Document:

Exhibit 4.3

 

 

[Form of
Subordinated Indenture]

 

BPZ Resources, Inc.,

as Issuer

 

and

 

any Subsidiary Guarantors named herein,

as Subsidiary Guarantors

 

to

 

                        ,

as Trustee

 

SUBORDINATED INDENTURE

 

Dated as of
                ,
20    

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  PAGE

  
	
  PARTIES

  	
  1

  
	
   

  	
   

  
	
  RECITALS
  OF THE COMPANY AND THE SUBSIDIARY GUARANTORS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS
  OF GENERAL APPLICATION

  	
   

  
	
   

  	
   

  
	
  SECTION 101. 

  	
  DEFINITIONS.

  	
  1

  
	
  Act

  	
  2

  
	
  Affiliate

  	
  2

  
	
  Authenticating
  Agent

  	
  2

  
	
  Board
  of Directors

  	
  2

  
	
  Board
  Resolution

  	
  2

  
	
  Business
  Day

  	
  2

  
	
  Capital
  Stock

  	
  2

  
	
  Commission

  	
  2

  
	
  Common
  Stock

  	
  2

  
	
  Company

  	
  3

  
	
  Company
  Request

  	
  3

  
	
  Company
  Order

  	
  3

  
	
  Conversion
  Agent

  	
  3

  
	
  Corporate
  Trust Office

  	
  3

  
	
  Corporation

  	
  3

  
	
  Covenant
  Defeasance

  	
  3

  
	
  Defaulted
  Interest

  	
  3

  
	
  Defeasance

  	
  3

  
	
  Depositary

  	
  3

  
	
  Event
  of Default

  	
  3

  
	
  Exchange
  Act

  	
  3

  
	
  Expiration
  Date

  	
  3

  
	
  Global
  Security

  	
  3

  
	
  Holder

  	
  3

  
	
  Indenture

  	
  3

  
	
  interest

  	
  3

  
	
  Interest
  Payment Date

  	
  4

  
	
  Investment
  Company Act

  	
  4

  
	
  Maturity

  	
  4

  
	
  Notice
  of Default

  	
  4

  
	
  Officers’
  Certificate

  	
  4

  
	
  Opinion
  of Counsel

  	
  4

  
	
  Original
  Issue Discount Security

  	
  4

  
	
  Outstanding

  	
  4

  
	
  Paying
  Agent

  	
  5

  
	
  Person

  	
  5

  
	
  Place
  of Payment

  	
  5

  
			

 

i

 

	
  Predecessor
  Security

  	
  5

  
	
  Redemption
  Date

  	
  5

  
	
  Redemption
  Price

  	
  5

  
	
  Regular
  Record Date

  	
  5

  
	
  Securities

  	
  6

  
	
  Securities
  Act

  	
  6

  
	
  Security
  Register

  	
  6

  
	
  Security
  Registrar

  	
  6

  
	
  Senior
  Debt

  	
  6

  
	
  Significant
  Subsidiary

  	
  6

  
	
  Special
  Record Date

  	
  6

  
	
  Stated
  Maturity

  	
  6

  
	
  Subsidiary

  	
  6

  
	
  Subsidiary
  Guarantees

  	
  6

  
	
  Subsidiary
  Guarantors

  	
  6

  
	
  Trust
  Indenture Act

  	
  6

  
	
  Trustee

  	
  6

  
	
  U.S.
  Government Obligation

  	
  7

  
	
  Vice
  President

  	
  7

  
	
  Voting
  Stock

  	
  7

  
	
  Wholly
  Owned Subsidiary

  	
  7

  
	
  SECTION 102.

  	
  Compliance Certificates
  and Opinions.

  	
  7

  
	
  SECTION 103.

  	
  Form of Documents
  Delivered to Trustee.

  	
  7

  
	
  SECTION 104.

  	
  Acts of Holders; Record
  Dates.

  	
  8

  
	
  SECTION 105.

  	
  Notices, Etc., to
  Trustee and Company.

  	
  10

  
	
  SECTION 106.

  	
  Notice to Holders; Waiver.

  	
  10

  
	
  SECTION 107.

  	
  Conflict with Trust
  Indenture Act.

  	
  11

  
	
  SECTION 108.

  	
  Effect of Headings and
  Table of Contents.

  	
  11

  
	
  SECTION 109.

  	
  Successors and Assigns.

  	
  11

  
	
  SECTION 110.

  	
  Separability Clause.

  	
  11

  
	
  SECTION 111.

  	
  Benefits of Indenture.

  	
  11

  
	
  SECTION 112.

  	
  Governing Law.

  	
  11

  
	
  SECTION 113.

  	
  Legal Holidays.

  	
  11

  
	
  SECTION 114

  	
  No Recourse Against Others

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO
  SECURITY FORMS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 201.

  	
  Forms Generally.

  	
  12

  
	
  SECTION 202.

  	
  Form of Face of
  Security.

  	
  12

  
	
  SECTION 203.

  	
  Form of Reverse of
  Security.

  	
  14

  
	
  SECTION 204.

  	
  Form of Notation of
  Subsidiary Guarantee.

  	
  18

  
	
  SECTION 205.

  	
  Form of Legend for
  Global Securities.

  	
  18

  
	
  SECTION 206.

  	
  Form of Trustee’s
  Certificate of Authentication.

  	
  18

  
	
  SECTION 207.

  	
  Form of Conversion Notice

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE THREE
  THE SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 301.

  	
  Amount Unlimited; Issuable
  in Series.

  	
  20

  
	
  SECTION 302.

  	
  Denominations.

  	
  22

  

 

ii

 

	
  SECTION 303.

  	
  Execution, Authentication,
  Delivery and Dating.

  	
  22

  
	
  SECTION 304.

  	
  Temporary Securities.

  	
  24

  
	
  SECTION 305.

  	
  Registration, Registration
  of Transfer and Exchange.

  	
  24

  
	
  SECTION 306.

  	
  Mutilated, Destroyed, Lost
  and Stolen Securities.

  	
  26

  
	
  SECTION 307.

  	
  Payment of Interest;
  Interest Rights Preserved.

  	
  26

  
	
  SECTION 308.

  	
  Persons Deemed Owners.

  	
  28

  
	
  SECTION 309.

  	
  Cancellation.

  	
  28

  
	
  SECTION 310.

  	
  Computation of Interest.

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR
  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 401.

  	
  Satisfaction and Discharge
  of Indenture.

  	
  28

  
	
  SECTION 402.

  	
  Application of Trust Money.

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 501.

  	
  Events of Default.

  	
  29

  
	
  SECTION 502.

  	
  Acceleration of Maturity;
  Rescission and Annulment.

  	
  31

  
	
  SECTION 503.

  	
  Collection of Indebtedness
  and Suits for Enforcement by Trustee.

  	
  32

  
	
  SECTION 504.

  	
  Trustee May File
  Proofs of Claim.

  	
  32

  
	
  SECTION 505.

  	
  Trustee May Enforce
  Claims Without Possession of Securities.

  	
  33

  
	
  SECTION 506.

  	
  Application of Money
  Collected.

  	
  33

  
	
  SECTION 507.

  	
  Limitation on Suits.

  	
  33

  
	
  SECTION 508.

  	
  Unconditional Right of
  Holders to Receive Principal, Premium and Interest.

  	
  34

  
	
  SECTION 509.

  	
  Restoration of Rights and
  Remedies.

  	
  34

  
	
  SECTION 510.

  	
  Rights and Remedies
  Cumulative.

  	
  34

  
	
  SECTION 511.

  	
  Delay or Omission Not
  Waiver.

  	
  34

  
	
  SECTION 512.

  	
  Control by Holders.

  	
  35

  
	
  SECTION 513.

  	
  Waiver of Past Defaults.

  	
  35

  
	
  SECTION 514.

  	
  Undertaking for Costs.

  	
  35

  
	
  SECTION 515.

  	
  Waiver of Usury, Stay or
  Extension Laws.

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX
  THE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 601.

  	
  Certain Duties and
  Responsibilities.

  	
  36

  
	
  SECTION 602.

  	
  Notice of Defaults.

  	
  36

  
	
  SECTION 603.

  	
  Certain Rights of Trustee.

  	
  36

  
	
  SECTION 604.

  	
  Not Responsible for
  Recitals or Issuance of Securities.

  	
  37

  
	
  SECTION 605.

  	
  May Hold Securities.

  	
  37

  
	
  SECTION 606.

  	
  Money Held in Trust.

  	
  37

  
	
  SECTION 607.

  	
  Compensation and
  Reimbursement.

  	
  37

  
	
  SECTION 608.

  	
  Conflicting Interests.

  	
  38

  
	
  SECTION 609.

  	
  Corporate Trustee
  Required; Eligibility.

  	
  38

  
	
  SECTION 610.

  	
  Resignation and Removal;
  Appointment of Successor.

  	
  38

  
	
  SECTION 611.

  	
  Acceptance of Appointment
  by Successor.

  	
  40

  
	
  SECTION 612.

  	
  Merger, Conversion,
  Consolidation or Succession to Business.

  	
  41

  

 

iii

 

	
  SECTION 613.

  	
  Preferential Collection of
  Claims Against Company and Subsidiary Guarantors.

  	
  41

  
	
  SECTION 614.

  	
  Appointment of
  Authenticating Agent.

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN
  HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 701.

  	
  Company to Furnish Trustee
  Names and Addresses of Holders.

  	
  42

  
	
  SECTION 702.

  	
  Preservation of
  Information; Communications to Holders.

  	
  43

  
	
  SECTION 703.

  	
  Reports by Trustee.

  	
  43

  
	
  SECTION 704.

  	
  Reports by Company and
  Subsidiary Guarantors.

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT
  CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 801.

  	
  Company
  May Consolidate, Etc., Only on Certain Terms.

  	
  43

  
	
  SECTION 802.

  	
  Subsidiary Guarantors
  May Consolidate, Etc., Only on Certain Terms.

  	
  44

  
	
  SECTION 803.

  	
  Successor Substituted.

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE NINE
  SUPPLEMENTAL INDENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 901.

  	
  Supplemental Indentures
  Without Consent of Holders.

  	
  45

  
	
  SECTION 902.

  	
  Supplemental Indentures
  With Consent of Holders.

  	
  46

  
	
  SECTION 903.

  	
  Execution of Supplemental
  Indentures.

  	
  47

  
	
  SECTION 904.

  	
  Effect of Supplemental
  Indentures.

  	
  48

  
	
  SECTION 905.

  	
  Conformity with Trust
  Indenture Act.

  	
  48

  
	
  SECTION 906.

  	
  Reference in Securities to
  Supplemental Indentures.

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE TEN
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1001.

  	
  Payment of Principal, Premium
  and Interest.

  	
  48

  
	
  SECTION 1002.

  	
  Maintenance of Office or
  Agency.

  	
  48

  
	
  SECTION 1003.

  	
  Money for Securities
  Payments to Be Held in Trust.

  	
  49

  
	
  SECTION 1004.

  	
  Statement by Officers as
  to Default.

  	
  50

  
	
  SECTION 1005.

  	
  Existence.

  	
  50

  
	
  SECTION 1006.

  	
  Maintenance of Properties.

  	
  50

  
	
  SECTION 1007.

  	
  Payment of Taxes and Other
  Claims.

  	
  50

  
	
  SECTION 1008.

  	
  Maintenance of Insurance.

  	
  51

  
	
  SECTION 1009.

  	
  Waiver of Certain
  Covenants.

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE ELEVEN
  REDEMPTION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1101.

  	
  Applicability of Article.

  	
  51

  
	
  SECTION 1102.

  	
  Election to Redeem; Notice
  to Trustee.

  	
  51

  
	
  SECTION 1103.

  	
  Selection by Trustee of
  Securities to Be Redeemed.

  	
  52

  
	
  SECTION 1104.

  	
  Notice of Redemption.

  	
  52

  
	
  SECTION 1105.

  	
  Deposit of Redemption
  Price.

  	
  53

  
	
  SECTION 1106.

  	
  Securities Payable on
  Redemption Date.

  	
  53

  
	
  SECTION 1107.

  	
  Securities Redeemed in
  Part.

  	
  53

  

 

iv

 

	
  ARTICLE TWELVE
  SUBORDINATION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1201.

  	
  Applicability of Article.

  	
  54

  
	
  SECTION 1202.

  	
  Securities Subordinate to
  Senior Debt.

  	
  54

  
	
  SECTION 1203.

  	
  Payment Over of Proceeds
  Upon Dissolution, Etc.

  	
  54

  
	
  SECTION 1204.

  	
  No Payment When Senior
  Debt of the Company in Default.

  	
  55

  
	
  SECTION 1205.

  	
  Payment Permitted If No
  Default.

  	
  56

  
	
  SECTION 1206.

  	
  Subrogation to Rights of
  Holders of Senior Debt of the Company.

  	
  57

  
	
  SECTION 1207.

  	
  Provisions Solely to
  Define Relative Rights.

  	
  57

  
	
  SECTION 1208.

  	
  Trustee to Effectuate
  Subordination.

  	
  57

  
	
  SECTION 1209.

  	
  No Waiver of Subordination
  Provisions.

  	
  57

  
	
  SECTION 1210.

  	
  Notice to Trustee.

  	
  58

  
	
  SECTION 1211.

  	
  Reliance on Judicial Order
  or Certificate of Liquidating Agent.

  	
  59

  
	
  SECTION 1212.

  	
  Trustee Not Fiduciary for
  Holders of Senior Debt of the Company.

  	
  59

  
	
  SECTION 1213.

  	
  Rights of Trustee as
  Holder of Senior Debt of the Company; Preservation of Trustee’s Rights.

  	
  59

  
	
  SECTION 1214.

  	
  Article Applicable to
  Paying Agents.

  	
  59

  
	
  SECTION 1215.

  	
  Defeasance of this
  Article Twelve.

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE THIRTEEN
  SUBSIDIARY GUARANTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1301.

  	
  Applicability of Article.

  	
  60

  
	
  SECTION 1302.

  	
  Subsidiary Guarantees.

  	
  60

  
	
  SECTION 1303.

  	
  Execution and Delivery of
  Notations of Subsidiary Guarantees.

  	
  61

  
	
  SECTION 1304.

  	
  Release of Subsidiary
  Guarantors.

  	
  62

  
	
  SECTION 1305.

  	
  Additional Subsidiary
  Guarantors.

  	
  62

  
	
  SECTION 1306.

  	
  Limitation on Liability.

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOURTEEN
  SUBORDINATION OF SUBSIDIARY GUARANTEES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1401.

  	
  Applicability of Article.

  	
  63

  
	
  SECTION 1402.

  	
  Subsidiary Guarantees
  Subordinate to Senior Debt of Subordinate Guarantors.

  	
  63

  
	
  SECTION 1403.

  	
  Payment Over of Proceeds
  Upon Dissolution, Etc.

  	
  63

  
	
  SECTION 1404.

  	
  No Payment When Senior
  Debt of such Subsidiary Guarantor in Default.

  	
  64

  
	
  SECTION 1405.

  	
  Payment Permitted If No
  Default.

  	
  65

  
	
  SECTION 1406.

  	
  Subrogation to Rights of
  Holders of Senior Debt of such Subsidiary Guarantor.

  	
  65

  
	
  SECTION 1407.

  	
  Provisions Solely to
  Define Relative Rights.

  	
  66

  
	
  SECTION 1408.

  	
  Trustee to Effectuate
  Subordination.

  	
  66

  
	
  SECTION 1409.

  	
  No Waiver of Subordination
  Provisions.

  	
  66

  
	
  SECTION 1410.

  	
  Notice to Trustee.

  	
  67

  
	
  SECTION 1411.

  	
  Reliance on Judicial Order
  or Certificate of Liquidating Agent.

  	
  68

  
	
  SECTION 1412.

  	
  Trustee Not Fiduciary for
  Holders of Senior Debt of such Subsidiary Guarantor.

  	
  68

  

 

v

 

	
  SECTION 1413.

  	
  Rights of Trustee as
  Holder of Senior Debt of such Subsidiary Guarantor; Preservation of Trustee’s
  Rights.

  	
  68

  
	
  SECTION 1414.

  	
  Article Applicable to
  Paying Agents.

  	
  68

  
	
  SECTION 1415.

  	
  Defeasance of this
  Article Fourteen.

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIFTEEN
  DEFEASANCE AND COVENANT DEFEASANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1501.

  	
  Company’s Option to Effect
  Defeasance or Covenant Defeasance.

  	
  69

  
	
  SECTION 1502.

  	
  Defeasance and Discharge.

  	
  69

  
	
  SECTION 1503.

  	
  Covenant Defeasance.

  	
  69

  
	
  SECTION 1504.

  	
  Conditions to Defeasance
  or Covenant Defeasance.

  	
  70

  
	
  SECTION 1505.

  	
  Deposited Money and U.S.
  Government Obligations to Be Held in Trust; Miscellaneous Provisions.

  	
  72

  
	
  SECTION 1506.

  	
  Reinstatement.

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIXTEEN
  SINKING FUNDS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1601.

  	
  Applicability of Article.

  	
  73

  
	
  SECTION 1602.

  	
  Satisfaction of Sinking
  Fund Payments with Securities.

  	
  73

  
	
  SECTION 1603.

  	
  Redemption of Securities
  for Sinking Fund.

  	
  73

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
  74

  
	
  SCHEDULE I

  	
   

  	
  I-1

  

 

vi

 

BPZ RESOURCES, INC.

 

CERTAIN
SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 

THROUGH 318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:

 

	
  TRUST INDENTURE ACT SECTION

  	
   

  	
  INDENTURE SECTION

  
	
  Section 310(a)(1)

  	
   

  	
  609

  
	
  (a)(2)

  	
   

  	
  609

  
	
  (a)(3)

  	
   

  	
  Not Applicable

  
	
  (a)(4)

  	
   

  	
  Not Applicable

  
	
  (b)

  	
   

  	
  608

  
	
   

  	
   

  	
  610

  
	
  Section 311(a)

  	
   

  	
  613

  
	
  (b)

  	
   

  	
  613

  
	
  Section 312(a)

  	
   

  	
  701

  
	
   

  	
   

  	
  702

  
	
  (b)

  	
   

  	
  702

  
	
  (c)

  	
   

  	
  702

  
	
  Section 313(a)

  	
   

  	
  703

  
	
  (b)

  	
   

  	
  703

  
	
  (c)

  	
   

  	
  703

  
	
  (d)

  	
   

  	
  703

  
	
  Section 314(a)

  	
   

  	
  704

  
	
  (a)(4)

  	
   

  	
  101

  
	
   

  	
   

  	
  1004

  
	
  (b)

  	
   

  	
  Not Applicable

  
	
  (c)(1)

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
  102

  
	
  (c)(3)

  	
   

  	
  Not Applicable

  
	
  (d)

  	
   

  	
  Not Applicable

  
	
  (e)

  	
   

  	
  102

  
	
  Section 315(a)

  	
   

  	
  601

  
	
  (b)

  	
   

  	
  602

  
	
  (c)

  	
   

  	
  601

  
	
  (d)

  	
   

  	
  601

  
	
  (e)

  	
   

  	
  514

  
	
  Section 316(a)

  	
   

  	
  101

  
	
  (a)(1)(A)

  	
   

  	
  502

  
	
   

  	
   

  	
  512

  
	
  (a)(1)(B)

  	
   

  	
  513

  
	
  (a)(2)

  	
   

  	
  Not Applicable

  
	
  (b)

  	
   

  	
  508

  
	
  (c)

  	
   

  	
  104

  
	
  Section 317(a)(1)

  	
   

  	
  503

  
	
  (a)(2)

  	
   

  	
  504

  
	
  (b)

  	
   

  	
  1003

  
	
  Section 318(a)

  	
   

  	
  107

  

 

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

 

vii

 

INDENTURE, dated as of
                ,
200  , among BPZ Resources, Inc., a corporation duly organized
and existing under the laws of  the State
of Texas (herein called the “Company”), having its principal office at 580
Westlake Park Boulevard, Suite 525, Houston, Texas 77079, each of the
Subsidiary Guarantors (as hereinafter defined) and                           
, a banking corporation duly organized and existing under the laws of the State
of                          ,
as Trustee (herein called the “Trustee”).

 

RECITALS OF THE COMPANY AND THE SUBSIDIARY GUARANTORS

 

The Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its unsecured debentures, notes or other
evidences of indebtedness (herein called the “Securities”), to be issued in one
or more series as in this Indenture provided.

 

The Company and the
Subsidiary Guarantors are members of the same consolidated group of companies.
The Subsidiary Guarantors will derive direct and indirect economic benefit from
the issuance of the Securities. Accordingly, each Subsidiary Guarantor has duly
authorized the execution and delivery of this Indenture to provide for its
full, unconditional and joint and several guarantee of the Securities to the
extent provided in or pursuant this Indenture.

 

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

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

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

 

ARTICLE ONE

 

DEFINITIONS
AND OTHER PROVISIONS

OF
GENERAL APPLICATION

 

SECTION 101. Definitions.

 

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

 

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

 

(2) all
other terms used herein which are defined in the Trust Indenture Act, either
directly or by reference therein, have the meanings assigned to them therein;

 

(3) all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles, and, except
as otherwise herein 

 

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expressly provided, the term
“generally accepted accounting principles” with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of this instrument;

 

(4) unless
the context otherwise requires, any reference to an “Article” or a “Section”
refers to an Article or a Section, as the case may be, of this Indenture;
and

 

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

 

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

 

“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition, “control” when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing; provided that
direct or indirect beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to control.

 

“Authenticating
Agent” means any Person authorized by the Trustee pursuant to
Section 614 to act on behalf of the Trustee to authenticate Securities of
one or more series.

 

“Board of
Directors” means, with respect to the Company, either the board of
directors of the Company or any committee of that board duly authorized to act
for it in respect hereof, and with respect to any Subsidiary Guarantor, either
the board of directors of such Subsidiary Guarantor or any committee of that
board duly authorized to act for it in respect hereof.

 

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

 

“Business Day”
when used with respect to any Place of Payment, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment are authorized or obligated by law or executive order
to close.

 

“Capital
Stock” of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general
or limited, of such Person.

 

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

 

“Common Stock”
means the common stock. no par value, of the Company as the same exists at the
date of execution and delivery of this Indenture or other Capital Stock of the
Company into which such common stock is converted, reclassified or changed from
time to time.

 

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

 

“Company
Request” or “Company Order”
means a written request or order signed in the name of the Company by its
Chairman of the Board of Directors, its Vice Chairman of the Board of
Directors, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.

 

“Conversion
Agent” means any Person authorized by the Company to convert any
Securities on behalf of the Company.

 

“Corporate
Trust Office” means the principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, such
office being located on the date hereof at [TRUSTEE’S ADDRESS].

 

“corporation”
means a corporation, association, limited liability company, joint-stock
company or business trust.

 

“Covenant
Defeasance” has the meaning specified in Section 1503.

 

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

 

“Defeasance”
has the meaning specified in Section 1502.

 

“Depositary”
means, with respect to Securities of any series issuable in whole or in part in
the form of one or more Global Securities, a clearing agency registered under
the Exchange Act that is designated to act as Depositary for such Securities as
contemplated by Section 301.

 

“Event of
Default” has the meaning specified in Section 501.

 

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

 

“Expiration
Date” has the meaning specified in Section 104.

 

“Global
Security” means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 205 (or
such legend as may be specified as contemplated by Section 301 for such
Securities).

 

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

 

“Indenture”
means this instrument as originally executed and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof, including, for all purposes
of this instrument and any such supplemental indenture, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this instrument
and any such supplemental indenture, respectively. The term “Indenture” shall
also include the terms of particular series of Securities established as
contemplated by Section 301.

 

“interest”,
when used with respect to an Original Issue Discount Security which by its 

 

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terms bears interest only
after Maturity, means interest payable after Maturity.

 

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

 

“Investment
Company Act” means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.

 

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

 

“Notice of
Default” means a written notice of the kind specified in
Section 501(4).

 

“Officers’
Certificate” means a certificate signed by the Chairman of the Board
of Directors, a Vice Chairman of the Board of Directors, the President or a
Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Company or a Subsidiary Guarantor, as the case
may be, and delivered to the Trustee. One of the officers signing an Officers’
Certificate given pursuant to Section 1004 shall be the principal
executive, financial or accounting officer of the Company.

 

“Opinion of
Counsel” means, as to the Company or a Subsidiary Guarantor, a
written opinion of counsel, who may be counsel for the Company or such
Subsidiary Guarantor, as the case may be, and who shall be acceptable to the
Trustee.

 

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

 

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

 

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

 

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

 

(3) Securities as to
which Defeasance has been effected pursuant to Section 1502; and

 

(4) Securities
which have been paid pursuant to Section 306 or in exchange for or in lieu
of which other Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such Securities are
valid obligations of the Company; provided, however, that in determining
whether the Holders of the requisite principal amount of the Outstanding
Securities have given, 

 

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made or taken any request,
demand, authorization, direction, notice, consent, waiver or other action
hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount
of the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502,
(B) if, as of such date, the principal amount payable at the Stated
Maturity of a Security is not determinable, the principal amount of such
Security which shall be deemed to be Outstanding shall be the amount as
specified or determined as contemplated by Section 301, (C) the
principal amount of a Security denominated in one or more foreign currencies or
currency units which shall be deemed to be Outstanding shall be the U.S. dollar
equivalent, determined as of such date in the manner provided as contemplated
by Section 301, of the principal amount of such Security (or, in the case
of a Security described in clause (A) or (B) above, of the amount determined
as provided in such clause), and (D) Securities owned by the Company, any
Subsidiary Guarantor or any other obligor upon the Securities or any Affiliate
of the Company, any Subsidiary Guarantor or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, waiver or other action, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Securities and that the pledgee
is not the Company, a Subsidiary Guarantor or any other obligor upon the
Securities or any Affiliate of the Company, a Subsidiary Guarantor or of such
other obligor.

 

“Paying Agent”
means any Person authorized by the Company to pay the principal of or any
premium or interest on any Securities on behalf of the Company.

 

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

 

“Place of
Payment,” when used with respect to the Securities of any series,
means the place or places where the principal of and any premium and interest
on the Securities of that series are payable as specified as contemplated by
Section 301.

 

“Predecessor
Security” of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of
a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

 

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

 

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

 

“Regular
Record Date” for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.

 

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“Securities”
has the meaning stated in the first recital of this Indenture and more particularly
means any Securities authenticated and delivered under this Indenture.

 

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

 

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

 

“Senior Debt”
with respect to any series of Securities shall have the meaning specified as
contemplated by Section 301.

 

“Significant
Subsidiary” means, at any date of determination, any Subsidiary that
represents 10% or more of the Company’s consolidated total assets at the end of
the most recent fiscal quarter for which financial information is available or
10% or more of the Company’s consolidated net revenues or consolidated
operating income for the most recent four quarters for which financial
information is available.

 

“Special
Record Date” for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 307.

 

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

 

“Subsidiary”
of any Person means (1) a corporation more than 50% of the combined voting
power of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person or by one or more other Subsidiaries of such Person
or by such Person and one or more Subsidiaries thereof or (2) any other
Person (other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.

 

“Subsidiary
Guarantees” means the guarantees of each Subsidiary Guarantor as
provided in Article Thirteen.

 

“Subsidiary
Guarantors” means (i) the subsidiaries listed in Schedule I
hereto; (ii) any successor of the foregoing; and (iii) each other
Subsidiary of the Company that becomes a Subsidiary Guarantor in accordance
with Section 1305 hereof, in each case (i), (ii) and (iii) until
such Subsidiary Guarantor ceases to be such in accordance with Section 1304
hereof.

 

“Trust
Indenture Act” means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, “Trust
Indenture Act” means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

 

“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 

 

6

 

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

 

“U.S.
Government Obligation” has the meaning specified in
Section 1504.

 

“Vice
President,” when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title “vice president”.

 

“Voting Stock”
of any Person means Capital Stock of such Person which ordinarily has voting
power for the election of directors (or persons performing similar functions)
of such Person, whether at all times or only so long as no senior class of
securities has such voting power by reason of any contingency.

 

“Wholly Owned
Subsidiary” of any Person means a Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which (other than
directors’ qualifying shares) shall at the time be owned by such Person or by
one or more Wholly Owned Subsidiaries of such Person or by such Person and one
or more Wholly Owned Subsidiaries of such Person.

 

SECTION 102. Compliance Certificates and Opinions.

 

Upon any application or
request by the Company or any Subsidiary Guarantor to the Trustee to take any
action under any provision of this Indenture, the Company and/or such
Subsidiary Guarantor, as appropriate, shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act.
Each such certificate or opinion shall be given in the form of an Officers’
Certificate, if to be given by an officer of the Company or a Subsidiary
Guarantor, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.

 

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

 

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

 

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

 

(3) a
statement that, in the opinion of each such individual, he 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

 

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

 

SECTION 103. Form of Documents Delivered to Trustee.

 

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

 

7

 

opinion as to such matters
in one or several documents.

 

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

 

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

 

SECTION 104. Acts of Holders; Record Dates.

 

Whenever in this Indenture
it is provided that the Holders of a specified percentage in aggregate
principal amount of the Securities of any or all series may take action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the Holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number
of instruments of similar tenor executed by Holders in person or by agent or
proxy appointed in writing, (b) by the record of the Holders voting in
favor thereof at any meeting of Holders duly called and held in accordance with
procedures approved by the Trustee, (c) by a combination of such
instrument or instruments and any such record of such a meeting of Holders or
(d) in the case of Securities evidenced by a Global Security, by any
electronic transmission or other message, whether or not in written format,
that complies with the Depositary’s applicable procedures. Such evidence (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the relevant Holders. Proof of execution of any
such instrument or of a writing appointing any such agent or proxy shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.

 

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

 

The ownership of Securities
shall be proved by the Security Register.

 

Any request, demand,
authorization, direction, notice, consent, waiver or other Act of the Holder of
any Security shall bind every future Holder of the same Security and the Holder
of 

 

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every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.

 

The Company may set any day
as a record date for the purpose of determining the Holders of Outstanding
Securities of any series entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given, made or taken by Holders of Securities
of such series, provided that the Company may not set a record date for, and
the provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Company, at its own expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Trustee in writing and to each
Holder of Securities of the relevant series in the manner set forth in
Section 106.

 

The Trustee may set any day
as a record date for the purpose of determining the Holders of Outstanding
Securities of any series entitled to join in the giving or making of
(i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction
referred to in Section 512, in each case with respect to Securities of
such series. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities of such series on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date; provided
that no such action shall be effective hereunder unless taken on or prior to
the applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically
and with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Trustee, at the Company’s expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities of the relevant series in the manner set forth in
Section 106.

 

9

 

With respect to any record
date set pursuant to this Section, the party hereto which sets such record
dates may designate any day as the “Expiration Date” and from time to time may
change the Expiration Date to any earlier or later day; provided that no such
change shall be effective unless notice of the proposed new Expiration Date is
given to the other party hereto in writing, and to each Holder of Securities of
the relevant series in the manner set forth in Section 106, on or prior to
the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto which
set such record date shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.

 

Without limiting the
foregoing, a Holder entitled hereunder to take any action hereunder with regard
to any particular Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly appointed agents each
of which may do so pursuant to such appointment with regard to all or any part
of such principal amount.

 

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

 

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

 

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

 

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

 

SECTION 106. Notice to Holders; Waiver.

 

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

 

10

 

such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.

 

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

 

SECTION 107. Conflict with Trust Indenture Act.

 

If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act
which is required under such Act to be a part of and govern this Indenture, the
latter provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.

 

SECTION 108. Effect of Headings and Table of Contents.

 

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

 

SECTION 109. Successors and Assigns.

 

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

 

SECTION 110. Separability Clause.

 

In case any provision in
this Indenture, the Securities or the Subsidiary Guarantees shall be invalid,
illegal or unenforceable, the validity, legality and enforce ability of the
remaining provisions shall not in any way be affected or impaired thereby.

 

SECTION 111. Benefits of Indenture.

 

Nothing in this Indenture,
the Securities or the Subsidiary Guarantees, express or implied, shall give to
any Person, other than the parties hereto and their successors hereunder, the
holders of Senior Debt and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.

 

SECTION 112. Governing Law.

 

This Indenture, the
Securities and the Subsidiary Guarantees shall be governed by and construed in
accordance with the law of the State of New York.

 

SECTION 113. Legal Holidays.

 

In any case where any
Interest Payment Date, Redemption Date, purchase date or Stated Maturity of any
Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of

 

11

 

Payment with the same force
and effect as if made on the Interest Payment Date, Redemption Date or purchase
date, or at the Stated Maturity.

 

SECTION 114.
No Recourse Against Others.

 

The
directors, officers, employees and stockholders of the Company and, if
applicable, the Subsidiary Guarantors, as such, shall have no liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities,
any Subsidiary Guarantees of this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. By accepting a
Security, each Holder shall be deemed to have waived and released all such
liability. The waiver and release shall be a part of the consideration for the
issue of the Securities.

 

ARTICLE TWO

 

SECURITY
FORMS

 

SECTION 201. Forms Generally.

 

The Securities of each
series and, if applicable, the notations of Subsidiary Guarantees to be
endorsed thereon shall be in substantially the form set forth in this Article,
or in such other form as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities
exchange or Depositary therefor or as may, consistently herewith, be determined
by the officers executing such Securities or notations of Subsidiary Guarantees,
as the case may be, as evidenced by their execution thereof. If the form of
Securities of any series is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified
by the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by
Section 303 for the authentication and delivery of such Securities.

 

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

 

SECTION 202. Form of Face of Security.

 

[Insert any legend required
by the Internal Revenue Code and the regulations thereunder.]

 

BPZ Resources, Inc.

 

	
  No.

  	
   

  	
  $

  

 

BPZ Resources, Inc., a
corporation duly organized and existing under the laws of Texas (herein called
the “Company,” which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to                         
, or registered assigns, the principal sum of                         
Dollars on                         
[if the Security is to bear interest prior to Maturity, insert — , and to
pay interest thereon from

 

12

 

or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on
                
and                 
in each year, commencing                 
, at the rate of     % per annum, until the principal
hereof is paid or made available for payment, provided that any principal and
premium, and any such installment of interest, which is overdue shall bear
interest at the rate of        % per
annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand. 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 Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest, which shall
be the                 
or                 
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture].

 

[If the Security is not to
bear interest prior to Maturity, insert — The principal of this Security shall
not bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the
overdue principal and any overdue premium shall bear interest at the rate of        %
per annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment. Interest on any overdue principal or premium shall be
payable on demand. Any such interest on overdue principal or premium which is
not paid on demand shall bear interest at the rate of       %
per annum (to the extent that the payment of such interest on interest shall be
legally enforceable), from the date of such demand until the amount so demanded
is paid or made available for payment. Interest on any overdue interest shall
be payable on demand.]

 

Payment of the principal of
(and premium, if any) and [if applicable, insert — any such] interest on this
Security will be made at the office or agency of the Company maintained for
that purpose in                 
, 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 payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register.

 

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

 

Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

 

13

 

IN WITNESS WHEREOF, the Company
has caused this instrument to be duly executed under its corporate seal.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
  BPZ Resources, Inc.

  
	
   

  	
  By

  
	
   

  	
   

  
	
  Attest:

  	
   

  

 

SECTION 203. Form of Reverse of Security.

 

This Security is one of a
duly authorized issue of securities of the Company (herein called the “Securities”),
issued and to be issued in one or more series under an Indenture, dated as of             
, 200    (herein called the “Indenture”, which term shall have the
meaning assigned to it in such instrument), among the Company, the Subsidiary
Guarantors named therein and                 
, as Trustee (herein called the “Trustee”, which term includes any successor
trustee under the Indenture), and reference is hereby made to the Indenture for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Subsidiary Guarantors, the Trustee,
the holders of Senior Debt and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof [if applicable,
insert — , limited in aggregate principal amount to $                ].

 

[If applicable, insert — The
Securities of this series are subject to redemption upon not less than 30 days’
notice by mail, [if applicable, insert — (1) on                 
in any year commencing with the year             
and ending with the year             
through operation of the sinking fund for this series at a Redemption Price
equal to 100% of the principal amount, and (2)] at any time [if applicable,
insert — on or after             
, 20     ], as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [if applicable, insert — on or before                 
,       %, and if redeemed] during the
12-month period beginning             
of the years indicated,

 

	
  Year

  	
   

  	
  Redemption

  Price

  	
   

  	
  Year

  	
   

  	
  Redemption

  Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

and thereafter at a
Redemption Price equal to       % of the
principal amount, together in the case of any such redemption [if applicable,
insert — (whether through operation of the sinking fund or otherwise)] with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof, all
as provided in the Indenture.]

