Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

 

Between

Mirant Corporation

and

Edward R. Muller

 

THIS AGREEMENT is made as
of September 30, 2005 between Mirant Corporation (the “Company”),
Mirant Services, LLC (“Services”) and Edward R. Muller (“Executive”).

 

In consideration of the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

 

1.  Employment.  The Company and Services shall employ Executive,
and Executive hereby accepts employment with the Company and Services, upon the
terms and conditions set forth in this Agreement, for
the period beginning on the date the United States Bankruptcy Court for the
Northern District of Texas (Fort Worth Division) (the “Bankruptcy Court”)
enters an order approving this Agreement (the “Commencement Date”) and
ending as provided in Section 5 hereof (the “Employment Period”).  The Company shall make reasonable commercial
efforts to obtain Bankruptcy Court approval of this Agreement promptly
following the execution hereof by Executive. 
This Agreement shall be void ab initio and of no force and effect if the
Commencement Date does not occur on or before December 31, 2005 or if
Executive fails to be elected as a member and Chairman of the Board of
Directors of the Company (the “Board”), as of the Commencement Date.

 

2.  Position
and Duties.

 

(a)           During the Employment Period, Executive shall serve as the
Chief Executive Officer (“CEO”) of the Company and shall have the normal
duties, responsibilities, functions and authorities customarily exercised by
the CEO of a company of similar size and nature as the Company.  During the Employment Period, Executive shall
render such administrative, financial and other executive and managerial
services to the Company and its affiliates (the “Company Group”) as are
consistent with Executive’s position and the by-laws of the Company and as the Board may from time to time reasonably direct.  Executive
shall also serve for no additional compensation or remuneration as an officer
or director of such subsidiaries of the Company as may from time to time be
designated by the Board.

 

(b)           During the Employment Period, Executive shall report to the
Board and shall devote his best efforts and his full business time and
attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the Company.  Executive shall perform his duties, responsibilities
and functions to the Company hereunder to the best of his abilities in a
diligent, trustworthy, professional and efficient manner

 

 

and shall comply
with the Company’s policies and procedures in all material respects.  In performing his duties and exercising his
authority under this Agreement, Executive shall support and implement the
business and strategic plans approved from time to time by the Board and shall
support and cooperate with the Company’s efforts to operate profitably and in
conformity with the business and strategic plans approved by the Board.  During the Employment Period, Executive shall
not serve as an officer or director of, or otherwise perform services for
compensation for, any other entity without the prior written consent of the
Board which shall not be unreasonably withheld; provided, however,
that the Board hereby consents to Executive’s service on and after the
Commencement Date as a director of each of the corporations listed on Exhibit A.  Executive may serve as an officer or director
of or otherwise participate in purely educational, welfare, social, religious
and civic organizations so long as such activities do not materially interfere with Executive’s regular performance of duties
and responsibilities hereunder.  Nothing
contained herein shall preclude Executive from (i) engaging in charitable
and community activities, (ii) participating in industry and trade
organization activities, (iii) managing his and his family’s personal
investments and affairs, and (iv) delivering lectures, fulfilling speaking
engagements or teaching at educational institutions, provided that such
activities do not materially interfere
with the regular performance of his duties and responsibilities under this
Agreement.

 

3.  Compensation
and Benefits.

 

(a)           The Company shall pay Executive an annual salary (the “Base
Salary”) at the rate of $1,000,000.00 in regular installments in accordance
with the Company’s ordinary payroll practices (in effect from time to time),
but in any event no less frequently than monthly.

 

(a)           Bonuses and Incentive
Compensation.

 

(i)            Annual Bonus.  For each fiscal year during the Employment
Period, Executive will be eligible to earn an annual bonus based on achievement
of performance criteria that are applicable to members of the Company’s
Management Counsel established by the Board as soon as administratively
practicable following the beginning of each such fiscal year after consultation
with Executive (the “Annual Bonus”). 
The target amount (the “Target Bonus”) of Executive’s Annual Bonus
shall equal 100% of Executive’s Base Salary (at the annual rate in effect at
the start of the fiscal year), with a maximum Annual Bonus in an amount equal
to 200% of Executive’s Base Salary (at the annual rate in effect at the start
of the fiscal year).  For the Company’s
fiscal year that includes the Commencement Date, Executive shall receive an
Annual Bonus of not less than 100% of his Base Salary, prorated (based on
number of days worked) from the Commencement
Date to the end of such fiscal year.  The
Company shall pay the Annual Bonus for each fiscal year in a single cash lump
sum after the end of the Company’s fiscal year in accordance with procedures
established by the Board, but in no event later than two and a half months
following the end of such fiscal year.

 

(ii)           Emergence Equity Grant.  The Company shall grant Executive a
combination of restricted stock units (“Restricted Stock Units”) that are to be settled in common
stock of the Company (“Common Stock”) and options to purchase Common
Stock (“Stock Options”) with an aggregate economic value of
$12 million (such grant of

 

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Restricted Stock Units and Stock Options are together
referred to as the “Executive LTIP”). 
The $12 million aggregate economic value of the Restricted Stock Units and
Stock Options to be awarded under the Executive LTIP shall be determined in the
good faith judgment of the Compensation Committee of the Board taking into
account the requirements set forth in (A) and (B) below.

 

(A)                              Ten
days following the Company’s emergence from bankruptcy protection (the “Emergence
Date”) under Chapter 11 of Title 11 of the United States Code, Executive
shall be awarded Restricted Stock Units and
Stock Options with an aggregate value of $6 million, with one-third of
such value to consist of Restricted Stock Units.  The exact number of Restricted Stock Units
to be awarded ten days following the Emergence Date shall be determined solely
based on the average of the daily closing price of a share of Common Stock on
The New York Stock Exchange or, if the Common Stock is not traded on The New
York Stock Exchange, the average of the midpoint of the daily bid and ask price
of a share of Common Stock on the OTC Bulletin Board, from the Emergence Date
to the date of grant of such Restricted Stock Units,
without any discount based on vesting requirements or lack of
transferability.  The Stock Options
granted ten days following the Emergence Date shall have an exercise price per
share equal to the closing price of a share of Common Stock on The New York
Stock Exchange or, if the Common Stock is not traded on The New York Stock
Exchange, the midpoint of the bid and ask price of a share of Common Stock on
the OTC Bulletin Board, on the date of grant of such Stock Options.  Such Stock Options shall have a ten-year
term.  The exact number of Stock Options
granted ten days following the Emergence Date shall be determined based upon a
Black-Scholes or other valuation model, using reasonable assumptions as
determined in good faith by the Compensation Committee of the Board.

 

(B)                                Forty
five days after the Emergence Date, Executive shall be awarded Restricted Stock
Units and
Stock Options with an aggregate value of $6 million, with one-third of such
value to consist of Restricted Stock Units.  The exact number of Restricted Stock Units
to be awarded 45 days after the Emergence Date shall be determined solely based
on the average of the daily closing price of a share of Common Stock on The New
York Stock Exchange or, if the Common Stock is not traded on The New York Stock
Exchange, the average of the midpoint of the daily bid and ask price of a share
of Common Stock on the OTC Bulletin Board, from the Emergence Date to the date
of grant of such Restricted Stock Units,
without any discount based on vesting requirements or lack of
transferability.  The Stock Options
granted 45 days after the Emergence Date shall have an exercise price equal to
the

 

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closing price
of a share of Common Stock on The New York Stock Exchange or, if the Common
Stock is not traded on The New York Stock Exchange, the midpoint of the bid and
ask price of a share of Common Stock on the OTC Bulletin Board, on the date of
grant of such Stock Options.  Such Stock
Options shall have a ten-year term.  The
exact number of Stock Options granted 45 days after the Emergence Date shall be
determined based upon a Black-Scholes or other valuation model, using
reasonable assumptions as determined in good faith by the Compensation Committee
of the Board.

 

The terms and conditions
of the Executive LTIP shall be governed by and subject to the award agreements
to be entered into between Executive and the Company, substantially in the
forms of Exhibits B and C respectively (the “LTIP Award Agreements”).  The Restricted Stock Units and Options
granted pursuant to the Executive LTIP shall, subject to the treatment of the
Executive LTIP upon termination of Executive’s employment as provided in the
LTIP Award Agreement, vest over a period of three years, with 25% to vest six
months after the Emergence Date, 25% to vest one year after the Emergence Date,
25% to vest two years after the Emergence Date and 25% to vest three years
after the Emergence Date.

 

(iii)          Annual Equity Grant.  Beginning with fiscal year 2007 and for each
fiscal year thereafter during the Employment Period, Executive shall be
eligible to receive additional equity-based compensation under the long term
incentive plan of the Company in effect at the time of such award, the amount,
terms and conditions of such award to be set by the Board at the time of
grant.  Such awards shall otherwise be
governed by the terms and conditions set forth in the long term incentive plan
of the Company as may be in effect at the time of such award and the
corresponding award agreement and shall be made at such time as grants are made
to other senior executives of the Company.

 

(b)           During the Employment Period, the Company shall reimburse
Executive for all reasonable business expenses incurred by him in the course of
performing his duties and responsibilities under this Agreement in accordance
with the Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses for senior executives.

 

(c)           Executive shall also be entitled to the following benefits
during the Employment Period, unless otherwise modified by the Board:

 

(i)            participation in the Company’s
retirement plans, health and welfare plans, disability insurance plans and
other benefit plans of the Company as in effect from time to time, under the
terms of such plans and to the same extent and under the same conditions such
participation and coverages are provided generally to other senior executives of the Company;

 

(ii)           reimbursement for the reasonable cost of temporary living
accommodations for Executive and his spouse in Atlanta, Georgia for up to six months

 

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and relocation expenses reimbursed in accordance with the Company’s
then existing Relocation Policy for senior executives;

 

(iii)          coverage for services rendered to the Company, its subsidiaries and affiliates while Executive is a director or
officer of the Company, or of any of its subsidiaries or affiliates, under any director and officer
liability insurance policy(ies)
maintained by the Company from time to time; and

 

(iv)          four weeks of vacation per year.

 

4.  Board
Membership.  It is
contemplated that Executive shall be elected as a member and Chairman
of the Board by no later than the Commencement Date.  Thereafter, Executive shall serve as Chairman of the Board and, in
addition to his duties, responsibilities, functions and authorities as CEO,
shall carry out the duties and responsibilities of the Chairman of the Board,
until the next regular election of directors of the Company.  The Company shall use its reasonable efforts
cause Executive to be re-nominated to be a member of the Board at each
succeeding regular election of directors of the
Company.  Effective upon the termination
or expiration of the Employment Period, Executive shall be deemed, without
further action by Executive or the Company, to have simultaneously resigned as
a director of the Company, and as an officer or director of any other member of
the Company Group, and agrees to take such action as may be reasonably
requested by the Company, including signing such documents as the Board may
reasonably request, to effect such resignation.

 

5.  Termination.  The Employment Period shall end on the third
anniversary of the Commencement Date; provided, however, that the Employment
Period shall be automatically renewed for successive one-year terms thereafter on the same terms and
conditions set forth herein unless either party provides the other party with
notice that it has elected not to renew the Employment Period at least 90 days
prior to the end of the initial Employment Period or any subsequent extension
thereof.  Notwithstanding the foregoing, (i) the
Employment Period shall terminate immediately upon Executive’s resignation (with
or without Good Reason, as defined herein), death or Disability (as defined
herein) and (ii) the Employment Period may be terminated by the Company at
any time prior to such date for Cause (as defined herein) or without
Cause.  Except as otherwise provided
herein, any termination of the Employment Period by the Company shall be
effective as specified in a written notice from the Company to Executive, but
in no event more than 90 days from the date of such notice.  The termination of the Employment Period shall
not affect the respective rights and obligations of the parties which, pursuant
to the terms of this Agreement, apply following the date of Executive’s
termination of employment with the Company.

 

6.  Severance.

 

(a)           Termination Without Cause, Non-Renewal or for Good Reason.  In the event of Executive’s termination of
employment with the Company (1) by the Company without Cause (as defined
herein), (2) by reason of the failure of the Company to offer to renew the
Agreement on terms that are based on competitive practices for companies of
comparable size and standing in the same industry, or (3) by Executive for Good Reason (as
defined herein), subject to

 

5

 

execution of a
Release substantially in the form attached as Exhibit D, Executive shall
be entitled to the benefits set forth below in this Section 6(a).

 

(i)            The Company shall pay Executive
an amount equal to two times Executive’s Base Salary plus two times Executive’s
Target Bonus (as in effect on the date of Executive’s termination).  The severance amount described in the
previous sentence shall be paid over a period of two years from the date of
termination in accordance with the payroll practices of the Company (in effect
from time to time); provided, however, that, in the event that
Executive is considered a “Specified Employee” as defined in Section 409A
of the Internal Revenue Code of 1986, as amended (the “JOBS Act”), and payments under this Section 6(a) are considered “deferred compensation” under the JOBS Act,
the first payment shall be delayed for six months, in which event Executive
shall receive a lump sum payment equal to one
times his Base Salary six months after the date his employment terminates (plus
interest on such payment of one times Base Salary at a floating rate equal to
LIBOR, from the date of termination of Executive’s employment to the date that
is six months after termination of Executive’s employment), and the remainder
of such severance amount shall be paid in equal installments over a period of
18 months thereafter in accordance with the ordinary payroll practices of
the company (in effect from time to time).

 

(ii)           The Executive LTIP shall be governed by the terms of the
applicable LTIP Award Agreements.

 

(iii)          The Company shall pay Executive the amounts described in Section 6(d) within 14 days of the date of termination.

 

(iv)          During the period of 24 months following Executive’s
termination of employment in accordance with Section 6(a), the Company
shall provide to Executive continued coverage under the retirement, life
insurance, long-term disability, medical, dental and other group health
benefits and plans in effect for senior executives of the Company, as in effect
on the date of Executive’s termination of employment (or substantially
comparable coverage) for Executive and, where applicable, Executive’s spouse,
dependents and beneficiaries, at the same contribution or premium rate as may
be charged from time to time to senior executives of the Company generally, as
if Executive had continued in employment during such period.  As an alternative, the Company may elect to
pay Executive cash in lieu of such contributions or coverage in an amount equal
to Executive’s after-tax cost of receiving such contributions or continuing such
coverage, where such contributions or coverage may not be continued (or where
such continuation would adversely affect the tax status of the plan pursuant to
which the contribution or coverage is provided).  The COBRA health care continuation coverage period
under Section 4980B of the Internal Revenue Code of 1986, as amended, (the
“Code”), or any replacement or successor provision of United
States tax law, shall commence immediately after the 24 month period.

 

(v)           The Company shall provide a release substantially in the
form attached hereto as Exhibit G. 
If the Company does not provide the release required pursuant to this
subsection (v), the Release by the Executive shall be null, void and

 

6

 

without effect, and
Executive shall still receive all of the payments and benefits described in
subsections (i) through (iv) above.

 

(b)           Termination for Cause or
Voluntary Resignation.  In the event that Executive’s employment with
the Company is terminated (i) by the Board for Cause or (ii) by
Executive’s resignation from the Company for any reason other than Good Reason
or Disability (as defined herein), subject to applicable law, the Company
agrees to the following:

 

(i)            The Executive LTIP shall be
governed by the terms of the applicable LTIP Award Agreements.

 

(ii)           The Company shall pay Executive the amounts described in Section 6(d) within 14 days of the date of termination.

 

For purposes of this
Agreement, Executive’s retirement shall be considered Executive’s resignation
from the Company without Good Reason.

 

(c)           Death or Disability.  In the event that Executive’s employment with
the Company is terminated as a result of Executive’s death or Disability, the
Company agrees to the following:

 

(i)            The Company shall pay Executive
(or his estate or legal representative, if applicable) in a lump sum payment an
amount equal to his target Annual Bonus for the year of termination prorated
for the number of days during such year that Executive was employed by the
Company; provided, however, that, in the event that Executive is
considered a “Specified Employee” as defined in the JOBS Act and
payments under this Section 6(c) are considered “deferred compensation” under the JOBS Act,
such payment shall be delayed for six months,
and Executive shall receive interest on such payment at a floating rate equal
to LIBOR, from the date of termination of Executive’s employment to the date
that is six months after termination of Executive’s employment.

 

(ii)           The Executive LTIP shall be governed by the terms of the
applicable LTIP Award Agreements.

 

(iii)          The Company shall pay Executive the amounts described in Section 6(d) within 14 days of the date of termination.

 

(d)           In the case of any termination of Executive’s employment
with the Company, Executive or his estate or legal representative shall be
entitled to receive, to the extent permitted by applicable law, from the
Company (i) Executive’s Base Salary through the date of termination to the
extent not previously paid, (ii) to the extent not previously paid, the
amount of any bonus, incentive compensation, and other compensation earned or
accrued by Executive as of the date of termination under any compensation and
benefit plans, programs or arrangements maintained in force by the Company (for
this purpose, Executive’s Annual Bonus, if any, for any fiscal year of the Company ended prior to the year of termination that
is then unpaid, and in the case of a termination under Section 6(a) or
(c) a pro-rata portion of the Target Bonus for the fiscal year in
which the date of termination occurs based on the number of days in that fiscal
year during

 

7

 

which Executive was employed, shall be deemed
to be earned), (iii) any vacation pay, expense reimbursements and
other cash entitlements accrued by Executive, in accordance with Company policy for senior executives, as of the date of termination to the extent not previously
paid, (iv) any Restricted Stock Units, Stock Options and other equity awards outstanding under
any Company long term incentive plans or arrangements (other than the Executive
LTIP), in accordance with the terms of the plans or arrangements under which
such awards were created or maintained, and (v) all benefits accrued by
Executive under all benefit plans and qualified and nonqualified retirement,
pension, 401(k) and similar plans and arrangements of the Company, in such
manner and at such times as are provided under the terms of such plans and
arrangements.

 

(e)           Termination Without Cause, Non-Renewal or for Good Reason Following a Change of Control.  In the event of Executive’s termination of
employment with the Company (1) by the Company without Cause, (2) as a result of the failure of the Company to offer to renew
the Agreement on terms that are consistent with competitive practices for
companies of comparable size and standing in the same industry, or (3) by Executive for Good Reason, in
any case, during the period beginning six
months before and ending two years following a Change of Control (as defined herein)
of the Company, subject to execution of a Release substantially in the form
attached as Exhibit D, Executive shall be entitled to the benefits set
forth below in this Section 6(e).

 

(i)            The Company shall pay Executive
the payments set forth in Section 6(a)(i), except the applicable multiplier shall be 3; provided, however, that in determining the amount of payment due under Section 6(a)(i),
Executive’s actual Annual Bonus for the year preceding the Change of Control
shall be used, if higher than his Target Bonus; and provided, further, that payment shall be made in a lump sum on the later of the date of
the Change of Control or 10 business days after Executive’s termination of
employment; provided, however, that, in the event Executive is considered a “Specified Employee” as
defined in the JOBS Act, and payments under this Section 6(e) are
considered “deferred compensation” under the JOBS Act, the payment shall be
delayed for six months from the date of Executive’s termination of employment
and Executive shall receive interest at a floating rate equal to LIBOR from the
date of termination of Executive’s employment to the date that is six months
after termination of Executive’s employment.

 

(ii)           The Company shall provide the benefits set forth in Section 6(a)(iv) except
the applicable period shall be 36 months.

 

(iii)          The Executive LTIP shall fully vest, to the extent not
already vested, and otherwise be governed by the terms of the applicable LTIP
Award Agreements.

 

(iv)          The Company shall pay Executive the amounts described in Section 6(d).

 

(v)           The Company shall provide a release substantially in the
form attached hereto as Exhibit G. 
If the Company does not provide the release required pursuant to this
subsection (v), the Release by the Executive shall be null, void and

 

8

 

without effect, and
Executive shall still receive all of the payments and benefits described in
subsections (i) through (iv) above.

 

(f)            Excess Parachute Payments.

 

(i)            In the event any payment granted
to Executive pursuant to the terms of this Agreement or otherwise (a “Payment”)
is determined to be subject to any excise tax (“Excise Tax”) imposed by Section 4999
of the Code (or any successor to such Section), the Company shall pay to
Executive, prior to the time any Excise Tax is payable with respect to such
Payment (through withholding or otherwise), an additional amount (a “Gross-Up
Payment”) which, after the imposition of all income, employment, excise and
other taxes, penalties and interest thereon, is equal to the sum of (A) the
Excise Tax on such Payment plus (B) any penalty and interest assessments
associated with such Excise Tax; provided, however, that the amount of the
Gross Up Payment shall not exceed $7 million.

 

(ii)           The determinations to be made with respect to this Section 6(f) shall
be made by a certified public accounting firm designated by the Company and
reasonably acceptable to Executive and Executive may rely on such determination
in making payments to the Internal Revenue Service.

 

(g)           No Other Payments.  Except as provided in Sections 6(a),
(b), (c), (d), (e) and (f) above, all of Executive’s rights to
salary, bonuses, employee benefits and other compensation hereunder which would
have accrued or become payable after the termination or expiration of the
Employment Period shall cease upon such termination or expiration, other than
those expressly required under applicable law (such as COBRA).

 

(h)           No Mitigation, No Offset.  In the event of Executive’s termination of
employment for whatever reason, Executive shall be under no obligation to seek
other employment, and there shall be no offset against amounts due him under
this Agreement or otherwise on account of any remuneration attributable to any subsequent
employment or claims asserted by the Company or any affiliate, provided that
this provision shall not apply with respect to any amounts that Executive owes
to the Company or any member of the Company Group on account of any loan,
advance or other payment, in respect of any of which Executive is obligated to
make repayment to the Company or any member of the Company Group.

 

(i)            Definitions.  For purposes of this Agreement, the following
terms shall have the following meanings:

 

“Cause”
shall mean one or more of the following:

 

(A)                              the
conviction of, or an agreement to a plea of nolo contendere
to, a crime involving moral turpitude or any felony;

 

(B)                                Executive’s
willful refusal substantially to perform duties as reasonably directed by the
Board under this or any other agreement;

 

9

 

(C)                                in
carrying out his duties, Executive engages in conduct that constitutes fraud,
willful neglect or willful misconduct which, in either case, would result in
demonstrable harm to the business, operations, prospects or reputation of the
Company;

 

(D)                               a
material violation
of the requirements of the Sarbanes-Oxley Act of 2002 (“SOX”) or other
federal or state securities law, rule or regulation; or

 

(E)                                 any
other material breach of this Agreement.

 

For purpose of this
Agreement, the Company is not entitled to assert that Executive’s termination
is for Cause unless the Company gives Executive written notice describing the
facts which are the basis for such termination and such grounds for termination
(if susceptible to correction) are not corrected by Executive within 30 days
of Executive’s receipt of such notice to the reasonable, good faith
satisfaction of the Board.

 

“Change of Control” shall mean the first to
occur of any of the following events:

 

(A)                              any
“person” (as that term is used in Sections 13 and 14(d)(2) of the
Securities Exchange Act of 1934 (“Exchange Act”)) becomes the beneficial
owner (as that term is used in Section 13(d) of the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the Company’s
capital stock entitled to vote in the election of directors;

 

(B)                                persons
who on the day following the Emergence Date constitute the Board (the “Emergence
Directors”) cease for any reason, including, without limitation, as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority thereof, provided, however, that any person who
becomes a director of the Company subsequent to the Emergence Date shall be considered
an Emergence Director if such person’s election or nomination for election was
approved by a vote of at least two-thirds (2/3) of the Emergence Directors; but
provided  further that any such person whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of members of the Board or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board, including by reason of agreement intended to avoid or settle any such
actual or threatened contest or solicitation, shall not be considered an
Emergence Director;

 

(C)                                consummation
of a reorganization, merger, consolidation, sale or other disposition of all or
substantially all of the assets of the Company (a “Business Combination”),
in each case, unless,

 

10

 

following such
Business Combination, all or substantially all of the individuals and entities
who were the beneficial owners of outstanding voting securities of the Company
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the company resulting from such Business Combination
(including, without limitation, a company which, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination, of the outstanding voting securities of the Company; and

 

(D)                               the
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.

