Document:

Exhibit 10.56

 

ASSET
PURCHASE AGREEMENT

 

This Asset Purchase
Agreement (“Agreement”) is entered into on this 26th day of November, 2008 (“Closing Date”) by and
between New Horizons Computer Learning Centers, Inc., a California
corporation (“Buyer”) on the one hand, and Technology Training &
Services Corporation, a California corporation (“Seller), Phyllis Scott, an
individual, and Clay Scott, an individual (collectively “Shareholders”) on the
other hand.  Buyer, Shareholders and
Seller are hereinafter sometimes individually referred to as a “Party” or
collectively as the “Parties”.

 

WHEREAS, Seller wishes to
sell to Buyer substantially all of Seller’s assets related to its business of
providing Online IT training and consulting services for government and industry
worldwide (the “Business”), which shall consist of the assets set forth on Exhibit “A”
(the “Assets”); and

 

WHEREAS, Buyer desires to
acquire the Assets from Seller; and

 

WHEREAS, concurrent with
the transaction described in this Agreement, Buyer desires to procure a
perpetual  license from Terillian, an
Oklahoma C Corporation an affiliate of Seller (“Terillian”), and a license to
use certain technology known as “Lab on Demand” (“LOD License”), the terms of
which shall be established as a condition precedent to the consummation of the
transactions contemplated by this Agreement.

 

NOW, THEREFORE, in
consideration of the covenants and agreements contained herein, the Parties
agree as follows:

 

1.                                      Purchase
of Assets; Excluded Assets; Closing Date:

 

(a)                                  Pursuant
to the terms and subject to the conditions set forth in this Agreement, Seller
hereby agrees to sell, grant, transfer, convey, assign and deliver the Assets
to Buyer as of the close of business on Friday, November 30, 2008 (the “Acquisition
Date”), which may be extended as forth in Section 4(i) below and
subject to fulfillment of each of the conditions set forth in Section 4
below.  The Assets shall include, without
limitation, all currently developed virtual labs and associated intellectual
property to continue the development thereof, all computer hardware and
software associated with the Business, and all other assets which are more
particularly set forth on Exhibit “A”.

 

(b)                                 The
Parties acknowledge and agree that, other than as otherwise expressly stated in
this Agreement, no other assets, personal or real property of Seller is
included in this transaction.

 

2.                                      Consideration:  In consideration for the transfer of the
Assets, Buyer shall remit to Seller the following:

 

 

(a)                                  $581,000
on the Closing Date in the form of a $550,000 wire transfer to a bank account
designated by Seller in writing to Buyer, and the payment of $31,000 for November payroll
included in the December 6th payroll paid directly by New Horizons;

 

(b)                                 $100,000
per month on the 15th day of each month for the five (5) month
period commencing December 15, 2008 and ending April 15, 2009;

 

(c)                                  an
earn-out payment, payable annually each year commencing December 31, 2009
and ending December 31, 2013, equal to fifty percent (50%) of the cumulative
net income of the Business as determined using U.S. Generally Accepted
Accounting Principles (“GAAP”) consistently applied, from the Acquisition
Date  through that calendar year end,
less all earn-out payments made to Seller previously, (each an “Earn-out
Payment” and collectively the “Earn-out Payments”).  For purposes of determining Net Income of the
Business, it is stipulated and agreed that all virtual lab development costs
will be treated as a current period expense, and income taxes shall be deducted
at a 30% rate.  Moreover, no Earn-out
Payment shall be due until Buyer’s external auditors have approved the
financial statements of the Business for each such year that an Earn-out
Payment is otherwise due.  Buyer shall
remit $500,000 to Seller as an advance payment against future Earn-out Payments
(the “Advance Earn-out Payment”), which Advance Earn-out Payment shall be
payable March 31, 2009.

 

3.                                      Taxes:  Seller shall be solely responsible for the
payment of any and all taxes, excise and other governmental charges or fees, if
any, which are payable in connection with the purchase of the Assets.

 

4.                                      Conditions Precedent to Closing; Covenants;
Extension of Closing Date:

 

(a)                                  On
the Closing Date, Seller shall cause any UCC filings to be terminated or
otherwise released such that the Assets are unencumbered.

 

(b)                                 On
the Closing Date, Buyer shall have entered into a service agreement with TulsaConnect for data hosting services of Seller’s
hosted servers and associated equipment at TulsaConnect’s data center in Tulsa,
Oklahoma, on terms and conditions acceptable to Buyer.

