “Custodian”
means any receiver, trustee, assignee, liquidator or other similar official
under any Bankruptcy Law.

 

SECTION 502. Acceleration
of Maturity; Rescission and Annulment. If an Event of Default with respect
to Securities of any series at the time Outstanding other than an Event of
Default specified in clause (6) or (7) of Section 501 occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series may declare the
principal (or, if any Securities are Original Issue Discount Securities or
Indexed Securities, such portion of the principal as may be specified in the
terms thereof) of all the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by the Holders), and upon any such declaration such principal or specified
portion thereof shall become immediately due and payable.

 

If an Event of
Default specified in clause (6) or (7) of Section 501 occurs, all unpaid
principal of and accrued interest on the Outstanding Securities of that series
(or such lesser amount as may be provided for in the Securities of such series)
shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder of any Security of that series.

 

At any time after
such a declaration of acceleration with respect to Securities of any series has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in principal amount of the Outstanding Securities of that series, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:

 

(1)           the Company has paid or deposited
with the Trustee a sum sufficient to pay in the currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series):

 

(A)          all
overdue installments of interest on and any Additional Amounts payable in
respect of all Outstanding Securities of that series and any related coupons,

 

(B)           the
principal of (and premium, if any, on) any Outstanding Securities of that
series which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate or rates borne by or provided for in such
Securities,

 

40

 

(C)           to
the extent that payment of such interest is lawful, interest upon overdue
installments of interest and any Additional Amounts at the rate or rates borne
by or provided for in such Securities, and

 

(D)          all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;
and

 

(2)           all Events of Default with respect to
Securities of that series, other than the nonpayment of the principal of (or
premium, if any) or interest on Securities of that series which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.

 

No such rescission
shall affect any subsequent default or impair any right consequent thereon.

 

SECTION 503. Collection
of Indebtedness and Suits for Enforcement by Trustee. The Company covenants
that if:

 

(1)           default is made in the payment of any
installment of interest or Additional Amounts, if any, on any Security of any
series and any related coupon when such interest or Additional Amount becomes
due and payable and such default continues for a period of 30 days, or

 

(2)           default is made in the payment of the
principal of (or premium, if any, on) any Security of any series at its
Maturity,

 

then the Company will,
upon demand by the Trustee, pay to the Trustee, for the benefit of the Holders
of such Securities of such series and coupons, the whole amount then due and
payable on such Securities and coupons for principal (and premium, if any) and
interest and Additional Amount, with interest upon any overdue principal (and
premium, if any) and, to the extent that payment of such interest shall be
legally enforceable, upon any overdue installments of interest or Additional
Amounts, if any, at the rate or rates borne by or provided for in such
Securities, 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 the Company
fails to pay such amounts forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, may institute a judicial proceeding
for the collection of the sums so due and unpaid, and may prosecute such
proceeding to judgment or final decree, and may enforce the same against the
Company or any other obligor upon such Securities of such series and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon such Securities of
such series, wherever situated.

 

41

 

If an Event of
Default with respect to Securities of any series 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 of such series and any related coupons by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

 

SECTION 504. Trustee
May File Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company, a Guarantor
or any other obligor upon the Securities or the property of the Company, a
Guarantor or such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities of any series shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company, Guarantor or
obligor for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:

 

(i)            to file and prove a claim for the
whole amount, or such lesser amount as may be provided for in the Securities of
such series, of principal (and premium, if any) and interest and Additional
Amounts, if any, owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and of the Holders allowed in such judicial proceeding, and

 

(ii)           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
of Securities of such series and coupons 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 to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee
and any predecessor Trustee, their agents and counsel, and any other amounts
due the Trustee or any predecessor Trustee under Section 606.

 

Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder of a Security or coupon any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or coupons or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security or coupon in any such
proceeding.

 

SECTION 505. Trustee
May Enforce Claims Without Possession of Securities or Coupons. All rights
of action and claims under this Indenture or any of the Securities or coupons
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or coupons or the production thereof in any proceeding relating
thereto, and any such proceeding

 

42

 

instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the Securities and
coupons in respect of which such judgment has been recovered.

 

SECTION 506. Application
of Money Collected. Any money collected by the Trustee pursuant to this
Article shall be applied 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 (or premium, if any) or interest and any Additional Amounts, upon
presentation of the Securities or coupons, or both, as the case may be, and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:

 

FIRST:  To the payment of all amounts due the Trustee
and any predecessor Trustee under Section 606;

 

SECOND:  To the payment of the amounts then due and
unpaid upon the Securities and coupons for principal (and premium, if any) and
interest and any Additional Amounts payable, in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the aggregate amounts due and payable on
such Securities and coupons for principal (and premium, if any), interest and
Additional Amounts, respectively; and

 

THIRD:  To the payment of the remainder, if any, to
the Company.

 

SECTION 507. Limitation
on Suits. No Holder of any Security of any series or any related coupon
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:

 

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

 

(2)           the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;

 

(3)           such Holder or Holders have offered
to the Trustee indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities to be incurred in compliance with such request;

 

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

 

43

 

(5)           no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding Securities of that
series;

 

it being understood and
intended that no one or more of such Holders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this 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 of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all such Holders.

 

SECTION 508. Unconditional
Right of Holders to Receive Principal, Premium, if any, Interest and Additional
Amounts. Notwithstanding any other provision in this Indenture, the Holder
of any Security or coupon shall have the right which is absolute and
unconditional to receive payment of the principal of (and premium, if any) and
(subject to Sections 305 and 307) interest on, and any Additional Amounts in
respect of, such Security or payment of such coupon on the respective due dates
expressed in such Security or coupon (or, in the case of redemption or repayment,
on the Redemption Date or the Repayment Date) and to institute suit for the
enforcement of any such payment or for the enforcement of any applicable
conversion right in the Securities, and such rights shall not be impaired
without the consent of such Holder.

 

SECTION 509. Restoration
of Rights and Remedies. If the Trustee or any Holder of a Security or
coupon has instituted any proceeding to enforce any right or remedy under this
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, the Company, any Guarantor, the Trustee and the Holders
of Securities and coupons shall, subject to any determination in such
proceeding, 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 510. Rights
and Remedies Cumulative. Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons in the last paragraph of Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders of Securities or
coupons is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

 

SECTION 511. Delay
or Omission Not Waiver. No delay or omission of the Trustee or of any
Holder of any Security or coupon to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Securities or coupons, as the case may be.

 

44

 

SECTION 512. Control
by Holders of Securities. The Holders of not less than a majority in
principal amount of the Outstanding Securities of any series 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
the Trustee with respect to the Securities of such series, provided that

 

(1)           such direction shall not be in
conflict with any rule of law or with this Indenture,

 

(2)           the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction, and

 

(3)           the Trustee need not take any action
which might involve it in personal liability or be unduly prejudicial to the Holders
of Securities of such series not joining therein.

 

SECTION 513. Waiver
of Past Defaults. The Holders of not less than a majority in principal
amount of the Outstanding Securities of any series may on behalf of the Holders
of all the Securities of such series and any related coupons waive any past
default hereunder with respect to such series and its consequences, except a
default

 

(1)                in the payment of the principal
of (or premium, if any) or interest on or Additional Amounts payable in respect
of any Security of such series or any related coupons,

 

(2)                in the conversion or exchange of
the Securities in accordance with their terms, or

 

(3)                in respect of a covenant or
provision hereof which under Article Nine cannot be modified or amended without
the consent of the Holder of each Outstanding Security of such series 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
Indenture; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

 

SECTION 514. Waiver
of Usury, Stay or Extension Laws. Each of the Company and each Guarantor
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 this Indenture; and each of the Company and each Guarantor
hereby expressly waives (to the extent that it may lawfully do so) 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.

 

45

 

SECTION 515. Undertaking
for Costs. All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of any undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption or repayment, on or after the
Redemption Date or the Repayment Date) or for the enforcement of any applicable
conversion right in the Securities.

 

ARTICLE SIX

 

THE TRUSTEE

 

SECTION 601. Notice
of Defaults. Within 90 days after the occurrence of any default hereunder
with respect to the Securities of any series, the Trustee shall transmit, in
the manner and to the extent provided in TIA Section 313(c), notice of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in
the payment of the principal of (or premium, if any) or interest on or any Additional
Amounts with respect to any Security of such series, or in the payment of any
sinking fund installment with respect to the Securities of such series, the
Trustee shall be protected in withholding such notice if and so long as
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders of the Securities
and coupons of such series; and provided further that in the case of any
default or breach of the character specified in Section 501(4) with respect to
the Securities and coupons of such series, no such notice to Holders shall be
given until at least 60 days after the occurrence thereof. For the purpose of
this Section, the term “default” means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to the Securities of such series.

 

SECTION 602. Certain
Rights of Trustee. Subject to the provisions of TIA Section 315(a) through
315(d):

 

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

 

(2)           any request or direction of the
Company mentioned herein shall be sufficiently evidenced by a Company Request
or Company Order (other than delivery of any Security, together with any
coupons appertaining thereto, to the Trustee for authentication and delivery

 

46

 

pursuant to Section 303
which shall be sufficiently evidenced as provided therein) and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;

 

(3)           whenever in the administration of
this 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, rely upon an Officers’ Certificate;

 

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

 

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

 

(6)           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, coupon 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;

 

(7)           the Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;

 

(8)           the Trustee shall have no liability
for the actions or omissions of any Paying Agent so long as the Trustee has
acted in good faith and with due care with respect to a matter;

 

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

 

(10)         subject to clause (11) below, the
Trustee shall not be charged with notice or knowledge of any matter except to
the extent reasonably known to a Responsible Officer of the Trustee or set
forth in a written notice received at the Corporate Trust Office and making
express reference to the Indenture, the Company or the Securities; and

 

47

 

(11)         unless and except to the extent
otherwise expressly provided herein, the Trustee shall be under no duty to
review or evaluate the contents of any reports or other documents filed with it
pursuant to Section 703 or Section 1009 hereof, except to make them available
for inspection at reasonable times by Holders of Securities.

 

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 any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.

 

Except during the
continuance of an Event of Default, the Trustee undertakes to perform only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee.

 

SECTION 603. Not
Responsible for Recitals or Issuance of Securities. The recitals contained
herein and in the Securities, except the Trustee’s certificate of
authentication, and in any coupons shall be taken as the statements of the
Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities or
coupons, except that the Trustee represents that it is duly authorized to
execute and deliver this Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in any Statement of
Eligibility on Form T-1 supplied to the Company are true and accurate. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.

 

SECTION 604. May
Hold Securities. The Trustee, any Paying Agent, Security Registrar,
Authenticating Agent or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Securities and coupons
and, subject to TIA Sections 310(b) and 311, may otherwise deal with the
Company with the same rights it would have if it were not Trustee, Paying
Agent, Security Registrar, Authenticating Agent or such other agent.

 

SECTION 605. 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 in writing with the Company.

 

SECTION 606. Compensation
and Reimbursement. The Company agrees:

 

(1)           to pay to the Trustee from time to
time reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);

 

(2)           except as otherwise expressly
provided herein, to reimburse each of the Trustee and any predecessor Trustee
upon its request for all reasonable expenses, disbursements and

 

48

 

advances incurred or made
by the Trustee in accordance with any provision of this Indenture (including
the reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and

 

(3)           to indemnify each of the Trustee and
any predecessor Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its own part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including without
limitation reasonable attorneys’ fees and costs) of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.

 

When the Trustee
incurs expenses or renders services in connection with an Event of Default
specified in Section 501(6) or Section 501(7), 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.

 

As security for
the performance of the obligations of the Company under this Section, the
Trustee shall have a lien prior to the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
payment of principal of (or premium, if any) or interest on particular
Securities or any coupons.

 

The provisions of
this Section shall survive the termination of this Indenture (and shall survive
the resignation or removal of the Trustee pursuant to Section 608).

 

SECTION 607. Eligibility
of Trustee; Conflicting Interests. There shall at all times be a Trustee
hereunder which shall be eligible to act as Trustee under TIA Section 310(a)(1)
and shall have a combined capital and surplus of at least $50,000,000. If such
Trustee publishes reports of condition at least annually, pursuant to law or
the requirements of Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Trustee 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 hereinafter specified in this Article.

 

SECTION 608. Resignation
and Removal; Appointment of Successor. (a) No resignation or removal of the
Trustee and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section 609.

 

(b)           The Trustee may resign at any time
with respect to the Securities of one or more series by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of

 

49

 

such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(c)           The Trustee may be removed at any
time with respect to the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such series
delivered to the Trustee and to the Company.

 

(d)           If at any time:

 

(1)           the Trustee shall fail to comply with
the provisions of TIA Section 310(b) 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

 

(2)           the Trustee shall cease to be
eligible under Section 607 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

 

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

 

then, in any such case,
(i) the Company by or pursuant to a Board Resolution may remove the Trustee and
appoint a successor Trustee with respect to all Securities, or (ii) subject to
TIA Section 315(e), any Holder of a Security 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 Trustee shall resign, be removed
or become incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause with respect to the Securities of one or more series, the
Company, by or pursuant to a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be appointed
with respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of any
particular series). If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, and to any successor
Trustee appointed by the Company with respect to such Securities, the successor
Trustee so appointed by the Holders shall, forthwith upon its acceptance of
such appointment, become the successor Trustee with respect to the Securities
of such series and to that extent supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders of Securities
and accepted appointment in the manner hereinafter provided, any Holder of a
Security

 

50

 

who has been a bona fide
Holder of a Security of such series 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 with respect to Securities
of such series.

 

(f)            The Company shall give notice of
each resignation and each removal of the Trustee with respect to the Securities
of any series and each appointment of a successor Trustee with respect to the
Securities of any series in the manner provided for notices to the Holders of
Securities in Section 106. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.

 

SECTION 609. Acceptance
of Appointment by Successor. (a)  In
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges and other due
but unpaid amounts owing to it hereunder, 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, subject
nevertheless to its claim, if any, provided for in Section 606.

 

(b)           In case of the appointment hereunder
of a successor Trustee with respect to the Securities of one or more (but not
all) series, the Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and deliver an
indenture supplemental hereto, pursuant to Article Nine hereof, wherein each
successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Trustee all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such

 

51

 

retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates.

 

(c)           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 such successor Trustee all such rights,
powers and trusts referred to in paragraph (a) or (b) of this Section, as the
case may be.

 

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

 

SECTION 610. Merger,
Conversion, Consolidation or Succession to Business. Any entity into which
the Trustee may be merged or converted or with which it may be consolidated, or
any entity resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any entity succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such entity 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 or coupons 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 or coupons so authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities or coupons. In case any
Securities or coupons shall not have been authenticated by such predecessor
Trustee, any such successor Trustee may authenticate and deliver such
Securities or coupons, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.

 

SECTION 611. Appointment
of Authenticating Agent. At any time when any of the Securities remain
Outstanding, the Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or partial redemption or repayment thereof,
and Securities so authenticated shall be entitled to the benefits of this
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 this 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 and shall at all times
be a bank or trust company or corporation organized and doing business and in
good standing under the laws of the United States or of any State or the
District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or

 

52

 

State authorities. If
such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.

 

Any entity into
which an Authenticating Agent may be merged or converted or with which it may
be consolidated, or any entity resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a party, or any
entity succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such entity 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 for any series of Securities may at any time resign by giving written
notice of resignation to the Trustee for such series and to the Company. The
Trustee for any series of Securities 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 a 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 for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth
in Section 106. 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 for its services under this
Section.

 

If an appointment
with respect to one or more series is made pursuant to this Section, the
Securities of such series 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 of the series designated therein referred to in the within-mentioned
Indenture.

 

[NAME OF TRUSTEE]

as Trustee

 

53

 

	
   

  	
  By:

  	
   

  	
  ,

  
	
   

  	
    as Authenticating Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Authorized Signatory

  

 

ARTICLE SEVEN

 

HOLDERS’ LISTS AND REPORTS

 

SECTION 701. Disclosure
of Names and Addresses of Holders. Every Holder of Securities or coupons,
by receiving and holding the same, agrees with the Company and the Trustee that
neither the Company nor the Trustee nor any Authenticating Agent nor any Paying
Agent nor any Security Registrar shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders of
Securities in accordance with TIA Section 312, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
TIA Section 312(b).

 

SECTION 702. Reports
by Trustee. Within 60 days after June 30 of each year commencing with the
first June 30 after the first issuance of Securities pursuant to this
Indenture, the Trustee shall transmit by mail to all Holders of Securities as
provided in TIA Section 313(c) a brief report dated as of such June 30 if
required by TIA Section 313(a).

 

SECTION 703. Company
to Furnish Trustee Names and Addresses of Holders. The Company will furnish
or cause to be furnished to the Trustee:

 

(a)           semi-annually, with respect to each
series of Securities, a list, in such form and as of such date as the Trustee
may reasonably require, of the names and addresses of the Holders of Registered
Securities of such series as of the applicable date, and

 

(b)           at such other times as the Trustee
may request in writing, within 30 days after the receipt by the Company of any
such request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished,

 

provided, however, that,
so long as the Trustee is the Security Registrar, no such list shall be
required to be furnished.

 

ARTICLE EIGHT

 

CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE

 

SECTION 801. Consolidation
or Merger of Company and Sale, Lease or Conveyance Permitted Subject to Certain
Conditions. The Company may consolidate with, or sell, lease or

 

54

 

convey all or
substantially all of its assets to, or merge with or into, any other
corporation, provided that, in any such case (i) either the Company shall be
the continuing corporation, or the successor corporation shall be a corporation
organized and existing under the laws of the United States or a State thereof
and such successor corporation shall expressly assume all of the obligations of
the Company on all of the Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company by supplemental indenture,
complying with Article Nine hereof, satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation, and (ii) immediately after giving
effect to such transaction and treating any indebtedness which becomes an
obligation of the Company or any Subsidiary as a result thereof as having been
incurred by the Company or such Subsidiary at the time of such transaction, no
Event of Default, and no event which, after notice or the lapse of time, or
both, would become an Event of Default, shall have occurred and be continuing.

 

SECTION 802. Rights
and Duties of Successor Corporation. In case of any such consolidation,
merger, sale, lease or conveyance and upon any such assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for
the Company with the same effect as if it had been named herein as the party of
the first part, and the predecessor corporation, except in the event of a
lease, shall be relieved of any further obligation under this Indenture and the
Securities. A successor corporation to the Company may cause to be signed, and
may issue either in its own name or in the name of the Company, any or all of
the Securities issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee; and, upon the order of such
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Company to the Trustee for
authentication, and any Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities
had been issued at the date of the execution hereof.

 

In case of any
such consolidation, merger, sale, lease or conveyance, such changes in
phraseology and form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.

 

SECTION 803. Officers’
Certificate and Opinion of Counsel. Any consolidation, merger, sale, lease
or conveyance permitted under Section 801 is also subject to the condition that
the Trustee receive an Officers’ Certificate and an Opinion of Counsel to the
effect that any such consolidation, merger, sale, lease or conveyance, and the
assumption by any successor corporation, complies with the provisions of this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.

