Document:

exv4w3

 

Exhibit 4.3

SOUTHERN FINANCIAL BANCORP, INC.

2003 STOCK INCENTIVE PLAN

1. PURPOSE

     The purpose of the SOUTHERN FINANCIAL BANCORP, INC. 2003 STOCK INCENTIVE
PLAN (the “Plan”) is to provide a means through which Southern Financial
Bancorp, Inc., a Virginia corporation (the “Company”), and its subsidiaries,
may attract able persons to the Company and to provide a means whereby those
employees Directors and consultants, upon whom the responsibilities of the
successful administration and management of the Company rest, and whose present
and potential contributions to the welfare of the Company are of importance,
can acquire and maintain stock ownership, thereby strengthening their concern
for the welfare of the Company and their desire to remain in its employ or
service. A further purpose of the Plan is to provide such employees, Directors
and consultants with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, the Plan provides
for granting Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Performance Awards, Phantom Stock
Awards, or any combination of the foregoing, as is best suited to the
circumstances of the particular Holder as provided herein.

2. DEFINITIONS

     The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

     (a)   “Affiliates” means any “parent corporation” of the Company and any
“subsidiary” of the Company within the meaning of Code Sections 424(e) and (f),
respectively.

     (b)   “Automatic Award Date” means the first business day after the first
meeting of the Company’s Board following each annual meeting of the
stockholders of the Company during the term of the Plan.

     (c)   “Automatic Option” means a Nonqualified Stock Option automatically
granted from time to time to a Non-Employee Director pursuant to Section 7(d)
hereof.

     (d)   “Award” means, individually or collectively, any Option, Restricted
Stock Award, Phantom Stock Award, Performance Award or Stock Appreciation
Right.

     (e)   “Board” means the Board of Directors of the Company.

     (f)   “Change of Control” means the occurrence of any of the following
events: (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly-owned subsidiary of the Company), (ii)
the Company’s subsidiary bank is merged or consolidated into, or otherwise

 

 

acquired by, an entity other than a wholly-owned subsidiary of the
Company; (iii) the Company sells, leases or exchanges all or substantially all
of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company), (iv) the Company is to be dissolved and liquidated,
(v) any person or entity, including a “group” as contemplated by Section
13(d)(3) of the 1934 Act, acquires or gains ownership or control (including,
without limitation, power to vote or control the voting) of more than 50% of
the outstanding shares of the Company’s voting stock (based upon voting power)
or (vi) as a result of or in connection with a contested election of directors,
the persons who were directors of the Company before such election shall cease
to constitute a majority of the Board.

     (g)   “Change of Control Value” shall mean (i) the per share price offered
to shareholders of the Company in any such merger, consolidation,
reorganization, sale of assets or dissolution transaction, (ii) the price per
share offered to shareholders of the Company in any tender offer or exchange
offer whereby a Change of Control takes place, or (iii) if such Change of
Control occurs other than pursuant to a tender or exchange offer, the Fair
Market Value per share of the shares into which Awards are exercisable, as
determined by the Committee, whichever is applicable. In the event that the
consideration offered to shareholders of the Company consists of anything other
than cash, the Committee shall determine the fair cash equivalent of the
portion of the consideration offered which is other than cash.

     (h)   “Code” means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to any section and any regulations under
such section.

     (i)   “Committee” means the Compensation Committee of the Board which shall
be (i) constituted so as to permit the Plan to comply with Rule 16b-3
promulgated by the Securities and Exchange Commission (“Rule 16b-3”) under the
1934 Act and (ii) constituted solely of “outside directors” within the meaning
of Code Section 162(m) and applicable interpretive authority thereunder.

     (j)   “Company” means Southern Financial Bancorp, Inc. and any of its
Affiliates.

     (k)   A “consultant” means an individual (other than a Director) who
performs services for the Company or its Affiliates as an independent
contractor.

     (l)   “Director” means an individual elected to the Board by the
shareholders of the Company or by the Board under applicable corporate law who
is serving on the Board on the date the Plan is adopted by the Board or is
elected to the Board after such date.

     (m)   An “employee” means any person (excluding a Non-Employee Director),
including an officer, in an employment relationship with the Company or any
parent or subsidiary corporation (as defined in section 424 of the Code).

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

     (o)   “Fair Market Value” means, as of any specified date, the mean of the
high and low sales prices of the Stock (i) reported by the any interdealer
quotation system on which the Stock is quoted on that date or (ii) if the Stock
is listed on a national stock exchange, reported on

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the stock exchange composite tape on that date; or, in either case, if no
prices are reported on that date, on the last preceding date on which such
prices of the Stock are so reported. If the Stock is traded over the counter
at the time a determination of its fair market value is required to be made
hereunder, its fair market value shall be deemed to be equal to the average
between the reported high and low or closing bid and asked prices of Stock on
the most recent date on which Stock was publicly traded. In the event Stock is
not publicly traded at the time a determination of its value is required to be
made hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.

     (p)   “Holder” means an employee, Director or consultant who has been
granted an Award.

     (q)   “Incentive Stock Option” means an option that is designated as an
incentive stock option within the meaning of section 422(b) of the Code.

     (r)   “Non-Employee Director” means an individual who is a Director of the
Company and who is not an employee of the Company or any Affiliate.

     (s)   “Nonqualified Stock Option” means an option granted under Paragraph 7
of the Plan, including an Automatic Option, to purchase Stock which does not
constitute an Incentive Stock Option.

     (t)   “Option” means an Award granted under Paragraph 7 of the Plan and
includes Incentive Stock Options to purchase Stock and Nonqualified Stock
Options to purchase Stock.

     (u)   “Option Agreement” means a written agreement between the Company and a
Holder with respect to an Option.

     (v)   “Performance Award” means an Award granted under Paragraph 10 of the
Plan.

     (w)   “Performance Award Agreement” means a written agreement between the
Company and a Holder with respect to a Performance Award.

     (x)   “Phantom Stock Award” means an Award granted under Paragraph 11 of the
Plan.

     (y)   “Phantom Stock Award Agreement” means a written agreement between the
Company and a Holder with respect to a Phantom Stock Award.

     (z)   “Plan” means the Southern Financial Bancorp, Inc. 2003 Stock Incentive
Plan, as amended from time to time.

     (aa)   “Restricted Stock Agreement” means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.

     (bb)   “Restricted Stock Award” means an Award granted under Paragraph 9 of
the Plan.

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     (cc)   “Spread” means, in the case of a Stock Appreciation Right, an amount
equal to the excess, if any, of the Fair Market Value of a share of Stock on
the date such right is exercised over the exercise price of such Stock
Appreciation Right.

     (dd)   “Stock” means the common stock, $0.01 par value per share, of the
Company.

     (ee)   “Stock Appreciation Right” means an Award granted under Paragraph 8
of the Plan.

     (ff)   “Stock Appreciation Rights Agreement” means a written agreement
between the Company and a Holder with respect to an Award of Stock Appreciation
Rights.

3. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan shall be effective upon the date of its adoption by the Board,
provided that the Plan is approved by the shareholders of the Company within
twelve months thereafter. No further Awards may be granted under the Plan
after the expiration of ten years from the date of its adoption by the Board.
The Plan shall remain in effect until all Awards granted under the Plan have
been satisfied or expired.

4. ADMINISTRATION

     (a)   Committee. The Plan shall be administered by the Committee.

     (b)   Powers. Subject to the provisions of the Plan, the Committee shall
have sole authority, in its discretion, to determine which employees, Directors
or consultants shall receive an Award, the time or times when such Award shall
be made, whether an Incentive Stock Option, Nonqualified Stock Option or Stock
Appreciation Right shall be granted, the number of shares of Stock which may be
issued under each Option, Stock Appreciation Right or Restricted Stock Award,
and the value of each Performance Award and Phantom Stock Award. In making
such determinations, the Committee may take into account the nature of the
services rendered by the respective employees, Directors or consultants, their
present and potential contributions to the Company’s success and such other
factors as the Committee in its discretion shall deem relevant.

     (c)   Additional Powers. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the
express provisions of the Plan, the Committee is authorized to construe the
Plan and the respective agreements executed thereunder, to prescribe such rules
and regulations relating to the Plan as it may deem advisable to carry out the
Plan, and to determine the terms, restrictions and provisions of each Award,
including such terms, restrictions and provisions as shall be requisite in the
judgment of the Committee to cause designated Options to qualify as Incentive
Stock Options, and to make all other determinations necessary or advisable for
administering the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in any agreement relating to an Award
in the manner and to the extent it shall deem expedient to carry it into
effect. The determinations of the Committee on the matters referred to in this
Article 4 shall be conclusive.

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5. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,

RESTRICTED STOCK AWARDS, PERFORMANCE AWARDS

AND PHANTOM STOCK AWARDS; SHARES SUBJECT TO THE PLAN

     (a)   Stock Grant and Award Limits. The Committee may from time to time
grant Awards to one or more employees, Directors or consultants determined by
it to be eligible for participation in the Plan in accordance with the
provisions of Paragraph 6. Subject to Paragraph 12, the aggregate number of
shares of Stock that may be issued under the Plan shall not exceed 150,000
shares. Shares of Stock shall be deemed to have been issued under the Plan
only to the extent actually issued and delivered pursuant to an Award. To the
extent that an Award lapses or the rights of its Holder terminate or the Award
is paid in cash, any shares of Stock subject to such Award shall again be
available for the grant of an Award. Separate stock certificates shall be
issued by the Company for those shares acquired pursuant the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise
of a Nonqualified Stock Option.

     (b)   Stock Offered. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Stock or Stock previously issued and
outstanding and reacquired by the Company.

6. ELIGIBILITY

     Awards may be granted only to persons who, at the time of grant, are
employees, Directors or consultants. An Award may be granted on more than one
occasion to the same person, and, subject to the limitations set forth in the
Plan, such Award may include an Incentive Stock Option or a Nonqualified Stock
Option, a Stock Appreciation Right, a Restricted Stock Award, a Performance
Award, a Phantom Stock Award or any combination thereof.

7. STOCK OPTIONS

     (a)   Option Period. The term of each Option shall be as specified by the
Committee at the date of grant, provided that the term of an Incentive Stock
Option cannot exceed ten years from the date of grant.

     (b)   Limitations on Exercise of Option. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.

     (c)   Special Limitations on Incentive Stock Options. No more than 150,000
shares of Stock may be subject to Incentive Stock Options. Incentive Stock
Options may be granted only to employees. To the extent that the aggregate
Fair Market Value (determined at the time the respective Incentive Stock Option
is granted) of Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar year under
all incentive stock option plans of the Company and its parent and subsidiary
corporations exceeds $100,000, such Incentive Stock Options shall be treated as
Nonqualified Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of an optionee’s Incentive Stock Options
will not constitute Incentive Stock Options because of such limitation and
shall notify the Holder of such options of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be
granted to an individual if, at the time the Option is granted,

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such individual owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of its parent or
subsidiary corporation, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the option price is at least 110%
of the Fair Market Value of the Stock subject to the Option and (ii) such
Option by its terms is not exercisable after the expiration of five years from
the date of grant.

     (d)   Automatic Option Grants.

		
	 	     (i)   On each Automatic Award Date occurring after the effective date
of the Plan, each Non-Employee Director on such date shall automatically
receive an Award of an Automatic Option for 1,100 Shares, or such lesser
number as the Committee may determine from time to time for the
Non-Employee Directors as a whole or for any one or more Non-Employee
Director. The price at which a share of Stock may be purchased upon
exercise of an Automatic Option is set forth in Paragraph 7(f).
	 