 

[If applicable, insert — The
Securities of this series are subject to redemption upon not less than 30 days’
notice by mail, (1) on
             in any
year commencing with the year             
and ending with the year             
through operation of the sinking fund for this series at the Redemption Prices
for redemption through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below, and (2) at any time
[if

 

14

 

applicable, insert — on or
after                 ],
as a whole or in part, at the election of the Company, at the Redemption Prices
for redemption otherwise than through operation of the sinking fund (expressed
as percentages of the principal amount) set forth in the table below: If
redeemed during the 12-month period beginning                 
of the years indicated,

 

	
  Year

  	
   

  	
  Redemption Price For

   Redemption Through Operation

   of the Sinking Fund

  	
   

  	
  Redemption Price For

   Redemption Otherwise

   Than Through Operation

   of the Sinking Fund

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

and thereafter at a
Redemption Price equal to       % of the
principal amount, together in the case of any such redemption (whether through
operation of the sinking fund or otherwise) with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]

 

[If applicable, insert —
Notwithstanding the foregoing, the Company may not, prior to
                ,
redeem any Securities of this series as contemplated by [if applicable, insert
— clause (2) of] the preceding paragraph as a part of, or in anticipation
of, any refunding operation by the application, directly or indirectly, of
moneys borrowed having an interest cost to the Company (calculated in
accordance with generally accepted financial practice) of less than       %
per annum.]

 

[If applicable, insert — The
sinking fund for this series provides for the redemption on
                
in each year beginning with the year
             and
ending with the year             
of [if applicable, insert — not less than $                
(“mandatory sinking fund”) and not more than] $                
aggregate principal amount of Securities of this series. Securities of this
series acquired or redeemed by the Company otherwise than through [if
applicable, insert — mandatory] sinking fund payments may be credited against
subsequent [if applicable, insert — mandatory] sinking fund payments otherwise
required to be made [if applicable, insert — , in the inverse order in which
they become due].]

 

[If the Security is subject
to redemption of any kind, insert — In the event of redemption of this Security
in part only, a new Security or Securities of this series and of like tenor for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.]

 

[If the Security is subject
to conversion, insert — Subject to the provisions of the Indenture, the Holder
has the right to convert the principal amount of this Security into fully paid
and nonassessable shares of Common Stock of the Company at the initial
conversion price per share of Common Stock of $                
(or $                
in principal amount of Securities for each such share of Common Stock), or at
the adjusted conversion price then in effect, if adjustment has been made as
provided in the Indenture, upon surrender of the Security to the Conversion
Agent, together with a fully executed notice in substantially the form attached
hereto and, if required by the Indenture, an amount equal to accrued interest
payable on this Security.]

 

The indebtedness evidenced
by this Security is, to the extent provided in the Indenture, subordinate and
subject in right of payment to the prior payment in full of all Senior Debt of
the

 

15

 

Company, and this Security
is issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.

 

[If applicable, insert — As
provided in the Indenture and subject to certain limitations therein set forth,
the obligations of the Company under this Security are guaranteed on a senior
subordinated basis pursuant to the Indenture as indicated in the notation of
Subsidiary Guarantees endorsed hereon. The Indenture provides that a Subsidiary
Guarantor shall be released from its Subsidiary Guarantee upon compliance with
certain conditions.]

 

[If applicable, insert — The
Indenture contains provisions for Defeasance at any time of [the entire
indebtedness of this Security] [or] [certain restrictive covenants and Events
of Default with respect to this Security] [, in each case] upon compliance with
certain conditions set forth in the Indenture.]

 

[If the Security is not an
Original Issue Discount Security, insert — If an Event of Default with respect
to Securities of this series shall occur and be continuing, the principal of
the Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture.]

 

[If the Security is an
Original Issue Discount Security, insert — If an Event of Default with respect
to Securities of this series shall occur and be continuing, an amount of
principal of the Securities of this series may be declared due and payable in
the manner and with the effect provided in the Indenture. Such amount shall be
equal to — insert formula for determining the amount. Upon payment (i) of
the amount of principal so declared due and payable and (ii) of interest
on any overdue principal, premium and interest (in each case to the extent that
the payment of such interest shall be legally enforceable), all of the Company’s
obligations in respect of the payment of the principal of and premium and
interest, if any, on the Securities of this series shall terminate.]

 

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 Securities of each series to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding of each
series to be affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, 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 Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security 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 Security.

 

As provided in and subject
to the provisions of the Indenture, the Holder of this Security shall not have
the right to institute any proceeding with respect to the Indenture or for the

 

16

 

appointment of a receiver or
trustee or for any other remedy thereunder, unless such Holder shall have
previously given the Trustee written notice of a continuing Event of Default
with respect to the Securities of this series, the Holders of not less than 25%
in principal amount of the Securities of this series at the time Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity, and the Trustee shall not have received from the Holders of a
majority in principal amount of Securities of this series at the time
Outstanding a direction inconsistent with such request, and shall have failed
to institute any such proceeding, for 60 days after receipt of such notice,
request and offer of indemnity. The foregoing shall not apply to any suit instituted
by the Holder of this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the respective due dates
expressed herein [if applicable, insert — or the right to convert this Security
in accordance with its terms].

 

No reference herein to the
Indenture and no provision of this Security or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of and any premium and interest on this Security at the
times, place and rate, and in the coin or currency, herein prescribed [if
applicable, insert — and to convert this Security in accordance with its
terms].

 

As provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this
Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company in
any place where the principal of and any premium and interest on this Security
are payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

 

The Securities of this
series are issuable only in registered form without coupons in denominations of
$                
and any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder 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 tax or other governmental
charge payable in connection therewith.

 

Prior to due presentment of
this Security 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
Security is registered as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.

 

All terms used in this
Security which are defined in the Indenture shall have the meanings assigned to
them in the Indenture.

 

17

 

SECTION 204. Form of Notation of Subsidiary Guarantee.

 

NOTATION OF SUBSIDIARY GUARANTEE

 

Each
of the Subsidiary Guarantors (which term includes any successor Person under
the Indenture) has fully, unconditionally and absolutely guaranteed, to the
extent set forth in the Indenture and subject to the provisions in the
Indenture, the due and punctual payment of the principal of, and premium, if
any, and interest on the Securities and all other amounts due and payable under
the Indenture and the Securities by the Company.

 

The
obligations of the Subsidiary Guarantors to the Holders of Securities and to
the Trustee pursuant to the Subsidiary Guarantee and the Indenture are
expressly set forth in Article Thirteen of the Indenture and reference is
hereby made to the Indenture for the precise terms of the Subsidiary Guarantee.

 

	
   

  	
  [Insert
  Names of Subsidiary Guarantors]

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  

 

SECTION 205. Form of Legend for Global Securities.

 

Unless otherwise specified
as contemplated by Section 301 for the Securities evidenced thereby, every
Global Security authenticated and delivered hereunder shall bear a legend in
substantially the following form:

 

THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT
BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN
THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

SECTION 206. Form of Trustee’s Certificate of
Authentication.

 

The Trustee’s certificates
of authentication shall be in substantially the following form:

 

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

 

	
   

  	
   

  	
  ,

  
	
   

  	
  As Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  

 

18

 

SECTION 207.
Form of Conversion Notice.

 

Each
convertible Security shall have attached thereto, or set forth on the reverse
of the Security, a notice of conversion in substantially the following form:

 

Conversion Notice

 

To:
   BPZ Resources, Inc.

 

The
undersigned owner of this Security hereby: (i) irrevocably exercises the
option to convert this Security, or the portion hereof below designated, for
shares of Common Stock of BPZ Resources, Inc. in accordance with the terms
of the Indenture referred to in this Security and (ii) directs that such
shares of Common Stock deliverable upon the conversion, together with any check
in payment for fractional shares and any Security(ies) representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares are
to be delivered registered in the name of a Person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto. Any
amount required to be paid by the undersigned on account of interest
accompanies this Security.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

Fill
in for registration of shares if to be delivered, and of Securities if to be
issued, otherwise than to and in the name of the registered holder.

 

	
   

  	
   

  	
  Social
  Security or other

  
	
   

  	
   

  	
  Taxpayer
  Identification Number

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Please
  print name and address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal
  amount to be converted: (if less than all)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Guarantee*

  	
   

  	
   

  

 

	
  *

  	
  Participant in a
  recognized Signature Guarantee Medallion Program (or other signature
  acceptable to the Trustee).

  

 

19

 

ARTICLE THREE

 

THE
SECURITIES

 

SECTION 301. Amount Unlimited; Issuable in Series.

 

The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.

 

The Securities may be issued
in one or more series. There shall be established in or pursuant to a Board
Resolution and, subject to Section 303, set forth, or determined in the
manner provided, in an Officers’ Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series,

 

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

 

(2)
if the Securities of the series will not have the benefit of the Subsidiary
Guarantees of the Subsidiary Guarantors;

 

(3)
any change to the subordination provisions which applies to the Securities of
the series from those contained in Article Twelve with respect to the
Securities and/or, if applicable, those contained in Article Fourteen with
respect to the Subsidiary Guarantees, and the definitions of Senior Debt and
Designated Senior Debt which shall apply to the Securities of the series, and,
if applicable, the Subsidiary Guarantees;

 

(4)
any limit upon the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to
Section 304, 305, 306, 906 or 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);

 

(5)
the Person to whom any interest on a Security of the series shall be payable,
if other than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest;

 

(6)
the date or dates on which the principal of any Securities of the series is payable;

 

(7)
the rate or rates at which any Securities of the series shall bear interest, if
any, the date or dates from which any such interest shall accrue, the Interest
Payment Dates on which any such interest shall be payable and the Regular
Record Date for any such interest payable on any Interest Payment Date;

 

(8)
the place or places where the principal of and any premium and interest on any
Securities of the series shall be payable;

 

(9) the period or periods
within which, the price or prices at which and the terms and conditions upon
which any Securities of the series may be redeemed, in whole or in part, at the
option of the Company and, if other than by a Board Resolution, the manner in
which any election by the Company to redeem the Securities shall be evidenced;

 

(10)
the obligation, if any, of the Company to redeem or purchase any Securities of
the series pursuant to any sinking fund or analogous provisions or at the
option of the Holder thereof and the period or periods within which, the price
or prices at which and the terms and conditions upon which any Securities of
the series shall be redeemed or purchased, in whole or 

 

20

 

in part, pursuant to such
obligation;

 

(11)
if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which any Securities of the series shall be issuable;

 

(12)
if the amount of principal of or any premium or interest on any Securities of
the series may be determined with reference to an index or pursuant to a
formula, the manner in which such amounts shall be determined;

 

(13)
if other than the currency of the United States of America, the currency,
currencies or currency units in which the principal of or any premium or
interest on any Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose, including for purposes of the definition of “Outstanding”
in Section 101;

 

(14)
if the principal of or any premium or interest on any Securities of the series
is to be payable, at the election of the Company or the Holder thereof, in one
or more currencies or currency units other than that or those in which such
Securities are stated to be payable, the currency, currencies or currency units
in which the principal of or any premium or interest on such Securities as to
which such election is made shall be payable, the periods within which and the
terms and conditions upon which such election is to be made and the amount so
payable (or the manner in which such amount shall be determined);

 

(15)
if other than the entire principal amount thereof, the portion of the principal
amount of any Securities of the series which shall be payable upon declaration
of acceleration of the Maturity thereof pursuant to Section 502;

 

(16)
if the principal amount payable at the Stated Maturity of any Securities of the
series will not be determinable as of any one or more dates prior to the Stated
Maturity, the amount which shall be deemed to be the principal amount of such
Securities as of any such date for any purpose thereunder or hereunder,
including the principal amount thereof which shall be due and payable upon any
Maturity other than the Stated Maturity or which shall be deemed to be
Outstanding as of any date prior to the Stated Maturity (or, in any such case,
the manner in which such amount deemed to be the principal amount shall be
determined);

 

(17) if applicable, that the
Securities of the series, in whole or any specified part, shall be defeasible
pursuant to Section 1502 or Section 1503 or both such Sections and,
if other than by a Board Resolution, the manner in which any election by the
Company to defease such Securities shall be evidenced;

 

(18)
if applicable, that any Securities of the series shall be issuable in whole or
in part in the form of one or more Global Securities and, in such case, the
respective Depositories for such Global Securities, the form of any legend or
legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 205 and any circumstances in addition to
or in lieu of those set forth in clause (2) of the last paragraph of
Section 305 in which any such Global Security may be exchanged in whole or
in part for Securities registered, and any transfer of such Global Security in
whole or in part may be registered, in the name or names of Persons other than
the Depositary for such Global Security or a nominee thereof;

 

(19)
any addition to or change in the Events of Default which applies to any
Securities of the series and any change in the right of the Trustee or the
requisite Holders of such Securities to declare the principal amount thereof
due and payable pursuant to Section 502;

 

21

 

(20)
any addition to or change in the covenants set forth in Article Ten which
applies to Securities of the series;

 

(21)
whether the Securities of the series will be convertible into Capital Stock (or
cash in lieu thereof) and, if so, the terms and conditions upon which such
conversion will be effected; and

 

(22)
any other terms of the series (which terms shall not be inconsistent with the
provisions of this Indenture, except as permitted by Section 901(5)).

 

All Securities of any one
series shall be substantially identical except as to denomination and except as
may otherwise be provided in or pursuant to the Board Resolution referred to
above and (subject to Section 303) set forth, or determined in the manner
provided, in the Officers’ Certificate referred to above or in any such
indenture supplemental hereto.

 

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

 

The Securities of each
series shall have the benefit of the Subsidiary Guarantees unless the Company
elects otherwise upon the establishment of a series pursuant to this
Section 301.

 

The Securities shall be
subordinated in right of payment to Senior Debt of the Company as provided in
Article Twelve. Each Subsidiary Guarantee shall be subordinated in right of
payment to Senior Debt of the applicable Subsidiary Guarantor as provided in
Article Fourteen.

 

SECTION 302. Denominations.

 

The Securities of each
series shall be issuable only in registered form without coupons and only in
such denominations as shall be specified as contemplated by Section 301.
In the absence of any such specified denomination with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.

 

SECTION 303. Execution, Authentication, Delivery and Dating.

 

The Securities shall be
executed on behalf of the Company by its Chairman of the Board of Directors,
its Vice Chairman of the Board of Directors, its President or one of its Vice
Presidents. If its corporate seal is reproduced thereon, then it shall be
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.

 

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

 

At any time and from time to
time after the execution and delivery of this Indenture, the Company may
deliver Securities of any series executed by the Company and, if applicable,
having endorsed thereon the notations of Subsidiary Guarantees executed as
provided in Section 1303 by the Subsidiary Guarantors to the Trustee for
authentication, together with a 

 

22

 

Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall
be fully protected in relying upon, an Opinion of Counsel stating,

 

(1)
if the form of such Securities has been established by or pursuant to Board
Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;

 

(2)
if the terms of such Securities have been established by or pursuant to Board
Resolution as permitted by Section 301, that such terms have been
established in conformity with the provisions of this Indenture; and

 

(3)
that such Securities, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and legally binding obligations
of the Company, and, if applicable, the notations of Subsidiary Guarantees
endorsed thereon will constitute valid and legally binding obligations of the
Subsidiary Guarantors, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles.

 

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

 

Notwithstanding the
provisions of Section 301 and of the preceding paragraph, if all
Securities of a series are not to be originally issued at one time, it shall
not be necessary to deliver the Officers’ Certificate otherwise required
pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.

 

Each Security shall be dated
the date of its authentication.

 

No Security or Subsidiary
Guarantee shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Security a certificate
of authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Security to the
Trustee for cancellation as provided in Section 309, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.

 

23

 

SECTION 304. Temporary Securities.

 

Pending the preparation of
definitive Securities of any series, the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary Securities which
are printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities and, if applicable, having endorsed thereon the notations of
Subsidiary Guarantees in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities and, if applicable, notations of Subsidiary
Guarantees may determine, as evidenced by their execution of such Securities
and notations of Subsidiary Guarantees.

 

If temporary Securities of
any series are issued, the Company will cause definitive Securities of that
series to be prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of such series
shall be exchangeable for definitive Securities of such series upon surrender
of the temporary Securities of such series at the office or agency of the
Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor one or more definitive Securities of the same
series, of any authorized denominations and of like tenor and aggregate
principal amount and, if applicable, having endorsed thereon notations of
Subsidiary Guarantees executed by the Subsidiary Guarantors. Until so
exchanged, the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series and tenor.

 

SECTION 305. Registration, Registration of Transfer and
Exchange.

 

The Company shall cause to
be kept at the Corporate Trust Office of the Trustee a register (the register
maintained in such office and in any other office or agency of the Company in a
Place of Payment being herein sometimes collectively referred to as the “Security
Register”) in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed “Security Registrar”
for the purpose of registering Securities and transfers of Securities as herein
provided.

 

Upon surrender for
registration of transfer of any Security of a series at the office or agency of
the Company in a Place of Payment for that series, the Company shall execute,
if applicable the Subsidiary Guarantors shall execute the notations of Subsidiary
Guarantees endorsed thereon and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount.

 

At the option of the Holder,
Securities of any series may be exchanged for other Securities of the same
series, of any authorized denominations and of like tenor and aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, if applicable the Subsidiary Guarantors shall execute
the notations of Subsidiary Guarantees endorsed thereon and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.

 

24

 

All Securities and, if
applicable, the Subsidiary Guarantees endorsed thereon issued upon any
registration of transfer or exchange of Securities shall be the valid
obligations of the Company and, if applicable, the respective Subsidiary
Guarantors, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities and Subsidiaries Guarantees surrendered upon
such registration of transfer or exchange.

 

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

 

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

 

If the Securities of any
series (or of any series and specified tenor) are to be redeemed in part, the
Company shall not be required (A) to issue, register the transfer of or
exchange any Securities of that series (or of that series and specified tenor,
as the case may be) during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of any such
Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.

 

The provisions of clauses
(1), (2), (3) and (4) below shall apply only to Global Securities:

 

(1)
Each Global Security authenticated under this Indenture shall be registered in
the name of the Depositary designated for such Global Security or a nominee
thereof and delivered to such Depositary or a nominee thereof or custodian
therefor, and each such Global Security shall constitute a single Security for
all purposes of this Indenture.

 

(2)
Notwithstanding any other provision in this Indenture, no Global Security may
be exchanged in whole or in part for Securities registered, and no transfer of
a Global Security in whole or in part may be registered, in the name of any
Person other than the Depositary for such Global Security or a nominee thereof
unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or
(ii) has ceased to be a clearing agency registered under the Exchange Act,
and in either case the Company fails to appoint a successor Depositary within
90 days, (B) there shall have occurred and be continuing an Event of
Default with respect to such Global Security and the Depositary shall have
notified the Trustee of its decision to exchange such Global Security for
Securities in certificated form or (C) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have been
specified for this purpose as contemplated by Section 301.

 

(3)
Subject to clause (2) above, any exchange of a Global Security for other
Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.

 

25

 

(4)
Every Security authenticated and delivered upon registration of transfer of, or
in exchange for or in lieu of, a Global Security or any portion thereof,
whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.

 

SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.

 

If any mutilated Security is
surrendered to the Trustee, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
and of like tenor and principal amount and bearing a number not contemporaneously
outstanding, and, if applicable, the Subsidiary Guarantors shall execute the
notation of Subsidiary Guarantee endorsed thereon.

 

If there shall be delivered
to the Company and the Trustee (i) evidence to their satisfaction of the
destruction, loss or theft of any Security 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 Security has been acquired by a bona fide purchaser, the
Company shall execute and the Trustee shall authenticate and deliver, in lieu
of any such destroyed, lost or stolen Security, a new Security of the same
series and of like tenor and principal amount and bearing a number not contemporaneously
outstanding, and, if applicable, the Subsidiary Guarantors shall execute the
notation of Subsidiary Guarantee endorsed thereon.

 

In case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and
payable or is to be converted, the Company in its discretion may, instead of
issuing a new Security, pay or authorize the conversion of such Security
(without surrender thereof save in the case of a mutilated Security).

 

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

 

Every new Security of any
series issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, and, if applicable, the Subsidiary Guarantees endorsed thereon, shall
constitute an original additional contractual obligation of the Company and, if
applicable, the respective Subsidiary Guarantors, whether or not the destroyed,
lost or stolen Security 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 Securities of that series duly issued hereunder.

 

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

 

SECTION 307. Payment of Interest; Interest Rights Preserved.

 

Except as otherwise provided
as contemplated by Section 301 with respect to any series of 

 

26

 

Securities, interest on any
Security which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest.

 

Any interest on any Security
of any series which is payable, but is not punctually paid or duly provided
for, on any Interest Payment Date (herein called “Defaulted Interest”) shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder, and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in clause (1) or
(2) below:

 

(1)
The Company may elect to make payment of any Defaulted Interest to the Persons
in whose names the Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Security of such series and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Securities of such series in the manner
set forth in Section 106, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).

 

(2)
The Company may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.

 

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

 

27

 

SECTION 308. Persons Deemed Owners.

 

Prior to due presentment of
a Security for registration of transfer, the Company, the Subsidiary
Guarantors, the Trustee and any agent of the Company, the Subsidiary
Guarantors, or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment
of principal of and any premium and (subject to Section 307) any interest
on such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, any Subsidiary Guarantor, the
Trustee nor any agent of the Company, any Subsidiary Guarantor, or the Trustee
shall be affected by notice to the contrary.

 

SECTION 309. Cancellation.

 

All Securities surrendered
for payment, redemption, purchase, registration of transfer or exchange or for
credit against any sinking fund payment shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver
to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the
Company has not issued and sold, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be disposed of as directed by a Company Order.

 

SECTION 310. Computation of Interest.

 

Except as otherwise
specified as contemplated by Section 301 for Securities of any series,
interest on the Securities of each series shall be computed on the basis of a
360-day year of twelve 30-day months.

 

ARTICLE FOUR

 

SATISFACTION
AND DISCHARGE

 

SECTION 401. Satisfaction and Discharge of Indenture.

 

This Indenture shall upon Company
Request cease to be of further effect (except as to any surviving rights of
conversion, registration of transfer or exchange of Securities herein expressly
provided for) with respect to the Securities of any series, and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when

 

(1)
either

 

(A)
all Securities of such series theretofore authenticated and delivered (other
than (i) Securities of such series which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 306 and
(ii) Securities of such series for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in 

 

28

 

Section 1003) have been
delivered to the Trustee for cancellation; or

 

(B)
all such Securities of such series not theretofore delivered to the Trustee for
cancellation

 

(i)
have become due and payable, or

 

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

 

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

 

and the Company or, if
applicable, a Subsidiary Guarantor, in the case of (i), (ii) or
(iii) above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose money in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal and any premium and interest to
the date of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;

 

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

 

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

 

Notwithstanding the
satisfaction and discharge of this Indenture, the obligations of the Company to
the Trustee under Section 607, the obligations of the Trustee to any
Authenticating Agent under Section 614 and, if money shall have been
deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the
last paragraph of Section 1003 shall survive.

 

SECTION 402. Application of Trust Money.

 

Subject to the provisions of
the last paragraph of Section 1003, all money deposited with the Trustee
pursuant to Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities 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 any premium and interest for whose
payment such money has been deposited with the Trustee.

 

ARTICLE FIVE

 

REMEDIES

 

SECTION 501. Events of Default.

 

“Event of Default”, wherever
used herein with respect to Securities of any series, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

29

 

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

 

(2) default
in the payment of the principal of or any premium on any Security of that
series at its Maturity; or

 

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

 

(4) default
in the performance, or breach, of any covenant of the Company or, if the
Subsidiary Guarantors have issued Subsidiary Guarantees with respect to the
Securities of such series, any Subsidiary Guarantor in Article Eight of
this Indenture; or

 

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

 

(6) the
entry by a court having jurisdiction in the premises of (A) a decree or
order for relief in respect of the Company, any Significant Subsidiary or, if
the Subsidiary Guarantors have issued Subsidiary Guarantees with respect to the
Securities of such series, any Subsidiary Guarantor in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company, any Significant Subsidiary or any such Subsidiary Guarantor a bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company, any Significant
Subsidiary or any such Subsidiary Guarantor under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, any Significant
Subsidiary [or any such Subsidiary Guarantor] or of any substantial part of its
or their property, or ordering the winding up or liquidation of its or their
affairs, and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60 consecutive
days; or

 

(7) the
commencement by the Company, any Significant Subsidiary or, if the Subsidiary
Guarantors have issued Subsidiary Guarantees with respect to the Securities of
such series, any Subsidiary Guarantor of a voluntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it or them to the entry of a decree or order for
relief in respect of the Company, any Significant Subsidiary or any such
Subsidiary Guarantor in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
it or them, or the filing by it or them of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it or them to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other 

 

30

 

similar official of the
Company, any Significant Subsidiary or any such Subsidiary Guarantor or of any
substantial part of its or their property, or the making by it or them of an
assignment for the benefit of creditors, or the admission by it or them in
writing of its or their inability to pay its or their debts generally as they
become due, or the taking of corporate action by the Company, any Significant
Subsidiary or any such Subsidiary Guarantor in furtherance of any such action;
or

 

(8) in
the event the Subsidiary Guarantors have issued Subsidiary Guarantees with
respect to the Securities of such series, the Subsidiary Guarantee of any
Subsidiary Guarantor is held by a final non-appealable order or judgment of a
court of competent jurisdiction to be unenforceable or invalid or ceases for
any reason to be in full force and effect (other than in accordance with the
terms of this Indenture) or any Subsidiary Guarantor or any Person acting on
behalf of any Subsidiary Guarantor denies or disaffirms such Subsidiary
Guarantor’s obligations under its Subsidiary Guarantee (other than by reason of
a release of such Subsidiary Guarantor from its Subsidiary Guarantee in
accordance with the terms of this Indenture); or

 

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

 

SECTION 502. Acceleration of Maturity; Rescission and Annulment.

 

If an Event of Default
(other than an Event of Default with respect to the Company specified in
Section 501(6) or 501(7)) with respect to Securities of any series at
the time Outstanding occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount of all
the Securities of that series (or, if any Securities of that series are
Original Issue Discount Securities, such portion of the principal amount of
such Securities as may be specified by the terms thereof) 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) shall become immediately due and payable. If an Event of Default with
respect to the Company specified in Section 501(6) or 501
(7) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified by the terms
thereof) shall automatically, and without any declaration or other action on
the part of the Trustee or any Holder, become immediately due and payable.

 

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

 

(1) the
Company or, if applicable, any Subsidiary Guarantor has paid or deposited with
the Trustee a sum sufficient to pay

 

(A) all
overdue interest on all Securities of that series,

 

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

 

31

 

(C) to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate or rates prescribed therefor in such Securities, and

 

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

 

and

 

(2) all
Events of Default with respect to Securities of that series, other than the
non-payment of the principal of Securities of that series which has become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 513.

 

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

 

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

 

The Company covenants that
if

 

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

 

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

 

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

 

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

 

SECTION 504. Trustee May File Proofs of Claim.

 

In case of any judicial
proceeding relative to the Company, any Subsidiary Guarantor or any other
obligor upon the Securities, or the property or creditors of the Company, any
Subsidiary Guarantor or any other obligor upon the Securities, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, 

 

32

 

disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607.

 

No provision of this
Indenture 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 Securities or any
Subsidiary Guarantee 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;
provided, however, that the Trustee may, on behalf of the Holders, vote for the
election of a trustee in bankruptcy or similar official and be a member of a
creditors’ or other similar committee.

 

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

 

All rights of action and
claims under this Indenture or the Securities or any Subsidiary Guarantee may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities 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 Securities in respect of which such
judgment has been recovered.

 

SECTION 506. Application of Money Collected.

 

Any money collected by the
Trustee pursuant to this Article shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal or any premium or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:

 

FIRST:
To the payment of all amounts due the Trustee under Section 607; and

 

SECOND:
Subject to Article Twelve and Article Fourteen, to the payment of the
amounts then due and unpaid for principal of and any premium and interest on
the Securities 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 Securities for principal and any premium
and interest, respectively.

 

SECTION 507. Limitation on Suits.

 

No Holder of any Security of
any series shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.

 

Notwithstanding any other provision
in this Indenture, the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal of and any
premium and (subject to Section 307) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or offer by the Company to purchase the Securities pursuant to the
terms of this Indenture, on the Redemption Date or purchase date, as
applicable) 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 509. 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 Subsidiary Guarantors, the Trustee and the Holders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.

 

SECTION 510. Rights and Remedies Cumulative.

 

Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities in the last paragraph of Section 306, 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 511. Delay or Omission Not Waiver.

 

No delay or omission of the
Trustee or of any Holder of any Securities 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 

 

34

 

time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

 

SECTION 512. Control by Holders.

 

The Holders of a majority in
principal amount of the Outstanding Securities of any series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities of such series, provided that

 

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

 

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

 

SECTION 513. Waiver of Past Defaults.

 

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

 

(1) in
the payment of the principal of or any premium or interest on any Security of
such series (including any Security which is required to have been purchased by
the Company pursuant to an offer to purchase by the Company made pursuant to
the terms of this Indenture), or

 

(2) in
respect of a covenant or provision hereof which under Article Nine cannot
be modified or amended without the consent of the Holder of each Outstanding
Security of such series affected.

 

Upon any such waiver, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

 

SECTION 514. Undertaking for Costs.

 

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, a court
may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in
the manner and to the extent provided in the Trust Indenture Act; provided,
however, that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company or any Subsidiary Guarantor.

 

SECTION 515. Waiver of Usury, Stay or Extension Laws.

 

Each of the Company and the
Subsidiary Guarantors covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and each of the Company and the
Subsidiary Guarantors (to the extent that it may 

 

35

 

lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

 

ARTICLE SIX

 

THE
TRUSTEE

 

SECTION 601. Certain Duties and Responsibilities.

 

The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture
Act. Notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Whether or not
therein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.

 

SECTION 602. Notice of Defaults.

 

If a default occurs hereunder
with respect to Securities of any series, the Trustee shall give the Holders of
Securities of such series notice of such default as and to the extent provided
by the Trust Indenture Act; provided, however, that in the case of any default
of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section,
the term “default” means any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to Securities of such
series.

 

SECTION 603. Certain Rights of Trustee.

 

Subject to the provisions of
Section 601:

 

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

 

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

 

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

 

(4) the
Trustee may consult with counsel and the written 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;

 

36

 

(5) the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, 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;

 

(6) the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney; and

 

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

 

SECTION 604. Not Responsible for Recitals or Issuance of
Securities.

 

The recitals contained
herein and in the Securities and the notations Subsidiary Guarantees, except
the Trustee’s certificates of authentication, shall be taken as the statements
of the Company or the Subsidiary Guarantors, as the case may be, and neither
the Trustee nor any Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities or the Subsidiary
Guarantees. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Securities or the
proceeds thereof.

 

SECTION 605. May Hold Securities.

 

The Trustee, any
Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company or any Subsidiary Guarantor, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company and any Subsidiary
Guarantor with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.

 

SECTION 606. Money Held in Trust.

 

Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company or
any Subsidiary Guarantor, as the case may be.

 

SECTION 607. Compensation and Reimbursement.

 

The Company and each
Subsidiary Guarantor jointly and severally agree

 

(1) to
pay to the Trustee from time to time reasonable compensation for all services 

 

37

 

rendered by it hereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

 

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

 

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

 

SECTION 608. Conflicting Interests.

 

If the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture. To the extent permitted by such Act, the
Trustee shall not be deemed to have a conflicting interest by virtue of being a
trustee under this Indenture with respect to Securities of more than one
series.

 

SECTION 609. Corporate Trustee Required; Eligibility.

 

There shall at all times be
one (and only one) Trustee hereunder with respect to the Securities of each
series, which may be Trustee hereunder for Securities of one or more other
series. Each Trustee shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such, and has a combined capital and surplus of at
least $50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section and to the
extent permitted by the Trust Indenture Act, the combined capital and surplus
of such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee with respect to the Securities of any series shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.

 

SECTION 610. Resignation and Removal; Appointment of Successor.

 

No resignation or removal of
the Trustee and no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Trustee
in accordance with the applicable requirements of Section 611.

 

The Trustee may resign at
any time with respect to the Securities of one or more series by giving written
notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

 

38

 

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

 

If
at any time:

 

(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or

 

(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by any
such Holder, or

 

(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (A) the Company by a Board Resolution
may remove the Trustee with respect to all Securities, or (B) subject to
Section 514, any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee or
Trustees.

 

If
the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, with respect to the
Securities of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such successor Trustee
may be appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series shall have been
so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder
of a Security of such series for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Securities of
such series.

 

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

 

39

 

SECTION 611. Acceptance of Appointment by Successor.

 

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

 

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

 

Upon
request of any such successor Trustee, the Company and the Subsidiary
Guarantors shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.

 

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

 

40

 

SECTION 612. Merger, Conversion, Consolidation or Succession to
Business.

 

Any
Person into which the Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to all or substantially all the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such Person shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. As soon as practicable, the successor Trustee shall mail a notice of
its succession to the Holders of the Securities then outstanding. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.

 

SECTION 613. Preferential Collection of Claims Against Company
and Subsidiary Guarantors.

 

If
and when the Trustee shall be or become a creditor of the Company, any
Subsidiary Guarantor or any other obligor upon the Securities, the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company, such Subsidiary Guarantor or any such
other obligor.

 

SECTION 614. Appointment of Authenticating Agent.

 

The
Trustee may appoint an Authenticating Agent or Agents with respect to one or
more series of Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee’s certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a Person organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.

 

Any
Person into which an Authenticating Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any Person succeeding to the corporate 

 

41

 

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

 

An
Authenticating Agent may resign at any time by giving written notice thereof to
the Trustee and to the Company. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such appointment
in the manner provided in Section 106 to all Holders of Securities of the
series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

 

The
Trustee agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section, and the Trustee shall be
entitled to be reimbursed for such payments, subject to the provisions of
Section 607.

 

If
an appointment with respect to one or more series is made pursuant to this
Section, the Securities of such series may have endorsed thereon, in addition
to the Trustee’s certificate of authentication, an alternative certificate of
authentication in the following form:

 

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

 

 

	
   

  	
   

  	
   ,

  
	
   

  	
  As Trustee

  	
   

  
	
  By

  	
   

  	
   ,

  
	
   

  	
  As Authenticating Agent

  	
   

  
	
  By

  	
   

  	
   ,

  
	
   

  	
  Authorized Officer

  	
   

  

 

ARTICLE SEVEN

 

HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders.

 

The
Company will furnish or cause to be furnished to the Trustee with respect to
the Securities of each series:

 

(1) not more than 10 days after each record date with respect to the
payment of interest, if any, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities of such series
as of such record date, and

 

(2) at such other times as the Trustee may request in writing, within 30
days after the 

 

42

 

receipt
by the Company of any such request, a list of similar form and content as of a
date not more than 15 days prior to the time such list is furnished;

 

excluding from any such list
names and addresses received by the Trustee in its capacity as Security
Registrar.

 

SECTION 702. Preservation of Information; Communications to
Holders.

 

The
Trustee shall preserve, in as current a form as is reasonably practicable, the
names and addresses of Holders contained in the most recent list furnished to
the Trustee as provided in Section 701 and the names and addresses of
Holders received by the Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided in Section 701
upon receipt of a new list so furnished.

 

The
rights of Holders to communicate with other Holders with respect to their
rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.

 

Every
Holder of Securities, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company, the Subsidiary Guarantors nor
the Trustee nor any agent of any of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.

 

SECTION 703. Reports by Trustee.

 

The
Trustee shall transmit to Holders such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.

 

A
copy of each such report shall, at the time of such transmission to Holders, be
filed by the Trustee with each stock exchange upon which any Securities are
listed, with the Commission and with the Company and with the Subsidiary
Guarantors. The Company will notify the Trustee when any Securities are listed
on any stock exchange.

 

SECTION 704. Reports by Company and Subsidiary Guarantors.

 

The
Company and each of the Subsidiary Guarantors shall file with the Trustee and
the Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act;
provided that any such information, documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within 15 days after the same is so required to
be filed with the Commission.

 

ARTICLE EIGHT

 

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 

SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms.

 

The
Company shall not, in a single transaction or a series of related transactions,
consolidate 

 

43

 

with or merge into any other
Person or permit any other Person to consolidate with or merge into the Company
or transfer, convey, sell, lease or otherwise dispose of all or substantially
all of its assets, unless:

 

(1) in a transaction in which the Company does not survive or in which
the Company transfers, conveys, sells, leases or otherwise disposes of all or
substantially all of its assets, the successor entity (for purposes of this
Article Eight, a “Successor Company”) shall be a corporation, partnership,
trust or other entity organized and validly existing under the laws of the
United States of America, 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, the due and
punctual payment of the principal of and any premium and interest on all the
Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed;

 

(2) immediately after giving pro forma effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;

 

(3) if, as a result of any such consolidation or merger or such
transfer, conveyance, sale, lease or other disposition, properties or assets of
the Company would become subject to a mortgage, pledge, lien, security interest
or other encumbrance which would not be permitted by this Indenture, the
Company or the Successor Company, as the case may be, shall take such steps as
shall be necessary effectively to secure the Securities equally and ratably
with (or prior to) all indebtedness secured thereby;

 

(4) any other conditions provided pursuant to Section 301 with
respect to the Securities of a series are satisfied; and

 

(5) the Company has delivered to the Trustee an Officers’ Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
transfer, conveyance, sale, lease or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.

 

SECTION 802. Subsidiary Guarantors May Consolidate, Etc., Only
on Certain Terms.