 

55

 

ARTICLE NINE

 

SUPPLEMENTAL INDENTURES

 

SECTION 901. Supplemental
Indentures Without Consent of Holders. Without the consent of any Holders
of Securities or coupons, the Company, when authorized by or pursuant to a
Board Resolution, any Guarantor and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

 

(1)           to evidence the succession of another
Person to the Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities contained; or

 

(2)           to add to the covenants of the
Company for the benefit of the Holders of all or any series of Securities (and
if such covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included solely for
the benefit of such series) or to surrender any right or power herein conferred
upon the Company; or

 

(3)           to add any additional Events of
Default for the benefit of the Holders of all or any series of Securities (and
if such Events of Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are expressly being included
solely for the benefit of such series); provided, however, that in respect of
any such additional Events of Default 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 provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the Holders of a
majority in aggregate principal amount of that or those series of Securities to
which such additional Events of Default apply to waive such default; or

 

(4)           to add to or change any of the
provisions of this Indenture to provide that Bearer Securities may be
registrable as to principal, to change or eliminate any restrictions on the
payment of principal of or any premium or interest on Bearer Securities, to
permit Bearer Securities to be issued in exchange for Registered Securities, to
permit Bearer Securities to be issued in exchange for Bearer Securities of
other authorized denominations or to permit or facilitate the issuance of
Securities in uncertificated form, provided that any such action shall not
adversely affect the interests of the Holders of Securities of any series or
any related coupons in any material respect; or

 

(5)           to change or eliminate any of the
provisions of this Indenture, provided that any such change or elimination
shall become effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is entitled
to the benefit of such provision; or

 

(6)           to secure the Securities or provide a
Guarantee of the Securities; or

 

56

 

(7)           to establish the form or terms of
Securities of any series and any related coupons as permitted by Sections 201
and 301, including the provisions and procedures relating to Securities
convertible or exchangeable into Common Shares or Preferred Shares, as the case
may be; or

 

(8)           to evidence and provide for the
acceptance of appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee; or

 

(9)           to cure any ambiguity, to correct or
supplement any provision herein which may be defective or inconsistent with any
other provision herein; or

 

(10)         to make any other provisions with
respect to matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture and which shall not
adversely affect the interests of the Holders of Securities and any related
coupons in any material respect; or

 

(11)         to supplement any of the provisions of
this Indenture to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to Sections 401,
1402 and 1403; provided that any such action shall not adversely affect the
interests of the Holders of Securities of such series and any related coupons
or any other series of Securities in any material respect.

 

SECTION 902. Supplemental
Indentures with Consent of Holders. With the consent of the Holders of not
less than a majority in principal amount of all Outstanding Securities affected
by such supplemental indenture, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by or pursuant to a Board
Resolution, any Guarantor of such Securities, and the Trustee, may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby:

 

(1)           change the Stated Maturity of the
principal of (or premium, if any, on) or any installment of principal of or
interest on, any Security, or reduce the principal amount thereof or the rate
(or calculation of the rate) or amount of interest thereon or any Additional
Amounts payable in respect thereof, or any premium payable upon the redemption
thereof, or change any obligation of the Company to pay Additional Amounts
pursuant to Section 1011 (except as contemplated by Section 801(1) and
permitted by Section 901(1)), or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the amount thereof provable in bankruptcy pursuant to Section 504, or adversely
affect any right of repayment at the option of the Holder of any Security, or
change any Place of Payment where, or the currency or currencies in which, any
Security or any premium or the interest thereon is payable, or impair the

 

57

 

right to institute suit
for the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption or repayment at the option of the Holder, on or
after the Redemption Date or the Repayment Date, as the case may be) or for the
enforcement of any applicable conversion or exchange right in any Security, or

 

(2)           reduce the percentage in principal
amount of the Outstanding Securities of any series, the consent of whose
Holders is required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver with respect to such series (or
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting, or

 

(3)           modify or effect in any manner
adverse to the Holders the terms and conditions of the obligations of any
Guarantor of Securities contained herein or in the related Guarantees, or
release any Guarantor of such Security from its Guarantee, or

 

(4)           modify any of the provisions of this
Section, Section 513 or Section 1012, except to increase the required percentage
to effect such action or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Security affected thereby.

 

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

 

A supplemental
indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or
more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.

 

SECTION 903. Execution
of Supplemental Indentures. In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or the
modification thereby of the trusts created by this Indenture, the Trustee shall
be entitled to receive, 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 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 this Indenture or otherwise.

 

SECTION 904. Effect
of Supplemental Indentures. Upon the execution of any supplemental
indenture under this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture
for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and any coupon appertaining thereto shall
be bound thereby.

 

58

 

SECTION 905. Conformity
with Trust Indenture Act. Every supplemental indenture executed pursuant to
this Article shall conform to the requirements of the TIA as then in effect.

 

SECTION 906. Reference
in Securities to Supplemental Indentures. Securities of any series
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall, if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities of
any series so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.

 

ARTICLE TEN

 

COVENANTS

 

SECTION 1001. Payment
of Principal, Premium, if any, Interest and Additional Amounts. The Company
covenants and agrees for the benefit of the Holders of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on and any Additional Amounts payable in respect of the
Securities of that series in accordance with the terms of such series of
Securities, any coupons appertaining thereto and this Indenture. Unless
otherwise specified as contemplated by Section 301 with respect to any series
of Securities, any interest due on and any Additional Amounts payable in
respect of Bearer Securities on or before Maturity, other than Additional
Amounts, if any, payable as provided in Section 1011 in respect of principal of
(or premium, if any, on) such a Security, shall be payable only upon
presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature. Unless
otherwise specified with respect to Securities of any series pursuant to
Section 301, at the option of the Company, all payments of principal may be
paid by check to the Holder of the Registered Security or other person entitled
thereto against surrender of such Security.

 

SECTION 1002. Maintenance
of Office or Agency. If Securities of a series are issuable only as
Registered Securities, the Company shall maintain in each Place of Payment for
any series of Securities an office or agency where Securities of that series
may be presented or surrendered for payment or conversion, where Securities of
that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
of that series and this Indenture may be served. If Securities of a series are
issuable as Bearer Securities, the Company will maintain: (A) in the Borough of
Manhattan, The City of New York, an office or agency where any Registered
Securities of that series may be presented or surrendered for payment or
conversion, where any Registered Securities of that series may be surrendered
for registration of transfer, where Securities of that series may be
surrendered for exchange, where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served and
where Bearer Securities of that series and related coupons may be presented or
surrendered for payment or conversion in the circumstances described in the
following paragraph (and not otherwise); (B) subject to any laws

 

59

 

or regulations applicable
thereto in a Place of Payment for that series which is located outside the
United States, an office or agency where Securities of that series and related
coupons may be presented and surrendered for payment (including payment of any
Additional Amounts payable on Securities of that series pursuant to Section
1011) or conversion; provided, however, that if the Securities of that series
are listed on the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, the Company
will maintain a Paying Agent for the Securities of that series in Luxembourg or
any other required city located outside the United States, as the case may be,
so long as the Securities of that series are listed on such exchange; and (C)
if the Securities of such series are or may also be issued in part as, or may
be converted to, Registered Securities, subject to any laws or regulations
applicable thereto in a Place of Payment for that series located outside the
United States, an office or agency where any Registered Securities of that
series may be surrendered for registration of transfer, where Securities of that
series may be surrendered for exchange and where notices and demands to or upon
the Company in respect of the Securities of that series and this Indenture may
be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of each 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, except that Bearer Securities of that
series and the related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts payable on Bearer Securities of
that series pursuant to Section 1011) or conversion at the offices specified in
the Security, in London, England, and the Company hereby appoints the same as
its agent to receive such respective presentations, surrenders, notices and
demands, and the Company hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands. Nothing herein shall
oblige the Trustee to maintain any such office or agency on behalf of the
Company in any such Place of Payment, other than the Corporate Trust Office.

 

Unless otherwise
specified with respect to any Securities pursuant to Section 301, no payment of
principal, premium or interest on or Additional Amounts in respect of Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that, if amounts owing with respect to any Bearer Securities of a series
are payable in Dollars, payment of principal of and any premium and interest on
any Bearer Security (including any Additional Amounts payable on Securities of
such series pursuant to Section 1011) shall be made at the office of the
Company’s Paying Agent in the Borough of Manhattan, The City of New York, if
(but only if) payment in Dollars of the full amount of such principal, premium,
interest or Additional Amounts, as the case may be, at all offices or agencies
outside the United States maintained for the purpose by the Company in
accordance with this Indenture, is illegal or effectively precluded by exchange
controls or other similar restrictions.

 

The Company may
from time to time designate one or more other offices or agencies where the
Securities of one or more series may be presented or surrendered for any or all
of such purposes, and may from time to time rescind any such designation;
provided, however, that no

 

60

 

such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in accordance with the requirements set forth
above for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency. Unless
otherwise specified with respect to any Securities pursuant to Section 301 with
respect to a series of Securities, the Company hereby designates as a Place of
Payment for each series of Securities the office or agency of the Company in
the Borough of Manhattan, The City of New York, and initially appoints [Name of
Trustee] at                   ,
[New York, New York]              
as Paying Agent in such city and as its agent to receive all such
presentations, surrenders, notices and demands.

 

Unless otherwise
specified with respect to any Securities pursuant to Section 301, if and so
long as the Securities of any series (i) are denominated in a Foreign Currency
or (ii) may be payable in a Foreign Currency, or so long as it is required
under any other provision of the Indenture, then the Company will maintain with
respect to each such series of Securities, or as so required, at least one
exchange rate agent.

 

SECTION 1003. Money
for Securities Payments to Be Held in Trust. If the Company shall at any
time act as its own Paying Agent with respect to any series of any Securities
and any related coupons, it will, on or before each due date of the principal
of (and premium, if any), or interest on or Additional Amounts in respect of,
any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum in the currency or currencies in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay
the principal (and premium, if any) or interest or Additional Amounts 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 of its
action or failure so to act.

 

Whenever the
Company shall have one or more Paying Agents for any series of Securities and
any related coupons, it will, on or before each due date of the principal of
(and premium, if any), or interest on or Additional Amounts in respect of, any
Securities of that series, deposit with a Paying Agent a sum (in the currency
or currencies described in the preceding paragraph) sufficient to pay the
principal (and premium, if any) or interest or Additional Amounts, so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest or Additional Amounts and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee 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

 

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

 

61

 

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

 

(3)           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 of this
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 by such
Paying Agent, such sums to be held by the Trustee upon the same trusts 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 sums.

 

Except as
otherwise provided in the Securities of any series (and subject to any
abandoned property laws that may be applicable), any money deposited with the
Trustee in trust or with any Paying Agent, or then held by the Company in
trust, for the payment of the principal of (and premium, if any) or interest
on, or any Additional Amounts in respect of, any Security of any series and
remaining unclaimed for two years after such principal (and premium, if any),
interest or Additional Amounts has become due and payable shall be paid to the
Company upon Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company and any Guarantor(s)
for payment of such principal of (and premium, if any) or interest on, or any
Additional Amounts in respect of, any Security, without interest thereon, and
all liability of the Trustee or such Paying Agent with respect to such 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 an Authorized Newspaper, 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.

 

SECTION 1004. [Reserved].

 

SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any right or franchise if
its Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of business and that the loss thereof is not
disadvantageous in any material respect to the Holders.

 

SECTION 1006. Maintenance
of Properties. The Company will, and will cause each of its Subsidiaries
to, cause all of its material properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary

 

62

 

repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company or any
Subsidiary from discontinuing the operation and maintenance of any such
properties if such discontinuance is, in the judgment of the Company or the
Subsidiary, desirable in the conduct of its business and not disadvantageous in
any material respect to the Holders.

 

SECTION 1007. Insurance.
The Company will, and will cause each of its Subsidiaries to, keep all of its
insurable properties adequately insured against loss or damage with insurers of
recognized responsibility in commercially reasonable amounts and types.

 

SECTION 1008. Payment
of Taxes and Other Claims. The Company will pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (1) all material
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (2) all material lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary unless such lien would not have a material adverse
effect upon such property; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) whose amount, applicability or validity is
being contested in good faith by appropriate proceedings or (ii) for which the
Company has set apart and maintains an adequate reserve.

 

SECTION 1009. Commission
and Other Reports to the Trustee. (a) 
The Company shall ensure delivery to the Trustee within 15 calendar days
after it files such annual and quarterly reports, information, documents and
other reports with the Commission, copies of its annual report and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act in accordance with TIA Section 314(a). In the event
the Company is at any time no longer subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, it shall continue to provide the
Trustee with reports containing substantially the same information as would
have been required to be filed with the Commission had the Company continued to
have been subject to such reporting requirements. In such event, such reports
shall be provided at the times the Company would have been required to provide
reports had it continued to have been subject to such reporting requirements.
The Company also shall comply with the other provisions of TIA Section 314(a).
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 the Company’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely conclusively on Officers’ Certificates). The Trustee shall
have no duty or responsibility to review such reports, information or
documents. In the event that the Company shall provide the Trustee with any
such report and shall not have filed such report on Commission’s Electronic
Data Gathering, Analysis and Retrieval system, the Trustee shall

 

63

 

promptly mail copies of
such reports to each Holder (other than reports provided solely pursuant to TIA
Section 314(a)).

 

(b)           The Company intends to file the
reports referred to in paragraph (a) above in this Section 1009 hereof with the
Commission in electronic form pursuant to Regulation S-T of the Commission
using the Commission’s Electronic Data Gathering, Analysis and Retrieval
system. Compliance with the foregoing shall constitute delivery by the Company
of such reports to the Trustee in compliance with the provisions of Section
1009(a) and TIA Section 314(a). The Trustee shall have no duty to search for or
obtain any electronic or other filings that the Company makes with the
Commission, regardless of whether such filings are periodic, supplemental or
otherwise. Delivery of the reports, information and documents to the Trustee
pursuant to this Section 1009(b) shall be solely for the purposes of compliance
with this Section 1009(b) and with TIA Section 314(a). The Trustee’s receipt of
such reports, information and documents shall not constitute notice to it of
the consent thereof or of any matter determinable from the content thereof,
including the Company’s compliance with any of its covenants hereunder, as to
which the Trustee is entitled to rely upon Officers’ Certificates.

 

SECTION 1010. Statement
as to Compliance. The Company and each Guarantor will deliver to the
Trustee, within 120 days after the end of each fiscal year, a brief certificate
from the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of its compliance with all
conditions and covenants under this Indenture and, in the event of any
noncompliance, specifying such noncompliance and the nature and status thereof.
For purposes of this Section 1010, such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.

 

SECTION 1011. Additional
Amounts. If any Securities of a series provide for the payment of
Additional Amounts, the Company will pay to the Holder of any Security of such
series or any coupon appertaining thereto Additional Amounts as may be
specified as contemplated by Section 301. Whenever in this Indenture there is
mentioned, in any context except in the case of Section 502(1), the payment of
the principal of or any premium or interest on, or in respect of, any Security
of any series or payment of any related coupon or the net proceeds received on
the sale or exchange of any Security of any series, such mention shall be
deemed to include mention of the payment of Additional Amounts provided by the
terms of such series established pursuant to Section 301 to the extent that, in
such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to such terms and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.

 

Except as
otherwise specified as contemplated by Section 301, if the Securities of a
series provide for the payment of Additional Amounts, at least 10 days prior to
the first Interest Payment Date with respect to that series of Securities (or
if the Securities of that series will not bear interest prior to Maturity, the
first day on which a payment of principal and any premium is made), and at
least 10 days prior to each date of payment of principal and any premium or
interest if there has been any change with respect to the matters set forth in
the below-mentioned

 

64

 

Officers’ Certificate,
the Company will furnish the Trustee and the Company’s principal Paying Agent
or Paying Agents, if other than the Trustee, with an Officers’ Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or interest on the Securities of that
series shall be made to Holders of Securities of that series or any related
coupons who are not United States persons without withholding for or on account
of any tax, assessment or other governmental charge described in the Securities
of the series. If any such withholding shall be required, then such Officers’
Certificate shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities of that series or
related coupons and the Company will pay to the Trustee or such Paying Agent
the Additional Amounts required by the terms of such Securities. In the event
that the Trustee or any Paying Agent, as the case may be, shall not so receive
the above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled (i) to assume that no such withholding or deduction is required with
respect to any payment of principal, premium, if any, or interest with respect
to any Securities of a series or related coupons until it shall have received a
certificate advising otherwise and (ii) to make all payments of principal,
premium, if any, and interest with respect to the Securities of a series or related
coupons without withholding or deductions until otherwise advised. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them or in reliance on any Officers’
Certificate furnished pursuant to this Section or in reliance on the Company’s
not furnishing such an Officers’ Certificate.

 

SECTION 1012. Waiver
of Certain Covenants. The Company may omit in any particular instance to
comply with any term, provision or condition set forth in Sections 1005 to
1011, inclusive, if before or after the time for such compliance the Holders of
at least a majority in principal amount of all outstanding Securities of such
series, by Act of such Holders, either waive such compliance in such instance
or generally waive compliance with such covenant or condition, but no such
waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.

 

ARTICLE ELEVEN

 

REDEMPTION OF SECURITIES

 

SECTION 1101. Applicability
of Article. Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.

 

SECTION 1102. 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 case of
any redemption at the election of the Company of less than all of the
Securities of any series, the Company shall, at least 15 days prior to the
giving of the notice of redemption in Section 1104

 

65

 

(unless a shorter notice
shall be satisfactory to the Trustee, for purposes of the Trustee’s
administrative convenience), notify the Trustee in writing of such Redemption
Date and of the principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers’ Certificate evidencing compliance with such restriction.

 

SECTION 1103. Selection
by Trustee of Securities to Be Redeemed. If less than all the Securities of
any series issued on the same day with the same terms are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series issued on such date with the same terms not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities of
that series.

 

The Trustee shall
promptly notify the Company and the Security Registrar (if other than itself)
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.

 

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

 

SECTION 1104. Notice
of Redemption. Notice of redemption shall be given in the manner provided
in Section 106, not less than 30 days nor more than 60 days prior to the
Redemption Date, unless a shorter period is specified by the terms of such
series established pursuant to Section 301, to each Holder of Securities to be
redeemed, but failure to give such notice in the manner herein provided to the
Holder of any Security designated for redemption as a whole or in part, or any
defect in the notice to any such Holder, shall not affect the validity of the
proceedings for the redemption of any other such Security or portion thereof.

 

Any notice that is
mailed to the Holders of Registered Securities in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
Holder receives the notice.

 

All notices of
redemption shall state:

 

(1)           the Redemption Date,

 

(2)           the Redemption Price, accrued
interest to the Redemption Date payable as provided in Section 1106, if any,
and Additional Amounts, if any,

 

66

 

(3)           if less than all Outstanding Securities
of any series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amount) of the particular Security or
Securities to be redeemed,

 

(4)           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 a charge, a new Security or Securities of
authorized denominations for the principal amount thereof remaining unredeemed,

 

(5)           that on the Redemption Date the
Redemption Price and accrued interest to the Redemption Date payable as
provided in Section 1106, if any, will become due and payable upon each such
Security, or the portion thereof, to be redeemed and, if applicable, that
interest thereon shall cease to accrue on and after said date,

 

(6)           the Place or Places of Payment where
such Securities, together in the case of Bearer Securities with all coupons
appertaining thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price and accrued interest, if any,
or for conversion,

 

(7)           that the redemption is for a sinking
fund, if such is the case,

 

(8)           that, unless otherwise specified in
such notice, Bearer Securities of any series, if any, surrendered for
redemption must be accompanied by all coupons maturing subsequent to the date
fixed for redemption or the amount of any such missing coupon or coupons will
be deducted from the Redemption Price, unless security or indemnity reasonably
satisfactory to the Company, the Trustee for such series and any Paying Agent
is furnished,

 

(9)           if Bearer Securities of any series
are to be redeemed and any Registered Securities of such series are not to be
redeemed, and if such Bearer Securities may be exchanged for Registered
Securities not subject to redemption on this Redemption Date pursuant to
Section 305 or otherwise, the last date, as determined by the Company, on which
such exchanges may be made,

 

(10)         the CUSIP number of such Security, if
any, and

 

(11)         if applicable, that a Holder of
Securities who desires to convert Securities for redemption must satisfy the
requirements for conversion contained in such Securities, the then existing
conversion price or rate, and the date and time when the option to convert
shall expire.