	 	     (ii)   Unless otherwise provided by the Committee in the applicable
Option Agreement evidencing the grant of Automatic Options, the
expiration date of each Automatic Option shall be ten years from its
Automatic Award Date, and each Automatic Option shall become exercisable
on the first anniversary of its Automatic Award Date; provided, however,
that an Automatic Option shall become immediately exercisable to the
extent otherwise specified in the Plan.

     (e)   Option Agreement. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent with the
provisions of the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify an Incentive Stock Option
under section 422 of the Code. No individual may be granted in any calendar
year Options to purchase more than 50,000 shares of Stock. An Option Agreement
may provide for the payment of the option price, in whole or in part, by the
delivery of a number of shares of Stock (plus cash if necessary) having a Fair
Market Value equal to such option price. Each Option Agreement shall specify
the effect of termination of employment, the cessation of serving on the Board
or the cessation of performing services as a consultant on the exercisability
of the Option. Moreover, an Option Agreement may provide for a “cashless
exercise” of the Option by establishing specific procedures related to such
cashless exercise. Such Option Agreement may also include, without limitation,
provisions relating to (i) vesting of Options, subject to the provisions hereof
accelerating such vesting on a Change of Control, (ii) tax matters (including
provisions (y) permitting the delivery of additional shares of Stock or the
withholding of shares of Stock from those acquired upon exercise to satisfy
federal or state income tax withholding requirements and (z) dealing with any
other applicable employee wage withholding requirements), and (iii) any other
matters not inconsistent with the terms and provisions of this Plan that the
Committee shall in its sole discretion determine. The terms and conditions of
the respective Option Agreements need not be identical.

     (f)   Option Price and Payment. The price at which a share of Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
(i) such purchase price shall not be less than the Fair Market Value of Stock
subject to an Incentive Stock Option or an Automatic Option on the date such
Incentive Stock Option or Automatic Option, as the case may be, is granted and
(ii) such purchase price shall be subject to adjustment as

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     provided in Paragraph 12. The Option or portion thereof may be exercised
by delivery of an irrevocable notice of exercise to the Company. The purchase
price of the Option or portion thereof shall be paid in full in the manner
prescribed by the Committee.

     (g)   Shareholder Rights and Privileges. The Holder shall be entitled to
all the privileges and rights of a shareholder only with respect to such shares
of Stock as have been purchased under the Option and for which certificates of
stock have been registered in the Holder’s name.

     (h)   Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become employees as a result of a merger or
consolidation of the employing corporation with the Company or any subsidiary,
or the acquisition by the Company or a subsidiary of the assets of the
employing corporation, or the acquisition by the Company or a subsidiary of
stock of the employing corporation with the result that such employing
corporation becomes a subsidiary.

8. STOCK APPRECIATION RIGHTS

     (a)   Stock Appreciation Rights. A Stock Appreciation Right is the right to
receive an amount equal to the Spread with respect to a share of Stock upon the
exercise of such Stock Appreciation Right. Stock Appreciation Rights may be
granted in connection with the grant of an Option, in which case the Option
Agreement will provide that exercise of Stock Appreciation Rights will result
in the surrender of the right to purchase the shares under the Option as to
which the Stock Appreciation Rights were exercised. Alternatively, Stock
Appreciation Rights may be granted independently of Options in which case each
Award of Stock Appreciation Rights shall be evidenced by a Stock Appreciation
Rights Agreement which shall contain such terms and conditions as may be
approved by the Committee. No individual may be granted in any calendar year
more than 50,000 Stock Appreciation Rights. The Spread with respect to a Stock
Appreciation Right may be payable either in cash, shares of Stock with a Fair
Market Value equal to the Spread or in a combination of cash and shares of
Stock. With respect to Stock Appreciation Rights that are subject to Section
16 of the 1934 Act, however, the Committee shall, except as provided in
Paragraph 12(c), retain sole discretion (i) to determine the form in which
payment of the Stock Appreciation Right will be made (i.e., cash, securities or
any combination thereof) or (ii) to approve an election by a Holder to receive
cash in full or partial settlement of Stock Appreciation Rights. Each Stock
Appreciation Rights Agreement shall specify the effect of termination of
employment, the cessation of serving on the Board or the cessation of
performing service as a consultant on the exercisability of the Stock
Appreciation Rights.

     (b)   Other Terms and Conditions. At the time of such Award, the Committee,
may in its sole discretion, prescribe additional terms, conditions or
restrictions relating to Stock Appreciation Rights, including, but not limited
to rules pertaining to termination of employment, the cessation of serving on
the Board or the cessation of performing services as a consultant (by
retirement, disability, death or otherwise) of a Holder prior to the expiration
of such Stock Appreciation Rights. Such additional terms, conditions or
restrictions shall be set forth in the Stock Appreciation Rights Agreement made
in conjunction with the Award. Such Stock

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Appreciation Rights Agreements may also include, without limitation,
provisions relating to (i) vesting of Awards, subject to the provisions hereof
accelerating vesting on a Change of Control,(ii) tax matters (including
provisions covering applicable wage withholding requirements), and (iii) any
other matters not inconsistent with the terms and provisions of this Plan, that
the Committee shall in its sole discretion determine. The terms and conditions
of the respective Stock Appreciation Rights Agreements need not be identical.

     (c)   Exercise Price. The exercise price of each Stock Appreciation Right
shall be determined by the Committee, but such exercise price (i) shall not be
less than the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is granted (or such greater exercise price as may be
required if such Stock Appreciation Right is granted in connection with an
Incentive Stock Option that must have an exercise price equal to 110% of the
Fair Market Value of the Stock on the date of grant pursuant to Paragraph
7(c)), and (ii) shall be subject to adjustment as provided in Paragraph 12.

     (d)   Exercise Period. The term of each Stock Appreciation Right shall be
as specified by the Committee at the date of grant.

     (e)  Limitations on Exercise of Stock Appreciation Right. A Stock
Appreciation Right shall be exercisable in whole or in such installments and at
such times as determined by the Committee.

9. RESTRICTED STOCK AWARDS

     (a)   Forfeiture Restrictions to be Established by the Committee. Shares of
Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances
(the “Forfeiture Restrictions”). The Forfeiture Restrictions shall be
determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of
targets established by the Committee that are based on (1) the price of a share
of Stock, (2) the Company’s earnings per share, (3) the Company’s revenue, (4)
the revenue of a business unit of the Company designated by the Committee, (5)
the return on shareholders’ equity achieved by the Company or (6) the Company’s
pre-tax cash flow from operations, (ii) the Holder’s continued employment with
the Company for a specified period of time or (iii) a combination of any two or
more of the factors listed in clauses (i) and (ii) of this sentence. Each
Restricted Stock Award may have different Forfeiture Restrictions, in the
discretion of the Committee. The Forfeiture Restrictions applicable to a
particular Restricted Stock Award shall not be changed except as permitted by
Paragraph 9(b) or Paragraph 12.

     (b)   The Committee, at the time of grant of a Restricted Stock Award, shall
specify the date or dates (which may depend upon or be related to the
attainment of targets and other conditions as set forth above) on which the
Forfeiture Restrictions shall lapse. The Committee at any time may accelerate
such date or dates and otherwise waive or amend any conditions of the grant;
provided, however, the Committee may not take any action described in this
paragraph with respect to a Restricted Stock Award that has been granted to a
“covered employee” (within

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the meaning of Treasury Regulation § 1.162-27(c)(2)) if such Restricted
Stock Award has been designed to meet the exception for performance-based
compensation under Section 162(m) of the Code. With respect to a Restricted
Stock Award granted to a “covered employee,” if the Forfeiture Restrictions
imposed upon such Restricted Stock Award are based on the attainment of
performance goals, the Committee shall certify in writing that such performance
goals have been attained.

     (c)   Other Terms and Conditions. No individual may be awarded more than
50,000 shares of Stock that are subject to a Restricted Stock Award in any
calendar year. Stock awarded pursuant to a Restricted Stock Award shall be
represented by a stock certificate registered in the name of the Holder of such
Restricted Stock Award. The Holder shall have the right to receive dividends
with respect to Stock subject to a Restricted Stock Award, to vote Stock
subject thereto and to enjoy all other shareholder rights, except that (i) the
Holder shall not be entitled to delivery of the stock certificate until the
Forfeiture Restrictions shall have expired, (ii) the Company shall retain
custody of the Stock until the Forfeiture Restrictions shall have expired,
(iii) the Holder may not sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of the Stock until the Forfeiture Restrictions shall have
expired and (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement shall cause a forfeiture
of the Restricted Stock Award. At the time of such Award, the Committee may,
in its sole discretion, prescribe additional terms, conditions or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the termination of employment, the cessation of serving on the
Board or the cessation of service as a consultant (by retirement, disability,
death or otherwise) of a Holder prior to expiration of the Forfeiture
Restrictions. Such additional terms, conditions or restrictions shall be set
forth in a Restricted Stock Agreement made in conjunction with the Award. Such
Restricted Stock Agreement may also include, without limitation, provisions
relating to (i) subject to the provisions hereof accelerating vesting on a
Change of Control, vesting of Awards, (ii) tax matters (including provisions
(y) covering any applicable employee wage withholding requirements and (z)
prohibiting an election by the Holder under Section 83(b) of the Code), and
(iii) any other matters not inconsistent with the terms and provisions of this
Plan that the Committee shall in its sole discretion determine. The terms and
conditions of the respective Restricted Stock Agreements need not be identical.

     (d)   Payment for Restricted Stock. The Committee shall determine the
amount and form of any payment for Stock received pursuant to a Restricted
Stock Award, provided that in the absence of such a determination, a Holder
shall not be required to make any payment for Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.

     (e)   Agreements. At the time any Award is made under this Paragraph 9, the
Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters as the Committee may determine to be appropriate.
The terms and provisions of the respective Restricted Stock Agreements need not
be identical.

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10. PERFORMANCE AWARDS

     (a)   Performance Period. The Committee shall establish, with respect to
and at the time of each Performance Award, a performance period over which the
performance of the Holder shall be measured.

     (b)   Performance Awards. Each Performance Award shall have a maximum value
established by the Committee at the time of such Award; provided that no
individual may be granted Performance Awards in any calendar year where the
value of such awards exceeds the Fair Market Value of 50,000 shares of Stock.

     (c)   Performance Measures. A Performance Award shall be awarded to an
employee, Director or consultant contingent upon future performance of the
employee, Director or consultant, the Company or any subsidiary, division or
department thereof by or in which is he employed or for which he performs
services during the performance period. The Committee shall establish the
performance measures applicable to such performance prior to the beginning of
the performance period but subject to such later revisions as the Committee
shall deem appropriate to reflect significant, unforeseen events or changes.

     (d)   Awards Criteria. In determining the value of Performance Awards, the
Committee shall take into account a Holder’s responsibility level,
contributions, performance, potential, other Awards and such other
considerations as it deems appropriate.

     (e)   Payment. Following the end of the performance period, the Holder of a
Performance Award shall be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Award, based on the achievement
of the performance measures for such performance period, as determined by the
Committee. Payment of a Performance Award may be made in cash, Stock or a
combination thereof, as determined by the Committee. Payment shall be made in
a lump sum or in installments as prescribed by the Committee. Any payment to
be made in Stock shall be based on the Fair Market Value of the Stock on the
payment date. If a payment of cash is to be made on a deferred basis, the
Committee shall establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto.

     (f)   Termination of Employment, Cessation of Serving on Board or
Termination of Service. A Performance Award shall terminate if the Holder does
not remain continuously in the employ of the Company, fails to serve on the
Board or fails to perform services as a consultant at all times during the
applicable performance period, except as may be determined by the Committee or
as may otherwise be provided in the Award at the time granted.