 

Except
in a transaction resulting in the release of a Subsidiary Guarantor in accordance
with the terms of this Indenture or as otherwise specified in a supplemental
indenture establishing a series of Securities pursuant to Section 301,
each Subsidiary Guarantor shall not, and the Company shall not permit any
Subsidiary Guarantor to, in a single or a series of related transactions,
consolidate or merge with or into any Person (other than the Company or another
Subsidiary Guarantor) or permit any Person (other than another Subsidiary
Guarantor) to consolidate or merge with or into such Subsidiary Guarantor or,
directly or indirectly, transfer, convey, sell, lease or otherwise dispose of
all or substantially all of its assets unless, in each case:

 

(1) in a transaction in which such Subsidiary Guarantor does not
survive or in which all or substantially all of the assets of such Subsidiary
Guarantor are transferred, conveyed, sold, leased or otherwise disposed of, the
successor entity (the “Successor Subsidiary Guarantor”) shall be a corporation,
partnership, trust or other entity organized and validly existing under the
laws of the United States of America, any State thereof or the District of
Columbia, and shall 

 

44

 

expressly
assume by an indenture supplemental hereto executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
all obligations of such Subsidiary Guarantor under its Subsidiary Guarantee and
this Indenture and the performance of every covenant of this Indenture on the
part of such Subsidiary Guarantor to be performed or observed; and

 

(2) the Company has delivered to the Trustee an Officers’ Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
transfer, conveyance, sale, lease or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture, comply with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.

 

SECTION 803. Successor Substituted.

 

(a)
Upon any consolidation of the Company with, or merger of the Company into, any
other Person or any transfer, conveyance, sale, lease or other disposition of
all or substantially all of the assets of the Company in accordance with
Section 801, the Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had been named as
the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Securities.

 

(b)
Upon any consolidation of a Subsidiary Guarantor with, or merger of such
Subsidiary Guarantor into, any other Person or any transfer, conveyance, sale,
lease or other disposition of all or substantially all of the assets of such
Subsidiary Guarantor in accordance with Section 802, the Successor
Subsidiary Guarantor shall succeed to, and be substituted for, and may exercise
every right and power of, such Subsidiary Guarantor under this Indenture with
the same effect as if such successor Person had been named as a Subsidiary
Guarantor herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and its Subsidiary Guarantee.

 

ARTICLE NINE

 

SUPPLEMENTAL INDENTURES

 

SECTION 901. Supplemental Indentures Without Consent of
Holders.

 

Without
the consent of any Holders, the Company, when authorized by a Board Resolution,
the Subsidiary Guarantors, when authorized by their respective Board
Resolutions, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

 

(1) to evidence the succession of another Person to the Company or any
Subsidiary Guarantor and the assumption by any such successor of the covenants
of the Company or any Subsidiary Guarantor herein and in the Securities or
Subsidiary Guarantees, as the case may be; or

 

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

 

45

 

(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or

 

(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of Securities
in uncertificated form; or

 

(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination (A) shall neither (i) apply to
any Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify
the rights of the Holder of any such Security with respect to such provision or
(B) shall become effective only when there is no such Security
Outstanding; or

 

(6) to secure the Securities; or

 

(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or

 

(8) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611; or

 

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

 

(10) to make any other provisions with respect to matters or questions
arising under this Indenture, provided that such action pursuant to clause
(9) above shall not adversely affect the interests of the Holders of
Securities of any series in any material respect; or

 

(11) to add new Subsidiary Guarantors.

 

SECTION 902. Supplemental Indentures With Consent of Holders.

 

With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company, the Subsidiary
Guarantors and the Trustee, the Company, when authorized by a Board Resolution,
the Subsidiary Guarantors, when authorized by their respective Board
Resolutions and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of modifying
in any manner the rights of the Holders of Securities of such series under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby:

 

(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an 

 

46

 

Original
Issue Discount Security or any other Security which would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency
in which, any Security or any premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date or in the case of an offer to purchase Securities which has
been made pursuant to a covenant contained in this Indenture, on or after the
applicable purchase date), or modify the provisions of this Indenture with respect
to the subordination of the Securities or the Subsidiary Guarantees in a manner
adverse to the Holders; or

 

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

 

(3) modify any of the provisions of this Section, Section 513 or
Section 1009, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this clause shall not be deemed to require the consent
of any Holder with respect to changes in the references to “the Trustee” and
concomitant changes in this Section and Section 1009, or the deletion of
this proviso, in accordance with the requirements of Sections 611 and 901(8);
or

 

(4) following the making of an offer to purchase Securities which has
been made pursuant to a covenant contained in this Indenture, modify the
provisions of this Indenture with respect to such offer to purchase in a manner
adverse to such Holder.

 

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

 

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

 

SECTION 903. Execution of Supplemental Indentures.

 

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

 

47

 

SECTION 904. Effect of Supplemental Indentures.

 

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

 

SECTION 905. Conformity with Trust Indenture Act.

 

Every
supplemental indenture executed pursuant to this Article shall conform to
the requirements of the Trust Indenture Act.

 

SECTION 906. Reference in Securities to Supplemental
Indentures.

 

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

 

ARTICLE TEN

 

COVENANTS

 

SECTION 1001. Payment of Principal, Premium and Interest.

 

The
Company covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay the principal of and any premium and interest
on the Securities of that series in accordance with the terms of the Securities
and this Indenture. Principle, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 11:00 A.M., New York City time, on the due
date monthly deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due.

 

SECTION 1002. Maintenance of Office or Agency.

 

The
Company will maintain in each Place of Payment for any series of Securities an
office or agency where Securities of that series may be presented or
surrendered for payment, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company or any Subsidiary Guarantor in respect of the Securities of that
series or any Subsidiary Guarantee and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the Trustee,
and the Company and each Subsidiary Guarantor hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and demands.

 

The
Company may also from time to time designate one or more other offices or
agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain 

 

48

 

an office or agency in each
Place of Payment for Securities of any series for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.

 

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

 

If
the Company or any Subsidiary Guarantor shall at any time act as its own Paying
Agent with respect to any series of Securities, it will, on or before each due
date of the principal of or any premium or interest on any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.

 

Whenever
the Company shall have one or more Paying Agents for any series of Securities,
it will, prior to 11:00 A.M., New York City time, on each due date of the
principal of or any premium or interest on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.

 

The
Company will cause each Paying Agent for any series of Securities other than
the Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company, the Subsidiary Guarantors, if
applicable, or any other obligor upon the Securities of that series in the
making of any payment in respect of the Securities of that series, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such Paying Agent for payment in respect of the Securities of that
series.

 

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

 

Any
money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in The City of New York, 

 

49

 

New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.

 

SECTION 1004. Statement by Officers as to Default.

 

(a) The
Company and the Subsidiary Guarantors will deliver to the Trustee, within 90
days after the end of each fiscal year of the Company ending after the date
hereof, an Officers’ Certificate, stating whether or not to the best knowledge
of the signers thereof the Company or any Subsidiary Guarantor, as the case may
be, is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company or any
Subsidiary Guarantor shall be in default, specifying all such defaults and the
nature and status thereof of which they may have knowledge.

 

(b) The
Company and each Subsidiary Guarantor shall deliver to the Trustee, as soon as
possible and in any event within five days after the Company or such Subsidiary
Guarantor becomes aware or should reasonably become aware of the occurrence of
an Event of Default or an event which, with notice or the lapse of time or
both, would constitute an Event of Default, an Officers’ Certificate setting
forth the details of such Event of Default or default, and the action which the
Company or such Subsidiary Guarantor proposes to take with respect thereto.

 

SECTION 1005. Existence.

 

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

 

SECTION 1006. Maintenance of Properties.

 

The
Company will cause all properties used or useful in the conduct of its business
or the business of any Subsidiary to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted) and supplied with
all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company
from discontinuing the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Subsidiary and not disadvantageous in
any material respect to the Holders.

 

SECTION 1007. Payment of Taxes and Other Claims.

 

The
Company will pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the
income, profits or property of the Company or any 

 

50

 

Subsidiary, and (2) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.

 

SECTION 1008. Maintenance of Insurance.

 

The
Company shall, and shall cause its Subsidiaries to, keep at all times all of
their properties which are of an insurable nature insured against loss or
damage with insurers believed by the Company to be responsible to the extent
that property of similar character is usually so insured by corporations similarly
situated and owning like properties in accordance with good business practice.

 

SECTION 1009. Waiver of Certain Covenants.

 

Except
as otherwise specified as contemplated by Section 301 for Securities of
such series, the Company may, with respect to the Securities of any series,
omit in any particular instance to comply with any term, provision or condition
set forth in any of Sections 1006 through 1008 or in any covenant provided
pursuant to Section 301(20), 901(2) or 901(7) for the benefit of
the Holders of such series if before the time for such compliance the Holders
of at least a majority in principal amount of the Outstanding Securities of
such series shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or condition,
but no such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect.

 

ARTICLE ELEVEN

 

REDEMPTION OF SECURITIES

 

SECTION 1101. Applicability of Article.

 

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

 

SECTION 1102. Election to Redeem; Notice to Trustee.

 

The
election of the Company to redeem any Securities shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 301
for such Securities. In case of any redemption at the election of the Company
of less than all the Securities of any series (including any such redemption
affecting only a single Security), the Company shall, at least five Business
Days prior to giving notice of such redemption (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers’ Certificate
evidencing compliance with such 

 

51

 

restriction.

 

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

 

If
less than all the Securities of any series are to be redeemed (unless all the
Securities of such series and of a specified tenor are to be redeemed or unless
such redemption affects only a single Security), the particular Securities to
be redeemed shall be selected by the Trustee, from the Outstanding Securities
of such series not previously called for redemption, (i) in compliance
with the requirements of the principal national securities exchange on which
such Securities are listed, if such Securities are listed on any national
securities exchange, and (ii) if such Securities are not so listed, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security of such series, provided that the
unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects
only a single Security), the particular Securities to be redeemed shall be selected
by the Trustee, from the Outstanding Securities of such series and specified
tenor not previously called for redemption in accordance with the preceding
sentence.

 

The
Trustee shall promptly notify the Company in writing of the Securities selected
for redemption as aforesaid and, in case of any Securities selected for partial
redemption as aforesaid, the principal amount thereof to be redeemed.

 

The
provisions of the two preceding paragraphs shall not apply with respect to any
redemption affecting only a single Security, whether such Security is to be
redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.

 

For
all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case
of any Securities redeemed or to be redeemed only in part, to the portion of
the principal amount of such Securities which has been or is to be redeemed. If
any Security selected for partial redemption is surrendered for conversion
after such selection, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Upon any
redemption of less than all the Securities of a series, for purposes of
selection for redemption the Company and the Trustee may treat as Outstanding
Securities surrendered for conversion during the period of 15 days next
preceding the mailing of a notice of redemption, and need not treat as
Outstanding any Security authenticated and delivered during such period in
exchange for the unconverted portion of any Security converted in part during
such period.

 

SECTION 1104. Notice of Redemption.

 

Notice
of redemption shall be given by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date, to each Holder
of Securities to be redeemed, at his address appearing in the Security
Register; provided, however, notice of redemption may be given more than 60
days prior to the Redemption Date if the notice is issued in connection with a
Defeasance pursuant to Section 1502 or a satisfaction and discharge
pursuant to Article Four.

 

All
notices of redemption shall state:

 

(1) the Redemption Date,

 

(2) the Redemption Price, if then determinable and otherwise the
method of its determination,

 

52

 

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

 

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

 

(5) the place or places where each such Security is to be
surrendered for payment of the Redemption Price, and

 

(6) that the redemption is for a sinking fund, if such is the case;
and

 

(7) if applicable, the conversion price then in effect and the
date on which the right to convert such Security will expire.

 

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

 

SECTION 1105. Deposit of Redemption Price.

 

Prior
to 11:00 A.M., New York City time, on any Redemption Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money sufficient to pay the Redemption Price
of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.

 

SECTION 1106. Securities Payable on Redemption Date.

 

Notice
of redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.

 

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

 

SECTION 1107. Securities Redeemed in Part.

 

Any
Security which is to be redeemed only in part shall be surrendered at a Place
of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall 

 

53

 

execute, if applicable to
Subsidiary Guarantors shall execute the notations of Subsidiary Guarantee
endorsed thereon, and the Trustee shall authenticate and deliver to the Holder
of such Security without service charge, a new Security or Securities of the
same series and of like tenor, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

 

ARTICLE TWELVE

 

SUBORDINATION OF SECURITIES

 

SECTION 1201. Applicability of Article.

 

Unless
otherwise provided with respect to the Securities of any series in or pursuant
to the Board Resolution or supplemental indenture establishing such series of
Securities pursuant to Section 301, the provisions of this Article shall
be applicable to each series of Securities.

 

SECTION 1202. Securities Subordinate to Senior Debt.

 

The
Company covenants and agrees, and each Holder of a Security, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article (subject to the provisions of Article Four
and Article Fifteen), the payment of the principal of (and premium, if
any) and interest on each and all of the Securities of such series are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Debt of the Company.

 

No
provisions of this Article Twelve shall prevent the occurrence of any
Event of Default.

 

SECTION 1203. Payment Over of Proceeds Upon Dissolution, Etc.

 

In
the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relative to the Company or to its creditors, as such,
or to its assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company,
then and in any such event specified in (a), (b) or (c) above (each
such event, if any, herein sometimes referred to as a “Proceeding”) the holders
of Senior Debt of the Company shall be entitled to receive payment in full of
all amounts due or to become due on or in respect of all Senior Debt of the
Company, or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior Debt
of the Company, before the Holders of the Securities are entitled to receive
any payment or distribution of any kind or character, whether in cash, property
or securities (including any payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company
subordinated to the payment of the Securities, such payment or distribution
being hereinafter referred to as a “Junior Subordinated Payment”), on account
of principal of (or premium, if any) or interest on the Securities or on
account of any purchase or other acquisition of Securities by the Company or
any Subsidiary of the Company (all such payments, distributions, purchases and
acquisitions, other than the payment or distribution of stock or securities of
the Company referred to in the second succeeding paragraph, herein referred to,
individually and collectively, as a “Securities 

 

54

 

Payment”), and to that end
the holders of Senior Debt of the Company shall be entitled to receive, for
application to the payment thereof, any Securities Payment which may be payable
or deliverable in respect of the Securities in any such Proceeding.

 

In
the event that, notwithstanding the foregoing provisions of this Section, the
Trustee or the Holder of any Security shall have received any Securities
Payment before all Senior Debt of the Company is paid in full or payment
thereof provided for in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt of the Company, and if such fact
shall, at or prior to the time of such Securities Payment, have been made known
to the Trustee or, as the case may be, such Holder, then and in such event such
Securities Payment shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Debt of the Company remaining unpaid, to the
extent necessary to pay all Senior Debt of the Company in full, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Debt of the Company.

 

For
purposes of this Article only, the words “any payment or distribution of
any kind or character, whether in cash, property or securities” shall not be
deemed to include a payment or distribution of stock or securities of the
Company provided for by a plan of reorganization or readjustment authorized by
an order or decree of a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law or of any other corporation
provided for by such plan of reorganization or readjustment which stock or
securities are subordinated in right of payment to all then outstanding Senior
Debt of the Company to substantially the same extent as the Securities are so
subordinated as provided in this Article. The consolidation of the Company with,
or the merger of the Company into, another Person or the liquidation or
dissolution of the Company following the conveyance or transfer of all or
substantially all of its assets to another Person upon the terms and conditions
set forth in Article Eight shall not be deemed a Proceeding for the
purposes of this Section if the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance or
transfer such assets, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.

 

SECTION 1204. No Payment When Senior Debt of the Company in
Default.

 

In
the event that any Senior Payment Default (as defined below) shall have occurred
and be continuing, then no Securities Payment shall be made unless and until
such Senior Payment Default shall have been cured or waived or shall have
ceased to exist or all amounts then due and payable in respect of Senior Debt
of the Company shall have been paid in full, or provision shall have been made
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt of the Company; provided, however,
that nothing in this Section shall prevent the satisfaction of any sinking
fund payment in accordance with Article Sixteen by delivering and
crediting pursuant to Section 1602 Securities which have been acquired
(upon redemption or otherwise) prior to such Senior Payment Default.

 

“Senior Payment Default” means any default in the payment of principal
of (or premium, if any) or interest on any Senior Debt of the Company when due,
whether at the Stated Maturity of any such payment or by declaration of
acceleration, call for redemption or otherwise.

 

55

 

In
the event that any Senior Nonmonetary Default (as defined below) shall have
occurred and be continuing, then, upon the receipt by the Company, the
Subsidiary Guarantors and the Trustee of written notice of such Senior
Nonmonetary Default from the agent for the Designated Senior Debt which is the
subject of such Senior Nonmonetary Default, no Securities Payment shall be made
during the period (the “Payment Blockage Period”) commencing on the date of
such receipt of such written notice and ending on the earlier of (i) the
date on which such Senior Nonmonetary Default shall have been cured or waived
or shall have ceased to exist or all Designated Senior Debt the subject of such
Senior Nonmonetary Default shall have been discharged; (ii) the 179th day
after the date of such receipt of such written notice; or (iii) the date
on which the Payment Blockage Period shall have been terminated by written
notice to the Company, any Subsidiary Guarantor or the Trustee from the agent
for the Designated Senior Debt initiating the Payment Blockage Period;
provided, however, that nothing in this Section shall prevent the
satisfaction of any sinking fund payment in accordance with Article Sixteen
by delivering and crediting pursuant to Section 1602 Securities which have
been acquired (upon redemption or otherwise) prior to the date of such receipt
of such written notice. No more than one Payment Blockage Period may be
commenced with respect to the Securities of a particular series during any
360-day period and there shall be a period of at least 181 consecutive days in
each 360-day period when no Payment Blockage Period is in effect. For all
purposes of this paragraph, no Senior Nonmonetary Default that existed or was
continuing on the date of commencement of any Payment Blockage Period shall be,
or be made, the basis for the commencement of a subsequent Payment Blockage
Period, whether or not within a period of 360 consecutive days, unless such
Senior Nonmonetary Default shall have been cured for a period of not less than
90 consecutive days.

 

“Senior
Nonmonetary Default” means the occurrence or existence and continuance of any
event of default with respect to any Designated Senior Debt, other than a
Senior Payment Default, permitting the holders of such Designated Senior Debt
(or a trustee or agent on behalf of the holders thereof) to declare such
Designated Senior Debt due and payable prior to the date on which it would
otherwise become due and payable.

 

In
the event that, notwithstanding the foregoing, the Company shall make any
Securities Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of
such Securities Payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such Securities Payment shall be
paid over and delivered forthwith to the Company.

 

The
provisions of this Section shall not apply to any Securities Payment with
respect to which Section 1203 would be applicable.

 

SECTION 1205. Payment Permitted If No Default.

 

Nothing
contained in this Article or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time except during the
pendency of any Proceeding referred to in Section 1203 or under the
conditions described in Section 1204, from making Securities Payments, or
(b) the application by the Trustee of any money deposited with it
hereunder to Securities Payments or the retention of such Securities Payment by
the Holders, if, at the time of such application by the Trustee, it did not
have knowledge that such Securities Payment would have been prohibited by the
provisions of this Article.

 

56

 

SECTION 1206. Subrogation to Rights of Holders of Senior Debt of
the Company.

 

Subject to the payment in
full of all amounts due or to become due on or in respect of Senior Debt of the
Company, or the provision for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt of the
Company, the Holders of the Securities shall be subrogated to the rights of the
holders of such Senior Debt of the Company to receive payments and
distributions of cash, property and securities applicable to the Senior Debt of
the Company until the principal of (and premium, if any) and interest on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of the Company of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Debt of the Company by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Debt of the
Company and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Debt of the Company.

 

SECTION 1207. Provisions Solely to Define Relative Rights.

 

The provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
Holders on the one hand and the holders of Senior Debt of the Company on the
other hand. Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall (a) impair, as
among the Company, its creditors other than holders of Senior Debt of the
Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional (and which, subject to the rights under this Article of
the holders of Senior Debt of the Company, is intended to rank equally with all
other general obligations of the Company), to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders
of Senior Debt of the Company; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this Article of
the holders of Senior Debt of the Company to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.

 

SECTION 1208. Trustee to Effectuate Subordination.

 

Each Holder of a Security by
his acceptance thereof authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for
any and all such purposes.

 

SECTION 1209. No Waiver of Subordination Provisions.

 

No right of any present or
future holder of any Senior Debt of the Company to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be 

 

57

 

otherwise charged with.

 

Without in any way limiting
the generality of the foregoing paragraph, the holders of Senior Debt of the
Company may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders of the Securities, without incurring
responsibility to the Holders of the Securities and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt of the
Company, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt of the Company, or otherwise amend or supplement in any manner Senior Debt
of the Company or any instrument evidencing the same or any agreement under
which Senior Debt of the Company is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Debt of the Company; (iii) release any Person liable in any manner
for the collection of Senior Debt of the Company; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.

 

SECTION 1210. Notice to Trustee.

 

The Company shall give
prompt written notice to the Trustee of any fact known to the Company which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder of Senior
Debt of the Company or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section at least three Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date.

 

Subject to the provisions of
Section 601, the Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself to be a holder of Senior
Debt of the Company (or a trustee therefor) to establish that such notice has
been given by a holder of Senior Debt of the Company (or a trustee therefor).
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior Debt of
the Company to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt of the
Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

 

58

 

SECTION 1211. Reliance on Judicial Order or Certificate of
Liquidating Agent.

 

Upon any payment or
distribution of assets of the Company referred to in this Article, the Trustee,
subject to the provisions of Section 601, and the Holders of the
Securities shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such Proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of Securities,
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Debt of the Company and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.

 

SECTION 1212. Trustee Not Fiduciary for Holders of Senior Debt
of the Company.

 

The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt of the Company
and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company, a
Subsidiary Guarantor or to any other Person cash, property or securities to
which any holders of Senior Debt of the Company shall be entitled by virtue of
this Article or otherwise.

 

SECTION 1213. Rights of Trustee as Holder of Senior Debt of the
Company; Preservation of Trustee’s Rights.

 

The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Debt of the Company which may at any
time be held by it, to the same extent as any other holder of Senior Debt of
the Company, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.

 

Nothing in this Article shall
apply to claims of, or payments to, the Trustee under or pursuant to
Section 607.

 

SECTION 1214. Article Applicable to Paying Agents.

 

In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting hereunder, the term “Trustee” as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that
Section 1213 shall not apply to the Company, any Subsidiary Guarantor or
any Affiliate of the Company if it or such Subsidiary Guarantor or Affiliate
acts as Paying Agent.

 

SECTION 1215. Defeasance of this Article Twelve.

 

The subordination of the
Securities of a series provided by this Article Twelve is expressly made
subject to the provisions for Defeasance or Covenant Defeasance in Article Fifteen
hereof and, anything herein to the contrary notwithstanding, upon the
effectiveness of any such Defeasance or Covenant Defeasance, the Securities of
such series then outstanding shall thereupon cease to be subordinated pursuant
to this Article Twelve.

 

59

 

ARTICLE THIRTEEN

 

SUBSIDIARY
GUARANTEES

 

SECTION 1301. Applicability of Article.

 

Unless the Company elects to
issue any series of Securities without the benefit of the Subsidiary
Guarantees, which election shall be evidenced in or pursuant to the Board
Resolution or supplemental indenture establishing such series of Securities
pursuant to Section 301, the provisions of this Article shall be
applicable to each series of Securities except as otherwise specified in or
pursuant to the Board Resolution or supplemental indenture establishing such
series pursuant to Section 301.

 

SECTION 1302. Subsidiary Guarantees.

 

Subject to
Section 1301, each Subsidiary Guarantor hereby, jointly and severally,
fully and unconditionally guarantees to each Holder of a Security authenticated
and delivered by the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest on such Security when and as the same shall
become due and payable, whether at the Stated Maturity, by acceleration, call
for redemption, offer to purchase or otherwise, in accordance with the terms of
such Security and of this Indenture, and each Subsidiary Guarantor similarly
guarantees to the Trustee the payment of all amounts owing to the Trustee in
accordance with the terms of this Indenture. In case of the failure of the
Company punctually to make any such payment, each Subsidiary Guarantor hereby,
jointly and severally, agrees to cause such payment to be made punctually when
and as the same shall become due and payable, whether at the Stated Maturity or
by acceleration, call for redemption, offer to purchase or otherwise, and as if
such payment were made by the Company.

 

Each of the Subsidiary
Guarantors hereby jointly and severally agrees that its obligations hereunder
shall be absolute, unconditional, irrespective of, and shall be unaffected by,
the validity, regularity or enforceability of such Security or this Indenture,
the absence of any action to enforce the same or any release, amendment, waiver
or indulgence granted to the Company or any guarantor or any consent to
departure from any requirement of any other guarantee of all or any of the
Securities of such series or any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor;
provided, however, that, notwithstanding the foregoing, no such release,
amendment, waiver or indulgence shall, without the consent of such Subsidiary
Guarantor, increase the principal amount of such Security, or increase the
interest rate thereon, or alter the Stated Maturity thereof. Each of the
Subsidiary Guarantors hereby waives the benefits of diligence, presentment,
demand for payment, any requirement that the Trustee or any of the Holders
protect, secure, perfect or insure any security interest in or other lien on
any property subject thereto or exhaust any right or take any action against
the Company or any other Person or any collateral, 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 or notice with respect
to such Security or the indebtedness evidenced thereby and all demands whatsoever,
and covenants that this Subsidiary Guarantee will not be discharged in respect
of such Security except by complete performance of the obligations contained in
such Security and in such Subsidiary Guarantee. Each Subsidiary Guarantor
agrees that if, after the occurrence and during the continuance of an Event of
Default, the Trustee or any of the Holders are prevented by applicable law from
exercising their respective rights to 

 

60

 

accelerate the maturity of
the Securities of a series, to collect interest on the Securities of a series,
or to enforce or exercise any other right or remedy with respect to the
Securities of a series, such Subsidiary Guarantor agrees to pay to the Trustee
for the account of the Holders, upon demand therefor, the amount that would
otherwise have been due and payable had such rights and remedies been permitted
to be exercised by the Trustee or any of the Holders.

 

The indebtedness of each
Subsidiary Guarantor evidenced by the Subsidiary Guarantees is, to the extent
provided in this Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Debt of each Subsidiary Guarantor, and the
Subsidiary Guarantees are issued subject to the provisions of this Indenture
with respect thereto. Each Holder of such Security, by accepting the same, will
be deemed to have (a) agreed to and be bound by such provisions,
(b) authorized and directed the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination so provided
and (c) appointed the Trustee his attorney-in-fact for any and all such
purposes.

 

Each Subsidiary Guarantor
shall be subrogated to all rights of the Holders of the Securities upon which
its Subsidiary Guarantee is endorsed against the Company in respect of any
amounts paid by such Subsidiary Guarantor on account of such Security pursuant
to the provisions of its Subsidiary Guarantee or this Indenture; provided,
however, that no Subsidiary Guarantor shall be entitled to enforce or to
receive any payments arising out of, or based upon, such right of subrogation
until the principal of (and premium, if any) and interest on all Securities of
the relevant series issued hereunder shall have been paid in full.

 

Each Subsidiary Guarantor
that makes or is required to make any payment in respect of its Subsidiary
Guarantee shall be entitled to seek contribution from the other Subsidiary
Guarantors to the extent permitted by applicable law; provided, however, that
no Subsidiary Guarantor shall be entitled to enforce or receive any payments
arising out of, or based upon, such right of contribution until the principal
of (and premium, if any) and interest on all Securities of the relevant series
issued hereunder shall have been paid in full.

 

Each Subsidiary Guarantee
shall remain in full force and effect and continue to be effective should any
petition be filed by or against the Company for liquidation or reorganization,
should the Company become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any part of
the Company’s assets, and shall, to the fullest extent permitted by law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Securities of a series, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any Holder of the Securities, whether as a “voidable
preference,” “fraudulent transfer,” or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Securities shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

 

SECTION 1303. Execution and Delivery of Notations of Subsidiary
Guarantees.

 

To further evidence the
Subsidiary Guarantee set forth in Section 1302, each of the Subsidiary
Guarantors hereby agrees that a notation relating to such Subsidiary Guarantee,
substantially in the form set forth in Section 204, shall be endorsed on
each Security entitled to 

 

61

 

the benefits of the
Subsidiary Guarantee authenticated and delivered by the Trustee and executed by
either manual or facsimile signature of an officer of such Subsidiary
Guarantor, or in the case of a Subsidiary Guarantor that is a limited
partnership, an officer of the general partner of each Subsidiary Guarantor.
Each of the Subsidiary Guarantors hereby agrees that the Subsidiary Guarantee
set forth in Section 1302 shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation relating to
the Subsidiary Guarantee. If any officer of the Subsidiary Guarantor, or in the
case of a Subsidiary Guarantor that is a limited partnership, any officer of
the general partner of the Subsidiary Guarantor, whose signature is on this
Indenture or a Security no longer holds that office at the time the Trustee
authenticates such Security or at any time thereafter, the Subsidiary Guarantee
of such Security shall be valid nevertheless. The delivery of any Security by
the Trustee, after the authentication thereof hereunder, shall constitute due
delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of
the Subsidiary Guarantors.

 

SECTION 1304. Release of Subsidiary Guarantors.

 

Unless otherwise specified
pursuant to Section 301 with respect to a series of Securities, each
Subsidiary Guarantee will remain in effect with respect to the respective
Subsidiary Guarantor until the entire principal of, premium, if any, and
interest on the Securities to which such Subsidiary Guarantee relates shall
have been paid in full or otherwise satisfied and discharged in accordance with
the provisions of such Securities and this Indenture and all amounts owing to
the Trustee hereunder have been paid; provided, however, that if (i) such
Subsidiary Guarantor ceases to be a Subsidiary in compliance with the
applicable provisions of this Indenture, (ii) either Defeasance or
Covenant Defeasance occurs with respect to such Securities pursuant to Article Fifteen
or (iii) all or substantially all of the assets of such Subsidiary
Guarantor or all of the Capital Stock of such Subsidiary Guarantor is sold
(including by sale, merger, consolidation or otherwise) by the Company or any
Subsidiary in a transaction complying with the requirements of this Indenture, then,
in each case of (i), (ii) or (iii), upon delivery by the Company of an
Officers’ Certificate and an Opinion of Counsel stating that all conditions
precedent herein provided for relating to the release of such Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee and this Article Thirteen
have been complied with, such Subsidiary Guarantor shall be released and
discharged of its obligations under its Subsidiary Guarantee and under this
Article Thirteen without any action on the part of the Trustee or any
Holder, and the Trustee shall execute any documents reasonably required in
order to acknowledge the release of such Subsidiary Guarantor from its
obligations under its Subsidiary Guarantee endorsed on the Securities of such
series and under this Article Thirteen.

 

SECTION 1305. Additional Subsidiary Guarantors.

 

Unless otherwise specified
pursuant to Section 301 with respect to a series of Securities, the
Company will cause any domestic Subsidiary of the Company that becomes a
Subsidiary after the date the Securities of a series are first issued hereunder
to become a Subsidiary Guarantor as soon as practicable after such Subsidiary
becomes a Subsidiary. The Company shall cause any such Subsidiary to become a
Subsidiary Guarantor with respect to the Securities by executing and delivering
to the Trustee (a) a supplemental indenture, in form and substance
satisfactory to the Trustee, which subjects such Person to the provisions
(including the representations and warranties) of this Indenture as a
Subsidiary Guarantor and (b) an Opinion of Counsel to the effect that such
supplemental indenture has been duly authorized and executed by such Person 

 

62

 

and such supplemental
indenture and such Person’s obligations under its Subsidiary Guarantee and this
Indenture constitute the legal, valid, binding and enforceable obligations of
such Person (subject to such customary exceptions concerning creditors’ rights
and equitable principles as may be acceptable to the Trustee in its
discretion).

 

SECTION 1306. Limitation on Liability.

 

Any term or provision of
this Indenture to the contrary notwithstanding, the maximum aggregate amount of
the Subsidiary Guarantee of any Subsidiary Guarantor shall not exceed the
maximum amount that can be hereby guaranteed by such Subsidiary Guarantor
without rendering such Subsidiary Guarantee voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.

 

ARTICLE FOURTEEN

 

SUBORDINATION
OF SUBSIDIARY GUARANTEES

 

SECTION 1401. Applicability of Article.

 

Unless otherwise provided
with respect to the Securities of any series in or pursuant to the Board
Resolution or supplemental indenture establishing such series of Securities
pursuant to Section 301, the provisions of this Article shall be
applicable to each series of Securities.

 

SECTION 1402. Subsidiary Guarantees Subordinate to Senior Debt
of Subordinate Guarantors.

 

Each Subsidiary Guarantor covenants
and agrees, and each Holder of a Security, by his acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article (subject to the provisions of Article Four and
Article Fifteen), the Subsidiary Guarantee of such Subsidiary Guarantor is
hereby expressly made subordinate and subject in right of payment to the prior
payment in full of all Senior Debt of such Subsidiary Guarantor.

 

No provisions of this
Article Fourteen shall prevent the occurrence of any Event of Default.

 

SECTION 1403. Payment Over of Proceeds Upon
Dissolution, Etc.

 

In the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to any Subsidiary Guarantor or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of any
Subsidiary Guarantor, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of any
Subsidiary Guarantor, then and in any such event specified in (a), (b) or
(c) above (each such event, if any, herein sometimes referred to as a
“Guarantor Proceeding”) the holders of Senior Debt of such Subsidiary Guarantor
shall be entitled to receive payment in full of all amounts due or to become
due on or in respect of all Senior Debt of such Subsidiary Guarantor, or provision
shall be made for such payment in cash or cash equivalents or otherwise in a
manner satisfactory to the holders of Senior Debt of such Subsidiary Guarantor,
before the Holders of the Securities are entitled to receive any payment or
distribution of any kind or character, whether in cash, property or 

 

63

 

securities (including any
payment or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of such Subsidiary Guarantor subordinated to
the payment of the Securities, such payment or distribution being hereinafter
referred to as a “Guarantor Junior Subordinated Payment”), on account of the
Subsidiary Guarantee of such Subsidiary Guarantor (all such payments, other
than the payment or distribution of stock or securities of a Subsidiary
Guarantor referred to in the second succeeding paragraph, herein referred to,
individually and collectively, as a “Guarantee Payment”), and to that end the
holders of Senior Debt of such Subsidiary Guarantor shall be entitled to
receive, for application to the payment thereof, any Guarantee Payment which
may be payable or deliverable in respect of such Subsidiary Guarantor’s
Subsidiary Guarantee in any such Guarantor Proceeding.

 

In the event that,
notwithstanding the foregoing provisions of this Section, the Trustee or the
Holder of any Security shall have received any Guarantee Payment before all
Senior Debt of such Subsidiary Guarantor is paid in full or payment thereof
provided for in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt of such Subsidiary Guarantor, and if such fact
shall, at or prior to the time of such Guarantee Payment, have been made known
to the Trustee or, as the case may be, such Holder, then and in such event such
Guarantee Payment shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of such Subsidiary Guarantor
for application to the payment of all Senior Debt of such Subsidiary Guarantor
remaining unpaid, to the extent necessary to pay all Senior Debt of such
Subsidiary Guarantor in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt of such Subsidiary Guarantor.

 

For purposes of this Article only,
the words “any payment or distribution of any kind or character, whether in
cash, property or securities” shall not be deemed to include a payment or
distribution of stock or securities of a Subsidiary Guarantor provided for by a
plan of reorganization or readjustment authorized by an order or decree of a
court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy law or of any other corporation provided for by such plan
of reorganization or readjustment which stock or securities are subordinated in
right of payment to all then outstanding Senior Debt of such Subsidiary
Guarantor to substantially the same extent as the Subsidiary Guarantees are so
subordinated as provided in this Article. The consolidation of a Subsidiary
Guarantor with, or the merger of a Subsidiary Guarantor into, another Person or
the liquidation or dissolution of such Subsidiary Guarantor following the
conveyance or transfer of all or substantially all of its assets to another
Person upon the terms and conditions set forth in Article Eight shall not
be deemed a Guarantor Proceeding for the purposes of this Section if the
Person formed by such consolidation or into which such Subsidiary Guarantor is
merged or the Person which acquires by conveyance or transfer such assets, as
the case may be, shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions set forth in Article Eight.

 

SECTION 1404. No Payment When Senior Debt of such Subsidiary
Guarantor in Default.

 

In the event that any Senior
Payment Default shall have occurred and be continuing, then no Guarantee
Payment shall be made unless and until such Senior Payment Default shall have
been cured or waived or shall have ceased to exist or all amounts then due and
payable in respect of the relevant Senior Debt of the Company shall have been
paid in full, or provision shall have been made for such payment in cash or
cash equivalents or otherwise in a manner satisfactory to 

 

64

 

the holders of such Senior
Debt; provided, that nothing in this Section shall prevent the
satisfaction of any sinking fund payment in accordance with Article Sixteen
by delivering and crediting pursuant to Section 1602 Securities which have
been acquired (upon redemption or otherwise) prior to such Senior Payment
Default.

