Document:

Exhibit 4.20

 

 

 

AMEREN CORPORATION,

 

 

as Collateral Agent, Custodial Agent

and Securities Intermediary

 

AND

 

 

as Purchase Contract Agent

 

PLEDGE AGREEMENT

 

DATED AS OF
                 

 

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
  Page

  
	
   

  
	
  ARTICLE I. DEFINITIONS

  
	
   

  	
   

  
	
  SECTION
  1.1

  	
  Definitions

  	
  2

  
	
   

  	
   

  
	
  ARTICLE
  II. PLEDGE; CONTROL AND PERFECTION

  
	
   

  	
   

  
	
  SECTION
  2.1

  	
  The
  Pledge

  	
  4

  
	
  SECTION 2.2

  	
  Control and
  Perfection

  	
  5

  
	
   

  	
   

  
	
  ARTICLE III.
  PAYMENTS ON COLLATERAL

  
	
   

  	
   

  
	
  SECTION
  3.1

  	
  Payments

  	
  7

  
	
  SECTION 3.2

  	
  Application of
  Payments

  	
  8

  
	
   

  	
   

  
	
  ARTICLE IV. SUBSTITUTION, RELEASE, REPLEDGE
  AND SETTLEMENT OF NOTES

  
	
   

  	
   

  
	
  SECTION
  4.1

  	
  Collateral
  Substitution and the Creation of Stripped Units

  	
  8

  
	
  SECTION
  4.2

  	
  Collateral
  Substitution and the Re-Creation of Normal Units

  	
  9

  
	
  SECTION 4.3

  	
  Termination Event

  	
  10

  
	
  SECTION
  4.4

  	
  Early
  Settlement; Merger Early Settlement; Cash Settlement

  	
  11

  
	
  SECTION
  4.5

  	
  Remarketing;
  Application of Proceeds; Settlement

  	
  11

  
	
   

  	
   

  
	
  ARTICLE V. VOTING
  RIGHTS — NOTES

  
	
   

  	
   

  
	
  SECTION
  5.1

  	
  Exercise
  by Purchase Contract Agent

  	
  13

  
	
   

  	
   

  
	
  ARTICLE
  VI. RIGHTS AND REMEDIES; TAX EVENT REDEMPTION

  
	
   

  	
   

  
	
  SECTION
  6.1

  	
  Rights
  and Remedies of the Collateral Agent

  	
  14

  
	
  SECTION 6.2

  	
  Substitutions

  	
  15

  
	
  SECTION 6.3

  	
  Tax Event Redemption

  	
  15

  
	
   

  	
   

  
	
  ARTICLE
  VII. REPRESENTATIONS AND WARRANTIES; COVENANTS

  
	
   

  	
   

  
	
  SECTION 7.1

  	
  Representations
  and Warranties

  	
  15

  
	
  SECTION
  7.2

  	
  Covenants

  	
  16

  
	
   

  	
   

  
	
  ARTICLE VIII. THE
  COLLATERAL AGENT

  
	
   

  	
   

  
	
  SECTION 8.1

  	
  Appointment, Powers and
  Immunities

  	
  16

  
	
  SECTION 8.2

  	
  Instructions of
  the Company

  	
  18

  
	
  SECTION
  8.3

  	
  Reliance

  	
  18

  
	
  SECTION 8.4

  	
  Rights in Other
  Capacities

  	
  18

  
	
  SECTION
  8.5

  	
  Non-Reliance
  on Collateral Agent

  	
  19

  

 

i

 

	
  SECTION 8.6

  	
  Compensation
  and Indemnity

  	
  19

  
	
  SECTION 8.7

  	
  Failure to Act

  	
  19

  
	
  SECTION
  8.8

  	
  Resignation

  	
  20

  
	
  SECTION
  8.9

  	
  Right to
  Appoint Agent or Advisor

  	
  21

  
	
  SECTION
  8.10

  	
  Survival

  	
  21

  
	
  SECTION 8.11

  	
  Exculpation

  	
  21

  
	
   

  	
   

  
	
  ARTICLE IX. AMENDMENT

  
	
   

  	
   

  
	
  SECTION
  9.1

  	
  Amendment
  Without Consent of Holders

  	
  22

  
	
  SECTION
  9.2

  	
  Amendment
  with Consent of Holders

  	
  22

  
	
  SECTION 9.3

  	
  Execution of
  Amendments

  	
  23

  
	
  SECTION 9.4

  	
  Effect of Amendments

  	
  23

  
	
  SECTION 9.5

  	
  Reference to
  Amendments

  	
  23

  
	
   

  	
   

  
	
  ARTICLE X. MISCELLANEOUS

  
	
   

  	
   

  
	
  SECTION
  10.1

  	
  No
  Waiver

  	
  24

  
	
  SECTION 10.2

  	
  Governing Law

  	
  24

  
	
  SECTION
  10.3

  	
  Notices

  	
  24

  
	
  SECTION 10.4

  	
  Successors and
  Assigns

  	
  25

  
	
  SECTION 10.5

  	
  Counterparts

  	
  25

  
	
  SECTION 10.6

  	
  Severability

  	
  25

  
	
  SECTION 10.7

  	
  Expenses, Etc.

  	
  25

  
	
  SECTION 10.8

  	
  Security
  Interest Absolute

  	
  26

  
	
  SECTION 10.9

  	
  Waiver Of Jury Trial

  	
  26

  
	
   

  	
   

  
	
  Exhibit A

  	
  Instruction to
  Custodial Agent Regarding Remarketing

  	
  A-1

  
	
  Exhibit B

  	
  Instruction to
  Custodial Agent Regarding Withdrawing From Remarketing

  	
  B-1

  

 

ii

 

PLEDGE AGREEMENT,
dated as of
                     
(this “Agreement”), among Ameren Corporation, a Missouri corporation (the
“Company”), as pledgee,
                           ,
                     ,
not individually but solely as collateral agent (in such capacity, together
with its successors in such capacity, the “Collateral Agent”), as custodial
agent (in such capacity, together with its successors in such capacity, the
“Custodial Agent”) and as securities intermediary as defined in
Section 8-102(a)(14) of the Code (as defined herein) (in such capacity,
together with its successors in such capacity, the “Securities Intermediary”),
and
                              ,
a                      
corporation, not individually but solely as purchase contract agent, trustee
and as attorney-in-fact of the Holders (as defined in the Purchase Contract
Agreement (as hereinafter defined)) from time to time of the Units (in such
capacity, together with its successors in such capacity, the “Purchase Contract
Agent”) under the Purchase Contract Agreement (terms not otherwise defined
herein are used herein with the meaning ascribed to them in the Purchase
Contract Agreement).

 

RECITALS

 

WHEREAS, the
Company and the Purchase Contract Agent are parties to the Purchase Contract
Agreement, dated as of the date hereof (as modified and supplemented and in
effect from time to time, the “Purchase Contract Agreement”), pursuant to which
there will be issued Units having a Stated Amount of [$25] per Unit, all of
which will initially be Normal Units.

 

WHEREAS, each
Normal Unit will be comprised of (a) a Purchase Contract and
(b) either beneficial ownership of (i) a Note, (ii) following a
successful remarketing of the Notes in accordance with the Purchase Contract
Agreement and the Remarketing Agreement, the appropriate Treasury Consideration
or (iii) following a Tax Event Redemption in accordance with the Purchase
Contract Agreement and the terms of the Notes, an Applicable Ownership Interest
in the Treasury Portfolio.

 

WHEREAS, in
accordance with the terms of the Purchase Contract Agreement, a holder of
Normal Units may separate the Notes or the appropriate Treasury Consideration
or Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
from the related Purchase Contracts by substituting for such Notes or the
appropriate Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, Treasury Securities that will pay in
the aggregate an amount equal to the aggregate principal amount of such Normal
Units.  Upon such separation, the Normal
Units will become Stripped Units.  Each
Stripped Unit will be comprised of (a) a Purchase Contract and (b) a
[1/40] undivided beneficial interest in a Treasury Security.

 

WHEREAS, pursuant
to the terms of the Purchase Contract Agreement, the Holders, from time to
time, of the Units have irrevocably authorized the Purchase Contract Agent, as
attorney-in-fact of such Holders, among other things, to execute and deliver
this Agreement on behalf of such Holders and to grant the pledge provided
hereby of the Notes, any Treasury Consideration, any Treasury Securities and
any Applicable Ownership Interest in the Treasury Portfolio delivered in
exchange therefor to secure each Holder’s obligations under the related
Purchase Contract, as provided herein and subject to the terms hereof.

 

 

NOW, THEREFORE,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own behalf
and as attorney-in-fact of the Holders from time to time of the Units, agree as
follows:

 

ARTICLE I.

DEFINITIONS

 

SECTION 1.1               Definitions.

 

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

 

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

 

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

 

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

 

“Code” has the
meaning specified in Section 6.1 hereof.

 

“Collateral” has
the meaning specified in Section 2.1 hereof.

 

“Collateral Account”
means the securities account maintained at
                          
in the name “                         ,
as Purchase Contract Agent on behalf of the holders of certain securities of
Ameren Corporation, Collateral Account subject to the security interest of
                         ,
as Collateral Agent, for the benefit of Ameren Corporation, as pledgee” and any
successor account.

 

“Collateral Agent”
has the meaning specified in the first paragraph of this Agreement.

 

“Company” means the
Person named as the “Company” in the first paragraph of this Agreement until a
successor shall have become such, and thereafter “Company” shall mean such
successor.

 

“Custodial Agent”
has the meaning specified in the first paragraph of this Agreement.

 

“Intermediary”
means any entity that in the ordinary course of its business maintains
securities accounts for others and is acting in that capacity.

 

“Pledge” has the
meaning specified in Section 2.1 hereof.

 

2

 

“Pledged Applicable Ownership
Interest in the Treasury Portfolio” has the meaning specified
in Section 2.1 hereof.

 

“Pledged Notes” has
the meaning specified in Section 2.1 hereof.

 

“Pledged Treasury Consideration” has
the meaning specified in Section 2.1 hereof.

 

“Pledged Treasury Securities”
has the meaning specified in Section 2.1 hereof.

 

“Proceeds” means
all interest, dividends, cash, instruments, securities, financial assets (as
defined in Section 8-102(a)(9) of the Code) and other property from time
to time received, receivable or otherwise distributed upon the sale, exchange,
collection or disposition of the Collateral or any proceeds thereof.

 

“Purchase Contract Agent”
has the meaning specified in the first paragraph of this Agreement.

 

“Purchase Contract Agreement”
has the meaning specified in the second paragraph of this Agreement.

 

“Securities Intermediary”
has the meaning specified in the first paragraph of this Agreement.

 

“Security Entitlement”
has the meaning set forth in Section 8-102(a)(17) of the Code.

 

“Separate Notes”
means any Notes that are not Pledged Notes.

 

 “TRADES Regulations” means the regulations of
the United States Department of the Treasury, published at 31 C.F.R. Part 357,
as amended from time to time.  Unless
otherwise defined herein, all terms defined in the TRADES Regulations are used
herein as therein defined.

 

“Transfer” means,
with respect to the Collateral and in accordance with the instructions of the
Collateral Agent, the Purchase Contract Agent or the Holder, as applicable:

 

(i)            in
the case of Collateral consisting of securities which cannot be delivered by
book-entry or which the parties agree are to be delivered in physical form,
delivery in appropriate physical form to the recipient accompanied by any duly
executed instruments of transfer, assignments in blank, transfer tax stamps and
any other documents necessary to constitute a legally valid transfer to the
recipient;

 

(ii)           in
the case of Collateral consisting of securities maintained in book-entry form
by causing a securities intermediary (as defined in Section 8-102(a)(14)
of the Code) to (a) credit a Security Entitlement with respect to such
securities to a “securities account” (as defined in Section 8-501(a) of
the Code) maintained by or on behalf of the recipient and (b) to issue a
confirmation to the recipient with respect to such credit.  In the case of Collateral to be delivered to
the Collateral Agent, the

 

3

 

securities intermediary shall be the Securities Intermediary and the
securities account shall be the Collateral Account.  In addition, any Transfer of Treasury Securities and Treasury
Consideration hereunder shall be made in accordance with the TRADES Regulations
and other applicable law.

 

ARTICLE II.

PLEDGE; CONTROL AND PERFECTION

 

SECTION 2.1               The
Pledge.

 

(a)   The Holders from time to time
acting through the Purchase Contract Agent, as their attorney-in-fact, and the
Purchase Contract Agent, as such attorney-in-fact, hereby pledge and grant to
the Collateral Agent, for the benefit of the Company, as collateral security
for the performance when due by such Holders of their respective obligations
under the related Purchase Contracts, a security interest in all of the right,
title and interest of the Purchase Contract Agent and such Holders in:

 

(i)            (A) the Notes,
Treasury Consideration, Treasury Securities and any Applicable Ownership
Interest in the Treasury Portfolio constituting a part of the Units,
(B) any Treasury Securities delivered in exchange for any Notes, Treasury
Consideration or any Applicable Ownership Interest in the Treasury Portfolio,
as applicable, in accordance with Section 4.1 hereof, and (C) any
Notes, Treasury Consideration or any Applicable Ownership Interest in the Treasury
Portfolio, as applicable, delivered in exchange for any Treasury Securities in
accordance with Section 4.2 hereof, in each case that have been
Transferred to or otherwise received by the Collateral Agent and not released
by the Collateral Agent to such Holders under the provisions of this Agreement;

 

(ii)           the Collateral Account
and all securities, financial assets, security entitlements, cash and other
property credited thereto and all Security Entitlements related thereto; and

 

(iii)          all Proceeds of the
foregoing (all of the foregoing, collectively, the “Collateral”).

 

(b)   Prior to or concurrently with
the execution and delivery of this Agreement, the Purchase Contract Agent, on
behalf of the initial Holders of the Units, shall cause the Notes comprising a
part of the Normal Units to be Transferred to the Collateral Agent for the
benefit of the Company.

 

(c)   The pledge provided in this
Section 2.1 is herein referred to as the “Pledge” and the Notes (including
any Notes that are delivered pursuant to Section 6.2 hereof), Treasury
Consideration, Treasury Securities or Applicable Ownership Interest in the
Treasury Portfolio subject to the Pledge, excluding any Notes, Treasury
Consideration, Treasury Securities or Applicable Ownership Interest in the
Treasury Portfolio released from the Pledge as provided in Sections 4.1 and 4.2
hereof, respectively, are hereinafter referred to as “Pledged Notes,” “Pledged
Treasury Consideration,” “Pledged Treasury Securities” or “Pledged Applicable

 

4

 

Ownership
Interest in the Treasury Portfolio,” respectively.  Subject to the Pledge and the provisions of Section 2.2
hereof, the Holders from time to time shall have full beneficial ownership of
the Collateral.  For purposes of
perfecting the Pledge under applicable law, including, to the extent
applicable, the TRADES Regulations or the Uniform Commercial Code as adopted
and in effect in any applicable jurisdiction, the Collateral Agent shall be the
agent of the Company as provided herein. 
Whenever directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to re-register in its
name the Notes or any other securities held in physical form.

 

(d)   Except as may be required in
order to release Notes or Treasury Consideration, as applicable, in connection
with a Tax Event Redemption or with a Holder’s election to convert its
investment from a Normal Unit to a Stripped Unit, or except as otherwise
required to release Notes as specified herein, neither the Collateral Agent,
the Custodial Agent nor the Securities Intermediary shall relinquish physical
possession of any certificate evidencing a Note, Treasury Securities, the
Applicable Ownership Interest in the Treasury Portfolio or Treasury Consideration,
as applicable, prior to the termination of this Agreement.  If it becomes necessary for the Securities
Intermediary to relinquish physical possession of a certificate in order to
release a portion of the Notes evidenced thereby from the Pledge, the
Securities Intermediary shall use its best efforts to obtain physical
possession of a replacement certificate evidencing any Notes remaining subject
to the Pledge hereunder registered to it or endorsed in blank within fifteen
days of the date it relinquished possession. 
The Securities Intermediary shall promptly notify the Company and the
Collateral Agent of the Securities Intermediary’s failure to obtain possession
of any such replacement certificate as required hereby.

 

SECTION 2.2               Control and Perfection.

 

(a)   In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this
Agreement, the Holders from time to time acting through the Purchase Contract
Agent, as their attorney-in-fact, hereby authorize and direct the Securities
Intermediary (without the necessity of obtaining the further consent of the
Purchase Contract Agent or any of the Holders), and the Securities Intermediary
agrees, to comply with and follow any instructions and “entitlement orders” (as
defined in Section 8-102(a)(8) of the Code) that the Collateral Agent may
deliver with respect to the Collateral Account, the Collateral credited thereto
and any Security Entitlements with respect to any thereof. In the event the
Securities Intermediary receives from the Holders or the Purchase Contract
Agent entitlement orders which conflict with entitlement orders received from
the Collateral Agent, the Securities Intermediary shall follow the entitlement
orders received from the Collateral Agent. 
Such instructions and entitlement orders may, without limitation, direct
the Securities Intermediary to transfer, redeem, assign, or otherwise dispose
of the Notes, the Treasury Consideration, the Treasury Securities, any
Applicable Ownership Interest in the Treasury Portfolio and any Security
Entitlements with respect thereto or sell, liquidate or dispose of such assets
through a broker designated by the Company, and to pay and deliver any income,
proceeds or other funds derived therefrom to the Company.  The Purchase Contract Agent and the Holders
from time to time acting through the Purchase Contract Agent, each hereby
further authorize and direct the Collateral Agent, as agent of the Company, to
itself issue instructions and entitlement orders, and to otherwise take action,
with respect to the Collateral Account, the Collateral credited thereto and any
Security Entitlements with respect thereto, pursuant to the terms and
provisions hereof, all without the

 

5

 

necessity
of obtaining the further consent of the Purchase Contract Agent or any of the
Holders.  The Collateral Agent shall be
the agent of the Company and shall act only in accordance with the terms hereof
or as otherwise directed by the Company. 
Without limiting the generality of the foregoing, the Collateral Agent
shall issue entitlement orders to the Securities Intermediary when and as
required by the terms hereof or as otherwise directed by the Company.