     (g)   Agreements. At the time any Award is made under this Paragraph 10,
the Company and the Holder shall enter into a Performance Award Agreement
setting forth each of the matters contemplated hereby, and, in addition such
matters as are set forth in Paragraph 9(b) as the Committee may determine to be
appropriate. The terms and provisions of the respective agreements need not be
identical.

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11. PHANTOM STOCK AWARDS

     (a)   Phantom Stock Awards. Phantom Stock Awards are rights to receive
shares of Stock (or cash in an amount equal to the Fair Market Value thereof),
or rights to receive an amount equal to any appreciation in the Fair Market
Value of Stock (or portion thereof) over a specified period of time, which vest
over a period of time or upon the occurrence of an event (including without
limitation a Change of Control) as established by the Committee, without
payment of any amounts by the Holder thereof (except to the extent otherwise
required by law) or satisfaction of any performance criteria or objectives.
Each Phantom Stock Award shall have a maximum value established by the
Committee at the time of such Award; provided that no individual may be granted
Phantom Stock Awards in any calendar year for more than 50,000 shares of Stock.

     (b)   Award Period. The Committee shall establish, with respect to and at
the time of each Phantom Stock Award, a period over which or the event upon
which the Award shall vest with respect to the Holder.

     (c)   Awards Criteria. In determining the value of Phantom Stock Awards,
the Committee shall take into account a Holder’s responsibility level,
contributions, performance, potential, other Awards and such other
considerations as it deems appropriate.

     (d)   Payment. Following the end of the vesting period for a Phantom Stock
Award, the Holder of a Phantom Stock Award shall be entitled to receive payment
of an amount, not exceeding the maximum value of the Phantom Stock Award, based
on the then vested value of the Award. Payment of a Phantom Stock Award may be
made in cash, Stock or a combination thereof as determine by the Committee.
Payment shall be made in a lump sum or in installments as prescribed by the
Committee in its sole discretion. Any payment to be made in Stock shall be
based on the Fair Market Value of the Stock on the payment date. Cash dividend
equivalents may be paid during or after the vesting period with respect to a
Phantom Stock Award, as determined by the Committee. If a payment of cash is
to be made on a deferred basis, the Committee shall establish whether interest
shall be credited, the rate thereof and any other terms and conditions
applicable thereto.

     (e)   Termination of Employment, Cessation of Serving on Board or
Termination of Service. A Phantom Stock Award shall terminate if the Holder
does not remain continuously in the employ of the Company, fails to serve on
the Board or fails to perform services as a consultant at all times during the
applicable vesting period, except as may be otherwise determined by the
Committee or as set forth in the Award at the time of grant.

     (f)   Agreements. At the time any Award is made under this Paragraph 11,
the Company and the Holder shall enter into a Phantom Stock Award Agreement
setting forth each of the matters contemplated hereby and, in addition such
matters as are set forth in Paragraph 9(b) as the Committee may determine to be
appropriate. The terms and provisions of the respective agreements need not be
identical.

11

 

12. RECAPITALIZATION OR REORGANIZATION

     (a)   In the event of changes in the outstanding Stock by reason of a stock
split, stock dividend, combination of shares or other relevant changes in
capitalization, the number and kind of shares of Stock or other securities
which are subject to this Plan or subject to any Awards theretofore granted,
and the purchase prices or exercise prices, as applicable, shall be
appropriately and equitably adjusted so as to maintain the proportionate number
of shares or other securities without changing the aggregate purchase price or
exercise price, as applicable.

     (b)   If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as applicable, of an
Award theretofore granted the Holder shall be entitled to (or entitled to
purchase, if applicable) under such Award, in lieu of the number of shares of
Stock then covered by such Award, the number and class of shares of stock and
securities to which the Holder would have been entitled pursuant to the terms
of the recapitalization if, immediately prior to such recapitalization, the
Holder had been the holder of record of the number of shares of Stock then
covered by such Award.

     (c)   Upon the occurrence of a Change of Control, all outstanding Awards
shall immediately vest and become exercisable or satisfiable, as applicable.
The Committee, in its discretion, may determine that upon the occurrence of a
Change of Control, each Award other than an Option outstanding hereunder shall
terminate within a specified number of days after notice to the Holder, and
such Holder shall receive, with respect to each share of Stock subject to such
Award, cash in an amount equal to the excess, if any, of the Change of Control
Value over the exercise price. Further, upon the occurrence of a Change of
Control, the Committee, in its discretion, shall act to effect one or more of
the following alternatives with respect to outstanding Options, which may vary
among individual Holders and which may vary among Options held by any
individual Holder: (i) determine a limited period of time for the exercise of
such Options on or before a specified date (before or after such Change of
Control) after which specified date all unexercised Options and all rights of
Holders thereunder shall terminate; (ii) require the mandatory surrender to the
Company by selected Holders of some or all of the outstanding Options held by
such Holders (irrespective of whether such Options are then exercisable under
the provisions of the Plan) as of a date, before or after such Change of
Control, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and the Company shall pay to each Holder an
amount of cash per share equal to the excess, if any, of the Change of Control
Value of the shares subject to such Option over the option price(s) under such
Options for such shares; (iii) make such adjustments to Options then
outstanding as the Committee deems appropriate to reflect such Change of
Control (provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to Options then outstanding); or
(iv) provide that thereafter upon any exercise of an Option theretofore granted
the Holder shall be entitled to purchase under such Option, in lieu of the
number of shares of Stock then covered by such Option the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Holder would have been entitled pursuant to the terms of the
agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of assets and
dissolution the Holder has been the holder of record of the number of shares of
Stock then covered by such Option. The provisions contained in this paragraph
shall not alter or terminate any rights of the Holder to further payments
pursuant to any other agreement with the Company following a Change of Control.

12

 

     (d)   The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Company’s capital structure or its business, any merger
or consolidation of the Company, any issue of debt or equity securities ahead
of or affecting Stock or the rights thereof, the dissolution or liquidation of
the Company or any sale, lease, exchange or other disposition of all or any
part of its assets or business or any other corporate act or proceeding.

     (e)   Any adjustment provided for in Subparagraphs (a), (b) or (c) above
shall be subject to any required shareholder action.

     (f)   Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares of obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Stock subject to Awards theretofore granted or the purchase price
per share, if applicable.

13. AMENDMENT AND TERMINATION OF THE PLAN

     The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Awards have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided that no change in any Award theretofore granted may be
made which would impair the rights of the Holder without the consent of the
Holder (unless such change is required in order to cause the benefits under the
Plan to qualify as performance-based compensation within the meaning of section
162(m) of the Code and applicable interpretive authority thereunder), and
provided, further, that the Board may not, without approval of the
shareholders, amend the Plan:

     (a)   to increase the maximum number of shares which may be issued on
exercise or surrender of an Award, except as provided in Paragraph 12;

     (b)   to change the Option price;

     (c)   to change the class of employees, Directors or consultants eligible to
receive Awards or materially increase the benefits accruing to employees,
Directors or consultants under the Plan;

     (d)   to extend the maximum period during which Awards may be granted under
the Plan;

     (e)   to modify materially the requirements as to eligibility for
participation in the Plan;

     (f)   to decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3; or

13

 

     (g)   in any other manner that would require shareholder approval under Rule
16b-3, the exchange on which Stock is listed, or Sections 162(m) or 422 of the
Code or any successor provisions.

14. MISCELLANEOUS

     (a)   No Right to An Award. Neither the adoption of the Plan by the Company
nor any action of the Board or the Committee shall be deemed to give an
employee, Director or consultant any right to be granted an Award to purchase
Stock, a right to a Stock Appreciation Right, a Restricted Stock Award, a
Performance Award or a Phantom Stock Award or any of the rights hereunder
except as may be evidenced by an Award or by an Option Agreement, Stock
Appreciation Rights Agreement, Restricted Stock Agreement, Performance Award
Agreement or Phantom Stock Award Agreement on behalf of the Company, and then
only to the extent and on the terms and conditions expressly set forth therein.
The Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of funds or
assets to assure the payment of any Award.

     (b)   No Employment or Service Rights Conferred. Nothing contained in the
Plan shall (i) confer upon any employee, Director or consultant any right with
respect to continuation of employment or service with the Company or any
subsidiary or (ii) interfere in any way with the right of the Company or any
subsidiary to terminate his or her employment or service at any time.

     (c)   Compliance With Other Laws; Withholding. The Plan, the grant and
exercise of Awards thereunder, and the obligation of the Company to sell and
deliver shares under such Awards, shall be subject to all applicable federal
and state laws, rules and regulations and to such approvals by any governmental
or regulatory agency as may be required. The Company shall not be obligated to
issue any Stock pursuant to any Award granted under the Plan at any time when
the shares covered by such Award have not been registered under any state and
federal laws, rules or regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules or regulations
available for the issuance and sale of such shares. No fractional shares of
Stock shall be delivered, nor shall any cash in lieu of fractional shares be
paid. The Company shall have the right to deduct in connection with all Awards
any taxes required by law to be withheld and to require any payments required
to enable it to satisfy its withholding obligations.

     (d)   No Restriction on Corporate Action. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action which is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Award made under the Plan. No employee,
director, beneficiary or other person shall have any claim against the Company
or any subsidiary as a result of any such action.

     (e)   Restrictions on Transfer. An Award shall not be transferable
otherwise than by will or the laws of descent and distribution or pursuant to a
“qualified domestic relations order” as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as

14

 

amended, or the rules thereunder, and shall be exercisable during the
Holder’s lifetime only by such Holder or the Holder’s guardian or legal
representative.

     (f)  Section 162(m). If the Company is subject to 162(m) of the Code, it
is intended that the Plan comply fully with and meet all the requirements of
Section 162(m) of the Code and regulations promulgated thereunder so that
Options and Stock Appreciation Rights granted hereunder and, if determined by
the Committee, Restricted Stock Awards, shall constitute “performance-based”
compensation within the meaning of such section. If any provision of the Plan
would disqualify the Plan or would not otherwise permit the Plan to comply with
Section 162(m) as so intended, such provision shall be construed or deemed
amended to conform to the requirements or provisions of Section 162(m);
provided that no such construction or amendment shall have an adverse effect on
the economic value to a Holder of any Award previously granted hereunder. With
respect to any Award granted to a “covered employee” (as defined in Section
162(m)(3) of the Code), if the payment of such Award is contingent on the
satisfaction of performance goals, such performance goals shall be established
in writing by the Committee not later than ninety (90) days after the
commencement of the period of service to which the performance goals relate;
provided, however, that the performance goals must be established before
twenty-five percent (25%) of such period of service has elapsed. The
performance goals shall comply with the requirements of Treasury Regulation
Section 1.162-27(e)(2). The Committee shall certify in writing prior to
payment of any such Award that such performance goals have been satisfied.

     (g)  Rule 16b-3. It is intended that the Plan and any grant of an Award
made to a person subject to Section 16 of the 1934 Act meet all of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award
would disqualify the Plan or such Award under, or would otherwise not comply
with, Rule 16b-3, such provision or award shall be construed or deemed amended
to conform to Rule 16b-3.

     (h)  Governing Law. This Plan shall be construed in accordance with the
laws of the Commonwealth of Virginia.

15<PAGE>

                                                                     EXHIBIT 4.5

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (this "Agreement") is made and
entered into this 9th day of September, 2003 among CenterPoint Energy, Inc., a
Texas corporation (the "Company"), Banc of America Securities LLC, Deutsche Bank
Securities Inc. and Wachovia Capital Markets, LLC, as representatives (the
"Representatives") of the initial purchasers (the "Initial Purchasers") listed
on Schedule I to the Purchase Agreement (defined below).