 

Notwithstanding the
foregoing, in no event shall the confirmation of the plan of reorganization
confirmed under 11 U.S.C. § 1129 (the “Plan of Reorganization”),
the implementation of the transactions contemplated by the Plan of
Reorganization on or after the Emergence Date or the effectuation of the
corporate governance provisions set forth therein, including the implementation
of the Board of Directors as specified therein, be considered a Change of Control.

 

“Disability”
shall mean Executive’s (i) being unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months or (ii) by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of
the Company.

 

“Good
Reason” shall mean Executive’s resignation from employment with the Company
prior to the end of the Employment Period as a result of one or more of the
following reasons:

 

(A)                              the
Company reduces the amount of Executive’s then current Base Salary or the
target for his Annual Bonus (it being understood that Executive shall not have
a basis to resign for Good Reason if no bonus is paid, or the amount of the
bonus is reduced as a result of the failure of Executive or the Company to
achieve applicable performance targets for such bonus);

 

(B)                                a
material diminution in Executive’s title, authority, duties or responsibilities
or the assignment of duties to Executive which are

 

11

 

materially
inconsistent with his position; provided, however, that,
following a Change of Control, any diminution of Executive’s title, duties or
responsibilities shall constitute Good Reason, provided  further,
that Executive shall not have Good Reason to terminate his employment either
prior to or following a Change of Control on the grounds that he no longer
holds the position of Chairman of the Board so long as he is
still a member of the Board;

 

(C)                                the
failure of the Company to obtain in writing the obligation to perform this
Agreement by any successor to the Company or a purchaser of all or
substantially all of the assets of the Company within 15 days after a merger,
consolidation, sale or similar transaction;

 

(D)                               the
failure of the Company to grant Executive the Executive LTIP within 60 days
after the Effective Date; or

 

(E)                                 following a Change
in Control, the requirement that Executive move his principal place of business
by more than 50 miles from that previously the case without his consent.

 

Notwithstanding the
foregoing, Executive agrees that he shall not be entitled to terminate his
employment for Good Reason in the event he is subject to any unintended or
adverse tax consequences under the JOBS Act, the Company amends this Agreement
or the terms of any employee benefit plan, program arrangement or agreement to
avoid such adverse tax consequences or he is required to forfeit incentive or
other compensation pursuant to Section 304 of SOX.  For purposes of this Agreement, Executive is
not entitled to assert that his termination is for Good Reason unless Executive
gives the Board written notice describing the event or events which are the basis
for such termination within ninety (90) days after the event or events occur
and such grounds for termination (if susceptible to correction) are not
corrected by the Company within 30 days of the
Company’s receipt of such notice to the reasonable, good faith satisfaction of
Executive.

 

7.  Indemnification.

 

(a)           The Company agrees that (i) if Executive is made a
party, or is threatened to be made a party, to any threatened or actual action,
suit or proceeding, whether civil, criminal, administrative, investigative, appellate
or other (each, a “Proceeding”) by reason of the fact that he is or was
a director, officer, employee, agent, manager, or representative of the Company
or is or was serving at the request of the Company as a director, officer,
member, employee, agent, manager, or representative of any member of the
Company Group or (ii) if any claim, demand, request, investigation,
dispute, controversy, threat, discovery request or request for testimony or
information (each, a “Claim”) is made, or threatened to be made, that
arises out of or relates to Executive’s service in any of the foregoing
capacities, then Executive shall be indemnified and held harmless by the
Company to the fullest extent legally permitted or authorized by the Company’s
certificate of incorporation, by-laws, Board resolutions or, if greater, by
applicable law, against any and all costs, expenses, liabilities and losses
(including, without limitation,

 

12

 

attorney’s fees,
judgments, interest, expenses of investigation, penalties, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) incurred or
suffered by Executive in connection therewith, and such indemnification shall
continue as to Executive even if he has ceased to be a director, member,
employee, agent, manager, or representative of the Company or any member of the
Company Group and shall inure to the benefit of Executive’s heirs, executors
and administrators.  To the extent
permitted by applicable law, the Company shall advance to Executive all costs
and expenses incurred by him in connection with any such Proceeding or Claim
within 15 days after receiving written notice requesting such an
advance.  Such notice shall include, to
the extent required by applicable law, an undertaking by Executive to repay the
amount advanced if he is ultimately determined not to be entitled to
indemnification against such costs and expenses.

 

(b)           Neither the failure of the Company (including the Board,
independent legal counsel or stockholders) to have made a determination in
connection with any request for indemnification or advancement under Section 7(a) that
Executive has satisfied any applicable standard of conduct nor a determination
by the Company (including the Board, independent legal counsel or stockholders)
that Executive has not met any applicable standard of conduct shall create a
presumption that Executive has or has not met an applicable standard of
conduct.

 

(c)           The Company agrees to use reasonable commercial efforts to
maintain director’s and officer’s liability insurance covering the Executive
for services rendered to the Company, its subsidiaries and affiliates while
Executive is a director or officer of the Company or any of its subsidiaries or
affiliates.

 

8.  Confidential
Information.  Executive agrees to
enter into the Confidentiality Agreement attached as Exhibit E
simultaneously with the execution of this Agreement.

 

9.  Intellectual
Property, Inventions and Patents. 
Executive agrees to enter into the Intellectual Property Agreement
attached as Exhibit F simultaneously with the execution of this
Agreement.

 

10.  Non-Compete, Non-Solicitation.

 

(a)           In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that during the course of his
employment with the Company, he shall become familiar with the Company Group’s
trade secrets and with other confidential information concerning the Company
Group and that his services shall be of special, unique and extraordinary value
to the Company Group, and, therefore, Executive agrees that, during the
Employment Period and for one (1) year thereafter (the “Noncompete
Period”), he shall not directly or indirectly own any interest in, manage,
control, be employed in an executive, managerial or administrative capacity by,
or otherwise render executive, managerial or administrative services to, any
company engaged in the business of owning and operating power generation
facilities or energy trading and marketing operations which competes with the
businesses of the Company on the date of the termination or expiration of the
Employment Period, within any geographical area in which the Company engages in
such businesses.  Nothing herein shall
prohibit Executive from being a passive owner of not more than 2% of the

 

13

 

outstanding stock of
any class of a corporation which is publicly traded, so long as Executive has
no active participation in the business of such corporation.

 

(b)           During the Noncompete Period, Executive shall not directly
or indirectly through another person or entity (i) induce or attempt to
induce any employee of the Company to leave the employ of the Company, or in
any way interfere with the relationship between the Company and any employee
thereof; (ii) hire any person who was a managerial or higher level employee of the Company during
the last six months of the Employment Period; or (iii) induce or attempt
to induce any customer, supplier, licensee, licensor, franchisee or other
business relation of the Company to cease doing business with the Company, or
in any way interfere with the relationship between any such customer, supplier,
licensee or business relation of the Company (including, without limitation,
making any negative or disparaging statements or communications regarding the
Company. 
The Company covenants that it will not, and it will advise members of
senior management of the Company and the Board not to, make any negative or
disparaging statements or communications regarding Executive.

 

(c)           If, at the time of enforcement of this Section 10, a
court shall hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. 
Executive acknowledges that the restrictions contained in this Section 10
are reasonable and that he has reviewed the provisions of this Agreement with
his legal counsel.

 

(d)           Executive acknowledges that in the event of the breach or a
threatened breach by Executive of any of the provisions of this Section 10,
the Company would suffer irreparable harm, and, in addition and supplementary
to other rights and remedies existing in its favor, the Company shall be
entitled to specific performance and/or injunctive or other equitable relief
from a court of competent jurisdiction in order to enforce or prevent any
violations of the provisions hereof (without posting a bond or other
security).  In addition, in the event of
a breach or violation by Executive of Section 10(a), the Noncompete Period
shall be automatically extended by the amount of time between the initial
occurrence of the breach or violation and when such breach or violation has
been duly cured.

 

11.  Executive’s
Representations.  Executive hereby
represents and warrants to the Company that (i) the execution, delivery
and performance of this Agreement by Executive do not and shall not conflict
with, breach, violate or cause a default under, any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which
he is bound which has not been waived; (ii) Executive is not a party to or
bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity which has not been waived; and (iii) on
the Commencement Date, this Agreement shall be the valid and binding obligation
of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents
that he has consulted with independent legal counsel regarding his rights and
obligations under this Agreement and that he fully understands the terms and
conditions contained herein.

 

14

 

12.  Notices.  All notices or communications hereunder shall
be in writing, addressed as follows:

 

To the Company:

 

Mirant Corporation

 

with a copy to:

 

Thomas E. Lauria, Esq.

White &
Case LLP

Wachovia Financial
Center

200 South Biscayne Boulevard, Suite 4900

Miami, FL  33131

 

To Executive:

 

 

With a copy to:

 

Robert J. Lichtenstein

Morgan, Lewis & Bockius, LLP

1701 Market Street

Philadelphia, PA  19103

 

All such notices shall be
conclusively deemed to be received and shall be effective (i) if sent by
hand delivery, upon receipt or (ii) if sent by electronic mail or
facsimile, upon confirmation of receipt by the sender of such transmission.

 

13.  Severability.  In the event any provision or part of this
Agreement is found to be invalid or unenforceable, only that particular
provision or part so found, and not the entire Agreement, will be inoperative.

 

14.  Complete
Agreement.  This Agreement, the LTIP
Award Agreements and those documents expressly referred to herein embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.

 

15.  No
Strict Construction.  The language
used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction
shall be applied against any party.

 

16.  Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

15

 

17.  Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the beneficiaries, heirs and
representatives of Executive and the successors and assigns of the
Company.  The Company shall require any
successor (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) to
all or a majority of its assets, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform this Agreement if no such succession had taken place.  Executive may not assign his rights (except
by will or the laws of descent and distribution) or delegate his duties or
obligations hereunder.  Except as
provided by this Section 17, this Agreement is not assignable by any party
and no payment to be made hereunder shall be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or other charge.

 

18.  Choice
of Law.  All issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of Georgia.

 

19.  Amendment
and Waiver.  The provisions of this
Agreement may be amended, modified or waived only with the prior written
consent of the Company and Executive, and no course of conduct or course of
dealing or failure or delay by any party hereto in enforcing or exercising any
of the provisions of this Agreement (including, without limitation, the Company’s
right to terminate the Employment Period for Cause) shall affect the validity,
binding effect or enforceability of this Agreement or be deemed to be an
implied waiver of any provision of this Agreement.

 

20.  JOBS Act
Compliance.  If any provision of this
Agreement would result in unintended or adverse tax consequences to Executive
or the Company or would, in the judgment of the Board, contravene the final
regulations anticipated to be promulgated under the JOBS Act or other
Department of Treasury guidance, the Company may reform this Agreement or any
provisions hereof to maintain to the maximum extent practicable the original
purpose of the provision without violating the provisions of the JOBS Act.

 

21.  Insurance.  The Company may, at its discretion, apply for
and procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered advisable.  Executive agrees to cooperate in any medical
or other examination, supply any information and execute and deliver any applications
or other instruments in writing as may be reasonably necessary to obtain and
constitute such insurance.  Executive
hereby represents that he has no reason to believe that his life is not
insurable at rates now prevailing for healthy men of his age.

 

22.  Withholding.  Any payments made or benefits provided to
Executive under this Agreement shall be reduced by any applicable withholding
taxes or other amounts required to be withheld by law or contract.

 

23.  Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement or otherwise in connection with the Executive’s
employment by the Company that cannot be mutually resolved by the parties to
this Agreement and their respective advisors

 

16

 

and representatives shall be settled exclusively by arbitration in
Atlanta, Georgia in accordance with the rules of the American Arbitration
Association before one arbitrator of exemplary qualifications and stature, who
shall be selected jointly by an individual to be designated by the Company and
an individual to be selected by Executive, or if such two individuals cannot
agree on the selection of the arbitrator, who shall be selected by the American
Arbitration Association.  The
Company shall reimburse Executive’s reasonable legal fees if he prevails on a
material issue in an arbitration.

 

24.  Corporate
Opportunity.  During the Employment
Period, Executive shall submit to the Board all business, commercial and
investment opportunities or offers presented to Executive that relate to the
business of power companies (“Corporate Opportunities”), if Executive wishes to
accept or pursue, directly or indirectly, such Corporate Opportunities on
Executive’s own behalf.  This Section 24
shall not apply to purchases of publicly traded stock by Executive.

 

25.  Executive’s
Cooperation.  During the Employment
Period and thereafter, Executive shall cooperate with the Company and its
affiliates, upon the Company’s reasonable request, with respect to any internal
investigation or administrative, regulatory or judicial proceeding involving
matters within the scope of Executive’s duties and responsibilities to the
Company Group during the Employment Period (including, without limitation,
Executive being available to the Company upon reasonable notice for interviews
and factual investigations, appearing at the Company’s reasonable request to
give testimony without requiring service of a subpoena or other legal process,
and turning over to the Company all relevant Company documents which are or may
come into Executive’s possession during the Employment Period); provided,
however, that any such request by the Company shall not be unduly
burdensome or interfere with Executive’s personal schedule or ability to
engage in gainful employment.  In the
event the Company requires Executive’s cooperation in accordance with this Section 25,
the Company shall reimburse Executive for reasonable out-of-pocket expenses
(including travel, lodging and meals) incurred by Executive in connection with
such cooperation, subject to reasonable documentation.

 

26.  Legal
Fees.  The
Company shall pay reasonable legal fees of Executive incurred in connection
with the negotiation of this Agreement, up to a maximum of $25,000.00.

 

17

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written above.

 

	
   

  	
  MIRANT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  A. D. Correll

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Director

  
	
   

  	
   

  
	
   

  	
  MIRANT SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Vance N. Booker

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
  Edward R. Muller

  

 

18

 

Exhibit A

 

LIST OF APPROVED
DIRECTORSHIPS

 

GlobalSantaFe Corporation

 

The Keith Companies, Inc.

 

A-1

 

Exhibit B

 

MIRANT CORPORATION

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

This Restricted Stock Unit Award (this “Award”) is made as of
[INSERT DATE THAT IS [10] [45] DAYS AFTER EMERGENCE DATE], by MIRANT
CORPORATION, a                     corporation
(the “Company”) to Edward R. Muller (“Executive”).

 

W I  T  N  E  S
S  E  T  H:

 

WHEREAS, the Company entered into an employment agreement with
Executive, dated as of [         ,
2005] (the “Agreement”) providing for the grant to Executive of
restricted stock units (“Restricted Stock Units”) upon the Company’s
emergence from bankruptcy protection; and

 

WHEREAS, pursuant to the terms of the Agreement the Compensation
Committee of the Board of Directors of the Company (the “Board”) has
granted to Executive an award of Restricted Stock Units to promote Executive’s
long-term interests in the success of the Company;

 

NOW THEREFORE, the Company awards Restricted Stock Units to Executive
pursuant to the following terms and conditions:

 

1.  Restricted Stock Unit
Award.  The Company hereby grants to
Executive an award of [               ]
Restricted Stock Units that are to be settled in common stock of the Company (“Common
Stock”).  The Restricted Stock Units
shall be transferable only in accordance with the provisions of Section 8
of this Award and subject to the restrictions and other conditions set forth
herein.  The shares to be delivered to
Executive in settlement of the Restricted Stock Units shall be issued under the
Company’s then existing omnibus incentive plan and, if the Common Stock is then
traded on a national securities exchange or inter-dealer quotation system,
including without limitation, NASDAQ, or if the Company is subject to the
reporting requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, or any successor provision
thereto, the Company shall take all action necessary to keep in effect a
registration statement under the Securities Act of 1933, as amended, or any
successor provision thereto (the “1933 Act”) enabling Executive to resell
Common Stock without restriction; provided, however, that the Company need not
take such action if, at the time of distribution of Common Stock to Executive,
such shares do not constitute “restricted securities” as defined in Rule 144
under the 1933 Act and Executive is not an “affiliate” of the Company under Rule 405
of the 1933 Act.  Capitalized terms used,
but not otherwise defined, shall have the meaning set forth in the Agreement.

 

2.  Restrictions.  Except as provided in Section 3 below,
the Restricted Stock Units shall vest and become transferable as follows:

 

a.     twenty-five
percent (25%) of the Restricted Stock Units shall vest [insert date that is six
months after the Company’s emergence from bankruptcy protection];

 

B-1

 

b.     twenty-five
percent (25%) of the Restricted Stock Units shall vest  [insert date that is one year after the
Company’s emergence from bankruptcy protection];

 

c.     twenty-five
percent (25%) of the Restricted Stock Units shall vest [insert date that is two
years after the Company’s emergence from bankruptcy protection]; and

 

d.     twenty-five
percent (25%) of the Restricted Stock Units shall vest  [insert date that is three years after the
Company’s emergence from bankruptcy protection].

 

3.  Change in Employment Status.

 

a.             Termination
Without Cause, Non-Renewal, for Good Reason, Death or Disability.  In the event of Executive’s termination of
employment with the Company (regardless of whether such termination is in
connection with a Change in Control (as defined in the Agreement)) (i) by
the Company without Cause (as defined in the Agreement), (ii) by reason of
the failure of the Company to offer to renew the Agreement (as provided in the
Agreement), (iii) by Executive for Good Reason (as defined in the
Agreement) or (iv) as a result of Executive’s death or Disability (as
defined in the Agreement), all Restricted Stock Units that have not already
vested, as of the date of such termination, shall vest immediately and become
nonforfeitable.

 

b.             Termination
for Cause, Voluntary Resignation Without Good Reason.  In the event of Executive’s termination of
employment with the Company (i) by the Company for Cause or (ii) by
reason of Executive’s resignation from the Company for any reason other than
Good Reason, all Restricted Stock Units that have not already vested as of the
date of such termination shall be immediately forfeited by Executive.

 

4.  Book Entry Account.  Within a reasonable time after the date of
this Award, the Company shall instruct its transfer agent to establish a book
entry account representing the Restricted Stock Units in Executive’s name
effective as of the grant date, provided that the Company shall retain control
of such account until the Restricted Stock Units have become vested in
accordance with this Award.

 

5.  Distribution of Shares.  Consistent with the provisions of Section 3
of this Award, on the day following Executive’s termination of employment with
the Company or immediately prior to the occurrence of a Change of Control,
Executive shall receive one share of the Company’s common stock, as provided in
Section 1 above in satisfaction of each Restricted Stock Unit credited to
his account under Section 4 above and vested either theretofore or by
reason of the event resulting in such termination.

 

6.  Stockholder Rights. 
Executive shall not have any of the rights of a stockholder with respect
to the Restricted Stock Units, including the right to vote the Common Stock
that will be issued upon vesting of the Restricted Stock Units, other than the
right to receive dividends or other distributions paid or made available with
respect to Common Stock of the Company when otherwise paid to shareholders;
provided, however, until such Restricted Stock Units are vested, any dividends
shall be credited to Executive’s account under Section 4 and paid in a
lump sum when such Restricted Stock Units to which the dividends are
attributable vest.

 

7.  Withholding. 
Executive shall pay all applicable federal, state and local income and
employment taxes (including taxes of any foreign jurisdiction), which the
Company is required

 

B-2

 

to withhold at any time with respect to the Restricted
Stock Units.  Such payment shall be made
in full, at Executive’s election, in cash or check, by withholding from
Executive’s next normal payroll check, or by the tender of shares of Common
Stock (including shares then vesting under this Award).  Shares tendered as payment of required
withholding shall be valued at the closing price per share of Common Stock on
the date such withholding obligation arises.

 

8.  Transferability.  Except as otherwise provided in this Section 8,
the Restricted Stock Units shall not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner, whether by the operation of law or
otherwise.  Executive may transfer the
Restricted Stock Units, in whole or in part, to a spouse or lineal descendant
(a “Family Member”), a trust for the exclusive benefit of Executive
and/or Family Members, a partnership or other entity in which all the
beneficial owners are Executive and/or Family Members, or any other entity
affiliated with Executive that may be approved by the Compensation Committee (a
“Permitted Transferee”).  Subsequent
transfers of the Restricted Stock Units shall be prohibited except in
accordance with this Section 8.  All
terms and conditions of the Restricted Stock Units, including provisions
relating to the termination of Executive’s employment with the Company, shall
continue to apply following a transfer made in accordance with this Section 8.  Any attempted transfer of the Restricted
Stock Units prohibited by this Section 8 shall be null and void.

 

9.  Adjustments.  In the event that the outstanding shares
of Common Stock are subject to a stock split or changed into or exchanged for a
different number or kind of shares or other securities of the Company or other
corporation by reason of a merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares or a dividend payable
in capital stock, or a similar corporate structural change, then the rights of
the Executive shall be appropriately adjusted as to the number of shares of
Common Stock subject to the Restricted Stock Unit Award.  The granting of the Restricted Stock Units
pursuant to this Award shall not affect in any way the right or power of the
Company to make adjustments, reorganizations, reclassifications, or changes of
its capital or business structure or to merge, consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.

 

10.  Change
in Control. 
Subject to the provisions of Section 3 of this Award, the
Compensation Committee, in its sole discretion, may at any time prior to,
coincident with or after the time of a Change in Control:

 

(i)            provide
for the acceleration of any vesting of the Restricted Stock Units upon a Change
in Control; or

 

(ii)           provide
that such Restricted Stock Units shall vest in accordance with the provisions
of this Agreement as though no Change in Control had occurred, except that, as
appropriate, the shares of Common Stock represented by the Restricted Stock
Units shall be treated in the same manner as other shares of Common Stock in
any transaction constituting a Change in Control; or

 

(iii)          cause
new rights to be substituted for the Restricted Stock Units by the surviving
corporation in such Change in Control.

 

B-3

 

Any such actions
shall be authorized by the Compensation Committee, whose determination as to
what actions shall be taken and the extent thereof, shall be final.

 

11.  Agreement
Provisions.  In
addition to the terms and conditions set forth herein, this Award is subject to
and governed by the terms and conditions set forth in the Agreement, which is
incorporated herein by reference.  In the
event of any conflict between the provisions of this Award and the Agreement,
the Agreement shall control.

 

12.  Notice.  Any written notice required or permitted by
this Award shall be mailed, certified mail (return receipt requested) or
hand-delivered, addressed to Company’s Senior Vice President – Administration
at Company’s North American headquarters at 1155 Perimeter Center West,
Atlanta, Georgia 30338, with a copy to Thomas E. Lauria, Esq., White &
Case, LLP, Wachovia Financial Center, 200 South Biscayne Boulevard, Suite 4900,
Miami, FL 33131, or to Executive at his most recent home address on record with
the Company, with a copy to Robert J. Lichtenstein, Morgan, Lewis &
Bockius LLP, 1701 Market Street, Philadelphia, PA 19103.  Notices are effective upon receipt.

 

13.  Miscellaneous.

 

(a)           Limitation of
Rights.  The granting of this Award
shall not give Executive any rights to similar grants in future years or any
right to be retained in the employ or service of the Company or its subsidiary
or interfere in any way with the right of the Company or any such subsidiary to
terminate Executive’s services at any time, or the right of Executive to
terminate his services at any time.

 

(b)           Severability.  If any term, provision, covenant or
restriction contained in this Award is held by a court or a federal regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions contained in
this Award shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated.

 

(c)           Controlling Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Award shall be
governed by, and construed in accordance with, the laws of the State of
Georgia.

 

(d)           Arbitration.  Any dispute or controversy arising under or
in connection with the Agreement or this Award or otherwise in connection with
the Executive’s employment by the Company that cannot be mutually resolved by
the parties to the Agreement or this Award and their respective advisors and
representatives shall be settled exclusively by arbitration in Atlanta, Georgia
in accordance with the rules of the American Arbitration Association
before one arbitrator of exemplary qualifications and stature, who shall be
selected jointly by an individual to be designated by the Company and an
individual to be selected by Executive, or if such two individuals cannot agree
on the selection of the arbitrator, who shall be selected by the American
Arbitration Association.  The Company
shall reimburse Executive’s reasonable legal fees if he prevails on a material
issue in an arbitration.