 

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 1105. Deposit
of Redemption Price. At least one Business Day 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, which it may not do in the case
of a sinking fund

 

67

 

payment under Article
Twelve, segregate and hold in trust as provided in Section 1003) an amount of
money in the currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay on the Redemption Date the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date, unless otherwise specified pursuant to Section 301 or in the
Securities of such series) accrued interest on, all the Securities or portions
thereof which are to be redeemed on that date.

 

SECTION 1106. 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 in the
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities of such
series) (together with accrued interest, if any, to the Redemption Date), and
from and after such date (unless the Company shall default in the payment of
the Redemption Price and accrued interest) such Securities shall, if the same
were interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments of interest
on Bearer Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable only at an office or agency located outside the United
States (except as otherwise provided in Section 1002) and, unless otherwise
specified as contemplated by Section 301, only upon presentation and surrender
of coupons for such interest; and provided further that, except as otherwise
specified in or pursuant to this Indenture or the Registered Securities of a
series, installments of interest on Registered Securities 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 and the
provisions of Section 307.

 

If any Bearer
Security surrendered for redemption shall not be accompanied by all appurtenant
coupons maturing after the Redemption Date, such Security may be paid after
deducting from the Redemption Price an amount equal to the face amount of all
such missing coupons, or the surrender of such missing coupon or coupons may be
waived by the Company and the Trustee if there be furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Security shall surrender to
the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; provided, however, that interest
represented by coupons shall be payable only at an office or agency located
outside the United States (except as otherwise provided in Section 1002) and,
unless otherwise specified as contemplated by Section 301, only upon
presentation and surrender of those coupons.

 

If any Security
called for redemption shall not be so paid upon surrender thereof for
redemption, the principal of and premium, if any, and, to the extent legally
enforceable, interest

 

68

 

or Yield to Maturity (in
the case of Original Issue Discount Securities) on such Security shall, until
paid, bear interest from the Redemption Date at the rate borne by the Security
on the Redemption Date.

 

SECTION 1107. Securities
Redeemed in Part. Any Registered Security which is to be redeemed only in
part (pursuant to the provisions of this Article or of Article Twelve) shall be
surrendered at a Place of Payment therefor (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) and 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 the same
series, of any authorized denomination as requested by such Holder in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.

 

ARTICLE TWELVE

 

SINKING FUNDS

 

SECTION 1201. Applicability
of Article. The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 301 for Securities of such series.

 

The minimum amount
of any sinking fund payment provided for by the terms of Securities of any
series is herein referred to as a “mandatory sinking fund payment”, and
any payment in excess of such minimum amount provided for by the terms of such
Securities of any series is herein referred to as an “optional sinking fund
payment”. If provided for by the terms of any Securities of any series, the
cash amount of any mandatory sinking fund payment may be subject to reduction
as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

 

SECTION 1202. Satisfaction
of Sinking Fund Payments with Securities. The Company may, in satisfaction
of all or any part of any mandatory sinking fund payment with respect to the
Securities of a series, (1) deliver Outstanding Securities of such series
(other than any previously called for redemption) together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining
thereto and (2) apply as a credit Securities of such series which have been
redeemed either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities, as provided for by the terms
of such Securities, or which have otherwise been acquired by the Company;
provided that such Securities so delivered or applied as a credit have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.

 

69

 

SECTION 1203. Redemption
of Securities for Sinking Fund. Not less than 60 days prior to each sinking
fund payment date for Securities of any series, the Company will deliver to the
Trustee an Officers’ Certificate specifying the amount of the next ensuing
mandatory sinking fund payment for that series pursuant to the terms of that
series, the portion thereof, if any, which is to be satisfied by payment of
cash in the currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 1202, and the optional amount, if any, to be added in cash to the next
ensuing mandatory sinking fund payment, and will also deliver to the Trustee
any Securities to be so delivered and credited. If such Officers’ Certificate
shall specify an optional amount to be added in cash to the next ensuing
mandatory sinking fund payment, the Company shall thereupon be obligated to pay
the amount therein specified. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 1106 and 1107.

 

ARTICLE THIRTEEN

 

REPAYMENT AT THE OPTION OF HOLDERS

 

SECTION 1301. Applicability
of Article. Repayment of Securities of any series before their Stated
Maturity at the option of Holders thereof shall be made in accordance with the
terms of such Securities, if any, and (except as otherwise specified by the
terms of such series established pursuant to Section 301) in accordance with
this Article.

 

SECTION 1302. Repayment
of Securities. Securities of any series subject to repayment in whole or in
part at the option of the Holders thereof will, unless otherwise provided in
the terms of such Securities, be repaid at a price equal to the principal
amount thereof, together with interest, if any, thereon accrued to the
Repayment Date specified in or pursuant to the terms of such Securities. The
Company covenants that at least one Business Day prior to the Repayment Date it
will 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 1003) an amount of money in the currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 301 for the Securities of such series) sufficient to pay the
principal (or, if so provided by the terms of the Securities of any series, a
percentage of the principal) of, and (except if the Repayment Date shall be an
Interest Payment Date, unless otherwise specified pursuant to Section 301 or in
the Securities of such series) accrued interest on, all the Securities or
portions thereof, as the case may be, to be repaid on such date.

 

SECTION 1303. Exercise
of Option. Securities of any series subject to repayment at the option of
the Holders thereof will contain an “Option to Elect Repayment” form on the
reverse of such Securities. In order for any Security to be repaid at the
option of the Holder, the Trustee must receive at the Place of Payment therefor
specified in the terms of such Security (or at such

 

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other place or places of
which the Company shall from time to time notify the Holders of such
Securities) not earlier than 60 days nor later than 30 days prior to the
Repayment Date (1) the Security so providing for such repayment together with
the “Option to Elect Repayment” form on the reverse thereof duly completed by
the Holder (or by the Holder’s attorney duly authorized in writing) or (2) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange, or the National Association of Securities Dealers, Inc. (“NASD”),
or a commercial bank or trust company in the United States setting forth the
name of the Holder of the Security, the principal amount of the Security, the
principal amount of the Security to be repaid, the CUSIP number, if any, or a
description of the tenor and terms of the Security, a statement that the option
to elect repayment is being exercised thereby and a guarantee that the Security
to be repaid, together with the duly completed form entitled “Option to Elect
Repayment” on the reverse of the Security, will be received by the Trustee not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, however, that such telegram, telex,
facsimile transmission or letter shall only be effective if such Security and
form duly completed are received by the Trustee by such fifth Business Day. If
less than the entire principal amount of such Security is to be repaid in
accordance with the terms of such Security, the principal amount of such
Security to be repaid, in increments of the minimum denomination for Securities
of such series, and the denomination or denominations of the Security or
Securities to be issued to the Holder for the portion of the principal amount
of such Security surrendered that is not to be repaid, must be specified. The
principal amount of any Security providing for repayment at the option of the
Holder thereof may not be repaid in part if, following such repayment, the
unpaid principal amount of such Security would be less than the minimum
authorized denomination of Securities of the series of which such Security to
be repaid is a part. Except as otherwise may be provided by the terms of any
Security providing for repayment at the option of the Holder thereof, exercise
of the repayment option by the Holder shall be irrevocable unless waived by the
Company.

 

SECTION 1304. When
Securities Presented for Repayment Become Due and Payable. If Securities of
any series providing for repayment at the option of the Holders thereof shall
have been surrendered as provided in this Article and as provided by or
pursuant to the terms of such Securities, such Securities or the portions
thereof, as the case may be, to be repaid shall become due and payable and
shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company shall default in the payment
of such Securities on such Repayment Date) such Securities shall, if the same
were interest-bearing, cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be repaid, except to the extent
provided below, shall be void. Upon surrender of any such Security for
repayment in accordance with such provisions, together with all coupons, if
any, appertaining thereto maturing after the Repayment Date, the principal
amount of such Security so to be repaid shall be paid by the Company, together
with accrued interest, if any, to the Repayment Date; provided, however, that
coupons whose Stated Maturity is on or prior to the Repayment Date shall be
payable only at an office or agency located outside the United States (except
as otherwise provided in Section 1002) and, unless otherwise specified pursuant
to Section 301, only upon presentation and surrender of such coupons; and
provided further that, in the case of Registered Securities (except as
otherwise specified in or pursuant to this Indenture or the Registered
Securities of a series), installments of interest, if any, whose Stated
Maturity is on

 

71

 

or prior to the Repayment
Date shall be payable (but without interest thereon, unless the Company shall
default in the payment thereof) 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 and the provisions of Section
307.

 

If any Bearer
Security surrendered for repayment shall not be accompanied by all appurtenant
coupons maturing after the Repayment Date, such Security may be paid after
deducting from the amount payable therefor as provided in Section 1302 an
amount equal to the face amount of all such missing coupons, or the surrender
of such missing coupon or coupons may be waived by the Company and the Trustee
if there shall be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Security shall surrender to the Trustee or any Paying Agent any
such missing coupon in respect of which a deduction shall have been made as
provided in the preceding sentence, such Holder shall be entitled to receive
the amount so deducted; provided, however, that interest represented by coupons
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
as contemplated by Section 301, only upon presentation and surrender of those
coupons.

 

If the principal
amount of any Security surrendered for repayment shall not be so repaid upon
surrender thereof, such principal amount (and, to the extent legally
enforceable, the interest, if any, thereon accrued to such Repayment Date)
shall, until paid, bear interest from the Repayment Date at the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) borne by such Security on the Repayment Date.

 

SECTION 1305. Securities
Repaid in Part. Upon surrender of any Registered Security which is to be
repaid in part only, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge
and at the expense of the Company, a new Registered Security or Securities of
the same series, of any authorized denomination specified by the Holder, in an
aggregate principal amount equal to and in exchange for the portion of the
principal of such Security so surrendered which is not to be repaid.

 

ARTICLE FOURTEEN

 

DEFEASANCE AND COVENANT DEFEASANCE

 

SECTION 1401. Applicability
of Article; Company’s Option to Effect Defeasance or Covenant Defeasance. If,
pursuant to Section 301, provision is made for either or both of (a) defeasance
of the Securities of or within a series under Section 1402 or (b) covenant
defeasance of the Securities of or within a series under Section 1403, then the
provisions of such Section or Sections, as the case may be, together with the
other provisions of this Article (with such modifications thereto as may be
specified pursuant to Section 301 with respect to any Securities), shall be
applicable to such Securities and any coupons appertaining thereto, and the
Company may at its option by Board Resolution, at any time, with respect to
such Securities and any coupons appertaining thereto, elect to have Section
1402 (if applicable) or Section 1403 (if 

 

72

 

applicable) be applied to
such Outstanding Securities and any coupons appertaining thereto upon
compliance with the conditions set forth below in this Article.

 

SECTION 1402. Defeasance
and Discharge. Upon the Company’s exercise of the above option applicable
to this Section with respect to any Securities of or within a series, the
Company shall be deemed to have been discharged from its obligations with
respect to such Outstanding Securities and any coupons appertaining thereto on
the date the conditions set forth in Section 1404 are satisfied (hereinafter, “defeasance”).
For this purpose, such defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by such
Outstanding Securities and any coupons appertaining thereto, which shall
thereafter be deemed to be “Outstanding” only for the purposes of Section 1405
and the other Sections of this Indenture referred to in clauses (A) and (B)
below, and to have satisfied all of its other obligations under such Securities
and any coupons appertaining thereto and this Indenture insofar as such
Securities and any coupons appertaining thereto are concerned (and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
the same), except for the following which shall survive until otherwise
terminated or discharged hereunder: (A) the rights of Holders of such
Outstanding Securities and any coupons appertaining thereto to receive, solely
from the trust fund described in Section 1404 and as more fully set forth in
such Section, payments in respect of the principal of (and premium, if any) and
interest, if any, on such Securities and any coupons appertaining thereto when
such payments are due, (B) the Company’s obligations with respect to such
Securities under Sections 305, 306, 1002 and 1003 and with respect to the payment
of Additional Amounts, if any, on such Securities as contemplated by Section
1011, and under or with respect to Section 606 hereof, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder, (D) the rights of
Holders to convert Securities, if any, in accordance with their terms, and (E)
this Article. Subject to compliance with this Article Fourteen, the Company may
exercise its option under this Section notwithstanding the prior exercise of
its option under Section 1403 with respect to such Securities and any coupons
appertaining thereto.

 

SECTION 1403. Covenant
Defeasance. Upon the Company’s exercise of the above option applicable to
this Section with respect to any Securities of or within a series, the Company
shall be released from its obligations under Sections 1005 to 1010, inclusive,
and, if specified pursuant to Section 301, its obligations under any other
covenant, with respect to such Outstanding Securities and any coupons
appertaining thereto on and after the date the conditions set forth in Section
1404 are satisfied (hereinafter, “covenant defeasance”), and such
Securities and any coupons appertaining thereto 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 Sections 1005 to 1010, inclusive, or such other covenant, but
shall continue to be deemed “Outstanding” for all other purposes hereunder. For
this purpose, such covenant defeasance means that, with respect to such
Outstanding Securities and any coupons appertaining thereto, 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

 

73

 

shall not constitute a
default or an Event of Default under Section 501(4) or 501(10) or otherwise, as
the case may be, but, except as specified above, the remainder of this Indenture
and such Securities and any coupons appertaining thereto shall be unaffected
thereby.

 

SECTION 1404. Conditions
to Defeasance or Covenant Defeasance. The following shall be the conditions
to application of Section 1402 or Section 1403 to any Outstanding Securities of
or within a series and any coupons appertaining thereto:

 

(a)           The Company shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 607 who shall agree in writing with the
Company and the Trustee, an executed copy of which shall be provided to the
Trustee, to comply with the provisions of this Article Fourteen applicable to
it (any such other trustee being referred to herein, and in Section 1405, as an
“Other Qualifying Trustee”) as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities and any coupons
appertaining thereto, (1) an amount in such currency or currencies in
which such Securities and any coupons appertaining thereto are then specified
as payable at Stated Maturity, or (2) Government Obligations applicable to such
Securities and coupons appertaining thereto (determined on the basis of the
currency or currencies in which such Securities and coupons appertaining
thereto are then specified as payable at Stated Maturity) which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than one day before the due date of
any payment of principal of (and premium, if any) and interest, if any, on such
Securities and any coupons appertaining thereto, money in an amount, or (3) a
combination thereof, in any case, in an amount, sufficient, without
consideration of any reinvestment of such principal and interest, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or Other Qualifying
Trustee) to pay and discharge, (i) the principal of (and premium, if any) and
interest, if any, on such Outstanding Securities and any coupons appertaining
thereto on the Stated Maturity of such principal or installment of principal or
interest and (ii) any mandatory sinking fund payments or analogous payments
applicable to such Outstanding Securities and any coupons appertaining thereto
on the day on which such payments are due and payable in accordance with the
terms of this Indenture and of such Securities and any coupons appertaining
thereto. The Trustee shall have no liability for the actions or omissions of
any Other Qualifying Trustee.

 

(b)           Such defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a
default under, this Indenture or any other material agreement or instrument to
which the Company or a Guarantor is a party or by which it is bound.

 

(c)           No Event of Default or event which
with notice or lapse of time or both would become an Event of Default with
respect to such Securities and any coupons appertaining thereto shall have
occurred and be continuing on the date of such deposit or, insofar as Sections
501(6) and 501(7) are concerned, at any time during the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period).

 

74

 

(d)           In the case of an election under
Section 1402, the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the date of execution
of this Indenture, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of such Outstanding Securities and any coupons
appertaining thereto 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 amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred.

 

(e)           In the case of an election under
Section 1403, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Outstanding Securities and any
coupons appertaining thereto 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.

 

(f)            The Company shall have delivered to
the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating
that all conditions precedent to the defeasance under Section 1402 or the
covenant defeasance under Section 1403 (as the case may be) have been complied
with and an Opinion of Counsel to the effect that either (i) as a result of a
deposit pursuant to subsection (a) above and the related exercise of the
Company’s option under Section 1402 or Section 1403 (as the case may be),
registration is not required under the Investment Company Act of 1940, as
amended, by the Company, with respect to the trust funds representing such
deposit or by the Trustee for such trust funds or (ii) all necessary
registrations under said Act have been effected.

 

(g)           Notwithstanding any other provisions
of this Section, such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or limitations
which may be imposed on the Company in connection therewith pursuant to Section
301.

 

SECTION 1405. Deposited
Money and Government Obligations to Be Held in Trust; Other Miscellaneous
Provisions. Subject to the provisions of the last paragraph of Section
1003, all money and Government Obligations (or other property as may be
provided pursuant to Section 301) (including the proceeds thereof) deposited
with the Trustee (or Other Qualifying Trustee) pursuant to Section 1404 in
respect of any Outstanding Securities of any series and any coupons appertaining
thereto shall be held in trust and applied by the Trustee (or such Other
Qualifying Trustee, as applicable), in accordance with the provisions of such
Securities and any coupons appertaining thereto and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee (or such Other Qualifying
Trustee, as applicable) may determine, to the Holders of such Securities and
any coupons appertaining thereto of all sums due and to become due thereon in
respect of

 

75

 

principal (and premium,
if any) and interest and Additional Amounts, if any, but such money need not be
segregated from other funds except to the extent required by law.

 

Unless otherwise
specified with respect to any Security pursuant to Section 301, if, after a
deposit referred to in Section 1404(a) has been made, (a) the Holder of a
Security in respect of which such deposit was made is entitled to, and does,
elect pursuant to Section 301 or the terms of such Security to receive payment
in a currency other than that in which the deposit pursuant to Section 1404(a)
has been made in respect of such Security, or (b) a Conversion Event occurs in
respect of the currency in which the deposit pursuant to Section 1404(a) has
been made, the indebtedness represented by such Security and any coupons
appertaining thereto shall be deemed to have been, and will be, fully
discharged and satisfied through the payment of the principal of (and premium,
if any), and interest, if any, on such Security as the same becomes due out of
the proceeds yielded by converting (from time to time as specified below in the
case of any such election) the amount or other property deposited in respect of
such Security into the currency in which such Security becomes payable as a
result of such election or Conversion Event based on the applicable market
exchange rate for such currency in effect on the second Business Day prior to
each payment date, except, with respect to a Conversion Event, for such
currency in effect (as nearly as feasible) at the time of the Conversion Event.

 

The Company shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the Government Obligations deposited pursuant to Section
1404 or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
such Outstanding Securities and any coupons appertaining thereto.

 

Anything in this
Article to the contrary notwithstanding, subject to Section 606, the Trustee
(or such Other Qualifying Trustee, as applicable) shall deliver or pay to the
Company from time to time upon Company Request any money or Government Obligations
(or other property and any proceeds therefrom) held by it as provided in
Section 1404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect a defeasance or covenant defeasance, as
applicable, in accordance with this Article.