         This Agreement is made pursuant to the Purchase Agreement dated
September 3, 2003, among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $200,000,000 principal amount of the Company's
7.25% Senior Notes due 2010 (the "Securities"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the closing under the Purchase Agreement.

         In consideration of the foregoing, the parties hereto agree as follows:

         1.       Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:

                  "1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.

                  "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

                  "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in The City
of New York are authorized or obligated by law or executive order to close and
which shall be a "business day" as defined under Rule 14d-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934.

                  "Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.

                  "Depositary" shall mean The Depository Trust Company, or any
other depositary for the Securities appointed by the Company; provided, however,
that such depositary must have an address in the Borough of Manhattan, in the
City of New York.

                  "Exchange Offer" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.

                  "Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits thereto and
all documents incorporated by reference therein.

<PAGE>

                  "Exchange Period" shall have the meaning set forth in Section
2.1 hereof.

                  "Exchange Securities" shall mean the notes issued by the
Company under the Indenture containing terms identical to the Securities in all
material respects (except for references to certain interest rate provisions,
restrictions on transfers and restrictive legends), to be offered to Holders of
Securities in exchange for Registrable Securities pursuant to the Exchange
Offer.

                  "Expiration Date" shall mean the date on which all the
Participating Broker-Dealers have sold all Exchange Securities held by them.

                  "Holder" shall mean an Initial Purchaser, for so long as it
owns any Registrable Securities, and each of its successors, assigns and direct
and indirect transferees who become owners of Registrable Securities under the
Indenture and each Participating Broker-Dealer that holds Exchange Securities
for so long as such Participating Broker-Dealer is required to deliver a
prospectus meeting the requirements of the 1933 Act in connection with any
resale of such Exchange Securities.

                  "Indenture" shall mean the Indenture, dated as of May 19, 2003
between the Company and JPMorgan Chase Bank, as trustee, as supplemented by a
Supplemental Indenture No. 3, dated as of September 9, 2003, as the same may be
amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof.

                  "Initial Purchaser" or "Initial Purchasers" shall have the
meaning set forth in the preamble.

                  "Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities or such smaller amount of Registrable Securities for
which action is to be taken; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors on the
Securities or any Affiliate (as defined in the Indenture) of the Company shall
be disregarded in determining whether such consent or approval was given by the
Holders of such required percentage amount.

                  "Participating Broker-Dealer" shall mean any Initial
Purchaser, and any other broker-dealer who acquired the Registrable Securities
for its own account as a result of market-making or other trading activities and
exchanges Registrable Securities in the Exchange Offer for Exchange Securities.

                  "Person" shall mean any individual, corporation, partnership,
joint venture, trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.

                  "Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement, including
any such prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration

                                       2

<PAGE>

Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.

                  "Purchase Agreement" shall have the meaning set forth in the
preamble.

                  "Registrable Securities" shall mean the Securities; provided,
however, that Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to such Securities shall have been declared
effective under the 1933 Act and such Securities shall have been disposed of
pursuant to such Registration Statement, (ii) such Securities have been sold to
the public pursuant to Rule 144 under the 1933 Act or may be sold pursuant to
Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, (iii) such Securities shall have ceased to be outstanding or (iv)
the Exchange Offer is consummated (except in the case of Securities purchased
from the Company and continued to be held by the Initial Purchasers).

                  "Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this Agreement,
including, without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. ("NASD") registration and filing fees,
including, if applicable, the reasonable fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be retained by
any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws and compliance with the rules
of the NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities and any filings with the NASD),
(iii) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges, (v) all rating agency fees, (vi) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or
custodian, (viii) the reasonable fees and disbursements of one firm, at any one
time, of legal counsel selected by the Representatives or the Majority Holders
to represent the Holders of Registrable Securities and (ix) any reasonable fees
and disbursements of the underwriters customarily required to be paid by issuers
or sellers of securities and the fees and expenses of any special experts
retained by the Company in connection with any Registration Statement, but
excluding underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.

                  "Registration Statement" shall mean any registration statement
of the Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.

                                       3

<PAGE>

                  "SEC" shall mean the United States Securities and Exchange
Commission or any successor agency or governmental body performing the functions
currently performed by the United States Securities and Exchange Commission.

                  "Securities" shall have the meaning set forth in the preamble.

                  "Shelf Registration" shall mean a registration effected
pursuant to Section 2.2 hereof.

                  "Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 2.2
of this Agreement which covers all of the Registrable Securities on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule that may
be adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

                  "TIA" shall mean the Trust Indenture Act of 1939, as amended.

                  "Trustee" shall mean the trustee with respect to the
Securities under the Indenture.

         2.       Registration Under the 1933 Act.

                  2.1      Exchange Offer. The Company shall, for the benefit of
the Holders, at the Company's cost, use its reasonable commercial efforts (A) to
file with the SEC the Exchange Offer Registration Statement not later than 180
days following the original issuance of the Securities with respect to a
proposed Exchange Offer and the issuance and delivery to the Holders, in
exchange for the Registrable Securities, of a like principal amount of Exchange
Securities, (B) to cause the Exchange Offer Registration Statement to be
declared effective under the 1933 Act within 270 days of the original issuance
of the Securities, (C) to keep the Exchange Offer Registration Statement
effective until the closing of the Exchange Offer and (D) unless the Exchange
Offer would not be permitted by applicable law or SEC policy, to cause the
Exchange Offer to be consummated within 315 days following the original issuance
of the Securities. The Exchange Securities will be issued under the Indenture.
Upon the effectiveness of the Exchange Offer Registration Statement, the Company
shall promptly commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder eligible and electing to exchange
Registrable Securities for Exchange Securities (assuming that such Holder (A) is
not an affiliate of the Company within the meaning of Rule 405 under the 1933
Act (an "Affiliate"), (B) is not a broker-dealer tendering Registrable
Securities acquired directly from the Company or one of its Affiliates for its
own account, (C) acquired the Exchange Securities in the ordinary course of such
Holder's business and (D) at the time of the consummation of the Exchange Offer
has no arrangements or understandings with any Person to participate in the
Exchange Offer for the purpose of distributing the Exchange Securities) to
transfer such Exchange Securities from and after their receipt without any
limitations or restrictions under the 1933 Act and without material restrictions
under the securities laws of a substantial portion of the several states of the
United States.

         In connection with the Exchange Offer, the Company will:

                                       4

<PAGE>

                  (A)      as promptly as practicable after the Exchange Offer
         Registration Statement has been declared effective by the SEC, mail to
         each Holder a copy of the Prospectus forming part of the Exchange Offer
         Registration Statement, together with an appropriate letter of
         transmittal and related documents;

                  (B)      keep the Exchange Offer open for acceptance for a
         period of not less than 20 Business Days after the date notice thereof
         is mailed to the Holders (or longer if required by applicable law)
         (such period referred to herein as the "Exchange Period");

                  (C)      utilize the services of the Depositary for the
         Exchange Offer;

                  (D)      notify each Holder that any Holder electing to have a
         Registrable Security exchanged pursuant to the Exchange Offer will be
         required to surrender such Registrable Security, together with the
         appropriate letters of transmittal, to the institution and at the
         address and in the manner specified in the notice prior to 5:00 p.m.
         (Eastern Time) on the last Business Day of the Exchange Period;

                  (E)      permit Holders to (i) withdraw tendered Registrable
         Securities at any time prior to 5:00 p.m. (Eastern Time) on the last
         Business Day of the Exchange Period, by sending to the institution
         specified in the notice a telegram, telex, facsimile transmission or
         letter setting forth the name of such Holder, the principal amount of
         Registrable Securities delivered for exchange and a statement that such
         Holder is withdrawing such Holder's election to have such Securities
         exchanged and (ii) tender Registrable Securities according to customary
         guaranteed delivery procedures if such Holder cannot deliver such
         Registrable Securities or complete the procedures relating thereto on a
         timely basis prior to 5:00 p.m. (Eastern Time) on the last Business Day
         of the Exchange Period;

                  (F)      notify each Holder that any Registrable Security not
         tendered will remain outstanding and continue to accrue interest, but
         will not retain any rights under this Agreement (except in the case of
         the Initial Purchasers and Participating Broker Dealers as provided
         herein); and

                  (G)      otherwise comply in all material respects with all
         applicable laws relating to the Exchange Offer.

         As soon as practicable after the close of the Exchange Offer the
Company shall:

                  (A)      accept for exchange all Registrable Securities duly
         tendered and not validly withdrawn pursuant to the Exchange Offer in
         accordance with the terms of the Exchange Offer Registration Statement
         and the letter of transmittal which shall be an exhibit thereto;

                  (B)      deliver or cause to be delivered all Registrable
         Securities accepted for exchange to the Trustee for cancellation; and

                  (C)      cause the Trustee promptly to authenticate and
         deliver Exchange Securities, to each Holder of Registrable Securities
         so accepted for exchange in a

                                       5

<PAGE>

         principal amount equal to the principal amount of the Registrable
         Securities of such Holder so accepted for exchange.

         Interest on each Exchange Security will accrue from the last date on
which interest was paid on the Registrable Securities surrendered in exchange
therefor or, if no interest has been paid on the Registrable Securities, from
the date of original issuance. The Exchange Offer shall not be subject to any
conditions, other than (A) that the Exchange Offer, or the making of any
exchange by a Holder, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (B) the valid tendering of Registrable
Securities in accordance with the Exchange Offer, (C) that each Holder of
Registrable Securities exchanged in the Exchange Offer shall have represented
that (i) it is not an affiliate of the Company within the meaning of Rule 405
under the 1933 Act, (ii) it is not a broker-dealer tendering Registrable
Securities acquired directly from the Company or one of its Affiliates for its
own account, (iii) all of the Exchange Securities to be received by it shall be
acquired in the ordinary course of its business and (iv) at the time of the
consummation of the Exchange Offer it shall have no arrangement or understanding
with any Person to participate in the distribution (within the meaning of the
1933 Act) of the Exchange Securities, and shall have made such other
representations as may be reasonably necessary under applicable SEC rules,
regulations or interpretations to render the use of Form S-4 or other
appropriate form under the 1933 Act available and (D) that no action or
proceeding shall have been instituted or threatened in any court or by or before
any governmental agency with respect to the Exchange Offer which, in the
Company's judgment, would reasonably be expected to impair the ability of the
Company to proceed with the Exchange Offer. The Company shall use its reasonable
commercial efforts to inform the Initial Purchasers of the names and addresses
of the Holders to whom the Exchange Offer is made, and the Initial Purchasers
shall have the right, subject to applicable securities laws, to contact such
Holders and otherwise facilitate the tender of Registrable Securities in the
Exchange Offer.

         The Company shall use its reasonable commercial efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
1933 Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by a Participating Broker-Dealer, such period shall terminate
at the earlier to occur of (i) the expiration of 180 days following the Exchange
Offer and (ii) the Expiration Date.