 

(e)           Construction.  This Award contains the entire understanding
between the parties and supersedes any prior understanding and agreements
between them representing the

 

B-4

 

subject
matter hereof, except that this Award shall be subject to the terms and
conditions set forth in the Agreement. 
There are no other representations, agreements, arrangements or
understandings, oral or written, between and among the parties hereto relating
to the subject matter hereof which are not fully expressed herein.

 

(f)            Headings.  Section and other headings contained in
this Award are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this Award
or any provision hereof.

 

IN WITNESS WHEREOF, the undersigned Chairman of the Compensation
Committee of the Board executes this Award on behalf of the Company as of day
and year first set forth above.

 

	
   

  	
  MIRANT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  

 

B-5

 

Exhibit C

 

MIRANT CORPORATION

STOCK OPTION AWARD

 

This Stock Option Award (this “Award”) is made as of [INSERT
DATE THAT IS [10] [45] DAYS AFTER EMERGENCE DATE], by MIRANT CORPORATION,
a                  corporation
(the “Company”) to Edward R. Muller (“Executive”).

 

W I  T  N  E  S  S  E
T  H:

 

WHEREAS, the Company entered into an employment agreement with
Executive, dated as of [           ,
2005] (the “Agreement”) providing for the grant to Executive of options
to purchase the common stock (“Common Stock”) of the Company (“Stock
Options”) upon the Company’s emergence from bankruptcy protection; and

 

WHEREAS, pursuant to the terms of the Agreement, the Compensation
Committee of the Board of Directors of the Company (the “Board”) has
granted to Executive an award of Stock Options to promote Executive’s long-term
interests in the success of the Company;

 

NOW THEREFORE, the Company awards Stock Options to Executive pursuant
to the following terms and conditions:

 

1.             Stock
Option Award.  Subject to
the terms and conditions contained herein and in the Agreement, the Company
hereby grants to the Executive an award of [           ]
Stock Options, at an exercise price of $[           ]
(the “Exercise Price”).  The Stock
Options are not intended to qualify as incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended.  Each such Stock Option shall entitle
Executive to purchase, upon payment of the Exercise Price, one share of Common
Stock.  Capitalized terms used, but not
otherwise defined, shall have the meaning set forth in the Agreement.

 

2.             Vesting.  Except as provided in Section 5 below,
the Stock Options shall vest and become transferable as follows:

 

a.     twenty-five percent (25%) of the Stock
Options shall vest on [insert date that is six months after the Company’s
emergence from bankruptcy protection];

 

b.     twenty-five percent (25%) of the Stock
Options shall vest on [insert date that is one year after the Company’s
emergence from bankruptcy protection];

 

c.     twenty-five percent (25%) of the Stock
Options shall vest on [insert date that is two years after the Company’s
emergence from bankruptcy protection];

 

d.     twenty-five percent (25%) of the Stock
Options shall vest on [insert date that is three years after the Company’s
emergence from bankruptcy protection].

 

C-1

 

3.             Term.  The Stock Options shall expire on the earlier
of 10 years from the date of grant or the date specified for termination of
such Stock Options, as provided in Section 5(c).

 

4.             Exercise,
Payment and Other Conditions. 
The Stock Options may be exercised in whole or in part to the extent
vested.  The Executive may exercise the
Stock Options by delivery to the Company of written notice providing:  (i) the name of Executive; (ii) the
address to which Common Stock certificates are to be mailed; and (iii) the
number of shares of Common Stock subject to the Stock Options to be
exercised.  Prior to the delivery to
Executive of any stock certificates, the Executive shall have paid to the
Company the Exercise Price of all shares of Common Stock purchased pursuant to
such exercise of the Stock Options as provided in this Award.  The Board may, in its discretion, require the
Executive to pay to the Company an amount equal to the federal, state and local
taxes, if any, required to be withheld or paid by the Company as a result of
such exercise.  All payments shall be in
United States dollars in the form of cash, certified check or bank draft, or,
with the consent of the Board by delivering to the Company (or by attesting to
the ownership of) shares of Common Stock which Executive has owned for at least
six months having a fair market value on the date of exercise equal to the
Exercise Price, plus the minimum withholding tax due in accordance with Section 7,
for the shares of Common Stock with respect to which Executive has exercised
such Stock Options.  The Stock Options
shall be considered exercised on the date the notice and payment are received
by the Chairman of the Compensation Committee of the Board (“Compensation
Committee”).  As promptly as
practicable after receipt of such notice and payment, the Company shall deliver
to Executive a certificate or certificates for the number of shares of Common
Stock with respect to which the Stock Options have been so exercised, issued in
Executive’s name.  Such delivery shall be
deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited such certificate or certificates in the United States
mail, addressed to Executive, at the address specified in the notice.

 

5.             Change in
Employment Status.

 

a.             Termination Without Cause,
Non-Renewal, for Good Reason, Death or Disability.  In the event of Executive’s termination of
employment with the Company (regardless of whether such termination is in
connection with a Change in Control (as defined in the Agreement)) (i) by
the Company without Cause (as defined in the Agreement)), (ii) by reason
of the failure of the Company to offer to renew the Agreement (as provided in
the Agreement), (iii) by Executive for Good Reason (as defined in the
Agreement) or (iv) as a result of Executive’s death or Disability (as
defined in the Agreement), all Stock Options that have not already vested, as
of the date of such termination shall vest immediately and become
nonforfeitable.

 

b.             Termination for Cause, Voluntary
Resignation Without Good Reason.  In
the event that of Executive’s termination of employment with the Company (i) by
the Company for Cause or (ii) by reason of Executive’s resignation from
the Company for any reason other than Good Reason, all Stock Options that have
not already vested as of the date of such termination shall be immediately
forfeited by Executive and Executive shall have no further right or interest
therein.

 

c.             Post-Termination Exercise. Upon
termination of Executive’s employment for any reason other than that described
in subsection b above, Executive shall have one year to

 

C-2

 

exercise any Stock
Options that are vested or become vested as of the date of Executive’s
termination of employment, subject to earlier expiration of the Stock Option as
provided in Section 3.

 

6.             Stockholder
Rights.  Executive shall
not have any of the rights of a stockholder with respect to the Stock Options,
including the right to vote the Common Stock that will be issued upon the
exercise of the Stock Options or to receive dividends or other distributions
paid or made available with respect to Common Stock of the Company until such
Stock Options are exercised.

 

7.             Withholding.  Executive shall pay all applicable federal,
state and local income and employment taxes (including taxes of any foreign
jurisdiction), which the Company is required to withhold at any time with
respect to the Stock Options.  Such
payment shall be made in full, at Executive’s election, in cash or check, by
withholding from Executive’s next normal payroll check, or by the tender of
shares of Common Stock (including shares acquired upon exercise of the Stock
Options).  Shares tendered as payment of
required withholding shall be valued at the closing price per share of Common
Stock on the date such withholding obligation arises.

 

8.             Transferability.
 Except as otherwise provided in this Section 8,
the Stock Options shall not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner, whether by the operation of law or
otherwise.  Executive may transfer the
Stock Options, in whole or in part, to a spouse or lineal descendant (a “Family
Member”), a trust for the exclusive benefit of Executive and/or Family
Members, a partnership or other entity in which all the beneficial owners are
Executive and/or Family Members, or any other entity affiliated with Executive
that may be approved by the Compensation Committee (a “Permitted Transferee”).  Subsequent transfers of the Stock Options
shall be prohibited except in accordance with this Section 8.  All terms and conditions of the Stock Options,
including provisions relating to the termination of Executive’s employment with
the Company, shall continue to apply following a transfer made in accordance
with this Section 8.  Any attempted
transfer of the Stock Options prohibited by this Section 8 shall be null
and void.  The shares to be delivered to
Executive upon the exercise of any Stock Options shall be issued under the
Company’s then existing omnibus incentive plan and, if the Common Stock is then
traded on a national securities exchange or inter-dealer quotation system,
including without limitation, NASDAQ, or if the Company is subject to the
reporting requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, or any successor provision
thereto, the Company shall take all action necessary to keep in effect a
registration statement under the Securities Act of 1933, as amended, or any
successor provision thereto (the “1933 Act”) enabling Executive to resell
Common Stock without restriction; provided, however, that the Company need not
take such action if, at the time of distribution of Common Stock to Executive,
such shares do not constitute “restricted securities” as defined in Rule 144
under the 1933 Act and Executive is not an “affiliate” of the Company under Rule 405
of the 1933 Act.

 

9.             Adjustments.  In the event that the outstanding shares of
Common Stock are subject to a stock split or changed into or exchanged for a
different number or kind of shares or other securities of the Company or other
corporation by reason of a merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares or a dividend payable
in

 

C-3

 

capital stock, or a
similar corporate structural change, then the rights of the Executive shall be
appropriately adjusted as to the number of shares of Common Stock subject to
the Stock Options and/or as to the Exercise Price.  The granting of the Stock Options pursuant to
this Award shall not affect in any way the right or power of the Company to
make adjustments, reorganizations, reclassifications, or changes of its capital
or business structure or to merge, consolidate, dissolve, liquidate, or sell or
transfer all or any part of its business or assets.

 

10.           Change in Control.  Subject to the provisions of Section 5
of this Award, the Compensation Committee, in its sole discretion, may at any
time prior to, coincident with or after the time of a Change in Control:

 

(i)            provide for the acceleration of any
vesting conditions relating to the exercise of the Stock Option or that the
Stock Option may be exercised in full on or before a date fixed by the
Committee;

 

(ii)           provide for the purchase of the Stock
Option, upon Executive’s request, for an amount of cash equal to the amount, as
determined by the Compensation Committee in its sole discretion, which could
have been realized upon the exercise of the Stock Options had the option been
currently exercisable; or

 

(iii)          

 

cause the Stock Options
then to be assumed, or new rights substituted therefore, by the surviving
corporation in such Change in Control.

 

Any such actions
shall be authorized by the Compensation Committee, whose determination as to
what actions shall be taken and the extent thereof, shall be final.

 

11.           Agreement Provisions.  In addition to the terms and conditions set
forth herein, this Award is subject to and governed by the terms and conditions
set forth in the Agreement, which is incorporated herein by reference.  In the event of any conflict between the provisions
of this Award and the Agreement, the Agreement shall control.

 

12.           Notice.  Any written notice required or permitted by
this Award shall be mailed, certified mail (return receipt requested) or
hand-delivered, addressed to Company’s Senior Vice President – Administration
at Company’s North American headquarters at 1155 Perimeter Center West,
Atlanta, Georgia 30338, with a copy to Thomas E. Lauria, Esq., White &
Case, LLP, Wachovia Financial Center, 200 South Biscayne Boulevard, Suite 4900,
Miami, FL 33131, or to Executive at his most recent home address on record with
the Company, with a copy to Robert J. Lichtenstein, Morgan, Lewis &
Blockius LLP, 1701 Market Street, Philadelphia, PA 19103.  Notices are effective upon receipt.

 

13.           Miscellaneous.

 

(a)           Limitation of
Rights.  The granting of this Award
shall not give Executive any rights to similar grants in future years or any
right to be retained in the employ or service of the Company or its subsidiary
or interfere in any way with the right of the Company or any such

 

C-4

 

subsidiary
to terminate Executive’s services at any time, or the right of Executive to
terminate his services at any time.

 

(b)           Severability.  If any term, provision, covenant or restriction
contained in this Award is held by a court or a federal regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions contained in this Award shall
remain in full force and effect, and shall in no way be affected, impaired or
invalidated.

 

(c)           Controlling Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Award shall be
governed by, and construed in accordance with, the laws of the State of
Georgia.

 

(d)           Arbitration.  Any dispute or controversy arising under or
in connection with the Agreement or this Award or otherwise in connection with
the Executive’s employment by the Company that cannot be mutually resolved by
the parties to the Agreement or this Award and their respective advisors and
representatives shall be settled exclusively by arbitration in Atlanta, Georgia
in accordance with the rules of the American Arbitration Association
before one arbitrator of exemplary qualifications and stature, who shall be
selected jointly by an individual to be designated by the Company and an
individual to be selected by Executive, or if such two individuals cannot agree
on the selection of the arbitrator, who shall be selected by the American
Arbitration Association.  The Company
shall reimburse Executive’s reasonable legal fees if he prevails on a material
issue in an arbitration.

 

(e)           Construction.  This Award contains the entire understanding
between the parties and supersedes any prior understanding and agreements
between them representing the subject matter hereof, except that this Award
shall be subject to the terms and conditions set forth in the Agreement.  There are no other representations,
agreements, arrangements or understandings, oral or written, between and among
the parties hereto relating to the subject matter hereof which are not fully
expressed herein.

 

(f)            Headings.  Section and other headings contained in
this Award are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this Award
or any provision hereof.

 

IN WITNESS WHEREOF, the undersigned Chairman of the Compensation
Committee of the Board executes this Award on behalf of the Company as of day
and year first set forth above.

 

	
   

  	
  MIRANT
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  

 

C-5

 

Exhibit D

 

FORM OF RELEASE

 

This General Release of
all Claims (this “Agreement”) is entered into by Edward R.
Muller (“Executive”“) and Mirant Services, LLC and Mirant Corporation
(collectively, the “Company”), effective as of [DATE].

 

In further consideration
of the promises and mutual obligations set forth in the Employment Agreement
between Executive and the Company, dated [                         ]
(the “Employment Agreement”), Executive and the Company agree as
follows:

 

1.             Return of Property.  All Company files, access keys, desk keys, ID
badges, computers, electronic devices, telephones and credit cards, and such
other property of the Company as the Company may reasonably request, in
Executive’s possession must be returned no later than the date of Executive’s
termination from the Company.

 

2.             General Release and Waiver of Claims.

 

(a)           Release.  In consideration of the payments and benefits
provided to Executive under the Employment Agreement and after consultation
with counsel, Executive, personally and on behalf of each of Executive’s
respective heirs, executors, administrators, representatives, agents,
successors and assigns (collectively, the “Releasors”) hereby
irrevocably and unconditionally releases and forever discharges the Company and
its subsidiaries and affiliates and each of their respective officers,
employees, directors, and agents (“Releasees”) from any and all claims,
actions, causes of action, rights, judgments, obligations, damages, demands,
accountings or liabilities of whatever kind or character (collectively, “Claims”),
including, without limitation, any Claims under any federal, state, local or
foreign law, that the Releasors had, have, may have, or in the future may
possess, arising out of (i) Executive’s employment relationship with and
service as an employee, officer or director of the Company, and the termination
of such relationship or service, and (ii) any event, condition,
circumstance or obligation that occurred, existed or arose on or prior to the
date hereof; provided, however, that Executive does not release,
discharge or waive any rights to payments and benefits provided under the
Employment Agreement that are contingent upon the execution by Executive of
this Agreement nor any rights to indemnification or as a shareholder of
the Company.

 

(b)           Specific
Release of ADEA Claims.  In further
consideration of the payments and benefits provided to Executive under the
Employment Agreement, the Releasors hereby unconditionally release and forever
discharge the Releasees from any and all Claims that the Releasors may have as
of the date Executive signs this Agreement arising under the Federal Age
Discrimination in Employment Act of 1967, as amended, and the applicable rules and
regulations promulgated thereunder (“ADEA”).  By signing this Agreement, Executive hereby
acknowledges and confirms the following: 
(i) Executive was advised by the Company in connection with his
termination to consult with an attorney of his choice prior to signing this
Agreement and to have such attorney explain to Executive the terms of this
Agreement, including, without limitation, the terms relating to Executive’s
release of claims arising under

 

D-1

 

ADEA, and Executive has in fact consulted
with an attorney; (ii) Executive was given a period of not fewer than 21
days to consider the terms of this Agreement and to consult with an attorney of
his choosing with respect thereto; and (iii) Executive knowingly and
voluntarily accepts the terms of this Agreement.  Executive also understands that he has seven (7) days
following the date on which he signs this Agreement within which to revoke the
release contained in this paragraph, by providing the Company a written notice
of his revocation of the release and waiver contained in this paragraph.

 

(c)           No
Assignment.  Executive represents and
warrants that he has not assigned any of the Claims being released under this
Agreement.

 

3.             Proceedings. 
Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding against the
Releasees before any local, state or federal agency, court or other body
relating to his employment or the termination of his employment, other than
with respect to the obligations of the Company to Executive under the
Employment Agreement (each, individually, a “Proceeding”), and agrees
not to participate voluntarily in any Proceeding.  Executive waives any right he may have to
benefit in any manner from any relief (whether monetary or otherwise) arising
out of any Proceeding.

 

4.             Remedies. 
In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this Agreement or
his post-termination obligations contained in the Employment Agreement, or if
he revokes the ADEA release contained in Paragraph 2(b) of this Agreement within
the seven-day period provided under Paragraph 2(b), the Company may, in
addition to any other remedies it may have, reclaim any amounts paid to him
under the severance provisions of the Employment Agreement or terminate any
benefits or payments that are subsequently due under the Employment Agreement,
without waiving the release granted herein. 
Executive acknowledges and agrees that the remedy at law available to
the Company for breach of any of his post-termination obligations under the
Employment Agreement or his obligations under Paragraphs 2 and 3 of this
Agreement would be inadequate and that damages flowing from such a breach may
not readily be susceptible to being measured in monetary terms.  Accordingly, Executive acknowledges, consents
and agrees that, in addition to any other rights or remedies that the Company
may have at law or in equity, the Company shall be entitled to seek a temporary
restraining order or a preliminary or permanent injunction, or both, without
bond or other security, restraining Executive from breaching his
post-termination obligations under the Employment Agreement or his obligations
under Paragraphs 2 and 3 of this Agreement. 
Such injunctive relief in any court shall be available to the Company,
in lieu of, or prior to or pending determination in, any arbitration
proceeding.

 

Executive understands
that by entering into this Agreement he will be limiting the availability of
certain remedies that he may have against the Company and limiting also his
ability to pursue certain claims against the Company.

 

D-2

 

5.             Severability Clause.  In the event any provision or part of this
Agreement is found to be invalid or unenforceable, only that particular
provision or part so found, and not the entire Agreement, will be inoperative.

 

6.             Non-admission. 
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.

 

7.             Governing Law. 
All matters affecting this Agreement, including the validity thereof,
are to be governed by, and interpreted and construed in accordance with, the
laws of the State of Georgia applicable to contracts executed in and to be
performed in that State.

 

8.             Arbitration. 
Any dispute or controversy arising under or in connection with this
Agreement or otherwise in connection with Executive’s employment by the Company
that cannot be mutually resolved by the parties to this Agreement and their
respective advisors and representatives shall be settled exclusively by
arbitration in Atlanta, Georgia in accordance with the rules of the
American Arbitration Association before one arbitrator of exemplary
qualifications and stature, who shall be selected jointly by an individual to
be designated by the Company and an individual to be selected by Executive or,
if such two individuals cannot agree on the selection of the arbitrator, who
shall be selected by the American Arbitration Association.

 

9.             Notices. 
All notices or communications hereunder shall be in writing, addressed
as follows:

 

To the Company:

 

Mirant Corporation

 

With a copy to:

 

Thomas E. Lauria, Esq.

White & Case LLP

Wachovia Financial Center

200 South Biscayne Boulevard, Suite 4900

Miami, FL 33131

 

To Executive:

 

With a copy to:

Robert J.
Lichtenstein

Morgan,
Lewis & Bockius, LLP

1701 Market Street

Philadelphia, PA 19103

 

D-3

 

All such notices shall be
conclusively deemed to be received and shall be effective (i) if sent by
hand delivery, upon receipt or (ii) if sent by electronic mail or
facsimile, upon confirmation of receipt by the sender of such transmission.

 

EXECUTIVE ACKNOWLEDGES THAT HE
HAS READ THIS AGREEMENT AND THAT HE FULLY KNOWS, UNDERSTANDS AND APPRECIATES
ITS CONTENTS, AND THAT HE HEREBY EXECUTES THE SAME AND MAKES THIS AGREEMENT AND
THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF HIS OWN FREE
WILL.

 

D-4

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first set forth above.

 

 

	
   

  	
  MIRANT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
  MIRANT SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Edward R. Muller

  

 

D-5

 

Exhibit E

 

 

CONFIDENTIALITY AGREEMENT

 

In consideration of my
Employment or continued Employment with Mirant Corporation and for other
valuable and adequate consideration which I agree has been exchanged, I agree
to comply with the Company’s Confidentiality Policy and this Confidentiality
Agreement, specifically:

 

1.                                       I
agree that the following words and phrases mean:

 

a)                                      “Affiliate(s)”
means any corporation or entity that is a subsidiary or business unit of Mirant
Corporation.

 

b)                                     “Company”
means Mirant Corporation, its divisions, its parents, its present and future
subsidiaries, and successors.

 

c)                                      “Confidential
Information” means and includes items that the Company marks or treats as
confidential.  It also includes
information (other than Trade Secrets) that has any value to the Company, is
known to persons inside the Company for purposes of doing their jobs, and is
not generally made known to persons outside the Company.

 

d)                                     “Confidentiality
Policy” means the policies and procedures the Company uses to protect its
valuable information.  The
Confidentiality Policy may change periodically and all Mirant employees are
expected to comply with the current Confidentiality Policy at all times.

 

e)                                      “Employment”
means my present or future job with the Company.  Except during those times when my job may
have been subject to a valid employment agreement, Employment with the Company
is, has been, and after this Agreement continues to be “employment at will.”

 

f)                                        “Third
Party” or “Third Parties” means a person, firm or some entity other than
the Company and its employees.

 

g)                                     “Trade
Secret(s)” means those things defined as trade secrets by law.  Trade Secrets include information about the
Company business that is valuable to the Company and gives the Company an
advantage in the market place.  This type
of information is not generally made known or available to people outside the

 

E-1

 

Company, and the Company protects it from
being disclosed.  Information that is a
Trade Secret may be found in such things as software (code and programs),
formulas, patterns, plans, charts, client lists (actual and possible), leads,
pricing information, confidential business arrangements, marketing plans, and
proposals.  Trade Secrets may be found in
other kinds of material as well.

 

2.                                       I
agree that during my Employment, I have been or may be given access to Trade
Secrets or Confidential Information belonging to the Company, its Affiliates,
or to Third Parties.  I agree that I will
only use this information for the benefit of the Company except as required by applicable law or in
any judicial or administrative process.  I understand and agree that I must not copy,
reveal, give or make known to anyone outside the Company any Trade Secret or
Confidential Information, without authorization by management and appropriate
safeguards.  I further understand and
agree that the Company is entitled to this protection:  (a) for Trade Secrets as long as it is a
Trade Secret under the law, and (b) for Confidential Information as long as
I am employed by the Company and for three (3) years after my Employment
ends.

 

3.                                       I
agree to not disclose any Confidential Information or Trade Secrets belonging
to Third Parties when:  (a) the
Company has agreed to protect such information, and (b) I am told or
determine that the Third Party’s information should be treated as confidential.  I will keep the Third Party’s information
confidential in the manner required by the Company.

 

4.                                       I
agree that I will provide the Company all of its Confidential Information and
Trade Secrets I have or that are under my control (including any belonging to
any Affiliate or Third Party) at any time the Company requests it.

 

5.                                       I
agree to return the originals and all copies of the Confidential Information
whether in electronic, printed or any other form before the last day of my
Employment.

 

6.                                       I
agree that this Confidentiality Agreement (a) is governed by the law of
the State of Georgia; (b) is binding on my heirs and representatives; (c) may
be assigned by Mirant Corporation; (d) continues in effect after the end
of my Employment; and (e) cannot be amended or released except in a
document signed by me and the Company.

 

7.                                       I
agree that this Confidentiality Agreement is intended to replace any previous
agreement, or portions of any agreement that contains confidentiality
requirements, that conflicts with this one. 
I further agree that this Confidentiality Agreement is to be read to
give the Company the greatest protection possible without being contrary to
law.  If any court finds part of this
Confidentiality Agreement to be unenforceable, I

 

E-2

 

agree
that part will be struck out and the remainder of the Confidentiality Agreement
will continue in effect.

 

In witness hereof, I have executed this
Confidentiality Agreement this                   
day of                      ,
2005.