 

(c)                                  On
the Closing Date, Buyer shall have procured a perpetual and  semi-exclusive license with Terillian, on
terms and conditions acceptable to Buyer, to use certain technology known as “Labs
on Demand”.

 

(d)                                 On
the Closing Date, Buyer shall have procured the approval of its Board of
Directors.

 

(e)                                  On
the Closing Date, Seller shall execute and deliver to Buyer the Bill of Sale in
the form attached hereto as Exhibit “B”.

 

(f)                                    On
the Closing Date, Buyer shall have procured key man life insurance policy with
a face value of $1 million and a five (5) year term for each of Clay Scott
and Phyllis Scott.

 

2

 

(g)                                 In
the event that all of the foregoing conditions are not fully and completely
satisfied on or before the Closing Date, then such failure shall extend the
Closing Date until such time as any unmet conditions have been satisfied, but
in any event not later than December 31, 2008.   Failure to meet the closing conditions by December 31,
2008 will release Buyer of its obligations to perform under this Agreement and
Buyer shall thereafter have no liability to Seller whatsoever.

 

(h)                                 Any
debts, liabilities or obligations incurred by or actions, claims or lawsuits
asserted against either Buyer or Seller which relate to the operation of the
Business on or prior to the Closing Date will be the responsibility of Seller.

 

5.                                      Representations
and Warranties of Seller and Shareholders:  Seller and Shareholders jointly and severally
represent, warrant and covenant as follows:

 

(a)                                  Seller
is a California corporation, duly organized, validly existing and in good
standing under the laws of the State of California and has all necessary
corporate powers to own its assets and to operate its business as now owned and
operated by it.  Shareholders own 100% of
the issued and outstanding equity of Buyer.

 

(b)                                 Seller
has the right, power, legal capacity, and authority to enter into and perform
its obligations under this Agreement and the execution of this Agreement has
been duly authorized by Shareholders.

 

(c)                                  Seller
has good and marketable title to all of the Assets, and, except as otherwise
indicated herein, such Assets are free and clear of any restrictions or conditions
to sale, conveyance or transfer and are free and clear of all liens, mortgages,
pledges, encumbrances, leases, agreements, rental agreements, charges, claims,
security interests, taxes, conditions or restrictions of any nature or
description whatsoever.   The Assets are
in good working condition, ordinary wear and tear excepted.  Except as otherwise expressly provided
herein, the Assets are being sold “as is, where is” without any express or
implied warranties whatsoever.

 

(d)                                 There
are no claims, actions or lawsuits pending or threatened against Seller
relating to the Assets and/or the Business.

 

(e)                                  Seller
shall execute all documents and take all steps reasonably necessary to transfer
the Assets to Buyer effective as of the Closing Date.

 

6.                                      Representations
of Buyer and Shareholders:  Buyer
represents, warrants and covenants as follows:

 

(a)                                  Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the State of California.

 

3

 

(b)                                 Subject
to Section 4(d) above, Buyer has the right, power, legal capacity,
and authority to enter into and perform its obligations under this Agreement.

 

7.                                      Indemnification:  Seller and Shareholders shall, jointly and
severally, indemnify, hold harmless and defend Buyer, its parent company,
affiliates, officers, agents, shareholders and employees from and against any
cause of action, claim, loss or liability arising out of or resulting in any
way from: (i) the negligent acts or omissions of Seller’s officers,
employees, agents or Shareholders; (ii) any breach or inaccuracy of any
representation, warranty or covenant of Seller set forth in this Agreement; and
(iii) any debts, claims, liabilities or lawsuits which relate to the use
or operation of the Business or the Assets on or prior to the Closing
Date.  If after ten  (10) days from receipt of written notice
the Seller fails to defend the Buyer as required above, Buyer will have the
right (but not the obligation) to undertake the defense, compromise or
settlement of such action on behalf of, and for the account and at the risk of
Seller.

 

8.                                      Employees:  Buyer agrees to offer employment to all
employees of Seller upon substantially the same terms and conditions as are
currently in effect for such employees. 
Such employees shall be “at will” and shall be subject to the employment
policies of Buyer.  Seller and
Shareholders shall be liable for any and all employment related liabilities
which arise or relate to the period prior to the Closing Date and shall jointly
and severally indemnify and defend Buyer against any such claims.