         The Company shall not be obligated to keep the Exchange Offer
Registration Statement effective or to permit the use of any Prospectus forming
a part of the Exchange Offer Registration Statement if (i) the Company
determines, in its reasonable judgment, upon advice of counsel that the
continued effectiveness and use of the Exchange Offer Registration Statement
would (x) require the disclosure of material information which the Company has a
bona fide business reason for preserving as confidential or (y) interfere with
any financing, acquisition, corporate reorganization or other material
transaction involving the Company or any of its subsidiaries; and provided,
further, that the failure to keep the Exchange Offer Registration Statement
effective and usable for offers and sales of Registrable Securities for such
reasons shall last no longer than 45 consecutive calendar days or no more than
an aggregate of 90 calendar days during any consecutive twelve-month period
(whereafter a Registration Default, as

                                       6

<PAGE>

hereinafter defined, shall occur) and (ii) the Company promptly thereafter
complies with the requirements of Section 3(L) hereof, if applicable; any such
period during which the Company is excused from keeping the Exchange Offer
Registration Statement effective and usable for offers and sales of Registrable
Securities is referred to herein as a "Exchange Offer Suspension Period"; an
Exchange Offer Suspension Period shall commence on and include the date that the
Company gives notice to the Holders that the Exchange Offer Registration
Statement is no longer effective or the Prospectus included therein is no longer
usable for offers and sales of Registrable Securities as a result of the
application of the proviso of the foregoing sentence, stating the reason
therefor, and shall end on the earlier to occur of the date on which each seller
of Registrable Securities covered by the Exchange Offer Registration Statement
either receives the copies of the supplemented or amended Prospectus or is
advised in writing by the Company that use of the Prospectus may be resumed.

         The Company acknowledges that pursuant to current interpretations by
the SEC's staff of Section 5 of the 1933 Act, in the absence of applicable
exemption therefrom, (i) each Holder which is a broker-dealer electing to
exchange Securities for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing information substantially in the
form set forth in (a) Annex A hereto, (b) Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section, (c) Annex C
hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Exchange Offer and to include in the Letter of Transmittal
delivered pursuant to the Exchange Offer, the information set forth in Annex D
hereto and (ii) an Initial Purchaser that elects to sell Exchange Securities
acquired in an exchange for Securities constituting any portion of an unsold
allotment, is required to deliver a prospectus containing the information
required by Item 507 or Item 508 of Regulation S-K under the 1933 Act, as
applicable, in connection with such sale.

                  2.2      Shelf Registration. In the event that (A) the Company
reasonably determines that changes in law, SEC rules or regulations or
applicable interpretations thereof by the staff of the SEC do not permit the
Company to effect the Exchange Offer as contemplated by Section 2.1 hereof, (B)
for any other reason, the Exchange Offer is not consummated within 315 days
after the original issuance of the Securities or (C) an Initial Purchaser
notifies the Company within 20 Business Days following the consummation of the
Exchange Offer that (i) it is not permitted by applicable law, SEC rules or
regulations or applicable interpretations thereof by the staff of the SEC to
participate in the Exchange Offer, (ii) it may not resell Exchange Securities
with the Prospectus included as part of the Exchange Offer Registration
Statement or (iii) it is a broker-dealer and owns Registrable Securities
acquired directly from the Company or one of the Company's Affiliates, then in
case of each of clauses (A) through (C) the Company shall, at its cost, in lieu
of effecting (or, in the case of clause (C), in addition to effecting) the
registration of the Exchange Securities pursuant to the Exchange Offer
Registration Statement:

                  (A)      as promptly as practicable, file with the SEC, and
         thereafter shall use its reasonable commercial efforts to cause to be
         declared effective no later than 345 days after the original issuance
         of the Securities, a Shelf Registration Statement relating to the offer
         and sale of the Registrable Securities by the Holders from time to time
         in accordance with the methods of distribution elected by the Majority
         Holders participating in the Shelf Registration and set forth in such
         Shelf Registration Statement;

                                       7

<PAGE>

                  (B)      use its reasonable commercial efforts to keep the
         Shelf Registration Statement continuously effective in order to permit
         the Prospectus forming a part thereof to be usable by Holders for a
         period of two years from the date of the original issuance of the
         Securities (plus the number of days in any Suspension Period), or until
         all of the Registrable Securities have been sold pursuant thereto;
         provided, however, that the Company shall not be obligated to keep the
         Shelf Registration Statement effective or to permit the use of any
         Prospectus forming a part of the Shelf Registration Statement if (i)
         the Company determines, in its reasonable judgment, upon advice of
         counsel that the continued effectiveness and use of the Shelf
         Registration Statement would (x) require the disclosure of material
         information which the Company has a bona fide business reason for
         preserving as confidential or (y) interfere with any financing,
         acquisition, corporate reorganization or other material transaction
         involving the Company or any of its subsidiaries; and provided,
         further, that the failure to keep the Shelf Registration Statement
         effective and usable for offers and sales of Registrable Securities for
         such reasons shall last no longer than 45 consecutive calendar days or
         no more than an aggregate of 90 calendar days during any consecutive
         twelve-month period (whereafter a Registration Default, as hereinafter
         defined, shall occur) and (ii) the Company promptly thereafter complies
         with the requirements of Section 3(L) hereof, if applicable; any such
         period during which the Company is excused from keeping the Shelf
         Registration Statement effective and usable for offers and sales of
         Registrable Securities is referred to herein as a "Suspension Period";
         a Suspension Period shall commence on and include the date that the
         Company gives notice to the Holders that the Shelf Registration
         Statement is no longer effective or the Prospectus included therein is
         no longer usable for offers and sales of Registrable Securities as a
         result of the application of the proviso of the foregoing sentence,
         stating the reason therefor, and shall end on the earlier to occur of
         the date on which each seller of Registrable Securities covered by the
         Shelf Registration Statement either receives the copies of the
         supplemented or amended Prospectus or is advised in writing by the
         Company that use of the Prospectus may be resumed.

         The Company shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration Statement. The Company
further agrees, if necessary, to supplement or amend the Shelf Registration
Statement, as required by Section 3(B) below, and to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.

                  2.3      Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section 2.1 or 2.2
hereof. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.

                  2.4      Effectiveness.

                  (A)      The Company will be deemed not to have used its
         reasonable commercial efforts to cause the Exchange Offer Registration
         Statement or the Shelf Registration Statement, as the case may be, to
         become, or to remain, effective during the requisite period if the
         Company voluntarily takes any action that would, or omits to take any
         action (other than any action specifically permitted by the last
         paragraph of Section 2.1 or by

                                       8

<PAGE>

         Section 2.2(B) hereof) which omission would, result in any such
         Registration Statement not being declared effective or in the Holders
         of Registrable Securities covered thereby not being able to exchange or
         offer and sell such Registrable Securities during that period as and to
         the extent contemplated hereby, unless such action is required by
         applicable law.

                  (B)      An Exchange Offer Registration Statement pursuant to
         Section 2.1 hereof or a Shelf Registration Statement pursuant to
         Section 2.2 hereof will not be deemed to have become effective unless
         it has been declared effective by the SEC; provided, however, that if,
         after it has been declared effective, the offering of Registrable
         Securities pursuant to an Exchange Offer Registration Statement or a
         Shelf Registration Statement is interfered with by any stop order,
         injunction or other order or requirement of the SEC or any other
         governmental agency or court, such Registration Statement will be
         deemed not to have become effective during the period of such
         interference, until the offering of Registrable Securities pursuant to
         such Registration Statement may legally resume.

                  2.5      Interest. In the event that (A) the Exchange Offer
Registration Statement is not filed with the SEC on or prior to the 180th day
following the date of original issuance of the Securities, (B) the Exchange
Offer Registration Statement is not declared effective on or prior to the 270th
calendar day following the date of original issuance of the Securities, (C) the
Exchange Offer is not consummated or a Shelf Registration Statement is not
declared effective, in either case, on or prior to the 315th calendar day
following the date of original issuance of the Securities or (D) the Exchange
Offer Registration Statement or the Shelf Registration Statement is filed and
declared effective but shall thereafter either be withdrawn by the Company or
becomes subject to an effective stop order suspending the effectiveness of such
registration statement, except as specifically permitted by the last paragraph
of Section 2.1 or Section 2.2(B) hereof, in each case without being succeeded
within 30 days by an amendment thereto or an additional registration statement
filed and declared effective (each such event referred to in clauses (A) through
(D) above, a "Registration Default"), the interest rate borne by the Registrable
Securities shall be increased ("Additional Interest") by one-fourth of one
percent (0.25%) per annum upon the occurrence of each Registration Default,
which rate will increase by an additional one-fourth of one percent (0.25%) per
annum if such Registration Default has not been cured within 90 days after
occurrence thereof and continuing until all Registration Defaults have been
cured, provided that the aggregate amount of any such increase in the interest
rate on the Registrable Securities shall in no event exceed one-half of one
percent (0.50%) per annum; and provided, further, that if the Exchange Offer
Registration Statement is not declared effective on or prior to the 270th
calendar day following the original issuance of the Securities and the Company
shall request Holders of Securities to provide information required by the
applicable rules of the SEC for inclusion in the Shelf Registration Statement,
then Registrable Securities owned by Holders who do not deliver such information
to the Company or who do not provide comments on the Shelf Registration
Statement when reasonably requested by the Company will not be entitled to any
such increase in the interest rate for any day after the 315th day following the
date of original issuance of the Securities. All accrued Additional Interest
shall be paid to Holders of Registrable Securities in the same manner and at the
same time as regular payments of interest on the Registrable Securities.
Following the cure of all Registration Defaults, the accrual of Additional
Interest will cease and the interest rate on the Registrable Securities will
revert to the original rate.

                                       9

<PAGE>

         3.       Registration Procedures. In connection with the obligations of
the Company with respect to Registration Statements pursuant to Sections 2.1 and
2.2 hereof, the Company shall:

                  (A)      prepare and file with the SEC a Registration
         Statement, within the relevant time period specified in Section 2, on
         the appropriate form under the 1933 Act, which form shall (i) be
         selected by the Company, (ii) in the case of a Shelf Registration, be
         available for the sale of the Registrable Securities by the selling
         Holders thereof and (iii) comply as to form in all material respects
         with the requirements of the applicable form and include or incorporate
         by reference all financial statements required by the SEC to be filed
         therewith or incorporated by reference therein, and use its reasonable
         commercial efforts to cause such Registration Statement to become
         effective and remain effective in accordance with Section 2 hereof;

                  (B)      use reasonable commercial efforts to cause (i) any
         Registration Statement and any amendment thereto, when it becomes
         effective, not to contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading and (ii)
         subject to the last paragraph of Section 2.1 and Section 2.2(B), any
         Prospectus forming part of any Registration Statement, and any
         supplement to such Prospectus (as amended or supplemented from time to
         time), not to include an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were made, not misleading;

                  (C)      prepare and file with the SEC such amendments and
         post-effective amendments to each Registration Statement as may be
         necessary under applicable law to keep such Registration Statement
         effective for the applicable period; and cause each Prospectus to be
         supplemented by any required prospectus supplement, and as so
         supplemented to be filed pursuant to Rule 424 (or any similar provision
         then in force) under the 1933 Act and comply with the provisions of the
         1933 Act, the 1934 Act and the rules and regulations thereunder
         applicable to them with respect to the disposition of all securities
         covered by each Registration Statement during the applicable period in
         accordance with the intended method or methods of distribution
         reasonably requested by the selling Holders thereof (including sales by
         any Participating Broker-Dealer);

                  (D)      in the case of a Shelf Registration, (i) notify each
         Holder of Registrable Securities, at least fifteen (15) calendar days
         prior to filing, that a Shelf Registration Statement with respect to
         the Registrable Securities is being filed and advising such Holders
         that the distribution of Registrable Securities will be made in
         accordance with the methods reasonably requested by the Majority
         Holders participating in the Shelf Registration, (ii) furnish to each
         Holder of Registrable Securities and to each underwriter of an
         underwritten offering of Registrable Securities, if any, without
         charge, as many copies of each Prospectus, including each preliminary
         Prospectus, and any amendment or supplement thereto, and such other
         documents as such Holder or underwriter may reasonably request,
         including financial statements and schedules and, if the Holder so
         requests, all exhibits in order to facilitate the public sale or other
         disposition of the Registrable Securities and (iii) hereby consent to
         the use of the Prospectus or any