 

ARTICLE FIFTEEN

 

MEETINGS OF HOLDERS OF SECURITIES

 

SECTION 1501. Purposes
for Which Meetings May Be Called. A meeting of Holders of Securities of any
series may be called at any time and from time to time pursuant to this Article
to make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be made, given or
taken by Holders of Securities of such series.

 

76

 

SECTION 1502. Call,
Notice and Place of Meetings. (a) 
The Trustee may at any time call a meeting of Holders of Securities of
any series for any purpose specified in Section 1501, to be held at such time
and at such place in the Borough of Manhattan or in The City of New York as the
Trustee shall determine. Notice of every meeting of Holders of Securities of
any series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 106, not less than 21 nor more than 180 days prior
to the date fixed for the meeting.

 

(b)           In case at any time the Company,
pursuant to a Board Resolution, or the Holders of at least 10% in principal
amount of the Outstanding Securities of any series shall have requested the
Trustee to call a meeting of the Holders of Securities of such series for any
purpose specified in Section 1501, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first publication of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the
Holders of Securities of such series in the amount above specified, as the case
may be, may determine the time and the place in the Borough of Manhattan or in
The City of New York for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection (a) of this
Section.

 

SECTION 1503. Persons
Entitled to Vote at Meetings. To be entitled to vote at any meeting of
Holders of Securities of any series, a Person shall be (1) a Holder of one or
more Outstanding Securities of such series, or (2) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders of Securities of any series shall be the Persons entitled to vote at
such meeting and their counsel, any representatives of the Trustee and its
counsel and any representatives of the Company or a Guarantor and their
counsel.

 

SECTION 1504. Quorum;
Action. The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series; provided, however, that if any action is
to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than a
specified percentage in principal amount of the Outstanding Securities of a
series, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series shall constitute a quorum. In
the absence of a quorum within 30 minutes after the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Securities
of such series, be dissolved. In any other case the meeting may be adjourned
for a period of not less than 10 days as determined by the chairman of the
meeting prior to the adjournment of such meeting. In the absence of a quorum at
any such adjourned meeting, such adjourned meeting may be further adjourned for
a period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section 1502(a), except
that such notice need be given only once not less than five days prior to the
date on which the meeting is scheduled to be reconvened.

 

77

 

Notice of the reconvening
of any adjourned meeting shall state expressly the percentage, as provided
above, of the principal amount of the Outstanding Securities of such series
which shall constitute a quorum.

 

Except as limited
by the proviso to Section 902, any resolution presented to a meeting or
adjourned meeting duly reconvened at which a quorum is present as aforesaid may
be adopted by the affirmative vote of the Holders of a majority in principal
amount of the Outstanding Securities of that series; provided, however, that,
except as limited by the proviso to Section 902, any resolution with respect to
any request, demand, authorization, direction, notice, consent, waiver or other
action which this Indenture expressly provides may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Securities of that series.

 

Any resolution
passed or decision taken at any meeting of Holders of Securities of any series
duly held in accordance with this Section shall be binding on all the Holders
of Securities of such series and the related coupons, whether or not present or
represented at the meeting.

 

Notwithstanding
the foregoing provisions of this Section 1504, if any action is to be taken at
a meeting of Holders of Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
this Indenture expressly provides may be made, given or taken by the Holders of
a specified percentage in principal amount of all Outstanding Securities
affected thereby, or of the Holders of such series and one or more additional
series:

 

(i)            there shall be no minimum quorum
requirement for such meeting; and

 

(ii)           the principal amount of the
Outstanding Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been
made, given or taken under this Indenture.

 

SECTION 1505. Determination
of Voting Rights; Conduct and Adjournment of Meetings. (a)  Notwithstanding any provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities of a series in regard to
proof of the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved in
the manner specified in Section 104 or by having the signature of the Person
executing the proxy witnessed or guaranteed by any trust company, bank or
banker authorized by Section 104 to certify to the holding of Bearer Securities.
Such regulations may provide that written instruments appointing

 

78

 

proxies, regular on their
face, may be presumed valid and genuine without the proof specified in Section
104 or other proof.

 

(b)           The Trustee shall, by an instrument in
writing appoint a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by Holders of Securities as provided in
Section 1502(b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented at
the meeting.

 

(c)           At any meeting each Holder of a
Security of such series or proxy shall be entitled to one vote for each $1,000
principal amount of the Outstanding Securities of such series held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security of such
series or proxy.

 

(d)           Any meeting of Holders of Securities
of any series duly called pursuant to Section 1502 at which a quorum is present
may be adjourned from time to time by Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented at
the meeting, and the meeting may be held as so adjourned without further
notice.

 

SECTION 1506. Counting
Votes and Recording Action of Meetings. The vote upon any resolution
submitted to any meeting of Holders of Securities of any series shall be by
written ballots on which shall be subscribed the signatures of the Holders of
Securities of such series or of their representatives by proxy and the
principal amounts and serial numbers of the Outstanding Securities of such
series held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at
the meeting. A record, at least in duplicate, of the proceedings of each
meeting of Holders of Securities of any Series shall be prepared by the
secretary of the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the fact, setting
forth a copy of the notice of the meeting and showing that said notice was
given as provided in Section 1502 and, if applicable, Section 1504. Each copy
shall be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to the Company and
another to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein stated.

 

79

 

ARTICLE SIXTEEN

GUARANTEE OF SECURITIES

 

SECTION 1601. Guarantee.
(1)  Each Person designated as a “Guarantor”
in the Board Resolution, supplemental indenture or Officers’ Certificate
establishing a series of Securities that also establishes itself as a Guarantor
of such Securities by Board Resolution or pursuant to authority granted by one
or more Board Resolutions and set forth, or determined in the manner provided,
in an Officers’ Certificate, or established in one or more indentures
supplemental hereto, with respect to each series of Securities to which this
Article Sixteen is made applicable, irrevocably and unconditionally guarantees
(the “Guarantee”) to each Holder of a Security of such series authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities of such series or the obligations of the Company under this
Indenture or the Securities of such series, that: (i) the principal of and
premium, if any, and interest on, or any Additional Amount in respect of, the
Securities of such series will be paid in full when due, whether at the Stated
Maturity or Interest Payment Date, by acceleration, call for redemption, or otherwise;
(ii) all other obligations of the Company to the Holders of such series or the
Trustee under this Indenture or the Securities of such series will be promptly
paid in full, all in accordance with the terms of this Indenture and the
Securities of such series; and (iii) in case of any extension of time of
payment or renewal of any Securities of such series or any of such other
obligations thereunder, they will be paid in full when due in accordance with
the terms of the extension or renewal, whether at the Stated Maturity or
Interest Payment Date, by acceleration, call for redemption, or otherwise. Failing
payment when due of any amount so guaranteed for whatever reason, each
Guarantor shall be obligated to pay the same before failure so to pay becomes
an Event of Default with respect to Securities of any series. If the Company
defaults in the payment of the principal of or premium, if any, or interest on,
or any Additional Amount in respect of, the Securities of a series so
guaranteed when and as the same shall become due, whether at the Stated
Maturity or Interest Payment Date, by acceleration, call for redemption, or
otherwise, without the necessity of action by the Trustee or any Holder, each
Guarantor with respect to such series shall be required to promptly make such
payment in full. The obligations of all Guarantors under this Article Sixteen
shall be joint and several.

 

(2)  Each Guarantor agrees with respect to
Securities of any series that its obligations with regard to this Guarantee
shall be as principal and not merely as surety and shall be full, irrevocable
and unconditional, irrespective of the validity, regularity or enforceability
of the Securities of such series or this Indenture, the absence of any action
to enforce the same, any delays in obtaining or realizing upon or failures to
obtain or realize upon collateral, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a surety or a
guarantor. Each Guarantor with respect to Securities of any series hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company or right to require the prior disposition
of the assets of the Company to meet its obligations, protest, notice and all
demands whatsoever and covenants that this Guarantee will not be discharged

 

80

 

except by complete
performance of all obligations contained in the Securities of such series and
this Indenture as it relates to such series of Securities.

 

(3)  If any Holder of Securities of a series or
the Trustee is required by any court or otherwise to return to any of the
Company or a Guarantor with respect to Securities of that series, or any
Custodian, trustee, or similar official acting in relation to any of the
Company or a Guarantor, any amount paid by any of the Company or a Guarantor to
the Trustee or such Holder with respect to Securities of that series, the
Guarantee with respect to Securities of that series, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor agrees
that it will not be entitled to any right of subrogation in relation to the
Holders of Securities of a series in respect of any obligations guaranteed
hereby until payment in full of all obligations of Securities of such series. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 502 for
the purposes of a Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration as to the Company of the obligations
so guaranteed, and (ii) in the event of any declaration of acceleration of
those obligations as provided in Section 502, those obligations (whether or not
due and payable) will forthwith become due and payable by the Guarantors with
respect to Securities of a series for purposes of the Guarantee.

 

(4)  Each Guarantor and by its acceptance of a
Security issued hereunder each Holder hereby confirms that it is the intention
of all such parties that the Guarantee by each Guarantor set forth in Section
1601(1) not constitute a fraudulent transfer or conveyance for purpose of any
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 all Guarantors hereby irrevocably agree that the
obligations of each of the Guarantors under the Guarantee set forth in Section
1601(1) shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor, and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to the next succeeding sentence, result in the
obligations of such Guarantor under such Guarantee not constituting such a
fraudulent transfer or conveyance. Each Guarantor that makes any payment or
distribution under Section 1601(1) shall be entitled to a contribution from
each other Guarantor equal to its Pro Rata Portion of such payment or
distribution. For purposes of the foregoing, the “Pro Rata Portion” of any
Guarantor means the percentage of net assets of all Guarantors held by such
Guarantor, determined in accordance with GAAP.

 

(5)  It is the intention of the parties that the
obligations of the Guarantors shall be in, but not in excess of, the maximum
amount permitted by applicable law. Accordingly, if the obligations in respect
of the Guarantee would be annulled, avoided or subordinated to the creditors of
any Guarantor by a court of competent jurisdiction in a proceeding actually
pending before such court as a result of a determination both that such Guarantee
was made without fair consideration and, immediately after giving effect
thereto, such Guarantor was insolvent or unable to pay its debts as they mature
or left with an unreasonably small capital, then the obligations of such
Guarantor under such Guarantee shall be reduced by such court if and to the

 

81

 

extent such reduction
would result in the avoidance of such annulment, avoidance or subordination;
provided, however, that any reduction pursuant to this paragraph shall be made
in the smallest amount as is strictly necessary to reach such result. For
purposes of this paragraph, “fair consideration,” “insolvency,” “unable to pay
its debts as they mature,” “unreasonably small capital” and the effective times
of reductions, if any, required by this paragraph shall be determined in
accordance with applicable law.

 

(6)  If the obligations of any Guarantor are
reduced pursuant to Section 1601(4) or 1601(5) above, such reduction shall be
applied proportionately with respect to all Securities (of whatever series)
guaranteed under Section 1601, in accordance with the respective outstanding
principal amount of such Securities so guaranteed (or, if any Securities are
Original Issue Discount Securities, the accreted value of such Securities) and
being then due upon the acceleration of the payment of such Securities.

 

(7)  A Guarantor may consolidate with, sell, lease
or convey all or substantially all of its assets to, or merge with or into, the
Company, a Subsidiary of the Company or another Guarantor at any time without
limitation, provided that, if the successor entity or entity acquiring the
assets is a Subsidiary of the Company or another Guarantor, such entity
expressly or by operation of law assumes all of the obligations of the
Guarantor under this Indenture in connection with the transaction. In any such
case, the Guarantor shall be released from all obligations under this
Indenture.

 

(8) In addition to
the transactions permitted by Section 1601(7), a Guarantor may consolidate
with, sell, lease or convey all or substantially all of its assets to, or merge
with or into, any other corporation, provided that, in any such case, the
Guarantor shall be the continuing corporation, or the successor corporation or corporation
acquiring the assets shall be a corporation organized and existing under the
laws of the United States or a State thereof and such corporation expressly
assumes all of the obligations of the Guarantor under this Indenture by
supplemental indenture complying with Article Nine hereof, satisfactory to the
Trustee, executed and delivered to the Trustee by such corporation. In any such
case, the Guarantor shall be released from all obligations under this Indenture.
Any such consolidation, sale, lease, conveyance or merger is also subject to
the condition that the Trustee receive an Officers’ Certificate of the
Guarantor and an Opinion of Counsel to the effect that the transaction, and the
assumption by any successor corporation or acquiror of assets, complies with
the provisions of this Section 1601(8) and that all conditions precedent herein
provided for relating to such transaction have been complied with.

 

(9)  Upon a sale, transfer or other disposition of
Capital Stock of a Subsidiary Guarantor by the Company to a Person other than
the Company, which disposition (i) is not subject to Section 1601(7), Section
1601(8) or Article Eight, (ii) causes such Guarantor to no longer be a
Subsidiary of the Company, (iii) is for consideration at least equal to the
fair value of the Capital Stock disposed of (in the good faith determination of
the Board of Directors of the Company) and (iv) is otherwise in compliance with
the terms of this Indenture, such Guarantor shall be released from all
obligations under this Indenture. Upon the delivery by the Company to the
Trustee of an Officers’ Certificate and, if requested by the Trustee, an
Opinion of Counsel to

 

82

 

the effect that the
transaction or series of related transactions giving rise to the release of
such obligations was made in accordance with the provisions of this Indenture,
the Trustee shall execute any documents reasonably required in order to
evidence the release of such Guarantor from its obligations. Any Guarantor not
so released remains liable for the full amount of principal of and premium, if
any, and interest on, and any Additional Amounts with respect to, the
Securities as provided in this Article Sixteen.

 

SECTION 1602. Future
Guarantors. Each Person providing a guarantee of any Security of a series
pursuant to this Indenture shall execute and deliver a supplemental indenture
making such Person a party to this Indenture for the purpose of becoming a
Guarantor.

 

SECTION 1603. Delivery
of Guarantee. The delivery of any Security of a series by the Trustee,
after the authentication thereof hereunder, shall constitute due delivery of
the Guarantee set forth in Section 1601 on behalf of each Guarantor for that
series.

 

ARTICLE SEVENTEEN

 

SUBORDINATION

 

SECTION 1701. Agreement
to Subordinate. The Company agrees, and each Holder by accepting a Security
agrees, that the indebtedness evidenced by the Securities is subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full of all Senior Debt and that the subordination is for
the benefit of the holders of Senior Debt.

 

SECTION 1702. Liquidation;
Dissolution; Bankruptcy. Upon any distribution to creditors of the Company
in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:

 

(1)           holders of Senior Debt shall be
entitled to receive payment in full in cash of the principal of and interest
(including interest accruing after the commencement of any such proceeding) to
the date of payment on the Senior Debt before Holders shall be entitled to
receive any payment of principal of or interest on Securities;

 

(2)           until the Senior Debt is paid in full
in cash, any distribution to which Holders would be entitled but for this
Article shall be made to holders of Senior Debt as their interests may appear,
except that Holders may receive securities that are subordinated to Senior Debt
to at least the same extent as the Securities; and

 

(3)           the Trustee is entitled to rely upon
an order or decree of a court of competent jurisdiction or a certificate of a
bankruptcy trustee or other similar official for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of Senior
Debt and other Company debt, the amount thereof or payable thereon and all
other pertinent facts relating to the Trustee’s obligations under this Article
Seventeen.

 

83

 

SECTION 1703. Default
on Senior Debt. The Company may not pay principal of or interest on the
Securities and may not acquire any Securities for cash or property other than
capital stock of the Company if:

 

(1)           a default on Senior Debt occurs and
is continuing that permits holders of such Senior Debt to accelerate its
maturity, and

 

(2)           the default is the subject of
judicial proceedings or the Company receives a notice of the default from a
person who may give it pursuant to Section 1711. If the Company receives any
such notice, a similar notice received within nine months thereafter relating
to the same default on the same issue of Senior Debt shall not be effective for
purposes of this Section.

 

The Company may
resume payments on the Securities and may acquire them when:

 

(a)           the default is cured or waived, or

 

(b)           120 days pass after the notice is
given, if the default is not the subject of judicial proceedings, if this
Article otherwise permits the payment or acquisition at that time.

 

SECTION 1704. Acceleration
of Securities. If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior Debt of
the acceleration. The Company may pay the Securities when 120 days pass after
the acceleration occurs if this Article permits the payment at that time.

 

SECTION 1705. When
Distribution Must Be Paid Over. If a distribution is made to Holders that
because of this Article should not have been made to them, the Holders who
receive the distribution shall hold it in trust for holders of Senior Debt and
pay it over to them as their interests may appear.

 

SECTION 1706. Notice
by Company. The Company shall promptly notify the Trustee and any Paying
Agent of any facts known to the Company that would cause a payment of principal
of or interest on Securities to violate this Article.

 

SECTION 1707. Subrogation.
After all Senior Debt is paid in full and until the Securities are paid in
full, Holders shall be subrogated to the rights of holders of Senior Debt to
receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior
Debt which otherwise would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on Senior Debt.

 

SECTION 1708. Relative
Rights. This Article defines the relative rights of Holders and holders of
Senior Debt. Nothing in this Indenture shall:

 

84

 

(1)           impair, as between the Company and
Holders, the obligation of the Company, which is absolute and unconditional, to
pay principal of and interest on the Securities in accordance with their terms;

 

(2)           affect the relative rights of Holders
and creditors of the Company other than holders of Senior Debt; or

 

(3)           prevent the Trustee or any Holder
from exercising its available remedies upon an Event of Default, subject to the
rights of holders of Senior Debt to receive distributions otherwise payable to
Holders.

 

If the Company
fails because of this Article to pay principal of or interest on a Security on
the due date, the failure is still a default.

 

SECTION 1709. Subordination
May Not Be Impaired by Company. No right of any holder of Senior Debt to
enforce the subordination of the indebtedness evidenced by the Securities shall
be impaired by any act or failure to act by the Company or by its failure to
comply with this Indenture.

 

SECTION 1710. Distribution
or Notice to Representative. Whenever a distribution is to be made or a
notice given to holders of Senior Debt, the distribution may be made and the
notice given to their Representative.

 

SECTION 1711. Rights
of Trustee and Paying Agent. The Trustee or any Paying Agent may continue
to make payments on the Securities until it receives written notice of facts
that would cause a payment of principal of or interest on the Securities to
violate this Article. Only the Company, a Representative or a holder of an issue
of Senior Debt that has no Representative may give the written notice.

 

The Trustee has no
fiduciary duty to the holders of Senior Debt other than as created under this
Indenture. The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee.

 

The Company’s
obligation to pay, and the Company’s payment of, the Trustee’s fees pursuant to
Section 606 are excluded from the operation of this Article Seventeen.

 

* * * * *

 

This Indenture may
be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same Indenture.