 

(b)   The Securities Intermediary
hereby confirms and agrees that:

 

(i)            all securities or
other property underlying any financial assets credited to the Collateral
Account shall be registered in the name of the Securities Intermediary, or its
nominee, indorsed to the Securities Intermediary, or its nominee, or in blank
or credited to another collateral account maintained in the name of the
Securities Intermediary and in no case will any financial asset credited to the
Collateral Account be registered in the name of the Purchase Contract Agent,
the Collateral Agent, the Company or any Holder, payable to the order of, or
specially indorsed to, the Purchase Contract Agent, the Collateral Agent, the
Company or any Holder except to the extent the foregoing have been specially
indorsed to the Securities Intermediary or in blank;

 

(ii)           all property delivered
to the Securities Intermediary pursuant to this Agreement (including, without
limitation, any Notes, Treasury Consideration, Treasury Securities or any
Applicable Ownership Interest in the Treasury Portfolio) will be promptly
credited to the Collateral Account;

 

(iii)          the Collateral Account
is an account to which financial assets are or may be credited, and the
Securities Intermediary shall, subject to the terms of this Agreement, treat
the Purchase Contract Agent as the “entitlement holder” (as defined in Section
8-102(a)(7) of the Code) with respect to the Collateral Account;

 

(iv)          the Securities
Intermediary has not entered into, and until the termination of this Agreement
will not enter into, any agreement with any other Person relating to the
Collateral Account and/or any financial assets credited thereto pursuant to
which it has agreed to comply with entitlement orders of such other Person; and

 

(v)           the Securities
Intermediary has not entered into, and until the termination of this Agreement
will not enter into, any agreement with the Company, the Collateral Agent, the
Purchase Contract Agent or the Holders of the Units purporting to limit or
condition the obligation of the Securities Intermediary to comply with entitlement
orders as set forth in this Section 2.2 hereof.

 

(c)   The Securities Intermediary
hereby agrees that each item of property (whether investment property,
financial asset, security, instrument or cash) credited to the Collateral
Account shall be treated as a “financial asset” within the meaning of
Section 8-102(a)(9) of the Code.

 

(d)   In the event of any conflict
between this Agreement (or any portion hereof) and any other agreement now
existing or hereafter entered into, the terms of this Agreement shall prevail.

 

6

 

(e)   The Purchase Contract Agent
hereby irrevocably constitutes and appoints the Collateral Agent and the
Company, and each of them severally, with full power of substitution, as the
Purchase Contract Agent’s attorney-in-fact to take on behalf of, and in the
name, place and stead of, the Purchase Contract Agent and the Holders, any
action necessary or desirable to perfect and to keep perfected the security
interest in the Collateral referred to in Section 2.1.  The grant of such power-of-attorney shall
not be deemed to require of the Collateral Agent any specific duties or
obligations not otherwise assumed by the Collateral Agent hereunder.
Notwithstanding the foregoing, in no event shall the Collateral Agent or
Securities Intermediary be responsible for the preparation or filing of any
financing or continuation statements in the appropriate jurisdictions or
responsible for maintenance or perfection of any Security Interest hereunder.

 

ARTICLE III.

PAYMENTS ON COLLATERAL

 

SECTION 3.1               Payments.

 

So long as the
Purchase Contract Agent is the registered owner of the Pledged Notes, Pledged
Treasury Consideration, Pledged Applicable Ownership Interest in the Treasury
Portfolio or Pledged Treasury Securities, it shall receive all payments
thereon.  If the Pledged Notes are
reregistered, such that the Collateral Agent becomes the registered holder, all
payments of the principal of, or interest on, the Pledged Notes and all
payments of the principal of, or cash distributions on, any Pledged Treasury
Consideration, Pledged Treasury Securities or any Pledged Applicable Ownership
Interest in the Treasury Portfolio, that are received by the Collateral Agent
and that are properly payable hereunder, shall be paid by the Collateral Agent
by wire transfer in same day funds:

 

(i)            in the case of
(A) quarterly cash distributions on Normal Units which include Pledged
Notes, Pledged Treasury Consideration or any Pledged Applicable Ownership
Interest in the Treasury Portfolio, any interest payments with respect to the
Pledged Notes or the appropriate Pledged Applicable Ownership Interest (as
specified in clause (B) of the definition of “Applicable Ownership
Interest”) of the Treasury Portfolio, as the case may be, and (B) any
payments of principal or, if applicable, the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) in the
Treasury Portfolio with respect to any Notes, Treasury Consideration or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the
relevant Holders of the Normal Units, to the account designated by the Purchase
Contract Agent for such purpose, no later than 10:00 a.m., New York City
time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the Collateral Agent on
a day that is not a Business Day or after 9:00 a.m., New York City time,
on a Business Day, then such payment shall be made no later than
9:30 a.m., New York City time, on the next succeeding Business Day);

 

(ii)           in the case of any
payments with respect to any Treasury Securities that have been released from
the Pledge pursuant to Section 4.3 hereof, to the Holders of the

 

7

 

Stripped
Units to the accounts designated by them in writing for such purpose no later
than 2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a Business Day or after
10:00 a.m., New York City time, on a Business Day, then such payment shall
be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day); and

 

(iii)          in the case of payments
in respect of any Pledged Notes, Pledged Treasury Consideration, Pledged
Treasury Securities or the appropriate Pledged Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) in the Treasury
Portfolio, as the case may be, to be paid upon settlement of such Holder’s
obligations to purchase Common Stock under the Purchase Contract, to the
Company on the Stock Purchase Date in accordance with the procedure set forth
in Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the respective
obligations of the Holders under the related Purchase Contracts.

 

SECTION 3.2               Application of Payments.

 

All payments
received by the Purchase Contract Agent as provided herein shall be applied by
the Purchase Contract Agent pursuant to the provisions of the Purchase Contract
Agreement.  If, notwithstanding the
foregoing, the Purchase Contract Agent shall receive any payments of principal
on account of any Note, Treasury Consideration or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
in the Treasury Portfolio, as applicable, that, at the time of such payment, is
a Pledged Note, Pledged Treasury Consideration or the appropriate Pledged
Applicable Ownership Interest (as specified in clause (A) of the definition of
“Applicable Ownership Interest”) in the Treasury Portfolio, as the case may be,
or a Holder of a Stripped Unit shall receive any payments of principal on
account of any Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or such Holder shall
hold the same as trustee of an express trust for the benefit of the Company
(and promptly deliver the same over to the Company) for application to the
obligations of the Holders under the related Purchase Contracts, and the
Holders shall acquire no right, title or interest in any such payments of
principal so received.

 

ARTICLE IV.

 

SUBSTITUTION,
RELEASE, REPLEDGE

AND
SETTLEMENT OF NOTES

 

SECTION 4.1               Collateral Substitution and the Creation
of Stripped Units.

 

At any time on or
prior to the second Business Day immediately preceding the Stock Purchase Date,
a Holder of Normal Units shall have the right to substitute Treasury Securities
for the Pledged Notes, Pledged Treasury Consideration or Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, securing such
Holder’s obligations under the Purchase Contracts comprising a part of such
Normal Units, in integral multiples of
          Normal Units, or after a
successful remarketing of the Notes pursuant to the Purchase Contract Agreement
or a Tax Exempt Redemption, in integral multiples of Normal Units such that

 

8

 

Treasury Securities to be deposited and the applicable
Treasury Consideration or the Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, to be released are in integral multiples of
$1,000, by (a) Transferring to the Collateral Agent Treasury Securities
having an aggregate principal amount equal to the aggregate Stated Amount of
such Normal Units and (b) delivering such Normal Units to the Purchase
Contract Agent, accompanied by a notice, substantially in the form of
Exhibit D to the Purchase Contract Agreement, to the Purchase Contract
Agent stating that such Holder has Transferred Treasury Securities to the Collateral
Agent pursuant to clause (a) above (stating the principal amount, the
maturities and the CUSIP numbers of the Treasury Securities Transferred by such
Holder) and requesting that the Purchase Contract Agent instruct the Collateral
Agent to release from the Pledge the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, related to such Normal Units, whereupon the
Purchase Contract Agent shall promptly give such instruction to the Collateral
Agent in the form provided in Exhibit C to the Purchase Contract
Agreement; provided that, such Holder may not substitute such Treasury
Securities for such Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio pursuant to this
Section 4.1 during the period from four Business Days prior to any
Remarketing Period until the expiration of three Business Days after the end of
such Remarketing Period.  Upon receipt
of Treasury Securities from a Holder of Normal Units and the related
instruction from the Purchase Contract Agent, the Collateral Agent shall
release the Pledged Notes, Pledged Treasury Consideration or the Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
and shall promptly Transfer such Pledged Notes, Pledged Treasury Consideration
or Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, free and clear of any lien, pledge or security interest created hereby,
to the Purchase Contract Agent.  All
items Transferred and/or substituted by any Holder pursuant to this
Section 4.1, Section 4.2 or any other Section of this Agreement shall
be Transferred and/or substituted free and clear of all liens, claims and
encumbrances.

 

SECTION 4.2               Collateral Substitution and the
Re-Creation of Normal Units.

 

At any time on or
prior to the second Business Day immediately preceding the Stock Purchase Date,
a Holder of Stripped Units shall have the right to reestablish Normal Units
(a) consisting of the Purchase Contracts and Notes in integral multiples
of           Normal Units, or
(b) after a remarketing of the Notes pursuant to the Purchase Contract
Agreement or a Tax Event Redemption, consisting of the Purchase Contracts and
the appropriate Treasury Consideration (identified and calculated by reference
to the Treasury Consideration then comprising Normal Units) or the appropriate
portion of the Treasury Portfolio in integral multiples of Stripped Units such
that the Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio to be deposited and the Treasury Securities to be released
are in integral multiples of $1,000, by (x) Transferring to the Collateral
Agent the Notes or the appropriate Treasury Consideration or Applicable
Ownership Interest (as defined in clause (A) of the definition of such term) in
the Treasury Portfolio, as the case may be, then comprising such number of
Normal Units as is equal to such Stripped Units and (y) delivering such
Stripped Units to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit D to the Purchase Contract Agreement,
to the Purchase Contract Agent stating that such Holder has transferred Notes,
Treasury Consideration or Applicable Ownership Interest in the Treasury
Portfolio to the Collateral Agent pursuant to clause (a) above and requesting
that the Purchase Contract Agent

 

9

 

instruct the Collateral Agent to release from the
Pledge the Pledged Treasury Securities related to such Stripped Units,
whereupon the Purchase Contract Agent shall promptly give such instruction to
the Collateral Agent in the form provided in Exhibit C to the Purchase
Contract Agreement; provided that, such Holder of Stripped Units shall not have
the right to reestablish Normal Units pursuant to this Section 4.2 during
the period from four Business Days prior to any Remarketing Period until the
expiration of three Business Days after the end of such Remarketing Period.  Upon receipt of the Notes or the appropriate
Treasury Consideration or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, from such Holder and the instruction from the
Purchase Contract Agent, the Collateral Agent shall release the Pledged
Treasury Securities and shall promptly Transfer such Pledged Treasury
Securities, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.

 

SECTION 4.3               Termination Event.

 

(a)   Upon receipt by the Collateral
Agent of written notice from the Company or the Purchase Contract Agent that
there has occurred a Termination Event, the Collateral Agent shall release all
Collateral from the Pledge and shall promptly Transfer any Pledged Notes,
Pledged Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, and Pledged Treasury Securities to the
Purchase Contract Agent for the benefit of the Holders of the Normal Units and
the Stripped Units, respectively, free and clear of any lien, pledge or
security interest or other interest created hereby.

 

(b)   If such Termination Event shall
result from the Company becoming a debtor under the Bankruptcy Code, and if the
Collateral Agent shall for any reason fail promptly to effectuate the release
and Transfer of all Pledged Notes, Pledged Treasury Consideration, Pledged
Applicable Ownership Interest in the Treasury Portfolio, or Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3, the Purchase
Contract Agent shall:

 

(i)            use best efforts to
obtain an opinion of a nationally recognized law firm reasonably acceptable to
the Collateral Agent to the effect that, as a result of the Company being the
debtor under the Bankruptcy Code, the Collateral Agent will not be prohibited
from releasing or Transferring the Collateral as provided in this
Section 4.3, and shall deliver such opinion to the Collateral Agent within
ten days after the occurrence of such Termination Event, and if (y) the
Purchase Contract Agent shall be unable to obtain such opinion within ten days
after the occurrence of such Termination Event or (z) the Collateral Agent
shall continue, after delivery of such opinion, to refuse to effectuate the
release and Transfer of all Pledged Notes, Pledged Treasury Consideration,
Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged
Treasury Securities, as the case may be, as provided in this Section 4.3,
then the Purchase Contract Agent shall within 15 days after the occurrence of
such Termination Event commence an action or proceeding in the court with
jurisdiction of the Company’s case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury Securities, as the case
may be, as provided by this Section 4.3 or

 

(ii)           commence an action or
proceeding like that described in subsection (i)(z) hereof within ten days
after the occurrence of such Termination Event.

 

10

 

SECTION 4.4               Early Settlement; Merger Early
Settlement; Cash Settlement.

 

Upon written
notice to the Collateral Agent by the Purchase Contract Agent that one or more
Holders of Units have elected to effect Early Settlement, Merger Early
Settlement or Cash Settlement of their respective obligations under the
Purchase Contracts forming a part of such Units in accordance with the terms of
the Purchase Contracts and the Purchase Contract Agreement (setting forth the
number of such Purchase Contracts as to which such Holders have elected to
effect such Early Settlement, Merger Early Settlement or Cash Settlement), and
that the Purchase Contract Agent has received from such Holders, and paid to
the Company, as confirmed to the Collateral Agent in writing by the Company,
the related Early Settlement Amounts, Merger Early Settlement Amounts or Cash
Settlement Amounts, as the case may be, pursuant to the terms of the Purchase
Contracts and the Purchase Contract Agreement and that all conditions to such
Early Settlement, Merger Early Settlement or Cash Settlement, as the case may
be, have been satisfied, then the Collateral Agent shall release from the
Pledge (a) Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be, in
the case of a Holder of Normal Units or (b) Pledged Treasury Securities,
in the case of a Holder of Stripped Units, relating to such Purchase Contracts
as to which such Holders have elected to effect such Early Settlement, Merger
Early Settlement or Cash Settlement, and shall Transfer all such Pledged Notes,
Pledged Treasury Consideration, Pledged Applicable Ownership Interest in the
Treasury Portfolio or Pledged Treasury Securities, as the case may be, free and
clear of the Pledge created hereby, to the Purchase Contract Agent for the
benefit of such Holders.

 

SECTION 4.5               Remarketing; Application of Proceeds; Settlement.

 

(a)   Pursuant to the Purchase
Contract Agreement, the Purchase Contract Agent shall notify, by
10:00 a.m., New York City time, on the third Business Day preceding the
first day of a Remarketing Period, the Remarketing Agent and the Collateral Agent
of the aggregate principal amount of Notes comprising part of Normal Units to
be remarketed.  The Collateral Agent
shall, by 10:00 a.m., New York City time, on the Business Day immediately
preceding the first day of any Remarketing Period, without any instruction from
Holders of Normal Units, deliver the Pledged Notes to be remarketed to the
Remarketing Agent for remarketing. 
After deducting as the remarketing fee an amount not exceeding
     basis points (.     %) of the
total proceeds of such remarketing of Pledged Notes, the Remarketing Agent will
deliver the Agent-purchased Treasury Consideration purchased from the proceeds
of the remarketing to the Purchase Contract Agent, which shall thereupon
deliver such Agent-purchased Treasury Consideration to the Collateral
Agent.  Upon receipt of the
Agent-purchased Treasury Consideration from the Purchase Contract Agent
following a successful remarketing pursuant to the Purchase Contract Agreement,
(i) the Collateral Agent, for the benefit of the Company, shall thereupon
hold such Agent-Purchased Treasury Consideration to secure such Normal Units
Holders’ obligations under the Purchase Contracts and to fund the quarterly
interest payment due to Normal Units Holders on the Stock Purchase Date, and
(ii) the remaining portion, if any, of the proceeds of such successful
remarketing shall be distributed by the Remarketing Agent to the Purchase
Contract Agent for payment to such Normal Units Holders participating in such
remarketing.  On the Stock Purchase
Date, the Collateral Agent shall apply that portion of the payments received in
respect of the Pledged Treasury Consideration equal to the aggregate Stated
Amount of the related Normal Units to satisfy in full the obligations of such
Normal Units

 

11

 

Holders
to pay the Purchase Price under the related Purchase Contracts and to pay the
quarterly payment due to Normal Units Holders on such Stock Purchase Date,
which such quarterly payment shall be paid in an amount equal to the Coupon
Rate for such quarterly payment.

 

(b)   Promptly following a Failed
Remarketing, the Notes delivered to the Remarketing Agent pursuant to
Section 4.5(a) shall be returned to the Collateral Agent.  The Collateral Agent, for the benefit of the
Company, shall thereupon hold such Notes to secure the Normal Units Holders’
obligations under the Purchase Contracts. 
The Remarketing Agent shall make one or more attempts to remarket the
Notes in accordance with the procedures set forth in the Purchase Contract
Agreement and the Remarketing Agreement, provided that the requirements of
Section 5.4(b)(ii) of the Purchase Contract Agreement have been met.  If by 4:00 p.m., New York City time, on
the Business Day immediately preceding the Stock Purchase Date, the Remarketing
Agent has failed to remarket the Notes at a price equal to at least
100.   % of the Remarketing Value, the “Last Failed Remarketing”
shall be deemed to have occurred. 
Promptly following the Last Failed Remarketing, the Notes delivered to
the Remarketing Agent pursuant to Section 4.5(a) shall be returned to the
Collateral Agent.  The Collateral Agent,
for the benefit of the Company will, at the written direction of the Company,
retain or dispose of the Pledged Notes in accordance with applicable law and
satisfy in full, from any such disposition or retention, such Holders’
obligations to pay the Purchase Price for the Common Stock; provided, that if
upon a Failed Remarketing or the Last Failed Remarketing, as the case may be,
the Collateral Agent exercises such rights for the benefit of the Company with
respect to such Notes, any accrued and unpaid interest on such Notes will
become payable by the Company to the Purchase Contract Agent for payment to the
Holder of the Normal Units to which such Notes relate in accordance with the
Purchase Contract Agreement.

 

(c)   In the event a Holder of
Stripped Units has not made a Cash Settlement, Early Settlement or Merger Early
Settlement of the Purchase Contracts underlying its Stripped Units, such Holder
shall be deemed to have elected to pay for the shares of Common Stock to be
issued under such Purchase Contracts from the payments received in respect of
the related Pledged Treasury Securities. 
Without receiving any instruction from any such Holder, the Collateral
Agent shall apply such payments to the settlement of such Purchase Contracts on
the Stock Purchase Date.  In the event
the payments received in respect of the related Pledged Treasury Securities are
in excess of the aggregate Purchase Price of the Purchase Contracts being
settled thereby, the Collateral Agent shall distribute such excess, when
received, to the Purchase Contract Agent for the benefit of such Holders of
Stripped Units.