                                       10

<PAGE>

         amendment or supplement thereto by each of the selling Holders of
         Registrable Securities in connection with the offering and sale of the
         Registrable Securities covered by the Prospectus or any amendment or
         supplement thereto, save and except during any Suspension Period;

                  (E)      use its reasonable commercial efforts to register or
         qualify the Registrable Securities under such state securities or blue
         sky laws of such jurisdictions as any Holder of Registrable Securities
         covered by a Registration Statement and each underwriter of an
         underwritten offering of Registrable Securities shall reasonably
         request by the time the applicable Registration Statement is declared
         effective by the SEC, and do any and all other acts and things which
         may be reasonably necessary or advisable to enable each such Holder and
         underwriter to consummate the disposition in each such jurisdiction of
         such Registrable Securities owned by such Holder; provided, however,
         that the Company shall not be required to (i) qualify as a foreign
         corporation or as a dealer in securities in any jurisdiction where it
         would not otherwise be required to qualify but for this Section 3(E) or
         (ii) take any action which would subject it to general service of
         process or taxation in any such jurisdiction where it is not then so
         subject;

                  (F)      notify promptly each Holder of Registrable Securities
         under a Shelf Registration or any Participating Broker-Dealer who has
         notified the Company that it is utilizing the Prospectus contained in
         the Exchange Offer Registration Statement as provided in Section 3(G)
         hereof and, if requested by such Holder or Participating Broker-Dealer,
         confirm such advice in writing promptly (i) when a Registration
         Statement has become effective and when any post-effective amendments
         and supplements thereto become effective, (ii) of any request by the
         SEC or any state securities authority for post-effective amendments and
         supplements to a Registration Statement and Prospectus or for
         additional information after the Registration Statement has become
         effective, (iii) of the issuance by the SEC or any state securities
         authority of any stop order suspending the effectiveness of a
         Registration Statement or the initiation of any proceedings for that
         purpose, (iv) in the case of a Shelf Registration, if, between the
         effective date of the Shelf Registration Statement and the closing of
         any sale of Registrable Securities covered thereby, the representations
         and warranties of the Company contained in any underwriting agreement,
         securities sales agreement or other similar agreement, if any, relating
         to the offering cease to be true and correct in all material respects,
         (v) of the happening of any event or the discovery of any facts during
         the period the Shelf Registration Statement is effective which makes
         any statement made in such Registration Statement or the related
         Prospectus untrue in any material respect or which requires the making
         of any changes in such Registration Statement or Prospectus in order to
         make the statements therein not misleading, (vi) of the receipt by the
         Company of any notification with respect to the suspension of the
         qualification of the Registrable Securities or the Exchange Securities,
         as the case may be, for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose and (vii) of any
         determination by the Company that a post-effective amendment to a
         Registration Statement would be appropriate;

                  (G)      (1) in the case of the Exchange Offer Registration
         Statement (a) include in the Exchange Offer Registration Statement a
         section entitled "Plan of Distribution,"

                                       11

<PAGE>

         which section shall be reasonably acceptable to the Representatives on
         behalf of the Participating Broker-Dealers, and which shall contain a
         summary statement of the positions taken or policies made by the staff
         of the SEC with respect to the potential "underwriter" status of any
         broker-dealer that holds Registrable Securities acquired for its own
         account as a result of market-making activities or other trading
         activities and that will be the beneficial owner (as defined in Rule
         13d-3 under the 1934 Act) of Exchange Securities to be received by such
         broker-dealer in the Exchange Offer, including a statement that any
         such broker-dealer who receives Exchange Securities for Registrable
         Securities pursuant to the Exchange Offer may be deemed a statutory
         underwriter and must deliver a prospectus meeting the requirements of
         the 1933 Act in connection with any resale of such Exchange Securities,
         (b) furnish to each Participating Broker-Dealer who has delivered to
         the Company the notice referred to in Section 3(F), without charge, as
         many copies of each Prospectus included in the Exchange Offer
         Registration Statement, including any preliminary prospectus, and any
         amendment or supplement thereto, as such Participating Broker-Dealer
         may reasonably request, (c) hereby consent to the use of the Prospectus
         forming part of the Exchange Offer Registration Statement or any
         amendment or supplement thereto, by any Person subject to the
         prospectus delivery requirements of the SEC, including all
         Participating Broker-Dealers, in connection with the sale or transfer
         of the Exchange Securities covered by the Prospectus or any amendment
         or supplement thereto for up to 180 days following the Exchange Offer
         except during any Exchange Offer Suspension Period, and (d) include in
         the transmittal letter or similar documentation to be executed by an
         exchange offeree in order to participate in the Exchange Offer (i) the
         following provision:

                  "If the exchange offeree is a broker-dealer holding
                  Registrable Securities acquired for its own account as a
                  result of market-making activities or other trading
                  activities, it will deliver a prospectus meeting the
                  requirements of the 1933 Act in connection with any resale of
                  Exchange Securities received in respect of such Registrable
                  Securities pursuant to the Exchange Offer,"

         and (ii) a statement to the effect that a broker-dealer by making the
         acknowledgment described in clause (i) and by delivering a Prospectus
         in connection with the exchange of Registrable Securities, the
         broker-dealer will not be deemed to admit that it is an underwriter
         within the meaning of the 1933 Act; and (2) in the case of any Exchange
         Offer Registration Statement, the Company agrees to deliver to any
         Participating Broker-Dealers upon the effectiveness of the Exchange
         Offer Registration Statement (a) an opinion of counsel or opinions of
         counsel substantially in the form attached hereto as Annex E, (b)
         officers' certificates substantially in the form customarily delivered
         by the Company in its public offerings of debt securities and (c) a
         comfort letter or comfort letters in customary form to the extent
         permitted by Statement on Auditing Standards No. 72 of the American
         Institute of Certified Public Accountants (or if such a comfort letter
         is not permitted, an agreed upon procedures letter in customary form)
         from the Company's independent certified public accountants (and, if
         necessary, any other independent certified public accountants of any
         subsidiary of the Company or of any business acquired by the Company
         for which financial statements are, or are required to be, included in
         the Registration Statement) at least as broad in scope and coverage as
         the

                                       12

<PAGE>

         comfort letter or comfort letters delivered to the Initial Purchasers
         in connection with the initial sale of the Securities to the Initial
         Purchasers;

                  (H)      (i) in the case of an Exchange Offer, furnish counsel
         for the Initial Purchasers and (ii) in the case of a Shelf
         Registration, furnish counsel for the Holders of Registrable
         Securities, copies of any comment letters received from the SEC or any
         other request by the SEC or any state securities authority for
         amendments or supplements to a Registration Statement and Prospectus or
         for additional information;

                  (I)      make every reasonable effort to obtain the withdrawal
         of any order suspending the effectiveness of a Registration Statement
         as soon as practicable and provide prompt notice to legal counsel for
         the Holders of the withdrawal of any such order;

                  (J)      in the case of a Shelf Registration, furnish to each
         Holder of Registrable Securities, and each underwriter, if any, without
         charge, at least one conformed copy of each Registration Statement and
         any post-effective amendment thereto, including financial statements
         and schedules (without documents incorporated therein by reference and
         all exhibits thereto, unless requested);

                  (K)      in the case of a Shelf Registration, cooperate with
         the selling Holders of Registrable Securities to facilitate the timely
         preparation and delivery of certificates representing Registrable
         Securities to be sold to the extent not held with the Depositary
         through Cede & Co., to remove any restrictive legends, and enable such
         Registrable Securities to be in such denominations (consistent with the
         provisions of the Indenture) and registered in such names as the
         selling Holders or the underwriters, if any, may reasonably request at
         least three Business Days prior to the closing of any sale of
         Registrable Securities;

                  (L)      upon the occurrence of any event or the discovery of
         any facts, each as contemplated by Sections 3(F)(ii), (iii), (v), (vi)
         and (vii) hereof and subject to the provisions of the second paragraph
         immediately following Section 3(U) hereof, as promptly as practicable
         after the occurrence of such an event, use its reasonable commercial
         efforts to prepare a supplement or post-effective amendment to the
         Registration Statement or the related Prospectus or any document
         incorporated therein by reference or file any other required document
         so that, as thereafter delivered to the purchasers of the Registrable
         Securities or Participating Broker-Dealers, such Prospectus will not
         contain at the time of such delivery any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading or will remain so qualified. At such time as such public
         disclosure is otherwise made or the Company determines that such
         disclosure is not necessary, in each case to correct any misstatement
         of a material fact or to include any omitted material fact, the Company
         agrees promptly to notify each Holder of such determination and to
         furnish each Holder such number of copies of the Prospectus as amended
         or supplemented, as such Holder may reasonably request;

                                       13

<PAGE>

                  (M)      obtain a CUSIP number for all Exchange Securities or
         Registrable Securities, as the case may be, not later than the
         effective date of a Registration Statement, and provide the Trustee
         with certificates for the Exchange Securities or the Registrable
         Securities, as the case may be, in a form eligible for deposit with the
         Depositary;

                  (N)      unless the Indenture, as its relates to the Exchange
         Securities or the Registrable Securities, as the case may be, has
         already been so qualified, use its reasonable commercial efforts to (i)
         cause the Indenture to be qualified under the TIA in connection with
         the registration of the Exchange Securities or Registrable Securities,
         as the case may be, (ii) cooperate with the Trustee and the Holders to
         effect such changes to the Indenture as may be required for the
         Indenture to be so qualified in accordance with the terms of the TIA
         and (iii) execute, and use its reasonable commercial efforts to cause
         the Trustee to execute, all documents as may be required to effect such
         changes, and all other forms and documents required to be filed with
         the SEC to enable the Indenture to be so qualified in a timely manner;

                  (O)      in the case of a Shelf Registration, enter into
         agreements (including underwriting agreements) and take all other
         customary and appropriate actions in order to expedite or facilitate
         the disposition of such Registrable Securities and in such connection
         whether or not an underwriting agreement is entered into and whether or
         not the registration is an underwritten registration:

                           (i)      make such representations and warranties to
                  the Holders of such Registrable Securities and the
                  underwriters, if any, in form, substance and scope as has been
                  customarily made by the Company to underwriters in similar
                  offerings of debt securities of the Company;

                           (ii)     obtain opinions of counsel of the Company
                  and updates thereof (which counsel and opinions (in form,
                  scope and substance) shall be reasonably satisfactory to the
                  managing underwriters, if any, and the Holders of a majority
                  in principal amount of the Registrable Securities being sold)
                  addressed to each selling Holder and the underwriters, if any,
                  covering the matters customarily covered in opinions requested
                  in sales of securities or underwritten offerings of the
                  Company;

                           (iii)    obtain "cold comfort" letters and updates
                  thereof from the Company's independent certified public
                  accountants (and, if necessary, any other independent
                  certified public accountants of any subsidiary of the Company
                  or of any business acquired by the Company for which financial
                  statements are, or are required to be, included in the
                  Registration Statement) addressed to the underwriters, if any,
                  and use reasonable efforts to have such letter addressed to
                  the selling Holders of Registrable Securities (to the extent
                  consistent with Statement on Auditing Standards No. 72 of the
                  American Institute of Certified Public Accounts), such letters
                  to be in customary form and covering matters of the type
                  customarily covered in "cold comfort" letters to underwriters
                  in connection with similar underwritten offerings of the
                  Company;