 

85

 

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

 

 

	
   

  	
  MORGANS
  HOTEL GROUP CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF TRUSTEE]

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
								

 

86

 

EXHIBIT A

 

FORMS OF CERTIFICATION

 

EXHIBIT A-1

 

FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED

TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST

PAYABLE PRIOR TO THE EXCHANGE DATE

 

CERTIFICATE

 

[Insert title or
sufficient description of Securities to be delivered]

 

To:  [Euroclear] [Clearstream]

 

From:  [Beneficial Holder]

 

This is to certify
that, as of the date hereof, and except as set forth below, the above-captioned
Securities held by you for our account (i) are owned by person(s) that are not
citizens or residents of the United States, domestic partnerships, domestic
corporations or any estate or trust the income of which is subject to United
States federal income taxation regardless of its source (“United States
person(s)”), (ii) are owned by United States person(s) that are (a) foreign
branches of United States financial institutions (financial institutions, as
defined in United States Treasury Regulations Section 2.165-12(c)(1)(v) are
herein referred to as “financial institutions”) purchasing for their own
account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United States
financial institution hereby agrees, on its own behalf or through its agent,
that you may advise Morgans Hotel Group Co. (the “Company”) or its agent
that such financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) are owned by United States
or foreign financial institution(s) for purposes of resale during the
restricted period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a United States or
foreign financial institution described in clause (iii) above (whether or not
also described in clause (i) or (ii)), this is to further certify that such
financial institution has not acquired the Securities for purposes of resale
directly or indirectly to a United States person or to a person within the
United States or its possessions.

 

As used herein, “United
States” means the United States of America (including the States and the
District of Columbia); and its “possessions” include Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.

 

A-1-1

 

We undertake to
advise you promptly by tested telex on or prior to the date on which you intend
to submit your certification relating to the above-captioned Securities held by
you for our account in accordance with your Operating Procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.

 

This certificate
excepts and does not relate to [U.S.$]                   
of such interest in the above-captioned Securities in respect of which we are
not able to certify and as to which we understand an exchange for an interest
in a Permanent Global Security or an exchange for and delivery of definitive
Securities (or, if relevant, collection of any interest) cannot be made until
we do so certify.

 

We understand that
this certificate may be required in connection with certain tax legislation in
the United States. If administrative or legal proceedings are commenced or
threatened in connection with which this certificate is or would be relevant,
we irrevocably authorize you to produce this certificate or a copy thereof to
any interested party in such proceedings.

 

This certificate
may be relied upon by you and each of the Company, [Name of Trustee], as
trustee under the Indenture dated as of                      
    , 200   between [Name of Trustee], as
trustee, and the Company (the “Indenture”) and any Paying Agent (as defined in
the Indenture).

 

Dated:                                   
       , 200    

 

[To be dated no earlier
than the 15th day prior to (i) the Exchange Date or (ii) the relevant Interest
Payment Date occurring prior to the Exchange Date, as applicable]

 

	
   

  	
  [Name of Person Making

  
	
   

  	
  Certification]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Authorized Signator)

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-1-2

 

EXHIBIT A-2

 

FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND
CLEARSTREAM IN

CONNECTION WITH THE EXCHANGE OF A PORTION OF A TEMPORARY

GLOBAL SECURITY OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE

EXCHANGE DATE

 

CERTIFICATE

 

[Insert title or
sufficient description of Securities to be delivered]

 

To:  [Name of Trustee], as trustee (the “Trustee”)
under the Indenture dated as of                         
     , 200     by and between the
Company (as defined below) and the Trustee.

 

From:  [Euroclear] [Clearstream]

 

This is to certify
that, based solely on written certifications that we have received in writing,
by tested telex or by electronic transmission from each of the persons
appearing in our records as persons entitled to a portion of the principal
amount set forth below (our “Member Organizations”) substantially in the
form attached hereto, as of the date hereof, [U.S.$] principal amount of the
above-captioned Securities (i) is owned by person(s) that are not citizens or
residents of the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States Federal
income taxation regardless of its source (“United States person(s)”),
(ii) is owned by United States person(s) that are (a) foreign branches of
United States financial institutions (financial institutions, as defined in
U.S. Treasury Regulations Section 1.165-12(c)(1)(v) are herein referred to as “financial
institutions”) purchasing for their own account or for resale, or (b)
United States person(s) who acquired the Securities through foreign branches of
United States financial institutions and who hold the Securities through such
United States financial institutions on the date hereof (and in either case (a)
or (b), each such financial institution has agreed, on its own behalf or
through its agent, that we may advise Morgans Hotel Group Co. (the “Company”)
or its agent that such financial institution will comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder), or (iii) is owned by United States or
foreign financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial
institutions described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the Securities
for purposes of resale directly or indirectly to a United States person or to a
person within the United States or its possessions.

 

As used herein, “United
States” means the United States of America (including the States and the
District of Columbia); and its “possessions” include Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.

 

A-2-1

 

We further certify
that (i) we are not making available herewith for exchange (or, if relevant,
collection of any interest) any portion of the temporary global Security
representing the above-captioned Securities excepted in the above-referenced
certificates of Member Organizations and (ii) as of the date hereof we have not
received any notification from any of our Member Organizations to the effect
that the statements made by such Member Organizations with respect to any
portion of the part submitted herewith for exchange (or, if relevant,
collection of any interest) are no longer true and cannot be relied upon as of
the date hereof.

 

We understand that
this certification is required in connection with certain tax legislation in
the United States. If administrative or legal proceedings are commenced or
threatened in connection with which this certificate is or would be relevant,
we irrevocably authorize you to produce this certificate or a copy thereof to
any interested party in such proceedings.

 

This certificate
may be relied upon by you and by the Company.

 

Dated:               ,
200  

 

[To be dated no earlier
than the Exchange Date or the relevant Interest Payment Date occurring prior to
the Exchange Date, as applicable]

 

	
   

  	
  [Morgan Guaranty Trust Company of New York,

  Brussels Office,] as Operator of the Euroclear

  System] [Clearstream Banking, société anonyme,

  Luxembourg]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

A-2-2Filed by Automated Filing Services Inc. (604) 609-0244 - U.S. Geothermal Inc. - Exhibit 10.37

U.S. GEOTHERMAL INC. 

  (A Development Stage Company) 

Consolidated Financial Statements 

  March 31, 2007 

Board of Directors 

  U.S. Geothermal Inc. 

  Boise, Idaho 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheet of
  U.S. Geothermal Inc. (a development stage company) as of March 31, 2007 and
  2006, and the related consolidated statements of operations, stockholders’
  equity and cash flows for the year then ended and for the period from February
  26, 2002 (inception) through March 31, 2007. These consolidated financial statements
  are the responsibility of the Company’s management. Our responsibility
  is to express an opinion on these consolidated financial statements based on
  our audit.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audits to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  U.S. Geothermal Inc. as of March 31, 2007 and 2006 and the results of its operations,
  stockholders’ equity, and cash flows for the year then ended and for the
  period from February 26, 2002 (inception) through March 31, 2007 in conformity
  with accounting principles generally accepted in the United States of America.

 

 

Williams & Webster, P.S. 

  Certified Public Accountants 

  Spokane, Washington 

  June 25, 2007 

U.S. GEOTHERMAL INC. 

  (A Development Stage Company) 

  CONSOLIDATED BALANCE SHEETS 

  (Stated in U.S. Dollars) 

	  	 	March 31, 	 	 	March 31,
    	 
	  	 	2007 	 	 	2006
    	 
	  	 	  	 	 	  	 
	ASSETS 	 	  	 	 	  	 
	  	 	  	 	 	  	 
	Current 	 	  	 	 	  	 
	         Cash and cash equivalents
    	$	 6,759,161 	 	$	 196,499 	 
	         Restricted
      cash 	 	5,363,400 	 	 	- 	 
	         Private placement proceeds
      receivable 	 	- 	 	 	19,961,890 	 
	         Accounts
      receivable from subsidiary 	 	154,277 	 	 	- 	 
	         Other current assets 	 	27,706 	 	 	11,429 	 
	             
           Total current assets 	 	12,304,544 	 	 	20,169,818 	 
	  	 	  	 	 	  	 
	Investment in subsidiary (note 2) 	 	6,230,410 	 	 	- 	 
	Property, plant and equipment 	 	4,138,386 	 	 	1,726,115 	 
	                           
      Total assets 	$	 22,673,340 	 	$	 21,895,933 	 
	  	 	  	 	 	  	 
	  	 	  	 	 	  	 
	LIABILITIES 	 	  	 	 	  	 
	  	 	  	 	 	  	 
	Current: 	 	  	 	 	  	 
	         Accounts
      payable and accrued liabilities 	$	 1,446,952 	 	$	 270,831 	 
	         Related party accounts payable
    	 	9,510 	 	 	10,083 	 
	             
           Total current liabilities 	 	1,456,462 	 	 	280,914 	 
	Long-term: 	 	  	 	 	  	 
	         Stock compensation
      payable (note 2 and 6) 	 	2,397,564 	 	 	1,707,548 	 
	                           
      Total liabilities 	 	3,854,026 	 	 	1,988,462 	 
	  	 	  	 	 	  	 
	STOCKHOLDERS’ EQUITY 	 	  	 	 	  	 
	  	 	  	 	 	  	 
	Capital stock 	 	  	 	 	  	 
	         Authorized:
    	 	  	 	 	  	 
	             100,000,000
      common shares with a $0.001 par value 	 	  	 	 	  	 
	         Issued and
      outstanding: 	 	  	 	 	  	 
	               43,810,512
      shares at March 31, 2007 and 	 	  	 	 	  	 
	               18,263,844
      shares at March 31, 2006 	 	43,811 	 	 	18,264 	 
	Capital stock issuable 	 	- 	 	 	20,134,260 	 
	Additional paid-in capital 	 	25,767,826 	 	 	4,954,690 	 
	Accumulated deficit before development stage 	 	(1,004,630	) 	 	(1,004,630	) 
	Accumulated deficit during development stage
    	 	(5,987,693	) 	 	(4,195,113	) 
	                   Total
      stockholders’ equity 	 	18,819,314 	 	 	19,907,471 	 
	  	 	  	 	 	  	 
	                           
      Total liabilities and stockholders’ equity 	$	 22,673,340 	 	$	 21,895,933 	 

The accompanying notes are an integral part of these consolidated
  financial statements. 

  -3- 

U.S. GEOTHERMAL INC. 

  (A Development Stage Company) 

  CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 

  (Stated in U.S. Dollars) 

	  	 	  	 	 	  	 	 	  	 	 	Cumulative Period 	 
	  	 	Year
      Ended March 31, 	 	 	From February 26, 	 
	  	 	  	 	 	  	 	 	  	 	 	2002 (Inception) to 	
	  	 	2007 	 	 	2006
    	 	 	2005
    	 	 	March 31, 2007 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Revenue 	$	 - 	 	$	 	 	$	 - 	 	$	 - 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Operating Expenses 	 	  	 	 	  	 	 	  	 	 	  	 
	Loss from investment in subsidiary 	 	102,336 	 	 	- 	 	 	- 	 	 	102,336 	 
	Consulting fees 	 	67,913 	 	 	29,005 	 	 	489,747 	 	 	463,804 	 
	Corporate admin and development 	 	215,914 	 	 	185,186 	 	 	118,098 	 	 	549,481 	 
	Exploration expenditures 	 	- 	 	 	- 	 	 	438,885 	 	 	440,611 	 
	Professional fees 	 	663,009 	 	 	386,275 	 	 	104,081 	 	 	1,627,001 	 
	Management fees 	 	45,515 	 	 	36,415 	 	 	86,463 	 	 	326,748 	 
	Salaries and wages 	 	506,354 	 	 	484,656 	 	 	129,219 	 	 	1,094,223 	 
	Stock based compensation 	 	978,772 	 	 	180,779 	 	 	295,540 	 	 	1,751,163 	 
	Travel and promotion 	 	408,056 	 	 	360,753 	 	 	89,497 	 	 	882,574 	 
	                 
      Loss from Operations 	 	(2,987,869	) 	 	(1,663,069	) 	 	(1,751,530	) 	 	(7,237,941	) 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Other Income 	 	  	 	 	  	 	 	  	 	 	  	 
	Foreign exchange gain 	 	411,341 	 	 	149,200 	 	 	(95,885	) 	 	422,611 	 
	Other income 	 	90,206 	 	 	- 	 	 	- 	 	 	90,206 	 
	Interest income 	 	693,738 	 	 	23,276 	 	 	16,994 	 	 	737,431 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Net Loss 	$	 (1,792,584	) 	$	 (1,490,593	) 	$	 (1,830,421	) 	$	 (5,987,693	) 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Basic And Diluted Net Loss Per Share 	$	 (0.04	) 	$	 (0.09	) 	$	 (0.12	) 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Weighted Average Number Of Shares 	 	  	 	 	  	 	 	  	 	 	  	 
	Outstanding for Basic and Diluted Calculations 	 	43,640,303 	 	 	17,797,637 	 	 	15,209,468 	 	 	  	 
	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Other Comprehensive Income (Loss) 	 	  	 	 	  	 	 	  	 	 	  	 
	          
      Net loss for the period 	$	 (1,792,584	) 	$	 (1,490,593	) 	$	 (1,830,421	) 	$	 (5,987,693	) 
	          
      Foreign currency translation 	 	  	 	 	  	 	 	  	 	 	  	 
	               
      adjustment 	 	-
      	 	 	(165,262	) 	 	165,262 	 	 	- 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Total Comprehensive
      Loss 	$	 (1,792,584	) 	$	 (1,655,855	) 	$	 (1,665,159	) 	$	 (5,987,693	) 

The accompanying notes are an integral part of these consolidated
  financial statements. 

  -4- 

U.S. GEOTHERMAL INC. 

  (A Development Stage Company) 

  CONSOLIDATED STATEMENTS OF CASH FLOWS 

  (Stated in U.S. Dollars) 

	  	 	  	 	 	  	 	 	  	 	 	From February
    	 
	  	 	  	 	 	  	 	 	  	 	 	26, 2002 	 
	  	 	Year
      Ended March 31, 	 	 	(Inception) to 	 
	  	 	2007 	 	 	2006
    	 	 	2005
    	 	 	March 31, 2007 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Operating Activities: 	 	  	 	 	  	 	 	  	 	 	  	 
	Net loss 	$	 (1,792,584	) 	$	 (1,490,593	) 	$	 (1,830,421	) 	$	 (5,987,693	) 
	Add non-cash items: 	 	  	 	 	  	 	 	  	 	 	  	 
	       Depreciation 	 	16,511 	 	 	1,350 	 	 	1,399 	 	 	19,836 	 
	       Loss of operations
      of subsidiary 	 	133,304 	 	 	- 	 	 	- 	 	 	133,304 	 
	       Shares issued for other than cash
    	 	65,384 	 	 	84,000 	 	 	- 	 	 	198,984 	 
	       Stock based compensation
    	 	978,772 	 	 	180,779 	 	 	295,540 	 	 	1,751,162 	 
	Change in non-cash working capital items: 	 	  	 	 	  	 	 	  	 	 	  	 
	       Accounts receivable,
      subsidiary 	 	(154,277	) 	 	- 	 	 	  	 	 	(154,277	) 
	       Accounts payable and accrued 	 	  	 	 	  	 	 	  	 	 	  	 
	           
      liabilities 	 	(160,166	) 	 	115,812 	 	 	(20,363	) 	 	120,748 	 
	       Prepaid expenses & other 	 	(16,277	) 	 	(1,608	) 	 	(24,294	) 	 	(27,706	) 
	Total cash used by operating activities 	 	(929,333	) 	 	(1,110,260	) 	 	(1,578,139	) 	 	(3,945,642	) 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Investing Activities: 	 	  	 	 	  	 	 	  	 	 	  	 
	Purchases of property, plant and equipment 	 	(1,093,068	) 	 	(1,131,764	) 	 	(41,331	) 	 	(2,822,508	) 
	Cash acquired in business combination 	 	- 	 	 	- 	 	 	- 	 	 	5,798 	 
	Cash restricted under contract 	 	(5,363,400	) 	 	- 	 	 	- 	 	 	(5,363,400	) 
	Investment in subsidiary 	 	(6,363,714	) 	 	- 	 	 	- 	 	 	(6,363,714	) 
	       Total cash used by investing activities
    	 	(12,820,182	) 	 	(1,131,764	) 	 	(41,331	) 	 	(14,543,824	) 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Financing Activities: 	 	  	 	 	  	 	 	  	 	 	  	 
	Issuance of share capital, net of share issue
    	 	  	 	 	  	 	 	  	 	 	  	 
	   cost 	 	20,312,177 	 	 	646,710 	 	 	2,576,562 	 	 	25,215,835 	 
	       Total cash provided
      by financing 	 	  	 	 	  	 	 	  	 	 	  	 
	           
      activities 	 	20,312,177 	 	 	646,710 	 	 	2,576,562 	 	 	25,215,835 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Foreign Exchange Effect On Cash And 	 	  	 	 	  	 	 	  	 	 	  	 
	   Cash Equivalents 	 	- 	 	 	(165,262	) 	 	129,470 	 	 	- 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Increase (Decrease) In Cash And Cash 	 	  	 	 	  	 	 	  	 	 	  	 
	   Equivalents 	 	6,562,662 	 	 	(1,760,576	) 	 	1,086,562 	 	 	6,759,161 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Cash And Cash Equivalents, Beginning 	 	  	 	 	  	 	 	  	 	 	  	 
	   Of Period 	 	196,499 	 	 	1,957,075 	 	 	870,513 	 	 	- 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Cash And Cash Equivalents, End Of Period 	$	 6,759,161 	 	$	 196,499 	 	$	 1,957,075 	 	$	 6,759,161 	 

The accompanying notes are an integral part of these consolidated
  financial statements. 

  -5- 

U.S. GEOTHERMAL INC. 

  (A Development Stage Company) 

  CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) 

  (Stated in U.S. Dollars) 

	  	 	 Year
      Ended 	 	 	From February 26, 2002  	 
	  	 	  	 	 	March 31, 	 	 	  	 	 	(Inception) to 	 
	  	 	2007 	 	 	2006
    	 	 	2005
    	 	 	March 31, 2007 	 
	  	 	  	 	 	  	 	 	  	 	 	  	 
	Supplemental Disclosure: 	 	  	 	 	  	 	 	  	 	 	  	 
	   Non-cash investing and financing activities 	 	  	 	 	  	 	 	  	 	 	  	 
	         Shares
      issued for settlement of debt 	 	  	 	 	  	 	 	 	 	$	173,639 	 
	         Shares issued with employment
      agreements 	$	 65,384 	 	$	 84,000 	 	 	  	 	 	198,984 	 
	         Shares issued
      for geothermal property 	 	  	 	 	  	 	$	 60,350 	 	 	77,350 	 
	         Purchase of property and
      equipment on account 	 	1,335,714 	 	 	  	 	 	  	 	 	1,335,714 	 
	         Warrants
      issued for share issue cost 	 	  	 	 	  	 	 	  	 	 	158,778 	 

The accompanying notes are an integral part of these consolidated
  financial statements. 

  -6- 

U.S. GEOTHERMALINC. 