 

(d)   Pursuant to the Remarketing
Agreement and the Purchase Contract Agreement, on or prior to the fourth
Business Day preceding the first day of any Remarketing Period, but no earlier
than the Payment Date immediately preceding
                       ,
holders of Separate Notes may elect to have their Separate Notes remarketed by
delivering their Separate Notes, together with a notice of such election,
substantially in the form of Exhibit A hereto, to the Custodial
Agent.  On the third Business Day prior
to the first day of any Remarketing Period, by 10:00 a.m., New York City
time, the Custodial Agent shall notify the Remarketing Agent of the number of
such Separate Notes to be remarketed. 
The Custodial Agent will hold such Separate Notes in an account separate
from the Collateral Account.  A holder
of Separate Notes electing to have its Separate Notes remarketed will also have
the right to withdraw such election by written notice to the Custodial Agent,
substantially in the form of Exhibit B hereto, on or

 

12

 

prior
to the fourth Business Day immediately preceding the first day of any
Remarketing Period, upon which notice the Custodial Agent will return such
Separate Notes to such holder.  On the
Business Day immediately preceding the first day of any Remarketing Period, the
Custodial Agent will deliver to the Remarketing Agent for remarketing all
Separate Notes delivered to the Custodial Agent pursuant to this
Section 4.5(d) and not withdrawn pursuant to the terms hereof prior to
such date.  The portion of the proceeds
from such remarketing equal to the amount calculated in respect of such
Separate Notes as set forth in Section 5.4(b) of the Purchase Contract
Agreement will automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such Separate Notes.  In addition, after deducting as the
remarketing fee an amount not exceeding     basis points
(.   %) of the total proceeds of such remarketing of such
Separate Notes, the Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds, if any, for the benefit of such holders of
such Separate Notes.  If, despite using
commercially reasonable best efforts, there has been a Failed Remarketing or
the Last Failed Remarketing, the Remarketing Agent will promptly return such
Separate Notes to the Custodial Agent for redelivery to such holders of such
Separate Notes.

 

ARTICLE V.

VOTING RIGHTS — NOTES

 

SECTION 5.1               Exercise by Purchase Contract Agent.

 

The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Notes or any part thereof for
any purpose not inconsistent with the terms of this Agreement and in accordance
with the terms of the Purchase Contract Agreement; provided, that the Purchase
Contract Agent shall not exercise or, as the case may be, shall not refrain
from exercising such right if, in the judgment of the Company, such action
would impair or otherwise have a material adverse effect on the value of all or
any of the Pledged Notes; and provided, further, that the Purchase Contract
Agent shall give the Company and the Collateral Agent at least five days’ prior
written notice of the manner in which it intends to exercise, or its reasons
for refraining from exercising, any such right.  Upon receipt of any notices and other communications in respect
of any Pledged Notes, including notice of any meeting at which holders of Notes
are entitled to vote or solicitation of consents, waivers or proxies of holders
of Notes, the Collateral Agent shall use reasonable efforts to send promptly to
the Purchase Contract Agent such notice or communication, and as soon as
reasonably practicable after receipt of a written request therefor from the
Purchase Contract Agent, execute and deliver to the Purchase Contract Agent
such proxies and other instruments in respect of such Pledged Notes (in form
and substance satisfactory to the Collateral Agent) as are prepared by the
Purchase Contract Agent with respect to the Pledged Notes.

 

13

 

ARTICLE VI.

RIGHTS AND REMEDIES; TAX EVENT
REDEMPTION

 

SECTION 6.1               Rights and Remedies of the Collateral
Agent.

 

(a)   In addition to the rights and
remedies available at law or in equity, after an event of default under the
Purchase Contracts, the Collateral Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the Uniform
Commercial Code (or any successor thereto) as in effect in the State of New
York from time to time (the “Code”) (whether or not the Code is in effect in
the jurisdiction where the rights and remedies are asserted) and the TRADES
Regulations and such additional rights and remedies to which a secured party is
entitled under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted. 
Wherever reference is made in this Agreement to any section of the Code,
such reference shall be deemed to include a reference to any provision of the
Code which is a successor to, or amendment of, such section.  Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by applicable
law, (i) retention of the Pledged Notes or other Collateral in full
satisfaction of the Holders’ obligations under the Purchase Contracts or
(ii) sale of the Pledged Notes or other Collateral in one or more public
or private sales, in each case at the written direction of the Company.

 

(b)   Without limiting any rights or
powers otherwise granted by this Agreement to the Collateral Agent, in the
event the Collateral Agent is unable to make payments to the Company on account
of any Pledged Treasury Consideration, Pledged Applicable Ownership Interest in
the Treasury Portfolio or Pledged Treasury Securities as provided in Article
III hereof in satisfaction of the obligations of the Holder of the Units of
which such Pledged Treasury Consideration, Pledged Applicable Ownership in the
Treasury Portfolio or Pledged Treasury Securities, as applicable, is a part
under the related Purchase Contracts, the inability to make such payments shall
constitute an event of default under the Purchase Contracts and the Collateral
Agent shall have and may exercise, with reference to such Pledged Treasury
Securities, Pledged Applicable Ownership Interest in the Treasury Portfolio or
Pledged Treasury Consideration, as applicable, and such obligations of such
Holder, any and all of the rights and remedies available to a secured party
under the Code and the TRADES Regulations after default by a debtor, and as
otherwise provided herein or under any other law.

 

(c)   Without limiting any rights or
powers otherwise granted by this Agreement to the Collateral Agent, the
Collateral Agent is hereby irrevocably authorized to receive and collect all
payments of (i) the principal amount of, or interest on, the Pledged
Notes, or (ii) the principal amount of, or interest (if any) on, the
Pledged Treasury Consideration, Pledged Applicable Ownership Interest in the
Treasury Portfolio or Pledged Treasury Securities, subject, in each case, to
the provisions of Article III, and as otherwise granted herein.

 

(d)   The Purchase Contract Agent,
individually and as attorney-in-fact for each Holder of Units, agrees that,
from time to time, upon the written request of the Company or the Collateral
Agent, such Holder shall execute and deliver such further documents and do such
other acts and things as the Company or the Collateral Agent may reasonably
request in order to maintain the Pledge, and the perfection and priority
thereof, and to confirm the rights of the

 

14

 

Collateral
Agent hereunder.  The Purchase Contract
Agent shall have no liability to any Holder for executing any documents or
taking any such acts requested by the Company or the Collateral Agent (acting
upon the written request of the Company) hereunder, except for liability for
its own negligent act, its own negligent failure to act, its bad faith or its
own willful misconduct.

 

SECTION 6.2               Substitutions.

 

Whenever a Holder
has the right to substitute Treasury Securities, Notes, Treasury Consideration
or the appropriate Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, for Collateral held by the Collateral Agent, such substitution
shall not constitute a novation of the security interest created hereby.

 

SECTION 6.3               Tax Event Redemption.

 

Upon the
occurrence of a Tax Event Redemption prior to a successful remarketing of the
Pledged Notes pursuant to the provisions of the Purchase Contract Agreement,
the aggregate Redemption Price payable on the Tax Event Redemption Date with
respect to such Pledged Notes shall be delivered to the Collateral Agent by the
Indenture Trustee on or prior to 12:00 p.m., New York City time, by wire
transfer in immediately available funds at such place and to such account as
may be designated by the Collateral Agent in exchange for the Pledged
Notes.  In the event the Collateral
Agent receives such Redemption Price, the Collateral Agent will, at the written
direction of the Company, apply an amount, out of such Redemption Price, equal
to the aggregate Redemption Amount with respect to the Pledged Notes to
purchase on behalf of the Holders of Normal Units the Treasury Portfolio and
promptly remit the remaining portion of such Redemption Price, if any, to the
Purchase Contract Agent for payment to the Holders of Normal Units.  The Collateral Agent shall Transfer the
Treasury Portfolio to the Collateral Account to secure the obligation of all
Holders of Normal Units to purchase Common Stock of the Company under the
Purchase Contracts constituting a part of such Normal Units, in substitution
for the Pledged Notes.  Thereafter the
Collateral Agent shall have such security interests, rights and obligations
with respect to the Treasury Portfolio as it had in respect of the Pledged
Notes as provided in Articles II, III, IV, V and VI, and any reference herein
to the Notes shall be deemed to be reference to such Treasury Portfolio, and
any reference herein to interest on the Notes shall be deemed to be a reference
to corresponding distributions on such Treasury Portfolio.

 

ARTICLE VII.

REPRESENTATIONS AND WARRANTIES;
COVENANTS

 

SECTION
7.1               Representations and
Warranties.

 

The Holders from
time to time, acting through the Purchase Contract Agent as their
attorney-in-fact (it being understood that the Purchase Contract Agent shall
not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represent and warrant to the Collateral Agent, which representations
and warranties shall be deemed repeated on each day a Holder Transfers
Collateral that:

 

15

 

(a)   such Holder has the power to
grant a security interest in and lien on the Collateral;

 

(b)   such Holder is the sole
beneficial owner of the Collateral and, in the case of Collateral delivered in
physical form, is the sole holder of such Collateral and is the sole beneficial
owner of, or has the right to Transfer, the Collateral it Transfers to the
Collateral Agent, free and clear of any security interest, lien, encumbrance,
call, liability to pay money or other restriction other than the security
interest and lien granted under Section 2.1;

 

(c)   upon the Transfer of the
Collateral to the Collateral Account, the Collateral Agent, for the benefit of
the Company, will have a valid and perfected first priority security interest
therein (assuming that any central clearing operation or any Intermediary or
other entity not within the control of the Holder involved in the Transfer of
the Collateral, including the Collateral Agent, gives the notices and takes the
action required of it hereunder and under applicable law for perfection of that
interest and assuming the establishment and exercise of control pursuant to Section 2.2);
and

 

(d)   the execution and performance
by the Holder of its obligations under this Agreement will not result in the
creation of any security interest, lien or other encumbrance on the Collateral
other than the security interest and lien granted under Section 2.1 or
violate any provision of any existing law or regulation applicable to it or of
any mortgage, charge, pledge, indenture, contract or undertaking to which it is
a party or which is binding on it or any of its assets.

 

SECTION 7.2               Covenants.

 

The Holders from
time to time, acting through the Purchase Contract Agent as their
attorney-in-fact (it being understood that the Purchase Contract Agent shall
not be liable for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the Collateral remains
subject to the Pledge:

 

(a)   neither the Purchase Contract
Agent nor such Holders will create or purport to create or allow to subsist any
mortgage, charge, lien, pledge or any other security interest whatsoever over
the Collateral or any part of it other than pursuant to this Agreement; and

 

(b)   neither the Purchase Contract
Agent nor such Holders will sell or otherwise dispose (or attempt to dispose)
of the Collateral or any part of it except for the beneficial interest therein,
subject to the pledge hereunder, transferred in connection with the Transfer of
the Units.

 

ARTICLE VIII.

THE COLLATERAL AGENT

 

SECTION 8.1               Appointment,
Powers and Immunities.

 

(a)   The Collateral Agent shall act
as agent for the Company hereunder with such powers as are specifically vested
in the Collateral Agent by the terms of this Agreement, together

 

16

 

with
such other powers as are reasonably incidental thereto.  Each of the Collateral Agent, the Custodial
Agent and the Securities Intermediary:

 

(i)            shall have no duties
or responsibilities except those expressly set forth or incorporated in this
Agreement and no implied covenants or obligations shall be inferred from this
Agreement against any of them, nor shall any of them be bound by the provisions
of any agreement by any party hereto beyond the specific or incorporated terms
hereof;

 

(ii)           shall not be
responsible for any recitals contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by it under, this
Agreement, the Units or the Purchase Contract Agreement (except as specifically
incorporated by reference herein), or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than as
against the Collateral Agent), the Units or the Purchase Contract Agreement or
any other document referred to or provided for herein (except as specifically
incorporated by reference herein) or therein or for any failure by the Company
or any other Person (except the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be) to perform any of its obligations
hereunder or thereunder or for the perfection, priority or, except as expressly
required hereby, existence, validity, perfection or maintenance of any security
interest created hereunder;

 

(iii)          shall not be required to
initiate or conduct any litigation or collection proceedings hereunder (except
in the case of the Collateral Agent, pursuant to directions furnished under
Section 8.2, subject to Section 8.6);

 

(iv)          shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in connection
herewith or therewith, except for its own negligence, bad faith or willful
misconduct; and

 

(v)           shall not be required
to advise any party as to selling or retaining, or taking or refraining from
taking any action with respect to, the Units or other property deposited
hereunder.

 

Subject to the foregoing,
during the term of this Agreement, the Collateral Agent shall take all
reasonable action in connection with the safekeeping and preservation of the
Collateral hereunder.

 

(b)   No provision of this Agreement
shall require the Collateral Agent, the Custodial Agent or the Securities
Intermediary to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder.  In no event shall the Collateral Agent, the
Custodial Agent or the Securities Intermediary be liable for any amount in
excess of the value of the Collateral or for any special, indirect, individual,
consequential damages or lost profits or loss of business, arising in
connection with this Agreement. 
Notwithstanding the foregoing, the Collateral Agent, the Custodial
Agent, the Purchase Contract Agent and Securities Intermediary, each in its
individual capacity, hereby waive any right of setoff, banker’s lien, liens or
perfection rights as securities intermediary or any counterclaim with respect
to any of the Collateral.

 

17

 

(c)   The Collateral Agent, Custodial
Agent and Securities Intermediary shall have no liability whatsoever for the
action or inaction of any Clearing Agency or any book-entry system
thereof.  In no event shall any Clearing
Agency or any book-entry system thereof be deemed an agent or subcustodian of
the Collateral Agent, Custodial Agent and Securities Intermediary.

 

SECTION 8.2               Instructions of the Company.

 

The Company shall
have the right, by one or more instruments in writing executed and delivered to
the Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case may be, or to
direct the taking or refraining from taking of any action authorized by this
Agreement; provided, however, that (i) such direction shall not conflict
with the provisions of any law or of this Agreement and (ii) the Collateral
Agent, the Custodial Agent and the Securities Intermediary shall each receive
indemnity reasonably satisfactory to it as provided herein.  Nothing in this Section 8.2 shall
impair the right of the Collateral Agent in its discretion to take any action
or omit to take any action which it deems proper and which is not inconsistent
with such direction.

 

SECTION 8.3               Reliance.

 

Each of the
Securities Intermediary, the Custodial Agent and the Collateral Agent shall be
entitled conclusively to rely upon any certification, order, judgment, opinion,
notice or other communication (including, without limitation, any thereof by
telephone, telecopy, telex or facsimile) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons (without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be.  As to
any matters not expressly provided for by this Agreement, the Collateral Agent,
the Custodial Agent and the Securities Intermediary shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Company in accordance with this Agreement.

 

SECTION 8.4               Rights in Other Capacities.

 

The Collateral
Agent, the Custodial Agent and the Securities Intermediary and their affiliates
may (without having to account therefor to the Company) accept deposits from,
lend money to, make their investments in and generally engage in any kind of
banking, trust or other business with the Purchase Contract Agent, any Holder
of Units and any holder of Separate Notes (and any of their respective subsidiaries
or affiliates) as if it were not acting as the Collateral Agent, the Custodial
Agent or the Securities Intermediary, as the case may be, and the Collateral
Agent, the Custodial Agent and the Securities Intermediary and their affiliates
may accept fees and other consideration from the Purchase Contract Agent, any
Holder of Units or any holder of Separate Notes without having to account for
the same to the Company; provided that each of the Securities Intermediary, the
Custodial Agent and the Collateral Agent covenants and agrees with the Company
that, except as provided in this Agreement, it shall not accept,

 

18

 

receive or permit there to be created in favor of
itself (and waives any right of set-off or banker’s lien with respect to) and
shall take no affirmative action to permit there to be created in favor of any
other Person, any security interest, lien or other encumbrance of any kind in
or upon the Collateral and the Collateral shall not be commingled with any
other assets of any such Person.

 

SECTION 8.5               Non-Reliance on Collateral Agent.

 

None of the
Securities Intermediary, the Custodial Agent or the Collateral Agent shall be
required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of Units of this Agreement, the Purchase
Contract Agreement, the Units or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Purchase
Contract Agent or any Holder of Units. 
The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall not have any duty or responsibility to provide the Company
or the Remarketing Agent with any credit or other information concerning the
affairs, financial condition or business of the Purchase Contract Agent, any
Holder of Units or any holder of Separate Notes (or any of their respective
subsidiaries or affiliates) that may come into the possession of the Collateral
Agent, the Custodial Agent or the Securities Intermediary or any of their
respective affiliates.

 

SECTION 8.6               Compensation and Indemnity.

 

The Company
agrees:

 

(a)   to pay each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary from time to time
such compensation as shall be agreed in writing between the Company and the
Collateral Agent, Custodial Agent or the Securities Intermediary, as the case
may be, for all services rendered by each of them hereunder, and

 

(b)   to indemnify the Collateral
Agent, the Custodial Agent and the Securities Intermediary for, and to hold
each of them harmless from and against, any loss, liability or reasonable
out-of-pocket expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
reasonable out-of-pocket costs and expenses (including reasonable fees and
expenses of counsel) of defending itself against any claim or liability in
connection with the exercise or performance of such powers and duties or
collecting such amounts.  The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall each promptly
notify the Company of any third party claim which may give rise to indemnity
hereunder and give the Company the opportunity to participate in the defense of
such claim with counsel reasonably satisfactory to the indemnified party, and
no such claim shall be settled without the written consent of the Company,
which consent shall not be unreasonably withheld.

 

SECTION 8.7               Failure to Act.

 

In the event of
any ambiguity in the provisions of this Agreement or any dispute between or
conflicting claims by or among the parties hereto or any other Person with
respect to any funds or property deposited hereunder, the Collateral Agent,
Custodial Agent and the Securities Intermediary shall be entitled, after prompt
notice to the Company and the Purchase Contract Agent, at its sole option, to
refuse to comply with any and all claims, demands or instructions

 

19

 

with respect to such property or funds so long as such
dispute or conflict shall continue, and none of the Collateral Agent, Custodial
Agent or the Securities Intermediary shall be or become liable in any way to
any of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. 
The Collateral Agent, Custodial Agent and the Securities Intermediary
shall be entitled to refuse to act until either (i) such conflicting or
adverse claims or demands shall have been finally determined by a court of
competent jurisdiction or settled by agreement between the conflicting parties
as evidenced in a writing, reasonably satisfactory to the Collateral Agent,
Custodial Agent or the Securities Intermediary, as the case may be, or
(ii) the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be, shall have received security or an indemnity
reasonably satisfactory to the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, sufficient to save the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be,
harmless from and against any and all loss, liability or reasonable out-of-pocket
expense which the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, may incur by reason of its acting without bad
faith, willful misconduct or negligence. 
The Collateral Agent, Custodial Agent or the Securities Intermediary may
in addition elect to commence an interpleader action or seek other judicial
relief or orders as the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, may deem necessary.  Notwithstanding anything contained herein to the contrary, none
of the Collateral Agent, Custodial Agent or the Securities Intermediary shall
be required to take any action that is in its opinion contrary to law or to the
terms of this Agreement, or which would in its opinion subject it or any of its
officers, employees or directors to liability.