 

9.                                      Notices:  All notices with respect to this Agreement
will be sent by certified mail or facsimile, to the following addresses or
facsimile numbers:

 

If to Buyer:

 

New Horizons Computer
Learning Center, Inc.

Attention:  Office of General Counsel

1900 S. State College
Blvd., Suite 120

Anaheim, CA  92806

Tel:  (714) 940-8000

Fax: (714) 938-6007

 

If to
Seller/Shareholders:

 

Technology Training &
Services Corporation

Attention:  Phyllis Scott, President

4910 Campus Drive

Newport Beach, CA  92660

Phone:  949752 6334

Fax 949 752 6363

 

10.                               Entire
Agreement; Assignment:  Except for the License Agreements and related
agreements which are being executed concurrently herewith, this Agreement and
the exhibits attached hereto represent the entire agreement between the Parties
and are binding on each 

 

4

 

Party’s respective successors, heirs and assigns.  This Agreement may not be assigned without
the written consent of the other party, and may only be amended by a written
agreement signed by authorized representatives of both Parties.

 

12.                               Waiver:  The failure of either party to
enforce any right, remedy or condition of this Agreement shall not be deemed a
waiver thereof nor shall it void or otherwise affect its right to enforce the
same right, remedy or condition at any subsequent time.

 

13.                               Survival
of Representations and Warranties:  The
representations and warranties set forth in this Agreement shall survive and
continue until the expiration of the applicable statute of limitations.

 

14.                               Counterparts:  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute but one and the same instrument.

 

15.                               Facsimile
Signatures:  For purposes of
execution of this Agreement, faxed signature pages shall be deemed the
same as original signature pages.

 

16.                               Governing
Law:  This
Agreement will be governed by the laws of the State of California.

 

5

 

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

 

	
  NEW HORIZONS COMPUTER LEARNING
  CENTERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Charles J. Mallon

  	
   

  
	
   

  	
  EVP & CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TECHNOLOGY TRAINING &
  SERVICES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Phyllis Scott

  	
   

  
	
   

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SHAREHOLDERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Clay Scott

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Phyllis Scott

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  *

  	
   

  

 

6EXHIBIT 4.1

 

WATTS WATER TECHNOLOGIES, INC.

 

and

 

 

 

Trustee

 

INDENTURE

 

Dated as of                     

 

SENIOR DEBT SECURITIES

 

 

CROSS-REFERENCE
TABLE(1)

 

	
  Section of
  

  Trust Indenture Act 

  of 1939, as amended

  	
   

  	
  Section of 

  Indenture

  
	
  310(a)

  	
   

  	
  6.09

  
	
  310(b)

  	
   

  	
  6.08

  
	
   

  	
   

  	
  6.10

  
	
  310(c)

  	
   

  	
  Inapplicable

  
	
  311(a)

  	
   

  	
  6.13

  
	
  311(b)

  	
   

  	
  6.13

  
	
  311(c)

  	
   

  	
  Inapplicable

  
	
  312(a)

  	
   

  	
  4.01 

  
	
   

  	
   

  	
  4.04

  
	
  312(b)

  	
   

  	
  4.04(c)

  
	
  312(c)

  	
   

  	
  4.04(c)

  
	
  313(a)

  	
   

  	
  4.03

  
	
  313(b)

  	
   

  	
  4.03

  
	
  313(c)

  	
   

  	
  4.03

  
	
  313(d)

  	
   

  	
  4.03

  
	
  314(a)

  	
   

  	
  4.02

  
	
  314(b)

  	
   

  	
  Inapplicable

  
	
  314(c)

  	
   

  	
  2.04

  
	
   

  	
   

  	
  8.04 

  
	
   

  	
   

  	
  9.01(c)

  
	
   

  	
   

  	
  10.01(b)

  
	
   

  	
   

  	
  11.05

  
	
  314(d)

  	
   

  	
  Inapplicable

  
	
  314(e)

  	
   

  	
  11.05

  
	
  314(f)

  	
   

  	
  Inapplicable

  
	
  315(a)

  	
   

  	
  6.01

  
	
   

  	
   

  	
  6.02

  
	
  315(b)

  	
   

  	
  5.11

  
	
  315(c)

  	
   

  	
  6.01

  
	
  315(d)

  	
   

  	
  6.01

  
	
   

  	
   

  	
  6.02

  
	
  315(e)

  	
   

  	
  5.12

  
	
  316(a) 

  	
   

  	
  5.09

  
	
   

  	
   

  	
  5.10

  
	
   

  	
   

  	
  7.04 

  
	
  316(b)

  	
   

  	
  5.06

  
	
   

  	
   

  	
  5.10

  
	
  316(c)

  	
   

  	
  7.02

  
	
  317(a)

  	
   

  	
  5.04

  
	
  317(b)

  	
   

  	
  3.04

  
	
  318(a)

  	
   

  	
  11.07

  

 

(1)           This Cross-Reference
Table does not constitute part of the Indenture and shall not have any bearing
on the interpretation of any of its terms or provisions.