 

In the event that any Senior
Nonmonetary Default shall have occurred and be continuing, then, upon the
receipt by the Company, the Subsidiary Guarantors and the Trustee of written
notice of such Senior Nonmonetary Default from any holder, or agent for the
holders, of any Designated Senior Debt of the Company, no Guarantee Payment
shall be made during the applicable Payment Blockage Period; provided, however,
that nothing in this Section shall prevent the satisfaction of any sinking
fund payment in accordance with Article Sixteen by delivering and
crediting pursuant to Section 1602 Securities which have been acquired
(upon redemption or otherwise) prior to the date of such receipt of such
written notice. No more than one Payment Blockage Period may be commenced with
respect to the Subsidiary Guarantees during any 360-day period and there shall
be a period of at least 181 consecutive days in each 360-day period when no
Payment Blockage Period is in effect. For all purposes of this paragraph, no
Senior Nonmonetary Default that existed or was continuing on the date of commencement
of any Payment Blockage Period shall be, or be made, the basis for the
commencement of a subsequent Payment Blockage Period, whether or not within a
period of 360 consecutive days, unless such Senior Nonmonetary Default shall
have been cured for a period of not less than 90 consecutive days.

 

In the event that,
notwithstanding the foregoing, a Subsidiary Guarantor shall make any Guarantee
Payment to the Trustee or any Holder prohibited by the foregoing provisions of
this Section, and if such fact shall, at or prior to the time of such Guarantee
Payment, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such Guarantee Payment shall be paid over and
delivered forthwith to the Company.

 

The provisions of this
Section shall not apply to any Guarantee Payment with respect to which
Section 1403 would be applicable.

 

SECTION 1405. Payment Permitted If No Default.

 

Nothing contained in this
Article or elsewhere in this Indenture or in any of the Subsidiary
Guarantees shall prevent (a) a Subsidiary Guarantor, at any time except
during the pendency of any Guarantor Proceeding referred to in
Section 1403 or under the conditions described in Section 1404, from
making Guarantee Payments, or (b) the application by the Trustee of any
money deposited with it hereunder to Guarantee Payments or the retention of
such Guarantee Payment by the Holders, if, at the time of such application by
the Trustee, it did not have knowledge that such Guarantee Payment would have
been prohibited by the provisions of this Article.

 

SECTION 1406. Subrogation to Rights of Holders of Senior Debt of
such Subsidiary Guarantor.

 

Subject to the payment in
full of all amounts due or to become due on or in respect of Senior Debt of a
Subsidiary Guarantor, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior Debt
of such Subsidiary Guarantor, 

 

65

 

the Holders of the
Securities shall be subrogated to the rights of the holders of such Senior Debt
of such Subsidiary Guarantor to receive payments and distributions of cash,
property and securities applicable to the Senior Debt of such Subsidiary
Guarantor until the principal of (and premium, if any) and interest on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of a Subsidiary Guarantor of
any cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Debt of a Subsidiary Guarantor by Holders of the Securities or the
Trustee, shall, as among a Subsidiary Guarantor, its creditors other than
holders of Senior Debt of such Subsidiary Guarantor and the Holders of the
Securities, be deemed to be a payment or distribution by such Subsidiary
Guarantor to or on account of the Senior Debt of such Subsidiary Guarantor.

 

SECTION 1407. Provisions Solely to Define Relative Rights.

 

The provisions of this
Article are and are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the holders of Senior Debt
of a Subsidiary Guarantor on the other hand. Nothing contained in this Article or
elsewhere in this Indenture or in the Subsidiary Guarantees is intended to or
shall (a) impair, as among a Subsidiary Guarantor, its creditors other
than holders of Senior Debt of such Subsidiary Guarantor and the Holders of the
Securities, the obligation of such Subsidiary Guarantor, which is absolute and
unconditional (and which, subject to the rights under this Article of the
holders of Senior Debt of such Subsidiary Guarantor, is intended to rank
equally with all other general obligations of such Subsidiary Guarantor), to
guarantee payment to the Holders of the Securities of the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against a Subsidiary Guarantor of the Holders of the Securities
and creditors of such Subsidiary Guarantor other than the holders of Senior
Debt of such Subsidiary Guarantor; or (c) prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article of the holders of Senior Debt of a Subsidiary Guarantor
to receive cash, property and securities otherwise payable or deliverable to
the Trustee or such Holder.

 

SECTION 1408. Trustee to Effectuate Subordination.

 

Each Holder of a Security by
his acceptance thereof authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for
any and all such purposes.

 

SECTION 1409. No Waiver of Subordination Provisions.

 

No right of any present or
future holder of any Senior Debt of a Subsidiary Guarantor to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of such Subsidiary Guarantor or
by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by such Subsidiary Guarantor with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.

 

66

 

Without in any way limiting
the generality of the foregoing paragraph, the holders of Senior Debt of a
Subsidiary Guarantor may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without incurring
responsibility to the Holders of the Securities and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt of
such Subsidiary Guarantor, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, Senior Debt of such Subsidiary Guarantor, or otherwise amend or
supplement in any manner Senior Debt of such Subsidiary Guarantor or any
instrument evidencing the same or any agreement under which Senior Debt of such
Subsidiary Guarantor is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt of such Subsidiary Guarantor; (iii) release any Person liable in any
manner for the collection of Senior Debt of such Subsidiary Guarantor; and
(iv) exercise or refrain from exercising any rights against such
Subsidiary Guarantor and any other Person.

 

SECTION 1410. Notice to Trustee.

 

Each Subsidiary Guarantor
shall give prompt written notice to the Trustee of any fact known to such
Subsidiary Guarantor which would prohibit the making of any payment to or by
the Trustee in respect of its Subsidiary Guarantee. Notwithstanding the
provisions of this Article or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in respect of the
Subsidiary Guarantees, unless and until the Trustee shall have received written
notice thereof from a Subsidiary Guarantor or a holder of Senior Debt of such
Subsidiary Guarantor or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section at least three Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest on any Security), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date.

 

Subject to the provisions of
Section 601, the Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself to be a holder of Senior
Debt of a Subsidiary Guarantor (or a trustee therefor) to establish that such
notice has been given by a holder of Senior Debt of such Subsidiary Guarantor
(or a trustee therefor). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Debt of a Subsidiary Guarantor to participate in any payment
or distribution pursuant to this Article, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Debt of such Subsidiary Guarantor held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.

 

67

 

SECTION 1411. Reliance on Judicial Order or Certificate of
Liquidating Agent.

 

Upon any payment or
distribution of assets of a Subsidiary Guarantor referred to in this Article,
the Trustee, subject to the provisions of Section 601, and the Holders of
the Securities shall be entitled to rely upon any order or decree entered by
any court of competent jurisdiction in which such Guarantor Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt of
such Subsidiary Guarantor and other indebtedness of such Subsidiary Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.

 

SECTION 1412. Trustee Not Fiduciary for Holders of Senior Debt
of such Subsidiary Guarantor.

 

The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt of a Subsidiary
Guarantor and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company, a
Subsidiary Guarantor, or to any other Person cash, property or securities to
which any holders of Senior Debt of such Subsidiary Guarantor shall be entitled
by virtue of this Article or otherwise.

 

SECTION 1413. Rights of Trustee as Holder of Senior Debt of such
Subsidiary Guarantor; Preservation of Trustee’s Rights.

 

The Trustee in its
individual capacity shall be entitled to all the rights set forth in this Article with
respect to any Senior Debt of a Subsidiary Guarantor which may at any time be
held by it, to the same extent as any other holder of Senior Debt of such
Subsidiary Guarantor, and nothing in this Indenture shall deprive the Trustee
of any of its rights as such holder.

 

Nothing in this Article shall
apply to claims of, or payments to, the Trustee under or pursuant to
Section 607.

 

SECTION 1414. Article Applicable to Paying Agents.

 

In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term “Trustee” as used in this Article shall
in such case (unless the context otherwise requires) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that
Section 1413 shall not apply to the Company, any Subsidiary Guarantor or
any Affiliate of the Company if it or such Subsidiary Guarantor or Affiliate
acts as Paying Agent.

 

SECTION 1415. Defeasance of this Article Fourteen.

 

The subordination of the
Subsidiary Guarantees provided by this Article Fourteen is expressly made
subject to the provisions for Defeasance or Covenant Defeasance of a series of
Securities in Article Fifteen hereof and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such Defeasance or Covenant
Defeasance with respect to a series of Securities, the Subsidiary Guarantees of
the Securities of such series shall thereupon cease to be 

 

68

 

subordinated pursuant to
this Article Fourteen.

 

ARTICLE FIFTEEN

 

DEFEASANCE
AND COVENANT DEFEASANCE

 

SECTION 1501.  Company’s Option to Effect Defeasance or Covenant Defeasance.

 

The Company may elect, at
its option at any time, to have Section 1502 or Section 1503 applied
to any Securities or any series of Securities, as the case may be, designated
pursuant to Section 301 as being defeasible pursuant to such Section 1502
or 1503, in accordance with any applicable requirements provided pursuant to
Section 301 and upon compliance with the conditions set forth below in
this Article. Any such election shall be evidenced in or pursuant to a Board
Resolution or in another manner specified as contemplated by Section 301
for such Securities.

 

SECTION 1502. Defeasance and Discharge.

 

Upon the Company’s exercise
of its option (if any) to have this Section applied to any Securities or
any series of Securities, as the case may be, the Company shall be deemed to
have been discharged from its obligations, each Subsidiary Guarantor shall be
deemed to have been discharged from its obligations with respect to its
Subsidiary Guarantees of such Securities, and the provisions of Articles Twelve
and Fourteen shall cease to be effective, with respect to such Securities and
Subsidiary Guarantees as provided in this Section on and after the date
the conditions set forth in Section 1504 are satisfied (herein called “Defeasance”).
For this purpose, such Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by such Securities
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1504 and as more
fully set forth in such Section, payments in respect of the principal of and
any premium and interest on such Securities when payments are due, (2) the
Company’s and each Subsidiary Guarantor’s obligations with respect to such
Securities under Sections 304, 305, 306, 1002 and 1003, (3) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and
(4) this Article. Subject to compliance with this Article, the Company may
exercise its option (if any) to have this Section applied to any
Securities notwithstanding the prior exercise of its option (if any) to have
Section 1503 applied to such Securities.

 

SECTION 1503. Covenant Defeasance.

 

Upon the Company’s exercise
of its option (if any) to have this Section applied to any Securities or
any series of Securities, as the case may be, (1) the Company shall be
released from its obligations under Section 801(3), Sections 1006 through
1008, inclusive, and any covenants provided pursuant to Section 301(20),
901(2) or 901(7) for the benefit of the Holders of such Securities,
and (2) the occurrence of any event specified in Sections 501(5) (with
respect to any of Section 801(3), Sections 1006 through 1008, inclusive,
and any such covenants provided pursuant to Section 301(20), 901(2) or
901(7)), 501(8) and 501(9) shall be deemed not to be or result in an
Event of Default and (3) the provisions of Articles Twelve, Thirteen and
Fourteen 

 

69

 

shall cease to be effective,
in each case with respect to such Securities and Subsidiary Guarantees as
provided in this Section on and after the date the conditions set forth in
Section 1504 are satisfied (herein called “Covenant Defeasance”). For this
purpose, such Covenant Defeasance means that, with respect to such Securities,
the Company and the Subsidiary Guarantors, as applicable, may omit to comply
with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified Section (to the extent so
specified in the case of Section 501(5)) or Article Twelve, Thirteen
or Article Fourteen, whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or Article or by
reason of any reference in any such Section or Article to any other
provision herein or in any other document, but the remainder of this Indenture
and such Securities shall be unaffected thereby.

 

SECTION 1504. Conditions to Defeasance or Covenant Defeasance.

 

The following shall be the
conditions to the application of Section 1502 or Section 1503 to any
Securities or any series of Securities, as the case may be:

 

(1) The
Company shall irrevocably have deposited or caused to be deposited with the
Trustee (or another trustee which satisfies the requirements contemplated by
Section 609 and agrees to comply with the provisions of this Article applicable
to it) as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely to, the
benefits of the Holders of such Securities, (A) money in an amount, or
(B) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in an
amount, or (C) a combination thereof, in each case 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, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any premium and
interest on such Securities on the respective Stated Maturities, in accordance
with the terms of this Indenture and such Securities. As used herein, “U.S.
Government Obligation” means (x) any security which is (i) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) an
obligation 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, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary
receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation
which is specified in clause (x) above and held by such bank for the
account of the holder of such depositary receipt, or with respect to any
specific payment of principal of or interest on any U.S. Government Obligation
which is so specified and held, 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 or the specific payment of
principal or interest evidenced by such depositary receipt.

 

(2) In
the event of an election to have Section 1502 apply to any Securities or
any series of Securities, as the case may be, the Company shall have delivered
to the Trustee an Opinion of Counsel stating that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this instrument, there has been a 

 

70

 

change in the applicable
Federal income tax law, in either case (A) or (B) to the effect that,
and based thereon such opinion shall confirm that, the Holders of such
Securities will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would be the case if such deposit,
Defeasance and discharge were not to occur.

 

(3) In
the event of an election to have Section 1503 apply to any Securities or
any series of Securities, as the case may be, the Company shall have delivered
to the Trustee an Opinion of Counsel to the effect that the Holders of such
Securities will not recognize gain or loss for Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would be the case if such deposit
and Covenant Defeasance were not to occur.

 

(4) The Company shall
have delivered to the Trustee an Officers’ Certificate to the effect that
neither such Securities nor any other Securities of the same series, if then
listed on any securities exchange, will be delisted as a result of such
deposit.

 

(5) No
event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to such Securities or any other Securities shall have
occurred and be continuing at the time of such deposit or, with regard to any
such event specified in Section 501(6), at any time on or prior to the
121st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 121st day).

 

(6) Such
Defeasance or Covenant Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming
all Securities are in default within the meaning of such Act).

 

(7) Such
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, any other agreement or instrument to which the
Company or any Subsidiary is a party or by which it is bound.

 

(8) At
the time of such deposit, (A) no default in the payment of any principal
of or premium or interest on any Senior Debt of the Company or any Subsidiary
Guarantor shall have occurred and be continuing, (B) no event of default
with respect to any Senior Debt of the Company or any Subsidiary Guarantor
shall have resulted in such Senior Debt becoming, and continuing to be, due and
payable prior to the date on which it would otherwise have become due and
payable (unless payment of such Senior Debt has been made or duly provided
for), and (C) no other event of default with respect to any Senior Debt of
the Company or any Subsidiary Guarantor shall have occurred and be continuing
permitting (after notice or lapse of time or both) the holders of such Senior
Debt (or a trustee on behalf of such holders) to declare such Senior Debt due
and payable prior to the date on which it would otherwise have become due and
payable.

 

(9) The
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that such deposit shall not cause either the Trustee or the trust so created to
be subject to the Investment Company Act of 1940.

 

(10) The
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent with respect to
such Defeasance 

 

71

 

or Covenant Defeasance have
been complied with.

 

SECTION 1505. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Miscellaneous Provisions.

 

Subject to the provisions of
the last paragraph of Section 1003, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee or
other qualifying trustee (solely for purposes of this Section and
Section 1506, the Trustee and any such other trustee are referred to
collectively as the “Trustee”) pursuant to Section 1504 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Securities and this Indenture, to the payment,
either directly or through any such Paying Agent (including the Company acting
as its own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law. Money and U.S.
Government Obligations so held in trust shall not be subject to the provisions
of Article Twelve or Article Fourteen.

 

The Company shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to
Section 1504 or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the Holders of Outstanding Securities.

 

Anything in this Article to
the contrary notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S. Government Obligations
held by it as provided in Section 1504 with respect to any Securities
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be,
with respect to such Securities.

 

SECTION 1506. Reinstatement.

 

If the Trustee or the Paying
Agent is unable to apply any money in accordance with this Article with
respect to any Securities by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations under this Indenture and such Securities from
which the Company has been discharged or released pursuant to Section 1502
or 1503 shall be revived and reinstated as though no deposit had occurred
pursuant to this Article with respect to such Securities, until such time
as the Trustee or Paying Agent is permitted to apply all money held in trust
pursuant to Section 1505 with respect to such Securities in accordance
with this Article; provided, however, that if the Company makes any payment of
principal of or any premium or interest on any such Security following such
reinstatement of its obligations, the Company shall be subrogated to the rights
(if any) of the Holders of such Securities to receive such payment from the
money so held in trust.

 

72

 

ARTICLE SIXTEEN

 

SINKING
FUNDS

 

SECTION 1601. Applicability of Article.

 

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

 

The minimum amount of any
sinking fund payment provided for by the terms of any Securities is herein
referred to as a “mandatory sinking fund payment”, and any payment in excess of
such minimum amount provided for by the terms of such Securities is herein
referred to as an “optional sinking fund payment.” If provided for by the terms
of any Securities, the cash amount of any sinking fund payment may be subject
to reduction as provided in Section 1602. Each sinking fund payment shall
be applied to the redemption of Securities as provided for by the terms of such
Securities.

 

SECTION 1602. Satisfaction of Sinking Fund Payments with
Securities.

 

The Company (1) may
deliver Outstanding Securities of a series (other than any previously called
for redemption) and (2) may apply as a credit Securities of a series which
have been redeemed either at the election of the Company pursuant to the terms
of such Securities or through the application of permitted optional sinking
fund payments pursuant to the terms of such Securities, in each case in
satisfaction of all or any part of any sinking fund payment with respect to any
Securities of such series required to be made pursuant to the terms of such
Securities as and to the extent provided for by the terms of such Securities;
provided, however, that the Securities to be so credited have not been
previously so credited. The Securities to be so credited shall be received and
credited for such purpose by the Trustee at the Redemption Price, as specified
in the Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.

 

SECTION 1603. Redemption of Securities for Sinking Fund.

 

Not less than 35 days prior
to each sinking fund payment date for any Securities, the Company will deliver
to the Trustee an Officers’ Certificate specifying the amount of the next
ensuing sinking fund payment for such Securities pursuant to the terms of such
Securities, the portion thereof, if any, which is to be satisfied by payment of
cash and the portion thereof, if any, which is to be satisfied by delivering
and crediting Securities pursuant to Section 1602 and will also deliver to
the Trustee any Securities to be so delivered. Not less than 32 days prior to
each such sinking fund payment date, the Trustee shall select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in Section 1103
and cause notice of the redemption thereof to be given in the name of and at
the expense of the Company in the manner provided in Section 1104. Such
notice having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 1106 and 1107.

 

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

 

73

 

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

 

	
  ISSUER:

  	
   

  
	
  BPZ Resources, Inc.

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  SUBSIDIARY GUARANTORS:

  	
   

  
	
  [Insert Subsidiary Guarantors]

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  TRUSTEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ,

  
	
  as
  Trustee

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

74

 

SCHEDULE I

 

SUBSIDIARY GUARANTORS

 

	
  SUBSIDIARY

  	
   

  	
  STATE OF ORGANIZATION

  
	
  [Insert Subsidiary
  Guarantors]

  	
   

  	
   

  

 

I-1Exhibit 10.1

 

[EXECUTION
VERSION]

 

MASTER REPURCHASE AGREEMENT

 

between

 

GOLDMAN SACHS MORTGAGE COMPANY,

 

as Buyer

 

and

 

STARWOOD PROPERTY MORTGAGE SUB-3, L.L.C.

 

as Seller

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  APPLICABILITY;
  OTHER APPLICABLE ANNEXES

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  ADDITIONAL
  AND SUBSTITUTE DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  INITIATION;
  CONFIRMATION; TERMINATION; FEES

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.

  	
  MANDATORY
  PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

  	
  26

  
	
   

  	
   

  	
   

  
	
  5.

  	
  INCOME
  PAYMENTS AND PRINCIPAL PAYMENTS

  	
  26

  
	
   

  	
   

  	
   

  
	
  6.

  	
  CAUTIONARY
  SECURITY INTEREST

  	
  28

  
	
   

  	
   

  	
   

  
	
  7.

  	
  PAYMENT,
  TRANSFER AND CUSTODY

  	
  29

  
	
   

  	
   

  	
   

  
	
  8.

  	
  CERTAIN
  RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS

  	
  33

  
	
   

  	
   

  	
   

  
	
  9.

  	
  RESERVED

  	
  34

  
	
   

  	
   

  	
   

  
	
  10.

  	
  REPRESENTATIONS

  	
  34

  
	
   

  	
   

  	
   

  
	
  11.

  	
  NEGATIVE
  COVENANTS OF SELLER

  	
  38

  
	
   

  	
   

  	
   

  
	
  12.

  	
  AFFIRMATIVE
  COVENANTS OF SELLER

  	
  39

  
	
   

  	
   

  	
   

  
	
  13.

  	
  RESERVED

  	
  42

  
	
   

  	
   

  	
   

  
	
  14.

  	
  EVENTS
  OF DEFAULT; REMEDIES

  	
  44

  
	
   

  	
   

  	
   

  
	
  15.

  	
  SINGLE
  AGREEMENT

  	
  49

  
	
   

  	
   

  	
   

  
	
  16.

  	
  NOTICES
  AND OTHER COMMUNICATIONS

  	
  49

  
	
   

  	
   

  	
   

  
	
  17.

  	
  NON-ASSIGNABILITY

  	
  49

  
	
   

  	
   

  	
   

  
	
  18.

  	
  GOVERNING
  LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

  	
  50

  
	
   

  	
   

  	
   

  
	
  19.

  	
  NO
  RELIANCE; DISCLAIMERS

  	
  51

  
	
   

  	
   

  	
   

  
	
  20.

  	
  INDEMNITY
  AND EXPENSES

  	
  52

  
	
   

  	
   

  	
   

  
	
  21.

  	
  DUE
  DILIGENCE

  	
  53

  
	
   

  	
   

  	
   

  
	
  22.

  	
  SERVICING

  	
  53

  
	
   

  	
   

  	
   

  
	
  23.

  	
  TREATMENT
  FOR TAX PURPOSES

  	
  55

  
	
   

  	
   

  	
   

  
	
  24.

  	
  INTENT

  	
  55

  
	
   

  	
   

  	
   

  
	
  25.

  	
  MISCELLANEOUS

  	
  55

  

 

i

 

	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
  Purchase Percentages and Margin Maintenance Percentages

  	
  1-1

  
	
  SCHEDULE 2

  	
  Purchased Loan Information

  	
  2-1

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I

  	
  Form of
  Confirmation

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT II

  	
  Authorized
  Representatives of Seller

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT III

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT IV-1

  	
  Form of
  Power of Attorney to Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT IV-2

  	
  Form of
  Power of Attorney to Seller

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT V

  	
  Representations
  and Warranties Regarding the Purchased Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VI

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT VII

  	
  Form of
  Bailee Agreement

  	
   

  

 

ii

 

MASTER REPURCHASE AGREEMENT

 

This
Master Repurchase Agreement (this “Agreement”) is dated as of December 2,
2010 and is made by and between Goldman Sachs Mortgage Company, as buyer (“Buyer”)
and Starwood Property Mortgage Sub-3, L.L.C., as seller (“Seller”).

 

1.                                      APPLICABILITY

 

From
time to time the parties hereto may enter into transactions in which Seller
agrees to transfer to Buyer one or more Eligible Loans, on a servicing-released
basis, against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller such Eligible Loans at a date certain (or such
earlier date, in accordance with the terms hereof), against the transfer of
funds by Seller.  Each such transaction
involving the transfer of an Eligible Loan from Seller to Buyer shall be
referred to herein as a “Transaction” and, unless otherwise agreed in
writing, shall be governed by this Agreement.

 

2.                                      DEFINITIONS

 

The following capitalized terms shall have the
respective meanings set forth below:

 

“Accelerated
Repurchase Date” shall have the meaning specified in Section 14(b)(i) of
this Agreement.

 

“Accepted
Servicing Practices” shall mean, with respect to any Purchased Loan,
servicing practices in conformity with those accepted and prudent servicing
practices in the industry for loans of the same type and in a manner at least
equal in quality to the servicing the applicable servicer provides for assets
that are similar to such Purchased Loan.

 

“Act
of Insolvency” shall mean, with respect to any Person, (a) the filing
of a decree or order for relief by a court having jurisdiction in the premises
with respect to such Person or any substantial part of its assets or property
in an involuntary case under any applicable Insolvency Law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its assets or property, or ordering the winding—up or liquidation of such Person’s
affairs, and such decree or order shall remain unstayed and in effect for a
period of thirty (30) days, (b) the commencement by such Person of a
voluntary case under any applicable Insolvency Law now or hereafter in effect, (c) the
consent by such Person to the entry of an order for relief in an involuntary
case under any Insolvency Law, (d) the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its assets or property, (e) the making by such Person
of any general assignment for the benefit of creditors, (f) the admission
in a legal proceeding or otherwise in writing of the inability of such Person
to pay its debts generally as they become due, or (g) the taking of action
by such Person in furtherance of any of the foregoing.

 

“Affiliate”
shall mean, when used with respect to any specified Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control
with, such Person.

 

“Aggregate
Repurchase Price” shall mean, as of any date of determination, the
aggregate Repurchase Price (excluding any accrued and unpaid Price
Differential) of all Purchased Loans outstanding as of such date.

 

“Agreement”
shall have the meaning specified in the introductory paragraph of this
Agreement.

 

 

“Alternative
Rate” shall have the meaning specified in Section 3(k) of this
Agreement.

 

“Alternative
Rate Transaction” shall mean any Transaction with respect to which the
Pricing Rate is determined with reference to the Alternative Rate.

 

“Applicable
Spread” has the meaning specified in the Fee Letter.

 

“Appraisal”
shall mean an appraisal of any Eligible
Property prepared by a licensed appraiser approved by Buyer in its reasonable
discretion, in accordance with the Uniform Standards of Professional Appraisal
Practice of the Appraisal Foundation, in compliance with the requirements of
Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and utilizing customary valuation methods, such as the income,
sales/market or cost approaches, as any of the same may be updated by
recertification from time to time by the appraiser performing such Appraisal.

 

“Asset Base” shall mean, as of any date of
determination, the aggregate Asset Base Components of all Purchased Loans
transferred by Seller to Buyer hereunder as of such date.

 

“Asset Base Component” shall mean, as of any date
of determination, with respect to each Purchased Loan, the product of its
Market Value multiplied by the Purchase Percentage applicable to such Purchased
Loan as of such date.

 

“Asset
Margin” shall mean, as of any date of
determination, the aggregate Asset Margin Components of all Purchased Loans
transferred by Seller to Buyer hereunder as of such date.

 

“Asset
Margin Component” shall mean, as of any
date of determination, with respect to each Purchased Loan, the product of its
Market Value multiplied by the Margin Percentage applicable to such Purchased
Loan as of such date.

 

“Assignment
of Leases” shall mean, with respect to any Purchased Loan that is a
Mortgage Loan, any assignment of leases, rents and profits or equivalent
instrument, whether contained in the related Mortgage or executed separately,
assigning to the holder or holders of such Mortgage all of the related
Mortgagor’s interest in the leases, rents and profits derived from the
ownership, operation, leasing or disposition of all or a portion of the related
Mortgaged Property as security for repayment of such Purchased Loan.

 

“Assignment
of Mortgage” shall mean, with respect to any Purchased Loan that is a
Mortgage Loan, an assignment of the mortgage, notice of transfer or equivalent
instrument in recordable form, sufficient under the laws of the jurisdiction
wherein the related property is located to reflect the assignment and pledge of
the Mortgage, subject to the terms of this Agreement.

 

“Bailee”
shall mean such third party as Buyer and Seller shall mutually approve in their
sole discretion.  Buyer and Seller each
agree that Sidley Austin LLP is an approved Bailee hereunder.

 

“Bailee
Agreement” shall mean the Bailee Agreement among Seller, Buyer and Bailee
in the form of Exhibit VII hereto.

 

“Bailee
Delivery Failure” shall have the meaning specified in the Bailee Agreement.

 

“Bankruptcy
Code” shall mean Title 11 of the United State Code, as amended from time to
time.

 

“Blocked Account”
shall have the meaning specified in Section 5(a) of this Agreement.

 

2

 

“Blocked
Account
Agreement” shall mean the Blocked Account Agreement executed by Buyer,
Seller, Servicer and the Depository Bank (and any successor thereto or
replacement thereof executed by Buyer, Seller, Servicer and the Depository
Bank).

 

“Business Day”  shall mean  any day other than
(i) a Saturday or Sunday and (ii) a day on which the New York Stock
Exchange, the Federal Reserve Bank of New York or the Custodian is authorized
or obligated by law or executive order to be closed.

 

“Buyer”
shall mean Goldman Sachs Mortgage Company, and any successor or assign.

 

“Capital
Lease Obligations” shall mean, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) property to the extent and in the amount that such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.

 

“Capital
Stock” shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent equity ownership interests in a Person which is not a corporation,
including, without limitation, any and all membership or other equivalent
interests in any limited liability company, and any and all partnership or
other equivalent interests in any partnership or limited partnership, and any
and all warrants or options to purchase any of the foregoing.

 

“Cash
Equivalents” shall mean, as of any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to
interest and principal by the United States Government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States and (ii) time deposits, certificates
of deposit, money market accounts or banker’s acceptances of any investment
grade rated commercial bank, in each case maturing within ninety (90) days
after such date.

 

“Cash
Liquidity” shall mean, with respect to Guarantor on any date, the amount of
cash and Cash Equivalents held by Guarantor and its Subsidiaries on a
consolidated basis.

 

“Cause”
means, with respect to an Independent Director, (i) acts or omissions by
such Independent Director that constitute willful disregard of such Independent
Director’s duties, (ii) such Independent Director has been indicted or convicted
for any crime or crimes of moral turpitude or dishonesty or for any violation
of any Requirement of Law, (iii) such Independent Director no longer
satisfies the requirements set forth in the definition of “Independent Director”,
(iv) the fees charged for the services of such Independent Director are
materially in excess of the fees charged by the other providers of Independent
Directors listed in the definition of “Independent Director “ or (v) any
other reason for which the prior written consent of Buyer shall have been
obtained.

 

“Change
of Control” shall mean the occurrence of any of the following:

 

(a) prior
to an internalization of management by Guarantor, if Manager is no longer the
manager of Guarantor;

 

(b) after
such time as Guarantor is internally managed, any “person” or “group” (within
the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) shall become, or obtain rights
(whether by means of warrants, options or otherwise) to become, the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, 

 

3

 

of
a percentage of the total voting power of all classes of Capital Stock of
Guarantor entitled to vote generally in the election of directors, of 20% or
more;

 

(c) change
in Control of Manager and/or Starwood Capital Group Global, L.P. from the
Person or Persons who are directly or indirectly Controlling such entities on
the date hereof;

 

(d) each
of either Guarantor or the Intermediate Starwood Entities shall cease to own
and control, of record and beneficially, directly or indirectly 100% of the
outstanding Capital Stock of Seller; or

 

(e) a
Transfer of all or substantially all of Guarantor’s assets (excluding any
Transfer on arms-length terms to Affiliates of Guarantor or any Transfer of
Repurchased Loans or other assets of Guarantor in connection with any
securitization transaction or any repurchase or other similar transactions in
the ordinary course of or Guarantor’s business).

 

“CMBS”
shall mean mortgage pass-through certificates or other securities issued
pursuant to a securitization of commercial real estate loans.

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

“Collection
Period” shall mean, with respect to the Remittance Date in any month, the
period beginning on the Remittance Date in the preceding month to and including
the calendar day immediately preceding such Remittance Date.

 

“Confirmation”
shall have the meaning specified in Section 3(d) of this Agreement.

 

“Control” shall mean, with respect to any
Person, the direct or indirect possession of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling,” “Controlled” and “under common
Control” have correlative meanings.

 

“Costs”  shall
mean, with respect to any Purchased Loan, all out-of-pocket costs, fees and
expenses in respect of such Purchased Loan actually incurred by Buyer,
including, without limitation, reasonable legal and custodial fees and expenses
associated with the establishment and maintenance of the facility under this
Agreement and the reasonable legal fees and expenses associated with asset
reviews by Buyer’s outside counsel.

 

“Cross-Termination
Event” shall mean a default by Guarantor, beyond any applicable notice and
grace period, in paying any recourse Indebtedness with an outstanding principal
amount of $25,000,000 or more, which default permits the acceleration of such
Indebtedness.

 

“Custodial
Agreement” shall mean the Custodial Agreement, dated as of December 2,
2010, entered into by and among Custodian, Seller and Buyer.

 

“Custodial
Delivery Certificate” shall mean the custodial delivery certificate, a form
of which is attached to the Custodial Agreement.

 

“Custodian”
shall mean U.S. Bank National Association or any successor Custodian appointed
by Buyer and reasonably acceptable to Seller.

 

“DBRS”
shall mean DBRS, Inc.

 

4

 

“Debt
Yield Ratio” shall mean, with respect to any Eligible Property
or Properties directly or indirectly securing a New Loan, the quotient
(expressed as a percentage) of (i) net operating income for the trailing
twelve-month period for the most recently ended fiscal quarter, divided  by
(ii) the total amount of indebtedness secured directly or indirectly by
such Eligible Property or Properties that are senior to or pari passu with such
New Loan.

 

“Default”
shall mean any event that, with the giving of notice, the passage of time, or
both, would constitute an Event of Default.

 

“Defaulted
Loan” shall mean any Purchased Loan as to which (i) there is a
material breach beyond any applicable notice and cure period of a
representation or warranty by Seller under Exhibit V attached
hereto (without regard to any Knowledge qualifier therein), (ii) a default
has occurred and is continuing beyond any applicable notice and cure period
under the related Purchased Loan Documents in the payment when due of interest,
principal or any other amounts due under the Purchased Loan Documents, (iii) the
occurrence and continuance of any other “Event of Default” as defined under the
related Purchased Loan Documents or (iv) the related Purchased
Loan File or any material portion thereof is subject to a continuing Bailee
Delivery Failure or has been released from the possession of the Custodian
under the Custodial Agreement to anyone other than Buyer or any Affiliate of
Buyer except in accordance with the terms of the Custodial Agreement; provided
that upon cure of a Bailee Delivery Failure satisfactory to Buyer or written
confirmation by Custodian of the return of such Purchased Loan File or portion
thereof, such Purchased Loan shall cease to be a Defaulted Loan under this
clause (iv).

 

“Delinquent
Loan” shall mean any Purchased Loan as to which the payment of principal
and/or interest owed thereunder by the underlying obligor is thirty (30) days
or more past due.

 

“Depository
Bank” shall mean Goldman Sachs Bank USA.

 

“Diligence
Fee” shall mean fees, costs and expenses (so long as no Event of Default is
continuing, not to exceed $30,000 annually or such prorated amount as shall be
applicable for the 2010 calendar year) payable by Seller to Buyer in respect of
Buyer’s out-of-pocket fees, costs and expenses (other than legal expenses and
desk reviews) incurred in connection with its review of the Diligence Materials
hereunder and Buyer’s continuing due diligence reviews of Purchased Loans pursuant
to Section 21 or otherwise hereunder. 
Buyer’s current fee for a desk review of a third party report is $500.

 

“Diligence
Materials” shall mean, with respect to any New Loan, the related
Preliminary Due Diligence Package together with the related Supplemental Due
Diligence Package.

 

“Draft
Appraisal” shall mean a short form appraisal, “letter opinion of value”, or
any other form of draft appraisal reasonably acceptable to Buyer.

 

“Early
Repurchase Date” shall have the meaning specified in Section 3(g) of
this Agreement.

 

“EBITDA”
shall mean, for each fiscal quarter, with respect to a Person and its
consolidated Subsidiaries, an amount equal to the sum of:

 

(a) Net
Income (or loss) of such Person (prior to any impact from minority interests or
joint venture net income and before deduction of any dividends on preferred
stock of such Person), plus the following (but only to the extent actually
included in determination of such Net Income (or loss):  (i) depreciation and amortization
expense, (ii) Interest Expense, (iii) income tax expense and (iv) extraordinary
or non-recurring gains and losses, plus

 

5

 

(b) such
Person’s proportionate share of Net Income of the joint venture investments and
unconsolidated Affiliates of such Person, all with respect to such fiscal
quarter, plus

 

(c) amounts
deducted in accordance with GAAP in respect of non-cash expenses in determining
Net Income of such Person.

 

“Eligible
Loans” shall mean performing Mortgage Loans (A) acceptable to Buyer in
the exercise of its sole good faith discretion (including, without limitation,
with respect to the suitability of such Mortgage Loan for a CMBS securitization
or similar transaction), (B) secured directly by an Eligible Property, (C) which
have a loan term equal to or less than ten (10) years (assuming exercise
of all extension options), (D) as to which the applicable representations
and warranties set forth in Exhibit V are true and correct in all material
respects as of the applicable Purchase Date, unless otherwise disclosed in
writing to Buyer on or prior to such Purchase Date, and (E) that have a
maximum LTV not in excess of 80%; provided, however, that a
Mortgage Loan with an LTV in excess of 80% shall, if all other terms and
conditions set forth in this Agreement governing the qualification of such
Mortgage Loan as an Eligible Loan are satisfied, be deemed an Eligible Loan
except that the Purchase Price Percentage and Margin Maintenance Percentage for
such loan shall be zero (0) percent for that portion of such loan that is in
excess of 80% LTV.

 

“Eligible
Property” shall mean a property that is a multifamily, retail, office,
industrial, warehouse, self-storage or hospitality property or such other
property type acceptable to Buyer in the exercise of its sole good faith
discretion.

 

“ERISA”
shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated thereunder. 
Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and, as of the relevant date, any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.

 

“ERISA
Affiliate” shall mean any corporation or trade or business (whether
or not incorporated) that is a member of any group of organizations described
in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b) of ERISA of which Seller is a member at any relevant
time.