 

SECTION 8.8               Resignation.

 

Subject to the
appointment and acceptance of a successor Collateral Agent, Custodial Agent or
Securities Intermediary, as provided below, (a) the Collateral Agent,
Custodial Agent and the Securities Intermediary may resign at any time by
giving notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Units, (b) the Collateral Agent,
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, Custodial Agent or the
Securities Intermediary fails to perform any of its material obligations
hereunder in any material respect for a period of not less than 20 days after
receiving written notice of such failure by the Purchase Contract Agent and
such failure shall be continuing, the Collateral Agent, Custodial Agent or the
Securities Intermediary may be removed by the Purchase Contract Agent.  The Purchase Contract Agent shall promptly
notify the Company of any removal of the Collateral Agent, the Custodial Agent
or the Securities Intermediary pursuant to clause (c) of the immediately
preceding sentence.  Upon any such
resignation or removal, the Company shall have the right to appoint a successor
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be.  If no successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Collateral Agent’s, Custodial Agent’s or Securities Intermediary’s
giving of notice of resignation or such removal, then the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, may at
the Company’s expense petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be.  Each
of the Collateral Agent, Custodial Agent and the Securities Intermediary shall
be a bank which has an office in New York, New York with a

 

20

 

combined capital and surplus of at least
$50,000,000.  Upon the acceptance of any
appointment as Collateral Agent, Custodial Agent or Securities Intermediary, as
the case may be, hereunder by a successor Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, such successor shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, Custodial Agent or Securities Intermediary,
as the case may be, and the retiring Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, shall take all appropriate action
to transfer any money and property held by it hereunder (including the
Collateral) to such successor.  The
retiring Collateral Agent, Custodial Agent or Securities Intermediary shall,
upon such succession, be discharged from its duties and obligations as
Collateral Agent, Custodial Agent or Securities Intermediary hereunder.  After any retiring Collateral Agent’s,
Custodial Agent’s or Securities Intermediary’s resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Section 8.8 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as the
Collateral Agent, Custodial Agent or Securities Intermediary.  Any resignation or removal of the Collateral
Agent hereunder shall be deemed for all purposes of this Agreement as the
simultaneous resignation or removal of the Custodial Agent and the Securities
Intermediary hereunder.

 

Any corporation
into which the Collateral Agent, the Custodial Agent or the Securities
Intermediary, in its individual capacity, may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Collateral Agent in its individual
capacity shall be a party, or any corporation to which substantially all the
corporate trust business of the Collateral Agent in its individual capacity may
be transferred, shall be the Collateral Agent, the Custodial Agent, or the
Securities Intermediary, as the case may be, respectively, under this Agreement
without further act.

 

SECTION 8.9               Right to Appoint Agent or Advisor.

 

The Collateral
Agent shall have the right to appoint agents or advisors in connection with any
of its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith.  The
appointment of agents pursuant to this Section 8.9 shall be subject to
prior consent of the Company, which consent shall not be unreasonably withheld.

 

SECTION 8.10             Survival.

 

The provisions of
this Article VIII shall survive termination of this Agreement and the
resignation or removal of the Collateral Agent, the Custodial Agent or the
Securities Intermediary.

 

SECTION 8.11             Exculpation.

 

Anything in this
Agreement to the contrary notwithstanding, in no event shall any of the
Collateral Agent, the Custodial Agent or the Securities Intermediary or their
officers, employees or agents be liable under this Agreement to any third party
for indirect, special, punitive or consequential loss or damage of any kind
whatsoever, including lost profits, whether or not the likelihood of such loss
or damage was known to the Collateral Agent, the Custodial Agent or the

 

21

 

Securities Intermediary, or any of them, incurred
without any act or deed that is found to be attributable to negligence, bad
faith or willful misconduct on the part of the Collateral Agent, the Custodial
Agent or the Securities Intermediary.

 

ARTICLE IX.

AMENDMENT

 

SECTION 9.1               Amendment Without Consent of Holders.

 

Without the
consent of any Holders, the Company, the Collateral Agent, the Custodial Agent,
the Securities Intermediary and the Purchase Contract Agent, at any time and
from time to time, may amend this Agreement, in form satisfactory to the
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent, for any of the following purposes:

 

(i)            to evidence the
succession of another Person to the Company, and the assumption by any such
successor of the covenants of the Company herein; or

 

(ii)           to add to the covenants
of the Company for the benefit of the Holders, or to surrender any right or
power herein conferred upon the Company so long as such covenants or such
surrender do not adversely affect the validity, perfection or priority of the
security interests granted or created hereunder; or

 

(iii)          to evidence and provide
for the acceptance of appointment hereunder by a successor Collateral Agent,
Custodial Agent, Securities Intermediary or Purchase Contract Agent; or

 

(iv)          to cure any ambiguity,
to correct or supplement any provisions herein which may be inconsistent with
any other such provisions herein, or to make any other provisions with respect
to such matters or questions arising under this Agreement, provided such action
shall not adversely affect the interests of the Holders.

 

SECTION 9.2               Amendment with Consent of Holders.

 

With the consent
of the Holders of not less than a majority of the Purchase Contracts at the
time outstanding voting together as one class, by Act of said Holders delivered
to the Company, the Purchase Contract Agent or the Collateral Agent, as the
case may be, the Company, the Purchase Contract Agent, the Collateral Agent,
the Custodial Agent and the Securities Intermediary may amend this Agreement
for the purpose of modifying in any manner the provisions of this Agreement or
the rights of the Holders in respect of the Units; provided, however, that no
such supplemental agreement shall, without the consent of the Holder of each
Outstanding Unit adversely affected thereby,

 

(i)            change the amount or
type of Collateral underlying a Unit (except for the rights of holders of
Normal Units to substitute the Treasury Securities for the Pledged Notes,
Pledged Treasury Consideration or the appropriate Pledged Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, or the rights of
Holders of Stripped Units

 

22

 

to
substitute Notes or the appropriate Treasury Consideration or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as applicable, for the
Pledged Treasury Securities), impair the right of the Holder of any Unit to
receive distributions on the underlying Collateral or otherwise adversely
affect the Holder’s rights in or to such Collateral; or

 

(ii)           otherwise effect any
action that would require the consent of the Holder of each Outstanding Unit
affected thereby pursuant to the Purchase Contract Agreement if such action
were effected by an agreement supplemental thereto; or

 

(iii)          reduce the percentage of
Purchase Contracts the consent of whose Holders is required for any such
amendment.

 

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

 

SECTION 9.3               Execution of Amendments.

 

In executing any
amendment permitted by this Section, the Collateral Agent, the Custodial Agent,
the Securities Intermediary and the Purchase Contract Agent shall be entitled
to receive and (subject to Section 6.1 hereof, with respect to the
Collateral Agent, and Section 7.1 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully protected in relying
upon, an officer’s certificate and Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied and, in the case of an amendment pursuant to
Section 9.1, that such amendment does not adversely affect the validity,
perfection or priority of the security interests granted or created hereunder.

 

SECTION 9.4               Effect of Amendments.

 

Upon the execution
of any amendment under this Article IX, this Agreement shall be modified in
accordance therewith, and such amendment shall form a part of this Agreement
for all purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.

 

SECTION 9.5               Reference to Amendments.

 

Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Article IX may, and shall if
required by the Collateral Agent or the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent and the Collateral
Agent as to any matter provided for in such amendment.  If the Company shall so determine, new
Certificates so modified as to conform, in the opinion of the Collateral Agent,
the Purchase Contract Agent and the Company, to any such amendment may be
prepared and executed by the Company and authenticated, executed on behalf of
the Holders and delivered by the Purchase Contract Agent in accordance with the
Purchase Contract Agreement in exchange for outstanding Certificates.

 

23

 

ARTICLE X.

 

MISCELLANEOUS

 

SECTION 10.1             No
Waiver.

 

No failure on the
part of any party hereto or any of its agents to exercise, and no course of
dealing with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by any party hereto or any of its agents of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.  The
remedies herein are cumulative and are not exclusive of any remedies provided
by law.

 

SECTION 10.2             GOVERNING LAW.

 

THIS AGREEMENT
SHALL BE GOVERNED BY AND DEEMED TO BE A CONTRACT UNDER, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF.  Without limiting
the foregoing, the above choice of law is expressly agreed to by the Securities
Intermediary, the Collateral Agent, the Custodial Agent and the Holders from
time to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and maintenance of the
Collateral Account, which law, for purposes of the Code, shall be deemed to be
the law governing all Security Entitlements related thereto.  In addition, such parties agree that, for
purposes of the Code, New York shall be the Securities Intermediary’s
jurisdiction.  The Company, the
Collateral Agent and the Holders from time to time of the Units, acting through
the Purchase Contract Agent as their attorney-in-fact, hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby.  The Company, the Collateral Agent and the Holders from time to
time of the Units, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.

 

SECTION 10.3             Notices.

 

Unless otherwise
stated herein, all notices, requests, consents and other communications
provided for herein (including, without limitation, any modifications of, or waivers
or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended
recipient at the “Address for Notices” specified below its name on the
signature pages hereof (or in the case of Holders, may be made and deemed given
as provided in Sections 1.5 and 1.6 of the Purchase Contract Agreement) or, as
to any party, at such other address as shall be designated by such party in a
notice to the other parties.  Except as
otherwise provided in this Agreement, all such communications shall be deemed
to have been

 

24

 

duly given when personally delivered or, in the case
of a mailed notice or notice transmitted by telecopier, upon receipt, in each
case given or addressed as aforesaid.

 

SECTION 10.4             Successors and Assigns.

 

This Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, and the Holders from
time to time of the Units, by their acceptance of the same, shall be deemed to
have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Purchase Contract
Agent.

 

SECTION 10.5             Counterparts.

 

This Agreement may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may execute
this Agreement by signing any such counterpart.

 

SECTION 10.6             Severability.

 

If any provision
hereof is invalid and unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, (i) the other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly as may be
possible and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.

 

SECTION 10.7             Expenses,
Etc.

 

The Company agrees
to reimburse the Collateral Agent, the Securities Intermediary and the
Custodial Agent for:

 

(a)   all reasonable out-of-pocket costs
and all reasonable expenses of the Collateral Agent, the Custodial Agent and
the Securities Intermediary (including, without limitation, the reasonable fees
and expenses of counsel to the Collateral Agent, the Custodial Agent and the
Securities Intermediary), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and
(ii) any modification, supplement or waiver of any of the terms of this
Agreement;

 

(b)   all reasonable costs and
expenses of the Collateral Agent (including, without limitation, reasonable
fees and expenses of counsel) in connection with (i) any enforcement or
proceedings resulting or incurred in connection with causing any Holder of
Units to satisfy its obligations under the Purchase Contracts forming a part of
the Units and (ii) the enforcement of this Section 10.7; and

 

(c)   all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any other
document referred to herein and all costs, expenses, taxes, assessments and
other charges

 

25

 

incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.

 

SECTION 10.8             Security Interest Absolute.

 

All rights of the
Collateral Agent and security interests hereunder, and all obligations of the
Holders from time to time hereunder, shall be absolute and unconditional
irrespective of:

 

(a)   any lack of validity or
enforceability of any provision of the Purchase Contracts or the Units or any
other agreement or instrument relating thereto;

 

(b)   any change in the time, manner
or place of payment of, or any other term of, or any increase in the amount of,
all or any of the obligations of Holders of Units under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any consent to
any departure from any requirement of, the Purchase Contract Agreement or any
Purchase Contract or any other agreement or instrument relating thereto; or

 

(c)   any other circumstance which
might otherwise constitute a defense available to, or discharge of, a borrower,
a guarantor or a pledgor.

 

SECTION 10.9             WAIVER OF JURY TRIAL.

 

EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

26

 

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

 

	
   

  	
  AMEREN CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  Ameren Corporation

  
	
   

  	
  1901 Chouteau Avenue

  
	
   

  	
  St. Louis, Missouri 63103

  
	
   

  	
  Attention: Treasurer

  
	
   

  	
  Telecopy:  (314) 554-3066

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
                           ,
  as Purchase Contract Agent and as attorney-in-fact of the Holders from time
  to time of the Units

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telecopy:

  	
   

  	
   

  
						

 

27

 

	
   

  	
                             ,
  as Collateral Agent, Custodial Agent and Securities Intermediary

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  c/o 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  
							

 

28

 

EXHIBIT A

 

Instruction to Custodial Agent Regarding Remarketing

 

 

    as
Collateral Agent 

c/o 

 

 

Attn: 

 

Re:          Notes
of Ameren Corporation (the “Company”)

 

The undersigned
hereby notifies you in accordance with Section 4.5(d) of the Pledge Agreement,
dated as of
                    
(the “Pledge Agreement”), among the Company, yourselves, as Collateral Agent,
Securities Intermediary and Custodial Agent, and
                          ,
as Purchase Contract Agent and as attorney-in-fact for the Holders of Normal
Units and Stripped Units from time to time, that the undersigned elects to
deliver
$                    
aggregate principal amount of Notes for delivery to the Remarketing Agent on
the fourth Business Day immediately preceding the first day of any Remarketing
Period for remarketing pursuant to Section 4.5(d) of the Pledge
Agreement.  The undersigned will, upon
request of the Remarketing Agent, execute and deliver any additional documents
deemed by the Remarketing Agent or by the Company to be necessary or desirable
to complete the sale, assignment and transfer of the Notes tendered hereby.

 

The undersigned
hereby instructs you, upon receipt of the proceeds of such remarketing from the
Remarketing Agent, net of amounts payable to the Remarketing Agent in
accordance with the Pledge Agreement, to deliver such proceeds to the
undersigned in accordance with the instructions indicated herein under “A.
Payment Instructions.”  The undersigned
hereby instructs you, in the event of a Failed Remarketing or the Last Failed
Remarketing, upon receipt of the Notes tendered herewith from the Remarketing
Agent, to deliver such Notes to the person(s) and the address(es) indicated
herein under “B. Delivery Instructions.”

 

With this notice,
the undersigned hereby (i) represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Notes
tendered hereby and that the undersigned is the record owner of any Notes
tendered herewith in physical form or a participant in The Depository Trust
Company (“DTC”) and the beneficial owner of any Notes tendered herewith by
book-entry transfer to your account at DTC and (ii) agrees to be bound by
the terms and conditions of Section 4.5(d) of the Pledge Agreement.  Capitalized terms used herein but not
defined shall have the meaning set forth or incorporated by reference in the
Pledge Agreement.

 

	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  	
   

  
				

 

A-1

 

Please print name
and address:

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Social Security
  or other Taxpayer

  Identification Number, if any

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

 

	
  A.            PAYMENT INSTRUCTIONS

  	
   

  	
  B.            DELIVERY
  INSTRUCTIONS

  	
   

  
	
  Proceeds of the
  remarketing should be paid by check in the name of the person(s) set forth
  below and mailed to the address set forth below.

  	
   

  	
  In the event of
  a Failed Remarketing or the Last Failed Remarketing, Notes which are in
  physical form should be delivered to the person(s) set forth below and mailed
  to the address set forth below.

  	
   

  
	
  Name(s)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name(s)

  	
   

  
	
  (Please Print)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please Print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Please Print)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Zip Code)

  	
   

  	
  (Please Print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Zip Code)

  	
   

  
	
  (Tax Identification or Social

  Security Number)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Tax Identification or Social

  Security Number)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the event of
  a Failed Remarketing or the Last Failed Remarketing, Notes which are in
  book-entry form should be credited to the account at The Depository Trust
  Company set forth below.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DTC Account Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name of Account

  	
   

  
	
   

  	
   

  	
  Party:

  	
   

  	
   

  
							

 

A-2

 

EXHIBIT B

 

Instruction to Custodial Agent Regarding Withdrawal from
Remarketing

 

 

    as
Collateral Agent 

c/o 

 

 

Attn:

 

Re:          Notes
of Ameren Corporation (the “Company”)

 

The undersigned
hereby notifies you in accordance with Section 4.5(d) of the Pledge
Agreement, dated as of
                    
(the “Pledge Agreement”), among the Company, yourselves, as Collateral Agent,
Securities Intermediary and Custodial Agent and                                ,
as Purchase Contract Agent and as attorney-in-fact for the Holders of Normal
Units and Stripped Units from time to time, that the undersigned elects to
withdraw the
$            aggregate
principal amount of Notes delivered to the Custodial Agent on
                               
for remarketing pursuant to Section 4.5(d) of the Pledge Agreement.  The undersigned hereby instructs you to
return such Notes to the undersigned in accordance with the undersigned’s
instructions.  With this notice, the
Undersigned hereby agrees to be bound by the terms and conditions of
Section 4.5(d) of the Pledge Agreement. 
Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee: 

  	
   

  
						

 

Please print name
and address:

 

	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
  Social Security
  or other Taxpayer

  Identification Number, if any

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

B-1EXHIBIT 10

                                                                 EXHIBIT 10.III

                         SECURITIES PURCHASE AGREEMENT

This  Securities  Purchase Agreement (this "Agreement") is dated as of February

3, 2004, among Mines  Management,  Inc.,  an Idaho corporation (the "Company"),

and each purchaser identified on the signature  pages  hereto  (each, including

its  successors  and assigns, a "Purchaser" and collectively the "Purchasers");

and

WHEREAS, subject to  the  terms  and conditions set forth in this Agreement and

pursuant to Section 4(2) of the Securities Act (as defined below), and Rule 506

promulgated  thereunder,  the  Company  desires  to  issue  and  sell  to  each

Purchaser, and each Purchaser, severally  and  not jointly, desires to purchase

from the Company in the aggregate, up to 2,000,000  shares  of Common Stock and

Warrants on the Closing Date.