  (A Development Stage Company) 

CONSOLIDATED STATEMENT OF STOCKHOLDERS’
  EQUITY (Continued) 

FROM INCEPTION, FEBRUARY
  26, 2002 TO MARCH 31, 2007 

  (Stated in U.S. Dollars) 

	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	ACCUM. 	 	 	  	 	 	  	 
	  	NUMBER 	 	 	  	 	 	ADDITIONAL 	 	 	CAPITAL 	 	 	STOCK 	 	 	OTHER 	 	 	  	 	 	  	 
	  	OF 	 	 	  	 	 	PAID-IN 	 	 	STOCK 	 	 	PURCHASE 	 	 	COMP. 	 	 	ACCUM. 	 	 	  	 
	  	SHARES 	 	 	AMOUNT 	 	 	CAPITAL 	 	 	ISSUABLE 	 	 	WARRANTS 	 	 	INCOME 	 	 	DEFICIT 	 	 	TOTAL 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Shares issued for cash at $0.015 per share
      – February 26, 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   2002 	2,600,000 	 	$	 2,600 	 	$	 37,400 	 	$	 - 	 	$	 - 	 	$	 - 	 	$	 - 	 	$	 40,000 	 
	Shares and warrants issued for Geothermal property
      at 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   $0.009 – March 5, 2002 	1,895,000 	 	 	1,895
    	 	 	15,105
    	 	 	  	 	 	  	 	 	  	 	 	  	 	 	17,000
    	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance, March 31, 2002 – U.S. Geothermal
      Inc. – Idaho 	4,495,000 	 	 	4,495 	 	 	52,505 	 	 	- 	 	 	- 	 	 	- 	 	 	- 	 	 	57,000 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Shares issued for cash at $0.25 per share – May 28, 2002
    	395,000 	 	 	395 	 	 	98,355 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	98,750 	 
	Shares issued for services at $0.25 per share
      – May 28, 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   2002 	5,000 	 	 	5 	 	 	1,245 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	1,250 	 
	Shares issued for cash at $0.30 per share –
      November 1, 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   2002 	1,023,667 	 	 	1,024 	 	 	306,076 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	307,100 	 
	Shares issued for services at $0.30 per share
      – November 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   1, 2002 	10,000 	 	 	10 	 	 	2,990 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	3,000 	 
	Shares issued for services at $0.30 per share
      – February 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   14, 2003 	151,170 	 	 	151 	 	 	45,199 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	45,350 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Net loss for the period 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	(164,909	) 	 	(164,909	) 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance carried forward, March 31, 2003 – U.S. 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   Geothermal Inc. – Idaho 	6,079,837 	 	$	 6,080 	 	$	 506,370 	 	$	 - 	 	$	 - 	 	$	 - 	 	$	 (164,909	) 	$	 347,541 	 

-6- 

U.S. GEOTHERMALINC. 

  (A Development Stage Company) 

CONSOLIDATED STATEMENT OF STOCKHOLDERS’
  EQUITY (Continued) 

FROM INCEPTION, FEBRUARY
  26, 2002, TO MARCH 31, 2007 

  (Stated in U.S. Dollars) 

	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	ACCUM. 	 	 	  	 	 	  	 
	  	NUMBER 	 	 	  	 	 	ADDITIONAL 	 	 	CAPITAL 	 	 	STOCK 	 	 	OTHER 	 	 	  	 	 	  	 
	  	OF 	 	 	  	 	 	PAID-IN 	 	 	STOCK 	 	 	PURCHASE 	 	 	COMP. 	 	 	ACCUM. 	 	 	  	 
	  	SHARES 	 	 	AMOUNT 	 	 	CAPITAL 	 	 	ISSUABLE 	 	 	WARRANTS 	 	 	INCOME 	 	 	DEFICIT 	 	 	TOTAL 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance carried forward, March 31, 2003 –
      U.S. 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   Geothermal Inc. – Idaho 	6,079,837 	 	$	 6,080 	 	$	 506,370 	 	$	 - 	 	$	 - 	 	$	 - 	 	$	 (164,909	) 	$	 347,541 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Consolidation adjustment to the number of shares issued 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   and outstanding as a result of
      the reverse take-over 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   transaction- U.S. Geothermal Inc.- Idaho; December
    	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   19, 2003 	(6,079,837	) 	 	(6,080	) 	 	6,080 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	- 	 
	Legal parent company shares issued and outstanding at 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   time of reverse take-over- U.S.
      Cobalt Inc.; December 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   19, 2003 	2,274,616 	 	 	2,275 	 	 	(2,275	) 	 	  	 	 	  	 	 	  	 	 	  	 	 	- 	 
	Shares issued for acquisition of U.S. Geothermal
      Inc.- 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   Idaho 	6,939,992 	 	 	6,940 	 	 	(6,940	) 	 	  	 	 	  	 	 	  	 	 	(408,166	) 	 	(408,166	) 
	Warrants issued for acquisition of U.S. Geothermal
      Inc.- 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   Idaho 	  	 	 	  	 	 	  	 	 	  	 	 	629,256 	 	 	  	 	 	(629,256	) 	 	- 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Shares and warrants issued for cash at a price of $0.45 per
    	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   share in a private placement,
      net of share issue costs of 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   $75,122 paid in cash and $25,437 paid by issuance
      of 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   83,333 agent’s warrants-
      December 19, 2003 	3,322,221 	 	 	3,322 	 	 	959,230 	 	 	  	 	 	457,326 	 	 	  	 	 	  	 	 	1,419,878 	 
	Shares and warrants issued for conversion of notes at 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   $0.45 per share – February
      20, 2004 	385,864 	 	 	386 	 	 	123,090 	 	 	  	 	 	50,162 	 	 	  	 	 	  	 	 	173,638 	 
	Stock options granted 	  	 	 	  	 	 	296,081 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	296,081 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Foreign currency translation gain 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	35,792 	 	 	  	 	 	35,792 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Net loss for the year 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	(676,398	) 	 	(676,398	) 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance, March 31, 2004 	12,922,693 	 	$	 12,923 	 	$	 1,881,636 	 	$	 - 	 	$	 1,136,744 	 	$	 35,792 	 	$	 (1,878,729	) 	$	 1,188,366 	 

-7-

U.S. GEOTHERMALINC. 

  (A Development Stage Company) 

CONSOLIDATED STATEMENT OF STOCKHOLDERS’
  EQUITY (Continued) 

FROM INCEPTION, FEBRUARY
  26, 2002 TO MARCH 31, 2007 

  (Stated in U.S. Dollars) 

	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	ACCUM. 	 	 	  	 	 	  	 
	  	NUMBER 	 	 	  	 	 	ADDITIONAL 	 	 	CAPITAL 	 	 	STOCK 	 	 	OTHER 	 	 	  	 	 	  	 
	  	OF 	 	 	  	 	 	PAID-IN 	 	 	STOCK 	 	 	PURCHASE 	 	 	COMP. 	 	 	ACCUM. 	 	 	  	 
	  	SHARES 	 	 	AMOUNT 	 	 	CAPITAL 	 	 	ISSUABLE 	 	 	WARRANTS 	 	 	INCOME 	 	 	DEFICIT 	 	 	TOTAL 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance, March 31, 2004 	12,922,693 	 	$	 12,923 	 	$	 1,881,636 	 	$	 - 	 	$	 1,136,744 	 	$	 35,792 	 	$	 (1,878,729	) 	$	 1,188,366 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Shares and warrants issued for cash at a price
      of $0.66 in 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   a private placement, net of share issue costs
      of 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   $225,131 paid in cash and $133,341
      paid by the 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   issuance of 280,000 agent’s warrants- September
      17, 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   2004 	4,000,001 	 	 	4,000 	 	 	1,103,082 	 	 	  	 	 	1,324,038 	 	 	  	 	 	  	 	 	2,431,120 	 
	Shares issued for property at a price of $0.60- February 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	   22, 2005 	100,000 	 	 	100 	 	 	60,251 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	60,351 	 
	Shares issued for stock options exercised 	308,735 	 	 	309 	 	 	145,133 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	145,442 	 
	Stock options granted 	  	 	 	  	 	 	295,540 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	295,540 	 
	Foreign currency translation gain 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	129,470 	 	 	  	 	 	129,470 	 
	Net loss for the year 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	(1,830,421	) 	 	(1,830,421	) 
	Balance, March 31, 2005 	17,331,429 	 	 	17,332 	 	 	3,485,642 	 	 	- 	 	 	2,460,782 	 	 	165,262 	 	 	(3,709,150	) 	 	2,419,868 	 
	Stock options granted 	  	 	 	  	 	 	180,780 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	180,780 	 
	Expiration of stock purchase warrants 	  	 	 	  	 	 	1,061,145 	 	 	  	 	 	(1,061,145	) 	 	  	 	 	  	 	 	- 	 
	Shares issued for stock options and warrants
      exercised 	812,415 	 	 	812 	 	 	526,753 	 	 	  	 	 	(75,599	) 	 	  	 	 	  	 	 	451,966 	 
	Stock issued as result of employment agreements 	120,000 	 	 	120 	 	 	83,880 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	84,000 	 
	Foreign currency translation loss 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	(165,262	) 	 	32,792 	 	 	(132,470	) 
	Capital stock issuable as result of a private placement to
    	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	be closed April 3, 2006 	  	 	 	  	 	 	  	 	 	20,134,260 	 	 	  	 	 	  	 	 	  	 	 	20,134,260 	 
	Stock compensation liability 	  	 	 	  	 	 	(383,510	) 	 	  	 	 	(1,324,038	) 	 	  	 	 	  	 	 	(1,707,548	) 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Net loss for the year 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	(1,523,385	) 	 	(1,523,385	) 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance, March 31, 2006 	18,263,844 	 	$	 18,264 	 	$	 4,954,690 	 	$	 20,134,260 	 	$	 - 	 	$	 - 	 	$	 (5,199,743	) 	$	 19,907,471 	 

-8- 

U.S. GEOTHERMALINC. 

  (A Development Stage Company) 

CONSOLIDATED STATEMENT OF STOCKHOLDERS’
  EQUITY (Continued) 

FROM INCEPTION, FEBRUARY
  26, 2002 TO MARCH 31, 2007 

  (Stated in U.S. Dollars) 

	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	ACCUM. 	 	 	  	 	 	  	 
	  	NUMBER 	 	 	  	 	 	ADDITIONAL 	 	 	CAPITAL 	 	 	STOCK 	 	 	OTHER 	 	 	  	 	 	  	 
	  	OF 	 	 	  	 	 	PAID-IN 	 	 	STOCK 	 	 	PURCHASE 	 	 	COMP. 	 	 	ACCUM. 	 	 	  	 
	  	SHARES 	 	 	AMOUNT 	 	 	CAPITAL 	 	 	ISSUABLE 	 	 	WARRANTS 	 	 	INCOME 	 	 	DEFICIT 	 	 	TOTAL 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance, March 31, 2006 	18,263,844 	 	$	 18,264 	 	$	 4,954,690 	 	$	 20,134,260 	 	$	 - 	 	$	 - 	 	$	 (5,199,743	) 	$	 19,907,471 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Stock issued as result of employment agreements
    	49,168 	 	 	49 	 	 	65,331 	 	 	  	 	 	  	 	 	  	 	 	4 	 	 	65,384 	 
	Stock options granted 	  	 	 	  	 	 	978,772 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	978,772 	 
	Shares issued for stock options and warrants
    	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	     exercised 	497,500 	 	 	498 	 	 	487,595 	 	 	  	 	 	(137,806	) 	 	  	 	 	  	 	 	350,287 	 
	Capital stock issued as result of a private
    	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	     placement closed April 3, 2006 	25,000,000 	 	 	25,000 	 	 	20,109,260 	 	 	(20,134,260	) 	 	  	 	 	  	 	 	  	 	 	- 	 
	Stock purchase warrants expired 	  	 	 	  	 	 	1,186,232 	 	 	  	 	 	(1,186,232	) 	 	  	 	 	  	 	 	- 	 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Stock compensation liability 	  	 	 	  	 	 	(2,014,054	) 	 	  	 	 	1,324,038 	 	 	  	 	 	  	 	 	(690,016	) 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Net loss for the period 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	(1,792,584	) 	 	(1,792,584	) 
	  	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 
	Balance, March 31, 2007 	43,810,512 	 	$	 43,811 	 	$	 25,767,826 	 	$	 - 	 	$	 - 	 	$	 - 	 	$	 (6,992,323	) 	$	 18,819,314 	 

The accompanying notes are an integral part of these consolidated
  financial statements. 

  -9- 

U.S. GEOTHERMAL INC. 

  (A Development Stage Company) 

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

  MARCH 31, 2007 

  (Stated in U.S. Dollars) 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS 

When U.S. Cobalt Inc. (“GTH” or the “Company”)
  completed a reverse take-over on December 19, 2003, the former stockholders
  of U.S. Geothermal Inc. (“GEO – Idaho”) a company incorporated
  on February 26, 2002 in the State of Idaho, acquired control of GTH. In connection
  with the transaction, U.S. Cobalt Inc. changed its name to U.S. Geothermal Inc.
  and consolidated its common stock on a one new to five old basis. All references
  to common shares in these financial statements have been restated to reflect
  the roll-back of common stock. 

The Company has been in the development stage since its formation
  and has not yet realized any revenues from its planned operations. GEO - Idaho
  operates for the purpose of acquiring geothermal properties and entered into
  an agreement with Vulcan Power Company (“Vulcan”) of Bend, Oregon,
  U.S.A., pursuant to which it acquired a 100% interest in the Raft River Geothermal
  Property located in Cassia County, Idaho, U.S.A. (Note 3). 

Basis of Presentation

These consolidated financial statements are prepared in accordance
  with accounting principles generally accepted in the United States of America.
  The Company consolidates more-than-50% owned subsidiaries that it controls and
  entities over which control is achieved through means other than voting rights.
  These consolidated financial statements include the accounts of the Company
  and its wholly-owned subsidiaries. The accounts of the following companies are
  consolidated in these financial statements: 

	 	i) 	 U.S. Geothermal Inc. (incorporated in the State of Delaware);

	 	ii) 	 U.S. Geothermal Inc. (incorporated in the State of Idaho);

	 	iii) 	 U.S. Cobalt Inc. (incorporated in the State of Colorado);

	 	iv) 	 U.S. Geothermal Services, LLC (incorporated in the State
        of Delaware).

All Company transactions are eliminated on consolidation. 

Raft River Energy I LLC was consolidated through July 2006, after
  which the entity is recorded under the equity method. See Consolidation of Variable
  Interest Entity in Note 2 for further discussion.

Reclassification 

Certain amounts from prior periods have been reclassified to
  conform to the current period presentation. This reclassification has resulted
  in no changes to the Company’s accumulated deficit or net losses presented.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The following are summarized accounting policies considered to
  be significant by the Company’s management: 

-10- 

Accounting Method 

The Company’s financial statements are prepared using the
  accrual basis of accounting in accordance with accounting principles generally
  accepted in the United States of America and have been consistently applied
  in the preparation of the financial statements. 

Development Stage Company

Pursuant to Statement of Financial Accounting Standards No. 7,
  “Accounting and Reporting by Development Stage Enterprises” (SFAS
  7), the Company is considered to be a development stage enterprise since its
  planned principal operations have not commenced. The various entities that comprised
  the Company prior to February 26, 2002 were not engaged in operations directly
  related to the development of geothermal power plants. After that time, the
  Company began its current and primary development activities, and accordingly,
  accounted for the accumulated deficit separately from the prior operations.
  The statements of operations, stockholders’ equity and cash flows present
  the accumulated activities from the inception of the current operating activities
  to present. This presentation will continue until the Company begins operations.

Use of Estimates

The preparation of financial statements in accordance with generally
  accepted accounting principles requires the use of estimates and assumptions
  that affect the reported amounts of assets and liabilities, disclosure of contingent
  assets and liabilities known to exist as of the date the financial statements
  are published, and the reported amounts of revenues and expenses during the
  reporting period. Uncertainties with respect to such estimates and assumptions
  are inherent in the preparation of the Company’s financial statements;
  accordingly, it is possible that the actual results could differ from these
  estimates and assumptions and could have a material effect on the reported amounts
  of the Company’s financial position and results of operations. 

Cash and Cash Equivalents 

The Company considers all unrestricted cash, short term deposits,
  and other investments with maturities of no more than ninety days when acquired
  to be cash and cash equivalents for the purposes of the statement of cash flows.
  Discussion regarding restricted cash is included in Notes 5 and 9. With the
  large value of funds invested in short term deposits, small variations in short
  term interest rates may materially affect the value of cash equivalents. Investments
  in government obligations accumulate higher interest, but the principal balance
  is not insured by the FDIC. All investments held by the Company are highly liquid,
  available on demand. 

Concentration of Credit Risk

The Company’s cash and cash equivalents consisted of commercial
  bank deposits, a money market account, and petty cash. The money market funds
  totaled $12,081,369, and are not subject to deposit insurance. Cash deposits
  are held in a commercial bank in Boise, Idaho, and in a commercial bank in Vancouver,
  British Columbia. The accounts in Idaho are guaranteed by the Federal Deposit
  Insurance Corporation (FDIC) up to $100,000. The Canadian dollar accounts in
  British Columbia are guaranteed by the Canadian Deposit Insurance Corporation
  (CIDC) up to $100,000 Canadian (approximately $86,000 in U.S. dollars at March
  31, 2007). At March 31, 2007, the Company exceeded the FDIC insured amount by
  approximately $53,800 and did not exceed the CIDC insured amount. 

Consolidation of Variable Interest Entities

The Company has a significant interest in a Raft River Energy
  I, LLC (RREI), which has been 

-11- 

determined to be a variable interest entity as defined by FASB
  Interpretation No. 46(R) (FIN 46(R)). RREI’s purpose is to hold the financial
  interests of the first phase of the Raft River project for the construction
  of a 10 megawatt geothermal power plant. As described below, the Company’s
  interest changed during the current fiscal period from primary beneficiary to
  a significant interest.

RREI resulted from agreements signed August 9, 2006, between
  U.S. Geothermal Inc. and Raft River Holdings, LLC, a subsidiary of the Goldman
  Sachs Group, for construction financing of Phase I of the Raft River project.
  To accommodate the construction financing, U.S. Geothermal sold 50% of its ownership
  in Raft River Energy to Raft River Holdings. As a result of the agreements,
  U.S. Geothermal is required to contribute approximately $6,400,000 in cash and
  property, and Raft River Holdings is required to contribute $34,000,000 to Raft
  River Energy.

As of March 31, 2007, U.S. Geothermal Inc. has contributed $6,363,714
  in cash and property to the project, while Raft River Holdings has contributed
  $23,458,100. As a result, Raft River Holdings has been designated the primary
  beneficiary.

For periods prior to August 2006, U.S. Geothermal was the 100%
  owner of RREI and consolidated the loss of $30,968. For the period August 2006
  to March 2007, U.S. Geothermal recorded RREI under the equity method of accounting
  for investments in subsidiaries based on the capital contribution ratio at March
  31, 2007 (loss of $102,336). 

RREI’s financial information is summarized as follows: 

  	As of November 24, 2006: 	 	  	 
	         Total current
        assets 	$	 3,417,793 	 
	         Property and equipment
      	 	18,618,764 	 
	                   Total
        assets 	$	 22,036,557 	 
	  	 	  	 
	         Total current
        liabilities 	$	 3,360,052 	 
	         Members’ equity 	 	18,676,505 	 
	           
               Total liabilities and equity 	$	 22,036,557 	 
	  	 	  	 
	From inception on August 18, 2005 to 	 	  	 
	    November 24, 2006: 	 	  	 
	         Operating
        revenues 	$	 0 	 
	         Operating loss 	 	(245,879	) 
	         Net loss
      	 	(237,309	) 

Property, Plant and Equipment 

Costs of acquisition of geothermal properties are capitalized
  on an area-of-interest basis. Geothermal properties include all direct costs
  for the acquisition of land rights, water rights and mineral rights. Amortization
  of these costs will be on a unit-of-production basis, based on estimated proven
  geothermal reserves should such reserves be found. If an area of interest is
  abandoned, the costs thereof are charged to income in the year of abandonment.
  With the inherent uncertainty of calculating the units of production for a renewable
  resource, revisions to the estimates and the subsequent field performance of
  the resource would cause the life of the resource to differ significantly from
  the estimated units of production. A large percentage increase or decrease in
  the estimated reserves would decrease or increase the depreciation, depletion
  or amortization of capital costs proportionately. 