 

“Event
of Default” shall have the meaning given such term in Section 14(a).

 

“Exception
Report” shall have the meaning given such term in Section 3(c)(viii).

 

“Facility
Amount” shall mean $150,000,000.

 

“Facility
Termination Date” shall mean the earlier to occur of (a) December 3,
2012 and (b) the one-year anniversary of a Cross-Termination Event.

 

“FAS
140” shall mean Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 140, as amended, modified or supplemented from
time to time.

 

“FAS
166” shall mean Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 166, as amended, modified or supplemented from
time to time.

 

“Federal
Funds Rate” shall mean, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business Day, 

 

6

 

the
average of the quotations at approximately 10:00 a.m. (New York time) on
such day or such transactions received by Buyer from three Federal funds
brokers of recognized standing selected by Buyer in its sole discretion.

 

“Fee
Letter” shall mean that certain letter agreement, dated the date hereof,
between Buyer and Seller, as the same may be amended, supplemented or otherwise
modified from time to time.

 

“Filings”
shall have the meaning specified in Section 6(b) of this Agreement.

 

“FIN
46” shall mean Financial Accounting Standards Board Interpretation No. 46
(revised December 2003), as amended, modified or supplemented from time to
time.

 

“Final
Approval” shall have the meaning specified in Section 3(c) of this
Agreement.

 

“Financial
Covenant Compliance Certificate” shall mean an Officer’s Certificate to be
delivered, subject to Section 3(e)(2) of this Agreement, by Guarantor
within forty-five (45) days after the end of each fiscal quarter confirming
that as of the fiscal quarter most recently ended, Guarantor satisfies the
following financial covenants (each tested on a consolidated basis): (A) ratio
of EBITDA to Interest Expense for such calendar quarter is not less than 2.0 to
1.0 (adjusted to remove the impact of the application of FAS 140, FAS 166 and
FIN 46 and transfers to special purpose entities that are wholly owned by
Guarantor in connection with bona fide securitization transactions); (B) ratio
of Total Indebtedness to Total Assets is not greater than 0.75 to 1.0 (adjusted
to remove the impact of the application of FAS 140, FAS 166 and FIN 46 and
transfers to special purpose entities that are wholly owned by Guarantor in
connection with bona fide securitization transactions); (C) Cash Liquidity
is not less than $10,000,000; (D) Near Cash Liquidity is not less than
$20,000,000; (E) Tangible Net Worth is not less than $750,000,000; and (F) ratio
of EBITDA to Fixed Charges for such calendar quarter is not less than 1.5 to
1.0.

 

“Fitch”
shall mean Fitch Inc.

 

“Fixed
Charges” shall mean, with respect to any Person and for the applicable
measurement period, the sum of (a) debt service, (b) all preferred
dividends, (c) Capital Lease Obligations paid or accrued during such
period, (d) capital expenditures (if any), and (e) any amounts
payable under any ground lease.

 

“GAAP”
shall mean United States generally accepted accounting principles consistently
applied as in effect from time to time.

 

“Governmental
Authority” shall mean any national or federal government, any state,
regional, local or other political subdivision thereof with jurisdiction and
any Person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Guarantee”
shall mean, as to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that
the term “Guarantee” shall not include endorsements for collection or deposit
in the ordinary course of business.  The
amount of any Guarantee of a Person shall be deemed to be an amount equal to
the maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith in accordance with GAAP.  The terms “Guarantee” and “Guaranteed” used
as verbs shall have correlative meanings.

 

7

 

“Guarantor”
shall mean Starwood Property Trust, Inc., a Maryland corporation, together
with its permitted successors and assigns.

 

“Guaranty”
shall mean that certain Guaranty , dated as of December 2, 2010, made by
Guarantor in favor of Buyer, as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Hedging
Transactions” shall mean, with respect to any or all of the Purchased
Loans, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller or by the underlying obligor with respect
to any Purchased Loan and pledged to Seller as collateral for such Purchased
Loan, with one or more counterparties whose unsecured debt is rated at least A
(or its equivalent) by any Rating Agency or, with respect to any Hedging
Transaction pledged to Seller as additional collateral for a Purchased Loan,
such other rating requirement applicable to such Hedging Transaction set forth
in the related Purchased Loan Documents or which is otherwise reasonably
acceptable to Buyer; provided that Seller shall not grant or permit any
liens, security interests, charges, or encumbrances with respect to any such
hedging arrangements for the benefit of any Person other than Buyer.

 

“Income”
shall mean, with respect to any Purchased Loan at any time, any payment or
other cash distribution thereon of principal, interest, dividends, fees,
reimbursements or proceeds thereof (including sales proceeds) or other cash
distributions thereon (including casualty or condemnation proceeds); provided
that, for avoidance of doubt, in no event shall Income include any escrow or
reserve payment made by the related Mortgagor.

 

“Indebtedness” shall mean, for any Person:  (i) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property from such Person); (ii) obligations of such Person to pay the
deferred purchase or acquisition price of property or services, other than
trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within ninety (90) days of the date the respective
goods are delivered or the respective services are rendered;
(iii) Indebtedness of others secured by a lien on the property of such
Person, whether or not the respective Indebtedness so secured has been assumed
by such Person; (iv) obligations (contingent or otherwise) of such Person
in respect of letters of credit or similar instruments issued or accepted by
banks and other financial institutions for account of such Person;
(v) Capital Lease Obligations of such Person; (vi) obligations of
such Person under repurchase agreements or like arrangements; (vii) Indebtedness
of others Guaranteed by such Person; (viii) all obligations of such Person
incurred in connection with the acquisition or carrying of fixed assets by such
Person; and (ix) Indebtedness of general partnerships of which such Person
is a general partner.

 

“Indemnified
Amounts” and “Indemnified Parties” shall have the respective
meanings specified in Section 20(a) of this Agreement.

 

“Independent
Director” of any corporation or limited liability company means an
individual who is provided by CT Corporation, Corporation Service Company,
National Registered Agents, Inc., Wilmington Trust Company, Stewart
Management Company, Lord Securities Corporation or, if none of those companies
is then providing professional independent directors, another
nationally-recognized company reasonably approved by Buyer, in each case that
is not an Affiliate of Seller and that provides professional independent
directors and other corporate services in the ordinary course of its business,
and which individual is duly appointed as a member of the board of directors of
such corporation or as an 

 

8

 

independent
manager, member of the board of managers, or special member of such limited
liability company and is not, and has never been, and will not while serving as
Independent Director be, any of the following:

 

(i)                                     a member (other
than an independent, non-economic “springing” member), partner, equityholder,
manager, director, officer or employee of such corporation or limited liability
company or any of its equityholders or affiliates (other than as an independent
director or manager of an affiliate of such corporation or limited liability
company that is required by a creditor to be a single purpose bankruptcy remote
entity, provided that such independent director or manager is employed by a
company that routinely provides professional independent directors or
managers);

 

(ii)                                  a creditor,
supplier or service provider (including provider of professional services) to
such corporation or limited liability company or any of its equityholders or
affiliates (other than a nationally recognized company that routinely provides
professional independent managers or directors and that also provides lien
search and other similar services to such corporation or limited liability
company or any of its equityholders or affiliates in the ordinary course of
business);

 

(iii)                               a family member
of any such member, partner, equityholder, manager, director, officer,
employee, creditor, supplier or service provider; or

 

(iv)                              a Person that
controls (whether directly, indirectly or otherwise) any of (i) or (ii) above.

 

A
natural person who otherwise satisfies the foregoing definition other than
subparagraph (i) by reason of being the Independent Director of a
Special-Purpose Entity affiliated with the corporation or limited liability
company in question shall not be disqualified from serving as an Independent
Director of such corporation or limited liability company, provided that the
fees that such natural person earns from serving as Independent Director of
affiliates of such the corporation or limited liability company in any given
year constitute in the aggregate less than five percent of such natural person’s
annual income for that year.  The same
natural persons may not serve as Independent Directors of a corporation or
limited liability company and, at the same time, serve as Independent Directors
of an equityholder or member of such corporation or limited liability company.

 

“Insolvency
Laws” shall mean the Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments and similar debtor relief
laws from time to time in effect affecting the rights of creditors generally.

 

“Insured
Closing Letter and Escrow Instructions” shall mean a letter addressed to
Seller and Buyer from the title insurance underwriter (or any agent thereof)
acting as an agent for each Table Funded Purchased Loan and related escrow
instructions, which letter and instructions shall be in form and substance
reasonably acceptable to Buyer and Seller.

 

“Interest
Expense” shall mean, with respect to any Person and any period, the amount
of total interest expense incurred by such Person, including capitalized or
accruing interest (but excluding interest funded under a construction loan),
all with respect to such period.

 

“Intermediate
Starwood Entities” shall mean, individually or collectively, Starwood
Property Mortgage BC, L.L.C., Starwood Property Mortgage, L.L.C. and SPT Real
Estate Sub I, LLC, a Delaware limited liability company.

 

9

 

“Interim Servicing Period”
with respect to each Purchased Loan, the period of time from the Purchase Date
to but not including the earlier of (i) the Servicing Transfer Date and
(ii) the Facility Termination Date.

 

“Kick-Out Loan” shall have
the meaning specified in Section 3(j) of this Agreement.

 

“Knowledge” whenever in this
Agreement or any of the Transaction Documents, or in any document or
certificate executed on behalf of Seller, Guarantor or any of their Affiliates
pursuant to this Agreement or any of the Transaction Documents, reference is
made to the knowledge of Seller or any such Person (whether by use of the words
“Knowledge” or “Known”), same shall mean the actual knowledge of the
individuals who have significant responsibility for any policy making, major
decisions, legal or financial affairs of the applicable entity, or with respect
to any representations, warranties, certifications or statements with respect
to any Purchased Loan, individuals who have significant responsibility for the
origination or acquisition, as applicable, underwriting or servicing of such
Purchased Loan, without further inquiry or investigation, and shall not be
construed, by imputation or otherwise, to refer to the knowledge of Seller or
Guarantor, any Affiliate of Seller or Guarantor, or to any other officer,
agent, manager, representative or employee of Seller, Guarantor or any
Affiliate thereof or to impose upon any such individuals any duty to
investigate the matter to which such actual knowledge, or the absence thereof,
pertains.

 

“LIBOR” shall mean, with
respect to each day on which any Transaction is outstanding (or if such day is
not a Business Day, the next succeeding Business Day) and determined daily by
Buyer, the offered rate for thirty (30) day U.S. dollar deposits, as the
applicable rate appears on Reuters Screen LIBOR01 Page as of 11:00 a.m.
(London time) on such date (rounded up to the nearest whole multiple of
1/100%); provided that if the applicable rate does not appear on Reuters Screen
LIBOR01 Page, the rate for such date will be based upon the offered rates of
the Reference Banks for U.S. dollar deposits as of 11:00 a.m. (London
time) on such date.  In such event, Buyer
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If on such date, two or more Reference Banks
provide such offered quotations, LIBOR shall be the arithmetic mean of all such
offered quotations (rounded to the nearest whole multiple of 1/100%). If on
such date, fewer than two Reference Banks provide such offered quotations,
LIBOR shall be the higher of (i) LIBOR as determined on the immediately
preceding day that LIBOR is available and (ii) the Reserve Interest
Rate.  With respect to each Transaction,
on the related Purchase Date and for each day that such Transaction is
outstanding, LIBOR shall be calculated as specified in the related
Confirmation.

 

“LIBOR
Rate” shall mean, as of any date of determination, a rate per annum determined
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):

 

 

	
   

  	
  LIBOR

  	
   

  
	
   

  	
  1
  - Reserve Requirement

  	
   

  

 

“LIBOR
Transaction” shall mean any Transaction with respect to which the Pricing
Rate is determined with reference to the LIBOR Rate.

 

“Loan
Type” shall mean, with respect to any Purchased Loan, the applicable loan
type listed in Schedule 1 to this Agreement.

 

“LTV”
shall mean, with respect to any Eligible Loan or Loans, the ratio of the
aggregate outstanding debt (which shall include such Eligible Loan and all debt
senior to or pari passu with such Eligible Loan) secured, directly or
indirectly, by the related Eligible Property or Properties, to the 

 

10

 

aggregate
value of such Eligible Property or Properties as determined by Buyer in its
sole good faith discretion.  For purposes
of Buyer’s determination, (i) the value may be determined by reference to
an Appraisal, discounted cash flow analysis or other commercially reasonable
method and (ii) for the avoidance of doubt, Buyer may reduce value for any
actual or potential risks (including risk of delay) posed by any liens on the
related Eligible Property or Properties.

 

“Manager”
shall mean SPT Management, LLC, a Delaware limited liability company.

 

“Mandatory
Repurchase” shall have the meaning given such term in Section 3(j).

 

“Mandatory
Repurchase Date” shall have the meaning given such term in Section 3(j).

 

“Margin
Deficit” shall have the meaning specified in Section 4 of this Agreement.

 

“Margin
Percentage” shall mean, with respect to any Purchased Loan, the “Margin
Maintenance Percentage” specified in Schedule 1 for the related Loan Type (or
as otherwise specified in the applicable Confirmation).

 

“Market
Value” shall mean, with respect to any Purchased Loan as of any relevant
date, the market value of such Purchased Loan on such date, as determined by
Buyer in its sole good faith discretion.

 

For
purposes of Buyer’s determination, (i) the Market Value may be determined
by reference to an Appraisal, discounted cash flow analysis or any other method
selected by Buyer in its sole good faith discretion, (ii) any amounts or
claims secured by the related Eligible Property or Properties ranking senior to
or pari passu with the lien of the Purchased Loan may be deducted from the
Market Value of the Purchased Loan, (iii) the Market Value of any
Defaulted Loan shall be zero (unless Buyer otherwise specifies), (iv) Buyer
may consider the representations and warranties set forth in Exhibit V (including
a breach thereof), and exceptions thereto in its determination of the Market
Value of the Purchased Loans (provided, however, that to the extent Seller
notified Buyer in writing of any exceptions to the representations and
warranties set forth on Exhibit V attached hereto prior to the Purchase
Date with respect to a Purchased Loan, Buyer shall not base any subsequent
reduction in the Market Value of such Purchased Loan, in whole or in part, on
such exceptions) and (v) for the avoidance of doubt, Buyer may reduce
Market Value for any actual or potential risks (including risk of delay) posed
by any liens or claims on the related Eligible Property or Properties, other
than Permitted Encumbrances.  Seller
shall reasonably cooperate with Buyer in its determination of the Market Value
of each Purchased Loan (including, without limitation, providing all
information and documentation in the possession of Seller regarding such item
of underlying collateral or otherwise required by Buyer).

 

“Material
Adverse Effect” shall mean a material adverse effect on (i) the
property, business, operations, financial condition, credit quality or
prospects of Guarantor, Seller or any Intermediate Starwood Entity, (ii) the
ability of the Guarantor or Seller to perform its obligations under any of the
Transaction Documents to which it is party, (iii) the validity or
enforceability of any the Transaction Documents, (iv) the rights and
remedies of Buyer under any of the Transaction Documents, or (v) the
aggregate value of the Purchased Loans.

 

“Monthly
Statement” shall mean, for each calendar month during which this Agreement
shall be in effect, Seller’s or Servicer’s, as applicable, reconciliation in
arrears of beginning balances, interest and principal paid to date and ending balances
for each Purchased Loan, together with a certified written report describing
(i) any developments or events with respect to such Purchased Loan that
have occurred since the last Monthly Statement that are reasonably likely to
have a Material Adverse Effect, (ii) any and 

 

11

 

all
written modifications to any Purchased Loan Documents that have occurred since
the last Monthly Statement, (iii) loan status, collection performance and
any delinquency and loss experience with respect to any Purchased Loan,
(iv) an update as to the expected disposition or sale of such Purchased
Loans and (v) such other information as mutually agreed by Seller and
Buyer, which report shall be delivered to Buyer for each calendar month during
the term of this Agreement within ten (10) Business Days following the end
of each such calendar month.

 

“Moody’s”
shall mean Moody’s Investors Service, Inc.

 

“Mortgage”
shall mean the mortgage, deed of trust, deed to secure debt or other instruments,
creating a valid and enforceable first lien on or a first priority ownership
interest in a Mortgaged Property.

 

“Mortgage
Loan” shall mean a whole commercial mortgage loan secured by a Mortgage and
evidenced and secured by the Mortgage Note and all other Mortgage Loan
documents (including all related Servicing Rights).

 

“Mortgage
Note” shall mean a note or other evidence of indebtedness of a Mortgagor
secured by a Mortgage.

 

“Mortgaged
Property” shall mean the real property or properties securing repayment of
the debt evidenced by a Mortgage Note.

 

“Mortgagor”
shall mean the obligor on a Mortgage Note, the grantor of the related Mortgage
and the owner of the related Mortgaged Property.

 

“Near
Cash Liquidity” shall mean, with respect to Guarantor on any date, the
market value of Near Cash Securities held by Guarantor and its direct or
indirect subsidiaries, on a consolidated basis, as of such date.  Market value of Near Cash Securities shall be
determined on a monthly basis by at least one independent third party financial
institution reasonably acceptable to Buyer.

 

“Near
Cash Securities” shall mean (i) CMBS having, at all times, a maturity
or weighted average life of twelve (12) months or less, as determined by the
applicable servicer, (ii) RMBS having a duration of twelve (12) months or
less as determined by Tilden Park Capital Management (and, at Buyer’s request,
the assumptions used in such determination shall be provided to Buyer for Buyer’s
review), in each case, having a rating of Baa3 or BBB (or the equivalent) or
higher by at least one Rating Agency (it being acknowledged that such
securities may also have a lower rating from one or more Rating Agencies) or (iii) other
public or privately placed securities approved by Buyer.

 

“Net
Income” shall mean, with respect to any Person for any period, the
consolidated net income for such period of such Person as reported in such
Person’s financial statements prepared in accordance with GAAP.

 

“New
Loan” shall mean an Eligible Loan that Seller proposes to sell to Buyer pursuant to a Transaction.

 

“OFAC”
shall mean the Office of Foreign Assets Control of the United States Department
of the Treasury.

 

“Officer’s
Certificate” shall mean, as to any
Person, a certificate of the chief
executive officer, the chief financial officer, the president, any vice
president or the secretary of such Person.

 

12

 

“Originated
Loan” shall mean any loan that is an Eligible Loan originated by Seller or
an Affiliate of Seller.

 

“Permitted
Encumbrances” shall mean, with respect to any Purchased Loans,
collectively: (a) liens for real property taxes, ground rents, water
charges, sewer rates and assessments not yet due and payable, (b) liens
arising by operation of law such as materialmen, mechanics, carriers, workmen,
repairmen and similar liens, arising in the ordinary course of business which
are discharged by payment, bonding or otherwise or which are being contested in
good faith by the Mortgagor in accordance with the related Purchased Loan
Documents, (c) covenants, conditions and restrictions, rights of way,
easements and other matters of public record, none of which, individually or in
the aggregate, in the reasonable judgment of Seller, materially interferes with
the current use of the related Mortgaged Property or the security intended to
be provided by such Mortgage or with the underlying obligor’s ability to pay
its obligations when they become due or the value of the related Mortgaged
Property, (d) liens and encumbrances set forth in the Title Policy with
respect to such Purchased Loan, (e) rights of existing or future tenants
as tenants only, pursuant to leases, and (f) liens granted pursuant to or
by the Transaction Documents.

 

“Person”
shall mean an individual, corporation, limited liability company, business
trust, partnership, joint tenant or tenant-in-common, trust, unincorporated
organization, or other entity, or a federal, state or local government or any
agency or political subdivision thereof.

 

“Plan”
shall mean an employee benefit or other plan established or maintained during
the five-year period ended prior to the date of this Agreement or to which
Seller or any ERISA Affiliate makes, is obligated to make or has, within the
five-year period ended prior to the date of this Agreement, been required to
make contributions and that is covered by Title IV of ERISA or Section 302
of ERISA or Section 412 of the Code.

 

“Plan
Assets” shall mean assets of any (i) employee benefit plan (as defined
in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan
(as defined in Section 4975(e)(l) of the Code) subject to Section 4975
of the Code, or (iii) governmental plan (as defined in Section 3(32)
of ERISA) subject to any other federal, state or local laws, rules or
regulations substantially similar to Title I of ERISA or Section 4975 of
the Code.

 

“Pre-Existing
Loans” shall mean any loan that is an Eligible Loan and is not an
Originated Loan.

 

“Preliminary
Approval” shall have the meaning specified in Section 3(b) of
this Agreement.

 

“Preliminary
Due Diligence Package” shall mean, with respect to any New Loan, the following
due diligence information, to the extent applicable, relating to such New Loan
to be provided by Seller to Buyer pursuant to this Agreement:

 

(i)                                     Seller’s internal
investment committee memorandum, among other things, outlining the proposed
transaction, including potential transaction benefits and all material
underwriting risks and Underwriting Issues, anticipated exit strategies and all
other characteristics of the proposed transaction that a prudent buyer would
consider material;

 

(ii)                                  current rent
roll, if applicable;

 

(iii)                               cash flow
pro-forma, plus historical information, if available;

 

(iv)                              interest
coverage ratios and Debt Yield Ratio;

 

13

 

(v)                                 loan-to-value
ratio;

 

(vi)                              Seller’s or any
Affiliate’s relationship with the underlying borrower or any affiliate;

 

(vii)                           material third
party reports, to the extent available and applicable, including:

 

(a)                                  engineering and structural
reports, each in form and prepared by consultants reasonably acceptable to
Buyer;

 

(b)                                 current Appraisal;

 

(c)                                  Phase I environmental report
(including asbestos and lead paint report) and, if applicable, Phase II or
other follow-up environmental report if recommended in Phase I, each in form
and prepared by consultants reasonably acceptable to Buyer;

 

(d)                                 seismic reports, each in
form and prepared by consultants reasonably acceptable to Buyer; and

 

(e)                                  operations and maintenance
plan with respect to asbestos containing materials, each in form and prepared
by consultants reasonably acceptable to Buyer;

 

(viii)                        copies of
documents evidencing such New Loan, or current drafts thereof, including,
without limitation, underlying debt and security documents, guaranties,
underlying borrower’s organizational documents, loan and collateral pledge
agreements, and intercreditor agreements, as applicable;

 

(xi)                                insurance
certificates or other evidence of insurance coverage evidencing the insurance
required to be maintained with respect to any Eligible Property or Properties
pursuant to Section 3(c)(iv) hereof (including evidence of terrorism
insurance coverage and such other customary insurance coverage reasonably
satisfactory to Buyer); and

 

(xii)                             analyses and
reports with respect to such other matters concerning the New Loan as Buyer may
in its reasonable discretion may require.

 

“Price
Differential” shall mean, with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Repurchase Price thereof (excluding any amount attributable
to Price Differential in the definition thereof), calculated on the basis of a
360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending
on (but excluding) the date of determination (such aggregate amount to be
reduced by any amount of such Price Differential paid by Seller to Buyer, prior
to such date, with respect to such Transaction).

 

“Pricing
Rate” shall mean with respect to any Transaction and any date of determination, an annual
rate equal to the LIBOR Rate on such date plus the Applicable Spread for the
related Purchased Loan (subject to adjustment and/or conversion as provided in
Sections 3(k), 3(l), 3(n) and 3(o) of this Agreement).

 

“Principal
Payment” shall mean, with respect to any Purchased Loan, any payment or
prepayment of principal received in respect thereof (including casualty or
condemnation proceeds to the extent that such proceeds are not required under
the underlying loan documents to be reserved, escrowed, readvanced 

 

14

 

or
applied for the benefit of the Mortgagor or the related Mortgaged
Property).  For purposes of
clarification, prepayment premiums, fees or penalties shall not be deemed to be
principal.

 

“Prohibited Person” shall
mean any Person:

 

(i)                                     listed in the Annex to (the “Annex”), or otherwise
subject to the provisions of, the Executive Order 13224 (the “Executive
Order”) ;

 

(ii)                                  that is owned or controlled by, or acting for or on behalf
of, any person or entity that is listed to the Annex to, or is otherwise
subject to the provisions of, the Executive Order;

 

(iii)                               with whom the Buyer is prohibited from dealing or otherwise
engaging in any transaction by any terrorism or money laundering law, including
the Executive Order;

 

(iv)                              who commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order;

 

(v)                                 that is named as a “specially designated national and
blocked person” on the most current list published by the OFAC at its official
website, http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or
other replacement official publication of such list; or

 

(vi)                              who is an Affiliate of a Person listed above.

 

“Purchase
Date” shall mean, with respect to any Eligible Loan, the date on which such
Eligible Loan is transferred by Seller to Buyer.

 

“Purchase
Percentage” shall mean, with respect to any Purchased Loan, the “Purchase
Percentage” specified in Schedule 1 for the related Loan Type (or as otherwise
specified in the applicable Confirmation).

 

“Purchase
Price” shall mean, with respect to any Purchased Loan, the price at which
such Purchased Loan is transferred by Seller to Buyer on the applicable
Purchase Date.  The Purchase Price as of
any Purchase Date for any Purchased Loan of a particular Loan Type shall be an
amount (expressed in dollars) equal to the lesser of (i) the product of (a) the
Market Value of such Purchased Loan multiplied by (b) the Purchase
Percentage for the related Loan Type and (ii) the par amount of such
Purchased Loan.

 

“Purchased
Loan Documents” shall mean, with respect to a Purchased Loan, the documents
comprising the Purchased Loan File for such Purchased Loan.

 

“Purchased
Loan File” shall mean the documents specified as the “Purchased Loan File”
in Section 7(b) of this Agreement, together with any additional
documents and information required to be delivered to Buyer or its designee
(including the Custodian) pursuant to this Agreement.

 

“Purchased
Loan Information” shall mean, with respect to each Purchased Loan, the
information set forth in Schedule 2 attached hereto.

 

“Purchased
Loan Schedule” shall mean a schedule of Purchased Loans, together with the
Purchased Loan Information for each such loan attached to each Trust Receipt
and Custodial Delivery Certificate.

 

15

 

“Purchased
Loans” shall mean (i) with respect to any Transaction, the Eligible
Loans sold by Seller to Buyer in such Transaction and (ii) with respect to
the Transactions in general, all Eligible Loans sold by Seller to Buyer.

 

“Quarterly
Report” shall mean, for each fiscal
quarter during which this Agreement shall be in effect, Seller’s or Servicer’s,
as applicable, certified written report summarizing (with a separate cover
sheet for each Purchased Loan or, in the case of a Purchased Loan secured
(directly or indirectly) by a portfolio of Mortgaged Properties, a cover sheet
for such portfolio on a consolidated basis), with respect to the Mortgaged
Properties securing each Purchased Loan (or, in the case of a Purchased Loan
secured (directly or indirectly) by a portfolio of Mortgaged Properties, such information
on a consolidated basis), the net operating income, debt service coverage,
occupancy, the revenues per room (for hospitality properties) and sales per
square footage (for retail properties), in each case, to the extent received by
Seller, and such other information as mutually agreed by Seller and Buyer,
which report shall be delivered to Buyer for each fiscal quarter during the
term of this Agreement within sixty (60) days following the end of each such
fiscal quarter.

 

“Rating
Agency” shall mean any of Fitch, Moody’s, Standard & Poor’s and
DBRS.

 

“Reference
Banks” shall mean any leading banks selected by Buyer which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
with an established place of business in London.

 

“Regulations
T, U and X” shall mean Regulations T, U and X of the Board of Governors of
the Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

 

“REIT”
shall mean a Person satisfying the conditions and limitations set forth in Section 756(b) and
856(c) of the Code which are necessary to qualify such Person as a “real
estate investment trust,” as defined in Section 756(a) of the Code.

 

“Remittance
Date” shall mean the tenth (10th) calendar day of each month, or the next succeeding
Business Day, if such calendar day shall not be a Business Day.

 

“Repurchase
Assets” shall have the meaning specified in Section 6(a).

 

“Repurchase
Date” shall mean, with respect to any Purchased Loan, the date that is the
earliest to occur of the following: (a) the Facility Termination Date, (b) 364
days following the Purchase Date of such Purchased Loan, (c) the date
specified in the related Confirmation, or (d) if applicable, the related
Mandatory Repurchase Date, Early Repurchase Date or Accelerated Repurchase
Date.

 

“Repurchased
Loan” shall mean any Purchased Loan that has been repurchased by Seller
pursuant to the terms hereof.

 

“Repurchase
Price” shall mean, with respect to any Purchased Loan as of any date, the
price at which such Purchased Loan is to be transferred from Buyer to Seller
upon termination of the related Transaction; in each case, such price shall
equal the sum of the Purchase Price of such Purchased Loan and the accrued and
unpaid Price Differential with respect to such Purchased Loan as of the date of
such determination, minus all Income and other cash actually received by Buyer
in respect of such Purchased Loan and applied towards the Repurchase Price
and/or Price Differential pursuant to this Agreement.

 

16

 

“Requirement
of Law” shall mean any law, treaty, rule, regulation, code, directive,
policy, order or requirement or determination of an arbitrator or a court or
other governmental authority whether now or hereafter enacted or in effect.

 

“Reserve
Interest Rate” shall mean with respect to any LIBOR determination date, the
rate per annum that Buyer determines to be either (i) the arithmetic mean
(rounded to the nearest whole multiple of 1/100%) of the one-month or overnight
U.S. dollar lending rates (as applicable) which New York City banks selected by
Buyer are quoting on the relevant LIBOR determination date to the principal
London offices of leading banks in the London interbank market or (ii) in
the event that Buyer can determine no such arithmetic mean, the lowest
one-month or overnight U.S. dollar lending rate (as applicable) which New York
City banks selected by Buyer are quoting on such LIBOR determination date to
leading European banks.

 

“Reserve
Requirement” shall mean, with respect to any date of determination, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such date (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System or other governmental
authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of such Board of Governors) maintained by Buyer.

 

“RMBS”
shall mean mortgage pass-through certificates or other securities issued
pursuant to a securitization of residential mortgage loans.

 

“Scheduled
Purchase Date” shall mean the date agreed between the parties or specified
in the applicable Confirmation as the “Purchase Date” or the “Scheduled
Purchase Date”.

 

“Seller”
“ shall have the meaning specified in the introductory paragraph of this
Agreement.

 

“Servicer”
shall mean Manager, or an Affiliate thereof, as sub-servicer of the Purchased
Loans, or such other servicer or sub-servicer as Buyer may appoint in its sole
discretion in accordance with Section 22.

 

“Servicing
Records” shall have the meaning specified in Section 22(b) of
this Agreement.

 

“Servicing Rights” means
contractual, possessory or other rights of Seller and/or Servicer to administer
or service any Purchased Loans (or to possess any Servicing Records relating
thereto), including: (i) the rights to service the Purchased Loans; (ii) the
right to receive compensation (whether direct or indirect) for such servicing,
including the right to receive and retain the related servicing fee and all
other fees with respect to such Purchased Loans; and (iii) all rights,
powers and privileges incidental to the foregoing, together with all Servicing
Records relating thereto.

 

“Servicing Transfer Date”
shall mean, with respect to the Servicer, the date that is forty-five (45) days
after the earlier of (i) the termination of Servicer as servicer of the
Purchased Loans pursuant to Section 22 hereof, and (ii) the Purchase
Date or any subsequent Remittance Date on which the Interim Servicing Period is
extended as provided in Section 22.

 

“Significant Modification” shall mean (i) any
material extension, amendment, waiver, termination, rescission, cancellation,
release, subordination or other material modification to the terms of, or any
collateral, guaranty or indemnity for, any Purchased Loan or Purchased Loan
Document, or (ii) the foreclosure or exercise of any material remedies by
the holder of any Purchased Loan or Purchased Loan 

 

17

 

Document after the occurrence and during the continuance
of an “Event of Default” as defined in the related Purchased Loan Documents.

 

“Special Purpose Entity” shall mean any
corporation, limited partnership or limited liability company that, since the
date of its formation and at all times on and after the date hereof, has
complied with and shall at all times comply with the provisions of Section 13.

 

“Standard &
Poor’s” shall mean Standard & Poor’s Ratings Services, Inc.,
a division of the McGraw Hill Companies Inc.

 

“Subsidiary” shall mean, with respect to any
Person, any other Person of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.

 

“Supplemental
Due Diligence Package” shall mean, with respect to any New Loan,
information or deliveries concerning such New Loan that Buyer shall reasonably
request in addition to the Preliminary Due Diligence Package, including, without limitation, a credit approval
memorandum representing the final terms of the underlying transaction, a
loan-to-value ratio computation and a final debt service coverage ratio
computation for such New Loan.

 

“Survey”
shall mean a certified ALTA/ACSM (or applicable state standards for the state
in which a Mortgaged Property is located) survey of a Mortgaged Property
prepared by a registered independent surveyor and in form and content
reasonably satisfactory to Buyer and the company issuing the Title Policy for
such Mortgaged Property.

 

“Table
Funded Purchased Loan” shall mean a Purchased Loan which is sold to Buyer
simultaneously with the origination or acquisition thereof, which origination
or acquisition is financed with the Purchase Price, pursuant to Seller’s
request, paid directly to a title company or other settlement agent, in each
case, reasonably approved by Buyer, for disbursement in connection with such
origination or acquisition.  A Purchased
Loan shall cease to be a Table Funded Purchased Loan after the Custodian has
delivered a Trust Receipt to Buyer certifying its receipt of the Purchased Loan
File therefor.

 

“Tangible
Net Worth” shall mean, with respect to any Person, as of any date of
determination, (a) all amounts that would be included under capital or
shareholders’ equity (or like caption) on the balance sheet of such Person at
such date, determined in accordance with GAAP as of such date, less (b)(i) amounts
owing to such Person from Affiliates or from officers, employees, partners,
members, directors, shareholders or other Persons similarly affiliated with
such Person or any Affiliate thereof, (ii) intangible assets of such
Person (other than Hedging Transactions specifically related to the Purchased
Loans) and (iii) prepaid taxes and/or expenses, all on or as of such date.

 

“Title
Policy” shall have the meaning specified in paragraph 4 of Exhibit V.

 

“Total
Assets” shall mean, with respect to any Person and any date of
determination, an amount equal to the aggregate book value of all assets owned
by such Person on a consolidated basis and the proportionate share of assets
owned by non-consolidated Subsidiaries of such Person, less (a) amounts
owing to such Person from any Affiliate thereof, or from officers, employees,
partners, members, 

 

18

 

directors,
shareholders or other Persons similarly affiliated with such Person or any
Affiliate thereof, (b) intangible assets (other than Hedging Transactions
specifically related to the Purchased Loans), and (c) prepaid taxes and
expenses, all on or as of such date.

 

“Total
Indebtedness” shall mean, with respect to any Person, as of any date of
determination, the aggregate Indebtedness of such Person plus the proportionate
share of all Indebtedness of all non-consolidated Subsidiaries of such Person
as of such date.

 

“Transaction”
shall have the meaning specified in Section 1(a) of this Agreement.

 

“Transaction
Conditions Precedent” shall have the meaning specified in Section 3(e) of
this Agreement.

 

“Transaction Costs” shall mean, with respect to
any Purchased Loan, all actual out-of-pocket costs and expenses paid or
incurred by Buyer and payable by Seller relating to the purchase of such
Purchased Loan (including legal fees and other fees described in Section 20(b) of
this Agreement).  Transaction Costs shall
not include costs incurred by Buyer for overhead and general administrative
expenses.

 

“Transaction
Documents” shall mean, collectively, this Agreement, the Blocked Account Agreement,
the Custodial Agreement, the Fee Letter, the Guaranty, all Transfer Documents,
all Confirmations executed pursuant to this Agreement in connection with
specific Transactions and all other documents executed in connection herewith
and therewith.

 

“Transfer”
shall mean, with respect to any Person, any sale or other whole or partial
conveyance of all or any portion of such Person’s assets, or any direct or
indirect interest therein to a third party (other than in connection with the
transfer of a Purchased Loan to Buyer in accordance herewith).

 

“Transfer
Documents” shall mean, with respect to any Purchased Loan, all applicable
documents described in Section 7(b) of this Agreement necessary to
transfer all of Seller’s right, title and interest in such Purchased Loan to
Buyer in accordance with the terms of this Agreement.

 

“Transfer
Event” shall have the meaning given such term in Section 17(b).

 

“Trust
Receipt” shall mean a trust receipt issued by the Custodian or the Bailee,
as applicable, to Buyer confirming the Bailee’s or the Custodian’s, as
applicable, possession of certain Purchased Loan Files that are the property of
and held by the Bailee or the Custodian, as applicable, on behalf of Buyer (or
any other holder of such trust receipt) in the form required under the
Custodial Agreement or the Bailee Agreement.

 

“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of any security interest is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York, with
respect to perfection or the effect of perfection or non-perfection, “UCC”
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions of this Agreement relating to such perfection or
effect of perfection or non-perfection.

 

“Underwriting
Issues” shall mean, with respect to any New Loan, all material information
of which Seller has knowledge that, based on the making of reasonable inquiries
and the exercise of reasonable care and diligence by a reasonable institutional
mortgage loan buyer in determining whether to 

 

19

 

originate
or acquire such New Loan under the circumstances, would, in the context of the
totality of the Transaction in question, be considered a materially “negative”
factor (either separately or in the aggregate with other information relating
to such New Loan), including, but not limited to, whether, to Seller’s
Knowledge, such New Loan was repurchased from any warehouse loan facility or a
repurchase transaction due to the breach of a representation and warranty or a
material defect in loan documentation or closing deliveries (such as any
absence of any material Purchased Loan Document(s)).