NOW,  THEREFORE,  IN  CONSIDERATION of the mutual covenants contained  in  this

Agreement, and for other  good  and  valuable  consideration  the  receipt  and

adequacy  of  which  are  hereby  acknowledged,  the Company and each Purchaser

agrees as follows:

                            ARTICLE I. DEFINITIONS

1.1 Definitions. In addition to the terms defined  elsewhere in this Agreement,

for  all  purposes  of this Agreement, the following terms  have  the  meanings

indicated in this Section 1.1: 

"Action" shall have the meaning ascribed to such term in Section 3.1(j).

"Affiliate" means any  Person  that, directly or indirectly through one or more

intermediaries, controls or is controlled  by or is under common control with a

Person as such terms are used in and construed  under Rule 144. With respect to

a  Purchaser,  any investment fund or managed account  that  is  managed  on  a

discretionary basis  by  the  same investment manager as such Purchaser will be

deemed to be an Affiliate of such Purchaser.

"Closing" means the closing of  the  purchase  and sale of the Common Stock and

the Warrants pursuant to Section 2.1.

"Closing Date" means the Trading Day when all of the Transaction Documents have

been  executed  and  delivered  by  the  applicable parties  thereto,  and  all

conditions precedent to (i) the Purchasers' obligations to pay the Subscription

Amount and (ii) the Company's obligations  to  deliver the Securities have been

satisfied or waived.

"Closing Price" means on any particular date (a)  the last reported closing bid

price per share of Common Stock on such date on the Trading Market (as reported

by Bloomberg L.P. at 4:15 PM (New York time), or (b)  if there is no such price

on  such date, then the closing bid price on the Trading  Market  on  the  date

nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York

time)  for  the  closing bid price for regular session trading on such day), or

(c) if the Common  Stock is not then listed or quoted on the Trading Market and

if prices for the Common Stock are then reported in the "pink sheets" published

by the Pink Sheets LLC (formerly the National Quotation Bureau Incorporated (or

a similar organization  or  agency  succeeding  to  its  functions of reporting

prices), the most recent bid price per share of the 

<PAGE>

Common  Stock so reported, or (e) if the shares of Common Stock  are  not  then

publicly  traded the fair market value of a share of Common Stock as determined

by a qualified  independent  appraiser selected in good faith by the Purchasers

of a majority in interest of the Shares then outstanding.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the common  stock  of  the  Company,  $0.01  par value per

share,  and  any  securities  into  which  such  common stock may hereafter  be

reclassified.

"Common  Stock  Equivalents"  means  any  securities  of  the  Company  or  the

Subsidiaries  which would entitle the holder thereof to  acquire  at  any  time

Common Stock, including  without limitation, any debt, preferred stock, rights,

options, warrants or other  instrument  that is at any time convertible into or

exchangeable for, or otherwise entitles the  holder  thereof to receive, Common

Stock.

"Company Counsel" means Paine, Hamblen, Coffin, Brooke  &  Miller  LLP,  717 W.

Sprague  Ave.,  Suite  1200,  Spokane,  WA  99201,  Telephone 509.455.6000, Fax

509.838.0007.

"Disclosure Schedules" means the Disclosure Schedules  of the Company delivered

concurrently herewith.

"Effective  Date"  means  the  date  that the Registration Statement  is  first

declared effective by the Commission.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Force Majeure" includes lightening, earthquakes,  storms,  floods, sunstrokes,

freezing, and disruption of the national transportation system.

"FW"  means  Feldman  Weinstein  LLP  with  offices  located at 420 Lexington

Avenue, Suite 2620, New York, New York 10170-0002.

"Intellectual Property Rights" shall have the meaning ascribed to such term in

Section 3.1(o).

"Liens" means a lien, charge, security interest, encumbrance, right of first

refusal, preemptive right or other restriction.

"Material  Adverse  Effect"  shall have the meaning ascribed to  such  term  in

Section 3. l(b).

"Material Permits" shall have  the  meaning ascribed to such term in Section 3.

l(m).

"Per Share Purchase Price" equals $5.00,  subject to adjustment for reverse and

forward stock splits, stock dividends, stock  combinations  and  other  similar

transactions of the Common Stock that occur after the date of this Agreement.

"Person"  means  an individual or corporation, partnership, trust, incorporated

or unincorporated  association, joint venture, limited liability company, joint

stock company, government (or an agency or subdivision thereof) or other entity

of any kind.

<PAGE>

"Proceeding"  means  an   action,  claim,  suit,  investigation  or  proceeding

(including, without limitation, an investigation or partial proceeding, such as

a deposition), whether commenced or threatened.

"Registration  Statement"  means   a   registration   statement   meeting   the

requirements  set  forth  in the Registration Rights Agreement and covering the

resale by the Purchasers of the Shares and the Warrant Shares.

"Registration Rights Agreement"  means the Registration Rights Agreement, dated

as of the date of this Agreement,  among the Company and each Purchaser, in the

form of Exhibit A hereto.

"Required Approvals" shall have the meaning ascribed to such term in Section 3.

l(e).

"Rule  144"  means Rule 144 promulgated  by  the  Commission  pursuant  to  the

Securities Act,  as  such Rule may be amended from time to time, or any similar

rule or regulation hereafter adopted by the Commission having substantially the

same effect as such Rule.

"SEC Reports" shall have the meaning ascribed to such term in Section 3.1(h).

"Securities" means the Shares, the Warrants and the Warrant Shares.

"Securities Act" means the Securities Act of 1933, as amended.

"Securities" means the Shares, the Warrants and the Warrant Shares.

"Securities Act" means the Securities Act of 1993, as amended.

"Shares" means the shares  of Common Stock issued or issuable to each Purchaser

pursuant to this Agreement.

"Subscription Amount" means,  as to each Purchaser, the amounts set forth below

such Purchaser's signature block on the signature page hereto, in United States

dollars and in immediately available funds.

"Subsidiary" shall mean the subsidiaries  of  the Company, if any, set forth on

Schedule 3.l(a).

"Trading Day" means a day on which the Common Stock  is  traded  on  a  Trading

Market.

"Trading  Market"  means the following markets or exchanges on which the Common

Stock is listed or quoted  for  trading  on  the date in question: OTC Bulletin

Board, the American Stock Exchange, the New York  Stock  Exchange,  the  Nasdaq

National Market or the Nasdaq Small Cap Market.

"Transaction Documents" means this Agreement, the Warrants and the Registration

Rights  Agreement  and any other documents or agreements executed in connection

with the transactions contemplated hereunder.

"Warrants" means the  Common Stock Purchase Warrants, in the form of Exhibit B,

issuable to the Purchasers  at the Closing, which warrants shall be exercisable

immediately upon issuance for  a  term  of five year and have an exercise price

equal to $7.25 per share.

<PAGE>

"Warrant Shares" means the shares of Common Stock issuable upon exercise of the

Warrants.

                         ARTICLE II. PURCHASE AND SALE

2.1         Closing.   On the Closing Date,  each Purchaser shall purchase from

the  Company,  severally and not jointly with the  other  Purchasers,  and  the

Company shall issue and sell to each Purchaser, (a) a number of Shares equal to

such Purchaser's  Subscription  Amount  divided by the Per Share Purchase Price

and  (b) the Warrants as determined pursuant  to  Section  2.2(a)(iii).     The

aggregate  number  of  Shares  sold  hereunder shall be up to 2,000,000.   Upon

satisfaction of the conditions set forth  in  Section  2.2,  the  Closing shall

occur at the offices of FW or such other location as the parties shall mutually

agree.

2.2         Closing Conditions; Deliveries.

(a)   On  the Closing Date, the Company shall deliver or cause to be  delivered

to each Purchaser the following:

(i)        this Agreement duly executed by the Company;

(ii)  a copy  of  the  irrevocable instructions to the Company's transfer agent

instructing the transfer agent to deliver, on an expedited basis, a certificate

evidencing a number of Shares  equal  to  such  Purchaser's Subscription Amount

divided  by  the  Per Share Purchase Price, registered  in  the  name  of  such

Purchaser;

(iii) with 3 Trading Days  of  the Closing Date,  a Warrant,  registered in the

name of such  Purchaser,  pursuant to  which  such  Purchaser  shall  have  the

right to  acquire  up  to the number of shares of Common Stock  equal to 25% of

the Shares to be issued to such Purchaser at the Closing;

(iv)  the Registration Rights Agreement duly executed by the Company; and

(v)   a legal  opinion  of  Company  Counsel, in the form of Exhibit C attached

hereto.

(b)         On the Closing Date, each Purchaser shall deliver or cause to be

delivered to the Company the following:

(i)        this Agreement duly executed by such Purchaser;

(ii)  such Purchaser's Subscription Amount  by  wire transfer to the account as

specified in writing by the Company; and

(iii)    the Registration Rights Agreement duly executed by such Purchaser.

(c)   All representations and warranties of  the  other  party  contained

herein  shall  remain true and correct as of the Closing Date and all covenants

of the other party shall have been performed if due prior to such date.

(d)   From  the  date  hereof  to the Closing Date, trading in the Common

Stock  shall  not  have  been  suspended by  the  Commission  (except  for  any

suspension of trading of limited  duration  agreed  to  by  the  Company, which

suspension shall be terminated prior to the Closing), and, at any time prior to

the Closing Date, trading in securities generally as 

<PAGE>

reported  by  Bloomberg  Financial  Markets  shall  not have been suspended  or

limited, or minimum prices shall not have been established  on securities whose

trades are reported by such service, or on any Trading   Market,  nor  shall  a

banking  moratorium  have been declared either by the United States or New York

State authorities nor  shall  there  have  occurred  any  material  outbreak or

escalation of hostilities or other national or international calamity  of  such

magnitude  in  its  effect on, or any material adverse change in, any financial

market which, in each case, in the reasonable judgment of each Purchaser, makes

it impracticable or inadvisable to purchase the Shares at the Closing.

                  ARTICLE III. REPRESENTATIONS AND WARRANTIES

3.1       Representations and Warranties of the Company.    Except as set forth

under the corresponding  section  of  the Disclosure Schedules which Disclosure

Schedules  shall  be  deemed  a  part hereof,  the  Company  hereby  makes  the

representations and warranties set forth below to each Purchaser:

      (a)   Subsidiaries.    All of the direct and indirect subsidiaries of the

Company are set forth on Schedule  3.1  (a).     The  Company owns, directly or

indirectly,  all  of  the  capital  stock  or  other equity interests  of  each

Subsidiary  free and clear of any Liens, and all  the  issued  and  outstanding

shares of capital  stock  of  each  Subsidiary are validly issued and are fully

paid, non-assessable and free of preemptive and similar rights to subscribe for

or purchase securities.    If the Company  has no subsidiaries, then references

in the Transaction Documents to the Subsidiaries will be disregarded.

      (b)   Organization and Qualification.    Each  of  the  Company  and  the

Subsidiaries  is  an  entity  duly incorporated or otherwise organized, validly

existing  and in good standing under  the  laws  of  the  jurisdiction  of  its

incorporation  or  organization  (as  applicable), with the requisite power and

authority to own and use its properties and assets and to carry on its business

as currently conducted.  Neither the Company nor any Subsidiary is in violation

or default of any of the provisions of  its  respective certificate or articles

of incorporation, bylaws or other organizational or charter documents.  Each of

the Company and the Subsidiaries is duly qualified  to  conduct business and is

in good standing as a foreign corporation or other entity  in each jurisdiction

in  which the nature of the business conducted or property owned  by  it  makes

such qualification necessary, except where the failure to be so qualified or in

good  standing, as the case may be, could not have or reasonably be expected to

result  in  (i)  a  material  adverse  effect  on  the  legality,  validity  or

enforceability  of  any Transaction Document, (ii) a material adverse effect on

the results of operations,  assets,  business, prospects or financial condition

of the Company and the Subsidiaries, taken  as  a  whole,  or  (iii) a material

adverse effect on the Company's ability to perform in any material respect on a

timely basis its obligations under any Transaction Document (any  of  (i), (ii)

or (iii), a "Material Adverse Effect") and no Proceeding has been instituted in

any  such  jurisdiction  revoking, limiting or curtailing or seeking to revoke,

limit or curtail such power and authority or qualification.

      (c)   Authorization;   Enforcement.    The   Company  has  the  requisite

corporate power and authority to enter into and to consummate  the transactions

contemplated by each of the Transaction Documents and otherwise  to  carry  out

its  obligations  thereunder.    The  execution  and  delivery  of  each of the

Transaction  Documents  by  the  Company  and  the  consummation  by  it of the

transactions contemplated thereby have been duly authorized by 

<PAGE>

all  necessary  action  on  the  part  of  the Company and no further action is

required by the Company in connection therewith  other  than in connection with

the Required Approvals. Each Transaction Document has been  (or  upon  delivery

will  have been) duly executed by the Company and, when delivered in accordance

with the  terms hereof, will constitute the valid and binding obligation of the

Company enforceable against the Company in accordance with its terms except (i)

as limited by applicable bankruptcy, insolvency, reorganization, moratorium and

other laws  of  general  application affecting enforcement of creditors' rights

generally and (ii) as limited  by laws relating to the availability of specific

performance, injunctive relief or other equitable remedies.

      (d)   No Conflicts.   The  execution,  delivery  and  performance  of the

Transaction  Documents by the Company, the issuance and sale of the Shares  and

the consummation  by the Company of the other transactions contemplated thereby

do not and will not (i) conflict with or violate any provision of the Company's

or any  Subsidiary's    certificate  or  articles   of  incorporation,   bylaws

or  other organizational  or  charter  documents,  or  (ii)  conflict  with, or

constitute  a  default  (or  an event that with notice or lapse of time or both

would become a default) under,  result  in the creation of any Lien upon any of

the properties or assets of the Company or  any  Subsidiary,  or give to others

any rights  of termination, amendment, acceleration  or  cancellation  (with or

without notice, lapse of time or both) of, any agreement, credit facility, debt

or  other instrument (evidencing a Company or Subsidiary debt or otherwise)  or

other  understanding  to  which  the Company or any Subsidiary is a party or by

which any property or asset of the  Company  or  any  Subsidiary  is  bound  or

affected,  or (iii) subject to the Required Approvals, to the Company's    best

knowledge, conflict with or result in a violation of any law, rule, regulation,

order, judgment,  injunction,  decree  or  other  restriction  of  any court or

governmental  authority  to  which  the  Company  or  a  Subsidiary  is subject

(including federal and state securities laws and regulations), or by which  any

property  or asset of the Company or a Subsidiary is bound or affected, or (iv)

conflict with or violate the terms of any agreement by which the Company or any

Subsidiary  is  bound  or  to which any property or asset of the Company or any

Subsidiary is bound or affected; except in the case of each of clauses (ii) and

(iii), such as could not have or reasonably be expected to result in a Material

Adverse Effect.

      (e)   Filings, Consents  and  Approvals.  The  Company is not required to

obtain any consent, waiver, authorization or order of,  give  any notice to, or

make any filing or registration with, any court or other federal,  state, local

or  other  governmental  authority  or  other  Person  in  connection  with the

execution,   delivery  and  performance  by  the  Company  of  the  Transaction

Documents, other  than  (i)  filings  required  pursuant to Section 4.4 of this

Agreement, (ii) the filing with the Commission of  the  Registration Statement,

(iii) application(s) to each applicable Trading Market for  the  listing of the

Shares  and Warrant Shares for trading thereon in the time and manner  required

thereby,  and (iv) the filing of Form D with the Commission and such filings as

are required  to  be made under applicable state securities laws (collectively,

the "Required Approvals").

      (f)   Issuance  of  the  Securities.     The Shares and Warrants are duly

authorized  and, when issued and paid for in accordance  with  the  Transaction

Documents, will  be duly and validly issued, fully paid and nonassessable, free

and clear of all Liens  imposed  by  the  Company  other  than  restrictions on

transfer  provided  for in the Transaction Documents. The Warrant Shares,  when

issued in accordance with the terms of the Transaction Documents, will 

<PAGE>

be validly issued, fully  paid  and  nonassessable, free and clear of all Liens

imposed  by the Company. The Company has  reserved  from  its  duly  authorized

capital stock the maximum number of shares of Common Stock issuable pursuant to

this Agreement and the Warrants.

(g)  Capitalization.  The  capitalization of the Company is as described in the

Company's most recent periodic  report  filed with the Commission. The Corrigan

has not issued any capital stock since such  filing  other than pursuant to the

exercise of employee stock options under the Company's  stock option plans, the

issuance  of  shares  of Common Stock to employees pursuant  to  the  Company's

employee stock purchase  plan  and  pursuant  to  the conversion or exercise of

outstanding Common Stock Equivalents outstanding. No  Person  has  any right of

first  refusal, preemptive right, right of participation, or any similar  right

to participate  in  the transactions contemplated by the Transaction Documents.

Except as a result of  the purchase and sale of the Securities and as set forth

on Schedule 3.1(g)), there  are no outstanding options, warrants, script rights

to subscribe to, calls or commitments  of any character whatsoever relating to,

or securities, rights or obligations convertible  into  or exchangeable for, or

giving any Person any right to subscribe for or acquire,  any  shares of Common

Stock, or contracts, commitments, understandings or arrangements  by  which the

Company or any Subsidiary is or may become bound to issue additional shares  of

Common  Stock,  or securities or rights convertible or exchangeable into shares

of Common Stock.  The  issue  and  sale of the Securities will not obligate the

Company to issue shares of Common Stock  or  other  securities  to  any  Person

(other  than  the  Purchasers)  and will not result in a right of any holder of

Company securities to adjust the  exercise, conversion, exchange or reset price

under such securities. All of the outstanding  shares  of  capital stock of the

Company are validly issued, fully paid and nonassessable, to the Company's best

knowledge, have been issued in compliance with all federal and state securities

laws,  and  none  of  such  outstanding shares was issued in violation  of  any

preemptive rights or similar rights to subscribe for or purchase securities. No

further approval or authorization of any stockholder, the Board of Directors of

the Company or others is required  for  the  issuance  and  sale of the Shares.

Except  as disclosed in the SEC Reports, there are no stockholders  agreements,

voting agreements  or  other  similar  agreements with respect to the Company's

capital stock to which the Company is a  party  or,  to  the  knowledge  of the

Company, between or among any of the Company's stockholders.