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
  Section 1.01

  	
  Certain Terms Defined

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  SECURITIES

  	
  5

  
	
  Section 2.01

  	
  Forms Generally

  	
  5

  
	
  Section 2.02

  	
  Form of Trustee’s Certificate
  of Authentication

  	
  5

  
	
  Section 2.03

  	
  Amount Unlimited; Issuable in
  Series

  	
  6

  
	
  Section 2.04

  	
  Authentication and Delivery of
  Securities

  	
  8

  
	
  Section 2.05

  	
  Execution of Securities

  	
  9

  
	
  Section 2.06

  	
  Certificate of Authentication

  	
  10

  
	
  Section 2.07

  	
  Denomination and Date of
  Securities; Payments of Interest

  	
  10

  
	
  Section 2.08

  	
  Registration, Transfer and Exchange

  	
  10

  
	
  Section 2.09

  	
  Mutilated, Defaced, Destroyed, Lost
  and Stolen Securities

  	
  13

  
	
  Section 2.10

  	
  Cancellation of Securities;
  Destruction Thereof

  	
  14

  
	
  Section 2.11

  	
  Temporary Securities

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  COVENANTS OF THE ISSUER

  	
  14

  
	
  Section 3.01

  	
  Payment of Principal and Interest

  	
  14

  
	
  Section 3.02

  	
  Offices for Payments, Etc.

  	
  14

  
	
  Section 3.03

  	
  Appointment to Fill a Vacancy in
  Office of Trustee

  	
  15

  
	
  Section 3.04

  	
  Paying Agents

  	
  15

  
	
  Section 3.05

  	
  Written Statement to Trustee

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  SECURITYHOLDERS LISTS AND REPORTS
  BY THE ISSUER AND THE TRUSTEE

  	
  16

  
	
  Section 4.01

  	
  Issuer to Furnish Trustee
  Information as to Names and Addresses of Securityholders

  	
  16

  
	
  Section 4.02

  	
  Reports by the Issuer

  	
  17

  
	
  Section 4.03

  	
  Reports by the Trustee

  	
  17

  
	
  Section 4.04

  	
  Preservation of Information;
  Communication with Securityholders

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  REMEDIES OF THE TRUSTEE AND
  SECURITYHOLDERS ON EVENT OF DEFAULT

  	
  17

  
	
  Section 5.01

  	
  Event of Default Defined;
  Acceleration of Maturity; Waiver of Default

  	
  17

  
	
  Section 5.02

  	
  Collection of Debt by Trustee;
  Trustee May Prove Debt

  	
  19

  
	
  Section 5.03

  	
  Application of Proceeds

  	
  21

  
	
  Section 5.04

  	
  Suits for Enforcement

  	
  22

  
	
  Section 5.05

  	
  Restoration of Rights on
  Abandonment of Proceedings

  	
  22

  
	
  Section 5.06

  	
  Limitations on Suits by
  Securityholders

  	
  22

  
	
  Section 5.07

  	
  Unconditional Right of
  Securityholders to Institute Certain Suits

  	
  23

  
				

 

i

 

	
  Section 5.08

  	
  Powers and Remedies Cumulative;
  Delay or Omission Not Waiver of Default

  	
  23

  
	
  Section 5.09

  	
  Control by Holders of Securities

  	
  23

  
	
  Section 5.10

  	
  Waiver of Past Defaults

  	
  24

  
	
  Section 5.11

  	
  Trustee to Give Notice of Default

  	
  24

  
	
  Section 5.12

  	
  Right of Court to Require Filing of
  Undertaking to Pay Costs

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  CONCERNING THE TRUSTEE

  	
  25

  
	
  Section 6.01

  	
  Duties and Responsibilities of the
  Trustee; During Default; Prior to Default

  	
  25

  
	
  Section 6.02

  	
  Certain Rights of the Trustee

  	
  25

  
	
  Section 6.03

  	
  Trustee Not Responsible for
  Recitals, Disposition of Securities or Application of Proceeds Thereof

  	
  27

  
	
  Section 6.04

  	
  Trustee and Agents May Hold
  Securities; Collections, Etc.