 

 

	
   

  	
   

  	
   

  	
   

  
	
  HR
  Representative

  	
   

  	
  Employee
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name & Title

  	
   

  	
  Print
  Name

  
					

 

E-3

 

Exhibit F

 

 

INTELLECTUAL PROPERTY AGREEMENT

 

In consideration of my
Employment or continued Employment with Mirant Corporation, and for other
valuable and adequate consideration which I agree has been exchanged, I agree
to comply with the Company’s Intellectual Property Policy and this Intellectual
Property Agreement (“Agreement”), specifically:

 

1.                                       I
agree that the following words and phrases mean:

 

a)                                      “Affiliate(s)”
means any corporation or entity that is a subsidiary or business unit of Mirant
Corporation.

 

b)                                     “Company”
means Mirant Corporation, its divisions, its parents, its present and future
subsidiaries, and successors.

 

c)                                      “Employment”
means my present or future job with the Company.  Except during those times when my job may
have been subject to a valid employment agreement, Employment with the Company
is, has been, and after this Agreement continues to be “employment at will.”

 

d)                                     “Intellectual
Property” means any invention, discovery, creation, improvement or
design.  Such Intellectual Property
includes machines, processes, concepts, chemical compounds, computer programs,
authored material, trademarks, service marks, and improvements to any of these
items; Intellectual Property may also include other things not listed here.  An individual’s work (and that of those
working together) will be considered the Company’s Intellectual Property if it:
(i) is related to any job the individual holds or has held with the
Company or its Affiliates, (ii) is created, worked on or implemented while
the individual is at work, or (iii) is created, worked on or implemented
using Company or Affiliate personnel, facilities, equipment knowledge,
information, resources or materials.

 

e)                                      “Intellectual
Property Policy” means the policies and procedures the Company uses to
protect its valuable Intellectual Property. 
The Intellectual Property Policy may change periodically and all Mirant
employees are expected to comply with the current Intellectual Property Policy
at all times.

 

f)                                        “Third
Party” or “Third Parties” means a person, firm or some entity other
than the Company and its employees.

 

F-1

 

2.                                       I
agree that I will fully inform the Company about any material that might be
Intellectual Property at the earliest possible time.  I also agree that I will not disclose
innovations or potential Intellectual Property to Third Parties and will treat
it as covered by the Company’s Confidentiality Policy and my Confidentiality
Agreement with the Company.

 

3.                                       As
a part of this Agreement, I transfer to the Company all rights to Intellectual
Property which comes into existence during my Employment.  I agree that all Intellectual Property is a “work
for hire” (as defined in the United States Code) belonging exclusively to the
Company.  No Intellectual Property I
transfer will be considered “joint work” belonging to anyone other than the
Company.

 

4.                                       I
agree to sign any documents, and provide any assistance the Company may need to
protect the Intellectual Property, obtain registrations (including Patents,
Trademarks, Copyrights, etc.), and establish and maintain its title to the
Intellectual Property.  The Company will
pay expenses required to obtain these protections.

 

5.                                       I
understand that the Company may decide, for whatever reason, not to pursue
legal protection for Intellectual Property created by me.  The company may also choose to release its
interest in the Intellectual Property to me. 
If this happens, I agree to execute any documents necessary to give the
Company the perpetual right and license to use, maintain, modify, make
derivative works from, practice and market the Intellectual Property at no cost
to the Company.

 

6.                                       I
agree that I will provide the Company all of its Intellectual Property that I
have or that is under my control (including any belonging to any Affiliate or
Third Party) at any time the Company requests it.

 

7.                                       I
agree to return the originals and all copies of the Intellectual Property
information whether in electronic, printed or any other form before the last
day of my Employment.

 

8.                                       I
agree that this Agreement (a) is governed by the laws of the State of
Georgia; (b) is binding on my heirs and representatives; (c) may be
assigned by the Company; (d) continues in effect after the end of my Employment;
and (e) cannot be amended or released except in a document signed by me
and the Company.

 

9.                                       I
agree that this Agreement is intended to replace any previous agreement, or
portions of any agreement that contains intellectual property requirements,
that conflicts with this one.  I further
agree that this Agreement is be read to give the Company the greatest
protection possible without being contrary to law.  If any court finds part of this Agreement to
be unenforceable, I agree that part will be struck out and the remainder of the
Agreement will continue in effect.

 

F-2

 

In witness hereof, I have executed this
Confidentiality Agreement this                  
day of                       ,
                        .

 

 

	
   

  	
   

  	
   

  	
   

  
	
  HR
  Representative

  	
   

  	
  Employee
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print
  Name & Title

  	
   

  	
  Print
  Name

  
					

 

F-3

 

EXHIBIT G

 

FORM OF RELEASE BY
THE COMPANY

 

This Release of Claims
(this “Agreement”) is entered into by Edward R.
Muller (“Executive”) and Mirant Services, LLC and Mirant Corporation
(collectively, the “Company”), effective as of [DATE].

 

In consideration of the
promises and mutual obligations set forth in the Employment Agreement between
Executive and the Company, dated                         
(the “Employment Agreement”) and other good and valuable consideration,
Executive and the Company agree as follows:

 

1.             General Release and Waiver of Claims.

 

(a)           Release.  The Company and its subsidiaries and affiliates
(“Company Releasors”) hereby irrevocably and unconditionally release and
forever discharge Executive personally and each of Executive’s heirs,
executors, administrators, representatives, agents, successors and assigns
(collectively, the “Executive Releasees”) from any and all claims,
actions, causes of action, rights, judgments, obligations, damages, demands,
accountings or liabilities of whatever kind or character (collectively, “Claims”),
including, without limitation, any Claims under any federal, state, local or
foreign law, that the Company Releasors had, have, may have, or in the future
may possess, arising out of Executive’s employment relationship with and
service as an employee, officer or director of the Company, and the termination
of such relationship or service; provided, however, that the
Company Releasors do not release, discharge or waive any Claims arising out of
or resulting from Executive’s fraud, gross-negligence or other violation of
law.

 

(b)           No
Assignment.  The Company represents
and warrants that it has not assigned any of the Claims being released under
this Agreement.

 

2.             Proceedings.  The Company has not filed, and agrees not to
initiate or cause to be initiated on its behalf, any complaint, charge, claim
or proceeding against the Executive Releasees before any local, state or
federal agency, court or other body based on the Claims released under this
Agreement (a “Proceeding”) and agrees not to participate voluntarily in
any Proceeding.

 

3.             Remedies.  The Company acknowledges and agrees that the
remedy at law available to the Executive for breach of any of the Company’s
obligations under Paragraphs 1 and 2 of this Agreement would be inadequate
and that damages flowing from such a breach may not readily be susceptible to
being measured in monetary terms. 
Accordingly, the Company acknowledges, consents and agrees that, in
addition to any other rights or remedies that Executive may have at law or in
equity, Executive shall be entitled to seek a temporary restraining order or a
preliminary or permanent injunction, or both, without bond or other security,
restraining the Company from breaching its obligations under Paragraphs 1
and 2 of

 

G-1

 

this Agreement.  Such injunctive relief in any court shall be
available to Executive, in lieu of, or prior to or pending determination in,
any arbitration proceeding.

 

The Company understands
that by entering into this Agreement it will be limiting the availability of
certain remedies that it may have against Executive and limiting also its
ability to pursue certain claims against Executive.

 

4.             Severability Clause.  In the event any provision or part of this
Agreement is found to be invalid or unenforceable, only that particular
provision or part so found, and not the entire Agreement, will be inoperative.

 

5.             Non-admission. 
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of Executive.

 

6.             Governing Law. 
All matters affecting this Agreement, including the validity thereof,
are to be governed by, and interpreted and construed in accordance with, the
laws of the State of Georgia applicable to contracts executed in and to be
performed in that State.

 

7.             Arbitration. 
Any dispute or controversy arising under or in connection with this
Agreement or otherwise in connection with Executive’s employment by the Company
that cannot be mutually resolved by the parties to this Agreement and their
respective advisors and representatives shall be settled exclusively by
arbitration in Atlanta, Georgia in accordance with the rules of the
American Arbitration Association before one arbitrator of exemplary
qualifications and stature, who shall be selected jointly by an individual to
be designated by the Company and an individual to be selected by Executive or,
if such two individuals cannot agree on the selection of the arbitrator, who
shall be selected by the American Arbitration Association.

 

8.             Notices. 
All notices or communications hereunder shall be in writing, addressed
as follows:

 

To the Company:

 

Mirant Corporation

 

with a copy to:

 

Thomas E. Lauria, Esq.

White & Case LLP

Wachovia Financial Center

200 South Biscayne Boulevard, Suite 4900

Miami, FL 33131

 

G-2

 

To Executive:

 

With a copy to:

 

Robert J.
Lichtenstein

Morgan,
Lewis & Bockius, LLP

1701 Market Street

Philadelphia, PA 19103

 

All such notices shall be
conclusively deemed to be received and shall be effective (i) if sent by
hand delivery, upon receipt or (ii) if sent by electronic mail or
facsimile, upon confirmation of receipt by the sender of such transmission.

 

THE COMPANY ACKNOWLEDGES THAT IT
HAS READ THIS AGREEMENT AND THAT IT FULLY KNOWS, UNDERSTANDS AND APPRECIATES
ITS CONTENTS, AND THAT IT HEREBY EXECUTES THE SAME AND MAKES THIS AGREEMENT AND
THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF ITS OWN FREE
WILL.

 

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first set forth above.

 

 

	
   

  	
  MIRANT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
  MIRANT SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Edward R. Muller

  

 

G-3Exhibit 4.1

 

EXECUTION COPY

 

 

 

HARRAH’S OPERATING COMPANY, INC.

 

Issuer

 

 

HARRAH’S ENTERTAINMENT, INC.

 

Guarantor

 

 

INDENTURE

 

Dated as of September 28, 2005

 

 

U.S. BANK NATIONAL ASSOCIATION

 

Trustee

 

 

 

1

 

TABLE OF
CONTENTS

 

	
  ARTICLE I.
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
   

  
	
  Section 1.2

  	
  Incorporation by Reference of
  Trust Indenture Act

  	
   

  
	
  Section 1.3

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II. THE NOTES

  	
   

  
	
   

  	
   

  
	
  Section 2.1

  	
  Terms of the
  Notes

  	
   

  
	
  Section 2.2

  	
  Execution
  and Authentication

  	
   

  
	
  Section 2.3

  	
  Registrar
  and Paying Agent

  	
   

  
	
  Section 2.4

  	
  Paying Agent to Hold Money in
  Trust

  	
   

  
	
  Section 2.5

  	
  Noteholder
  Lists

  	
   

  
	
  Section 2.6

  	
  Intentionally
  Omitted

  	
   

  
	
  Section 2.7

  	
  Mutilated,
  Destroyed, Lost and Stolen Notes

  	
   

  
	
  Section 2.8

  	
  Outstanding
  Notes

  	
   

  
	
  Section 2.9

  	
  Treasury Notes

  	
   

  
	
  Section 2.10

  	
  Temporary
  Notes

  	
   

  
	
  Section 2.11

  	
  Cancellation

  	
   

  
	
  Section 2.12

  	
  Defaulted
  Interest

  	
   

  
	
  Section 2.13

  	
  Global Notes

  	
   

  
	
  Section 2.14

  	
  Transfer
  and Exchange

  	
   

  
	
  Section 2.15

  	
  Payments

  	
   

  
	
  Section 2.16

  	
  CUSIP Numbers

  	
   

  
	
  Section 2.17

  	
  Mandatory Disposition of
  Notes Pursuant to Gaming Laws

  	
   

  
	
  Section 2.18

  	
  Additional
  Notes

  	
   

  
	
  Section 2.19

  	
  Additional Interest Under Registration
  Rights Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III. REDEMPTION

  	
   

  
	
   

  	
   

  
	
  Section 3.1

  	
  Optional Redemption

  	
   

  
	
  Section 3.2

  	
  Notice to Trustee

  	
   

  
	
  Section 3.3

  	
  Selection
  of Notes to be Redeemed

  	
   

  
	
  Section 3.4

  	
  Notice of
  Redemption

  	
   

  
	
  Section 3.5

  	
  Effect
  of Notice of Redemption

  	
   

  
	
  Section 3.6

  	
  Deposit
  of Redemption Price

  	
   

  
	
  Section 3.7

  	
  Notes
  Redeemed in Part

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV. COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 4.1

  	
  Payment
  of Principal and Interest

  	
   

  
	
  Section 4.2

  	
  SEC Reports

  	
   

  
	
  Section 4.3

  	
  Compliance
  Certificate

  	
   

  
	
  Section 4.4

  	
  Stay,
  Extension and Usury Laws

  	
   

  
	
  Section 4.5

  	
  Corporate Existence

  	
   

  
	
  Section 4.6

  	
  Taxes

  	
   

  

 

i

 

	
  Section 4.7

  	
  Limitation on Liens

  	
   

  
	
  Section 4.8

  	
  Limitation on Sale-Lease Back
  Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. SUCCESSORS

  	
   

  
	
   

  	
   

  
	
  Section 5.1

  	
  When Company May Merge,
  Etc

  	
   

  
	
  Section 5.2

  	
  Successor Corporation
  Substituted

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.
  DEFAULTS AND REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section 6.1

  	
  Events of Default

  	
   

  
	
  Section 6.2

  	
  Acceleration of Maturity;
  Rescission and Annulment

  	
   

  
	
  Section 6.3

  	
  Collection of Indebtedness and
  Suits for Enforcement by Trustee

  	
   

  
	
  Section 6.4

  	
  Trustee May File Proofs
  of Claim

  	
   

  
	
  Section 6.5

  	
  Trustee
  May Enforce Claims Without Possession of Notes

  	
   

  
	
  Section 6.6

  	
  Application
  of Money Collected

  	
   

  
	
  Section 6.7

  	
  Limitation on
  Suits

  	
   

  
	
  Section 6.8

  	
  Unconditional
  Right of Holders to Receive Principal and Interest

  	
   

  
	
  Section 6.9

  	
  Restoration
  of Rights and Remedies

  	
   

  
	
  Section 6.10

  	
  Rights and
  Remedies Cumulative

  	
   

  
	
  Section 6.11

  	
  Delay or
  Omission Not Waiver

  	
   

  
	
  Section 6.12

  	
  Control by
  Holders

  	
   

  
	
  Section 6.13

  	
  Waiver of
  Past Defaults

  	
   

  
	
  Section 6.14

  	
  Undertaking
  for Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.
  TRUSTEE

  	
   

  
	
   

  	
   

  
	
  Section 7.1

  	
  Duties of Trustee

  	
   

  
	
  Section 7.2

  	
  Rights of Trustee

  	
   

  
	
  Section 7.3

  	
  Individual
  Rights of Trustee

  	
   

  
	
  Section 7.4

  	
  Trustee’s
  Disclaimer

  	
   

  
	
  Section 7.5

  	
  Notice of
  Defaults

  	
   

  
	
  Section 7.6

  	
  Reports by
  Trustee to Holders

  	
   

  
	
  Section 7.7

  	
  Compensation
  and Indemnity

  	
   

  
	
  Section 7.8

  	
  Replacement
  of Trustee

  	
   

  
	
  Section 7.9

  	
  Successor
  Trustee by Merger, etc

  	
   

  
	
  Section 7.10

  	
  Eligibility;
  Disqualification

  	
   

  
	
  Section 7.11

  	
  Preferential
  Collection of Claims Against Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII. SATISFACTION AND DISCHARGE;
  DEFEASANCE

  	
   

  
	
   

  	
   

  
	
  Section 8.1

  	
  Satisfaction
  and Discharge of Indenture

  	
   

  
	
  Section 8.2

  	
  Application
  of Trust Funds; Indemnification

  	
   

  
	
  Section 8.3

  	
  Legal
  Defeasance of Notes

  	
   

  
	
  Section 8.4

  	
  Covenant
  Defeasance

  	
   

  
	
  Section 8.5

  	
  Repayment to
  Company

  	
   

  

 

ii

 

	
  ARTICLE IX.
  AMENDMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  
	
  Section 9.1

  	
  Without
  Consent of Holders

  	
   

  
	
  Section 9.2

  	
  With Consent
  of Holders

  	
   

  
	
  Section 9.3

  	
  Limitations

  	
   

  
	
  Section 9.4

  	
  Compliance
  with Trust Indenture Act

  	
   

  
	
  Section 9.5

  	
  Revocation
  and Effect of Consents

  	
   

  
	
  Section 9.6

  	
  Notation on
  or Exchange of Notes

  	
   

  
	
  Section 9.7

  	
  Trustee Protected

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 10.1

  	
  Trust
  Indenture Act Controls

  	
   

  
	
  Section 10.2

  	
  Notices

  	
   

  
	
  Section 10.3

  	
  Communication
  by Holders with Other Holders

  	
   

  
	
  Section 10.4

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
   

  
	
  Section 10.5

  	
  Statements
  Required in Certificate or Opinion

  	
   

  
	
  Section 10.6

  	
  Rules by
  Trustee and Agents

  	
   

  
	
  Section 10.7

  	
  Legal
  Holidays

  	
   

  
	
  Section 10.8

  	
  No Recourse
  Against Others

  	
   

  
	
  Section 10.9

  	
  Counterparts

  	
   

  
	
  Section 10.10

  	
  Governing Laws

  	
   

  
	
  Section 10.11

  	
  No Adverse
  Interpretation of Other Agreements

  	
   

  
	
  Section 10.12

  	
  Successors

  	
   

  
	
  Section 10.13

  	
  Severability

  	
   

  
	
  Section 10.14

  	
  Table of
  Contents, Headings, Etc

  	
   

  
	
  Section 10.15

  	
  Judgment
  Currency

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.
  SINKING FUNDS

  	
   

  
	
   

  	
   

  
	
  Section 11.1

  	
  No Sinking Funds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII. GUARANTEE

  	
   

  
	
   

  	
   

  
	
  Section 12.1

  	
  Guarantee

  	
   

  
	
  Section 12.2

  	
  Execution
  and Delivery of Guarantee

  	
   

  
	
  Section 12.3

  	
  Release of
  Guarantor

  	
   

  
	
  Section 12.4

  	
  When Guarantor
  May Merge, etc

  	
   

  

 

iii

 

HARRAH’S OPERATING COMPANY, INC.

 

Reconciliation and tie between Trust Indenture Act of 1939 and

Indenture, dated as of September 28, 2005

 

	
  § 310(a)(1)

  	
   

  	
   

  	
   

  	
  7.10

  
	
  (a)(2)

  	
   

  	
   

  	
   

  	
  7.10

  
	
  (a)(3)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (a)(4)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (a)(5)

  	
   

  	
   

  	
   

  	
  7.10

  
	
  (b)

  	
   

  	
   

  	
   

  	
  7.10

  
	
  § 311(a)

  	
   

  	
   

  	
   

  	
  7.11

  
	
  (b)

  	
   

  	
   

  	
   

  	
  7.11

  
	
  (c)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  § 312(a)

  	
   

  	
   

  	
   

  	
  2.5

  
	
  (b)

  	
   

  	
   

  	
   

  	
  10.3

  
	
  (c)

  	
   

  	
   

  	
   

  	
  10.3

  
	
  § 313(a)

  	
   

  	
   

  	
   

  	
  7.6

  
	
  (b)(1)

  	
   

  	
   

  	
   

  	
  7.6

  
	
  (b)(2)

  	
   

  	
   

  	
   

  	
  7.6

  
	
  (c)(1)

  	
   

  	
   

  	
   

  	
  7.6

  
	
  (d)

  	
   

  	
   

  	
   

  	
  7.6

  
	
  § 314(a)

  	
   

  	
   

  	
   

  	
  4.2,
  10.5

  
	
  (b)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (c)(1)

  	
   

  	
   

  	
   

  	
  10.4

  
	
  (c)(2)

  	
   

  	
   

  	
   

  	
  10.4

  
	
  (c)(3)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (d)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (e)

  	
   

  	
   

  	
   

  	
  10.5

  
	
  (f)

  	
   

  	
   

  	
   

  	
  Not
  Applicable

  
	
  § 315(a)

  	
   

  	
   

  	
   

  	
  7.1

  
	
  (b)

  	
   

  	
   

  	
   

  	
  7.5

  
	
  (c)

  	
   

  	
   

  	
   

  	
  7.1

  
	
  (d)

  	
   

  	
   

  	
   

  	
  7.1

  
	
  (e)

  	
   

  	
   

  	
   

  	
  6.14

  
	
  § 316(a)

  	
   

  	
   

  	
   

  	
  2.9

  
	
  (a)(1)(A)

  	
   

  	
   

  	
   

  	
  6.12

  
	
  (a)(1)(B)

  	
   

  	
   

  	
   

  	
  6.13

  
	
  (b)

  	
   

  	
   

  	
   

  	
  6.8

  
	
  § 317(a)(1)

  	
   

  	
   

  	
   

  	
  6.3

  
	
  (a)(2)

  	
   

  	
   

  	
   

  	
  6.4

  
	
  (b)

  	
   

  	
   

  	
   

  	
  2.4

  
	
  § 318(a)

  	
   

  	
   

  	
   

  	
  10.1

  

 

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

 

iv

 

INDENTURE

 

Indenture dated as of September 28, 2005 between
Harrah’s Operating Company, Inc., a Delaware corporation (the “Company”),
Harrah’s Entertainment, Inc., a Delaware corporation (the “Guarantor”),
and U.S. Bank National Association, a national banking association (the “Trustee”).

 

Each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the 5.75%
Senior Notes due 2017 (the “Notes”):

 

ARTICLE I.

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.1                                      Definitions.

 

“Additional Interest” means all additional
interest then owing pursuant to Section 5 of the Registration Rights
Agreement.

 

“Additional Notes” means an unlimited
additional aggregate principal amount of Notes (other than Initial Notes)
issued after the date hereof pursuant to Section 2.18 as part of the same
series as the Initial Notes.

 

“Additional Note Board Resolutions” means
resolutions duly adopted by the Board of Directors of the Company and delivered
to the Trustee in an Officer’s Certificate providing for the issuance of
Additional Notes.

 

“Additional Note Supplemental Indenture” means
a supplement to this Indenture duly executed and delivered by the Company and
the Trustee pursuant to Article IX hereof providing for the issuance of
Additional Notes.

 

“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”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.

 

“Agent” means any Registrar, Paying Agent or
Service Agent.

 

“Applicable Procedures” means, with respect to
any transfer or exchange of or for beneficial interests in any Global Note, the
rules and procedures of the Depositary, Euroclear and Clearstream that
apply to such transfer or exchange.

 

“Bankruptcy Law” shall have the meaning set
forth in Section 6.1.

 

 

“Board of Directors” means the Board of
Directors of the Company or any duly authorized committee thereof.

 

“Board Resolution” means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have
been adopted by the Board of Directors or pursuant to authorization by the
Board of Directors and to be in full force and effect on the date of the
certificate and delivered to the Trustee.

 

“Business Day” means, unless otherwise provided
by Board Resolution, Officer’s Certificate or supplemental indenture hereto,
any day except a Saturday, Sunday or a legal holiday in the City of New York on
which banking institutions are authorized or required by law, regulation or
executive order to close.

 

“Certificated Note” means a certificated Note
registered in the name of the Holder thereof and issued in accordance with Section 2.14.3
hereof, substantially in the form of Exhibit A hereto except that such
note shall not bear the Global Notes Legend and shall not have the “Schedule of
Interests in the Global Note” attached thereto.

 

“Clearstream” means Clearstream Banking,
Societé Anonyme.

 

“Company” means the party named as such above
until a successor replaces it and thereafter means the successor.

 

“Company Order” means a written order signed in
the name of the Company by an Officer.

 

“Company Request” means a written request
signed in the name of the Company by an Officer.

 

“Comparable Treasury Issue” means the United
States Treasury security selected by the Reference Treasury Dealer as having a
maturity comparable to the remaining term of the Notes to be redeemed, that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Notes.

 

“Comparable Treasury Price” means, with respect
to any Redemption Date, the Reference Treasury Dealer Quotations for that
Redemption Date.