(h)       SEC  Reports; Financial Statements. The Company has filed all reports

required to be filed  by  it  under  the  Securities  Act and the Exchange Act,

including  pursuant  to  Section  13(a)  or 15(d) thereof, for  the  two  years

preceding the date hereof (or such shorter  period  as the Company was required

by law to file such material) (the foregoing materials,  including the exhibits

thereto,  being  collectively  referred to herein as the "SEC  Reports")  on  a

timely basis or has received a valid  extension  of such time of filing and has

filed any such SEC Reports prior to the expiration of any such extension. As of

their respective dates, the SEC Reports complied in  all material respects with

the requirements of the Securities Act and the Exchange  Act  and the rules and

regulations  of  the  Commission promulgated thereunder, and none  of  the  SEC

Reports, when filed, contained  any  untrue  statement  of  a  material fact or

omitted to state a material fact required to be stated therein or  necessary in

order to make the statements therein, in light of the circumstances under which

they  were  made,  not  misleading.  The  financial  statements  of the Company

included  in  the  SEC  Reports comply in all material respects with applicable

accounting requirements and  the  rules  and regulations of the Commission with

respect thereto as in effect at the time of  filing.  Such financial statements

have  been  prepared  in  accordance  with  United  States  generally  accepted

accounting principles applied on a consistent basis 

<PAGE>

during the periods involved ("GAAP"), except as may be otherwise  specified  in

such  financial  statements  or  the  notes  thereto  and except that unaudited

financial statements may not contain all footnotes required by GAAP, and fairly

present in all material respects the financial position  of the Company and its

consolidated subsidiaries as of and for the dates thereof  and  the  results of

operations and cash flows for the periods then ended, subject, in the  case  of

unaudited statements, to normal, immaterial, year-end audit adjustments.

(i)        Material  Changes.  Since  the  date of the latest audited financial

statements included within the SEC Reports, except as specifically disclosed in

the SEC Reports, (i) there has been no event,  occurrence  or  development that

has  had  or that could reasonably be expected to result in a Material  Adverse

Effect, (ii)  the  Company  has  not  incurred  any  liabilities (contingent or

otherwise) other than (A) trade payables and accrued expenses  incurred  in the

ordinary  course  of business consistent with past practice and (B) liabilities

not required to be  reflected in the Company's financial statements pursuant to

GAAP or required to be disclosed in filings made with the Commission, (iii) the

Company has not altered  its  method  of  accounting,  (iv) the Company has not

declared or made any dividend or distribution of cash or  other property to its

stockholders  or  purchased,  redeemed or made any agreements  to  purchase  or

redeem any shares of its capital  stock  and (v) the Company has not issued any

equity securities to any officer, director  or  Affiliate,  except  pursuant to

existing  Company stock option plans. The Company does not have pending  before

the Commission any request for confidential treatment of information.

(j)   Litigation.  There  is  no  action,  suit,  inquiry, notice of violation,

proceeding  or  investigation  pending  or, to the knowledge  of  the  Company,

threatened against or affecting the Company,  any  Subsidiary  or  any of their

respective  properties  before  or  by  any court, arbitrator, governmental  or

administrative agency or regulatory authority (federal, state, county, local or

foreign) (collectively, an "Action") which  (i) adversely affects or challenges

the legality, validity or enforceability of any of the Transaction Documents or

the Securities or (ii) could, if there were an  unfavorable  decision,  have or

reasonably  be  expected to result in a Material Adverse Effect. Except as  set

forth on Schedule  3.1(j),  neither  the  Company  nor  any Subsidiary, nor any

director or officer thereof, is or has been the subject of any Action involving

a claim of violation of or liability under federal or state  securities laws or

a claim of breach of fiduciary duty. There has not been, and to  the  knowledge

of the Company, there is not pending or contemplated, any investigation  by the

Commission  involving  the Company or any current or former director or officer

of the Company. The Commission  has  not  issued  any stop order or other order

suspending the effectiveness of any registration statement filed by the Company

or any Subsidiary under the Exchange Act or the Securities Act.

(k)   Labor Relations. No material labor dispute exists or, to the knowledge of

the Company, is imminent with respect to any of the  employees  of  the Company

which could reasonably be expected to result in a Material Adverse Effect.

(1)   Compliance.  Neither  the  Company  nor  any Subsidiary (i) is in default

under or in violation of (and no event has occurred  that  has  not been waived

that,  with notice or lapse of time or both, would result in a default  by  the

Company  or  any  Subsidiary  under),  nor  has  the  Company or any Subsidiary

received  notice  of  a claim that it is in default under  or  that  it  is  in

violation of, any indenture, loan or credit agreement or any other agreement or

instrument to which it  is  a  party or by which it or any of its properties is

bound (whether or not such default or 

<PAGE>

violation has been waived), (ii)  is  in  violation  of any order of any court,

arbitrator or governmental body, or (iii) is or has been  in  violation  of any

statute,  rule  or  regulation of any governmental authority, including without

limitation all foreign,  federal,  state  and  local  laws  applicable  to  its

business  except in each case as could not have a Material Adverse Effect. See,

Schedule 3.1(m) for additional information.

(m)   Regulatory  Permits.  Except as disclosed on Schedule 3.1(m), the Company

and  the Subsidiaries possess  all  certificates,  authorizations  and  permits

issued   by  the  appropriate  federal,  state,  local  or  foreign  regulatory

authorities  necessary  to  conduct their respective businesses as described in

the SEC Reports, except where  the  failure  to  possess such permits could not

have  or  reasonably  be  expected  to  result  in  a Material  Adverse  Effect

("Material Permits"), and neither the Company nor any  Subsidiary  has received

any  notice  of proceedings relating to the revocation or modification  of  any

Material Permit.

(n)    Title to  Assets.  .  The  Company  and  the  Subsidiaries have good and

marketable  title  in fee simple to all real property owned  by  them  that  is

material to the business  of  the  Company  and  the  Subsidiaries and good and

marketable title in all personal property owned by them that is material to the

business of the Company and the Subsidiaries, in each case  free  and  clear of

all  Liens,  except  for  Liens  as  do not materially affect the value of such

property and do not materially interfere  with  the use made and proposed to be

made of such property by the Company and the Subsidiaries  and  Liens  for  the

payment  of  federal,  state  or  other  taxes, the payment of which is neither

delinquent  nor subject to penalties. Any real  property  and  facilities  held

under lease by  the  Company and the Subsidiaries are held by them under valid,

subsisting and enforceable leases of which the Company and the Subsidiaries are

in compliance.

See, Schedule 3.1(n) for information regarding the right to process and develop

unpatented mining claims.

(o)   Patents and Trademarks.  The  Company  and the Subsidiaries have, or have

rights  to  use,  all  patents,  patent  applications,   trademarks,  trademark

applications,  service  marks,  trade  names,  copyrights, licenses  and  other

similar  rights  necessary  or  material  for  use  in  connection  with  their

respective businesses as described in the SEC Reports  and which the failure to

so have could have a Material Adverse Effect (collectively,  the  "Intellectual

Property  Rights").  Neither  the  Company  nor  any Subsidiary has received  a

written notice that the Intellectual Property Rights used by the Company or any

Subsidiary  violates  or  infringes  upon  the rights of  any  Person.  To  the

knowledge of the Company, all such Intellectual Property Rights are enforceable

and  there  is  no  existing  infringement by another  Person  of  any  of  the

Intellectual Property Rights of others.

(p)   Insurance. The Company and  the  Subsidiaries  are insured by insurers of

recognized financial responsibility against such losses  and  risks and in such

amounts as are prudent and customary in the businesses in which the Company and

the  Subsidiaries  are  engaged.  To  the  best  of  Company's knowledge,  such

insurance contracts and policies are accurate and complete. Neither the Company

nor any Subsidiary has any reason to believe that it will  not be able to renew

its existing insurance coverage as and when such coverage expires  or to obtain

similar  coverage  from  similar  insurers as may be necessary to continue  its

business without a significant increase in cost.

<PAGE>

(q)   Transactions With Affiliates  and  Employees.  Except as set forth in the

SEC  Reports,  none of the officers or directors of the  Company  and,  to  the

knowledge of the  Company,  none of the employees of the Company is presently a

party to any transaction with  the  Company  or  any Subsidiary (other than for

services  as  employees,  officers  and  directors),  including  any  contract,

agreement or other arrangement providing for the furnishing  of  services to or

by, providing for rental of real or personal property to or from,  or otherwise

requiring payments to or from any officer, director or such employee or, to the

knowledge  of  the Company, any entity in which any officer, director,  or  any

such employee has a substantial interest or is an officer, director, trustee or

partner, in each case in excess of $60,000 other than (i) for payment of salary

or consulting fees  for  services  rendered,  (ii)  reimbursement  for expenses

incurred  on  behalf  of  the  Company  and  (iii) for other employee benefits,

including stock option agreements under any stock option plan of the Company.

(r)   Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material

compliance  with all provisions of the Sarbanes-Oxley Act  of  2002  which  are

applicable to  it  as  of  the  Closing  Date. The Company and the Subsidiaries

maintain  a  system  of  internal  accounting controls  sufficient  to  provide

reasonable assurance that (i) transactions  are  executed  in  accordance  with

management's general or specific authorizations, (ii) transactions are recorded

as  necessary  to permit preparation of financial statements in conformity with

GAAP and to maintain  asset accountability, (iii) access to assets is permitted

only in accordance with  management's  general  or  specific authorization, and

(iv)  the  recorded  accountability for assets is compared  with  the  existing

assets at reasonable intervals  and appropriate action is taken with respect to

any differences. The Company has established disclosure controls and procedures

(as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the Company and

designed  such  disclosure controls and  procedures  to  ensure  that  material

information relating  to the Company, including its subsidiaries, is made known

to the certifying officers by others within those entities, particularly during

the period in which the  Company's  most recently filed period report under the

Exchange Act, as the case may be, is  being  prepared. The Company's certifying

officers  have  evaluated  the  effectiveness  of the  Company's  controls  and

procedures as of the last date of the period covered by the most recently filed

periodic report under the Exchange Act (such date,  the "Evaluation Date"). The

Company presented in its most recently filed period report  under  the Exchange

Act the conclusions of the certifying officers about the effectiveness  of  the

disclosure  controls  and  procedures  based  on  their  evaluations  as of the

Evaluation  Date.  Since  the  Evaluation  Date, there have been no significant

changes in the Company's internal controls (as  such  term  is  defined in Item

307(b)  of Regulation S-K under the Exchange Act) or, the Company's  knowledge,

in other  factors  that  could  significantly  affect  the  Company's  internal

controls.

(s)   Certain  Fees.  Except  as disclosed on Schedule 3.1(s), no brokerage  or

finder's fees or commissions are  or  will  be  payable  by  the Company to any

broker,  financial  advisor or consultant, finder, placement agent,  investment

banker, bank or other  Person  with respect to the transactions contemplated by

this Agreement. The Purchasers shall  have  no  obligation  with respect to any

fees  or with respect to any claims made by or on behalf of other  Persons  for

fees of  a type contemplated in this Section that may be due in connection with

the transactions contemplated by this Agreement.

<PAGE>

(t)   Private    Placement.   Assuming   the   accuracy   of   the   Purchasers

representations and  warranties set forth in Section 3.2, no registration under

the Securities Act is  required for the offer and sale of the Securities by the

Company to the Purchasers  as contemplated hereby. The issuance and sale of the

Securities hereunder does not  contravene  the  rules  and  regulations  of the

Trading Market.

(u)   Investment  Company.  The Company is not, and is not an Affiliate of, and

immediately after receipt of  payment  for  the  Shares,  will  not be or be an

Affiliate  of,  an  "investment  company"  within the meaning of the Investment

Company Act of 1940, as amended. The Company  shall  conduct  its business in a

manner so that it will not become subject to the Investment Company Act.

(v)     Registration Rights. Except as disclosed on Schedule 3.1(v),  no Person

has  any  right  to  cause  the  Company  to  effect the registration under the

Securities Act of any securities of the Company.

(w)     Listing and Maintenance Requirements. The  Company's  Common  Stock  is

registered  pursuant  to Section 12(g) of the Exchange Act, and the Company has

taken no action designed  to,  or  which to its knowledge is likely to have the

effect of, terminating the registration  of the Common Stock under the Exchange

Act  nor  has  the Company received any notification  that  the  Commission  is

contemplating terminating  such  registration.  The  Company has not, in the 12

months preceding the date hereof, received notice from  any  Trading  Market on

which  the Common Stock is or has been listed or quoted to the effect that  the

Company  is  not  in compliance with the listing or maintenance requirements of

such Trading Market.  The Company is, and has no reason to believe that it will

not in the foreseeable  future  continue  to  be,  in  compliance with all such

listing and maintenance requirements.

(x)   Application  of  Takeover  Protections.  The  Company and  its  Board  of

Directors  have  taken  all  necessary  action,  if  any, in  order  to  render

inapplicable any control share acquisition, business combination,  poison  pill

(including  any  distribution  under a rights agreement) or other similar anti-

takeover provision under the Company's Certificate of Incorporation (or similar

charter documents) or the laws of  its  state of incorporation that is or could

become applicable to the Purchasers as a  result  of  the  Purchasers  and  the

Company  fulfilling  their  obligations  or  exercising  their rights under the

Transaction Documents, including without limitation the Company's  issuance  of

the Securities and the Purchasers' ownership of the Securities.

(y)    Disclosure. The Company confirms that, neither the Company nor any other

Person  acting on its behalf has provided any of the Purchasers or their agents

or counsel  with any information that constitutes or might constitute material,

non-public  information.   The   Company  understands  and  confirms  that  the

Purchasers  will  rely  on  the  foregoing  representations  and  covenants  in

effecting transactions in securities of the Company. All disclosure provided to

the  Purchasers  regarding  the Company,  its  business  and  the  transactions

contemplated hereby, including the Schedules to this Agreement, furnished by or

on behalf of the Company with  respect  to  the  representations and warranties

made  herein  are  true  and correct with respect to such  representations  and

warranties and do not contain  any  untrue statement of a material fact or omit

to state any material fact necessary  in  order  to  make  the  statements made

therein,  in  light  of  the  circumstances  under  which  they were made,  not

misleading. The 

<PAGE>

Company  acknowledges  and  agrees  that  no  Purchaser makes or has  made  any

representations  or  warranties with respect to the  transactions  contemplated

hereby other than those specifically set forth in Section 3.2 hereof.

(z)   No  Integrated  Offering.   Assuming  the  accuracy  of  the  Purchasers'

representations and warranties set  forth  in Section 3.2, neither the Company,

nor any of its affiliates, nor any Person acting  on  its  or their behalf has,

directly or indirectly, made any offers or sales of any security  or  solicited

any  offers  to  buy  any  security,  under circumstances that would cause this

offering of the Securities to be integrated with prior offerings by the Company

for  purposes  of  the Securities Act or any  applicable  shareholder  approval

provisions, including,  without  limitation, under the rules and regulations of

any exchange or automated quotation  system  on  which any of the securities of

the Company are listed or designated, except for those  Persons  to whom offers

or sales of shares of Common Stock of the Company may be made by the Company to

accredited investors in a pending private placement, as disclosed  on  Schedule

3.1(z).

(aa)   Solvency.  Based  on  the  financial  condition of the Company as of the

Closing Date after giving effect to the receipt  by the Company of the proceeds

from  the  sale of the Securities hereunder, (i) the  Company's  fair  saleable

value of its  assets  exceeds the amount that will be required to be paid on or

in respect of the Company's  existing  debts  and  other liabilities (including

known contingent liabilities) as they mature; (ii) the  Company's assets do not

constitute unreasonably small capital to carry on its business  for the current

fiscal  year  as  now  conducted and as proposed to be conducted including  its

capital needs taking into  account  the  particular capital requirements of the

business  conducted  by  the Company, and projected  capital  requirements  and

capital availability thereof;  and  (iii) the current cash flow of the Company,

together with the proceeds the Company  would receive, were it to liquidate all

of its assets, after taking into account  all  anticipated  uses  of  the cash,

would  be sufficient to pay all amounts on or in respect of its debt when  such

amounts  are  required  to  be paid. The Company does not intend to incur debts

beyond its ability to pay such  debts  as  they mature (taking into account the

timing and amounts of cash to be payable on or in respect of its debt).

(bb)  Form S-3 Eligibility. The Company will be eligible to register the resale

of its Common Stock by the Purchasers under  Form  S-3  promulgated  under  the

Securities  Act  and  the  Company  hereby covenants and agrees to use its best

efforts to maintain its eligibility to  use  Form  S-3  until  the Registration

Statement  covering  the resale of the Shares shall have been filed  with,  and

declared effective by, the Commission.

(cc)  Taxes.  Except for  matters  that  would  not,  individually  or  in  the

aggregate, have  or  reasonably  be  expected  to  result in a Material Adverse

Effect, the Company and each Subsidiary to their best  knowledge  has filed all

necessary federal, state and foreign income and franchise tax returns  and  has

paid  or  accrued  all  taxes  shown  as  due  thereon,  and the Company has no

knowledge of a tax deficiency which has been asserted or threatened against the

Company or any Subsidiary.

(dd)  General Solicitation. Neither the Company nor any person acting on behalf

of  the Company has offered or sold any of the Shares by any  form  of  general

solicitation  or  general  advertising.  The Company has offered the Shares for

sale only to the Purchasers and certain other "accredited investors" within the

meaning of Rule 501 under the Securities Act.

<PAGE>

(ee)  Foreign Corrupt Practices. Neither the  Company,  nor to the knowledge of

the Company, any agent or other person acting on behalf of the Company, has (i)

directly  or  indirectly,  used  any corrupt funds for unlawful  contributions,

gifts, entertainment or other unlawful  expenses related to foreign or domestic

political  activity, (ii) made any unlawful  payment  to  foreign  or  domestic

government officials  or  employees  or  to  any  foreign or domestic political

parties or campaigns from corporate funds, (iii) failed  to  disclose fully any

contribution made by the Company (or made by any person acting on its behalf of

which the Company is aware) which is in violation of law, or (iv)  violated  in

any  material  respect  any  provision  of the Foreign Corrupt Practices Act of

1977, as amended.

(ff)  Accountants. The Company's accountants  are set forth on Schedule 3.1(ff)

of the Disclosure Schedule. To the Company's knowledge,  such  accountants, who

the  Company  expects will express their opinion with respect to the  financial

statements to be included in the Company's Annual Report on Form 10-KSB for the

year ended December  31,  2003,  are independent accountants as required by the

Securities Act.

(gg)  Acknowledgment Regarding Purchasers'  Purchase  of  Shares.  The  Company

acknowledges  and  agrees  that  each of the Purchasers is acting solely in the

capacity of an arm's length purchaser with respect to the Transaction Documents

and the transactions contemplated hereby. The Company further acknowledges that

no Purchaser is acting as a financial  advisor  or fiduciary of the Company (or

in any similar capacity) with respect to this Agreement  and  the  transactions

contemplated  hereby  and  any  advice  given by any Purchaser or any of  their

respective representatives or agents in connection  with this Agreement and the

transactions  contemplated  hereby  is  merely incidental  to  the  Purchasers'

purchase of the Shares. The Company further  represents  to each Purchaser that

the Company's decision to enter into this Agreement has been  based  solely  on

the  independent  evaluation  of  the  transactions  contemplated hereby by the

Company and its representatives.