The Company expenses all costs related to the development of
  geothermal reserves prior to the establishment of proven and probable reserves.

-12- 

Depreciation will be based upon the estimated useful life of
  the asset. For assets directly related to revenue production defined by a specific
  contract, the estimated useful lives will not exceed the life of the contract.
  Depletion on wells and other assets directly involved in the extraction of the
  natural resources will be based upon the total estimated capacity on a unit
  of production basis. Units will be defined as gallons of geothermal water, processed
  through the plant, used directly in the production of revenues.

Other equipment is recorded at cost. Depreciation of other equipment
  is calculated on a straight-line basis at an annual rate of 30%. 

Impairment of Long-Lived Assets

Statement of Financial Accounting Standards No. 144 “Accounting
  for the Impairment or Disposal of Long-Lived Assets” (SFAS 144) establishes
  a single accounting model for long-lived assets to be disposed of by sale including
  discontinued operations. SFAS 144 requires that these long-lived assets be measured
  at the lower of the carrying amount or fair value less cost to sell, whether
  reported in continuing operations or discontinued operations. The Company has
  adopted SFAS 144 and evaluates its long-term assets annually for impairment
  or when circumstances or events occur that may impact the fair value of the
  assets. The fair value of geothermal property is primarily evaluated based upon
  the present value of expected revenues directly associated with those assets.
  An impairment loss would be recognized if the carrying amount of a capitalized
  asset is not recoverable and exceeds its fair value. As expected for the initial
  stages of the Company’s operations, circumstances have not warranted the
  recognition of losses due to the impairment of long-lived assets. 

Asset Retirement Obligations

Statement of Financial Accounting Standards No. 143, “Accounting
  for Asset Retirement Obligations,” requires legal obligations associated
  with the retirement of long-lived assets to be recognized at their fair value
  at the time the obligations are incurred. Upon initial recognition of a liability,
  that cost should be capitalized as part of the related long-lived asset and
  allocated to expense over the useful life of the asset. The Company has previously
  adopted this statement, with no impact to the Company’s financial statements.

Stock Options Granted to Employees and Non-employees

On April 1, 2006, the Company adopted Statement of Financial
  Accounting Standards No. 123 (revised 2004), “Share-Based Payment”
  (SFAS 123(R)), which requires the measurement of the value of employee services
  received in exchange for an award of an equity instrument based on the grant-date
  fair value of the award. For employees, directors and officers, the fair value
  of the awards are expensed over the vesting period. The current vesting period
  for all options is eighteen months. 

Under SFAS 123(R), the Company has elected to use the modified
  prospective transition method, and accordingly, the Company’s consolidated
  financial statements for periods prior to adoption of SFAS 123(R) have not been
  restated to reflect, and do not include the impact of adopting.

For non-employee stock based compensation, the Company has adopted
  EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued
  to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
  or Services” and EITF Issue No. 00-18, “Accounting Recognition for
  Certain Transactions involving Equity Instruments Granted to Other Than Employees.”
  Non-employee stock options have been granted, at the Board of Director’s
  discretion, to select vendors as a bonus for exceptional performance. Prior
  to issuance of the awards, the Company was not under any obligation to issue
  the stock options. Subsequent to the award, the recipient was not obligated
  to perform any services. Therefore, the fair value of these options was expensed
  on the grant date which was also the measurement date.

-13- 

Pursuant to the requirements to SFAS 123(R), the Company made
  certain reclassifications to its consolidated balance sheet as of March 31,
  2006, to reflect the stock compensation liability that resulted from the issuance
  of stock options denominated in a foreign currency. The reclassification from
  shareholder equity to liabilities amounted to $1,707,548 at March 31, 2006.
  We account for stock-based compensation in accordance with SFAS No.123(R), Share-Based
  Payment. Under the fair value recognition provisions of this statement,
  share-based compensation cost is measured at the grant date based on the value
  of the award and is recognized as expense over the vesting period. Determining
  the fair value of share-based awards at the grant date requires judgment, including
  estimating expected dividends. In addition, judgment is also required in estimating
  the amount of share-based awards that are expected to be forfeited. If actual
  results differ significantly from these estimates, stock-based compensation
  expense and our results of operations could be materially impacted. 

Earnings Per Share

The Company has adopted Statement of Financial Accounting Standard
  No. 128 “Earnings per Share” (SFAS 128), which provides for calculation
  of "basic" and "diluted" earnings per share. Basic earnings per share includes
  no dilution and is computed by dividing net income available to common shareholders
  by the weighted average common shares outstanding for the period. Diluted earnings
  per share reflect the potential dilution of securities that could share in the
  earnings of an entity similar to fully diluted earnings per share. Although
  there were common stock equivalents outstanding at March 31, 2007 and 2006,
  they were not included in the calculation of earnings per share because their
  inclusion would have been considered anti-dilutive. 

Financial Instruments

The Company’s financial instruments consist of cash and
  cash equivalents, refundable tax credits, and accounts payable and accrued liabilities.
  Unless otherwise noted, it is management’s opinion that the Company is
  not exposed to significant interest, currency or credit risks arising from these
  financial instruments. The fair values of these financial instruments approximate
  their carrying values, unless otherwise noted. 

Refundable tax credit is comprised of Goods and Services Tax
  (“GST”) which is refundable from the Government of Canada. 

Foreign Currency Translation

The Company’s functional currency is the U.S. dollar. Transactions
  in foreign currency are converted into U.S. dollars using the current method
  as follows: 

	Monetary items at the rate prevailing at the balance sheet date;
  
	Non-monetary items at the historical exchange rate;
  
	Revenue and expenses at the average rate in effect during the applicable
    accounting period. 

Adjustments arising from the translation of the foreign currency
  amounts are included as a separate component of stockholders’ equity. 

Foreign Operations

The accompanying balance sheet contains certain recorded Company
  assets (principally cash) in a foreign country (Canada). Although Canada is
  considered economically stable, it is always possible that unanticipated events
  in foreign countries could disrupt the Company’s operations. 

-14- 

Provision for Taxes 

Income taxes are provided based upon the liability method of
  accounting pursuant to Statement of Financial Accounting Standards No. 109,
  “Accounting for Income Taxes” (SFAS 109). Under this approach, deferred
  income taxes are recorded to reflect the tax consequences in future years of
  differences between the tax basis of assets and liabilities and their financial
  reporting amounts at each year-end. A valuation allowance is recorded against
  deferred tax assets if management does not believe the Company has met the “more
  likely than not” standard imposed by SFAS 109 to allow recognition of such
  an asset. 

At March 31, 2007, the Company had net deferred tax assets calculated
  at an expected rate of 34% of approximately $2,177,500 (March 31, 2006 - $1,568,000)
  principally arising from net operating loss carry forwards and stock compensation.
  As management of the Company cannot determine that it is more likely than not
  that the Company will realize the benefit of the net deferred tax asset, a valuation
  allowance equal to the net deferred tax asset was recorded at March 31, 2007.
  The significant components of the deferred tax asset at March 31, 2007 and March
  31, 2006 were as follows: 

	  	 	March 31, 	 	 	March 31, 	 
	  	 	2007
    	 	 	2006
    	 
	Net operating loss carry forward 	$	 6,404,500 	 	$	 4,612,100 	 
	  	 	  	 	 	  	 
	Deferred tax asset 	$	 2,177,500 	 	$	 1,568,000 	 
	Deferred tax asset valuation allowance 	 	(2,177,500	) 	 	(1,568,000	) 
	Net deferred tax asset 	$	 - 	 	$	 - 	 

At March 31, 2007, the Company has net operating loss carry forwards
  of approximately $6,404,500 ($4,612,100 in March 31, 2006), which expire in
  the years 2023 through 2027. The change in the allowance account from March
  31, 2006 to March 31, 2007 was $609,500. 

Although we believe that our estimates are reasonable, no assurance
  can be given that the final tax outcome of these matters will not be different
  than that which is reflected in our tax provisions. Ultimately, the actual tax
  benefits to be realized will be based upon future taxable earnings levels, which
  are very difficult to predict. 

Going Concern

Based on the Company’s projected spending over the next
  12 months, the $20,134,260 cash received from the private placement completed
  April 3, 2006, and the private placement completed in June 2007 (details provided
  in footnote 10), the Company’s auditors have removed the going concern
  qualification from the Company’s financial statements. Management believes
  that sufficient funding will be available to meet its business objectives, including
  anticipated cash needs for working capital, and financing for construction of
  the phase one power plant. As shown in the accompanying consolidated financial
  statements, the Company has incurred an accumulated deficit of $7,025,115 and
  has no revenue from operations. In the ordinary course of constructing a power
  plant facility of this size and complexity, cost overruns and contract delays
  can significantly affect the economics of the project. Failure to achieve commercial
  operations of the power plant prior to December 31, 2008 would jeopardize the
  production tax credit, and could materially affect the ability of U.S. Geothermal
  to operate as a going concern. 

-15- 

Accounting Pronouncements - Recent 

The Fair Value Option for Financial Assets and Financial
  Liabilities 

  In February 2007, the FASB issued Statement of Financial Accounting Standards
  No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”
  (SFAS 159). This statement permits entities to choose to measure many financial
  instruments and certain other items at fair value. The objective is to improve
  financial reporting by providing entities with the opportunity to mitigate volatility
  in reported earnings caused by measuring related assets and liabilities differently
  without having to apply complex hedge accounting provisions. This Statement
  is expected to expand the use of fair value measurement, which is consistent
  with the Board’s long-term measurement objectives for accounting for financial
  instruments. This Statement is effective as of the beginning of an entity’s
  first fiscal year that begins after November 15, 2007, although early adoption
  is permitted. Management is currently evaluating the potential impact of the
  adoption of this statement on the financial position, results of operations
  and cash flows of the Company. Management has not elected early adoption of
  this statement.

Defined Benefit Pension and Other Postretirement Plans
  

  In September, 2006, the Financial Accounting Standards Board issued Statement
  of Financial Accounting Standards No. 158, “Employers’ Accounting
  for Defined Benefit Pension and Other Postretirement Plans – an amendment
  of FASB Statements No. 87,88,106, and 132(R)” (SFAS No. 158”). This
  statement requires an employer to recognize the overfunded or underfunded statues
  of a defined benefit postretirement plan (other than a multiemployer plan) as
  an asset or liability in its statement of financial position and to recognize
  changes in that funded status in the year in which the changes occur through
  comprehensive income of a business entity or changes in unrestricted net assets
  of a not for profit organization. This statement also requires an employer to
  measure the funded status of a plan as of the date of its year end statement
  of financial position, with limited exceptions. The adoption of this statement
  had no immediate material effect on the Company’s financial condition or
  results of operations. 

Fair Value Measurements 

  In September 2006, the FASB issued Statement of Financial Accounting Standards
  No. 157, “Fair Value Measurements” (SFAS 157). This statement defines
  fair value as used in numerous accounting pronouncements, establishes a framework
  for measuring fair value in generally accepted accounting principles and expands
  disclosure related to the use of fair value measures in financial statements.
  The statement is to be effective for financial statements issued in 2008; however,
  earlier application is encouraged. The Company is currently evaluating the timing
  of adoption and the impact that adoption might have on its financial position
  or results of operations. 

Accounting for Uncertainty in Income Taxes 

  In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting
  for Uncertainty in Income Taxes” (FIN 48). The interpretation clarifies
  the accounting for uncertainty in income taxes recognized in a company's financial
  statements in accordance with SFAS 109. Specifically, the pronouncement prescribes
  a recognition threshold and a measurement attribute for the financial statement
  recognition and measurement of a tax position taken or expected to be taken
  in a tax return. The interpretation also provides guidance on the related derecognition,
  classification, interest and penalties, accounting for interim periods, disclosure
  and transition of uncertain tax positions. The interpretation is effective for
  fiscal years beginning after December 15, 2006. The Company does not expect
  the adoption of FIN 48 to have a material impact on the Company's consolidated
  financial position, results of operations, cash flows or financial statement
  disclosures. 

-16- 

NOTE 3 - REVERSE TAKE-OVER 

Effective December 19, 2003, GTH acquired 100% of the issued
  and outstanding voting shares of GEO - Idaho by issuing 6,939,992 common shares
  and 2,420,217 share purchase warrants, of which 2,150,309 common shares and
  no share purchase warrants were held in escrow as at December 31, 2005 (as of
  March 31, 2005, 4,243,325 common shares and 1,946,937 share purchase warrants
  were held in escrow). Each share purchase warrant entitled the holder to purchase
  one additional common share at a price of $0.75 per share until December 19,
  2005. As of December 31, 2005, the 2,420,217 stock purchase warrants noted above
  expired without exercise. Since the transaction resulted in the former shareholders
  of GEO - Idaho owning the majority of the issued shares of GTH, the transaction,
  which is referred to as a “reverse take-over”, has been treated for
  accounting purposes as an acquisition by GEO - Idaho of the net assets and liabilities
  of GTH. Under this purchase method of accounting, the results of operations
  of GTH are included in these financial statements from December 19, 2003. GEO
  - Idaho is deemed to be the purchaser for accounting purposes. Accordingly,
  its net assets are included in the balance sheet at their previously recorded
  values. 

The Company determined that the share purchase warrants issued
  as part of the aforementioned transaction have a fair value of $629,256 as determined
  by using the Black-Scholes pricing model with the assumptions as stated in Note
  6. The amount is considered to be additional consideration given to the former
  GEO - Idaho shareholders and, as such, was allocated, along with the net liabilities
  assumed of GTH, to accumulated deficit. The acquisition is summarized as follows:

  	Current assets (including cash of $5,798)
      	$	 11,616 	 
	Current liabilities 	 	(419,782	) 
	Net liabilities assumed 	$	 (408,166	) 

The net liabilities assumed have been charged to accumulated
  deficit. 

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT 

During the year ended March 31, 2007, the Company incurred an
  additional $12,084,849 in construction costs for Raft River Project phase I.
  These costs were primarily for the drilling of additional wells and the construction
  of the power plant and related infrastructure. Raft River Holdings reimbursed
  the Company for $4,917,100 in amounts associated with Raft River Energy phase
  I. As described in note 2, property (both geothermal property and construction
  in process) was transferred to Raft River Energy, in exchange Company’s
  interest in the subsidiary that amounted to $6,363,714. In addition to construction
  activities, the Company acquired 1,083 acres of surface rights in exchange for
  cash payments of $1,281,006 and 631 acre feet per annum in water rights for
  $138,820. Legal fees for $87,121 were incurred for the acquisition of mineral
  rights. The Company acquired access to 5,409 acres of surface, mineral and geothermal
  rights through a lease payment of $15,000. Vehicles, furniture and computer
  equipment utilized by the corporate administrative and the Raft River site offices
  were purchased for $102,800. 

For the year ended March 31, 2006, the Company acquired a 100%
  interest in the Raft River Geothermal Property by making cash payments totalling
  $250,000 in 2003, $225,000 in 2004 and the final instalment of $125,000 in 2005.
  The Company has also completed the requisite work program. In addition, the
  Company has paid $57,728 to acquire two purchase options on 1,083 acres of surface
  and water rights, and paid $949,036 to initiate construction of the Raft River
  Project. 

Property, plant and equipment consisted of the following at the
  dates shown: 

-17- 

	 	  	 	March 31, 	 	 	March 31, 	 
	 	  	 	2007 	 	 	2006
    	 
	 	Geothermal Property (land and equipment) 	 	  	 	 	  	 
	 	         Balance, beginning of period
    	$	 775,079 	 	$	 592,351 	 
	 	         Contributed
      to subsidiary 	 	(480,911	) 	 	- 	 
	 	         Acquisitions 	 	1,521,947 	 	 	182,728 	 
	 	         Balance,
      end of period 	 	1,816,115 	 	 	775,079 	 
	 	  	 	  	 	 	  	 
	 	Construction in Process- Raft River Project
    	 	  	 	 	  	 
	 	       Balance, beginning of period 	 	949,036 	 	 	- 	 
	 	       Contributed to subsidiary
    	 	(5,882,803	) 	 	- 	 
	 	       Reimbursed by partner 	 	(4,917,100	) 	 	- 	 
	 	       Acquisitions 	 	12,084,849
    	 	 	949,036 	 
	 	       Balance, end of period 	 	2,233,982 	 	 	949,036 	 
	 	  	 	  	 	 	  	 
	 	Other Equipment 	 	  	 	 	  	 
	 	       Balance, beginning
      of period 	 	5,325 	 	 	5,325 	 
	 	       Acquisitions 	 	102,800 	 	 	- 	 
	 	         Balance,
      end of period 	 	108,125 	 	 	5,325 	 
	 	         Less: Accumulated depreciation
    	 	(19,836	) 	 	(3,325	) 
	 	       Balance, end of
      period 	 	88,289 	 	 	2,000 	 
	 	  	 	  	 	 	  	 
	 	  	$	 4,138,386 	 	$	 1,726,115 	 

NOTE 5 - CAPITAL STOCK 

The Company is authorized to issue 100,000,000 shares of common
  stock. All shares have equal voting rights, are non-assessable and have one
  vote per share. Voting rights are not cumulative and, therefore, the holders
  of more than 50% of the common stock could, if they choose to do so, elect all
  of the directors of the Company. 

During the quarter ended March 31, 2007, the Company issued 62,500
  common shares upon the exercise of 12,500 stock options, plus 50,000 broker
  compensation options at an exercise price of $1.00 CDN ($0.83 U.S.). 

During the quarter ended December 31, 2006, the Company issued
  72,741 shares to employees in satisfaction of employment agreements at an average
  price of $0.90, and 23,573 shares previously held in escrow were cancelled and
  returned to treasury. 

During the quarter ended September 30, 2006, the Company issued
  395,000 common shares upon the exercise of 280,000 stock purchase warrants at
  an exercise price of $0.85 CDN ($0.73 -$0.75 U.S.), the exercise of 15,000 stock
  purchase warrants at an exercise price of $1.25 CDN ($0.86 U.S.), and the exercise
  of 100,000 options at an exercise price of $0.60 CDN ($0.54 U.S.). 

During the quarter ended June 30, 2006, the Company issued 40,000
  common shares upon the exercise of 40,000 options at an exercise price of $0.60
  CDN ($0.53 U.S.). 

On April 3, 2006, the Company completed a private placement of
  25,000,000 common shares at a price of $1.00 CDN ($0.86 U.S. as of April 3,
  2006). Proceeds, net of financing fees, totaled $20,134,260. Of the net proceeds,
  $172,370 had been received in the Company’s bank accounts prior to year
  end. Since the subscription forms reflected a March 30, 2006 date, and the remainder
  of the cash of $19,961,890 was on deposit with Dundee Securities Corporation,
  the private placement was 

-18- 

recorded as “Private placement proceeds receivable”
  and as “Capital Stock Issuable” in the financial statements at March
  31, 2006.