 

“Consolidated Net Tangible Assets” means the
total amount of assets (including investments in Joint Ventures) of the Company
and its subsidiaries (less applicable depreciation, amortization and other
valuation reserves) after deduction therefrom of (a) all current
liabilities of the Company and its subsidiaries (excluding (i) the current
portion of long-term indebtedness, (ii) intercompany liabilities and (iii) any
liabilities which are by their terms renewable or extendible at the option of
the obligor thereon to a time more than 12 months from the time as of which the
amount thereof is being computed) and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and any other like intangibles, all as set
forth on the

 

2

 

consolidated
balance sheet of the Company for the most recently completed fiscal quarter for
which financial statements are available and computed in accordance with
generally accepted accounting principles.

 

“Consolidated Property” means any property of
the Company or any of its Subsidiaries.

 

“Corporate Trust Office” means the office of
the Trustee at which at any particular time this Indenture shall be principally
administered, which initially shall be 60 Livingston Avenue, St. Paul, MN 55107-1419,
Attention: Corporate Trust Services.

 

“Custodian” shall have the meaning set forth in
Section 6.1.

 

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

 

“Depositary” means, with respect to the Notes
issuable or issued in whole or in part in the form of one or more Global Notes,
the person designated as Depositary by the Company, which Depositary shall be a
clearing agency registered under the Exchange Act; and if at any time there is
more than one such person, “Depositary” as used with respect to the Notes shall
mean the Depositary with respect to the Notes.

 

“Dollars” means the currency of the United
States of America.

 

“DTC” means The Depository Trust Company.

 

“Euroclear” means Euroclear Bank S.A./N.V., as
operator of the Euroclear Clearance System.

 

“Event of Default” shall have the meaning set
forth in Section 6.1.

 

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

 

“Exchange Offer Registration Statement” has the
meaning set forth in the Registration Rights Agreement.

 

“Foreign Currency” means any currency or
currency unit issued by a government other than the government of the United
States of America.

 

“Foreign Government Obligations” means with
respect to Notes that are denominated in a Foreign Currency, (i) direct
obligations of the government that issued or caused to be issued such currency
for the payment of which obligations its full faith and credit is pledged or (ii) obligations
of a Person controlled or supervised by or acting as an agency or
instrumentality of such government the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by such
government, which, in either case under clauses (i) or (ii), are not
callable or redeemable at the option of the issuer thereof.

 

3

 

“Funded Debt” means all Indebtedness of the
Company which (i) matures by its terms on, or is renewable at the option
of any obligor thereon to, a date more than one year after the date of original
issuance of such Indebtedness and (ii) ranks at least pari passu with the
notes.

 

“Gaming Laws” means the gaming laws of a
jurisdiction or jurisdictions to which the Company or a subsidiary of the
Company is, or may at any time after the date of this Indenture be, subject.

 

“Gaming Authority” means the Nevada Gaming
Commission, the Nevada State Gaming Control Board, the New Jersey Casino
Control Commission or any similar commission or agency which has, or may at any
time after the date of this Indenture have, jurisdiction over the gaming
activities of the Company or a subsidiary of the Company or any successor
thereto.

 

“Global Note” or “Global Notes” means a
Note or Notes, as the case may be, in the form established pursuant to Section 2.13
evidencing all or part of the Notes, issued to the Depositary or its nominee,
and registered in the name of such Depositary or nominee.

 

“Global Notes Legend” means the legend set
forth in Section 2.13.2, which is required to be placed on all Global
Notes issued under this Indenture.

 

“Guarantee” shall have the meaning set forth in
Section 12.1 hereof.

 

“Guarantor” means the party named as such above
until a successor replaces it and thereafter means the successor.

 

“Holder” or “Noteholder” means a Person
in whose name a Note is registered.

 

“Indebtedness” of any Person means (a) any
indebtedness of such Person, contingent or otherwise, in respect of borrowed
money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof), or evidenced by notes, bonds,
debentures or similar instruments or letters of credit, or representing the
balance deferred and unpaid of the purchase price of any property, including
any such indebtedness incurred in connection with the acquisition by such
Person or any of its Subsidiaries of any other business or entity, if and to
the extent such indebtedness would appear as a liability upon a balance sheet
of such Person prepared in accordance with generally accepted accounting
principles, including for such purpose obligations under capitalized leases,
and (b) any guarantee, endorsement (other than for collection or deposit
in the ordinary course of business), discount with recourse, agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire or to
supply or advance funds with respect to, or to become liable with respect to
(directly or indirectly) any indebtedness, obligation, liability or dividend of
any Person, but shall not include indebtedness or amounts owed for compensation
to employees, or for goods or materials purchased, or services utilized, in the
ordinary course of business of such Person. 
Notwithstanding anything to the contrary in the foregoing, “Indebtedness”
shall not include (i) any contracts providing for the completion of
construction or other payment or performance with respect to the construction,
maintenance or improvement of, or payment of taxes, revenue share payments or
other fees to governmental entities with respect to, property or equipment of
the Company or its Affiliates or

 

4

 

(ii) any
contracts providing for the obligation to advance funds, property or services
on behalf of an Affiliate of the Company in order to maintain the financial
condition of such Affiliate.  For
purposes of this definition of Indebtedness, a “capitalized lease” shall be
deemed to mean a lease of real or personal property which, in accordance with
generally accepted accounting principles, is required to be capitalized.

 

“Indenture” means this Indenture as amended
from time to time and shall include the form and terms of the Notes established
as contemplated hereunder.

 

“Initial Notes” means the first $750,000,000
aggregate principal amount of Notes issued under this Indenture on the date
hereof.

 

“Initial Purchasers” shall have the meaning set
forth in the purchase agreement dated as of September 21, 2005 among the
Company, the Guarantor, and the Initial Purchasers listed therein.

 

“Institutional Accredited Investor” means an
institution that is an “accredited investor” as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act, who are not also QIBs.

 

“Interest Payment Date,” when used with respect
to any Notes, means the date an installment of interest is due and payable on
such Notes.

 

“Joint Venture” means any partnership,
corporation or other entity, in which up to and including 50% of the
partnership interests, outstanding voting stock or other equity interests is
owned, directly or indirectly, by the Company and/or one or more of its
subsidiaries.

 

“Judgment Currency” shall have the meaning set
forth in Section 10.15.

 

“Legal Holiday” shall have the meaning set
forth in Section 10.7.

 

“Lien” means any mortgage, pledge,
hypothecation, assignment, deposit, arrangement, encumbrance, security
interest, lien (statutory or otherwise), or preference, priority or other
security or similar agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).

 

“Maturity” means the date on which the
principal of the Notes becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption, notice of option to elect repayment or otherwise.

 

“Maturity Date” shall have the meaning set
forth in Section 2.1.1.

 

“New Notes” means the Notes issued in the
Registered Exchange Offer pursuant to Section 2.14.4 hereof.

 

“New York Banking Day” shall have the meaning
set forth in Section 10.15.

 

5

 

“Non-recourse Indebtedness” means indebtedness
with terms providing that the lender’s claim for repayment of such indebtedness
is limited solely to a claim against the property which secures the indebtedness.

 

“Non-U.S. Person” means a Person who is not a
U.S. Person as defined in Rule 902(k) under the Securities Act.

 

“Notes” has the meaning assigned to it in the
preamble to this Indenture.  The Initial
Notes and the Additional Notes shall be treated as a single class for all
purposes under this Indenture.

 

“Obligations” means any principal, interest,
premium, if any, penalties, fees, indemnifications, reimbursements, damages or
other liabilities or amounts payable under the documentation governing or otherwise
in respect of any Indebtedness.

 

“Officer” means the Chairman of the Board, any
President, any Vice-President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.

 

“Officer’s Certificate” means a certificate
signed by an Officer.

 

“Opinion of Counsel” means a written opinion of
legal counsel who is acceptable to the Trustee. 
The counsel may be an employee of or counsel to the Company.

 

“Paying Agent” shall have the meaning set forth
in Section 2.3.

 

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

 

“Private Placement Legend” means the legend set
forth in Section 2.14.5(a) to be placed on all Notes issued under
this Indenture except where otherwise permitted by the provisions of this
Indenture.

 

“QIB” means a “qualified institutional buyer”
as defined in Rule 144A.

 

“Redemption Date” means the date of redemption
of the Notes.

 

“Reference Treasury Dealer” means Citigroup
Global Markets Inc. and its successor; provided that, if Citigroup
Global Markets Inc. ceases to be a primary U.S. Government securities dealer,
the Company shall substitute another nationally recognized investment banking
firm that is a primary U.S. Government securities dealer.

 

“Reference Treasury Dealer Quotations” means,
with respect to the Reference Treasury Dealer and any Redemption Date, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by the Reference Treasury
Dealer at 3:30 p.m., New York City time, on the third Business Day
preceding that Redemption Date.

 

6

 

“Registered Exchange Offer” has the meaning set
forth in the Registration Rights Agreement.

 

“Registrar” shall have the meaning set forth in
Section 2.3.

 

“Registration Rights Agreement” means the
Registration Rights Agreement, dated as of September 28, 2005, by and
among the Company, the Guarantor and the other parties named on the signature pages thereof,
as such agreement may be amended, modified or supplemented from time to time,
and, with respect to any Additional Notes, one or more registration rights
agreements between the Company and the other parties thereto, as such
agreement(s) may be amended, modified or supplemented from time to time,
relating to rights given by the Company to the purchasers of Additional Notes
to register such Additional Notes under the Securities Act.

 

“Regular Record Date” shall have the meaning
set forth in Section 2.1.3.

 

“Regulation S” means Regulation S promulgated
under the Securities Act.

 

“Regulation S Global Note” means a Global Note
bearing the Private Placement Legend and deposited with or on behalf of the
Depositary and registered in the name of the Depositary or its nominee, issued
in a denomination equal to the outstanding principal amount of the Notes
initially sold in reliance on Rule 903 of Regulation S.

 

“Remaining Scheduled Payments” means the
remaining scheduled payments of principal of and interest on the Notes that
would be due after the related Redemption Date but for that redemption.  If that Redemption Date is not an Interest
Payment Date, the amount of the next succeeding scheduled interest payment on
the Notes will be reduced by the amount of interest accrued on the Notes to
such Redemption Date.

 

“Required Currency” shall have the meaning set
forth in Section 10.15.

 

“Responsible Officer” means any officer of the
Trustee assigned to administer corporate trust matters and also means, with
respect to a particular corporate trust matter, any other officer to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with a particular subject.

 

“Restricted Certificated Note” means a
Certificated Note bearing the Private Placement Legend.

 

“Restricted Global Note” means a Global Note
bearing the Private Placement Legend.

 

“Restricted Period” means the 40-day
distribution compliance period as defined in Regulation S.

 

“Rule 144” means Rule 144 promulgated
under the Securities Act.

 

7

 

“Rule 144A” means Rule 144A
promulgated under the Securities Act.

 

“Rule 144A Global Note” means a Global
Note bearing the Private Placement Legend and deposited with or on behalf of
the Depositary and registered in the name of the Depositary or its nominee,
issued in a denomination equal to the outstanding principal amount of the Notes
initially sold in reliance on Rule 144A.

 

“Rule 903” means Rule 903 promulgated
under the Securities Act.

 

“Rule 904” means Rule 904 promulgated
under the Securities Act.

 

“Sale and Lease-Back Transaction” means any
arrangement with a Person (other than the Company or any of its Subsidiaries),
or to which any such Person is a party, providing for the leasing to the
Company or any of its Subsidiaries for a period of more than three years of any
Consolidated Property which has been or is to be sold or transferred by the
Company or any of its Subsidiaries to such Person or to any other Person (other
than the Company of any of its Subsidiaries), to which funds have been or are
to be advanced by such Person on the security of the leased property.

 

“SEC” means the Securities and Exchange
Commission.

 

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

 

“Service Agent” shall have the meaning set
forth in Section 2.3.

 

“Significant Subsidiary” means (i) any
direct or indirect Subsidiary of the Company that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation is in effect on
the date hereof, or (ii) any group of direct or indirect Subsidiaries of
the Company that, taken together as a group, would be a “significant subsidiary”
as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such regulation is in effect on the date
hereof.

 

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

 

“Subsidiary” of any specified Person means any
corporation of which at least a majority of the outstanding stock having by the
terms thereof ordinary voting power for the election of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by
such Person, or by one or more other Subsidiaries, or by such Person and one or
more other Subsidiaries.

 

“successor person” shall have the meaning set
forth in Section 5.1.

 

8

 

“TIA” means the Trust Indenture Act of 1939 (15
U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this
Indenture; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, “TIA” means, to the extent
required by any such amendment, the Trust Indenture Act as so amended.

 

“Treasury Rate” means, with respect to any
Redemption Date for the Notes, the rate per annum equal to the semi-annual
equivalent yield to maturity (computed as of the third Business Day immediately
preceding that Redemption Date) of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for that Redemption
Date.

 

“Trustee” means the Person named as the “Trustee”
in the first paragraph of this instrument 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 Trustee
hereunder.

 

“Unrestricted Certificated Note” means one or
more Certificated Notes that do not bear and are not required to bear the
Private Placement Legend.

 

“Unrestricted Global Note” means a permanent
Global Note substantially in the form of Exhibit A hereto that bears the
Global Notes Legend and that has the “Schedule of Exchanges of Interests
in the Global Note” attached thereto, and that is deposited with or on behalf
of and registered in the name of the Depositary, representing a series of Notes
that do not bear the Private Placement Legend.

 

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

 

“Value” means, with respect to a Sale and
Lease-Back Transaction, as of any particular time, the amount equal to the
greater of (i) the net proceeds of the sale or transfer of property leased
pursuant to such Sale and Lease-Back Transaction or (ii) the fair value,
in the opinion of the Board of Directors as evidenced by a board resolution, of
such property at the time of entering into such Sale and Lease-Back
Transaction.

 

Section 1.2                                      Incorporation by Reference of Trust
Indenture Act.

 

9

 

Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a part of this
Indenture.  The following TIA terms
correspond to the following terms used in this Indenture:

 

“indenture
securities” means the Notes.

 

“indenture
security holder” means a Noteholder.

 

“indenture
to be qualified” means this Indenture.

 

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

 

“obligor”
on the indenture securities means the Company and any successor obligor upon
the Notes.

 

All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by
SEC rule under the TIA and not otherwise defined herein are used herein as
so defined.

 

Section 1.3                                      Rules of Construction.

 

Unless the context otherwise requires:

 

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

 

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

 

(c)                                  references to “generally accepted
accounting principles” shall mean generally accepted accounting principles in
effect as of the time when and for the period as to which such accounting
principles are to be applied;

 

(d)                                 “or” is not exclusive;

 

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

 

(f)                                    provisions apply to successive
events and transactions.

 

ARTICLE II.

THE NOTES

 

Section 2.1                                      Terms of the Notes.

 

The entire outstanding principal of
the Notes will mature on October 1, 2017 (the “Maturity Date”).

 

The Notes shall be in denominations of $1,000 and any
integral multiple thereof.  The Notes
shall be denominated in U.S. dollars and all payments of principal and interest
on the Notes shall be made in U.S. dollars.

 

10

 

The Notes shall bear interest at a rate of 5.75% per
annum; the date from which interest shall accrue shall be September 28,
2005; the Interest Payment Dates for the Notes on which interest shall be
payable shall be April 1 and October 1 in each year, beginning April 1,
2006; the Regular Record Dates for the interest payable on the Notes on any
Interest Payment Date shall be the March 15 or September 15 (whether
or not a Business Day), as the case may be, immediately preceding such Interest
Payment Date (each a “Regular Record Date”).  Interest shall accrue on the basis of a 360-day
year, consisting of twelve 30-day months. 
Interest on any Note shall be payable only to the Person in whose name
that Note is registered at the close of business on the Regular Record Date for
such interest payment.  If any Interest
Payment Date, Redemption Date or Maturity Date of any of the Notes is not a
Business Day, then payment of principal and interest will be made on the next
succeeding Business Day.  No interest
will accrue on the amount so payable for the period from such Interest Payment
Date, Redemption Date or Maturity Date, as the case may be, to the date payment
is made.

 

The place of payment where the principal of and
interest on the Notes shall be payable and the Notes may be surrendered for the
registration of transfer or exchange shall be the Corporate Trust Office of the
Trustee.  The place where notices or
demands to or upon the Company in respect of the Notes and this Indenture may
be served shall be the Corporate Trust Office of the Trustee.

 

The Notes will be redeemable at the option of the
Company pursuant to Article III.

 

Section 2.2                                      Execution and Authentication.

 

An Officer shall sign the Notes for the Company by
manual or facsimile signature.

 

If an Officer whose signature is on a Note no longer
holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.

 

A Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.  The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.

 

Subject to the provisions of this Section 2.2,
the Trustee shall, at any time, and from time to time, authenticate Notes for
original issue upon receipt by the Trustee of a Company Order.  Such Company Order may authorize
authentication pursuant to written or electronic instructions from the Company
or its duly authorized agent or agents.

 

Prior to the issuance of the Notes, the Trustee shall
have received and (subject to Section 7.1) shall be fully protected in
relying on: (a) a Board Resolution, supplemental indenture hereto or
Officer’s Certificate establishing the form and terms of the Notes, (b) an
Officer’s Certificate complying with Section 10.4, and (c) an Opinion
of Counsel complying with Section 10.4.

 

11

 

The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes.  An authenticating agent may authenticate
Notes whenever the Trustee may do so.  Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent.  An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.

 

Section 2.3                                      Registrar and Paying Agent.

 

The Company shall maintain, with respect to the Notes,
at the place or places specified pursuant to Section 2.1.4, an office or
agency where the Notes may be presented or surrendered for payment (“Paying
Agent”), where the Notes may be surrendered for registration of transfer or
exchange (“Registrar”) and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be served (“Service
Agent”).  The Registrar shall keep a
register with respect to the Notes and to their transfer and exchange.  The Company will give prompt written notice
to the Trustee of the name and address, and any change in the name or address,
of each Registrar, Paying Agent or Service Agent.  If at any time the Company shall fail to
maintain any such required Registrar, Paying Agent or Service Agent or shall
fail to furnish the Trustee with the name and address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.

 

The Company may also from time to time designate one
or more co-registrars, additional paying agents or additional service agents
and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligations to maintain a Registrar, Paying Agent and Service Agent in
each place so specified pursuant to Section 2.1.4 for the Notes 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 name or address of any such co-registrar, additional paying agent
or additional service agent.  The term “Registrar”
includes any co-registrar; the term “Paying Agent” includes any additional
paying agent; and the term “Service Agent” includes any additional service
agent.

 

The Company hereby appoints the Trustee as the initial
Registrar, Paying Agent and Service Agent for the Notes.  The Company hereby appoints DTC to act as
Depositary with respect to the Global Notes.

 

Section 2.4                                      Paying Agent to Hold Money in Trust.

 

The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent will hold in trust, for
the benefit of Noteholders, or the Trustee, all money held by the Paying Agent
for the payment of principal of or interest on the Notes, and will notify the
Trustee of any default by the Company in making any such payment.  While any such default continues, the Trustee
may require a Paying Agent to pay all money held by it to the Trustee.  The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying
Agent (if other than the Company or

 

12

 

a
Subsidiary) shall have no further liability for the money.  If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
Noteholders all money held by it as Paying Agent.

 

Section 2.5                                      Noteholder Lists.

 

The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders and shall otherwise comply with TIA § 312(a).  If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least ten days before each interest
payment date and at such other times as the Trustee may request in writing a
list, in such form and as of such date as the Trustee may reasonably require,
of the names and addresses of Noteholders.

 

Section 2.6                                      Intentionally Omitted.

 

Section 2.7                                      Mutilated, Destroyed, Lost and
Stolen Notes.

 

If any mutilated Note is surrendered to the Trustee,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.

 

If there shall be delivered to the Company and the
Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any Note and (ii) such security or indemnity as may be 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 Note has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and make available for delivery, in lieu
of any such destroyed, lost or stolen Note, a new Note of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

 

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

 

Upon the issuance of any new Note 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 Note issued pursuant to this Section in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.

 

13

 

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
Notes.

 

Section 2.8                                      Outstanding Notes.

 

The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, those reductions in the amount outstanding on a Global
Note effected by the Trustee in accordance with the provisions hereof and those
described in this Section as not outstanding.

 

If a Note is replaced pursuant to Section 2.7, it
ceases to be outstanding until the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.

 

If the Paying Agent (other than the Company, a
Subsidiary or an Affiliate of any thereof) holds on the Maturity Date
money sufficient to pay such Notes payable on that date, then on and after that
date such Notes cease to be outstanding and interest on them ceases to accrue.

 

A Note does not cease to be outstanding because the
Company or an Affiliate holds the Note.

 

Section 2.9                                      Treasury Notes.

 

In determining whether the Holders of the required
principal amount of Notes have concurred in any request, demand, authorization,
direction, notice, consent or waiver Notes owned by the Company or an Affiliate
shall be disregarded, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver only Notes that the Trustee
knows are so owned shall be so disregarded.

 

Section 2.10                                Temporary Notes.

 

Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall, subject to Section 2.2, (in the
case of original issuance), authenticate temporary Notes upon a Company
Order.  Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall
prepare and the Trustee upon request shall authenticate definitive Notes and
date of maturity in exchange for temporary Notes.  Until so exchanged, temporary securities
shall have the same rights under this Indenture as the definitive Notes.

 

Section 2.11                                Cancellation.

 

The Company at any time may deliver Notes to the
Trustee for cancellation.  The Registrar
and the Paying Agent shall forward to the Trustee any Notes surrendered to them
for

 

14

 

registration
of transfer, exchange or payment.  The
Trustee shall cancel all Notes surrendered for transfer, exchange, payment,
replacement or cancellation and shall destroy such canceled Notes (subject to
the record retention requirement of the Exchange Act) and deliver a
certificate of such destruction to the Company, unless the Company otherwise
directs.  The Company may not issue new
Notes to replace Notes that it has paid or delivered to the Trustee for
cancellation.

 

Section 2.12                                Defaulted Interest.

 

If the Company defaults in a payment of interest on
the Notes, it shall pay the defaulted interest, plus, to the extent permitted
by law, any interest payable on the defaulted interest, to the Persons who are
Noteholders on a subsequent special record date.  The Company shall fix the record date and
payment date.  At least 30 days before
the record date, the Company shall mail to the Trustee and to each Noteholder a
notice that states the record date, the payment date and the amount of interest
to be paid.  The Company may pay
defaulted interest in any other lawful manner.

 

Section 2.13                                Global Notes.

 

2.13.1                  Form of Notes. 
Notes shall be issued in global form substantially in the form of Exhibit A
hereto.

 

2.13.2                  Legend. 
Any Global Note issued hereunder shall bear a legend in substantially
the following form:

 

“THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITARY OR A NOMINEE OF THE DEPOSITARY. 
THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR
ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH A SUCCESSOR
DEPOSITARY.”

 

2.13.3                  Acts of Holders. 
The Depositary, as a Holder, may appoint agents and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a Holder is entitled to give or
take under the Indenture.

 

2.13.4                  Consents, Declaration and Directions. 
Except as provided in Section 2.15, the Company, the Trustee and
any Agent shall treat a person as the Holder of such principal amount of
outstanding Notes represented by a Global Note as shall be specified in a
written statement of the Depositary with respect to such Global Note, for
purposes of obtaining any

 

15

 

consents,
declarations, waivers or directions required to be given by the Holders
pursuant to this Indenture.

 

Section 2.14                                Transfer and Exchange.

 

2.14.1                  Transfer
and Exchange of Global Notes.  A Global Note
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.  All Global Notes will be exchanged by the
Company for Certificated Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by
the Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes
(in whole but not in part) should be exchanged for Certificated Notes and
delivers a written notice to such effect to the Trustee.  Upon the occurrence of either of the
preceding events in (i) or (ii) above, Certificated Notes shall be
issued in such names as the Depositary shall instruct the Trustee.  Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof.  Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.14 or Section 2.7 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note.  A Global Note may not be exchanged for
another Note other than as provided in this Section 2.14.1, however,
beneficial interests in a Global Note may be transferred and exchanged as
provided in Section 2.14.2, 2.14.3, and 2.14.4 hereof.