 

3.                                      INITIATION;
CONFIRMATION; TERMINATION; FEES

 

(a)                                  Seller may,
from time to time, prior to the Facility Termination Date, request that Buyer
enter into a Transaction with respect to one or more New Loans.  Seller shall initiate each request by
submitting a Preliminary Due Diligence Package for Buyer’s review and approval
in Buyer’s sole discretion. 
Notwithstanding anything to the contrary herein, Buyer shall have no
obligation to consider for purchase any New Loan if, immediately after the
purchase of such New Loan, the Aggregate Repurchase Price (including the
proposed Purchase Price of such New Loan) would exceed the Facility
Amount.  Buyer and its representatives
shall have the right to review all New Loans proposed to be sold to Buyer in
any Transaction and to conduct its own due diligence investigation of such New
Loans as Buyer determines is reasonably necessary in Buyer’s sole
discretion.  Seller agrees to reimburse
Buyer promptly for its Diligence Fees upon request for payment or reimbursement
thereof.  Notwithstanding any provision
to the contrary herein or any other Transaction Document, Buyer shall be
entitled to make a determination, in its sole discretion, whether a New Loan
qualifies as an Eligible Loan or whether to reject any New Loan proposed to be
sold to Buyer by Seller.

 

(b)                                 Upon Buyer’s receipt
of a Preliminary Due Diligence Package with respect to a New Loan, Buyer shall
have the right to request a Supplemental Due Diligence Package to evaluate such
New Loan.  Upon Buyer’s receipt of such
Supplemental Due Diligence Package or Buyer’s waiver thereof, Buyer shall,
within three (3) Business Days, either (i) notify Seller of Buyer’s
intent to proceed with the Transaction and of its determination with respect to
the Purchase Price and the Market Value for the related New Loan (such notice,
a “Preliminary Approval”) or (ii) deny, in Buyer’s sole discretion,
Seller’s request for the applicable Transaction.  Buyer’s failure to respond to Seller within
three (3) Business Days, as applicable, shall be deemed to be a denial of
Seller’s request to enter into the proposed Transaction, unless Buyer and
Seller have agreed otherwise in writing.

 

(c)                                  Upon Seller’s
receipt of Buyer’s Preliminary Approval with respect to a Transaction, Seller
shall, if Seller desires to enter into such Transaction with respect to the
related New Loan upon the terms set forth by Buyer in its Preliminary Approval,
deliver the documents set forth below in this Section 3(c) with
respect to each New Loan and related Eligible Property or Properties (to the
extent not already delivered in the Preliminary Due Diligence Package or in the
Supplemental Due Diligence Package) as a condition precedent to Buyer’s Final
Approval and issuance of a Confirmation, all in a manner and/or form
satisfactory to Buyer in its sole discretion (unless otherwise expressly
provided below) and pursuant to documentation satisfactory to Buyer in its sole
discretion:

 

(i)                                     Delivery of
Purchased Loan Documents. 
Seller shall deliver to Buyer:  (A) with
respect to any New Loan that is a Pre-Existing Loan, copies of the Purchased
Loan Documents, except for such Purchased Loan Documents that were not in
Seller’s possession; and (B) with respect to any New Loan that is an
Originated Loan, drafts of the Purchased Loan Documents.

 

(ii)                                  Environmental
and Engineering.  Buyer shall
have received a “Phase I” (and, if recommended by the Phase I, a “Phase II”)
environmental report, an asbestos survey, if applicable, and an engineering
report, each in form reasonably satisfactory to Buyer, by an engineer and an
environmental consultant, approved by Buyer in its reasonable discretion.

 

20

 

(iii)                               Appraisal.  If obtained by Seller, Buyer shall have
received either an Appraisal or a Draft Appraisal of the related Eligible
Property or Properties.  If Buyer
receives only a Draft Appraisal prior to entering into a Transaction, Seller
shall use its best efforts to deliver an Appraisal on or before thirty (30)
days after the Purchase Date.

 

(iv)                              Insurance.  Buyer shall have received certificates or
other evidence of insurance detailing insurance coverage in respect of the
related Eligible Property or Properties of types (including but not limited to
casualty, general liability and terrorism insurance coverage), in amounts, with
insurers and otherwise in compliance with the terms, provisions and conditions
set forth in the Purchased Loan Documents and otherwise reasonably satisfactory
to Buyer.  Such certificates or other
evidence shall indicate that Seller (or as to a New Loan that is a participation
interest, the lead lender on the related whole loan in which Seller is a
participant) will be named as an additional insured as its interest may appear
and shall contain a loss payee endorsement in favor of such additional insured
with respect to the policies required to be maintained under the Purchased Loan
Documents.

 

(v)                                 Opinions of
Counsel.  Buyer shall have received
copies of all legal opinions with respect to the New Loan (which shall include
a non-consolidation opinion, if applicable) that shall be in form and substance
reasonably satisfactory to Buyer; provided that Seller may deliver drafts of
such opinions if such New Loan is being originated concurrently with the
transfer to Buyer and shall deliver final, executed copies of such legal opinions
on the Purchase Date of such New Loan.

 

(vi)                              Title Policy.  Seller shall have delivered to Buyer (1) an
unconditional commitment from the title company to issue a Title Policy or
Policies in favor of Seller and Seller’s successors and/or assigns with respect
to each Mortgage securing such New Loan with an amount of insurance that shall
be not less than the principal balance of such New Loan or (2) an
endorsement or confirmatory letter from the existing title company to an
existing Title Policy (in an amount not less than the principal balance of such
New Loan) in favor of Seller and Seller’s successors and/or assigns that adds
such parties as an additional insured.

 

(vii)                           Additional Real
Estate Matters.  To the
extent obtained by Seller, Seller shall have delivered to Buyer such other real
estate related certificates and documentation as may have been reasonably
requested by Buyer, such as:  (a) certificates
of occupancy issued by the appropriate Governmental Authority and either
letters certifying that the related Eligible Property or Properties are in
material compliance (or in legal non-compliance) with all applicable zoning
laws issued by the appropriate Governmental Authority, a zoning report in form
prepared by a consultant reasonably acceptable to Buyer evidencing such
material compliance (or legal non-compliance), or evidence that the related
Title Policy includes a zoning endorsement; and (b) abstracts of all
material leases in effect at the Mortgaged Property delivered in connection
with the New Loan.

 

(viii)                        Exception
Report.  Seller shall have delivered to
Buyer a report of any exceptions to the representations and warranties in Exhibit V
attached hereto (an “Exception Report”).

 

(ix)                                Other Documents.  Buyer shall have received such other documents
as Buyer shall reasonably deem to be necessary.

 

Within
three (3) Business Days of Seller’s delivery of the documents and
materials contemplated in clauses (i) through (viii) above, Buyer
shall in its sole discretion either (A) notify Seller that Buyer has not
approved the New Loan or (B) notify Seller that Buyer agrees to purchase
the New Loan, subject to 

 

21

 

satisfaction
(or waiver by Buyer) of the Transaction Conditions Precedent upon the terms set
forth in the Preliminary Approval (or, if Buyer intends to enter into the
Transaction on terms different than those set forth in the Preliminary
Approval, Buyer shall set forth such new terms in Buyer’s notice to Seller
pursuant to this clause (B)) (a “Final Approval”) set forth in Section 3(e) below.  Buyer’s failure to respond to Seller within
three (3) Business Days shall be deemed to be a denial of Seller’s request
that Buyer purchase the New Loan, unless Buyer and Seller have agreed otherwise
in writing.

 

(d)                                 Within two (2) Business
Days after Seller’s request therefor, delivered after Seller has received a
Final Approval from Buyer pursuant to Section 3(c) above with respect
to a proposed Transaction and setting forth the proposed Purchase Date for such
proposed Transaction, Buyer shall deliver to Seller a written confirmation of
such Final Approval of such proposed Transaction including such proposed
Purchase Date in the form of Exhibit I attached hereto (a “Confirmation”);
provided that, unless otherwise agreed by Seller, Buyer shall deliver a
separate Confirmation with respect to each New Loan that will be the subject of
a Transaction.  Each Confirmation shall
be deemed to be incorporated herein by reference with the same effect as if set
forth herein at length.

 

(e)                                  Provided that
each of the Transaction Conditions Precedent set forth in this Section 3(e) have
been satisfied (or waived by Buyer in its sole discretion), and subject to
Seller’s rights under Section 3(f), Buyer shall transfer the Purchase Price
to Seller with respect to each New Loan for which it has issued a Confirmation
on the Purchase Date specified in such Confirmation, and the related New Loan
shall be concurrently transferred by Seller to Buyer or its nominee.  For purposes of this Section 3(e), the “Transaction
Conditions Precedent” shall be satisfied with respect to any proposed
Transaction if:

 

(1)                                  no Default,
Event of Default or Margin Deficit shall have occurred and be continuing as of
the Purchase Date for such proposed Transaction;

 

(2)                                  Guarantor shall
have delivered to Buyer a true and accurate Financial Covenant Compliance
Certificate with respect to Guarantor’s most recently ended fiscal quarter;

 

(3)                                  Seller shall
have delivered to Buyer an Officer’s Certificate of Seller certifying that the
representations and warranties made by Seller in this Agreement are true and
correct in all material respects as of the Purchase Date for such Transaction
(except such representations which by their terms speak as of a specified date
and subject to any exceptions disclosed to Buyer in an Exception Report prior
to issuance of the Confirmation by Buyer). 
If requested by Buyer, Seller shall also deliver an Officer’s
Certificate of Seller covering such matters as Buyer may reasonably request with
respect to matters relating to this Agreement or the other Transaction
Documents;

 

(4)                                  Buyer shall
have (A) determined, in accordance with the applicable provisions of Section 3(a) of
this Agreement that the New Loan proposed to be sold to Buyer by Seller in such
Transaction is an Eligible Loan and (B) obtained internal credit approval
for the inclusion of such New Loan as a Purchased Loan in a Transaction, each
of which shall be deemed satisfied upon Buyer’s delivery to Seller of a Final
Approval with respect to such Transaction pursuant to Section 3(c) above;

 

(5)                                  the applicable
Purchased Loan File described in Section 7(b) of this Agreement shall
have been delivered to Custodian or Bailee, and Buyer shall have received a
Trust Receipt from Custodian or Bailee with respect to such Purchased Loan
File;

 

(6)                                  Seller shall
have delivered to each Mortgagor or obligor or related servicer or lead lender
under any Purchased Loan a direction letter in accordance with Section 5(a) of
this 

 

22

 

Agreement unless such
Mortgagor or obligor or related servicer or lead lender is already remitting
payments to the Servicer whereupon Seller shall direct the Servicer to remit
all such amounts into the Blocked Account in accordance with Section 5(a) of this
Agreement and to service such payments in accordance with the provisions of
this Agreement;

 

(7)                                  Seller shall
have paid to Buyer (i) any fees then due and payable under the Fee Letter
and (ii) any unpaid Diligence Fees and Transaction Costs in respect of
such Purchased Loan (which amounts, at Seller’s option, may be held back from
funds remitted to Seller by Buyer on the Purchase Date);

 

(8)                                  such Purchased
Loan shall not be a Delinquent Loan or a Defaulted Loan;

 

(9)                                  Buyer shall
have received true and complete copies of fully executed originals of all
Transfer Documents;

 

(10)                            in Buyer’s good
faith judgment, no event shall have occurred or circumstance shall exist that
has a Material Adverse Effect;

 

(11)                            in Buyer’s good
faith judgment, there shall not have occurred

 

(i) (a) a material change in financial
markets, an outbreak or escalation of hostilities or a material change in
national or international political, financial or economic conditions, or (b) a
general suspension of trading on major stock exchanges, or (c) a
disruption in or moratorium on commercial banking activities or securities
settlement services; or

 

(ii) (a) an event or events in the good
faith determination of Buyer resulting in the effective absence of a “repo
market” or comparable “lending market” for financing debt obligations secured
by commercial mortgage loans, or (b) an event or events shall have
occurred resulting in the Buyer not being able to finance Eligible Loans
through the “repo market” or “lending market” with traditional counterparties
at rates which would have been reasonable prior to the occurrence of such event
or events.

 

(12)                            no
Cross-Termination Event shall have occurred and be continuing.

 

(f)                                    Each
Confirmation, together with this Agreement, shall be conclusive evidence
(absent manifest error) of the terms of the Transaction covered thereby unless
objected to in writing by Seller no more than three (3) Business Days
after the date such Confirmation is received by Seller.  An objection sent by Seller with respect to
any Confirmation must state specifically that the writing is an objection, must
specify the provision(s) of such Confirmation being objected to by Seller,
must set forth such provision(s) in the manner that Seller believes such
provisions should be stated, and must be received by Buyer no more than three (3) Business
Days after such Confirmation is received by Seller.  Buyer, in its good faith discretion, may
issue another Confirmation addressing Seller’s objections or may elect not to
proceed with the proposed Transaction.

 

(g)                                 Seller shall be
entitled to terminate a Transaction on demand, and repurchase the related
Purchased Loans on any Business Day prior to the applicable Repurchase Date (an
“Early Repurchase Date”); provided, however, that:

 

(i)                                     no Event of
Default shall be continuing or would occur or result from such early
repurchase;

 

23

 

(ii)                                  Seller notifies
Buyer in writing, no later than five (5) Business Days prior to the Early
Repurchase Date, of its intent to terminate such Transaction and repurchase the
related Purchased Loan; and

 

(iii)                               Seller shall
pay to Buyer on the Early Repurchase Date an amount equal to the sum of the
Repurchase Price for such Transaction, all Costs and any other amounts payable
by Seller and outstanding under this Agreement (including, without limitation,
Sections 3(m), 3(n) and 3(o) of this Agreement, if any) with respect
to such Transaction against transfer to Seller or its agent of the related
Purchased Loan.

 

(h)                                 On the
Repurchase Date (or the Early Repurchase Date, as applicable), termination of
the applicable Transactions will be effected by transfer to Seller or, if
requested by Seller, its designee, of the related Purchased Loans, and any
Income in respect thereof received by Buyer (and not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to Section 4
or Section 5 hereof) against the simultaneous transfer of the Repurchase
Price, all Costs and any other amounts payable by Seller and outstanding under
this Agreement (including without limitation, Sections 3(m), 3(n) and 3(o) of
this Agreement, if any) to an account of Buyer.

 

(i)                                     So long as
Event of Default has occurred and is then continuing, the Repurchase Price with
respect to one or more Purchased Loans may be paid in part at any time upon two
(2) Business Days prior written notice from Seller to Buyer; provided,
however, that any such payment shall be accompanied by an amount
representing accrued Price Differential with respect to such Purchased Loan(s) on
the amount of such payment and all other amounts then due under the Transaction
Documents.  Each partial payment of the
Repurchase Price that is voluntary (as opposed to mandatory under the terms of
this Agreement) shall be in an amount of not less than One Hundred Thousand
Dollars ($100,000).

 

(j)                                     Not later than
thirty (30) days after receipt of written notice from Buyer (a “Mandatory
Repurchase Date”) that any Purchased Loan is not eligible for inclusion in
a CMBS securitization, which notice shall describe in reasonable detail the
reason for such ineligibility, whether by reason of failure to satisfy legal or
REMIC requirements or a Rating Agency or “B-piece” buyer determination (a “Kick-Out
Loan”), Seller shall repurchase the applicable Purchased Loan at the
Repurchase Price therefor (a “Mandatory Repurchase”).  The Purchase Percentage of a Kick Out Loan
shall be subject to reduction as set forth in Schedule I.

 

(k)                                  If Buyer shall
have reasonably determined (which determination shall be conclusive and binding
upon Seller absent manifest error) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate, then Buyer shall give telecopy or telephonic
notice thereof to Seller as soon as practicable thereafter.  If such notice is given, the Pricing Rate
with respect to the Transaction until such notice has been withdrawn by Buyer,
shall be a per annum rate equal to the sum of (i) the Federal Funds Rate,
plus (ii) 0.25% plus (iii) the Applicable Spread (the “Alternative
Rate”).

 

(l)                                     Notwithstanding
any other provision herein, if, after the date of this Agreement, the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for Buyer to effect LIBOR
Transactions as contemplated by the Transaction Documents, (i) the
commitment of Buyer hereunder to enter into new LIBOR Transactions and to
continue LIBOR Transactions as such shall forthwith be canceled, and (ii) the
LIBOR Transactions then outstanding shall be converted automatically to
Alternative Rate Transactions.

 

(m)                               Upon demand by
Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any net
actual, out-of-pocket loss or expense (not to include any indirect or
consequential damages including, 

 

24

 

without limitation, lost profit or opportunity)
(including, without limitation, reasonable attorneys’ fees and disbursements)
that Buyer actually sustains or incurs as a consequence of (i) a default
by Seller in terminating any Transaction after Seller has given a notice in
accordance with Section 3(g) of a termination of a Transaction, (ii) any
payment of all or any portion of the Repurchase Price, as the case may be, on
any day other than a Remittance Date (including, without limitation, any such
loss or expense arising from the reemployment of funds obtained by Buyer to
maintain Transactions hereunder or from fees payable to terminate the deposits
from which such funds were obtained, provided that Seller shall not be
obligated to reimburse Buyer for the incremental cost of reemploying funds or
terminating deposits that arise solely as a result of Buyer’s depositing funds
or employing funds at a rate calculated other than by reference to LIBOR) or (iii) Seller’s
failure to sell Eligible Loans to Buyer after Seller has notified Buyer of a
proposed Transaction and Buyer has issued a Confirmation to purchase such
Eligible Loans in accordance with the provisions of this Agreement.  Buyer shall promptly deliver a certificate to
Seller certifying such actual, out-of-pocket losses or expenses and setting
forth the calculations therefor, which certificate shall be prima facie
evidence of the information set forth therein.

 

(n)                                 If (A) the
Transactions are characterized by a U.S. Federal, state or local taxing
authority in a manner other than as described in Section 23 of this
Agreement, or (B) after the date of this Agreement, the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof by any Governmental Authority or compliance by Buyer with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority having jurisdiction over Buyer made subsequent to
the date hereof:

 

(i)                                     shall subject
Buyer to any tax of any kind whatsoever with respect to the Transaction
Documents, any Purchased Loan or any Transaction, or change the basis of
taxation of payments to Buyer in respect thereof (except for income, franchise
and similar taxes and any changes in the rate of tax on Buyer’s overall net
income);

 

(ii)                                  shall impose,
modify or hold applicable any reserve, special deposit, compulsory loan or
similar requirement against assets held by, deposits or other liabilities in or
for the account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of Buyer which is not otherwise
included in the determination of the LIBOR Rate hereunder; or

 

(iii)                               shall impose on
Buyer any other condition due to this Agreement or the Transactions;

 

and
the result of any of the foregoing is to increase the cost to Buyer of entering
into, continuing or maintaining Transactions or to reduce any amount receivable
under the Transaction Documents in respect thereof; then, in any such case,
Seller shall pay Buyer, within ten (10) Business Days after written demand
therefor is received by Seller, any additional amounts necessary to compensate
Buyer for such increased cost payable or reduced amount receivable.  If Buyer becomes aware that it is entitled to
claim any additional amounts pursuant to this Section 3(n), it shall
notify Seller in writing within ten (10) Business Days of the event by
reason of which it has become so entitled. 
A certificate as to the calculation of any additional amounts payable
pursuant to this Section 3(n) shall be submitted by Buyer to Seller
and shall be conclusive and binding upon Seller in the absence of manifest
error.  This covenant shall survive the
termination of this Agreement and the repurchase by Seller of any or all of the
Purchased Loans.

 

(o)                                 If Buyer shall
have reasonably determined that the adoption of or any change in any
Requirement of Law regarding reserve, special deposit or similar requirements
relating to extensions of credit or other assets of Buyer or in the
interpretation or application thereof or compliance by Buyer or 

 

25

 

any corporation controlling Buyer with any request
or directive regarding such requirements (whether or not having the force of
law) from any Governmental Authority made subsequent to the date hereof has the
effect of reducing the rate of return on Buyer’s or such corporation’s capital
as a consequence of its obligations hereunder to a level below that which Buyer
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration Buyer’s or such corporation’s policies
with respect to such requirements) by an amount deemed by Buyer to be material,
then from time to time, within five (5) Business Days after submission by
Buyer to Seller of a written request therefor, Seller shall pay to Buyer such
additional amount or amounts as will compensate Buyer for such reduction.  A certificate as to the calculation of any
additional amounts payable pursuant to this subsection shall be submitted by
Buyer to Seller and shall be conclusive and binding upon Seller in the absence
of manifest error.  This covenant shall
survive the termination of this Agreement and the repurchase by Seller of any
or all of the Purchased Loans.

 

(p)                                 If any of the
events described in Section 3(k), Section 3(l), Section 3(n) or
Section 3(o) result in Buyer’s election to use the Alternative Rate
or Buyer’s request for additional amounts, then Seller shall have the option to
notify Buyer in writing of its intent to terminate all of the Transactions and
repurchase all of the Purchased Loans no later than five (5) Business Day
after such notice is given to Buyer, and such repurchase by Seller shall be
conducted pursuant to and in accordance with Section 3(g).  The election by Seller to terminate the
Transactions in accordance with this Section 3(p) shall not relieve
Seller for liability with respect to any additional amounts or increased costs
actually incurred by Buyer prior to the actual repurchase of the Purchased Loans.

 

(q)                                 From and after
the Facility Termination Date, Buyer shall have no further obligation to
purchase any New Loans.  On the Facility
Termination Date, Seller shall be obligated to repurchase all of the Purchased
Loans and transfer payment of the Repurchase Price for each such Purchased
Loan, together with the accrued and unpaid Price Differential and all Costs and
other amounts due and payable to Buyer hereunder.  Following the Facility Termination Date,
Buyer shall not be obligated to transfer any Purchased Loans to Seller until
payment in full to Buyer of all amounts due hereunder.

 

4.                                      MANDATORY
PAYMENT OR DELIVERY OF ADDITIONAL ASSETS

 

Buyer
may determine and re-determine the Asset Base and/or Asset Margin on any
Business Day and on as many Business Days as it may elect.  If at any such time the Aggregate Repurchase
Price of the Purchased Loans is greater than the Asset Margin as determined by
Buyer in its sole good faith discretion and notified to Seller on any Business
Day (a “Margin Deficit”), then Seller shall, no later than the second (2nd) Business Day after receipt
of such notice, either deliver to Buyer (i) cash or (ii) additional
collateral acceptable to Buyer in its sole and absolute discretion (including,
without limitation, Eligible Loans pursuant to the terms of this Agreement), in
each case in an amount sufficient to reduce the Aggregate Repurchase Price to
an amount equal to the Asset Base as re-determined by Buyer after giving effect
to the delivery of cash or additional collateral by Seller to Buyer pursuant to
this Section 4.  Any cash delivered
to Buyer pursuant to this Section 4 shall be applied by Buyer to reduce
the Repurchase Price of each Purchased Loan on a pro rata basis.

 

5.                                      INCOME
PAYMENTS AND PRINCIPAL PAYMENTS

 

(a)                                  On or before
the date hereof, Seller, Servicer and Buyer shall establish and maintain with
the Depository Bank a deposit account in the name of Seller and under the sole
control of Buyer with respect to which the Blocked Account Agreement shall have been
executed (such account, together with any replacement or successor thereof, the
“Blocked
Account”).  Seller shall cause
all Income with respect to the Purchased Loans or cash delivered under Section 4
to be deposited in the Blocked Account.  In
furtherance of the foregoing, Servicer agrees to remit to the Blocked Account
all Income received in 

 

26

 

respect of the Purchased Loans within one (1) Business
Day of receipt.  All Income in respect of
the Purchased Loans, which may include payments in respect of associated
Hedging Transactions, shall be deposited directly into, or, if applicable,
remitted directly from the applicable underlying collection account to, the Blocked Account.

 

(b)                                 Unless an Event
of Default shall have occurred and be continuing, on each Remittance Date, all
Income on deposit in the Blocked Account in respect of the Purchased Loans and the
associated Hedging Transactions shall be applied as follows:

 

(i)                                     first, to Buyer, an
amount equal to the Price Differential which has accrued and is outstanding in
respect of the Transactions as of such Remittance Date;

 

(ii)                                  second, to Buyer, all
Costs and all other amounts payable by Seller and outstanding hereunder and
under the other Transaction Documents (other than the Repurchase Price);

 

(iii)                               third, if a
Principal Payment in respect of any Purchased Loan has been made during such
Collection Period, to Buyer, an amount equal to the greater of (i) the
product of the amount of such Principal Payment multiplied by the applicable
Purchase Percentage and (ii) such greater amount, such that after giving
effect to such payment of the applicable Repurchase Price, the Aggregate
Repurchase Price of the Purchased Loans is equal to the Asset Base, as
determined by Buyer after giving effect to such payment; and

 

(iv)                              fourth, to Seller the
remainder, if any.

 

If,
on any Remittance Date, the amounts deposited in the Blocked Account shall be
insufficient to make the payments required under clauses (i) through (iii) of
this Section 5(b), and Seller does not otherwise make such payments on
such Remittance Date, the same shall constitute an Event of Default hereunder.

 

(c)                                  If an Event of
Default shall have occurred and be continuing, all Income on deposit in the Blocked Account
in respect of the Purchased Loans and the associated Hedging Transactions shall
be applied on the Business Day next following the Business Day on which such
funds are deposited in the Blocked Account as follows:

 

(i)                                     first, to Buyer, an
amount equal to the Price Differential which has accrued and is outstanding in
respect of the Transactions as of such Business Day;

 

(ii)                                  second, to Buyer, all
Costs and all other amounts payable by Seller and outstanding hereunder and
under the other Transaction Documents (other than the Repurchase Price);

 

(iii)                               third, to Buyer, an
amount equal to the Aggregate Repurchase Price of the Purchased Loans, until
the Aggregate Repurchase Price for all of the Purchased Loans has been reduced
to zero; and

 

(iv)                              fourth, to Seller the
remainder, if any.

 

(d)                                 If at any time
during the term of any Transaction any Income is distributed to Seller with
respect to the related Purchased Loan or Seller has otherwise received such
Income and has made a payment in respect of such Income to Buyer pursuant to
this Section 5, and for any reason such amount is 

 

27

 

required to be returned by Buyer to an obligor under
such Purchased Loan (either before or after the Repurchase Date), Buyer may
provide Seller with notice of such required return, and Seller shall pay the
amount of such required return to Buyer by 11:00 a.m., New York time, on
the Business Day following Seller’s receipt of such notice.

 

(e)                                  Subject to the
other provisions hereof, Seller shall be responsible for all Costs in respect
of any Purchased Loans to the extent it would be so obligated if the Purchased
Loans had not been sold to Buyer.  Buyer
shall provide Seller with notice of any Costs promptly upon receiving such
notice, and Seller shall pay the amount of any Costs to Buyer by 11:00 a.m.,
New York time, on the later of (i) five (5) Business Days after the
date on which Buyer has informed Seller that such amount is due under the
Purchased Loan Documents and (ii) three (3) Business Days following
Seller’s receipt of such notice.

 

6.                                      CAUTIONARY
SECURITY INTEREST

 

(a)                                  Buyer and
Seller intend that all Transactions hereunder be sales to Buyer of the
Purchased Loans for all purposes (other than for U.S. Federal, state and local
income or franchise tax purposes) and not loans from Buyer to Seller secured by
the Purchased Loans.  However, in the
event that any Transaction is deemed to be a loan,  subject to the terms and conditions of this
Agreement, Seller hereby pledges to Buyer as security for the performance by
Seller of its obligations under the Transactions and the Transaction Documents
and hereby grants to Buyer a first priority security interest in all of Seller’s
right, title and interest in and to (i) all of the Purchased Loans
(including, for the avoidance of doubt, all security interests, mortgages and
liens on personal or real property securing the Purchased Loans) and related
Servicing Rights, (ii) the Blocked Account and all amounts and property from
time to time on deposit therein, (iii) all Income from the
Purchased Loans, (iv) all insurance policies and insurance proceeds
relating to any Purchased Loan or the related Eligible Property, (v) all “general
intangibles”, “accounts” and “chattel paper” as defined in the UCC relating to
or constituting any and all of the foregoing, (vi) all replacements,
substitutions or distributions on or proceeds, payments and profits of, and
records and files relating to, any and all of the foregoing, and (viii) any
other property, rights, title or interests as are specified in the Confirmation
and/or the Trust Receipt, the Purchased Loan Schedule or exception report with
respect to the foregoing in all instances, whether now owned or hereafter
acquired, now existing or hereafter created (collectively, the “Repurchase
Assets”).

 

(b)                                 With respect to
the security interest in the Repurchase Assets granted in Section 6(a) hereof,
and with respect to the security interests granted in Section 6(c), Buyer
shall have all of the rights and, upon the occurrence and during the
continuance of an Event of Default, may exercise all of the remedies of a
secured creditor under the UCC and any other applicable law and shall have the
right to apply the Repurchase Assets or proceeds therefrom to the obligations
of Seller under the Transaction Documents. 
In furtherance of the foregoing, (i) Buyer, at Seller’s sole cost
and expense, shall cause to be filed as a protective filing with respect to the
Repurchase Assets and as a UCC filing with respect to the security interests granted
in Section 6(c) one or more UCC financing statements in form
satisfactory to Buyer (to be filed in the filing office indicated therein), in
such locations as may be necessary to perfect and maintain perfection and
priority of the outright transfer (including under Section 22 of this
Agreement) and the security interest granted hereby and, in each case,
continuation statements and any amendments thereto (including, without
limitation, by causing to be filed any amendments necessary to add or delete
Repurchase Assets covered by the financing statement to reflect the purchase
and repurchase of Purchased Loans) (collectively, the “Filings”), and
shall forward copies of such Filings to Seller upon completion thereof, and (ii) Seller
shall, from time to time, at its own expense, deliver and cause to be duly
filed all such further filings, instruments and documents and take all such
further actions as may be reasonably necessary or as may be reasonably
requested by Buyer with respect to the perfection and priority of the outright
transfer of the Purchased Loans and the security interest granted hereunder in
the Repurchase Assets and the rights and remedies of Buyer with respect to the
Repurchase 

 

28

 

Assets (including under Section 22 of this
Agreement) (including the payments of any fees and taxes required in connection
with the execution and delivery of this Agreement).

 

(c)                                  Seller hereby
pledges to Buyer, as security for the performance by Seller of its obligations
under all Transactions, Seller’s rights under all Hedging Transactions relating
to Purchased Loans entered into by Seller and all proceeds thereof.  Seller shall take all action as is necessary
or desirable to obtain consent to assignment of any such Hedging Transaction to
Buyer and shall use reasonable efforts to cause the counterparty under each
such Hedging Transaction to enter into such document or instrument reasonably
satisfactory to Buyer, Seller and such counterparty, pursuant to which such counterparty
will covenant and agree to accept notice from Buyer to redirect payments under
such Hedging Transaction as Buyer may direct. 
So long as no Event of Default shall be continuing, Buyer agrees that it
will not redirect payments under any Hedging Transaction pledged to Buyer
pursuant to the terms of this Section 6(c).

 

(d)                                 Notwithstanding
that Servicer has no rights to the Servicing Rights relating to any Purchased
Loans or any appurtenant rights, to the extent that a court determines that
Servicer has rights with respect to any such Servicing Rights and appurtenant
rights, and as security for the performance by Servicer of its obligations
under the Transaction Documents, Servicer hereby grants and pledges to Buyer a
first priority security interest in all of its rights, title and interest in
and to the following property: (i) the Servicing Rights related to the
Purchased Loans; (ii) all rights of Servicer to receive from any third
party or to take delivery of any servicing of the Purchased Loans; (iii) all
rights of Servicer to receive from any third party or to take delivery of all
related Servicing Records and all other documents which constitute a part of
the related Purchased Loan Files; (iv) all rights of Servicer to recover
from any third party or to take delivery of any of the foregoing, in all
instances, whether now owned or hereafter acquired, now existing or hereafter
created; and (v) all replacements, substitutions or distributions on or
proceeds, payments or profits of any and all of the foregoing.

 

(e)                                  In connection
with the repurchase by Seller of any Purchased Loan in accordance herewith,
upon receipt of the Repurchase Price by Buyer, Buyer will deliver to Seller, at
Seller’s expense, such documents and instruments as may be reasonably necessary
and requested by Seller to reconvey such Purchased Loan and any Income related
thereto to Seller and to evidence the termination of Buyer’s security interest
therein including, without limitation, UCC termination statements.

 

7.                                      PAYMENT,
TRANSFER AND CUSTODY

 

(a)                                  Subject to the
terms and conditions of this Agreement, on the Purchase Date for each
Transaction, ownership of the Purchased Loans and all rights thereunder shall
be transferred to Buyer or its designee (including the Custodian) against the simultaneous
transfer of the Purchase Price to an account of Seller specified in the
Confirmation relating to such Transaction. 
On the Purchase Date for the first Transaction, Buyer will provide
Seller with a power of attorney, substantially in the form attached as Exhibit IV-2
hereto, allowing Seller to administer, operate and service such Purchased
Loans.  Provided that no Event of Default
shall have occurred and be continuing, the power of attorney shall be binding
upon Buyer and Buyer’s successors and assigns.

 

(b)                                 With respect to
each Table Funded Purchased Loan, Seller shall cause the Bailee to deliver to
the Buyer by no later than 1:00 p.m. (New York time), on the Purchase
Date, by facsimile a true and complete copy of the related promissory note, the
Insured Closing Letter and Escrow Instructions, if any, and the executed Bailee
Agreement.  In connection with the sale
of each Purchased Loan, not later than 1:00 p.m. (New York time), two (2) Business
Days prior to the related Purchase Date (or with respect to a Table Funded
Purchased Loan not later than 1:00 p.m. (New York time) on the third (3rd) Business Day following the
applicable Purchase Date), Seller shall deliver or cause Bailee to deliver
(with 

 

29

 

a copy to Buyer) and release to the Custodian
(together with the Custodial Delivery Certificate ), and shall cause the
Custodian to deliver a Trust Receipt on the Purchase Date (or in the case of a
Table Funded Purchased Loan, not later than two (2) Business Days
following the receipt by the Custodian) confirming the receipt of the following
original (or where indicated, copied) documents, to the extent applicable
(collectively, the “Purchased Loan File”), pertaining to each of the
Purchased Loans identified in the Custodial Delivery Certificate delivered
therewith:

 

(i)                                     With respect to
each Purchased Loan that is a Mortgage Loan, the following documents, as
applicable and subject to clause (ii) below:

 

(A)  The original
Mortgage Note bearing all intervening endorsements, endorsed “Pay to the order
of
                  
without recourse” and signed in the name of the last endorsee (the “Last
Endorsee”) by an authorized Person of the Last Endorsee (in the event that
the Purchased Loan was acquired by the Last Endorsee in a merger, the signature
must be in the following form:  “[Last
Endorsee], successor by merger to [name of predecessor]”; in the event that the
Purchased Loan was acquired or originated by the Last Endorsee while doing
business under another name, the signature must be in the following form:  “[Last Endorsee], [formerly known] or [doing
business] as [previous name]”) or a lost note affidavit in a form reasonably
approved by Buyer, with a copy of the applicable Mortgage Note attached
thereto.

 

(B)  The original or a
copy of the loan agreement and the guarantee, if any, executed in connection
with the Purchased Loan.

 

(C)  The original
Mortgage with evidence of recording thereon, or a copy thereof together with an
Officer’s Certificate of Seller or certification of Bailee certifying that such
copy represents a true and correct copy of the original and that such original
has been submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.

 

(D)  The originals of
all assumption, modification, consolidation or extension agreements with
evidence of recording thereon, or copies thereof together with an Officer’s
Certificate of Seller or certification of Bailee certifying that such copies
represent true and correct copies of the originals and that such originals have
each been submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.

 

(E)  The original Assignment
of Mortgage in blank for each Purchased Loan, in form and substance acceptable
for recording and signed in the name of the Last Endorsee (in the event that
the Purchased Loan was acquired by the Last Endorsee in a merger, the signature
must be in the following form:  “[Last
Endorsee], successor by merger to [name of predecessor]”; in the event that the
Purchased Loan was acquired or originated while doing business under another
name, the signature must be in the following form: “[Last Endorsee], [formerly
known] or [doing business] as [previous name]”).

 

(F)  The originals of
all intervening assignments of mortgage (if any) with evidence of recording
thereon, or copies thereof together with an Officer’s Certificate of Seller or
certification of Bailee certifying that such copies represent true and correct
copies of the originals and that such originals have each been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.

 

30

 

(G)  The original Title
Policy or, if the original Title Policy has not been issued, the original
irrevocable marked commitment to issue the same.

 

(H)  The original of
any security agreement, chattel mortgage or equivalent document executed in
connection with the Purchased Loan.

 

(I)  The original
Assignment of Leases, if any, with evidence of recording thereon, or a copy
thereof together with an Officer’s Certificate of Seller or certification of
Bailee, certifying that such copy represents a true and correct copy of the
original that has been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.