  	
  27

  
	
  Section 6.05

  	
  Moneys Held by Trustee

  	
  27

  
	
  Section 6.06

  	
  Compensation and Indemnification of
  Trustee and Its Prior Claim

  	
  27

  
	
  Section 6.07

  	
  Right of Trustee to Rely on
  Officer’s Certificate, Etc.

  	
  28

  
	
  Section 6.08

  	
  Disqualification; Conflicting
  Interests

  	
  28

  
	
  Section 6.09

  	
  Persons Eligible for Appointment as
  Trustee

  	
  28

  
	
  Section 6.10

  	
  Resignation and Removal;
  Appointment of Successor Trustee

  	
  28

  
	
  Section 6.11

  	
  Acceptance of Appointment by
  Successor Trustee

  	
  30

  
	
  Section 6.12

  	
  Merger, Conversion, Consolidation
  or Succession to Business of Trustee

  	
  30

  
	
  Section 6.13

  	
  Preferential Collection of Claims
  Against the Issuer

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  CONCERNING THE SECURITYHOLDERS

  	
  31

  
	
  Section 7.01

  	
  Evidence of Action Taken by
  Securityholders

  	
  31

  
	
  Section 7.02

  	
  Proof of Execution of Instruments and
  of Holding of Securities

  	
  31

  
	
  Section 7.03

  	
  Holders to Be Treated as Owners

  	
  32

  
	
  Section 7.04

  	
  Securities Owned by Issuer Deemed
  Not Outstanding

  	
  32

  
	
  Section 7.05

  	
  Right of Revocation of Action Taken

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  SUPPLEMENTAL INDENTURES

  	
  33

  
	
  Section 8.01

  	
  Supplemental Indentures Without
  Consent of Securityholders

  	
  33

  
	
  Section 8.02

  	
  Supplemental Indentures With
  Consent of Securityholders

  	
  34

  
	
  Section 8.03

  	
  Effect of Supplemental Indenture

  	
  35

  
	
  Section 8.04

  	
  Documents to Be Given to Trustee

  	
  35

  
	
  Section 8.05

  	
  Notation on Securities in Respect
  of Supplemental Indentures

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  CONSOLIDATION, MERGER, SALE OR
  CONVEYANCE

  	
  36

  
	
  Section 9.01

  	
  Issuer May Consolidate, Etc.,
  on Certain Terms

  	
  36

  
	
  Section 9.02

  	
  Successor Issuer Substituted

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  SATISFACTION AND DISCHARGE OF
  INDENTURE; UNCLAIMED MONEYS

  	
  37

  
	
  Section 10.01

  	
  Satisfaction and Discharge of
  Indenture

  	
  37

  
				

 

ii

 

	
  Section 10.02

  	
  Application by Trustee of Funds
  Deposited for Payment of Securities

  	
  39

  
	
  Section 10.03

  	
  Repayment of Moneys Held by Paying
  Agent

  	
  40

  
	
  Section 10.04

  	
  Return of Moneys Held by Trustee
  and Paying Agent Unclaimed for Two Years

  	
  40

  
	
  Section 10.05

  	
  Indemnity for U.S. Government
  Obligations

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  MISCELLANEOUS PROVISIONS

  	
  40

  
	
  Section 11.01

  	
  No Recourse

  	
  40

  
	
  Section 11.02

  	
  Provisions of Indenture for the
  Sole Benefit of Parties and Holders of Securities

  	
  41

  
	
  Section 11.03

  	
  Successors and Assigns of Issuer
  Bound by Indenture

  	
  41

  
	
  Section 11.04

  	
  Notices and Demands on Issuer,
  Trustee and Holders of Securities

  	
  41

  
	
  Section 11.05

  	
  Officer’s Certificates and Opinions
  of Counsel; Statements to Be Contained Therein

  	
  42

  
	
  Section 11.06

  	
  Payments Due on Saturdays, Sundays
  and Holidays

  	
  42

  
	
  Section 11.07

  	
  Conflict of Any Provision of
  Indenture With Trust Indenture Act of 1939

  	
  43

  
	
  Section 11.08

  	
  New York Law to Govern

  	
  43

  
	
  Section 11.09

  	
  Counterparts

  	
  43

  
	