                                       14

<PAGE>

                           (iv)     if an underwriting agreement is entered
                  into, cause the same to set forth indemnification provisions
                  and procedures substantially equivalent to the indemnification
                  provisions and procedures set forth in Section 4 hereof with
                  respect to the underwriters and all other parties to be
                  indemnified pursuant to said Section; and

                           (v)      deliver such documents and certificates as
                  may be reasonably requested and as are customarily delivered
                  in similar offerings to the Holders of a majority in principal
                  amount of the Registrable Securities being sold and the
                  managing underwriters, if any;

         the above shall be done at (i) the effectiveness of such Registration
         Statement (and each post-effective amendment thereto) and (ii) each
         closing under any underwriting or similar agreement as and to the
         extent required thereunder;

                  (P)      in the case of a Shelf Registration or if a
         Prospectus is required to be delivered by any Participating
         Broker-Dealer in the case of an Exchange Offer, make available for
         inspection by representatives of the Holders of the Registrable
         Securities, any underwriters participating in any disposition pursuant
         to a Shelf Registration Statement, any Participating Broker-Dealer and
         any counsel or accountant retained by any of the foregoing, all
         financial and other records, pertinent corporate documents and
         properties of the Company reasonably requested by any such persons, and
         cause the respective officers, directors, employees and any other
         agents of the Company to supply all information reasonably requested by
         any such representative, underwriter, special counsel or accountant in
         connection with a Registration Statement, and make such representatives
         of the Company available for discussion of such documents as shall be
         reasonably requested by the Initial Purchasers in order to enable such
         persons to conduct a reasonable investigation within the meaning of
         Section 11 of the 1933 Act; provided, however, that such persons shall
         first agree in writing with the Company that any information that is
         reasonably and in good faith designated by the Company in writing as
         confidential at the time of delivery of such information shall be kept
         confidential by such persons, unless (i) disclosure of such information
         is required by court or administrative order or is necessary to respond
         to inquiries of regulatory authorities, (ii) disclosure of such
         information is required by law (including any disclosure requirements
         pursuant to federal securities laws in connection with the filing of
         the Shelf Registration Statement or the use of any Prospectus), (iii)
         such information becomes generally available to the public other than
         as a result of a disclosure or failure to safeguard such information by
         such persons or (iv) such information becomes available to such persons
         from a source other than the Company and its subsidiaries and such
         source is not known by such persons to be bound by a confidentiality
         agreement; and provided, further, that the foregoing inspection and
         information gathering shall be coordinated by (x) the managing
         underwriter in connection with any underwritten offering pursuant to a
         Shelf Registration, (y) the Holder or Holders designated by the
         participating Majority Holders in connection with any nonunderwritten
         offering pursuant to a Shelf Registration or (z) the Participating
         Broker-Dealer holding the largest amount of Registrable Securities in
         the case of use of a Prospectus included in the Exchange Offer
         Registration Statement, together with one counsel designated by and on
         behalf of such persons;

                                       15

<PAGE>

                  (Q)      (i) in the case of an Exchange Offer Registration
         Statement, within a reasonable time prior to the filing of any Exchange
         Offer Registration Statement, any Prospectus forming a part thereof,
         any amendment to an Exchange Offer Registration Statement or amendment
         or supplement to such Prospectus, provide copies of such document to
         the Initial Purchasers and to counsel to the Holders of Registrable
         Securities and make such changes in any such document prior to the
         filing thereof as the Initial Purchasers or counsel to the Holders of
         Registrable Securities may reasonably request and, except as otherwise
         required by applicable law, not file any such document in a form to
         which the Initial Purchasers on behalf of the Holders of Registrable
         Securities and counsel to the Holders of Registrable Securities shall
         not have previously been advised and furnished a copy of or to which
         the Initial Purchasers on behalf of the Holders of Registrable
         Securities or counsel to the Holders of Registrable Securities shall
         reasonably object (which objection shall be made within a reasonable
         period of time), and make the representatives of the Company available
         for discussion of such documents as shall be reasonably requested by
         the Initial Purchasers; and (ii) in the case of a Shelf Registration, a
         reasonable time prior to filing any Shelf Registration Statement, any
         Prospectus forming a part thereof, any amendment to such Shelf
         Registration Statement or amendment or supplement to such Prospectus,
         provide copies of such document to the Holders of Registrable
         Securities, to the Initial Purchasers, to counsel for the Holders and
         to the underwriter or underwriters of an underwritten offering of
         Registrable Securities, if any, make such changes in any such document
         prior to the filing thereof as the Initial Purchasers, the counsel to
         the Holders or the underwriter or underwriters reasonably request and
         not file any such document in a form to which the Majority Holders, the
         Initial Purchasers on behalf of the Holders of Registrable Securities,
         counsel for the Holders of Registrable Securities or any underwriter
         shall not have previously been advised and furnished a copy of or to
         which the Majority Holders, the Initial Purchasers on behalf of the
         Holders of Registrable Securities, counsel to the Holders of
         Registrable Securities or any underwriter shall reasonably object
         (which objection shall be made within a reasonable period of time), and
         make the representatives of the Company available for discussion of
         such document as shall be reasonably requested by the Holders of
         Registrable Securities, the Initial Purchasers on behalf of such
         Holders, counsel for the Holders of Registrable Securities or any
         underwriter;

                  (R)      use its reasonable commercial efforts to (a) if the
         Securities have been rated prior to the initial sale of such
         Securities, confirm such ratings will apply to the Securities covered
         by a Registration Statement, or (b) if the Securities were not
         previously rated, cause the Securities covered by a Registration
         Statement to be rated with the appropriate rating agencies, if so
         requested by Holders of a majority in aggregate principal amount of
         Securities covered by such Registration Statement, or by the managing
         underwriters, if any.

                  (S)      otherwise comply with all applicable rules and
         regulations of the SEC and make available to its security holders, as
         soon as reasonably practicable, an earnings statement covering at least
         12 months which shall satisfy the provisions of Section 11(a) of the
         1933 Act and Rule 158 thereunder;

                                       16

<PAGE>

                  (T)      cooperate and assist in any filings required to be
         made with the NASD and, in the case of a Shelf Registration, in the
         performance of any due diligence investigation by any underwriter and
         its counsel (including any "qualified independent underwriter" that is
         required to be retained in accordance with the rules and regulations of
         the NASD); and

                  (U)      upon consummation of an Exchange Offer, obtain a
         customary opinion of counsel to the Company addressed to the Trustee
         for the benefit of all Holders of Registrable Securities participating
         in the Exchange Offer, and which includes an opinion substantially to
         the effect that (i) the Company has duly authorized, executed and
         delivered the Exchange Securities and the related supplemental
         indenture and (ii) each of the Exchange Securities and related
         indenture constitute a legal, valid and binding obligation of the
         Company, enforceable against the Company in accordance with its
         respective terms (with customary exceptions).

         In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably require
for inclusion in the Shelf Registration Statement and request in writing.

         In the case of a Shelf Registration Statement, each Holder agrees, and
in the case of the Exchange Offer Registration Statement, each Participating
Broker-Dealer agrees, that, upon receipt of any notice from the Company of (a)
the happening of any event or the discovery of any facts, each of the kind
described in Sections 3(F)(ii), (iii) or (v) hereof or (b) the Company's
determination, in its reasonable judgment, upon advice of counsel, that the
continued effectiveness and use of the Shelf Registration Statement or the
Prospectus included in the Shelf Registration Statement or the Exchange Offer
Registration Statement would (x) require the disclosure of material information,
which the Company has a bona fide business reason for preserving as
confidential, or (y) interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Company or any of its
subsidiaries, such Holder or Participating Broker-Dealer, as the case may be,
will forthwith discontinue disposition of Registrable Securities pursuant to
such Registration Statement or Prospectus until the receipt by such Holder or
Participating Broker-Dealer, as the case may be, of either copies of the
supplemented or amended Prospectus contemplated by Section 3(L) hereof, and, if
so directed by the Company, such Holder or Participating Broker-Dealers will
deliver to the Company (at its expense) all copies in its possession of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice, or notice in writing from the Company that such Holder or
Participating Broker-Dealers may resume disposition of Registrable Securities
pursuant to such Registration Statement or Prospectus. If the Company shall give
any such notice described in clause (a) above to suspend the disposition of
Registrable Securities pursuant to a Registration Statement as a result of the
happening of any event or the discovery of any facts, each of the kind described
in Section 3(F)(ii), (iii) and (v) hereof, the Company shall be deemed to have
used its reasonable commercial efforts to keep such Registration Statement
effective during such Suspension Period provided that the Company shall use its
reasonable commercial efforts to file and have declared effective (if an
amendment) as soon as practicable an amendment or supplement to such
Registration Statement. The Company shall extend the

                                       17

<PAGE>

period during which such Registration Statement shall be maintained effective or
the Prospectus used pursuant to this Agreement by the number of days during the
period from and including the date of the giving of the notice described in
clauses (a) and (b) above to and including the date when the Holders or
Participating Broker-Dealers shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions or notification that
they may resume such disposition under an existing Prospectus.

         If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in such
offering and shall be reasonably acceptable to the Company. No Holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

         4.       Indemnification; Contribution.

         (A)      In the event of a Shelf Registration Statement or in
connection with any prospectus delivery pursuant to an Exchange Offer
Registration Statement by an Initial Purchaser or Participating Broker-Dealer,
the Company agrees to indemnify and hold harmless the Initial Purchasers, each
Holder, each Participating Broker-Dealer, each Person who participates as an
underwriter (any such Person being an "Underwriter") and each Person, if any,
who controls any Initial Purchaser, Holder, Participating Broker-Dealer or
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act (collectively, the "Section 4 Persons"), against any losses,
claims, damages, liabilities or expenses (including the reasonable cost of
investigating and defending against any claims therefore and counsel fees
incurred in connection therewith as such expenses are incurred), joint or
several, which may be based upon either the 1933 Act, or the 1934 Act, or any
other statute or at common law, on the ground or alleged ground that any
Registration Statement (or any amendment or supplement thereto) pursuant to
which Exchange Securities or Registrable Securities were registered under the
1933 Act or any Prospectus included therein (or any amendment or supplement
thereto) included or allegedly included an untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, written information
furnished to the Company by any such Section 4 Person specifically for use in
the preparation thereof; provided that in no case is the Company to be liable
with respect to any claims made against any Section 4 Person unless such Section
4 Person shall have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Section 4 Person, but failure to
notify the Company of any such claim shall not relieve it from any liability
which it may have to such Section 4 Person otherwise than on account of the
indemnity agreement contained in this paragraph; and provided, further, that the
foregoing indemnity with respect to any Prospectus, including any preliminary
prospectus or preliminary prospectus supplement, shall not inure to the benefit
of any Section 4 Person if a copy of the Prospectus (as amended or

                                       18

<PAGE>

supplemented, exclusive of the material incorporated by reference) had not been
sent or given by or on behalf of such Section 4 Person to the Person asserting
any such losses, claims, damages or liabilities concurrently with or prior to
delivery of the written confirmation of the sale of Exchange Securities or
Registrable Securities, as the case may be, to such Person and the untrue
statement or omission of a material fact contained in any such Prospectus was
corrected in the Prospectus (as amended or supplemented) if the Company had
previously furnished copies thereof to such Section 4 Persons.