 

(J)  The originals of all
intervening assignments of assignment of leases and rents, if any, or copies
thereof, with evidence of recording thereon, or copies thereof together with an
Officer’s Certificate of Seller or certification of Bailee certifying that such
copies represent true and correct copies of the originals and that such
originals have each been submitted for recordation in the appropriate
governmental recording office of the jurisdiction where the Mortgaged Property
is located.

 

(K)  A copy of the UCC
financing statements, certified as true and correct by Seller, and all
necessary UCC continuation statements with evidence of filing thereon or copies
thereof together with evidence that such UCC financing or continuation
statements have been sent for filing, and UCC assignments in blank, which UCC
assignments shall be in form and substance acceptable for filing in the
applicable jurisdictions.

 

(L)  The original
environmental indemnity agreement or similar guaranty or indemnity, whether
stand-alone or incorporated into the applicable loan documents (if any).

 

(M)  The original
omnibus assignment in blank or such other documents necessary and sufficient to
transfer to Buyer all of Seller’s right, title and interest in and to the
Purchased Loan (if any).

 

(N)  Mortgagor’s certificate
or title affidavit (if any).

 

(O)  A Survey of the
Mortgaged Property (if any) as accepted by the title company for issuance of
the Title Policy.

 

(P)  A copy of the
Mortgagor’s opinions of counsel.

 

(Q)  An assignment of
any management agreements, permits, contracts and other material agreements (if
any).

 

(R)  The original or a
copy of the intercreditor or co-lender agreement (if any) executed in
connection with the Purchased Loan to the extent the subject borrower, or an
affiliate thereof, has encumbered its assets with senior, junior or similar
financing, whether mortgage financing or mezzanine loan financing.

 

31

 

(S)  Copies of all documents relating to the
formation and organization of the related obligor under such Purchased Loan,
together with all consents and resolutions delivered in connection with such
obligor’s obtaining such Purchased Loan.

 

(T)  All other material documents and instruments
evidencing, guaranteeing, securing or modifying such Purchased Loan, executed
and delivered in connection with, or otherwise relating to, such Purchased
Loan, including all documents establishing or implementing any lockbox pursuant
to which Seller is entitled to receive any payments from cash flow of the
underlying real property.

 

(ii)                                 If Seller
cannot deliver, or cause to be delivered, any of the original documents and/or
instruments required to be delivered as originals under the provisions above,
Seller shall deliver a photocopy thereof and, unless waived by Buyer, an
Officer’s Certificate of Seller certifying that such copy represents a true and
correct copy of the original.  Seller
shall then, (1) use its best efforts to obtain and deliver the original
document within 180 days after the related Purchase Date (or such longer period
after the related Purchase Date to which Buyer may consent in its sole good
faith discretion, so long as Seller is, as certified in writing to Buyer not
less frequently than monthly, using its best efforts to obtain the original),
(2) after the expiration of such best efforts period, deliver to Buyer a
certification that states, despite Seller’s best efforts, Seller was unable to
obtain such original document and (3) thereafter have no further obligation to
deliver the related original document.

 

(c)                                  From time to
time, Seller shall forward to the Custodian additional original documents or
additional documents evidencing any assumption, modification, consolidation or
extension of a Purchased Loan approved in accordance with the terms of this
Agreement, and upon receipt of any such other documents, the Custodian shall
hold such other documents on behalf of Buyer and as Buyer shall request from time
to time.  With respect to any documents
which have been delivered or are being delivered to recording offices for
recording and have not been returned to Seller in time to permit their delivery
hereunder at the time required, in lieu of delivering such original documents,
Seller shall deliver to Buyer a true copy thereof with an Officer’s Certificate
certifying that such copy is a true, correct and complete copy of the original,
which has been transmitted for recordation. 
Seller shall deliver such original documents to the Custodian promptly
when they are received.  With respect to
all of the Purchased Loans delivered by Seller to Buyer or its designee
(including the Custodian), Seller shall execute an omnibus power of attorney
substantially in the form of Exhibit IV-1 attached hereto irrevocably
appointing Buyer its attorney-in-fact with full power to, during the
continuance of an Event of Default, (i) complete and record any Assignment of
Mortgage, (ii) complete the endorsement of any Mortgage Note and (iii) take
such other steps as may be necessary or desirable to enforce Buyer’s rights
against any Purchased Loans and the related Purchased Loan Files and the
Servicing Records.  Buyer shall deposit
the Purchased Loan Files representing the Purchased Loans, or cause the
Purchased Loan Files to be deposited directly, with the Custodian to be held by
the Custodian on behalf of Buyer.  The
Purchased Loan Files shall be maintained in accordance with the Custodial
Agreement.  Any Purchased Loan Files not
delivered to Buyer or its designee (including the Custodian) are and shall be
held in trust by Seller or its designee for the benefit of Buyer as the owner
thereof.  Seller or its designee shall
maintain a copy of the Purchased Loan File and any originals of the Purchased
Loan File not delivered to Buyer or its designee.  The possession of the Purchased Loan File by
Seller or its designee is at the will of Buyer for the sole purpose of
servicing the related Purchased Loan, and such retention and possession by Seller
or its designee is in a custodial capacity only.  The books and records (including, without
limitation, any computer records or tapes) of Seller or its designee shall be
marked appropriately to reflect clearly the transfer, subject to the terms and
conditions of this Agreement, of the related Purchased Loan to Buyer.  Seller or its designee (including the
Custodian) shall release its custody of the Purchased Loan File only in
accordance with written instructions from Buyer, unless such release is required
as incidental to the servicing of the 

 

32

 

Purchased Loans or is in connection with a
repurchase of any Purchased Loan by Seller or is pursuant to the order of a
court of competent jurisdiction.

 

(d)                                 Unless an Event
of Default shall have occurred and be continuing, Seller shall exercise all
voting, consent, corporate and decision-making rights with respect to the
Purchased Loans, provided that Seller shall not effectuate any Significant
Modification of any Purchased Loan without Buyer’s prior written consent
thereto, which consent shall not be unreasonably withheld, conditioned or
delayed.  Buyer agrees to use
commercially reasonable efforts to respond to any requests for consent by
Seller pursuant to this Section 7(d) in an expeditious manner.  Upon the occurrence and during the
continuation of an Event of Default, Buyer shall be entitled to exercise all
voting, consent, corporate, and decision-making rights with respect to the
Purchased Loans without regard to Seller’s instructions.

 

(e)                                  On the date of
this Agreement, Buyer shall have received
all of the following items and documents, each of which shall be satisfactory
to Buyer in form and substance:

 

(i)                                     Transaction
Documents.

 

(A)  this Agreement, duly executed and delivered
by Seller, Buyer and Servicer;

 

(B)  the Custodial Agreement, duly executed and
delivered by Seller, Buyer and Custodian;

 

(C)  the Blocked Account Agreement, duly executed and
delivered by Seller, Buyer, Servicer and Depository Bank;

 

(D)  the Fee Letter, duly executed and delivered
by Seller and Buyer; and

 

(E)  the Guaranty, duly executed and delivered by
Guarantor.

 

(ii)                                  Organizational
Documents. Certified copies of the organizational documents
of the Seller and the Guarantor and resolutions or other documents evidencing
the authority of Seller and the Guarantor with respect to the execution,
delivery and performance of the Transaction Documents to which it is a party
and each other document to be delivered by Seller and/or Guarantor from time to
time in connection with the Transaction Documents (and Buyer may conclusively
rely on such certifications until it receives notice in writing from Seller or
Guarantor, as the case may be, to the contrary);

 

(iii)                               Legal Opinion.  Opinions of counsel to Seller, the Guarantor
and the Servicer in form and substance satisfactory to Buyer as to authority,
enforceability of the Transaction Documents to which it is a party,
perfection, bankruptcy safe harbors, the Investment Company Act and such other
matters as may be requested by Buyer; and

 

(iv)                              Other Documents.  Such other documents as Buyer may reasonably
request.

 

8.                                      CERTAIN
RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS

 

(a)                                  Subject to the
terms and conditions of this Agreement, title to all Purchased Loans shall pass
to Buyer on the applicable Purchase Date, and, subject to the terms and
conditions of this Agreement, Buyer shall have free and unrestricted use of its
interest in the Purchased Loans in accordance with the terms and conditions of
the Purchased Loan Documents.  Nothing in
this Agreement or any other Transaction Document shall preclude Buyer from
engaging, at Buyer’s expense, in repurchase 

 

33

 

transactions with the Purchased Loans with Persons
in conformity with the terms and conditions of the Purchased Loan Documents or
otherwise selling, transferring, pledging, repledging, hypothecating, or
rehypothecating all or a portion of its interest in the Purchased Loans to
Persons in conformity with the terms and conditions of the Purchased Loan
Documents, but no such transaction shall relieve Buyer of its obligations to
transfer the Purchased Loans to Seller pursuant to Section 3 of this Agreement
or of Buyer’s obligation to credit or pay Income to, or apply Income to the
obligations of, Seller pursuant to Section 5 of this Agreement or otherwise
affect the rights, obligations and remedies of any party to this Agreement.

 

(b)                                 Subject to the
terms and conditions of this Agreement, any documents delivered to the
Custodian pursuant to Section 7 of this Agreement shall be released only in
accordance with the terms and conditions of the Custodial Agreement.

 

9.                                      RESERVED

 

10.                               REPRESENTATIONS

 

(a)                                  Seller
represents and warrants to Buyer that as of the Purchase Date and as of the
date of this Agreement and at all times while this Agreement and any
Transaction thereunder is in effect:

 

(i)                                     Organization.  Seller is duly organized, validly existing
and in good standing under the laws and regulations of the state of Seller’s
organization and is duly licensed, qualified, and in good standing in every
state where such licensing or qualification is necessary for the transaction of
Seller’s business.  Seller has the power
to own and hold the assets it purports to own and hold, and to carry on its
business as now being conducted and proposed to be conducted, and has the power
to execute, deliver, and perform its obligations under this Agreement and the
other Transaction Documents.

 

(ii)                                  Due Execution;
Enforceability.  The
Transaction Documents have been duly executed and delivered by Seller, for good
and valuable consideration.  The
Transaction Documents constitute the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms
subject to bankruptcy, insolvency, and other limitations on creditors’ rights
generally and to equitable principles.

 

(iii)                               Non-Contravention;
Consents.  Neither the
execution and delivery of the Transaction Documents, nor consummation by Seller
of the transactions contemplated by the Transaction Documents (or any of them),
nor compliance by Seller with the terms, conditions and provisions of the
Transaction Documents (or any of them) will (x) conflict with or result in a
breach or violation of any of the terms, conditions or provisions of any
judgment or order, writ, injunction, decree or demand of any court applicable
to Seller, (y) result in the creation or imposition of any lien or any other
encumbrance upon any of the assets of Seller, other than pursuant to the
Transaction Documents or (z) violate or conflict with contractual provisions
of, or cause an event of default under, any indenture, loan agreement,
mortgage, material contract or other material agreement to which Seller is a
party or by which Seller may be bound. 
Seller has all necessary licenses, permits and other consents from
Governmental Authorities necessary to acquire, own and sell the Purchased Loans
and for the performance of its obligations under the Transaction Documents.

 

(iv)                              Litigation;
Requirements of Law.  There is no
action, suit, proceeding, investigation, or arbitration pending or, to the best
Knowledge of Seller, threatened against Seller or any of its assets which may
result in any Material Adverse Effect, or which may have an 

 

34

 

adverse effect on the
validity of the Transaction Documents or any action taken or to be taken in
connection with the obligations of Seller under any of the Transaction Documents.  Seller is in compliance in all material
respects with all Requirements of Law. 
Seller is not in default in any material respect with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any arbitrator
or Governmental Authority.

 

(v)                                 No Broker.  Seller has not dealt with any broker,
investment banker, agent or other Person (other than Buyer or an Affiliate of
Buyer) who may be entitled to any commission or compensation in connection with
the sale of the Purchased Loans pursuant to any Transaction Documents.

 

(vi)                              Good Title to
Purchased Loans.  Immediately
prior to the purchase of any Purchased Loans by Buyer from Seller, such
Purchased Loans are free and clear of any lien, security interest, claim,
option, charge, encumbrance or impediment to transfer to Buyer (including any “adverse
claim” as defined in Section 8-102(a)(1) of the UCC), and are not subject to
any rights of set-off, any prior sale, transfer, assignment, or participation
by Seller or any agreement by Seller to assign, convey, transfer or participate
in such Purchased Loans, in whole or in part, and Seller is the sole legal
record and beneficial owner of, and owns and has the right to sell and
transfer, such Purchased Loans to Buyer, and, upon transfer of such Purchased
Loans to Buyer, Buyer shall be the owner of such Purchased Loans (other than
for U.S. Federal, state and local income and franchise tax purposes) free of
any adverse claim, subject to Seller’s rights pursuant to this Agreement.  In the event that the related Transaction is
recharacterized as a secured financing of the Purchased Loans and with respect
to the security interests granted in Sections 6(a) and 6(c), the provisions of
this Agreement are effective to create in favor of Buyer a valid security
interest in all right, title and interest of Seller in, to and under the
Repurchase Assets specified in Sections 6(a) and the other collateral specified
in Section 6(c), and Buyer shall have a valid, perfected and enforceable first
priority security interest in the Repurchase Assets and such other collateral
to the extent that a security interest in the Repurchase Assets and such
collateral can be perfected under the UCC by the filing of UCC financing
statements in accordance with Section 6(b) hereof or by delivery of the
Purchased Loan File to the Custodian in accordance with Section 7(b) hereof,
subject to no lien or rights of others other than as granted herein (other than
Permitted Encumbrances).

 

(vii)                           No Default.  No Event of Default and, to Seller’s
Knowledge, no Default exists under or with respect to the Transaction
Documents.

 

(viii)                        Representations
and Warranties Regarding Purchased Loans; Delivery of Purchased Loan File.  Each Purchased Loan sold hereunder, as of the
applicable Purchase Date for the Transaction in question, conforms in all
material respects to the applicable representations and warranties set forth in
Exhibit V attached hereto, except as has been disclosed to Buyer in an
Exception Report prior to Buyer’s issuance of a Confirmation with respect to
the related Purchased Loan.  It is
understood and agreed that the representations and warranties set forth in
Exhibit V hereto (as modified by any Exception Report disclosed to Buyer in
writing prior to Buyer’s issuance of a Confirmation with respect to the related
Purchased Loan), shall survive delivery of the respective Purchased Loan File
to Buyer or its designee (including the Custodian).  With respect to each Purchased Loan, the
Mortgage Note, the Mortgage (if any), the Assignment of Mortgage (if any) and
any other documents required to be delivered under this Agreement and the
Custodial Agreement for such Purchased Loan have been delivered (or with
respect to Table Funded Purchased Loans shall be delivered in accordance with
Section 7(b)) to Buyer or the Custodian on its behalf or such requirement will
have been expressly waived in writing by Buyer. 
Seller or its designee is in possession of a complete, true and accurate
Purchased Loan File with 

 

35

 

respect to each Purchased
Loan, except for such documents the originals of which have been delivered to
the Custodian and except as disclosed to Buyer in an Exception Report prior to
Buyer’s issuance of a Confirmation with respect to the related Purchased Loan.

 

(ix)                                Adequate
Capitalization; No Fraudulent Transfer.  Seller has, as of such Purchase Date,
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations.  Seller is generally able to
pay, and as of the date hereof is paying, its debts as they come due.  Seller has not become, and is not presently,
financially insolvent nor will Seller be made insolvent by virtue of Seller’s
execution of or performance under any of the Transaction Documents within the
meaning of the bankruptcy laws or the insolvency laws of any jurisdiction.  Seller has not entered into any Transaction
Document or any Transaction pursuant thereto in contemplation of insolvency or
with intent to hinder, delay or defraud any creditor.  Seller has not received any written notice
that any payment or other transfer made to or on account of Seller from or on
account of any Mortgagor or any other person obligated under any Purchased Loan
Documents is or may be void or voidable as an actual or constructive fraudulent
transfer or as a preferential transfer.

 

(x)                                   Organizational
Documents.  Seller has
delivered to Buyer true and correct certified copies of its organizational
documents, together with all amendments thereto.

 

(xi)                                [Intentionally
Omitted]

 

(xii)                             No Investment
Company.  Neither Seller nor any
Intermediate Starwood Entity is an “investment company”, or a company “controlled
by an investment company”, within the meaning of the Investment Company Act of
1940, as amended.

 

(xiii)                          Taxes.  Seller has filed or caused to be filed all
tax returns that would be delinquent if they had not been filed on or before
the date hereof and has paid all taxes due and payable on or before the date
hereof and all other taxes, fees or other charges imposed on it and any of its
assets by any Governmental Authority; no tax liens have been filed against any
of Seller’s assets, other than liens for taxes that are being appropriately
contested in good faith by appropriate proceedings, diligently conducted and
with respect to which adequate reserves have been provided in accordance with
GAAP; and, to Seller’s Knowledge, no claims are being asserted with respect to
any such taxes, fees or other charges that are not being contested in good
faith as provided above.

 

(xiv)                         ERISA.  Neither Seller nor any ERISA Affiliate
(a) sponsors or maintains any Plans or (b) makes any contributions to
or has any liabilities or obligations (direct or contingent) with respect to
any Plans.  Seller does not, and would
not be deemed to, hold Plan Assets, and the consummation of the transactions
contemplated by this Agreement will not constitute or result in any non-exempt
prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or
substantially similar provisions under any other federal, state or local laws,
rules or regulations.

 

(xv)                            Judgments/Bankruptcy.  Except as disclosed in writing to Buyer,
there are no judgments against Seller that are unsatisfied of record or
docketed in any court located in the United States of America and no Act of
Insolvency has ever occurred with respect to Seller.

 

(xvi)                         Full and
Accurate Disclosure.  No
information provided pursuant to the Transaction Documents, or any written statement
furnished by or on behalf of Seller pursuant to the terms of the Transaction
Documents (including any certification of Bailee), contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the 

 

36

 

statements contained herein
or therein not misleading in light of the circumstances under which they were
made when such statements and omissions are considered in the totality of the
circumstances in question.

 

(xvii)                      Financial
Information.  All
financial data concerning Seller and Guarantor and all data concerning the
Purchased Loans that has been delivered to Buyer by Seller, any Affiliate of
Seller or Seller’s advisors is true, complete and correct in all material
respects and has been prepared in accordance with GAAP (to the extent
applicable).  Since the delivery of such
data, except as otherwise disclosed in writing to Buyer, there has been no
change in the financial position of Seller or Guarantor or the Purchased Loans,
or in the results of operations of Seller or Guarantor, which change is
reasonably likely to result in a Material Adverse Effect.

 

(xviii)                   Jurisdiction of
Organization.  Seller’s
jurisdiction of organization is the State of Delaware.

 

(xix)                           Location of
Books and Records.  The
location where Seller keeps its books and records at its chief executive office
at 591 West Putnam Avenue, Greenwich, Connecticut 06830.

 

(xx)                              Regulation T, U
and X.  Neither the entering into nor
consummation of any Transaction hereunder, nor the use of the proceeds thereof,
will violate any provisions of Regulation T, U or X.

 

(xxi)                           If requested by
Buyer, Seller, any applicable Affiliate of Seller and the recipient of any
portion of the proceeds of, or any portion of, any Transaction shall furnish to
Buyer a statement on Federal Reserve Form G-3 referred to in Regulation U.

 

(xxii)                        USA Patriot
Act; OFAC.  Neither
Seller, Guarantor, Servicer nor any of their respective Affiliates is a
Prohibited Person and each of Seller, Guarantor and Servicer is in full
compliance with all applicable orders, rules, regulations and recommendations
of OFAC.  None of Seller, Guarantor or
Servicer any of their respective members, directors, executive officers,
parents or Subsidiaries: (1) are subject to U.S. or multilateral economic or
trade sanctions currently in force; (2) are owned or controlled by, or act on
behalf of, any governments, corporations, entities or individuals that are
subject to U.S. or multilateral economic or trade sanctions currently in force;
(3) is a Prohibited Person or is otherwise named, identified or described on
any blocked persons list, designated nationals list, denied persons list,
entity list, debarred party list, unverified list, sanctions list or other list
of individuals or entities with whom U.S. persons may not conduct business,
including but not limited to lists published or maintained by OFAC, lists
published or maintained by the U.S. Department of Commerce, and lists published
or maintained by the U.S. Department of State. 
Each of Seller, Guarantor and Servicer has established an anti-money
laundering compliance program as required by all applicable anti-money
laundering laws and regulations, including without limitation the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56) (the “USA PATRIOT ACT”)
(collectively, the “Anti-Money Laundering Laws”).

 

(xxiii)                     REIT Status.  Guarantor has not engaged in any material “prohibited
transactions” as defined in Section 857(b)(6)(B)(iii) and (C) of the Code.  Guarantor for its current “tax year” (as
defined in the Code) is entitled to a dividends paid deduction under the
requirements of Section 857 of the Code with respect to any dividends paid by
it with respect to each such year for which it claims a deduction in its Form
1120-REIT filed with the United States Internal Revenue Service for such year.

 

37

 

11.                               NEGATIVE
COVENANTS OF SELLER

 

On
and as of the date hereof and each Purchase Date and until this Agreement is no
longer in force with respect to any Transaction, Seller shall not without the
prior written consent of Buyer:

 

(a)                                  transfer,
assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose
of, or pledge or hypothecate, directly or indirectly, any interest in the
Purchased Loans (or any of them) to any Person other than Buyer, or engage in
repurchase transactions or similar transactions with respect to the Purchased
Loans (or any of them) with any Person other than Buyer, except where the
Purchased Loans in question are simultaneously repurchased from Buyer;

 

(b)                                 create, incur
or permit to exist any lien, encumbrance or security interest in or on the
Purchased Loans, except as described in Section 6 of this Agreement;

 

(c)                                  create, incur
or permit to exist any lien, encumbrance or security interest in or on any of
the Repurchase Assets or other collateral subject to the security interests
granted by Seller pursuant to Section 6 of this Agreement;

 

(d)                                 create, incur
or permit any lien, security interest, charges, or encumbrances with respect to
any Hedging Transaction relating to the Purchased Loans for the benefit of any
Person other than Buyer;

 

(e)                                  permit Guarantor
to internalize its management without Buyer’s prior written approval, which
shall not be unreasonably withheld;

 

(f)                                    consent or
assent to a Significant Modification of any Purchased Loan without the prior
written consent of Buyer, which consent shall not be unreasonably withheld;

 

(g)                                 take any action
or permit such action to be taken which would result in a Change of Control
without the prior written consent of Buyer;

 

(h)                                 after the
occurrence and during the continuation of any Event of Default or monetary
Default, make any distribution, payment on account of, or set apart assets for,
a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any equity or ownership interest of Seller,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Seller;

 

(i)                                     sponsor or
maintain any Plans or make any contributions to, or have any liability or
obligation (direct or contingent) with respect to, any Plan or permit any ERISA
Affiliate to sponsor or maintain any Plans or make any contributions to, or
have any liability or obligation (direct or contingent) with respect to, any
Plan;

 

(j)                                     engage in any
transaction that would cause any obligation or action taken or to be taken
hereunder (or the exercise by Buyer of any of its rights under this Agreement,
the Purchased Loans or any Transaction Document) to be a non-exempt prohibited
transaction under Section 406 of ERISA, Section 4975  of the Code or
substantially similar provisions under any other federal, state or local laws,
rules or regulations;

 

(k)                                  make any future
advances under any Purchased Loan to any underlying obligor that are not
permitted by the related Purchased Loan Documents;

 

38

 

(l)                                     seek its
dissolution, liquidation or winding up, in whole or in part;  or

 

(m)                               incur any
Indebtedness except as provided in Section 13(i) or otherwise cease to be a Single-Purpose
Entity.

 

12.                               AFFIRMATIVE
COVENANTS OF SELLER

 

(a)                                  Seller shall
promptly notify Buyer of any event and/or condition that is likely to have a
Material Adverse Effect of which Seller has Knowledge.

 

(b)                                 Seller shall
give notice to Buyer of the following (accompanied by an Officer’s Certificate
setting forth details of the occurrence referred to therein and stating what
actions Seller has taken or proposes to take with respect thereto):

 

(i)                                     promptly upon
receipt of notice or Knowledge of the occurrence of any Default, Event of
Default or Cross-Termination Event;

 

(ii)                                  with respect to
any Purchased Loan sold to Buyer hereunder, promptly following receipt of any
unscheduled Principal Payment (in full or in part);

 

(iii)                               with respect to
any Purchased Loan sold to Buyer hereunder, promptly following receipt by
Seller of notice or Knowledge that the related Mortgaged Property has been
damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado
or other casualty, or otherwise damaged so as to affect adversely the value of
such Mortgaged Property;

 

(iv)                              promptly
following receipt of notice by Seller or Knowledge of (1) any Purchased Loan
that becomes a Defaulted Loan, (2) any lien or security interest (other than
security interests created hereby) on, or claim asserted against, any Purchased
Loan or, to Seller’s Knowledge, the underlying collateral therefor or (3) any
event or change in circumstances that has or could reasonably be expected to
have an adverse affect on the Market Value of a Purchased Loan;

 

(v)                                 promptly, and
in any event within ten (10) Business Days after service of process on any of
the following, give to Buyer notice of all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are pending or threatened) or other legal or arbitrable
proceedings affecting Seller or affecting any of the assets of Seller before
any Governmental Authority that (1) questions or challenges the validity or
enforceability of any of the Transaction Documents or any action to be taken in
connection with the transactions contemplated hereby, (2) makes a claim or
claims in an aggregate amount greater than $1,000,000, or (3) which,
individually or in the aggregate, if adversely determined could reasonably be
likely to have a Material Adverse Effect;

 

(vi)                              promptly upon
Seller obtaining Knowledge of any change in Guarantor’s status as a REIT; and

 

(vii)                           promptly upon
any transfer of any underlying Mortgaged Property or any direct or indirect equity
interest in any Mortgagor of which the Seller has Knowledge, whether or not
consent to such transfer is required under the applicable Purchased Loan
Documents.

 

39

 

(c)                                  Seller shall
provide Buyer with copies of such documents as Buyer may reasonably request
evidencing the truthfulness of the representations set forth in Section 10, to
the extent such documentation is available to Seller.

 

(d)                                 Seller shall
defend the right, title and interest of Buyer in and to the Purchased Loans
against, and take such other action as is necessary to remove, the liens,
security interests, claims, encumbrances, charges and demands of all Persons
against the Purchased Loans (other than security interests granted to Buyer hereunder
and other than Permitted Encumbrances).

 

(e)                                  Seller will
permit Buyer or its designated representative to inspect any of Seller’s
records with respect to all or any portion of the Purchased Loans and the
conduct and operation of its business related thereto at such reasonable times
and with reasonable frequency requested by Buyer or its designated
representative and to make copies of extracts of any and all thereof.

 

(f)                                    If any amount
payable under or in connection with any of the Purchased Loans shall be or
become evidenced by any promissory note, other instrument or chattel paper (as
each of the foregoing is defined under the UCC), such note, instrument or
chattel paper shall be promptly delivered to Buyer or its designee, duly
endorsed in a manner satisfactory to Buyer or if any collateral or other
security shall subsequently be delivered to Seller in connection with any
Purchased Loan, Seller shall promptly deliver or forward such item of
collateral or other security to Buyer or its designee, together with such
instruments of assignment as Buyer may reasonably request.

 

(g)                                 Seller shall
provide (or cause to be provided) to Buyer the following financial and
reporting information:

 

(i)                                     the Monthly
Statement;

 

(ii)                                  the Quarterly
Report, together with all operating statements and occupancy information that
Seller or Servicer has received relating to the Purchased Loans for the related
fiscal quarter;

 

(iii)                               the Financial
Covenant Compliance Certificate;

 

(iv)                              as soon as
available and in any event within forty-five (45) days after the end of each of
the first three quarterly fiscal periods of each fiscal year of Guarantor, the
unaudited, consolidated balance sheets of Guarantor, as at the end of such
period and the related unaudited, consolidated statements of income and
retained earnings and of cash flows for Guarantor for such period and the
portion of the fiscal year through the end of such period (and in each case
with comparisons to applicable information in the financials statements from
the previous year), accompanied by an Officer’s Certificate of Guarantor, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of
Guarantor in accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to normal year-end audit adjustments);

 

(v)                                 within
forty-five (45) days following the end of each fiscal quarter, or within ninety
(90) days following the end of each fiscal year, as the case may be, an Officer’s
Certificate of Seller in form and substance reasonably satisfactory to Buyer
certifying that during such fiscal quarter or year there has occurred no Event
of Default which remains uncured and, to Seller’s Knowledge, no event or circumstance
has occurred that is reasonably likely to result in a Material Adverse Effect
under this Agreement;

 

40

 

(vi)                              as soon as
available and in any event within ninety (90) days after the end of each fiscal
year of Guarantor, the consolidated balance sheets of Guarantor as at the end
of such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for Guarantor for such year, accompanied by
an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations
of Guarantor as at the end of, and for, such fiscal year in accordance with
GAAP;

 

(vii)                           within ten (10)
Business Days after Buyer’s request, such further information with respect to
the operation of any Mortgaged Property, Purchased Loan, the financial affairs
of Seller or Guarantor and any Plan and Multiemployer Plan in Seller’s or
Guarantor’s possession as may be reasonably requested by Buyer, including all
business plans prepared by or for Seller; provided, however, that with respect
to information not previously Known to, or in the possession of, Guarantor
relating to any Multiemployer Plan, Guarantor shall be required to provide only
such information as may be obtained through its good faith efforts; and

 

(viii)                        within ten (10)
Business Days after Buyer’s request, such further information in Guarantor’s
possession as may be reasonably requested by Buyer.

 

(h)                                 Seller shall at
all times comply in all material respects with all laws, ordinances, rules and
regulations of any federal, state, municipal or other public authority having
jurisdiction over Seller or any of its assets, and Seller shall do or cause to
be done all things reasonably necessary to preserve and maintain in full force
and effect its legal existence and all licenses material to its business.

 

(i)                                     Seller shall at
all times keep proper books of records and accounts in which full, true and
correct entries shall be made of its transactions in accordance with GAAP and
set aside on its books from its earnings for each fiscal year all such proper
reserves in accordance with GAAP.

 

(j)                                     Seller shall
advise Buyer in writing of the opening of any new chief executive office of
Seller or the closing of any such office and of any change in Seller’s name or
the places where the books and records pertaining to the Purchased Loans are
held not less than the later of fifteen (15) Business Days prior to taking any
such action or thirty (30) days before any financing statement filing will
lapse, lose perfection or become materially misleading of which Seller has
Knowledge.

 

(k)                                  Seller shall
observe, perform and satisfy all the terms, provisions, covenants and
conditions required to be observed, performed or satisfied by it, and shall pay
when due all costs, fees and expenses required to be paid by it, under the
Transaction Documents.  Seller shall pay
and discharge all taxes, levies, liens and other charges, if any, on its assets
and on the Purchased Loans that, in each case, in any manner would create any
lien or charge upon the Purchased Loans, except for any such taxes as are being
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves have been provided in
accordance with GAAP.

 

(l)                                     Seller shall
maintain its existence as a limited partnership or a limited liability company,
as applicable, organized solely and in good standing under the law of the State
of Delaware (unless Seller shall have given Buyer at least fifteen (15)
Business Days’ prior written notice that Seller intends to change the
jurisdiction of its organization) and shall not dissolve, liquidate, merge with
or into any other Person or otherwise change its organizational structure or
documents in any material respect or incorporate or organize in any other
jurisdiction, without the prior written approval of Buyer, which approval shall
not be unreasonably withheld, conditioned or delayed.

 

41

 

(m)                               Seller shall
maintain all records with respect to the Purchased Loans and the conduct and
operation of its business with no less a degree of prudence than if the
Purchased Loans were held by Seller for its own account and will furnish Buyer,
upon request by Buyer or its designated representative, with information
reasonably obtainable by Seller with respect to the Purchased Loans and the
conduct and operation of its business.

 

(n)                                 Seller shall
provide Buyer with notice of each modification of any Purchased Loan Documents
consented to by Seller (including such modifications which do not constitute a
Significant Modification).

 

(o)                                 Seller shall
provide Buyer with reasonable access to operating statements, the occupancy
status and other property level information, with respect to the Mortgaged
Properties, plus any such additional reports in Seller’s possession as Buyer
may reasonably request.

 

(p)                                 Seller may
propose, and Buyer will consider, but shall be under no obligation to approve,
strategies for the foreclosure or other realization upon the security for any
Purchased Loan that has become a Defaulted Loan.

 

(q)                                 Seller shall
not cause any Purchased Loan to be serviced by any servicer other than a
servicer expressly approved in writing by Buyer.

 

(r)                                    If Seller has
entered into or shall enter into or amend a repurchase agreement, warehouse
facility, credit facility or other similar arrangement with any Person which by
its terms provides more favorable terms with respect to any financial
covenants, including without limitation covenants covering the same or similar
subject matter set forth in the Financial Covenant Compliance Certificates
required to be delivered hereunder, then Seller shall deliver written notice to
Buyer of such more favorable terms and, upon Buyer’s request, Buyer and Seller
shall enter into an amendment to this Agreement in form and substance
reasonably acceptable to each of the parties, which amendment shall incorporate
such more favorable terms.

 

13.                               SINGLE-PURPOSE
ENTITY

 

Seller
hereby represents and warrants to Buyer and covenants with Buyer, that as of
the date hereof and so long as any of the Transaction Documents shall remain in
effect:

 

(a)                                  It is and
intends to remain solvent, and it has paid and will pay its debts and
liabilities (including overhead expenses) from its own assets as the same shall
become due.

 

(b)                                 It has complied
and will comply with the provisions of its certificate of formation and its
limited liability company agreement.

 

(c)                                  It has done or
caused to be done and will do all things necessary to observe limited liability
company formalities and to preserve its existence.

 

(d)                                 It has
maintained and will maintain all of its books, records, financial statements
and bank accounts separate from those of its affiliates, its members and any
other Person, and it will file its own tax returns (except to the extent
consolidation is required or permitted under GAAP or as a matter of law).

 

(e)                                  It has been, is
and will be, and at all times will hold itself out to the public as, a legal
entity separate and distinct from any other entity (including any Affiliate),
shall correct any known 

 

42

 

misunderstanding regarding its status as a separate
entity, shall conduct business in its own name, shall not identify itself or
any of its Affiliates as a division or part of the other and shall maintain and
utilize separate stationery, invoices and checks.

 

(f)                                    It has not
owned and will not own any property or any other assets other than the Purchased
Loans, cash and its interest under any associated Hedging Transactions and
other assets incidental to the origination, acquisition, ownership, financing
and disposition of the Purchased Loans and the associated Hedging Transactions.

 

(g)                                 It has not
engaged and will not engage in any business other than the origination,
acquisition, ownership, financing and disposition of the Purchased Loans and
the associated Hedging Transactions in accordance with the applicable
provisions of the Transaction Documents.

 

(h)                                 It has not
entered into, and will not enter into, any contract or agreement with any of
its affiliates, except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an arm’s-length basis
with Persons other than such affiliate.

 

(i)                                     It has not
incurred and will not incur any indebtedness or obligation, secured or
unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than (A) obligations under the Transaction Documents,
(B) obligations under the documents evidencing the Purchased Loans, and
(C) unsecured trade payables, in an aggregate amount not to exceed
$300,000 at any one time outstanding, incurred in the ordinary course of acquiring,
owning, financing and disposing of the Purchased Loans; provided, however,
that any such trade payables incurred by Seller shall be paid within ninety
(90) days of the date incurred.

 

(j)                                     It has not made
and will not make any loans or advances to any other Person, and shall not
acquire obligations or securities of any member or affiliate of any member or
any other Person (other than in connection with the origination or acquisition
of Purchased Loans).

 

(k)                                  It will
maintain adequate capital for the normal obligations reasonably foreseeable in
a business of its size and character and in light of its contemplated business
operations.

 

(l)                                     Neither it nor
Guarantor, any Intermediate Starwood Entity or Manager will seek the
dissolution, liquidation or winding up, in whole or in part of Seller.

 

(m)                               It will not
commingle its funds and other assets with those of any of its Affiliates or any
other Person.

 

(n)                                 It has
maintained and will maintain its assets in such a manner that it will not be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any of its Affiliates or any other Person.

 

(o)                                 It has not held
and will not hold itself out to be responsible for the debts or obligations of
any other Person.

 

(p)                                 (i) It will
have at all times at least one Independent Director and (ii) provide Buyer with
up-to-date contact information for all Independent Director(s) and a copy of
the agreement pursuant to which each Independent Director consents to and
serves as an “Independent Director” for Seller

 

(q)                                 Its
organizational documents shall provide that (i) no Independent Director of
Seller may be removed or replaced without Cause, (ii) Buyer be given at least
two (2) Business Days prior notice of 

 

43

 

the removal and/or replacement of the Independent
Director, together with the name and contact information of the replacement
Independent Director and evidence of the replacement’s satisfaction of the
definition of Independent Director and (iii) any Independent Director of Seller
shall not have any fiduciary duty to anyone including the holders of the equity
interests in Seller and any Affiliates of Seller except Seller and the
creditors of Seller with respect to taking of, or otherwise voting on, any
Insolvency Action; provided, that the foregoing shall not eliminate the implied
contractual covenant of good faith and fair dealing.