  Section 11.10

  	
  Effect of Headings

  	
  43

  
	
  Section 11.11

  	
  Actions by Successor

  	
  43

  
	
  Section 11.12

  	
  Severability

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  REDEMPTION OF SECURITIES AND
  SINKING FUNDS

  	
  43

  
	
  Section 12.01

  	
  Applicability of Article

  	
  43

  
	
  Section 12.02

  	
  Notice of Redemption; Partial
  Redemptions

  	
  43

  
	
  Section 12.03

  	
  Payment of Securities Called for
  Redemption

  	
  45

  
	
  Section 12.04

  	
  Exclusion of Certain Securities
  from Eligibility for Selection for Redemption

  	
  45

  
	
  Section 12.05

  	
  Mandatory and Optional Sinking
  Funds

  	
  45

  
				

 

iii

 

THIS INDENTURE, dated as of
                  
between WATTS WATER TECHNOLOGIES, INC., a Delaware corporation (the “Issuer”), and
                ,
a
              
(the “Trustee”),

 

W I T
N E S S E T H :

 

WHEREAS, the Issuer may from time to time duly authorize the issue of
its unsecured debentures, notes or other evidences of indebtedness to be issued
in one or more series (the “Securities”)
up to such principal amount or amounts as may from time to time be authorized
in accordance with the terms of this Indenture;

 

WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication, delivery
and administration of the Securities; and

 

WHEREAS, all things necessary to make this Indenture a valid indenture
and agreement according to its terms have been done;

 

NOW, THEREFORE:

 

In consideration of the premises and the purchases of the Securities by
the holders thereof, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective holders from time to time
of the Securities as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.01     Certain Terms Defined.  The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section.  All other terms used in this Indenture that
are defined in the Trust Indenture Act of 1939 or the definitions of which in
the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939,
including terms defined therein by reference to the Securities Act of 1933
(except as herein otherwise expressly provided or unless the context otherwise
clearly requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of this
Indenture.  All accounting terms used
herein and not expressly defined shall have the meanings assigned to such terms
in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles”
means such accounting principles as are generally accepted at the time of any
computation.  The words “herein”, “hereof”
and “hereunder” and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.  The terms defined in this Article have
the meanings assigned to them in this Article and include the plural as
well as the singular.

 

“Board of Directors” means
either the Board of Directors of the Issuer or any committee of such Board duly
authorized to act on its behalf.

 

 

“Board Resolution” means a
copy of one or more resolutions, certified by the secretary or an assistant
secretary of the Issuer to have been duly adopted by the Board of Directors and
to be in full force and effect, and delivered to the Trustee.

 

“Business Day” means, with
respect to any Security, a day that in the city (or in any of the cities, if
more than one) in which amounts are payable, as specified in the form of such
Security, is not a day on which banking institutions are authorized or required
by law or regulation to close.

 

“Commission” means the
Securities and Exchange Commission, as from time to time constituted, created
under the Securities Exchange Act of 1934, or if at any time after the
execution and delivery of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act of 1939,
then the body performing such duties on such date.

 

“Common Stock” means
shares of Class A Common Stock, par value $0.10 per share, of the Issuer
as the same exists at the date of execution and delivery of this Indenture or
as such stock may be reconstituted from time to time.

 

“Corporate Trust Office”
means the office of the Trustee at which the corporate trust business of the
Trustee shall, at any particular time, be principally administered, which
office is, at the date as of which this Indenture is dated, located at
                    .

 

“Debt” of any Person means
any debt for money borrowed which is created, assumed, incurred or guaranteed
in any manner by such Person or for which such Person is otherwise responsible
or liable, and shall expressly include any such guaranty thereof by such
Person.  For the purpose of computing the
amount of the Debt of any Person there shall be excluded all Debt of such
Person for the payment or redemption or satisfaction of which money or
securities (or evidences of such Debt, if permitted under the terms of the
instrument creating such Debt) in the necessary amount shall have been
deposited in trust with the proper depositary, whether upon or prior to the
maturity or the date fixed for redemption of such Debt; and, in any instance
where Debt is so excluded, for the purpose of computing the assets of such
Person there shall be excluded the money, securities or evidences of Debt
deposited by such Person in trust for the purpose of paying or satisfying such
Debt.

 

“Depositary” means, with
respect to the Securities of any series issuable or issued in the form of one
or more Global Securities, the Person designated as Depositary by the Issuer
pursuant to Section 2.04 until a successor Depositary shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter “Depositary” shall mean or include each
Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, “Depositary”
as used with respect to the Securities of any such series shall mean the
Depositary with respect to the Global Securities of that series.