         The Company will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event that the
Company elects to assume the defense of any such suit and retains such counsel,
each Section 4 Person may retain additional counsel but shall bear the fees and
expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Section 4 Person or Section 4 Persons and such persons have been
advised by such counsel that one or more legal defenses may be available to it
or them which may not be available to the Company, in which case the Company
shall not be entitled to assume the defense of such suit on behalf of such
Section 4 Person, notwithstanding its obligation to bear the reasonable fees and
expenses of such counsel, it being understood, however, that the Company shall
not, in connection with any one such suit or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such Section 4 Persons, which firm shall be designated in writing
by the Initial Purchasers. The Company shall not be liable to indemnify any
Person for any settlement of any such claim effected without the Company's prior
written consent. This indemnity agreement will be in addition to any liability,
which the Company might otherwise have.

         (B)      Each Section 4 Person agrees severally and not jointly to
indemnify and hold harmless the Company, each of the Company's directors, each
of the Company's officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the 1933 Act or
the 1934 Act, against any losses, claims, damages, liabilities or expenses
(including the reasonable cost of investigating and defending against any claims
therefor and counsel fees incurred in connection therewith as such expenses are
incurred), joint or several, which may be based upon the 1933 Act, or any other
statute or at common law, on the ground or alleged ground that any Registration
Statement (or any amendment or supplement thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act or any
Prospectus included therein (or any amendment or supplement thereto) included or
allegedly included an 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 not misleading, but only insofar as any such statement or
omission was made in reliance upon, and in conformity with, written information
furnished to the Company by such Section 4 Person specifically for use in the
preparation thereof; provided that in no case is such Section 4 Person to be
liable with respect to any claims made against the Company or any such director,
officer or controlling person unless the Company or any such director, officer
or controlling person shall have notified such Section 4 Person in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall

                                       19

<PAGE>

have been served upon the Company or any such director, officer or controlling
person, but failure to notify such Section 4 Person of any such claim shall not
relieve it from any liability which it may have to the Company or any such
director, officer or controlling person otherwise than on account of the
indemnity agreement contained in this paragraph. Notwithstanding any other
provision of this subsection (B), with respect to any amount due to an
indemnified person under this subsection (B), such Section 4 Person shall not be
liable for any amount in excess of the amount by which the net proceeds received
by such Section 4 Person from the sale of Exchange Securities or Registrable
Securities pursuant to a Registration Statement exceeds the amount of damages
which such Section 4 Person has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

         Such Section 4 Person will be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such Section 4 Person elects to
assume the defense, such defense shall be conducted by counsel chosen by it. In
the event that such Section 4 Person elects to assume the defense of any such
suit and retain such counsel, the Company or such director, officer or
controlling person, defendant or defendants in the suit, may retain additional
counsel but shall bear the fees and expenses of such counsel unless (i) such
Section 4 Person shall have specifically authorized the retaining of such
counsel or (ii) the parties to such suit include the Company or any such
director, officer, trustee or controlling person and such Section 4 Person and
the Company or such director, officer, trustee or controlling person have been
advised by such counsel that one or more legal defenses may be available to it
or them which may not be available to such Section 4 Person, in which case such
Section 4 Person shall not be entitled to assume the defense of such suit on
behalf of the Company or such director, officer, trustee or controlling person,
notwithstanding its obligation to bear the reasonable fees and expenses of such
counsel, it being understood, however, that such Section 4 Person shall not, in
connection with any one such suit or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one a separate firm of attorneys at any time for
all of the Company and any such director, officer or controlling person, which
firm shall be designated in writing by the Company. Such Section 4 Person shall
not be liable to indemnify any person for any settlement of any such claim
effected without such Section 4 Person's prior written consent. This indemnity
agreement will be in addition to any liability which such Section 4 Person might
otherwise have.

         (C)      If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (A) or (B) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (A) or (B) above in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other indemnified
party, as the case may be, on the other, and the parties' relative

                                       20

<PAGE>

intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first sentence
of this subsection (C) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (C).
Notwithstanding any other provision of this subsection (C), the Holders of the
Securities and the Exchange Securities shall not be required to contribute any
amount in excess of the amount by which the net proceeds received by such
Holders from the sale of such securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. The obligations of the Holders of the Securities and Exchange
Securities in this subsection (C) to contribute are several in proportion to the
net proceeds received from the sale of such securities by such Holder and not
joint. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
subsection (C), each person, if any, who controls such indemnified party within
the meaning of the 1933 Act or the 1934 Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act shall have the same
rights to contribution as the Company.

         5.       Miscellaneous.

                  5.1      Rule 144 and Rule 144A. For so long as the Company is
subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the
Company covenants that it will file the reports required to be filed by it under
the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (A) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the 1933
Act, (B) deliver such information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the 1933 Act and (C) take such further
action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable
Securities without registration under the 1933 Act within the limitation of the
exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may
be amended from time to time or (iii) any similar rules or regulations hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.

                  5.2      No Inconsistent Agreements. The Company has not
entered into and the Company will not after the date of this Agreement enter
into any agreement which is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not and will
not for the term of this Agreement in any way conflict with the rights granted
to the holders of the Company's other issued and outstanding securities under
any such agreements.

                                       21

<PAGE>

                  5.3      Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided that in the event the Company
increases the aggregate principal amount of, and issues additional Securities
pursuant to Section 202 of the Supplemental Indenture No. 3 dated September 9,
2003, such additional Securities issued shall be deemed to be included in the
definition of Securities hereunder, and any initial purchasers named in any
purchase agreement executed in connection with such additional Securities issued
shall be deemed to be included in the definition of Initial Purchasers
hereunder, and provided further that the Company may amend, modify or supplement
the provisions hereof to reflect the increase in the aggregate principal amount
of the Securities, including any modification of the Initial Purchasers and any
other changes deemed by the Company to be necessary, advisable or appropriate to
reflect such increase, without the written consent of the Holders to the extent
such amendment, modification or supplement does not have a material adverse
effect on the Holders. Without the consent of the Holder of each Security
however, no modification may change the provisions relating to the payment of
Additional Interest.

                  5.4      Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the
provisions of this Section 5.4, which address initially is the address set forth
in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to
the Company, initially at the Company's address set forth in the Purchase
Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4.

         All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two Business Days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and on the next
Business Day if timely delivered to an air courier guaranteeing overnight
delivery.

         Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in such Indenture.

                  5.5      Successor and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and

                                       22

<PAGE>

provisions of this Agreement, including the restrictions on resale set forth in
this Agreement and, if applicable, the Purchase Agreement, and such person shall
be entitled to receive the benefits hereof.

                  5.6      Third Party Beneficiaries. The Initial Purchasers
(even if the Initial Purchasers are not Holders of Registrable Securities) shall
be third party beneficiaries to the agreements made hereunder between the
Company, on the one hand, and the Holders, on the other hand, and shall have the
right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights hereunder.

                  5.7      Specific Performance. Without limiting the remedies
available to the Initial Purchasers and the Holders, the Company acknowledges
that any failure by the Company to comply with its obligations under Sections
2.1 through 2.4 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and that,
in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Company's
obligations under Sections 2.1 through 2.4 hereof.

                  5.8      Restriction on Resales. Until the expiration of two
years after the original issuance of the Securities, the Company will not, and
will cause its "affiliates" (as such term is defined in Rule 144(a)(1) under the
1933 Act) not to, resell any Securities which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act) that have been
reacquired by any of them and shall immediately upon any purchase of any such
Securities submit such Securities to the Trustee for cancellation.

                  5.9      Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed signature page of this Agreement by facsimile or any other rapid
transmission device designed to produce a written record of the communication
transmitted shall be as effective as delivery of a manually executed counterpart
thereof.

                  5.10     Headings. The headings in this Agreement are for the
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  5.11     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

                  5.12     Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable,

                                       23

<PAGE>

the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.

                  5.13     Entire Agreement. This Agreement and the Purchase
Agreement represent the entire agreement among the parties hereto with respect
to the subject matter hereof and supercedes and replaces any and all prior
agreements and understandings, whether oral or written, with respect thereto.

                                       24

<PAGE>

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

                                     CENTERPOINT ENERGY, INC.

                                     By:   /s/ Gary L. Whitlock
                                         ---------------------------------------
                                         Name: Gary L. Whitlock
                                         Title: Executive Vice President and CFO

CONFIRMED AND ACCEPTED
AS OF THE DATE FIRST ABOVE WRITTEN:

BANC OF AMERICA SECURITIES LLC, for itself and
as a representative of the Initial Purchasers

By:    /s/ Robert D. Craig
    ------------------------------------------
    Name: Robert D. Craig
    Title: Managing Director

DEUTSCHE BANK SECURITIES INC., for itself and
as a representative of the Initial Purchasers

By:    /s/ Matt Siracuse
    ------------------------------------------
    Name: Matt Siracuse
    Title: Director

By:    /s/ Charles W. Chigas
    -----------------------------------------
    Name: Charles W. Chigas
    Title: Managing Director

WACHOVIA CAPITAL MARKETS, LLC, for itself and
as a representative of the Initial Purchasers

By:    /s/ James T. Williams, Jr.
    -----------------------------------------
    Name: James T. Williams, Jr.
    Title: Director

                                       25

<PAGE>

                                                                         ANNEX A

         Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the 1933 Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
Exchange Securities received in exchange for Securities where such Securities
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 180 days
after the Expiration Date (as defined herein), it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."

<PAGE>

                                                                         ANNEX B

         Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

                                       2

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

         Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 200 , all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.(1)

         The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the 1933 Act and any profit
on any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the 1933 Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the 1933 Act.

         For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
1933 Act.

--------------
(1) In addition, the legend required by Item 502(b) of Regulation S-K will
appear on the inside front cover page of the Exchange Offer prospectus below the
Table of Contents.

                                       3

<PAGE>

                                                                         ANNEX D

[     ]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

         Name: _______________________________________
         Address: ____________________________________

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the 1933 Act.

                                       4

<PAGE>

                                                                         ANNEX E

                           FORM OF OPINION OF COUNSEL

         The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended.

         The Registration Statement has become effective under the 1933 Act,
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted and are pending or are
threatened by the SEC under the 1933 Act.

         The Exchange Offer Registration Statement and the Prospectus (except
for (A) the financial statements, including the notes and schedules, if any
thereto (except to the extent such notes describe legal and governmental
proceedings to which the Company is a party and are incorporated by reference
into one or more items of a report that is incorporated by reference or included
in therein other than an item that requires financial statements to be provided)
or the auditor's reports on the audited portions thereof, (B) the other
accounting, financial and statistical data, and (C) the exhibits thereto, as to
which we have not been asked to comment) comply as to form in all material
respects with the applicable requirements of the 1933 Act and the applicable
rules and regulations promulgated under the 1933 Act.

         We have participated in conferences with certain officers and other
representatives of the Company, representatives of the independent public
accountants of the Company, representatives of the [Initial Purchasers]
[Holders] and counsel for the [Initial Purchasers] [Holders], at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed. Although we have not undertaken to determine independently, and
do not assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in or incorporated by reference in the Registration
Statement or the Prospectus, we advise you that, on the basis of the foregoing
(relying as to materiality to a large extent upon statements and other
representations of officers and other representatives of the Company), no facts
have come to our attention that lead us to believe that the Registration
Statement and any amendment made thereto prior to the date hereof (except for
(A) the financial statements, including the notes and schedules, if any thereto
or the auditor's reports on the audited portions thereof, (B) the other
accounting, financial and statistical data, and (C) the exhibits thereto, as to
which we have not been asked to comment), as of the time the Registration
Statement became effective or such amendment was filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, and any amendment or supplement thereto made prior to the
date hereof (except for (A) the financial statements, including the notes and
schedules, if any thereto or the auditor's reports on the audited portions
thereof, (B) the other accounting, financial and statistical data, and (C) the
exhibits thereto, as to which we have not been asked to comment), as of the date
of the Prospectus or such amendment or supplement contained any

<PAGE>

untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.

                                       2

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