 

(r)                                    It shall not,
without the consent of its Independent Director, institute any proceeding to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or answer
or consent seeking reorganization or relief under the Bankruptcy Code or
consent to the filing of any such petition or to the appointment of a receiver,
rehabilitator, conservator, liquidator, assignee, trustee or sequestrator (or
other similar official) of it or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, or make an assignment
for the benefit of creditors, or admit in writing its inability to pay its
debts generally as they become due, or take any action in furtherance of any of
the foregoing.

 

(s)                                  It shall not
have any employees.

 

14.                               EVENTS
OF DEFAULT; REMEDIES

 

(a)                                  The following
shall constitute an event of default by Seller hereunder (each a “Event of
Default”):

 

(i)                                     failure of
Seller to repurchase one or more Purchased Loans on the applicable Repurchase
Date;

 

(ii)                                  failure of
Seller to apply any Income received by Seller in accordance with the provisions
hereof;

 

(iii)                               (A) the
Transaction Documents shall for any reason not cause, or shall cease to cause,
Buyer to be the owner of, or, if recharacterized as a secured financing, a
secured party with respect to, the Repurchase Assets specified in Sections 6(a)
and the other collateral specified in Section 6(c) free of any adverse claim,
liens and other rights of others (other than Permitted Encumbrances and other
than as granted herein), and Seller shall fail to cure such default within
three (3) Business Days after its receipt of Buyer’s notice thereof; (B) if a
Transaction is recharacterized as a secured financing, the Transaction
Documents with respect to any Transaction shall for any reason cease to create
a valid first priority security interest in favor of Buyer in the Repurchase
Assets specified in Section 6(a) and the other collateral specified in Section
6(c), and Seller shall fail to cure such default within three (3) Business Days
after its receipt of Buyer’s notice thereof; or (C) if the Transaction
Documents shall cease to be in full force and effect or if the enforceability
of any of them is challenged or repudiated by Seller, Guarantor or Servicer or
any Affiliate of any of them;

 

(iv)                              failure of
Seller to make the payments required under Section 4 or Section 5(b) when due;

 

(v)                                 failure of
Seller to make any other payment owing to Buyer which has become due, whether
by acceleration or otherwise, under the terms of this Agreement which failure
is not remedied within the period specified herein or, if no period is
specified, five (5) Business Days after notice thereof to Seller from Buyer; provided,
however, that Buyer shall not be required to 

 

44

 

provide notice in the event
of a failure by Seller to repurchase any Purchased Loan on the required
Repurchase Date therefor;

 

(vi)                              breach by
Seller in the due performance or observance of any term, covenant or agreement
contained in Section 11 of this Agreement;

 

(vii)                           a Change of
Control shall have occurred that has not been consented to by Buyer in writing;

 

(viii)                        any
representation made by Seller herein or in any Transaction Document shall have
been incorrect or untrue in any material respect when made or repeated or deemed
to have been made or repeated; provided  that the representations
and warranties made by Seller in Section 10(a) (vi) or (viii) (in the case of
(vi), with respect to the affected or Purchased Loans only) shall not be
considered an Event of Default if incorrect or untrue in any material respect
(which determination shall be made with respect to the representations and
warranties in Exhibit V without regard to any Knowledge qualifier therein), if
Buyer terminates the related Transaction and Seller repurchases the related
Purchased Loan(s) on an Early Repurchase Date no later than ten (10) Business
Days after receiving written notice of such incorrect or untrue representation;
provided, however, that if Seller shall have made any such
representation with Knowledge that it was materially incorrect or untrue at the
time made, such misrepresentation shall constitute an Event of Default;

 

(ix)                                (A) a final
judgment by any competent court in the United States of America for the payment
of money in an amount greater than $100,000 shall have been rendered against
Seller and remains undischarged or unpaid for a period of forty-five (45) days,
during which period execution of such judgment is not effectively stayed or (B)
a final judgment by any competent court in the United States of America for the
payment of money in an amount greater than $25,000,000 shall have been rendered
against Guarantor and remains undischarged or unpaid for a period of thirty
(30) days, during which period execution of such judgment is not effectively
stayed;

 

(x)                                   (A) Seller
shall have defaulted or failed to perform under any note, indenture, loan
agreement, guaranty, swap agreement or any other contract, agreement or
transaction to which it is a party, and which default (1) involves the failure to
pay a matured obligation in excess of $100,000, or (2) involves an obligation
of at least $100,000 and is a monetary default or a material non-monetary
default beyond any applicable notice and grace periods and results in
acceleration of the obligation by any other party to or beneficiary of such
note, indenture, loan agreement, guaranty, swap agreement or other contract
agreement or transaction or (B) Guarantor shall have defaulted or failed to
perform under any note, indenture, loan agreement, guaranty, swap agreement or
any other contract, agreement or transaction to which it is a party, and which
default (1) involves the failure to pay a matured obligation in excess of
$25,000,000, or (2) involves an obligation of at least $25,000,000 and is a
monetary default or a material non-monetary default beyond any applicable
notice and grace periods and results in acceleration of the obligation by any
other party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract agreement or transaction ; provided,
however, that any such default, failure to perform or breach shall not
constitute an Event of Default if Seller or Guarantor, as the case may be,
cures such default, failure to perform or breach, as the case may be, within
the grace period, if any, provided under the applicable agreement;

 

(xi)                                as of the end
of any fiscal quarter, Guarantor’s (A) ratio of EBITDA to Interest Expense for
such calendar quarter is less than 2.0 to 1.0 (adjusted to remove the impact of
the 

 

45

 

application of FAS 140, FAS
166 and FIN 46 and transfers to special purpose entities that are wholly owned
by Guarantor in connection with bona fide securitization transactions); (B)
ratio of Total Indebtedness to Total Assets is greater than 0.75 to 1.0
(adjusted to remove the impact of the application of FAS 140, FAS 166 and FIN
46 and transfers to special purpose entities that are wholly owned by Guarantor
in connection with bona fide securitization transactions); (C) Cash Liquidity
is less than $10,000,000; (D) Near Cash Liquidity is less than $20,000,000; (E)
Tangible Net Worth is less than $750,000,000; or (F) ratio of EBITDA to Fixed
Charges for such fiscal quarter is less than 1.5 to 1.0.

 

(xii)                             if Seller shall
breach or fail to perform any of the terms, covenants, obligations or
conditions of this Agreement or any other Transaction Document, other than as
specifically otherwise referred to in this definition of “Event of Default”,
and such breach or failure to perform is not remedied within ten (10) Business
Days after notice thereof to Seller by Buyer, or its successors or assigns;
provided, however, that if such default is susceptible of cure but cannot
reasonably be cured within such ten (10) Business Day period and provided
further that Seller shall have commenced to cure such default within such ten
(10) Business Day period and thereafter diligently and expeditiously proceeds
to cure the same, such ten (10) Business Day period shall be extended for such
time as is reasonably necessary for Seller, in the exercise of due diligence,
to cure such default, and in no event shall such cure period exceed thirty (30)
days from Seller’s receipt of Buyer’s notice of such default;

 

(xiii)                          an Act of
Insolvency shall have occurred with respect to Seller, Guarantor or any
Intermediate Starwood Entity;

 

(xiv)                         an “event of
default” or “termination event” (as defined in the agreements relating to a
facility described in clause (A) or (B) of this clause (xiv)), resulting from a
payment default or failure by Seller or Guarantor to pay cash or deliver other
required collateral in satisfaction of any margin call or other collateral
delivery obligation when required by Seller or Guarantor, beyond any applicable
notice and cure period, shall have occurred under (A) any repurchase facility,
loan facility or hedging transaction entered into by Seller or Guarantor and
Buyer or any Affiliate of Buyer or (B) any repurchase facility, loan facility
or hedging transaction with Buyer or any Affiliate of Buyer in which Seller or
Guarantor is a guarantor;

 

(xv)                            (A) any of the representations and warranties of Guarantor in the Guaranty
or any Financial Covenant Compliance Certificate shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been
made or repeated or (B) Guarantor shall breach any covenant of Guarantor in the
Guaranty and such breach has not been cured within three (3) Business Days
after receipt of notice thereof from Buyer; or

 

(xvi)                         Guarantor fails (i) to qualify as a REIT (without giving any effect to any
cure or corrective periods or allowances), or (ii) to continue to be entitled
to a dividend paid deduction under Section 857 of the Code with respect to
dividends paid by it with respect to each taxable year for which it claims a
deduction on its Form 1120- REIT filed with the United States Internal Revenue
Service for such year, or the entering into by Guarantor of “prohibited
transactions” as defined in Sections 857(b)(6)(B)(iii) of the Code (taking into
account Sections 857(b)(6)(C), 857(b)(6)(D) and 857(b)(6) (E) of the Code) or
(iii) to satisfy any of the income or asset tests required to be satisfied by a
REIT.

 

(b)                                 If an Event of
Default shall occur and be continuing, the following rights and remedies shall
be available to Buyer:

 

46

 

(i)                                     At the option
of Buyer, exercised by written notice to Seller (which option shall be deemed
to have been exercised, even if no notice is given, immediately upon the
occurrence of an Act of Insolvency with respect to Seller), the Repurchase Date
for each Transaction hereunder shall, if it has not already occurred, be deemed
immediately to occur (the date on which such option is exercised or deemed to
have been exercised being referred to hereinafter as the “Accelerated
Repurchase Date”) (and any Transaction for which the related Purchase Date
has not yet occurred shall be canceled).

 

(ii)                                  If Buyer
exercises or is deemed to have exercised the option referred to in Section
14(b)(i):

 

(A)  Seller’s obligations hereunder to repurchase
all Purchased Loans shall become immediately due and payable on and as of the
Accelerated Repurchase Date, and except as otherwise provided in Section 5(c),
all Income deposited in the Blocked Account shall be retained by Buyer and applied to the
aggregate unpaid Repurchase Price and any other amounts owing by Seller
hereunder; and

 

(B)  the Repurchase Price with respect to each
Transaction (determined as of the Accelerated Repurchase Date) shall include
the accrued and unpaid Price Differential with respect to each Purchased Loan
accrued at the Pricing Rate applicable upon an Event of Default for such
Transaction; and

 

(C)  the Custodian shall, upon the request of Buyer
(with simultaneous copy of such request to Seller), deliver to Buyer all
instruments, certificates and other documents then held by the Custodian
relating to the Purchased Loans.

 

(iii)                               Buyer may,
after ten (10) days notice to Seller of Buyer’s intent to take such action
(provided that no such notice shall be required in the circumstances set forth
in Section 9-611(d) of the UCC), (A) immediately sell, at a public or private
sale in a commercially reasonable manner and at such price or prices as Buyer may
reasonably deem to be satisfactory any or all of the Purchased Loans on a
servicing released basis or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Loans, to give Seller credit for
such Purchased Loans in an amount equal to the Market Value (without regard to
the provisions of clause (iii) of the definition thereof) of such Purchased
Loans against the aggregate unpaid Repurchase Price for such Purchased Loans
and any other amounts owing by Seller under the Transaction Documents.  The proceeds of any disposition of Purchased
Loans effected pursuant to this Section 14(b)(iii) shall be applied (v) first,
to the costs and expenses incurred by Buyer in connection with Seller’s
default, (w) second, to the costs of cover and/or Hedging Transactions, if any,
(x) third, to the Repurchase Price, (y) fourth, to any other outstanding
obligation owed by Seller to Buyer or its Affiliates pursuant to the
Transaction Documents (including interest which would be payable as post-petition
interest in connection with any bankruptcy or similar proceeding) irrespective
of whether such obligations are direct or indirect, absolute or contingent,
matured or unmatured, and (z) the balance, if any, to Seller.  In the event that Buyer shall not have
received repayment in full of the aggregate Repurchase Price and the other
obligations of the Seller under the Transaction Documents following its
liquidation of the Purchased Loans, Buyer may, in its sole discretion, pursue
the Seller and Guarantor (to the extent provided in the Guaranty) for all or
any part of any deficiency.

 

(iv)                              The parties
recognize that it may not be possible to purchase or sell all of the Purchased
Loans on a particular Business Day, or in a transaction with the same purchaser,
or in the same manner because the market for such Purchased Loans may not be
liquid.  In view of the 

 

47

 

nature of the Purchased
Loans, the parties agree that, to the extent permitted by applicable law, liquidation
of a Transaction or the Purchased Loans shall not require a public purchase or
sale and that a good faith private purchase or sale shall be deemed to have
been made in a commercially reasonable manner. 
Accordingly, Buyer may elect, in its sole discretion, the time and
manner of liquidating any Purchased Loans, and nothing contained herein shall
(A) obligate Buyer to liquidate any Purchased Loans on the occurrence and
during the continuance of an Event of Default or to liquidate all of the Purchased
Loans in the same manner or on the same Business Day or (B) constitute a waiver
of any right or remedy of Buyer.

 

(v)                                 Seller shall be
liable to Buyer for (A) the amount of all expenses, including reasonable legal
fees and expenses of counsel, incurred by Buyer in connection with or as a
consequence of an Event of Default, (B) all actual damages, losses, judgments,
out-of-pocket costs and other expenses incurred by Buyer under any Hedging
Transactions as a result of an Event of Default by Seller hereunder, and (C)
any other actual loss, damage, out-of-pocket cost or expense directly arising
or resulting from the occurrence of an Event of Default.

 

(vi)                              Buyer may
exercise any or all of the remedies available to Buyer immediately upon the
occurrence of an Event of Default and at any time during the continuance
thereof.  All rights and remedies arising
under the Transaction Documents, as amended from time to time, are cumulative
and not exclusive of any other rights or remedies that Buyer may have.

 

(vii)                           Buyer may
enforce its rights and remedies hereunder without prior judicial process or
hearing, and Seller hereby expressly waives any defenses Seller might otherwise
have to require Buyer to enforce its rights by judicial process.  Seller also waives any defense Seller might
otherwise have arising from the use of nonjudicial process, disposition of any
or all of the Purchased Loans, or from any other election of remedies.  Seller recognizes that nonjudicial remedies
are consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm’s length.

 

(viii)                        Without
limiting any other rights or remedies of Buyer, Buyer shall have the right,
without prior notice to Seller, and any such notice being expressly waived by
Seller to the extent permitted by applicable law, to set off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final) in any currency, and any other obligation (including to return excess
margin), credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by or due from Buyer or any Affiliate thereof to or for the
credit of the account of Seller, Guarantor or any Subsidiary of either of them
to any obligations of Seller hereunder to Buyer.

 

(ix)                                Buyer shall have, in addition to its rights and remedies under the
Transaction Documents, all of the rights and remedies provided by applicable
federal, state, foreign, and local laws (including, without limitation, if the
Transactions are recharacterized as secured financings, the rights and remedies
of a secured party under the UCC of the State of New York, to the extent that
the UCC is applicable, and the right to offset any mutual debt and claim), in
equity, and under any other agreement between Buyer and Seller, exercisable
upon ten (10) days notice from Buyer to Seller. 
Without limiting the generality of the foregoing, Buyer shall be
entitled to set off the proceeds of the liquidation of the Purchased Loans
against all of Seller’s obligations to Buyer or its Affiliates, whether under
this Agreement or under any other agreement between Seller and Buyer or between
Seller and any Affiliate of Buyer, or otherwise, whether or not such
obligations are then due, without prejudice to Buyer’s right to recover any
deficiency.

 

48

 

(x)                                   Buyer shall at
any time have the right, in each case until such time as Buyer determines otherwise,
to retain, to suspend payment of, or to decline to remit, any amount or
property that Buyer would otherwise be obligated to pay, remit or deliver to
Seller hereunder if a Default or an Event of Default has occurred and is
continuing.

 

15.                               SINGLE AGREEMENT

 

Buyer
and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees to perform all of its obligations in respect of
each Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder.

 

16.                               NOTICES
AND OTHER COMMUNICATIONS

 

All
notices, consents, approvals and requests required or permitted hereunder shall
be given in writing and shall be effective for all purposes if hand delivered
or sent by (a) hand delivery, with proof of attempted delivery, (b) certified
or registered United States mail, postage prepaid, (c) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, or (d) by telecopier (with answerback acknowledged); provided
that such telecopied notice must also be delivered by one of the means set
forth in (a), (b) or (c) above, to the addresses specified in Annex I
hereto or at such other address and person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section 16.  A notice shall be deemed to have been given:  (w) in the case of hand delivery, at the
time of delivery; (x) in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; (y) in the
case of expedited prepaid delivery upon the first attempted delivery on a
Business Day; or (z) in the case telecopier, upon receipt of answerback
confirmation, provided that such telecopied notice is also delivered as
required in this Section 16.  A
party receiving a notice that does not comply with the technical requirements
for notice under this Section 16 may elect to waive any deficiencies and
treat such notice as having been properly given.  Notwithstanding the foregoing, notices
pursuant to Section 4 may be sent by electronic mail to the e-mail addresses
set forth on Annex I.

 

17.                               NON-ASSIGNABILITY

 

(a)                                  The rights and
obligations of Seller under the Transaction Documents, the Hedging Transactions
and under any Transaction shall not be assigned by Seller without the prior
written consent of Buyer.

 

(b)                                 Buyer may
assign, participate or sell all or a portion of its rights and obligations
under the Transaction Documents and under any Transaction and all or a portion
of its rights and interests in any Hedging Transaction, in each case, without
the prior written consent of Seller but, prior to the occurrence and continuance
of an Event of Default, upon thirty (30) days prior written notice to
Seller.  Any such assignment,
participation or sale of more than 50% of Buyer’s interest in the Transactions
and the Transaction Documents prior to an Event of Default, other than to an
Affiliate of Buyer, shall be referred to herein as a “Transfer Event.”  Buyer agrees that prior to the occurrence and
continuance of an Event of Default, (i) Buyer shall remain responsible for
reviewing and determining the eligibility of any New Loan for purposes of any
Transaction and (ii) Seller shall continue to deal solely and directly with
Buyer in connection with any Transaction. 
As long as an Event of Default shall have occurred and be continuing,
Buyer may assign, participate or sell its rights and obligations under the
Transaction Documents and/or 

 

49

 

any Transaction to any Person without prior notice
to Seller and without regard to the limitations in the prior sentence.

 

(c)                                  Buyer shall maintain
a record of ownership identifying all assignees.  If any assignee is a non-U.S. Person, such
assignee shall timely provide Seller with such forms as may be required to
establish the assignee’s status for U.S. withholding tax purposes.

 

(d)                                 Subject to the
foregoing, the Transaction Documents and any Transactions shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns.  Nothing in the
Transaction Documents, express or implied, shall give to any Person, other than
the parties to the Transaction Documents and their respective successors, any
benefit or any legal or equitable right, power, remedy or claim under the
Transaction Documents.

 

18.                               GOVERNING
LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

(a)                                  This Agreement
shall be governed by the laws of the State of New York without giving effect to
the conflict of law principles thereof, except for Section 5-1401 of the
General Obligations Law of the State of New York..

 

(b)                                 Each party irrevocably
and unconditionally submits to the non-exclusive jurisdiction of any United
States Federal or New York State court sitting in Manhattan, and any appellate
court from any such court, solely for the purpose of any suit, action or
proceeding brought to enforce its obligations under this Agreement or relating
in any way to this Agreement or any Transaction under this Agreement.

 

(c)                                  To the extent
that either party has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any
court or from set off or any legal process (whether service or notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) with respect to itself or any of its
property, such party hereby irrevocably waives and agrees not to plead or claim
such immunity in respect of any action brought to enforce its obligations under
this Agreement or relating in any way to this Agreement or any Transaction
under this Agreement.

 

(d)                                 Each party
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile and irrevocably consents to the service of any
summons and complaint and any other process by the mailing of copies of such
process to them at their respective address specified herein.  Each party hereby agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Section 18 shall
affect the right of Buyer to serve legal process in any other manner permitted
by law or affect the right of Buyer to bring any action or proceeding against
Seller or its property in the courts of other jurisdictions.

 

(e)                                  EACH PARTY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR
THEREUNDER.

 

50

 

19.                               NO
RELIANCE; DISCLAIMERS

 

(a)                                  Each party hereby
acknowledges, represents and warrants to the other that, in connection with the
negotiation of, the entering into, and the performance under, the Transaction
Documents and each Transaction thereunder:

 

(i)                                     It is not
relying (for purposes of making any investment decision or otherwise) upon any
advice, counsel or representations (whether written or oral) of the other party
to the Transaction Documents, other than the representations expressly set
forth in the Transaction Documents.

 

(ii)                                  It has consulted
with its own legal, regulatory, tax, business, investment, financial and
accounting advisors to the extent that it has deemed to be necessary, and it
has made its own investment, hedging and trading decisions (including decisions
regarding the suitability of any Transaction) based upon its own judgment and
upon any advice from such advisors as it has deemed to be necessary and not
upon any view expressed by the other party.

 

(iii)                               It is a
sophisticated and informed Person that has a full understanding of all the
terms, conditions and risks (economic and otherwise) of the Transaction
Documents and each Transaction thereunder and is capable of assuming and
willing to assume (financially and otherwise) those risks.

 

(iv)                              It is entering
into the Transaction Documents and each Transaction thereunder for the purposes
of managing its borrowings or investments or hedging its underlying assets or
liabilities and not for purposes of speculation.

 

(v)                                 It is not
acting as a fiduciary or financial, investment or commodity trading advisor for
the other party and has not given the other party (directly or indirectly
through any other Person) any assurance, guaranty or representation whatsoever
as to the merits (either legal, regulatory, tax, business, investment, financial
accounting or otherwise) of the Transaction Documents or any Transaction
thereunder.

 

(b)                                 Each
determination by Buyer of the Market Value with respect to each New Loan or
Purchased Loan or the communication to Seller of any information pertaining to
Market Value under this Agreement shall be subject to the following
disclaimers:

 

(i)                                     Buyer has
assumed and relied upon, with Seller’s consent and without independent
verification, the accuracy and completeness of the information provided by
Seller and reviewed by Buyer.  Buyer has
not made any independent inquiry of any aspect of the New Loans or Purchased
Loans or the underlying collateral. 
Buyer’s view is based on economic, market and other conditions as in
effect on, and the information made available to Buyer as of, the date of any
such determination or communication of information, and such view may change at
any time without prior notice to Seller.

 

(ii)                                  Market Value
determinations and other information provided to Seller constitute a statement
of Buyer’s view of the value of one or more loans or other assets at a
particular point in time and neither (A) constitute a bid for a particular
trade, (B) indicate a willingness on the part of Buyer or any Affiliate thereof
to make such a bid, nor (C) reflect a valuation for substantially similar
assets at the same or another point in time, or for the same assets at another
point in time.

 

51

 

(iii)                               Market Value
determinations and other information provided to Seller may vary significantly
from valuation determinations and other information that may be obtained from
other sources.

 

(iv)                              Market Value
determinations and other information provided to Seller are communicated to
Seller solely for its use and may not be relied upon by any other person and
may not be disclosed or referred to publicly or to any third party without the
prior written consent of Buyer, which consent Buyer may withhold or delay in
its sole and absolute discretion.

 

(v)                                 Buyer makes no
representations or warranties with respect to any Market Value determinations
or other information provided to Seller. 
Buyer shall not be liable for any incidental or consequential damages
arising out of any inaccuracy in such valuation determinations and other
information provided to Seller, including as a result of any act of gross
negligence or breach of any warranty.

 

(vi)                              Market Value
determinations and other information provided to Seller in connection with
Section 3(b) hereof are only indicative of the initial Market Value of the
New Loan submitted to Buyer for consideration thereunder, and may change
without notice to Seller prior to, or subsequent to, the transfer by Seller of
the New Loan pursuant to Section 3(e) hereof.  No indication is provided as to Buyer’s
expectation of the future value of such Purchased Loan or the underlying
collateral.

 

(vii)                           Initial Market
Value determinations and other information provided to Seller in connection
with Section 3(b) hereof are to be used by Seller for the sole purpose of
determining whether to proceed in accordance with Section 3 hereof and for
no other purpose.

 

20.                               INDEMNITY
AND EXPENSES

 

(a)                                  Seller hereby
agrees to hold Buyer and its Affiliates and each of their respective officers,
directors and employees (“Indemnified Parties”) harmless from and
indemnify the Indemnified Parties against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, taxes (including stamp,
excise, sales or other taxes that may be payable or determined to be payable
with respect to any of the Purchased Loans or in connection with any of the
transactions contemplated by this Agreement (or the recharacterization of any
Transaction) and the documents delivered in connection herewith and therewith,
other than income or franchise taxes of Buyer), costs and expenses (including
reasonable attorneys’ fees and disbursements and any and all servicing and
enforcement costs with respect to the Purchased Loans) or disbursements (all of
the foregoing, collectively “Indemnified Amounts”) that may at any time
(including, without limitation, such time as this Agreement shall no longer be
in effect and the Transactions shall have been repaid in full) be imposed on or
asserted against any Indemnified Party in any way whatsoever arising out of or
in connection with, or relating to, this Agreement or any Transactions
thereunder or any action taken or omitted to be taken by any Indemnified Party
under or in connection with any of the foregoing; provided, that Seller
shall not be liable for Indemnified Amounts resulting from the bad faith, gross
negligence or willful misconduct of any Indemnified Party.  Without limiting the generality of the
foregoing, Seller agrees to hold each Indemnified Party harmless from and
indemnify each Indemnified Party against all Indemnified Amounts with respect
to all Purchased Loans relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation ERISA, that, in each case, results from
anything other than the bad faith, gross negligence or willful misconduct of an
Indemnified Party.  In any suit,
proceeding or action brought by Buyer in connection with any Purchased Loan for
any sum owing thereunder, or to enforce any provisions of any Purchased Loan
Documents, Seller will save, indemnify and hold Buyer harmless from and against
all expense, loss or 

 

52

 

damage suffered by Buyer by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by Seller of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from Seller.  Seller also
agrees to reimburse an Indemnified Party as and when billed by such Indemnified
Party for all such Indemnified Party’s costs and expenses incurred in
connection with the enforcement or the preservation of such Indemnified Party’s
rights under this Agreement and any other Transaction Document or any
transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel.  Seller hereby acknowledges that its
obligations hereunder are recourse obligations of Seller.

 

(b)                                 Seller agrees
to pay as and when billed by Buyer all of the out-of-pocket costs and expenses
incurred by Buyer in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement, this
Agreement and the other Transaction Documents or any other documents prepared
in connection herewith or therewith. 
Seller agrees to pay as and when billed by Buyer all of the
out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby including
without limitation (i) all the reasonable fees, disbursements and expenses
of counsel to Buyer and (ii) all the Due Diligence Fees, testing and
review costs and expenses incurred by Buyer in connection with the evaluation
of any New Loan and with respect to any Transaction.

 

21.                               DUE
DILIGENCE

 

Seller
acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Purchased Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or determining or re-determining the Asset Base for purposes of
Section 4 of this Agreement, or otherwise, and Seller agrees that Buyer, at its option, has the right at any time
to conduct a partial or complete due diligence review on any or all of the
Purchased Loans, including, without limitation, ordering new credit reports and
Appraisals on the applicable collateral and otherwise regenerating the
information used to originate such Purchased Loans; provided, however,
notwithstanding anything to the contrary contained herein, so long as no Event
of Default is continuing, in no event shall Seller be responsible for payment
of Diligence Fees of Buyer hereunder in excess of $30,000 per calendar
year.  Upon reasonable (but no less than
three (3) Business Days) prior notice to Seller, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Purchased Loan Files and any and
all documents, records, agreements, instruments or information relating to any
Purchased Loan in the possession or under the control of Seller, any servicer
or sub-servicer and/or Custodian.  Seller
also shall make available to Buyer a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Purchased Loan
Files and the Purchased Loans.  Seller
agrees to cooperate with Buyer and any third party underwriter designated by
Buyer in connection with such underwriting, including, but not limited to,
providing Buyer and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such
Purchased Loans in the possession, or under the control, of such Seller.

 

22.                               SERVICING

 

(a)                                  The parties
hereto agree and acknowledge that, the Purchased Loans will be sold by Seller
to Buyer on a servicing released basis. 
In furtherance of the foregoing, the Seller and the Servicer hereby
agree and confirm that from and after the date hereof that this Section 22
shall solely govern the servicing of the Purchased Loans and any prior
agreement between Seller and Servicer or otherwise with respect to such
servicing is hereby superseded in all respects. 
During the related Interim Servicing Period, Servicer shall sub-service
the Purchased Loans for the benefit of or on behalf of Buyer; provided, 

 

53

 

however, that the obligation of
Servicer to sub-service any Purchased Loan for the benefit of or on behalf of
Buyer as aforesaid shall cease upon the repurchase of such Purchased Loan by
Seller in accordance with the provisions of this Agreement.  In the event that the preceding language is
interpreted as constituting one or more servicing contracts, each such servicing
contract shall terminate automatically upon the earliest of (a) the termination
thereof by Buyer pursuant to Section 22(c) below, (b) forty-five (45) days
after the Purchase Date of the applicable Purchased Loans or any subsequent
date on which the Interim Servicing Period is extended pursuant to Section
22(c), (c) the date of an Event of Default, or (d) the transfer of servicing to
any other entity approved by Buyer and the assumption thereof by such entity.

 

(b)                                 Seller and
Servicer agrees that, as between Seller and Servicer, on the one hand, and
Buyer, on the other, Buyer is the owner of all servicing records, including but
not limited to any and all servicing agreements, files, documents, records,
data bases, computer tapes, copies of computer tapes, proof of insurance
coverage, insurance policies, appraisals, other closing documentation, payment
history records, and any other records relating to or evidencing the servicing
of Purchased Loans (the “Servicing Records”) so long as the Purchased
Loans are subject to this Agreement. 
Each of Seller and Servicer covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee (including the
Custodian) at Buyer’s request.

 

(c)                                  With respect to
the Servicing Records for each Purchased Loan and the physical and contractual
servicing of each Purchased Loan, Servicer shall deliver such Servicing Records
and, to the extent applicable, the servicing to such other successor as may be
designated by Buyer on the Servicing Transfer Date.  Notwithstanding the foregoing, the Interim
Servicing Period with respect to the Purchased Loans shall automatically
terminate on each Remittance Date unless reinstated for each such Purchased
Loan pursuant to written notice of Buyer of such reinstatement (and thereafter
the immediately preceding delivery requirement will be deemed to be rescinded),
and a new 45-day Interim Servicing Period will be deemed to commence for such
Purchased Loan as of such Remittance Date upon receipt of such written notice from
Buyer.  If the Interim Servicing Period
terminates with respect to the Purchased Loans, the Servicer shall be
terminated and shall transfer such servicing in accordance with
Section 22(g) below.  Sellers’ and
Servicer’s transfer and delivery of the Servicing Rights, Servicing Records and
the physical and contractual servicing under this Section, as applicable, shall
be in accordance with customary standards in the industry and such transfer
shall include the transfer of the gross amount of all escrows held for the
related mortgagors (without reduction for unreimbursed advances or “negative
escrows”).

 

(d)                                 Servicer shall
sub-service the Purchased Loans in accordance with Accepted Servicing
Practices.  Seller shall not, and shall
not permit Servicer to, employ any other sub-servicers to service the Purchased
Loans without the prior written approval of Buyer which approval shall not be
unreasonably withheld.  If the Purchased
Loans are serviced by a sub-servicer, Seller shall irrevocably assign all
rights, title and interest in the servicing agreements with such sub-servicer
to Buyer.

 

(e)                                  Seller shall
cause Servicer and any other sub-servicers engaged by Seller to execute a
letter agreement with Buyer acknowledging Buyer’s security interest in the
Purchased Loans and the servicing agreements and agreeing that each such
sub-servicer shall deposit all Income with respect to the Purchased Loans in
the Blocked
Account, all in such manner as shall be reasonably acceptable to Buyer.

 

(f)                                    Seller shall
permit Buyer to inspect Seller’s or its Affiliate’s servicing facilities, as
the case may be, for the purpose of satisfying Buyer that Seller or its
Affiliate, as the case may be, has the ability to service such Purchased Loan
as provided in this Agreement.

 

(g)                                 Buyer may, in
its sole discretion if an Event of Default shall have occurred and be
continuing, sell the Purchased Loans on a servicing released basis without
payment of any termination fee or any other amount to Servicer.  Upon the occurrence of an Event of Default
hereunder, Buyer shall have 

 

54

 

the right immediately to terminate Servicer’s right
to service the Purchased Loans without payment of any penalty or termination
fee.  If Servicer shall be terminated under
any of Section 22(c), this Section 22(g) or as otherwise provided
hereunder, Servicer shall transfer such servicing with respect to such
Purchased Loans to such successor designated by Buyer by the Servicing Transfer
Date, at no cost or expense to Buyer. 
The Seller and the Servicer each agree to cooperate with Buyer in
connection with the termination of Servicer under the terms of this
Section 22 and transfer of servicing.

 

23.                               TREATMENT
FOR TAX PURPOSES

 

It
is the intention of the parties that, for U.S. Federal, state and local income
and franchise tax purposes, the Transactions constitute a financing, and that
Seller is, and, so long as no Event of Default shall have occurred and be
continuing, will continue to be, treated as the owner of the Purchased Loans
for such purposes.  Unless prohibited by
applicable law, Seller and Buyer agree to treat the Transactions as described
in the preceding sentence on any and all filings with any U.S. Federal, state
or local taxing authority.

 

24.                               INTENT

 

(a)                                  The parties
intend and acknowledge that each Transaction is a “repurchase agreement” as
that term is defined in Section 101(47A)(i) of Title 11 of the Bankruptcy
Code, a “master netting agreement” as that term is defined in
Section 101(38A)(A) of the Bankruptcy Code and a “securities contract” as
that term is defined in Section 741(7)(A)(i) of the Bankruptcy Code.

 

(b)                                 The parties
intend and acknowledge that the Guaranty is a “securities contract” as that
term is defined in Section 741(7)(A)(xi) of the Bankruptcy Code.

 

(c)                                  It is
understood and agreed that any party’s right to cause the termination,
liquidation or acceleration of, or to offset net termination values, payment
amounts or other transfer obligations arising under or in connection with this
Agreement or any Transaction hereunder is in each case a contractual right to
cause the termination, liquidation, or acceleration of, or to offset net
termination values, payment amounts or other transfer obligations arising under
or in connection with this Agreement or any Transaction hereunder as described
in Sections 555, 559 and 561 of the Bankruptcy Code.

 

(d)                                 The parties
hereby agree that any provisions hereof or in any other document, agreement or
instrument that is related in any way to the servicing of the Purchased Loans
shall be deemed “related to” this Agreement within the meaning of Sections
101(38A)(A) and 101(47)(A)(v) of the Bankruptcy Code and part of the “contract”
as such term is used in Section 741 of the Bankruptcy Code.

 

25.                               MISCELLANEOUS

 

(a)                                  Time is of the
essence under the Transaction Documents and all Transactions thereunder, and
all references to a time shall mean New York time in effect on the date of the
action unless otherwise expressly stated in the Transaction Documents.

 

(b)                                 All rights, remedies
and powers of Buyer hereunder and in connection herewith are irrevocable and
cumulative, and not alternative or exclusive, and shall be in addition to all
other rights, remedies and powers of Buyer whether under law, equity or
agreement.  In addition to the rights and
remedies granted to it in this Agreement to the extent applicable, Buyer shall
have all rights and remedies of a secured party under the UCC and any other
applicable law.

 

55

 

(c)                                  The Transaction
Documents may be executed in counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.

 

(d)                                 The headings in
the Transaction Documents are for convenience of reference only and shall not
affect the interpretation or construction of the Transaction Documents.

 

(e)                                  Each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or be invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

 

(f)                                    This Agreement,
the Fee Letter and each Confirmation contains a final and complete integration
of all prior expressions by the parties with respect to the subject matter
hereof and thereof and shall constitute the entire agreement among the parties
with respect to such subject matter, superseding all prior oral or written
understandings.

 

(g)                                 Each party
understands that this Agreement is a legally binding agreement that may affect
such party’s rights.  Each party
represents to the other that such party has received legal advice from counsel
of its choice regarding the meaning and legal significance of this Agreement
and that it is satisfied with its legal counsel and the advice received from
it.

 

(h)                                 Should any
provision of this Agreement require judicial interpretation, it is agreed that
a court interpreting or construing the same shall not apply a presumption that
the terms hereof shall be more strictly construed against any Person by reason
of the rule of construction that a document is to be construed more strictly
against the Person who itself or through its agent prepared the same, it being
agreed that all parties have participated in the preparation of this Agreement.

 

[SIGNATURES COMMENCE ON NEXT PAGE]

 

56

 

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

 

 

	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  GOLDMAN
  SACHS MORTGAGE COMPANY, 

  
	
   

  	
  a
  New York limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Goldman
  Sachs Real Estate Funding Corp.,

  
	
   

  	
   

  	
  its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  STARWOOD
  PROPERTY MORTGAGE SUB-3,

  L.L.C., a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SERVICER (FOR PURPOSES OF SECTION 5,

  SECTION 6(d) AND SECTION 22 HEREOF):

  
	
   

  	
   

  	
   

  
	
   

  	
  SPT
  MANAGEMENT, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Starwood
  Capital Group Global, L.P., its Sole

  
	
   

  	
   

  	
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  SCGG
  GP, L.L.C., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]