 

“Dollar” means the
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.

 

“Event of Default” means
any event or condition specified as such in Section 5.01.

 

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“Foreign Currency” means a
currency issued by the government of a country other than the United States.

 

“Global Security”, means a
Security evidencing all or a part of a series of Securities, issued to the
Depositary for such series in accordance with Section 2.04, and bearing
the legend prescribed in Section 2.04.

 

“Holder”, “holder of Securities”, “Securityholder” or other similar terms mean
the Person in whose name such Security is registered in the Security register
kept by the Issuer for that purpose in accordance with the terms hereof.

 

“Indenture” means this
instrument as originally executed and delivered or, if amended or supplemented
as herein provided, as so amended or supplemented or both, and shall include
the forms and terms of particular series of Securities established as
contemplated hereunder.

 

“interest”, unless the
context otherwise requires, refers to interest, and when used with respect to
non-interest bearing Securities, refers to interest payable after maturity, if
any.

 

“Issuer” means Watts Water
Technologies, Inc. and, subject to Article 9, its successors and
assigns.

 

“Issuer Order” means a
written statement, request or order of the Issuer signed in its name by the
chairman of the Board of Directors, the president or any vice president of the
Issuer.

 

“Officer’s Certificate”
means a certificate signed by the chairman of the Board of Directors, the
president, any vice president, the treasurer, the secretary or any assistant
secretary of the Issuer and delivered to the Trustee.  Each such certificate shall comply with Section 314
of the Trust Indenture Act of 1939 and shall include the statements provided
for in Section 11.05.

 

“Opinion of Counsel” means
an opinion in writing signed by the general corporate counsel or such other
legal counsel who may be an employee of or counsel to the Issuer and who shall
be satisfactory to the Trustee.  Each
such opinion shall comply with Section 314 of the Trust Indenture Act of
1939 and shall include the statements provided for in Section 11.05, if
and to the extent required hereby.

 

“original issue date” of
any Security (or portion thereof) means the earlier of (a) the date of
such Security or (b) the date of any Security (or portion thereof) for
which such Security was issued (directly or indirectly) on registration of
transfer, exchange or substitution.

 

“Original Issue Discount Security”
means any Security that provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to Section 5.01.

 

“Outstanding”, when used
with reference to Securities, shall, subject to the provisions of Section 7.04,
mean, as of any particular time, all Securities authenticated and delivered by
the Trustee under this Indenture, except

 

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

 

(b)           Securities,
or portions thereof, for the payment or redemption of which moneys or U.S.
Government Obligations (as provided for in Section 10.01) in the necessary
amount shall have been deposited in trust with the Trustee or with any paying
agent (other than the Issuer) or shall have been set aside, segregated and held
in trust by the Issuer for the Holders of such Securities (if the Issuer shall
act as its own paying agent); provided,
that if such Securities, or portions thereof, are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made for
giving such notice; and

 

(c)           Securities
in substitution for which other Securities shall have been authenticated and
delivered, or which shall have been paid, pursuant to the terms of Section 2.09
(except with respect to any such Security as to which proof satisfactory to the
Trustee is presented that such Security is held by a Person in whose hands such
Security is a legal, valid and binding obligation of the Issuer), Securities
converted into Common Stock pursuant hereto and Securities not deemed outstanding
pursuant to Section 12.02.

 

In determining whether the Holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.01.

 

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

 

“principal” whenever used
with reference to the Securities or any Security or any portion thereof, shall
be deemed to include “and premium, if any”.

 

“Responsible Officer”,
when used with respect to the Trustee, means the chairman of the board of
directors, any vice chairman of the board of directors, the chairman of the
trust committee, the chairman of the executive committee, any vice chairman of
the executive committee, the president, any vice president, the cashier, the
secretary, the treasurer, any trust officer, any assistant trust officer, any
assistant vice president, any assistant cashier, any assistant secretary, any
assistant treasurer, or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity
with the particular subject.

 

“Security” or “Securities” has the meaning stated in the
first recital of this Indenture, or, as the case may be, Securities that have
been authenticated and delivered under this Indenture.

 

“Security Registrar” shall have the
meaning set forth in Section 4.01(b).