 

2.14.2                  Transfer
and Exchange of Beneficial Interests in the Global Notes. 
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. 
Beneficial interests in the Restricted Global Notes shall be subject to
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. 
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (a) or (b) below, as applicable,
as well as one or more of the other following subparagraphs, as applicable:

 

(a)                                  Transfer of Beneficial Interests
in the Same Global Note.  Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set forth in the
Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in the
Regulation S Global Note may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).  Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.14.2(a).

 

16

 

(b)                                 All Other Transfers and Exchanges
of Beneficial Interests in Global Notes.  In connection
with all transfers and exchanges of beneficial interests that are not subject
to Section 2.14.2(a) above, the transferor of such beneficial
interest must deliver to the Registrar either (A) (1) a written order
from a participant or an indirect participant in the Depositary given to the
Depositary in accordance with the Applicable Procedures directing the Depositary
to credit or cause to be credited a beneficial interest in another Global Note
in an amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given in accordance with the Applicable Procedures
containing information regarding the participant account to be credited with
such increase or (B) (1) a written order from a participant or an
indirect participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Certificated Note
in an amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Certificated Note shall be
registered to effect the transfer or exchange referred to in (1) above.  Upon consummation of a Registered Exchange
Offer by the Company in accordance with Section 2.14.4 hereof, the
requirements of this Section 2.14.2(b) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Notes.  Upon
satisfaction of all of the requirements for transfer or exchange of beneficial
interests in Global Notes contained in this Indenture and the Notes or
otherwise applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section 2.14.6
hereof.

 

(c)                                  Transfer of Beneficial Interests
to Another Restricted Global Note.  A beneficial
interest in any Restricted Global Note may be transferred to a Person who takes
delivery thereof in the form of a beneficial interest in another Restricted
Global Note if the transfer complies with the requirements of Section 2.14.2(b) above
and the Registrar receives the following:

 

(i)                                     if the transferee will take delivery
in the form of a beneficial interest in the Rule 144A Global Note, then
the transferor must deliver a certificate in the form of Exhibit C hereto;
and

 

(ii)                                  if the transferee will take delivery
in the form of a beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit D hereto.

 

(d)                                 Transfer and Exchange of Beneficial
Interests in a Restricted Global Note for Beneficial Interests in the
Unrestricted Global Note.  A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.14.2(b) above and:

 

17

 

(i)                                     such exchange or transfer is
effected pursuant to the Registered Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the New
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;

 

(ii)                                  such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the Registration Rights
Agreement;

 

(iii)                               such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or

 

(iv)                              the Registrar receives a certificate
and/or any other information reasonably required by and satisfactory to it in
order to ensure compliance with the Securities Act and, if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

If any such transfer is effected pursuant to
subparagraph (ii) or (iv) above at a time when an Unrestricted Global
Note has not yet been issued, the Company shall issue and, upon receipt of a
Company Order in accordance with Section 2.2 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of beneficial interests transferred
pursuant to subparagraph (ii) or (iv) above.

 

Beneficial interests in an Unrestricted Global Note
cannot be exchanged for, or transferred to Persons who take delivery thereof in
the form of, a beneficial interest in a Restricted Global Note.

 

2.14.3                  Transfer
or Exchange of Beneficial Interests for Certificated Notes.

 

(a)                                  Beneficial Interests in
Restricted Global Notes to Restricted Certificated Notes. 
If any holder of a beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Certificated
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Certificated Note, then, upon receipt by
the Registrar of an Opinion of Counsel and/or a certificate and/or any other
information reasonably required by and satisfactory to it in order to ensure
compliance with the Securities Act, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.14.6 hereof, and the Company shall execute and the
Trustee shall authenticate

 

18

 

and
deliver to the Person designated in the instructions a Certificated Note in the
appropriate principal amount.  Any
Certificated Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.14.3 shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the participant or indirect participant in
the Depositary.  The Trustee shall
deliver such Certificated Notes to the Persons in whose names such Notes are so
registered.  Any Certificated Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.14.3(a) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.

 

(b)                                 Beneficial Interests in
Restricted Global Notes to Unrestricted Certificated Notes. 
A holder of a beneficial interest in a Restricted Global Note may
exchange such beneficial interest for an Unrestricted Certificated Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Certificated Note only if:

 

(i)                                     such exchange or transfer is
effected pursuant to the Registered Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such beneficial interest, in
the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the New
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;

 

(ii)                                  such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the Registration Rights
Agreement;

 

(iii)                               such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or

 

(iv)                              the Registrar receives an Opinion of
Counsel and/or a certificate and/or any other information reasonably required
by and satisfactory to it in order to maintain compliance with the Securities
Act and to ensure that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required.

 

(c)                                  Beneficial Interests in
Unrestricted Global Notes to Unrestricted Certificated Notes. 
If any holder of a beneficial interest in an Unrestricted Global Note
proposes to exchange such beneficial interest for a Certificated Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Certificated Note, then, upon satisfaction of the conditions set
forth in Section 2.14.2(b) hereof, the Trustee shall cause the
aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.14.6 hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person designated
in the instructions

 

19

 

a
Certificated Note in the appropriate principal amount.  Any Certificated Note issued in exchange for
a beneficial interest pursuant to this Section 2.14.3(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the participant or
indirect participant in the Depositary. 
The Trustee shall deliver such Certificated Notes to the Persons in
whose names such Notes are so registered. 
Any Certificated Note issued in exchange for a beneficial interest pursuant
to this Section 2.14.3(c) shall not bear the Private Placement
Legend.

 

2.14.4                  Registered
Exchange Offer.  Upon the occurrence of the Registered
Exchange Offer in accordance with the Registration Rights Agreement, the
Company shall issue and, upon receipt of a Company Order in accordance with Section 2.2,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes
in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance by
Persons that certify in the applicable letters of transmittal that (x) they are
not broker-dealers, (y) they are not participating in a distribution of the New
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Registered Exchange Offer and (ii) Certificated
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Certificated Notes accepted for exchange in the Registered Exchange
Offer.  Concurrently with the issuance of
such Notes, the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Notes to be reduced accordingly, and the Company
shall execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Certificated Notes so accepted Unrestricted
Certificated Notes in the appropriate principal amount.

 

2.14.5                  Legends. 
The following legends shall appear on the face of all Global Notes and
Certificated Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.

 

(a)                                  Private Placement Legend.  Except as permitted by subparagraph (b) below,
each Global Note and each Certificated Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in substantially the
following form:

 

“THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTORS (1) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION
COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR

 

20

 

(4) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) BY
SUBSEQUENT INVESTORS, AS SET FORTH IN (A) ABOVE, AND, IN ADDITION, TO AN
INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF
RULE 501 OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND, IN THE CASE OF EACH OF CLAUSES (A) AND
(B), IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS. IN CONNECTION WITH ANY TRANSFER OF THIS
NOTE WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED
PURSUANT TO THE INDENTURE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.”

 

(b)                                 Notwithstanding the foregoing, any
Global Note or Certificated Note issued pursuant to Sections 2.14.2(d),
2.14.3(b), 2.14.3(c), 2.14.4 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.

 

(c)                                  Global Notes Legend. 
Each Global Note shall bear the Global Notes Legend in addition to the
Private Placement Legend.

 

2.14.6                  Cancellation
and/or Adjustment of Global Notes.  At such time
as all beneficial interests in a particular Global Note have been exchanged for
Certificated Notes or a particular Global Note has been redeemed, repurchased
or canceled in whole and not in part, each such Global Note shall be returned
to or retained and canceled by the Trustee in accordance with Section 2.11
hereof.  At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Certificated Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

 

2.14.7                  General
Provisions Relating to Transfers and Exchanges.

 

(a)                                  To permit registrations of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Global Notes and Certificated Notes upon receipt of a Company Order or at the
Registrar’s request.

 

21

 

(b)                                 No service charge shall be made to a
Holder of a beneficial interest in a Global Note or to a Holder of a
Certificated Note for any registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or transfer
pursuant to Sections 2.10, 3.7, and 9.6 hereof).

 

(c)                                  The Registrar shall not be required
to register the transfer of or exchange any Note selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.

 

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

 

(e)                                  Neither the Company nor the
Registrar shall be required (A) to issue, to register the transfer of or
to exchange any Notes during a period beginning at the opening of business 15
days before the day of any selection of Notes for redemption under Section 3.2
hereof and ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part or (C) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.

 

(f)                                    Prior to due presentment for the
registration of a transfer of any Note, the Trustee, any Agent and the Company
may deem and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of principal
of and interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the contrary.

 

(g)                                 The Trustee shall authenticate
Global Notes and Certificated Notes in accordance with the provisions of Section 2.2
hereof.

 

(h)                                 All certifications, certificates and
Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.14
to effect a registration of transfer or exchange may be submitted by facsimile.

 

Section 2.15                                Payments.

 

Notwithstanding the other provisions of this
Indenture, unless otherwise specified, payment of the principal of and
interest, if any, on any Global Note shall be made to the Holder thereof.

 

22

 

Section 2.16                                CUSIP Numbers.

 

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

 

Section 2.17                                Mandatory Disposition of Notes
Pursuant to Gaming Laws.

 

Each Holder and beneficial owner, by accepting or
otherwise acquiring an interest in the Notes, shall be deemed to have agreed
that if the Gaming Authority of any jurisdiction in which the Company or any of
its subsidiaries conducts or proposes to conduct gaming requires that a Person
who is a Holder or beneficial owner must be licensed, qualified or found
suitable under the applicable Gaming Laws, such Holder or beneficial owner
shall apply for a license, qualification or a finding of suitability within the
required time period.  If such Person
fails to apply or become licensed or qualified or is found unsuitable, then the
Company shall have the right, at its option, (i) to require such Person to
dispose of its Notes or beneficial interest therein within 30 days of receipt
of notice of the Company’s election or such earlier date as may be requested or
prescribed by such Gaming Authority or (ii) to redeem such Notes at a
redemption price equal to the lesser of (a) such Person’s cost or (b) 100%
of the principal amount thereof, plus accrued and unpaid interest to the
earlier of the redemption date and the date of the finding of unsuitability,
which may be less than 30 days following the notice of redemption if so
requested or prescribed by the Gaming Authority.  The Company shall notify the Trustee in
writing of any such redemption as soon as practicable.  The Company shall not be responsible for any
costs or expenses any such Holder or beneficial owner may incur in connection
with its application for a license, qualification or a finding of suitability.

 

Section 2.18                                Additional Notes.

 

The Company may, from time to time, subject to
compliance with any other applicable provisions of this Indenture, without the
consent of the Holders, create and issue pursuant to this Indenture Additional
Notes having terms and conditions identical to those of the Initial Notes,
except that Additional Notes:

 

(i)  may have a different issue date from
the Initial Notes;

 

(ii)  may have a different amount of
interest payable than is payable on the Initial Notes;

 

(iii)  may have terms specified in the
Additional Note Board Resolution or Additional Note Supplemental Indenture for
such Additional Notes making appropriate adjustments applicable to such
Additional Notes in order to conform to and ensure compliance with the
Securities Act (or other applicable securities laws) and any

 

23

 

registration rights or
similar agreement applicable to such Additional Notes, which are not adverse in
any material respect to the Holder of any Initial Notes; and

 

(iv)  may be entitled to
additional interest as contemplated in Section 2.19 not applicable to
Initial Notes and may not be entitled to such additional interest applicable to
Initial Notes.

 

Section 2.19                                Additional Interest Under
Registration Rights Agreements.

 

Under certain circumstances, the Company may be
obligated to pay Additional Interest to Holders, all as and to the extent set
forth in the Registration Rights Agreement or any registration rights agreement
applicable to Additional Notes.  The
terms thereof are hereby incorporated herein by reference and such Additional
Interest, if required to be paid, is deemed to be interest for purposes of this
Indenture.

 

ARTICLE III.

REDEMPTION

 

Section 3.1                                      Optional Redemption.

 

The Notes shall not be redeemable at the option of any
Holder thereof, upon the occurrence of any particular circumstances or
otherwise.  The Notes will be redeemable,
as a whole or in part, at the option of the Company, at any time or from time
to time, at a redemption price equal to the greater of (a) 100% of the
principal amount of the Notes to be redeemed and (b) the sum of the
present values of the Remaining Scheduled Payments on such Notes discounted to
the Redemption Date, on a semiannual basis (assuming a 360-day year consisting
of twelve 30-day months) at a rate equal to the sum of the applicable Treasury
Rate plus 35 basis points.  Accrued and
unpaid interest will be paid to the Redemption Date.

 

Section 3.2                                      Notice to Trustee.

 

If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.1, it shall notify the Trustee
of the Redemption Date and the principal amount of Notes to be redeemed.

 

Section 3.3                                      Selection of Notes to be Redeemed.

 

If less than all the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed in any manner that the Trustee
deems fair and appropriate.  The Trustee
shall make the selection from Notes outstanding not previously called for
redemption.  The Trustee may select for
redemption portions of the principal of Notes that have denominations larger
than $1,000.  Notes and portions of them
it selects shall be in amounts of $1,000 or whole multiples of $1,000.

 

24

 

Section 3.4                                      Notice of Redemption.

 

At least 30 days but not more than 60 days before a
redemption date, the Company shall mail a notice of redemption by first-class
mail to each Holder whose Notes are to be redeemed (and provide a copy of such
notice to the Trustee).

 

The notice shall identify the Notes to be redeemed and
shall state:

 

(a)                                  the redemption date;

 

(b)                                 the redemption price;

 

(c)                                  if any Note is being redeemed in
part, the portion of the principal amount of such Note to be redeemed and that
after the Redemption Date upon surrender of such Note a new Note or Notes in
principal amount equal to the unredeemed portion will be issued upon
cancellation of the original Notes;

 

(d)                                 the name and address of the Paying
Agent;

 

(e)                                  that Notes called for redemption
must be surrendered to the Paying Agent to collect the redemption price;

 

(f)                                    that interest on Notes called for
redemption ceases to accrue on and after the redemption date; and

 

(g)                                 that no representation is made as to
the correctness or accuracy of the CUSIP number, if any, listed in such notice
or printed on the Notes.

 

At the Company’s request, the Trustee shall give the
notice of redemption in the Company’s name and at its expense, provided that
the Company makes such request at least two Business Days (or such shorter time
as is reasonably acceptable to the Trustee) prior to the date by which such
notice of redemption must be given to Holders in accordance with this Section 3.4
and provides the Trustee with all information required for such notice of
redemption.

 

Section 3.5                                      Effect of Notice of Redemption.

 

Once notice of redemption is mailed as provided in Section 3.4,
Notes called for redemption become due and payable on the redemption date and
at the redemption price.  A notice of redemption
may not be conditional.  Upon surrender
to the Paying Agent, such Notes shall be paid at the redemption price plus
accrued interest to the redemption date.

 

Section 3.6                                      Deposit of Redemption Price.

 

On or before the redemption date, the Company shall
deposit with the Paying Agent money sufficient to pay the redemption price of
and accrued interest, if any, on all Notes to be redeemed on that date.  If the Company complies with the provisions
of this Section, on and after the Redemption Date, interest will cease to
accrue on the Note or the portions of the Notes called for redemption.

 

25

 

Section 3.7                                      Notes Redeemed in Part.

 

Upon surrender of a Note that is redeemed in part, the
Trustee shall authenticate for the Holder a new Note and the same maturity
equal in principal amount to the unredeemed portion of the Note surrendered.

 

ARTICLE IV.

COVENANTS

 

Section 4.1                                      Payment of Principal and Interest.

 

The Company covenants and agrees for the benefit of
the Holders of the Notes that it will duly and punctually pay the principal of
and interest, if any, on the Notes in accordance with the terms of the Notes
and this Indenture.

 

Section 4.2                                      SEC Reports.

 

The Company shall deliver to the Trustee within 15
days after it files them with the SEC copies of the annual reports and the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to Section 13
or 15(d) of the Exchange Act.  The
Company also shall comply with the other provisions of TIA § 314(a).

 

Section 4.3                                      Compliance Certificate.

 

The Company shall deliver to the Trustee, within 90
days after the end of each fiscal year of the Company, an Officer’s Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his knowledge the Company has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge).

 

The Company will, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officer’s Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.

 

Section 4.4                                      Stay, Extension and Usury Laws.

 

The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in

 

26

 

force,
which may affect the covenants or the performance of this Indenture or the
Notes; and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not, by resort to any such law, 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 has been enacted.

 

Section 4.5                                      Corporate Existence.

 

Subject to Article V hereof, the Company shall do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other
existence of each Significant Subsidiary in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Significant Subsidiary and the rights (charter and statutory), licenses and
franchises of the Company and its Significant Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any Significant
Subsidiary, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries taken as a whole and that the loss thereof is not adverse
in any material respect to the Holders.

 

Section 4.6                                      Taxes.

 

The Company shall, and shall cause each of its
Significant Subsidiaries to, pay prior to delinquency all material taxes,
assessments and governmental levies, except as contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holder of the Notes.

 

Section 4.7                                      Limitation on Liens.

 

Neither the Company nor any of its Subsidiaries may
issue, assume or guarantee any Indebtedness secured by a Lien upon any
Consolidated Property or on any Indebtedness or shares of capital stock of, or
other ownership interests in, any Subsidiaries (regardless of whether the
Consolidated Property, Indebtedness, capital stock or ownership interests were
acquired before or after the date of the Indenture) without effectively
providing that the Notes shall be secured equally and ratably with (or prior
to) such Indebtedness so long as such Indebtedness shall be so secured, except
that this restriction will not apply to: (a) Liens existing on the date of
original issuance of the Notes; (b) Liens affecting property of a
corporation or other entity existing at the time it becomes a Subsidiary of the
Company or at the time it is merged into or consolidated with the Company or a
Subsidiary of the Company; (c) Liens on property existing at the time of
acquisition thereof or to secure Indebtedness incurred prior to, at the time
of, or within 24 months after the acquisition for the purpose of financing all
or part of the purchase price thereof; (d) Liens on any property to secure
all or part of the cost of improvements or construction thereon or Indebtedness
incurred to provide funds for such purpose in a principal amount not exceeding
the cost of such improvements or construction; (e) Liens which secure
Indebtedness owing by a Subsidiary of the Company to the Company or to another
Subsidiary of the Company; (f) Liens securing Indebtedness of the Company
the proceeds of which are used substantially simultaneously with the incurrence
of such Indebtedness to retire Funded Debt; (g)

 

27

 

purchase
money security Liens on personal property; (h) Liens securing Indebtedness
of the Company or any of its Subsidiaries the proceeds of which are used within
24 months of the incurrence of such Indebtedness for the cost of the
construction and development or improvement of property of the Company or any
of its Subsidiaries; (i) Liens on the stock, partnership or other equity
interest of the Company or any of its Subsidiaries in any Joint Venture or any
such Subsidiary which owns an equity interest in such Joint Venture to secure
Indebtedness, provided the amount of such Indebtedness is contributed
and/or advanced solely to such Joint Venture; (j) Liens to government entities,
including pollution control or industrial revenue bond financing; (k) Liens
required by any contract or statute in order to permit the Company or a
Subsidiary of the Company to perform any contract or subcontract made by it
with or at the request of a governmental entity; (l) mechanic’s, materialman’s,
carrier’s or other like Liens, arising in the ordinary course of business; (m)
Liens for taxes or assessments and similar charges; (n) zoning restrictions,
easements, licenses, covenants, reservations, restrictions on the use of real
property and certain other minor irregularities of title; and (o) any
extension, renewal, replacement or refinancing of any Indebtedness secured by a
Lien permitted by any of the foregoing clauses (a) through (n).  Notwithstanding the foregoing, the Company
and any one or more of its Subsidiaries may, without securing the Notes, issue,
assume or guarantee Indebtedness which would otherwise be subject to the
foregoing restrictions in an aggregate principal amount which, together with
all other such Indebtedness of the Company and its Subsidiaries which would
otherwise be subject to the foregoing restrictions (not including Indebtedness
permitted by the preceding paragraph) and the aggregate Value of Sale and
Lease-Back Transactions (other than those in connection with which the Company
has voluntarily retired Funded Debt), does not at any one time exceed 15% of
Consolidated Net Tangible Assets of the Company and its consolidated
Subsidiaries.

 

Section 4.8                                      Limitation on Sale and Lease-Back
Transactions.

 

Neither the Company nor any of its Subsidiaries shall
enter into any Sale and Lease-Back Transaction unless either (a) the
Company or such Subsidiary would be entitled, pursuant to the above provisions,
to incur Indebtedness in a principal amount equal to or exceeding the Value of
such Sale and Lease-Back Transaction, secured by a Lien on the property to be
leased, without equally and ratably securing the Notes or (b) the Company
within 120 days after the effective date of such Sale and Lease-Back
Transaction applies to the voluntary retirement of its Funded Debt an amount
equal to the Value of the Sale and Lease-Back Transaction (subject to credits
for certain voluntary retirements of Funded Debt).

 

ARTICLE V.

SUCCESSORS

 

Section 5.1                                      When Company May Merge, Etc.

 

The Company shall not consolidate with or merge with
or into any other Person or, directly or indirectly, sell, lease or convey all
or substantially all of its assets to another Person, and may not permit any
Person to, directly or indirectly, sell, lease or convey all or substantially
all of its assets to the Company, whether in a single transaction or a series of
related transactions, unless:

 

28

 

(a)                                  either the Company shall be the
continuing person, or the Person (if other than the Company) formed by such
consolidation or into or with which the Company is merged or to which the
assets of the Company are transferred shall be a corporation organized and
validly existing under the laws of the United States or any State thereof or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company on the Notes
and under this Indenture;

 

(b)                                 immediately after giving effect to
such transaction, no Event of Default, and no event or condition which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and

 

(c)                                  the Company has delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, sale, conveyance or lease and such supplemental
indenture comply with this Section 5.1 and that all conditions precedent
herein provided for relating to such transaction have been complied with.

 

Section 5.2                                      Successor Corporation Substituted.

 

Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company in accordance with Section 5.1, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, lease, conveyance or other disposition is made shall succeed
to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the “Company” shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor person has been named as the Company herein; provided, however,
that the predecessor Company in the case of a sale, lease, conveyance or other
disposition shall not be released from the obligation to pay the principal of
and interest, if any, on the Notes.

 

ARTICLE VI.

DEFAULTS AND REMEDIES

 

Section 6.1                                      Events of Default.

 

“Event of Default,” wherever used herein with
respect to the Notes, means any one of the following events:

 

(a)                                  default in the payment of any
interest on any Note when it becomes due and payable, and continuance of such
default for a period of 30 days (unless the entire amount of such payment is
deposited by the Company with the Trustee or with a Paying Agent prior to the
expiration of such period of 30 days); or

 

29

 

(b)                                 default in the payment of the
principal of any Note at its Maturity, upon redemption or otherwise; or

 

(c)                                  default in the performance or breach
of any covenant or warranty of the Company or the Guarantor in this Indenture,
which default continues uncured for a period of 60 days after there has been
given, by registered or certified mail, to the Company or the 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 Notes (including Additional
Notes, if any) 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

 

(d)                                 the acceleration of the maturity of
any Indebtedness of the Company (other than Non-recourse Indebtedness), at any
one time, in an amount in excess of the greater of (i) $25 million and (ii) 5%
of Consolidated Net Tangible Assets, if such acceleration is not annulled
within 30 days after written notice to the Company by the Trustee and the
Holders of at least 25% in principal amount of the outstanding Notes (including
Additional Notes, if any); or

 

(e)                                  the Company or any of its
Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy
Law:

 

(i)                                     commences a voluntary case,

 

(ii)                                  consents to the entry of an order
for relief against it in an involuntary case,

 

(iii)                               consents to the appointment of a
Custodian of it or for all or substantially all of its property,

 

(iv)                              makes a general assignment for the
benefit of its creditors, or

 

(v)                                 generally is not paying its debts as
the same become due; or

 

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

 

(i)                                     is for relief against the Company or
any of its Significant Subsidiaries in an involuntary case,

 

(ii)                                  appoints a Custodian of the Company
or any of its Significant Subsidiaries or for all or substantially all of its
property, or

 

(iii)                               orders the liquidation of the
Company or any of its Significant Subsidiaries, and the order or decree remains
unstayed and in effect for 60 consecutive days.