3.2   Representations and Warranties of the Purchasers.  Each Purchaser hereby,

for itself and for no other Purchaser, represents and warrants  as  of the date

hereof and as of the Closing Date to the Company as follows:

(a)   Organization;  Authority.  Such  Purchaser  is  an entity duly organized,

validly existing and in good standing under the laws of the jurisdiction of its

organization with full right, corporate or partnership  power  and authority to

enter  into and to consummate the transactions contemplated by the  Transaction

Documents and otherwise to carry out its obligations thereunder. The execution,

delivery  and performance by such Purchaser of the transactions contemplated by

this Agreement  have been duly authorized by all necessary corporate or similar

action on the part  of such Purchaser. Each Transaction Document to which it is

party has been duly executed  by  such  Purchaser,  and  when delivered by such

Purchaser in accordance with the terms hereof, will constitute  the  valid  and

legally  binding  obligation  of  such  Purchaser,  enforceable  against  it in

accordance  with  its  terms,  except  (i)  as  limited  by  general  equitable

principles  and  applicable  bankruptcy, insolvency, reorganization, moratorium

and  other  laws of general application  affecting  enforcement  of  creditors'

rights generally,  (ii)  as  limited  by  laws  relating to the availability of

specific performance, injunctive relief or other  equitable  remedies and (iii)

insofar  as  indemnification  and  contribution  provisions may be  limited  by

applicable law.

<PAGE>

(b)    Investment Intent.  Such Purchaser understands  that  the Securities are

"restricted securities" and have not been registered under the  Securities  Act

or  any  applicable  state  securities  law  and is acquiring the Securities as

principal for its own account for investment purposes  only and not with a view

to or for distributing or reselling such Securities or any part thereof, has no

present intention of distributing any of such Securities and has no arrangement

or  understanding  with  any other persons regarding the distribution  of  such

Securities (this representation  and  warranty  not  limiting  such Purchaser's

right  to  sell  the  Securities  pursuant  to  the  Registration Statement  or

otherwise  in  compliance with applicable federal and state  securities  laws).

Such Purchaser is  acquiring the Securities hereunder in the ordinary course of

its business. Such Purchaser  does  not  have  any  agreement or understanding,

directly or indirectly, with any Person to distribute any of the Securities.

(b)  Purchaser  Status.     At  the  time  such  Purchaser   was   offered  the

Securities, it was, and at the date hereof it is, and on each date on  which it

exercises  any  Warrants,  it  will be either: (i) an "accredited investor"  as

defined  in  Rule  501(a)(l),  (a)(2),  (a)(3),  (a)(7)  or  (a)(8)  under  the

Securities Act or (ii) a "qualified  institutional  buyer"  as  defined in Rule

144A(a)  under  the  Securities  Act.    Such Purchaser is not required  to  be

registered as a broker-dealer under Section 15 of the Exchange Act.

(c)      Experience  of  Such  Purchaser.   Such  Purchaser,  either  alone  or

together  with its representatives,  has  such  knowledge,  sophistication  and

experience  in business and financial matters so as to be capable of evaluating

the merits and  risks  of the prospective investment in the Securities, and has

so evaluated the merits and risks of such investment. Such Purchaser is able to

bear the economic risk of  an  investment in the Securities and, at the present

time, is able to afford a complete loss of such investment.

(d)     General  Solicitation.      Such   Purchaser  is   not   purchasing the

Securities  as  a  result  of  any  advertisement,  article,  notice  or  other

communication regarding the Securities published in any newspaper, magazine  or

similar media or broadcast over television or radio or presented at any seminar

or any other general solicitation or general advertisement.

The  Company  acknowledges  and agrees that each Purchaser does not make or has

not made any representations  or  warranties  with  respect to the transactions

contemplated hereby other than those specifically set  forth  in  this  Section

3.2.

                  ARTICLE IV. OTHER AGREEMENTS OF THE PARTIES

4.1       Transfer Restrictions.

(a)   The  Securities  may  only  be  disposed  of in compliance with state and

federal securities laws.  In connection with any  transfer  of Securities other

than  pursuant  to  an  effective registration statement or Rule  144,  to  the

Company or to an Affiliate  of  a  Purchaser  or in connection with a pledge as

contemplated in Section 4.1(b), the Company may  require the transferor thereof

to provide to the Company an opinion of counsel selected  by the transferor and

reasonably acceptable to the Company, the form and substance  of  which opinion

and  shall be reasonably satisfactory to the Company, to the effect  that  such

transfer 

<PAGE>

does  not  require  registration  of  such  transferred  Securities  under  the

Securities Act.  As a condition of transfer, any such transferee shall agree in

writing to be bound by the terms of this Agreement and shall have the rights of

a Purchaser under this Agreement and the Registration Rights Agreement.

(b)   The  Purchasers  agree  to the imprinting, so long as is required by this

Section 4.1(b), of a legend on  any  of  the  Securities  substantially  in the

following form:

THESE  SECURITIES  HAVE  NOT  BEEN  REGISTERED WITH THE SECURITIES AND EXCHANGE

COMMISSION OR THE SECURITIES COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN

EXEMPTION  FROM  REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT

TO AN EFFECTIVE REGISTRATION  STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO

AN  AVAILABLE  EXEMPTION  FROM,  OR  IN  A  TRANSACTION  NOT  SUBJECT  TO,  THE

REGISTRATION  REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN  ACCORDANCE  WITH

APPLICABLE STATE SECURITIES LAWS AS EVIDENCED  BY A LEGAL OPINION OF COUNSEL TO

THE  TRANSFEROR  TO SUCH EFFECT, THE SUBSTANCE OF  WHICH  SHALL  BE  REASONABLY

ACCEPTABLE TO THE COMPANY.

(c)   Certificates  evidencing  the Shares and Warrant Shares shall not contain

any legend (including the legend  set  forth  in  Section  4.1(b)), (i) while a

registration  statement  (including  the Registration Statement)  covering  the

resale  of  such  security  is effective under  the  Securities  Act,  or  (ii)

following any sale of such Shares  or  Warrant  Shares pursuant to Rule 144, or

(iii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k),

or  (iv) if such legend is not required under applicable  requirements  of  the

Securities Act (including judicial interpretations and pronouncements issued by

the Staff  of  the Commission).  The Company shall cause its counsel to issue a

legal opinion to the Company's transfer agent promptly after the Effective Date

if required by the Company's transfer agent to effect the removal of the legend

hereunder. If all or any portion of a Warrant is exercised at a time when there

is an effective  registration  statement  to  cover  the  resale of the Warrant

Shares,  such Warrant Shares shall be issued free of all legends.  The  Company

agrees that  following  the Effective Date or at such time as such legend is no

longer required under this  Section 4.1(c), it will, no later than five Trading

Days following the delivery by  a  Purchaser  to  the  Company or the Company's

transfer agent of a certificate representing Shares or Warrant  Shares,  as the

case  may  be, issued with a restrictive legend (such date, the "Legend Removal

Date"), deliver  or  cause  to  be  delivered  to  such Purchaser a certificate

representing  such  Securities  that  is  free from all restrictive  and  other

legends unless the failure to deliver such  certificate in a timely manner is a

result of Force Majeure. The Company may not  make  any notation on its records

or  give  instructions to any transfer agent of the Company  that  enlarge  the

restrictions on transfer set forth in this Section.

(d)    In addition  to  such  Purchaser's other available remedies, the Company

shall pay to a Purchaser, in cash,  as  partial liquidated damages and not as a

penalty, for each $1,000 of Shares or Warrant  Shares  (based  on  the  Closing

Price  of  the  Common  Stock  on the date such Securities are submitted to the

Company's transfer agent) subject  to  Section  4.1(c),  $10  per  Trading  Day

(increasing  to  $20  per  Trading Day five (5) Trading Days after such damages

have begun to accrue) for each  Trading Day after the Legend Removal Date until

such certificate is delivered. Nothing  herein  shall  limit  such  Purchaser's

right to pursue actual 

<PAGE>

damages  for  the  Company's  failure to deliver certificates representing  any

Securities as required by the Transaction  Documents,  and such Purchaser shall

have  the  right to pursue all remedies available to it at  law  or  in  equity

including,  without   limitation,  a  decree  of  specific  performance  and/or

injunctive relief.

(e)   Each Purchaser, severally  and  not  jointly  with  the other Purchasers,

agrees   that   the   removal  of  the  restrictive  legend  from  certificates

representing Securities as set forth in this Section 4.1 is predicated upon the

Company's reliance that  the  Purchaser  will  sell  any Securities pursuant to

either  the  registration  requirements of the Securities  Act,  including  any

applicable prospectus delivery requirements, or an exemption therefrom.

(f)   Until the date that each  Purchaser  holds  less  than  20% of the Shares

initially  purchased  hereunder  by  such  Purchaser,  the  Company  shall  not

undertake  a  reverse or forward stock split or reclassification of the  Common

Stock without the prior written consent of the Purchasers holding a majority in

interest of the Shares.

4.2   Furnishing  of Information. As long as any Purchaser owns Securities, the

Company covenants to  timely  file (or obtain extensions in respect thereof and

file within the applicable grace  period)  all  reports required to be filed by

the Company after the date hereof pursuant to the  Exchange Act. As long as any

Purchaser  owns  Securities,  if the Company is not required  to  file  reports

pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and

make publicly available in accordance  with  Rule 144(c) such information as is

required for the Purchasers to sell the Securities  under Rule 144. The Company

further  covenants  that  it will take such further action  as  any  holder  of

Securities may reasonably request, all to the extent required from time to time

to enable such Person to sell  such  Securities  without registration under the

Securities Act within the limitation of the exemptions provided by Rule 144.

4.3         Integration.   Except as disclosed in  Schedule 3.1(z), the Company

shall not sell, offer for sale or solicit offers to  buy or otherwise negotiate

in respect of any security (as defined in Section 2 of the Securities Act) that

would be integrated with the offer or sale of the Securities  in  a manner that

would  require  the  registration under the Securities Act of the sale  of  the

Securities to the Purchasers or that would be integrated with the offer or sale

of the Securities for  purposes  of  the  rules  and regulations of any Trading

Market such that it would require shareholder approval  prior to the closing of

such  other  transaction  unless  shareholder approval is obtained  before  the

closing of such subsequent transaction.

4.4         Securities Laws Disclosure;  Publicity.  The Company shall, by 8:30

a.m. Eastern time on the Trading Day following  the Closing Date, issue a press

release  or  file  a  Current  Report  on  Form 8-K, in  each  case  reasonably

acceptable to each Purchaser disclosing the  material terms of the transactions

contemplated hereby. The Company and each Purchaser  shall  consult  with  each

other   in  issuing  any  press  releases  with  respect  to  the  transactions

contemplated  hereby, and neither the Company nor any Purchaser shall issue any

such press release  or  otherwise  make  any  such public statement without the

prior  consent  of  the  Company,  with respect to any  press  release  of  any

Purchaser, or without the prior consent  of each Purchaser, with respect to any

press release of the Company, which consent shall not unreasonably be withheld,

except if such disclosure is required by law,  in  which  case  the  disclosing

party  shall promptly provide the other party with prior notice of such  public

statement  or  communication.  Notwithstanding the foregoing, the Company shall

<PAGE>

not publicly disclose  the  name  of  any Purchaser, or include the name of any

Purchaser in any filing with the Commission or any regulatory agency or Trading

Market, without the prior written consent  of  such  Purchaser,  except  (i) as

required  by  federal  securities  law  in  connection  with  the  registration

statement  contemplated  by  the  Registration Rights Agreement and (ii) to the

extent such disclosure is required  by  law  or  Trading Market regulations, in

which case the Company shall provide the Purchasers  with  prior notice of such

disclosure permitted under subclause (i) or (ii).

4.5    Shareholders  Rights  Plan.   No claim will be made or enforced  by  the

Company  or,  to the knowledge of  the  Company,  any  other  Person  that  any

Purchaser is an  "Acquiring  Person"  under  any  shareholders  rights  plan or

similar  plan or arrangement in effect or hereafter adopted by the Company,  or

that any Purchaser  could  be deemed to trigger the provisions of any such plan

or  arrangement,  by  virtue of  receiving  Securities  under  the  Transaction

Documents or under any  other agreement between the Company and the Purchasers.

The Company shall conduct  its  business in a manner so that it will not become

subject to the Investment Company Act. 

4.6         Non-Public Information.  The  Company  covenants  and  agrees  that

neither it nor any other Person acting on its behalf will provide any Purchaser

or  its  agents  or  counsel  with  any  information  that the Company believes

constitutes  material  non-public  information,  unless  prior   thereto   such

Purchaser shall have executed a written agreement regarding the confidentiality

and  use  of  such  information. The Company understands and confirms that each

Purchaser  shall be relying  on  the  foregoing  representations  in  effecting

transactions in securities of the Company.

4.7         Use  of  Proceeds.  Except  as  set  forth on Schedule 4.7 attached

hereto, the Company shall use the net proceeds from  the sale of the Securities

hereunder  for  working capital purposes and not for the  satisfaction  of  any

portion of the Company's  debt  (other  than  payment  of trade payables in the

ordinary course of the Company's business and prior practices),  to  redeem any

Company  equity  or  equity-equivalent  securities or to settle any outstanding

litigation.

4.8         Reimbursement.   If any Purchaser  becomes involved in any capacity

in any Proceeding by or against any Person who is  a stockholder of the Company

(except as a result of sales, pledges, margin sales and similar transactions by

such Purchaser to or with any current stockholder),  solely as a result of such

Purchaser's  acquisition  of the Securities under this Agreement,  the  Company

will reimburse such Purchaser  for  its  reasonable  legal  and  other expenses

(including  the cost of any investigation preparation and travel in  connection

therewith) incurred in connection therewith, as such expenses are incurred. The

reimbursement  obligations  of  the  Company  under  this paragraph shall be in

addition to any liability which the Company may otherwise  have,  shall  extend

upon the same terms and conditions to any Affiliates of the Purchasers who  are

actually  named  in  such  action,  proceeding  or investigation, and partners,

directors, agents, employees and controlling persons  (if any), as the case may

be, of the Purchasers and any such Affiliate, and shall  be  binding  upon  and

inure   to   the  benefit  of  any  successors,  assigns,  heirs  and  personal

representatives  of  the Company, the Purchasers and any such Affiliate and any

such Person.    The Company  also  agrees  that  neither the Purchasers nor any

such Affiliates, partners, directors, agents, employees  or controlling persons

shall  have  any  liability  to the Company or any Person asserting  claims  on

behalf of or in right of the Company  solely  as  a  result  of  acquiring  the

Securities under this Agreement.

<PAGE>

4.9         Indemnification of Purchasers.    Subject to the provisions of this

Section  4.9,  the  Company  will  indemnify  and hold the Purchasers and their

directors,  officers, shareholders, partners, employees  and  agents  (each,  a

"Purchaser Party")  harmless from any and all losses, liabilities, obligations,

claims, contingencies,  damages, costs and expenses,  including  all judgments,

amounts  paid  in  settlements,   court  costs   and reasonable attorneys' fees

and costs of investigation that any such Purchaser Party may suffer or incur as

a  result  of  or  relating  to (a) any breach of any of  the  representations,

warranties, covenants or agreements made by the Company in this Agreement or in

the  other  Transaction Documents  or  (b)  any  action  instituted  against  a

Purchaser, or any of them or their respective Affiliates, by any stockholder of

the Company who  is  not an Affiliate of such Purchaser, with respect to any of

the transactions contemplated  by the Transaction Documents (unless such action

is  based  upon  a  breach of such Purchaser's  representation,  warranties  or

covenants under the Transaction  Documents  or any agreements or understandings

such Purchaser may have with any such stockholder  or  any  violations  by  the

Purchaser  of state or federal securities laws or any conduct by such Purchaser

which constitutes  fraud, gross negligence, willful misconduct or malfeasance).

If any action shall  be brought against any Purchaser Party in respect of which

indemnity may be sought  pursuant to this Agreement, such Purchaser Party shall

promptly notify the Company in writing, and the Company shall have the right to

assume the defense thereof  with  counsel  of  its  own choosing. Any Purchaser

Party shall have the right to employ separate counsel  in  any  such action and

participate in the defense thereof, but the fees and expenses of  such  counsel

shall  be at the expense of such Purchaser Party except to the extent that  (i)

the employment  thereof  has  been  specifically  authorized  by the Company in

writing,  (ii)  the  Company has failed after a reasonable period  of  time  to

assume such defense and  to employ counsel or (iii) in such action there is, in

the reasonable opinion of  such  separate  counsel,  a material conflict on any

material issue between the position of the Company and  the  position  of  such

Purchaser  Party.  The  Company will not be liable to any Purchaser Party under

this Agreement (i) for any  settlement  by  an Purchaser Party effected without

the Company's prior written consent, which shall  not  be unreasonably withheld

or delayed; or (ii) to the extent, but only to the extent  that  a loss, claim,

damage or liability is attributable to any Purchaser Party's breach  of  any of

the representations, warranties, covenants or agreements made by the Purchasers

in this Agreement or in the other Transaction Documents.

4.10        Reservation of Common Stock. As of the date hereof, the Company has

reserved  and  the  Company shall continue to reserve and keep available at all

times, free of preemptive rights, a sufficient number of shares of Common Stock

for the purpose of menabling  the  Company  to  issue  Shares  pursuant to this

Agreement and Warrant Shares pursuant to any exercise of the Warrants.

4.11        Listing  of  Common  Stock. The Company hereby agrees to  use  best

efforts to maintain the listing of the Common Stock on a Trading Market, and as

soon as reasonably practicable following  the  Closing  (but not later than the

earlier of the Effective Date and the first anniversary of the Closing Date) to

list all of the Shares and Warrant Shares on such Trading  Market.  The Company

further agrees, if the Company applies to have the Common Stock traded  on  any

other Trading Market, it will include in such application all of the Shares and

Warrant Shares, and will take such other action as is necessary to cause all of

the  Shares  and  Warrant  Shares  to be listed on such other Trading Market as

promptly as possible.   The Company  will  take all action reasonably necessary

to continue the listing and trading of its Common Stock on a Trading Market and

will  comply in all respects with the Company's  reporting,  filing  and  other

obligations under the bylaws or rules of the Trading Market.