During the quarter ended March 31, 2006, the Company issued 691,304
  common shares upon the exercise of 378,370 options at an exercise price of $0.60
  CDN ($0.51 U.S.), the exercise of 192,934 stock purchase warrants at an exercise
  price of $0.75 U.S., and 120,000 common shares as a signing bonus as part of
  an employment agreement at a deemed price of $0.72 CDN ($0.61 U.S.).

During the quarter ended December 31, 2005, the Company issued
  183,333 common shares upon the exercise of 100,000 options at an exercise price
  of $0.60 CDN ($0.51 U.S.) and 83,333 purchase warrants at an exercise price
  of $0.45 U.S. 

During the quarter ended September 30, 2005, the Company issued
  40,000 common shares upon the exercise of 40,000 options at an exercise price
  of $0.60 CDN ($0.51 U.S.).

During the quarter ended June 30, 2005, the Company issued 17,778
  common shares upon the exercise of 17,778 options at an exercise price of $0.90
  CDN ($0.73 U.S.). 

Escrow Shares and Warrants 

The following common shares are in escrow at the dates shown:

  	  	March 31, 	March 31, 
	  	2007 	2006
      
	  	  	  
	Common shares 	0 	2,150,309 
	Share purchase warrants 	0 	0 

The escrow shares and warrants were held in escrow pursuant to
  standard requirements of the TSX Venture Exchange, which required that escrow
  conditions be placed upon the shares and share purchase warrants issued in conjunction
  with the acquisition of GEO - Idaho and the concurrently completed private placement,
  noted above. Shares were released from escrow at six month intervals, with the
  last release from escrow completed December 19, 2006. All stock purchase warrants
  previously held in escrow expired as of December 31, 2005, without exercise.

NOTE 6 - STOCK BASED COMPENSATION 

The Company’s stock option plan provides for the grant of
  incentive stock options for up to 4,381,051 common shares to employees, consultants,
  officers and directors of the Company. All terms and conditions of the options
  are the same for external parties as well as internal employees and directors.
  Options are granted for a term of up to five years from the date of grant. Stock
  options granted generally vest over a period of eighteen months, with no conditions
  precedent to vesting. Since the plan has been administered by the Company’s
  Vancouver office and Pacific Corporate Trust Company, the Company has issued
  stock options with an exercise price stated in Canadian dollars per share.

U.S. Geothermal and their Board of Directors have previously
  provided additional incentive to our United States (“U.S.A.”) employees
  and consultants by offering stock options at a discount off market price as
  allowed by the TSX Venture exchange. The U.S.A. legislature and the Internal
  Revenue Service (“IRS”) are now issuing regulations to dissuade companies
  from granting these discounted stock options. Through the American Jobs Creation
  Act of 2004 and the Internal Revenue Code Section 409A, discounted stock options
  have now been classified as deferred compensation in which 

-19- 

the “discount” is taxable at the date of vesting, instead
  of upon the date of exercise. They have also dictated that a 20% penalty on
  all discounts is to be paid at date of vesting. These new rules have been retroactively
  applied to all options vesting after January 1, 2005. 

Since U.S. Geothermal stock options vest 25% on date of grant
  and 25% every six months thereafter, option holders would be subject to amending
  tax returns for prior years and paying tax and penalty on the value of the discount.
  These amendment and payments would be required whether or not the option holder
  exercises the options. The IRS is allowing option holders until December 31,
  2007 to rectify the situation by allowing them to reprice the existing options
  to the market price on the date of option grant. As of March 31, 2007, the majority
  of our U.S.A. option holders have repriced their options to the market price
  on the date of grant. An adjustment to the fair market value of the repriced
  options was included in the stock compensation accrual for March 2007. 

During the quarter ended March 31, 2007, the Company granted
  235,000 stock options to consultants and employees exercisable at a price of
  $1.40 CDN ($1.24 U.S.) until January 22, 2012. 

During the quarter ended September 30, 2006, the Company granted
  170,000 stock options to consultants and employees exercisable at a price of
  $1.00 CDN ($0.89 U.S.) until July 31, 2011. 

During the quarter ended June 30, 2006, the Company granted 1,763,000
  stock options to consultants, employees, directors and officers exercisable
  at prices ranging from $0.85 to $1.00 CDN ($0.77 to $0.90 U.S.) until April
  12, 2011. 

During the year ended March 31, 2006, the Company granted 50,000
  stock options to a consultant exercisable at a price of $0.72 CDN ($0.58 U.S.).

During the year ended March 31, 2005, the Company granted 560,000
  stock options to consultants, directors and officers exercisable at prices ranging
  from $0.72 to $0.90 CDN ($0.58 to $0.72 U.S.). 

During the year ended March 31, 2004, the Company granted 1,745,000
  stock options to consultants, directors and officers exercisable at a price
  of $0.60 CDN ($0.48 U.S.).

The changes in stock options are as follows: 

	  	 	  	 	 	Weighted 	 	 	  	 	 	  	 
	  	 	  	 	 	Average 	 	 	Weighted 	 	 	  	 
	  	 	Number of 	 	 	Exercise 	 	 	Average 	 	 	Aggregate 	 
	  	 	shares under 	 	 	Price Per 	 	 	Fair Value 	 	 	Intrinsic 	 
	  	 	options 	 	 	Share 	 	 	(US
      $) 	 	 	Value (US $) 	 
	  	 	  	 	 	 	 	 	  	 	 	  	 
	Balance outstanding, March 31, 2004 	 	1,745,000 	 	$	 0.60 CDN 	 	$	 0.28 	 	$	 495,489 	 
	     Forfeited 	 	(240,000	) 	 	0.60 CDN 	 	 	0.30 	 	 	(70,880	) 
	     Exercised 	 	(308,735	) 	 	0.60 CDN 	 	 	0.27 	 	 	(84,984	) 
	     Granted 	 	560,000 	 	 	0.85
      CDN 	 	 	0.45
    	 	 	250,408 	 
	Balance outstanding, March 31, 2005 	 	1,756,265 	 	 	0.68 CDN 	 	 	0.34 	 	 	590,033 	 
	     Forfeited 	 	(204,489	) 	 	0.63 CDN 	 	 	0.31 	 	 	(64,037	) 
	     Exercised 	 	(536,148	) 	 	0.61 CDN 	 	 	0.29 	 	 	(153,641	) 
	     Granted 	 	50,000 	 	 	0.72
      CDN 	 	 	0.54
    	 	 	26,791 	 
	Balance outstanding, March 31, 2006 	 	1,065,628 	 	 	0.69 CDN 	 	 	0.37 	 	 	399,146 	 
	     Forfeited 	 	(145,000	) 	 	0.86 CDN 	 	 	0.62 	 	 	(90,487	) 
	     Exercised 	 	(152,500	) 	 	0.63 CDN 	 	 	0.30 	 	 	(46,427	) 
	     Granted 	 	2,168,000
    	 	 	1.05
      CDN 	 	 	0.99
    	 	 	2,140,719
    	 

-20- 

	Balance outstanding, March 31, 2007 	 	2,936,128 	 	$	 0.96 CDN 	 	$	 0.82 	 	$	 2,402,951 	 

The fair value of each option award is estimated on the date
  of grant using the Black-Scholes option-pricing model using the assumptions
  noted in the following table. Expected volatilities are based on historical
  volatility of the Company’s stock. The Company uses historical data to
  estimate option exercises and employee termination within the Black-Scholes
  model. The expected term of options granted represents the period of time that
  options granted are expected to be outstanding, based upon past experience and
  future estimates and includes data from the Plan. The risk-free rate for periods
  within the expected term of the option is based upon the U.S. Treasury yield
  curve in effect at the time of grant. The Company currently does not foresee
  the payment of dividends in the near term. 

The fair value of the stock options granted was estimated using
  the Black-Scholes option-pricing model and is amortized over the vesting period
  of the underlying options. The weighted average fair value of options granted
  was $0.89 per share. The assumptions used to calculate the fair value are as
  follows: 

	  	Fiscal Years Ended 
	  	2007 	2006
    	2005
    
	  	  	  	  
	Dividend yield 	0 	0 	0 
	Expected volatility 	82-149% 	140% 	144-155% 
	Risk free interest rate 	3.94-4.20% 	3.25% 	2.83-3.18% 
	Expected life (years) 	3.36 	3.00 	3.06 

Changes in the subjective input assumptions can materially affect
  the fair value estimate and, therefore, the existing models do not necessarily
  provide a reliable measure of the fair value of the Company’s stock options.

The following table summarizes information about the stock options
  outstanding at March 31, 2007: 

  	 OPTIONS
        OUTSTANDING 	 	OPTIONS EXERCISABLE 
	  	  	REMAINING 	 	  
	EXERCISE 	NUMBER OF 	CONTRACTUAL 	 	NUMBER OF 
	PRICE 	SHARES 	LIFE (YEARS) 	 	SHARES 
	  	  	  	 	  
	$      0.60CDN      
      	355,628 	1.91 	 	355,628 
	  0.72CDN 	197,500 	2.67 	 	197,500 
	 0.85 CDN 	20,000 	4.00 	 	15,000 
	  0.90CDN 	347,500 	2.67 	 	347,500 
	 1.00 CDN 	1,615,500 	4.00 	 	807,750 
	  1.15CDN 	165,000 	4.50 	 	82,500 
	  1.40 CDN 	235,000 	4.83 	 	58,750 
	  	  	  	 	  
	$      0.96CDN     
      	2,936,128 	3.59 	 	1,864,628 

The following table summarizes information about the stock options
  outstanding at March 31, 2006: 

-21- 

  	 OPTIONS
        OUTSTANDING 	 	OPTIONS EXERCISABLE 
	  	  	REMAINING 	 	  
	EXERCISE 	NUMBER OF 	CONTRACTUAL 	 	NUMBER OF 
	PRICE 	SHARES 	LIFE (YEARS) 	 	SHARES 
	  	  	  	 	  
	$      0.60CDN
      	495,628 	2.76 	 	495,628 
	         0.72CDN  	520,000 	3.67 	 	390,000 
	         0.90CDN 
      	50,000 	3.67 	 	37,500 
	  	  	  	 	  
	$      0.67CDN 	1,065,628 	3.25 	 	923,128 

A summary of the status of the Company’s nonvested shares
  for the fiscal years ended March 31, 2007 and 2006, and changes during the years
  ended March 31, 2007 and 2006, are presented as follows: 

	  	 	  	 	 	Weighted 	 	 	Weighted 	 
	  	 	  	 	 	Average Grant 	 	 	Average 	 
	  	 	Number of 	 	 	Date Fair Value 	 	 	Grant Date 	 
	  	 	shares 	 	 	Per
      Share 	 	 	Fair
      Value 	 
	  	 	  	 	 	 	 	 	  	 
	Nonvested, March 31, 2005 	 	719,066 	 	$	 0.68 CDN 	 	$	 0.34 	 
	     Granted 	 	50,000 	 	 	0.72 CDN 	 	 	0.54 	 
	     Vested 	 	(386,566	) 	 	0.61 CDN 	 	 	0.29 	 
	     Forfeited 	 	(240,000	) 	 	0.63
      CDN 	 	 	0.31
    	 
	Nonvested, March 31, 2006 	 	142,500 	 	 	0.69 CDN 	 	 	0.37 	 
	  	 	  	 	 	 	 	 	  	 
	     Granted 	 	2,168,000 	 	 	1.05 CDN 	 	 	0.99 	 
	     Vested 	 	(1,094,000	) 	 	0.63 CDN 	 	 	0.30 	 
	     Forfeited 	 	(145,000	) 	 	0.86 CDN 	 	 	0.62 	 
	Nonvested, March 31, 2007 	 	1,071,500 	 	$	 0.96 CDN 	 	$	 0.82 	 

As of March 31, 2007, there was $408,078 of total unrecognized
  compensation cost related to nonvested share-based compensation arrangements
  granted under the Plan. That cost is expected to be recognized over a weighted-average
  period of 1.5 years. The total fair value of shares vested during the years
  ended March 31, 2007, 2006, and 2005, was $992,778, $166,773, and $295,540,
  respectively. 

Stock Purchase Warrants

As at March 31, 2007, no share purchase warrants are outstanding.

During the quarter ended September 30, 2006, stock purchase warrants
  representing 3,985,001 common shares at an exercise price of $1.25 CDN expired
  without being exercised, stock purchase warrants representing 280,000 common
  shares at an exercise price of $0.85 CDN were exercised, and stock purchase
  warrants representing 15,000 common shares at an exercise price of $1.25 CDN
  were exercised. 

During the year ended March 31, 2006, stock purchase warrants
  representing 4,081,327 shares at an exercise price of $0.75 expired without
  exercise, stock purchase warrants representing 192,934 common shares at an exercise
  price of $0.75 were exercised, and stock purchase warrants representing 83,333
  common shares at an exercise price of $0.45 were exercised. 

-22- 

NOTE 7 - RELATED PARTY TRANSACTIONS 

At March 31, 2007 and March 31, 2006, the amounts of $9,510 and
  $10,083, respectively, are payable to directors and officers of the Company.
  These amounts are unsecured and due on demand. 

At March 31, 2007, the Company’s subsidiary Raft River Energy
  I, LLC owed the Company $154,277 for operating and maintenance expenses. The
  receivable balance is comprised of unsecured demand obligations due within the
  next year of operations. 

The Company incurred the following transactions with directors,
  officers and a company with a common director: 

	 	  	 	Year Ended 	 	 	Year Ended 	 
	 	  	 	March 31, 	 	 	March 31, 	 
	 	  	 	2007 	 	 	2006
    	 
	 	  	 	  	 	 	  	 
	 	Administrative services 	$	 20,563 	 	$	 19,584 	 
	 	Director fees 	 	23,250 	 	 	21,500 	 
	 	Consulting fees 	 	24,000 	 	 	24,960 	 
	 	Legal fees 	 	- 	 	 	871 	 
	 	Rent 	 	- 	 	 	13,863 	 
	 	  	 	  	 	 	  	 
	 	  	$	 67,813 	 	$	 80,778 	 

NOTE 8 - DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP 

The Company’s consolidated financial statements have been
  prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
  The material difference in respect to these financial statements between U.S.
  and Canadian GAAP is reflected in the recording of Property, Plant and Equipment.
  Under Canadian GAAP, development and exploration costs associated with the Raft
  River project (property lease payments, geological consulting fees, well monitoring
  and permitting, etc.) are recorded as a capital asset. Under U.S. GAAP, these
  amounts are expensed. As a result of the above, under Canadian GAAP the following
  line items in the consolidated balance sheets and income statements would have
  been presented as follows: 

  	Consolidated Balance Sheets 	U.S. GAAP 
 March
        31, 
 2007 	Canadian 
 GAAP
        
 March 31, 
 2007 	U.S. GAAP 
 March
        31, 
 2006 	Canadian 
 GAAP
        
 March 31, 
 2006 
	Plant, Property & Equipment 	$ 4,138,386 	$ 4,578,997 	$ 1,726,115 	$ 2,166,726 
	Total Assets 	22,673,340 	     23,113,951 	21,895,933 	22,336,544 
	Stockholders’ Equity 	21,216,878 	     21,657,489 	21,615,019 	22,055,630 
	Total Liabilities & Stockholders’ Equity 	22,673,340 	     23,113,951 	21,895,933 	     22,336,544 

  -23- 

  	Consolidated Statements of 
 Operations
        and 
 Comprehensive Loss 	U.S. GAAP 
 Year
        Ended 
 March 31, 
 2007 	Canadian 
 GAAP
        Year 
 Ended March 
 31, 2007 	U.S. GAAP 
 Year
        ended 
 December 
 31, 2006 	Canadian 
 GAAP
        Year 
 ended 
 December 

        31, 2006 
	Exploration Expenditures 	$ - 	$ - 	$ - 	$ - 
	Loss from Operations 	       (2,987,869) 	 (2,987,869) 	(1,663,069) 	     (1,607,755) 
	Net Loss 	       (1,792,584) 	 (1,792,584) 	(1,523,385) 	     (1,468,071) 

NOTE 9 - COMMITMENTS AND CONTINGENCIES 

Operating Lease Agreements 

  The Company has entered into several lease agreements with terms expiring
  up to December 1, 2034 for geothermal properties adjoining the Raft River Geothermal
  Property and for Neal Hot Springs. The leases provide for the following annual
  payments within the next five fiscal years: 

  	  	 	Year Ending 	 
	  	 	March 31, 	 
	  	 	  	 
	2007 	$	 40,100 	 
	2008 	 	45,400 	 
	2009 	 	50,800 	 
	2010 	 	53,800 	 
	2011 	 	50,100 	 
	Thereafter 	 	425,350 	 

Power Sales Agreement 

  The Company has signed a 10 megawatt power purchase agreement with Idaho
  Power Company for sale of power generated from its planned phase one power plant.
  Sale of power generated from phase two power plants are currently under discussion.
  The Company has also signed a transmission agreement with Bonneville Power Administration
  for transmission of the electricity from this plant to Idaho Power, and from
  the phase two plants to other purchasers. These agreements are all contingent
  upon successful financing and construction of the power plant at Raft River.

Construction Contract 

  On December 5, 2005, the Company signed a contract (the “Ormat EPC
  Agreement”) with Ormat Nevada, Inc. (Ormat) for Ormat to construct a 13
  megawatt geothermal power plant at Raft River, Idaho for a lump sum price of
  $20,200,000 (exclusive of taxes). The Company expects the output of the plant
  will be used to meet power delivery requirements of the Company’s agreements
  with Idaho Power Company. As part of the Ormat EPC Agreement, as amended, the
  Company has established a $1,000,000 letter of credit with Wells Fargo Bank
  to collateralize amounts committed by Ormat, but not paid by the Company. The
  amount will increase monthly until a maximum letter of credit amount of $10,252,000
  is reached. A $5,363,400 money market fund is pledged as collateral backing
  the letter of credit as of March 31, 2007, and is reported as restricted cash.

Partnership Agreement Construction Costs

  Under the Amended and Restated Operating Agreement of Raft River Energy
  I LLC, dated as of August 9, 2006, among Raft River Energy I LLC, Raft River
  I Holdings, LLC and us, Raft River I Holdings, LLC, a subsidiary of The Goldman
  Sachs Group Inc., will contribute in staged payments a total of $34 million
  in cash and we will contribute $5 million in cash and approximately $1.5 million
  in production and injection wells and geothermal leases to Raft River Energy
  I LLC, the Phase 1 project joint venture company. If total construction costs
  exceed budget, US Geothermal will contribute the required additional funding
  to the joint venture. 

-24- 

Office Lease 

  The Company leases general office space for an executive office in Boise
  at an annual cost of $31,051. The underlying lease is a year-to-year lease that
  expires on January 31, 2008. 

NOTE 10 - SUBSQUENT EVENT 

The Company entered into an agreement with a syndicate of Canadian
  investment dealers to underwrite a private placement of 6,818,182 shares of
  common shares at a cost of $2.20 CDN per share to raise gross proceeds of approximately
  $15 million in Canadian dollars ($13.5 million US Dollars). The Underwriters
  exercised their option to purchase an additional 2,272,727 common shares at
  the issue price under the offering which could provide aggregate proceeds of
  approximately $20 million in Canadian dollars ($18.8 million US Dollars). The
  proceeds will be used to fund current and future plant development. The offering
  closed June 5, 2007 and is subject to certain conditions including, but not
  limited to, the approval of the TSX Venture Exchange. 

-25-

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