 

30

 

The term “Bankruptcy Law” means Title 11, U.S.
Code or any similar Federal or State law for the relief of debtors.  The term “Custodian” means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.

 

Section 6.2                                      Acceleration of Maturity; Rescission
and Annulment.

 

If an Event of Default with respect to the Notes at
the time outstanding occurs and is continuing (other than an Event of Default
referred to in Section 6.1(e) or (f)) then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
outstanding Notes (including Additional Notes, if any) may declare the
principal amount of and accrued and unpaid interest, if any, on all of the
Notes to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) and accrued and unpaid interest, if
any, shall become immediately due and payable. 
If an Event of Default specified in Section 6.1(e) or (f) shall
occur, the principal amount (or specified amount) of and accrued and
unpaid interest, if any, on all outstanding Notes 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.

 

At any time after such a declaration of acceleration
with respect to the Notes 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 aggregate principal
amount of the then outstanding Notes, by written notice to the Company and the
Trustee, may, on behalf of all the Holders, rescind and annul such declaration
and its consequences if:

 

(a)                                  the Company has paid or deposited
with the Trustee a sum sufficient to pay

 

(i)                                     all overdue interest, if any, on all
Notes,

 

(ii)                                  the principal of any Notes which
have become due otherwise than by such declaration of acceleration and interest
thereon,

 

(iii)                               to the extent that payment of such
interest is lawful, interest upon any overdue principal and overdue interest at
the rate or rates prescribed therefor in such Notes, and

 

(iv)                              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

 

(b)                                 all Events of Default with respect to
the Notes, other than the non-payment of the principal of the Notes which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.13.

 

31

 

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

 

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

 

The Company covenants that if:

 

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

 

(b)                                 default is made in the payment of
principal of any Note at the Maturity thereof,

 

then, the Company will, upon
demand of the Trustee, pay to it, for the benefit of the Holders of the Notes,
the whole amount then due and payable on the Notes for principal and interest
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal or any overdue interest, at the rate or rates
prescribed therefor in the Notes, 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, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon such Notes
and collect the moneys adjudged or deemed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the Notes,
wherever situated.

 

If an Event of Default with respect to any Note occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of the Notes 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 6.4                                      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 or any other
obligor upon the Notes or the property of the Company or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of the
Notes 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 for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,

 

32

 

(a)                                  to file and prove a claim for the
whole amount of principal and interest owing and unpaid in respect of the Notes
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

 

(b)                                 to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same,

 

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.

 

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

 

Section 6.5                                      Trustee May Enforce Claims
Without Possession of Notes.

 

All rights of action and claims under this Indenture
or the Notes may be prosecuted and enforced by the Trustee without the
possession of any of the Notes or the production thereof in any proceeding
relating thereto, and any such proceeding 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 Notes in respect of which such
judgment has been recovered.

 

Section 6.6                                      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
interest, upon presentation of the Notes 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 under Section 7.7; and

 

Second:     To
the payment of the amounts then due and unpaid for principal of and interest on
the Notes 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 amounts due and payable on such Notes for principal and interest,
respectively; and

 

33

 

Third:                                                                To
the Company.

 

Section 6.7                                      Limitation on Suits.

 

No Holder of any Note 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

 

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

 

(b)                                 the Holders of not less than 25% in
principal amount of the outstanding Notes 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;

 

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

 

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

 

(e)                                  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 Notes;

 

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 6.8                                      Unconditional Right of Holders to
Receive Principal and Interest.

 

Notwithstanding any other provision in this Indenture,
the Holder of any Notes shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
the Notes on the Stated Maturity (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.

 

Section 6.9                                      Restoration of Rights and Remedies.

 

If the Trustee or any Holder 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, subject to any determination in such proceeding, the Company, the Trustee
and the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all

 

34

 

rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

 

Section 6.10                                Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.7,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

 

Section 6.11                                Delay or Omission Not Waiver.

 

No delay or omission of the Trustee or of any Holder
of any Notes 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, as the case may be.

 

Section 6.12                                Control by Holders.

 

The Holders of a majority in principal amount of the
outstanding Notes 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
Notes, provided that:

 

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

 

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

 

(c)                                  subject to the provisions of Section 6.1,
the Trustee shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer of the Trustee, determine
that the proceeding so directed would involve the Trustee in personal
liability, cost or expense.

 

Section 6.13                                Waiver of Past Defaults.

 

The Holders of not less than a majority in principal
amount of the outstanding Notes may on behalf of the Holders of all the Notes
waive any past Default hereunder with respect to the Notes and its
consequences, except a Default in the payment of the principal of or

 

35

 

interest
on any Notes (provided, however, that the Holders of a majority
in principal amount of the outstanding Notes may rescind an acceleration and
its consequences, including any related payment default that resulted from such
acceleration).  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 impair any right
consequent thereon.

 

Section 6.14                                Undertaking for Costs.

 

All parties to this Indenture agree, and each Holder
of any Notes 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, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, 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 Notes, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
or interest on any Notes on or after the Stated Maturity or Stated Maturities
expressed in such Note (or, in the case of redemption, on the redemption date).

 

ARTICLE VII.

TRUSTEE

 

Section 7.1                                      Duties of Trustee.

 

(a)                                  If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
as a prudent Person would exercise or use under the circumstances in the
conduct of such Person’s own affairs.

 

(b)                                 Except during the continuance of an
Event of Default:

 

(i)                                     The Trustee need perform only those
duties that are specifically set forth in this Indenture and no others.

 

(ii)                                  In the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon Officer’s Certificates
or Opinions of Counsel furnished to the Trustee and conforming to the
requirements of this Indenture; however, in the case of any such Officer’s
Certificates or Opinions of Counsel which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall examine
such

 

36

 

Officer’s
Certificates and Opinions of Counsel to determine whether or not they conform
to the requirements of this Indenture.

 

(c)                                  The Trustee may not be relieved from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:

 

(i)                                     This paragraph does not limit the
effect of paragraph (b) of this Section.

 

(ii)                                  The Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts.

 

(iii)                               The Trustee shall not be liable with
respect to any action taken, suffered or omitted to be taken by it with respect
to the Notes in good faith in accordance with the direction of the Holders of a
majority in principal amount of the outstanding Notes relating to the time,
method and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Notes.

 

(d)                                 Every provision of this Indenture
that in any way relates to the Trustee is subject to paragraph (a), (b) and
(c) of this Section.

 

(e)                                  The Trustee may refuse to perform
any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.

 

(f)                                    The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree in writing
with the Company.  Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.

 

(g)                                 No provision of this Indenture shall
require the Trustee to risk its own funds or otherwise incur any financial
liability in the performance of any of its duties, 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 is not reasonably
assured to it.

 

(h)                                 The Paying Agent, the Registrar and
any authenticating agent shall be entitled to the protections, immunities and
standard of care as are set forth in paragraphs (a), (b) and (c) of
this Section with respect to the Trustee.

 

Section 7.2                                      Rights of Trustee.

 

(a)                                  The Trustee may rely on and shall be
protected in acting or refraining from acting upon any document believed by it
to be genuine and to have been signed or

 

37

 

presented
by the proper Person.  The Trustee need
not investigate any fact or matter stated in the document.

 

(b)                                 Before the Trustee acts or refrains
from acting, it may require an Officer’s Certificate or an Opinion of
Counsel.  The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officer’s Certificate or Opinion of Counsel.

 

(c)                                  The Trustee may act through agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.  No Depositary
shall be deemed an agent of the Trustee and the Trustee shall not be
responsible for any act or omission by any Depositary.

 

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

 

(e)                                  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.

 

(f)                                    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 Notes unless
such Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.

 

(g)                                 The Trustee shall be entitled to
rely on faxed or telecopy documents in the same manner and to the same extent
that it may rely on original, manually signed documents.

 

(h)                                 Except with respect to Section 4.1,
the Trustee shall have no duty to inquire as to the performance of the Company
with respect to the covenants contained in Article 4.  In addition, the Trustee shall not be deemed
to have notice of any Default or Event of Default unless (i) any Default
or Event of Default has occurred pursuant to Sections 4.1, 6.1(a) or
6.1(b), (ii) a trust officer of the Trustee has actual knowledge thereof
or (iii) written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office, and such notice
references the Notes and this Indenture.

 

(i)                                     Delivery of reports, information and
documents to the Trustee under Section 4.2 is for informational purposes
only and the Trustee’s receipt of the foregoing shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
their covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officer’s Certificates).

 

38

 

Section 7.3                                      Individual Rights of Trustee.

 

The Trustee in its individual or any other capacity
may become the owner or pledgee of Notes and may otherwise deal with the
Company or an Affiliate of the Company with the same rights it would have if it
were not Trustee.  Any Agent may do the same
with like rights.  The Trustee is also
subject to Sections 7.10 and 7.11.

 

Section 7.4                                      Trustee’s Disclaimer.

 

The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Notes, it shall not be accountable for the
Company’s use of the proceeds from the Notes, and it shall not be responsible
for any statement in the Notes other than its authentication.

 

Section 7.5                                      Notice of Defaults.

 

If a Default or Event of Default occurs and is
continuing with respect to the Notes and if it is known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Noteholder, notice of a
Default or Event of Default within 90 days after it occurs or, if later, after
a Responsible Officer of the Trustee has knowledge of such Default or Event of
Default.  Except in the case of a Default
or Event of Default in payment of principal of or interest on the Notes, the
Trustee may withhold the notice if and so long as its corporate trust committee
or a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.

 

Section 7.6                                      Reports by Trustee to Holders.

 

Within 60 days after May 15 in each year, the
Trustee shall transmit by mail to all Noteholders, as their names and addresses
appear on the register kept by the Registrar, a brief report dated as of such May 15,
in accordance with, and to the extent required under, TIA § 313.

 

A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Notes are listed.  The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.

 

Section 7.7                                      Compensation and Indemnity.

 

The Company shall pay to the Trustee from time to time
reasonable compensation for its services as shall be agreed upon pursuant to a
separate agreement dated not later than the date hereof.  The Trustee’s compensation shall not be
limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it.  Such expenses shall include the reasonable
compensation and expenses of the Trustee’s agents and counsel.

 

The Company shall indemnify the Trustee (including the
cost of defending itself) against any loss, liability or expense incurred by it
except as set forth in the next paragraph in the

 

39

 

performance
of its duties under this Indenture as Trustee or Agent.  The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. 
The Company shall defend the claim and the Trustee shall cooperate in
the defense.  The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel.  The Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.  This
indemnification shall apply to officers, directors, employees, shareholders and
agents of the Trustee.

 

The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the Trustee or by any
officer, director, employee, shareholder or agent of the Trustee through gross
negligence or bad faith.

 

To secure the Company’s payment obligations in this
Section, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes.

 

When
the Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

 

The
obligations of the Company pursuant to this Section 7.7 shall survive the
resignation or removal of the Trustee and the termination of this Indenture.

 

Section 7.8                                      Replacement of Trustee.

 

A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee’s acceptance of appointment as provided in this Section.

 

The Trustee may resign with respect to the Notes by so
notifying the Company.  The Holders of a
majority in principal amount of the Notes may remove the Trustee with respect
to the Notes by so notifying the Trustee and the Company.  The Company may remove the Trustee with
respect to Notes if:

 

(a)                                  the Trustee fails to comply with Section 7.10;

 

(b)                                 the Trustee is adjudged a bankrupt
or an insolvent or an order for relief is entered with respect to the Trustee
under any Bankruptcy Law;

 

(c)                                  a Custodian or public officer takes
charge of the Trustee or its property; or

 

(d)                                 the Trustee becomes incapable of
acting.

 

If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee.  Within one
year after the successor Trustee takes office, the Holders of a majority in
principal amount of the then

 

40

 

outstanding
Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.

 

If a successor Trustee with respect to the Notes does
not take office within 60 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the Notes may petition any court of competent jurisdiction
for the appointment of a successor Trustee.

 

If the Trustee with respect to the Notes fails to
comply with Section 7.10, any Noteholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

 

A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.  Immediately after that, the retiring Trustee
shall transfer all property held by it as Trustee to the successor Trustee
subject to the lien provided for in Section 7.7, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with
respect to the Notes.  A successor
Trustee shall mail a notice of its succession to each Noteholder.  Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company’s obligations under Section 7.7
hereof shall continue for the benefit of the retiring trustee with respect to
expenses and liabilities incurred by it prior to such replacement.

 

Section 7.9                                      Successor Trustee by Merger, etc.

 

If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Trustee.

 

Section 7.10                                Eligibility; Disqualification.

 

This Indenture shall always have a Trustee who
satisfies the requirements of TIA § 310(a)(1), (2) and (5).  The Trustee shall always have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. 
The Trustee shall comply with TIA § 310(b).

 

Section 7.11                                Preferential Collection of Claims
Against Company.

 

The Trustee is subject to TIA §  311(a),
excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated
therein.

 

41

 

ARTICLE VIII.

SATISFACTION AND DISCHARGE; DEFEASANCE

 

Section 8.1                                      Satisfaction and Discharge of
Indenture.

 

This Indenture shall upon Company Order cease to be of
further effect (except as hereinafter provided in this Section 8.1), and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when

 

(a)                                  either

 

(i)                                     all Notes theretofore authenticated
and delivered (other than Notes that have been destroyed, lost or stolen and
that have been replaced or paid) have been delivered to the Trustee for
cancellation; or

 

(ii)                                  all such Notes not theretofore
delivered to the Trustee for cancellation

 

(1)                            have
become due and payable, or

 

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

 

(3)                            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, or

 

(4)                            are
deemed paid and discharged pursuant to Section 8.3, as applicable;

 

and the Company, in the case of (1), (2) or (3) above,
has deposited or caused to be deposited with the Trustee as trust funds in
trust an amount sufficient for the purpose of paying and discharging the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal and interest to the date of such deposit (in the case
of Notes which have become due and payable on or prior to the date of such
deposit) or to the Stated Maturity or redemption date, as the case may be;

 

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

 

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

 

Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 7.7,
and, if money shall have been deposited with the Trustee pursuant to clause (a) of
this Section, the provisions of Sections 2.3, 2.7, 2.14, 8.1,  8.2
and 8.5 shall survive.

 

42

 

Section 8.2                                      Application of Trust Funds;
Indemnification.

 

(a)                                  Subject to the provisions of Section 8.5,
all money deposited with the Trustee pursuant to Section 8.1, all money
and U.S. Government Obligations or Foreign Government Obligations deposited
with the Trustee pursuant to Section 8.3 or 8.4 and all money received by
the Trustee in respect of U.S. Government Obligations or Foreign Government
Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4,
shall be held in trust and applied by it, in accordance with the provisions of
the Notes 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
interest for whose payment such money has been deposited with or received by
the Trustee or to make payments as contemplated by Sections 8.3 or 8.4.

 

(b)                                 The Company shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations or Foreign Government Obligations
deposited pursuant to Sections 8.3 or 8.4 or the interest and principal
received in respect of such obligations other than any payable by or on behalf
of Holders.

 

(c)                                  The Trustee shall deliver or pay to
the Company from time to time upon Company Request any U.S. Government
Obligations or Foreign Government Obligations or money held by it as provided
in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, are then in excess of the amount thereof
which then would have been required to be deposited for the purpose for which
such U.S. Government Obligations or Foreign Government Obligations or money
were deposited or received.  This
provision shall not authorize the sale by the Trustee of any U.S. Government
Obligations or Foreign Government Obligations held under this Indenture.

 

Section 8.3                                      Legal Defeasance of Notes.

 

The Company shall be deemed to have paid and
discharged the entire indebtedness on all the outstanding Notes on the 91st day
after the date of the deposit referred to in subparagraph (d) hereof, and
the provisions of this Indenture, as it relates to such outstanding Notes,
shall no longer be in effect (and the Trustee, at the expense of the Company,
shall, at Company Request, execute proper instruments acknowledging the same),
except as to:

 

(a)                                  the rights of Noteholders to
receive, from the trust funds described in subparagraph (d) hereof,
payment of the principal of and each installment of principal of and interest
on the outstanding Notes on the Stated Maturity of such principal or
installment of principal or interest;

 

(b)                                 the provisions of Sections 2.3, 2.7,
2.14, 8.2, 8.3 and 8.5; and

 

(c)                                  the rights, powers, trust and
immunities of the Trustee hereunder;

 

43

 

provided that, the following
conditions shall have been satisfied:

 

(d)                                 the Company shall have deposited or
caused to be deposited irrevocably with the 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 Noteholders, cash in Dollars (or
such other money or currencies as shall then be legal tender in the United
States) and/or U.S. Government Obligations, which through the payment of
interest and principal in respect thereof, in accordance with their terms, will
provide (and without reinvestment and assuming no tax liability will be imposed
on such Trustee), not later than one day before the due date of any payment of
money, an amount in cash, sufficient, 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 each installment of
principal of and interest, if any, on all the Notes on the dates such
installments of interest or principal are due;

 

(e)                                  such deposit will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Company is a party or by which it is
bound;

 

(f)                                    no Default or Event of Default with
respect to the Notes shall have occurred and be continuing on the date of such
deposit or during the period ending on the 91st day after such date;

 

(g)                                 the Company shall have delivered to
the Trustee an Officer’s Certificate and an Opinion of Counsel to the effect
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 of
Counsel shall confirm that, the Holders of the Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such deposit, defeasance and discharge had not occurred;

 

(h)                                 the Company shall have delivered to
the Trustee an Officer’s Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders of the Notes over any
other creditors of the company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company;

 

(i)                                     such deposit shall not result in the
trust arising from such deposit constituting an investment company (as defined
in the Investment Company Act of 1940, as amended), or such trust shall be
qualified under such Act or exempt from regulation thereunder; and

 

44

 

(j)                                     the Company shall have delivered to
the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for relating to the defeasance
contemplated by this Section have been complied with.

 

Section 8.4                                      Covenant Defeasance.

 

On and after the 91st day after the date of the
deposit referred to in subparagraph (a) hereof, the Company may omit to
comply with any term, provision or condition set forth under Sections 4.2, 4.3,
4.4, 4.5, 4.6, 4.7, 4.8 and 5.1 (and the failure to comply with any such
covenants shall not constitute a Default or Event of Default under Section 6.1) and
the occurrence of any event described in clause (e) of Section 6.1
shall not constitute a Default or Event of Default hereunder, with respect to
the Notes, provided that the following conditions shall have been satisfied:

 

(a)                                  With reference to this Section 8.4,
the Company has deposited or caused to be irrevocably deposited (except as
provided in Section 8.2(c)) with the Trustee as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the benefit of
the Noteholders, cash in Dollars (or such other money or currencies as shall
then be legal tender in the United States) and/or U.S. Government
Obligations, which through the payment of interest and principal in respect
thereof, in accordance with their terms, will provide (and without reinvestment
and assuming no tax liability will be imposed on such Trustee), not later than
one day before the due date of any payment of money, an amount in cash,
sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants expressed in a written certification thereof
delivered to the Trustee, to pay principal and interest, if any, on the Notes
on the dates such installments of interest or principal are due;

 

(b)                                 Such deposit will not result in a
breach or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Company is a party or by which it is
bound;

 

(c)                                  No Default or Event of Default with
respect to the Notes shall have occurred and be continuing on the date of such
deposit or during the period ending on the 91st day after such date;

 

(d)                                 the Company shall have delivered to
the Trustee an Opinion of Counsel confirming that Holders of the Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and 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 deposit and defeasance had not occurred;

 

(e)                                  the Company shall have delivered to
the Trustee an Officer’s Certificate stating the deposit was not made by the
Company with the intent of preferring the Holders of the Notes over any other
creditors of the Company or with the intent of defeating, hindering, delaying
or defrauding any other creditors of the Company; and

 

45

 

(f)                                    The Company shall have delivered to
the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating
that all conditions precedent herein provided for relating to the defeasance
contemplated by this Section have been complied with.

 

Section 8.5                                      Repayment to Company.

 

The Trustee and the Paying Agent shall pay to the
Company upon request any money held by them for the payment of principal and
interest that remains unclaimed for two years. 
After that, Noteholders entitled to the money must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another Person.

 

ARTICLE IX.

AMENDMENTS AND WAIVERS

 

Section 9.1                                      Without Consent of Holders.

 

The Company and the Trustee may amend or supplement
this Indenture or the Notes without the consent of any Noteholder:

 

(a)                                  to cure any ambiguity, defect or
inconsistency;

 

(b)                                 to comply with Article V;

 

(c)                                  to make any change that does not
adversely affect the rights of any Noteholder;

 

(d)                                 to provide for the issuance of
Additional Notes as permitted by this Indenture; or

 

(e)                                  to comply with requirements of the
SEC in order to effect or maintain the qualification of this Indenture under
the TIA.

 

The Company may also provide for the issuance of New
Notes, which will have terms substantially identical to the other outstanding
Notes except that (i) a Private Placement Legend shall not be required and
(ii) the related transfer restrictions under the Securities Act and this
Indenture and the payment of Additional Interest shall not be applicable to
such New Notes.  The New Notes shall be
treated, together with any outstanding Notes, as a single issue of securities.

 

Section 9.2                                      With Consent of Holders.

 

The Company and the Trustee may enter into a
supplemental indenture with the written consent of the Holders of at least a
majority in principal amount of the outstanding Notes affected by such
supplemental indenture (including consents obtained in connection with a tender
offer or exchange offer for the Notes), for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Noteholders.  Except as

 

46

 

provided
in Section 6.13, the Holders of at least a majority in principal amount of
the outstanding Notes by notice to the Trustee (including consents obtained in
connection with a tender offer or exchange offer for the Notes) may waive
compliance by the Company with any provision of this Indenture or the Notes.

 

It shall not be necessary for the consent of the
Noteholders under this Section 9.2 to approve the particular form of any
proposed supplemental indenture or waiver, but it shall be sufficient if such
consent approves the substance thereof. 
After a supplemental indenture or waiver under this Article becomes
effective, the Company shall mail to the Noteholders a notice briefly
describing the supplemental indenture or waiver.  Any failure by the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or waiver.

 

Section 9.3                                      Limitations.

 

Without the consent of each Noteholder affected, an
amendment or waiver may not:

 

(a)                                  reduce the amount of Notes whose
Holders must consent to an amendment, supplement or waiver;

 

(b)                                 reduce the rate of or extend the time
for payment of interest (including default interest) on the Notes;

 

(c)                                  reduce the principal or change the
Stated Maturity of the Notes or reduce the amount of, or postpone the date
fixed for, redemption;

 

(d)                                 reduce the principal amount of
discount securities payable upon acceleration of Maturity;

 

(e)                                  waive a Default or Event of Default
in the payment of the principal of or interest, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);

 

(f)                                    make the principal of or interest,
if any, on the Notes payable in any currency other than that stated in the
Note; or

 

(g)                                 make any change in Sections 6.8,
6.13, 9.3 (this sentence), or 10.15.

 

Section 9.4                                      Compliance with Trust Indenture Act.

 

Every amendment to this Indenture or the Notes shall
be set forth in a supplemental indenture hereto that complies with the TIA as
then in effect.

 

47

 

Section 9.5                                      Revocation and Effect of Consents.

 

Until an amendment or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder’s Note, even if notation of the consent is not
made on any Note.  However, any such
Holder or subsequent Holder may revoke the consent as to his Note or portion of
a Note if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective.

 

Any amendment or waiver once effective shall bind
every Noteholder unless it is of the type described in any of clauses (a) through
(f) of Section 9.3.  In that
case, the amendment or waiver shall bind each Holder of a Note who has
consented to it and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder’s Note.

 

Section 9.6                                      Notation on or Exchange of Notes.

 

The Trustee may place an appropriate notation about an
amendment or waiver on any Notes thereafter authenticated.  The Company in exchange for Notes may issue
and the Trustee shall authenticate upon request new Notes that reflect the amendment
or waiver.

 

Section 9.7                                      Trustee Protected.

 

In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 7.1) shall be fully
protected in relying upon, an Officer’s Certificate and an Opinion of Counsel
each stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture.  The Trustee
shall sign all supplemental indentures, except that the Trustee need not sign
any supplemental indenture that adversely affects its rights.