<PAGE>

4.12        Equal Treatment of Purchasers. No consideration shall be offered or

paid to  any  person  to  amend  or  consent to a waiver or modification of any

provision of any of the Transaction Documents  unless the same consideration is

also  offered  to  all  of  the parties to the Transaction  Documents.      For

clarification purposes,  this provision constitutes a separate right granted to

each Purchaser by the Company  and negotiated separately by each Purchaser, and

is intended to treat for the Company the Purchasers as a class and shall not in

any way be construed as the Purchasers  acting  in  concert  or as a group with

respect to the purchase, disposition or voting of Securities or otherwise.

4.13        Participation in Future Financing.  From the date  hereof  until 12

months  after  the  Effective  Date,  upon  any financing by the Company of its

Common  Stock  or  Common  Stock Equivalents (a "Subsequent  Financing"),  each

Purchaser shall have the right  to participate in up to 100% of such Subsequent

Financing. At least 5 Trading Days  prior  to  the  closing  of  the Subsequent

Financing, the Company shall deliver to each Purchaser a written notice  of its

intention  to  effect  a  Subsequent Financing ("Pre-Notice"), which Pre-Notice

shall ask such Purchaser if  it  wants  to review the details of such financing

(such additional notice, a "Subsequent Financing  Notice").    Upon the request

of  a  Purchaser,  and only upon a request by such Purchaser, for a  Subsequent

Financing Notice, the  Company  shall promptly, but no later than 1 Trading Day

after such request, deliver a Subsequent  Financing  Notice  to such Purchaser.

The  Subsequent  Financing  Notice  shall   describe in reasonable  detail  the

proposed terms of such Subsequent Financing, the amount of proceeds intended to

be  raised  thereunder,  the  Person  with whom such  Subsequent  Financing  is

proposed to be effected, and attached to which shall be a term sheet or similar

document relating thereto.    If  by  6:30  p.m.  (New  York  City time) on the

second  Trading  Day after all of the Purchasers have received the  Pre-Notice,

notifications of the  Purchasers  of  their  willingness  to participate in the

Subsequent  Financing  (or  to  cause their designees to provide)  is,  in  the

aggregate, less than the total amount  of  the  Subsequent  Financing, then the

Company  may effect the remaining portion of such Subsequent Financing  on  the

terms and  to  the Persons set forth in the Subsequent Financing Notice. If the

Company receives  no  notice  from a Purchaser as of such 2nd Trading Day, such

Purchaser shall be deemed to have  notified  the Company that it does not elect

to  participate.  The  Company  must  provide  the  Purchasers  with  a  second

Subsequent Financing Notice, and the Purchasers will  again  have  the right of

participation set forth above in this Section 4.13, if the Subsequent Financing

subject to the initial Subsequent Financing Notice is not consummated  for  any

reason  on  the  terms  set forth in such Subsequent Financing Notice within 60

Trading Days after the date  of the initial Subsequent Financing Notice. In the

event  the Company receives responses  to  Subsequent  Financing  Notices  from

Purchasers seeking to purchase more than the aggregate amount of the Subsequent

Financing,  each such Purchaser shall have the right to purchase their Pro Rata

Portion (as defined below) of the Participation Maximum.  "Pro Rata Portion" is

the ratio of  (x)  the Subscription Amount of a participating Purchaser and (y)

the sum of the aggregate  Subscription  Amount of all participating Purchasers.

Notwithstanding the foregoing, this Section  4.13 shall not apply in respect of

the issuance of (a) shares of Common Stock or options to employees, officers or

directors of the Company pursuant to any stock or option plan duly adopted by a

majority of the non-employee members of the Board  of  Directors of the Company

or  a  majority  of  the  members  of  a  committee  of non-employee  directors

established  for  such  purpose  or  (b)  securities upon the  exercise  of  or

conversion  of  any  convertible securities, options  or  warrants  issued  and

outstanding on the date  of  this Agreement, provided that such securities have

not been amended since the date of this Agreement.

<PAGE>

4.14        Intentionally Omitted.

4.15  Deliver of Securities After  Closing. The Company shall deliver, or cause

to be delivered, the respective Shares and Warrants purchased by each Purchaser

to such Purchaser within 5 Trading Days of the Closing Date.

                           ARTICLE V. MISCELLANEOUS

5.1         Fees and Expenses. Except as otherwise set forth in this Agreement,

each  party  shall  pay  the  fees  and  expenses  of  its  advisers,  counsel,

accountants and other experts, if any, and  all other expenses incurred by such

party  incident  to  the  negotiation,  preparation,  execution,  delivery  and

performance of this Agreement. The Company  shall pay all stamp and other taxes

and duties levied in connection with the sale of the Securities.

5.2         Entire  Agreement. The Transaction  Documents,  together  with  the

exhibits and schedules thereto, contain the entire understanding of the parties

with respect to the subject  matter  hereof  and supersede all prior agreements

and understandings, oral or written, with respect  to  such  matters, which the

parties  acknowledge  have  been  merged  into  such  documents,  exhibits  and

schedules.

5.3         Notices.  Any and all notices or other communications or deliveries

required or permitted to be provided hereunder shall be in writing and shall be

deemed given and effective on the earliest of (a) the date of transmission,  if

such notice or communication is delivered via facsimile at the facsimile number

set  forth  on the signature pages attached hereto prior to 6:30 p.m. (New York

City time) on  a  Trading  Day,   (b)  the  next  Trading Day after the date of

transmission, if such notice or communication is delivered via facsimile at the

facsimile number set forth on the signature pages attached hereto on a day that

is  not  a  Trading Day or later than 6:30 p.m. (New York  City  time)  on  any

Trading Day,  (c) the second Trading Day following the date of mailing, if sent

by U.S. nationally  recognized  overnight  courier  service, or (d) upon actual

receipt by the party to whom such notice is required  to  be given. The address

for  such notices  and communications shall be as set forth  on  the  signature

pages attached hereto.

5.4         Amendments; Waivers.   No provision of this Agreement may be waived

or amended  except in a written instrument signed, in the case of an amendment,

by the Company  and  each  Purchaser  or, in the case of a waiver, by the party

against whom enforcement of any such waiver is sought. No waiver of any default

with respect to any provision, condition or requirement of this Agreement shall

be deemed to be a continuing waiver in the future or a waiver of any subsequent

default or a waiver of any other provision,  condition  or  requirement hereof,

nor shall any delay or omission of either party to exercise any right hereunder

in any manner impair the exercise of any such right.

5.5         Construction.    The headings herein are for convenience  only,  do

not  constitute  a  part  of this Agreement and shall not be deemed to limit or

affect any of the provisions hereof.   The language used in this Agreement will

be deemed to be the language  chosen  by  the  parties  to express their mutual

intent, and no rules of strict construction will be applied against any party.

5.6         Successors and Assigns. This Agreement shall  be  binding  upon and

inure to the benefit of the parties and their successors and permitted assigns.

The  Company  may  not  assign  this  Agreement  or  any  rights or obligations

hereunder without the prior written consent of each Purchaser.    Any Purchaser

may assign any or all of its rights under this Agreement to any Person  to whom

<PAGE>

such  Purchaser  assigns  or transfers any Securities, provided such transferee

agrees in writing to be bound,  with  respect to the transferred Securities, by

the provisions hereof that apply to the "Purchasers".

5.7         No Third-Party Beneficiaries.  This  Agreement  is intended for the

benefit  of  the parties hereto and their respective successors  and  permitted

assigns and is not for the benefit of, nor may any provision hereof be enforced

by, any other Person, except as otherwise set forth in Section 4.8.

5.8         Governing   Law.     All  questions  concerning  the  construction,

validity, enforcement and  interpretation of the Transaction Documents shall be

governed by and  construed and enforced in accordance with the internal laws of

the State of New York, without  regard  to  the  principles of conflicts of law

thereof.    Each party hereby irrevocably submits to the exclusive jurisdiction

of the state and federal courts sitting in the City  of  New  York,  borough of

Manhattan  for  the  adjudication  of  any  dispute  hereunder or in connection

herewith  or  with  any  transaction  contemplated hereby or  discussed  herein

(including  with  respect  to  the  enforcement   of  any  of  the  Transaction

Documents), and hereby irrevocably waives, and agrees  not  to  assert  in  any

suit,  action or proceeding, any claim that it is not personally subject to the

jurisdiction  of  any  such  court,  that  such  suit,  action or proceeding is

improper  or  inconvenient  venue  for  such proceeding.    Each  party  hereby

irrevocably waives personal service of process  and  consents  to process being

served  in  any such suit, action or proceeding by mailing a copy  thereof  via

registered or  certified mail or overnight delivery (with evidence of delivery)

to such party at  the  address in effect for notices to it under this Agreement

and agrees that such service  shall  constitute  good and sufficient service of

process and notice thereof.  Nothing contained herein  shall be deemed to limit

in  any  way  any right to serve process in any manner permitted  by  law.  The

parties hereby  waive  all  rights  to  a  trial by jury. If either party shall

commence an action or proceeding to enforce  any  provisions of the Transaction

Documents,  then the prevailing party in such action  or  proceeding  shall  be

reimbursed by  the  other  party  for  its  attorneys' fees and other costs and

expenses incurred with the investigation, preparation  and  prosecution of such

action or proceeding.

5.9         Survival.     The  representations  and  warranties  herein   shall

survive the Closing and delivery of the Shares and Warrant Shares.

5.10        Execution.   This   Agreement  may  be  executed  in  two  or  more

counterparts, all of which when taken  together shall be considered one and the

same agreement and shall become effective when counterparts have been signed by

each party and delivered to the other party,  it  being  understood  that  both

parties need not sign the same counterpart.  In the event that any signature is

delivered  by  facsimile  transmission, such signature shall create a valid and

binding obligation of the party executing (or on whose behalf such signature is

executed) with the same force  and  effect  as if such facsimile signature page

were an original thereof.

5.11        Severability.   If any provision  of  this  Agreement is held to be

invalid or unenforceable in any respect, the validity and enforceability of the

remaining  terms  and  provisions of this Agreement shall not  in  any  way  be

affected or impaired thereby and the parties will attempt to agree upon a valid

and enforceable provision that is a reasonable substitute therefor, and upon so

agreeing, shall incorporate such substitute provision in this Agreement.

<PAGE>

5.12        Rescission  and  Withdrawal  Right.     Notwithstanding anything to

the contrary contained in (and without limiting  any similar provisions of) the

Transaction  Documents,  whenever any Purchaser exercises  a  right,  election,

demand or option under a Transaction  Document  and the Company does not timely

perform its related obligations within the periods  therein provided, then such

Purchaser may rescind or withdraw, in its sole discretion  from  time  to  time

upon written notice to the Company, any relevant notice, demand or election  in

whole or in part without prejudice to its future actions and rights.

5.13        Replacement   of  Securities.  If  any  certificate  or  instrument

evidencing any Securities is  mutilated, lost, stolen or destroyed, the Company

shall issue or cause to be issued  in  exchange  and  substitution for and upon

cancellation  thereof,  or  in  lieu  of  and  substitution  therefor,   a  new

certificate  or  instrument,  but  only  upon  receipt  of  evidence reasonably

satisfactory  to the Company of such loss, theft or destruction  and  customary

and reasonable indemnity, if requested. The applicants for a new certificate or

instrument under  such  circumstances shall also pay any reasonable third-party

costs associated with the issuance of such replacement Securities.

5.14        Remedies.   In  addition  to  being entitled to exercise all rights

provided herein or granted by law, including  recovery  of damages, each of the

Purchasers and the Company will be entitled to specific performance  under  the

Transaction  Documents.  The  parties  agree  that  monetary damages may not be

adequate  compensation  for  any  loss  incurred by reason  of  any  breach  of

obligations described in the foregoing sentence  and  hereby agrees to waive in

any action for specific performance of any such obligation  the  defense that a

remedy at law would be adequate.

5.15        Payment Set Aside. To the extent that the Company makes  a  payment

or  payments  to  any  Purchaser  pursuant  to  any  Transaction  Document or a

Purchaser  enforces  or  exercises  its rights thereunder, and such payment  or

payments or the proceeds of such enforcement  or  exercise  or any part thereof

are  subsequently  invalidated, declared to be fraudulent or preferential,  set

aside, recovered from,  disgorged  by or are required to be refunded, repaid or

otherwise restored to the Company, a  trustee,  receiver  or  any  other person

under  any  law  (including,  without limitation, any bankruptcy law, state  or

federal law, common law or equitable  cause  of  action), then to the extent of

any such restoration the obligation or part thereof  originally  intended to be

satisfied shall be revived and continued in full force and effect  as  if  such

payment had not been made or such enforcement or setoff had not occurred.

5.16        Independent  Nature  of  Purchasers'  Obligations  and Rights.  The

obligations  of each Purchaser under any Transaction Document are  several  and

not joint with  the  obligations of any other Purchaser, and no Purchaser shall

be responsible in any  way  for the performance of the obligations of any other

Purchaser under any Transaction  Document.   Nothing contained herein or in any

Transaction Document, and no action  taken  by  any Purchaser pursuant thereto,

shall be deemed to constitute the Purchasers as a  partnership, an association,

a joint venture or any other kind of entity, or create  a  presumption that the

Purchasers are in any way acting in concert or as a group with  respect to such

obligations or the transactions contemplated by the Transaction Document.  Each

Purchaser  shall be entitled to independently protect and enforce  its  rights,

including without  limitation,  the rights arising out of this Agreement or out

of the other Transaction Documents, and it shall not be necessary for any other

Purchaser  to be joined as an additional  party  in  any  proceeding  for  such

purpose.   Each  Purchaser  has  been  represented  by  its  own separate legal

counsel  in  their  review  and  negotiation of the Transaction Documents.  For

reasons of administrative convenience  only,  Purchasers  and  their respective

<PAGE>

counsel have chosen to communicate with the Company through FW.   FW  does  not

represent  all  of  the Purchasers but only The Shemano Group, who has acted as

placement agent to the  transaction.   The  Company  has elected to provide all

Purchasers with the same terms and Transaction Documents for the convenience of

the  Company  and not because it was required or requested  to  do  so  by  the

Purchasers.

5.17        Liquidated Damages.    The Company's obligations to pay any partial

liquidated damages  or other amounts owing under the Transaction Documents is a

continuing obligation  of  the Company and shall not terminate until all unpaid

partial liquidated damages and other amounts have been paid notwithstanding the

fact that the instrument or  security pursuant to which such partial liquidated

damages or other amounts are due and payable shall have been canceled.

IN WITNESS WHEREOF, the parties  hereto  have  caused  this Securities Purchase

Agreement to be duly executed by their respective authorized  signatories as of

the date first indicated above.

MINES MANAGEMENT, INC.

Address for Notice:

By:                                        

Name: Title:

With a copy to (which shall not constitute notice):

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR PURCHASERS

FOLLOW]

<PAGE>

 [PURCHASER SIGNATURE PAGES TO MNMM SECURITIES PURCHASE AGREEMENT]

IN  WITNESS  WHEREOF,  the  undersigned  have  caused this Securities  Purchase

Agreement to be duly executed by their respective  authorized signatories as of

the date first indicated above.

Name of Investing Entity:___________________

Signature of Authorized Signatory of Investing entity:

Name of Authorized Signatory:_______________

Title of Authorized Signatory:______________

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount:

Shares:

Warrant Shares:

BIN Number: [WE SUGGEST YOU PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

<PAGE>

                             DISCLOSURE SCHEDULES

                         SECURITIES PURCHASE AGREEMENT

                 AMONG MINES MANAGEMENT, INC. (THE "COMPANY")

                     AND PURCHASER DATED FEBRUARY 3, 2004

Schedule 3.1 (a) Subsidiaries

Newhi, Inc., a Washington corporation, is a wholly owned subsidiary of the

Company. Schedule 3.1 (g) Capitalization

As of December 31, 2003, options to purchase 200,000  shares  of  Common  Stock

were  outstanding  under  the 1998 fixed employee stock-based compensation plan

and incentive based plan.

Stock option plans were adopted  by  the  shareholders  in  2003; options under

those  plans  to  purchase 860,000 shares currently have been granted  and  are

unexercised.

As a result of a private  placement  completed  in  2003,  purchasers  in  that

offering  hold  unexercised common stock purchase warrants for 1,029,506 shares

of the Company's Common Stock.

Schedule 3.1 (j) Litigation

The Company was informed in June, 2003 that William R. Green, a director of the

Company at that time,  had  engaged  in  a  purchase  and sale of the Company's

shares  of  common  stock  in  a  manner  that violated Section  16(b)  of  the

Securities  Exchange  Act  of 1934. Mr. Green  disgorged  the  profit  on  that

transaction to the Company.

Schedule 3. l(m) Regulatory Permits

The  Company  will be initiating  a  re-permitting  process  on  its  Montanore

property in Montana  during  the  first  half  of  2004  with various state and

federal agencies, including the Untied States Forest Service.

Schedule 3. l(n) Title to Assets

Although  the  Montanore  property  held by Newhi, Inc. includes  two  patented

mining claims, a significant portion  of  the  Company's  holdings  consist  of

unpatented  lode  and  mill  site  claims.  Unpatented mining claims are unique

property interests and are generally considered  subject  to greater title risk

than patented mining claims, or real property interests that  are  owned in fee

simple.

DISCLOSURE SCHEDULES -1

<PAGE>

Schedule 3.1(s) Certain Fees

The Company and the Shemano Group, Inc. have entered into an agreement  by  the

terms of which the Company will pay a fee to the Shemano Group of seven percent

(7%)  of  the  Subscription  Amount  and  Warrants to purchase 30,000 shares of

Common Stock for each $1,000,000 of the Subscription  Amount.  Amounts  paid to

the  Company by Purchasers following exercise of Common Stock Purchase Warrants

will be subject to payment of the same cash fee and grant of warrants.

Schedule 3. l(v)

Purchasers  of  shares  of  Common  Stock in the private placement disclosed in

Schedule 3.1(z) will have registration rights similar to those set forth in the

Registration Rights Agreement.

Schedule 3.1(z) No Integrated Offering

The Company intends to offer to sell not to exceed 500,000 shares of its Common

Stock to not more than ten current shareholders  who  are accredited investors;

the  offering  will be made pursuant to Regulation D, rule  506.  The  offering

price of the shares  and  the  price  and  terms  of  the common stock purchase

warrants will be the same as the Per Share Purchase Price and the Warrants. The

Company believes that this offering would be integrated  with  the  transaction

described in the Agreement.

Schedule 3.1 (ff) Accountants

LeMaster & Daniels PLLC

601 W. Riverside Ave., Suite 700

Spokane, Washington   99201

Schedule 4.7 Use of Proceeds Not applicable.

DISCLOSURE SCHEDULES -2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]