 

ARTICLE X.

MISCELLANEOUS

 

Section 10.1                                Trust Indenture Act Controls.

 

If any provision of this Indenture limits, qualifies,
or conflicts with another provision which is required or deemed to be included
in this Indenture by the TIA, such required or deemed provision shall control.

 

Section 10.2                                Notices.

 

Any notice or communication by the Company or the Trustee
to the other is duly given if in writing and delivered in person or mailed by
first-class mail, telecopier or overnight air carrier guaranteeing next day
delivery:

 

48

 

if to the Company:

 

Harrah’s Operating
Company, Inc.

One Harrah’s Court

Las Vegas,
Nevada  89119

Telecopier No.: (702) 407-6022

Attention:  General Counsel

 

with a copy to:

 

Latham &
Watkins LLP

650 Town Center Dr.

20th Floor

Costa Mesa, California 92626

Telecopier No.:  (714) 755-8290

Attention:  Charles Ruck, Esq.

 

if to the Trustee:                                                                                                                                                        

U.S. Bank National Association 

60 Livingston Avenue

St. Paul, Minnesota 55107

Telecopier No.: (651) 495-8097

Attention: Corporate Trust Services

 

All notices and communications (other than those sent
to Holders) will be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.

 

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

 

Any notice or communication to a Noteholder shall be
mailed by first-class mail overnight air courier guaranteeing next day delivery
to the Noteholder’s address shown on the register kept by the Registrar.  Failure to mail a notice or communication to
a Noteholder or any defect in it shall not affect its sufficiency with respect
to other Noteholders.

 

If a notice or communication is mailed in the manner
provided above, within the time prescribed, it is duly given, whether or not
the Noteholder receives it.

 

If the Company mails a notice or communication to
Noteholders, it shall mail a copy to the Trustee and each Agent at the same
time.

 

49

 

Section 10.3                                Communication by Holders with Other
Holders.

 

Noteholders may communicate pursuant to TIA § 312(b) with
other Noteholders with respect to their rights under this Indenture or the
Notes.  The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA § 312(c).

 

Section 10.4                                Certificate and Opinion as to
Conditions Precedent.

 

Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall furnish to
the Trustee:

 

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

 

(b)                                 an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been
complied with.

 

Section 10.5                                Statements Required in Certificate
or Opinion.

 

Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA § 314(a)(4)) shall comply with
the provisions of TIA § 314(e) and shall include:

 

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

 

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

 

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

 

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

 

Section 10.6                                Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for action
by or a meeting of Noteholders.  Any
Agent may make reasonable rules and set reasonable requirements for its
functions.

 

Section 10.7                                Legal Holidays.

 

A “Legal Holiday” is any day that is not a Business
Day.  If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.

 

50

 

Section 10.8                                No Recourse Against Others.

 

A past, present or future director, officer, employee,
incorporator or stockholder, as such, of the Company, the Guarantor, or any of
their Affiliates or successor corporations shall not have any liability for any
obligations of the Company or the Guarantor under the Notes or the Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation.  Each Noteholder by accepting a
Note waives and releases all such liability. 
The waiver and release are part of the consideration for the issue of
the Notes.

 

Section 10.9                                Counterparts.

 

This Indenture may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

Section 10.10                          Governing Laws.

 

This
Indenture and the Notes shall be governed by the law of the State of New York
without regard to the conflict of law principles that would result in the application
of any law other than the law of the State of New York.

 

Section 10.11                          No Adverse Interpretation of Other
Agreements.

 

This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary.  Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.

 

Section 10.12                          Successors.

 

All agreements of the Company in this Indenture and
the Notes shall bind its successor.  All
agreements of the Trustee in this Indenture shall bind its successor.

 

Section 10.13                          Severability.

 

In case any provision in this Indenture or in the
Notes 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 10.14                          Table of Contents, Headings, Etc.

 

The Table of Contents, Cross-Reference Table, and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.

 

51

 

Section 10.15                          Judgment Currency.

 

The Company agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of or interest or other amount on the Notes (the “Required
Currency”) into a currency in which a 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 day on
which final unappealable judgment is entered, unless such day is not a New York
Banking Day, then, 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 final unappealable judgment is
entered and (b) its obligations under this Indenture to make payments in
the Required Currency (i) shall not be discharged or satisfied by any
tender, any recovery pursuant to any judgment (whether or not entered in
accordance with subsection (a)), in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in the
actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture.  For purposes of the foregoing, “New York Banking
Day” means any day except a Saturday, Sunday or a legal holiday in The City
of New York on which banking institutions are authorized or required by law,
regulation or executive order to close.

 

ARTICLE XI.

SINKING FUNDS

 

Section 11.1                                No Sinking Funds.

 

The Notes shall not be entitled to the benefit of any
sinking fund.

 

ARTICLE XII.

GUARANTEE

 

Section 12.1                                Guarantee.

 

12.1.1                  Subject to Section 12.1.2,
below, the Guarantor hereby irrevocably and unconditionally guarantees (such
guarantee being the “Guarantee”) to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture and the Notes
hereunder, that: (i) the principal of, premium, if any, and interest on
the Notes promptly will be paid in full when due, whether at the Maturity, by
acceleration, call for redemption or otherwise, and interest on the overdue
principal, premium, if any, and interest, if any, of the Notes, if lawful, and
all other obligations of the Company to the

 

52

 

Holders
and the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof, and (ii) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise. Failing payment when due by the Company
of any amount so guaranteed for whatever reason, the Guarantor shall be
obligated to pay the same immediately. 
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor.  The Guarantor 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, protest, notice and all demands whatsoever and
covenants that this Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture. If
any Holder or the Trustee is required by any court or otherwise to return to
the Company or any custodian, Trustee, liquidator or other similar official
acting in relation to the Company, any amount paid by the Company to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. The Guarantor agrees that it
shall not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations is guaranteed hereby.

 

12.1.2                  It is the intention of the Guarantor
and the Company that the obligations of the Guarantor hereunder shall be, 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
the 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, the Guarantor was insolvent or unable to pay its debts as they
mature or left with an unreasonably small capital, then the obligations of the
Guarantor under the Guarantee shall be reduced by such court if 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.

 

12.1.3                  The Guarantor shall be subrogated to
all rights of the Holders against the Company in respect of any amounts paid by
Guarantor pursuant to the provisions of the Guarantee or this Indenture;
provided, however, that the Guarantor shall

 

53

 

not be
entitled to enforce or to receive any payments arising out of, or based upon,
such right of subrogation until the principal of, premium, if any, and interest
on all Notes issued hereunder shall have been paid in full.

 

Section 12.2                                Execution and Delivery of Guarantee.

 

To
evidence the Guarantee set forth in Section 12.1, the Company and the
Guarantor hereby agree that a notation of such Guarantee shall be endorsed on
each Note authenticated and delivered by the Trustee, that such notation of
such Guarantee shall be in the form attached hereto as Exhibit B, and
shall be executed on behalf of the Guarantor by its Chairman of the Board, one
of its Vice Chairmen of the Board, its President or one of its Vice Presidents.

 

The
Guarantor hereby agrees that the Guarantee set forth in Section 12.1 shall
remain in full force and effect notwithstanding any failure to endorse on each
Note a notation of the Guarantee.

 

If
an officer whose signature is on this Indenture no longer holds that office at
the time the Trustee authenticates the Note on which the Guarantee is endorsed,
the Guarantee shall be valid nevertheless.

 

The
delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantor.

 

Section 12.3                                Release of Guarantor.

 

The
Guarantor shall be released from all of its obligations under the Guarantee and
under this Indenture if:

 

(a)                                  the Company or the Guarantor has
transferred all or substantially all of its properties and assets to any Person
(whether by sale, merger or consolidation or otherwise), or has merged into or
consolidated with another Person, pursuant to a transaction in compliance with
this Indenture and:

 

(i)                                     the corporation to whom all or
substantially all of the properties and assets of the Company or the Guarantor
are transferred, or whom the Company or the Guarantor has merged into or
consolidated with, has expressly assumed, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Guarantor under the Guarantee and this Indenture;

 

(ii)                                  immediately before and immediately
after giving effect to such transaction, no Event of Default, and no event or
condition which,

 

54

 

after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and

 

(iii)                               the Guarantor has delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture comply
with this Section 12.3 and that all conditions precedent herein provided
for relating to such transaction have been complied with;

 

(b)                                 the Guarantor liquidates (other than
pursuant to any Bankruptcy Law) and complies, if applicable, with the
provisions of this Indenture; provided that if a Person and its
Affiliates, if any, shall acquire all or substantially all of the assets of the
Guarantor upon such liquidation the Guarantor shall liquidate only if:

 

(i)                                     the Person and each such Affiliate
(or the common corporate parent of such Person and its Affiliates, if such
Person and its Affiliates are wholly owned by such parent) which acquire or
will acquire all or a portion of the assets of the Guarantor shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the
Guarantor, under the Guarantee and this Indenture and such Person or any of
such Affiliates (or such parent) shall be a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia;

 

(ii)                                  immediately after giving effect to
such transaction, no Event of Default, and no event or condition which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and

 

(iii)                               the Guarantor has delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such liquidation and such supplemental indenture comply with this Section 12.3
and that all conditions precedent herein provided for relating to such
transaction have been complied with; or

 

(c)                                  the Company ceases for any reason to
be a “wholly owned subsidiary” of the Guarantor (as such term is defined in Rule 1-02(z)
of the Regulation S-X promulgated by the SEC).

 

Upon any assumption of the Guarantee by any Person
pursuant to this Section 12.3, such Person may exercise every right and
power of the Guarantor under this Indenture with the same effect as if such
successor corporation had been named as the Guarantor herein, and all the
obligations of the Guarantor, hereunder and under the Guarantee and the
Indenture shall terminate.

 

55

 

Section 12.4                                When Guarantor May Merge, etc. 

 

The Guarantor shall not consolidate with or merge with
or into any other Person or, directly or indirectly, sell, lease or convey all
or substantially all of its assets (computed on a consolidated basis) to
another Person, and may not permit any Person to, directly or indirectly, sell,
lease or convey all or substantially all of its assets to the Guarantor,
whether in a single transaction or a series of related transactions, unless:

 

(a)                                  either the Guarantor shall be the continuing
person, or the Person (if other than the Guarantor) formed by such
consolidation or into or with which the Guarantor is merged or to which the
assets of the Guarantor are transferred shall be a corporation organized and
validly existing under the laws of the United States or any State thereof or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Guarantor under the
Guarantee and this Indenture;

 

(b)                                 immediately after giving effect to
such transaction, no Event of Default, and no event or condition which, after
notice or lapse of time or both, would become an Event of Default, shall have
occurred and be continuing; and

 

(c)                                  the Guarantor has delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, sale, conveyance or lease and such supplemental
indenture comply with this Section 12.4 and that all conditions precedent
herein provided for relating to such transaction have been complied with.

 

Upon
any consolidation or merger, or any sale, conveyance or lease of all or
substantially all of the assets of the Guarantor, in accordance with this Section 12.4,
the successor corporation formed by such consolidation or into or with which
the Guarantor is merged or to which such transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Guarantor
under this Indenture with the same effect as if such successor corporation had
been named as the Guarantor herein, and all the obligations of the predecessor
Guarantor hereunder and under the Guarantee and the Indenture shall terminate.

 

56

 

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

 

	
   

  	
  HARRAH’S
  OPERATING COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan S.
  Halkyard

  
	
   

  	
   

  	
  Name:

  	
  Jonathan S.
  Halkyard

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARRAH’S
  ENTERTAINMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan S.
  Halkyard

  
	
   

  	
   

  	
  Name:

  	
  Jonathan S.
  Halkyard

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Raymond S.
  Haverstock

  
	
   

  	
   

  	
  Name:

  	
  Raymond S.
  Haverstock

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

57

 

EXHIBIT A

 

FORM OF
NOTE

 

[Insert Global Notes Legend, if applicable to the
provisions of the Indenture]

 

[Insert Private Placement Legend, if applicable
pursuant to the provisions of the Indenture]

 

No.:       

 

	
  CUSIP No.:

  	
   

  	
   

  	
  Principal Amount: $                       

  

 

 

HARRAH’S OPERATING
COMPANY, INC.

 

5.75% Senior Notes due
2017

Payment of principal, interest and premium, if any, unconditionally guaranteed
by

 

HARRAH’S ENTERTAINMENT,
INC.

 

Harrah’s Operating Company, Inc., a Delaware
corporation (hereinafter called the “Company”, which term includes any
successor under the Indenture referred to below), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal
sum of                           DOLLARS
($                      )
on October 1, 2017 (“Maturity”), and to pay interest thereon from September 28,
2005 or from the most recent date to which interest has been paid or duly
provided for, semi-annually on April 1 and October 1 of each year
(each, an “Interest Payment Date”), commencing April 1, 2006 and at
Maturity, at the rate of 5.75% per annum, until the principal hereof is paid or
duly made available for payment. 
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months.  The
interest so payable and punctually paid or duly provided for on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in
whose name this Note is registered at the close of business on the Regular
Record Date for such interest, which shall be the March 15 or September 15
(whether or not a Business Day), as the case may be, immediately preceding such
Interest Payment Date.  If the Company
defaults in a payment of interest on the Notes, it shall pay the defaulted
interest plus, to the extent permitted by law, any interest payable on the
defaulted interest, to the Persons who are the registered Holders of the Notes
on a subsequent special record date.  The
Company shall fix the record date and the payment date.  At least 30 days before the record date, the
Company shall mail to the Trustee and to each Holder a notice that states the
record date, the payment date and the amount of interest to be paid.  The Company may pay defaulted interest in any
other lawful manner.

 

If any Interest Payment Date, Redemption Date or
Maturity Date of any of the Notes is not a Business Day, then payment of
principal and interest will be made on the next succeeding Business Day.  No interest will accrue on the amount so
payable for the period from such Interest Payment Date, Redemption Date or
Maturity Date, as the case may be, to the date payment is made.

 

A-1

 

Under certain circumstances the Company may be
required to pay Additional Interest as provided in the Indenture.

 

Payment of the principal of and the interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however,
that, at the option of the Company, interest may be paid by check mailed to the
address of the Person entitled thereto as such address shall appear in the
register or by wire transfer to an account maintained by the payee located in
the United States of America.

 

This Note is one of a duly authorized issue of Notes
of the Company (herein called the “Notes”) issued and to be issued under
an Indenture dated as of September 28, 2005 (herein called, together with
all indentures supplemental thereto, the “Indenture”) among, the
Company, Harrah’s Entertainment, Inc. and U.S. Bank National Association,
as trustee (herein called the “Trustee”, which term includes any
successor trustee under the Indenture), to which the Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes, and the terms upon which
the Notes are, and are to be, authenticated and delivered.  This Note is one of the Notes of the series
designated on the face hereof, limited in aggregate principal amount to
$750,000,000, subject to the Company’s ability to issue additional notes as
provided in the Indenture.

 

The Notes are senior obligations of the Company.  The Indenture imposes certain limitations on
the ability of the Company to, among other things, create or incur liens and
make certain sale-leaseback transactions. 
The Indenture also imposes limitations on the ability of the Company to
consolidate or merge with or into any other Person or convey, transfer or lease
substantially all of the property of the Company.

 

The Notes are subject to redemption prior to the
Maturity Date of the principal thereof as provided in the Indenture.

 

If an Event of Default with respect to the Notes shall
occur and be continuing, the principal of the Notes may be declared due and
payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes issued
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Notes at the time outstanding of each series affected thereby.  The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Notes at the time outstanding, on behalf of the Holders of all Notes, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any

 

A-2

 

Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.

 

No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note, at the time, place and rate, and in the coin or
currency, herein and in the Indenture prescribed.

 

As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the register upon surrender of this Note for registration of transfer at the
office or agency of the Company maintained for the purpose in any place where
the principal of and interest on this Note are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder hereof or by his attorney
duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees. 
The Notes are issuable only in registered form without coupons in the
denominations of $1,000 and integral multiples of $1,000.  As provided in the Indenture and subject to
certain limitations set forth therein, the Notes are exchangeable for a like
aggregate principal amount of Notes of authorized denominations as requested by
the Holders surrendering the same.

 

No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith, other than in certain cases provided in the Indenture.

 

Prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

 

The indenture contains provisions whereby (i) the
Company may be discharged from its obligations with respect to the Notes
(subject to certain exceptions) or (ii) the Company may be released from
its obligations under specified covenants and agreements in the Indenture, in
each case if the Company irrevocably deposits with the Trustee money or U.S.
Government Obligations sufficient to pay and discharge the entire indebtedness
on all Notes, and satisfies certain other conditions, all as more fully
provided in the Indenture.

 

This Note shall be governed by the
law of the State of New York without regard to the conflict of law principles
that would result in the application of any law other than the law of the State
of New York.

 

Capitalized terms used in this Note which are not
defined herein shall have the meanings assigned to them in the Indenture.

 

A-3

 

Unless the certificate of authentication hereon has
been executed by or on behalf of the Trustee under the Indenture by the manual
signature of one of its authorized signatories, this Note shall not be entitled
to any benefits under the Indenture or be valid or obligatory for any purpose.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

A-4

 

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

 

Dated:

 

	
   

  	
  HARRAH’S
  OPERATING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Notes of the series designated

therein referred to in the within-mentioned Indenture.

 

	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

A-5

 

ASSIGNMENT FORM

 

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

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE

 

	
   

  
	
   

  
	
   

  

 

 

	
   

  

 

PLEASE PRINT OR TYPEWRITE
NAME AND ADDRESS OF ASSIGNEE

 

	
   

  

 

the within Note and all rights thereunder, hereby
irrevocably constituting and appointing

 

                                                                                                          Attorney
to transfer said Note on the books of the Company with full power of
substitution in the premises.

 

	
  Dated:

  	
   

  

 

Notice: The
signature to this assignment must correspond with the name as it appears upon
the face of the Note in every particular, without alteration or enlargement or
any change whatever.

 

	
   

  	
   

  	
   

  
	
  Signature must be guaranteed by a participant

  in a recognized signature guaranty medallion

  program or other signature guarantor

  acceptable to the Trustee

  	
   

  	
  Signature of Signature Guarantor

  

 

A-6

 

ABBREVIATIONS

 

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

 

	
  TEN COM—as
  tenants in common UNIF GIFT MIN ACT—

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TEN ENT—as
  tenants by the entireties

  	
  (Cust)

  	
  (Minor)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JT TEN—as joint
  tenants with right of

  	
  Under Uniform
  Gifts to Minors

  
	
   

  	
  survivorship and
  not as

  	
  Act

  	
   

  
	
   

  	
  tenants in
  common

  	
   

  	
  (State)

  
							

 

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

 

 

	
   

  

 

A-7

 

SCHEDULE OF
EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

 

The following exchanges of a part of this Global Note
for an interest in another Global Note or for a Certificated Note, or exchanges
of a part of another Global Note or Certificated Note for an interest in this
Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of decrease in

  Principal Amount of

  this Global Note

  	
   

  	
  Amount of increase in

  Principal Amount of

  this Global Note

  	
   

  	
  Principal Amount

  of this Global Note

  following such

  decrease (or increase)

  	
   

  	
  Signature of authorized

  officer of Trustee or

  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-8

 

EXHIBIT B

 

FORM OF
NOTATION OF GUARANTEE

 

NOTATION OF
GUARANTEE OF HARRAH’S ENTERTAINMENT, INC.

 

For value received, the undersigned, Harrah’s
Entertainment, Inc. (the “Guarantor”)(which term includes any
successor person under the Indenture), has unconditionally guaranteed, to the
extent set forth in the Indenture and subject to the provisions in the
Indenture, dated as of September 28, 2005 (the “Indenture”), among Harrah’s Operating Company, Inc.
(the “Company”), the Guarantor and U.S. Bank National Association, as
trustee (the “Trustee”), (a) the due and punctual payment of the
principal of, premium, if any, and interest on, the Notes, whether at maturity,
by acceleration, redemption or otherwise, the due and punctual payment of
interest on overdue principal of and interest on the Notes, if any, if lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms of the Indenture
and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Guarantor to the Holders of Notes and to the Trustee
pursuant to the Guarantee and the Indenture are expressly set forth in Article 12
of the Indenture and reference is hereby made to the Indenture for the precise
terms of the Guarantee. Each Holder of a Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c) appoints
the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this
Note Guarantee shall cease to be so subordinated and subject in right of
payment upon any defeasance of this Note in accordance with the provisions of
the Indenture.

 

Capitalized terms used but not defined herein have the
meanings given to them in the Indenture.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

B-1

 

IN
WITNESS WHEREOF, the undersigned has caused this notation of Guarantee to be
duly executed.

 

Date:

 

 

	
   

  	
  HARRAH’S
  ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-2

 

EXHIBIT C

 

FORM OF CERTIFICATE FOR TRANSFER PURSUANT TO RULE
144A

 

[Date]

 

U.S. Bank National Association

60 Livingston Avenue

St. Paul, Minnesota 55107

 

Re:                               5.75%
Senior Notes due 2017

 

Ladies and Gentlemen:

 

Reference is hereby made to the Indenture, dated as of
September 28, 2005 (as amended and supplemented from time to time, the “Indenture”),
among Harrah’s Operating Company, Inc. (the “Company”), Harrah’s
Entertainment, Inc. (the “Guarantor”) and U.S. Bank National Association
as trustee (the “Trustee”). Capitalized terms used but not defined herein shall
have the meanings given them in the Indenture.

 

This letter relates to $aggregate principal amount of
Notes, which represents an interest in a Regulation S Global Note beneficially
owned by the undersigned (the “Transferor”), to effect the transfer of such
Notes in exchange for an equivalent beneficial interest in the Rule 144A
Global Note.

 

In connection with such request, and with respect to
such Notes, the Transferor does hereby certify that such Notes are being
transferred in accordance with Rule 144A, to a transferee that the
Transferor reasonably believes is purchasing the Notes for its own account or
an account with respect to which the transferee exercises sole investment
discretion, and the transferee, as well as any such account, is a “qualified
institutional buyer” within the meaning of Rule 144A, in a transaction
meeting the requirements of Rule 144A and in accordance with applicable
securities laws of any state of the United States or any other jurisdiction.

 

C-1

 

You, the Company
and the Guarantor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name of Transferor]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  
				

 

C-2

 

EXHIBIT D

 

FORM OF CERTIFICATE FOR TRANSFER PURSUANT TO
REGULATION S

 

[Date]

 

U.S. Bank National
Association

60 Livingston Avenue

St. Paul, Minnesota 55107

 

Re:                               5.75%
Senior Notes due 2017

 

Ladies and Gentlemen:

 

Reference is hereby made to the Indenture, dated as of
September 28, 2005 (as amended and supplemented from time to time, the “Indenture”),
among Harrah’s Operating Company, Inc. (the “Company”), Harrah’s Entertainment, Inc. (the “Guarantor”) and
U.S. Bank National Association, as trustee (the “Trustee”). Capitalized terms
used but not defined herein shall have the meanings given them in the
Indenture.

 

In connection with our proposed sale of $aggregate
principal amount of Notes, which represents an interest in the Rule 144A
Global Note beneficially owned by the undersigned (the “Transferor”), we
confirm that such sale has been effected pursuant to and in accordance with
Regulation S, and, accordingly, we represent that:

 

(a)  the offer of such Notes was not made to a
person in the United States;

 

(b)  either (i) at the time the buy order
was originated, the transferee was outside the United States or we and any
person acting on our behalf reasonably believed that the transferee was outside
the United States or (ii) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;

 

(c)  no directed selling efforts have been made
in the United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;

 

(d)  the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act; and

 

(e)  we are the beneficial owner of the principal
amount of such Notes being transferred.

 

D-1

 

In addition, if the sale is made during the Restricted
Period and the provisions of Rule 904(b)(1) or Rule 904(b)(2) of
Regulation S are applicable thereto, we confirm that such sale has been
made in accordance with the applicable provisions of Rule 904(b)(1) or
Rule 904(b)(2), as the case may be.

 

You, the Company
and the Guarantor are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this letter have the meanings set forth
in Regulation S.

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name of Transferor]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  
				

 

D-2

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