 

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“Subsidiary” means a
corporation of which stock having a majority of the voting power under ordinary
circumstances is owned, directly or indirectly, by the Issuer or by one or more
subsidiaries of the Issuer, or by the Issuer and one or more subsidiaries of
the Issuer.

 

“Trust Indenture Act of 1939”
(except as otherwise provided in Sections 8.01 and 8.02) means the Trust
Indenture Act of 1939 as in force at the date as of which this Indenture was originally
executed.

 

“Trustee” means the Person
identified as “Trustee” in the
first paragraph hereof and, subject to the provisions of Article 6, shall
also include any successor trustee.  “Trustee” shall also mean or include each
Person who is then a trustee hereunder and if at any time there is more than
one such Person, “Trustee” as used
with respect to the Securities of any series shall mean the trustee with
respect to the Securities of such series.

 

“U.S. Government Obligations”
shall have the meaning set forth in Section 10.01(a).

 

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

 

“Yield to Maturity” means
the yield to maturity on a series of securities, calculated at the time of
issuance of such series, or, if applicable, at the most recent redetermination
of interest on such series, and calculated in accordance with accepted
financial practice.

 

ARTICLE 2

SECURITIES

 

Section 2.01           Forms
Generally.  The Securities of
each series shall be substantially in such form (not inconsistent with this
Indenture) as shall be established by or pursuant to one or more Board
Resolutions (as set forth in a Board Resolution or, to the extent established
pursuant to (rather than set forth in) a Board Resolution, an Officer’s
Certificate detailing such establishment) or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have imprinted or otherwise reproduced thereon such legend or
legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto, or with any rules of any securities exchange
or to conform to general usage, all as may be determined by the officers
executing such Securities as evidenced by their execution of such Securities.

 

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

 

Section 2.02           Form of
Trustee’s Certificate of Authentication. 
The Trustee’s certificate of authentication on all Securities
shall be in substantially the following form:

 

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

 

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  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  

 

Section 2.03           Amount
Unlimited; Issuable in
Series.  The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

 

The Securities may be issued in one or more series.  The terms of a series of Securities shall be
established prior to the initial issuance thereof in or pursuant to one or more
Board Resolutions of the Board of Directors and set forth in a Board
Resolution, or, to the extent established pursuant to (rather than set forth
in) a Board Resolution, in an Officer’s Certificate detailing such
establishment and/or established in one or more indentures supplemental
hereto.  The terms of such series
reflected in such Board Resolution, Officer’s Certificate, or supplemental
indenture may include the following or any additional or different terms:

 

(a)           the
designation of the Securities of the series (which may be part of a series of
Securities previously issued);

 

(b)           the
terms and conditions, if applicable, upon which conversion or exchange of the
Securities into Common Stock will be effected, including the initial conversion
or exchange price or rate and any adjustments thereto, the conversion or
exchange period and other provisions in addition to or in lieu of those
described herein;

 

(c)           any
limit upon the aggregate principal amount of the Securities of the series that
may be authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the series pursuant to Section 2.08,
2.09, 2.11, 8.05 or 12.03);

 

(d)           if
other than Dollars, the Foreign Currency in which the Securities of that series
are denominated;

 

(e)           any
date on which the principal of the Securities of the series is payable;

 

(f)            the
rate or rates at which the Securities of the series shall bear interest, if
any, the record date or dates for the determination of holders to whom interest
is payable, the date or dates from which such interest shall accrue and on
which such interest shall be payable and/or the method by which such rate or
rates or date or dates shall be determined;

 

(g)           the
place or places where the principal of and any interest on Securities of the
series shall be payable (if other than as provided in Section 3.02);

 

(h)           the
price or prices at which, the period or periods within which and the terms and
conditions upon which Securities of the series may be redeemed, in whole or in
part, at the option of the Issuer, pursuant to any sinking fund or otherwise;

 

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(i)            the
obligation, if any, of the Issuer to redeem, purchase or repay Securities of
the series pursuant to any mandatory redemption, sinking fund or analogous
provisions or at the option of a Holder thereof and the price or prices at
which and the period or periods within which and any terms and conditions upon
which Securities of the series shall be redeemed, purchased or repaid, in whole
or in part, pursuant to such obligation;

 

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

 

(k)           if
other than the principal amount thereof, the portion of the principal amount of
Securities of the series which shall be payable upon declaration of
acceleration of the maturity thereof;

 

(l)            if
other than the currency in which the Securities of that series are denominated,
the currency in which payment of the principal of or interest on the Securities
of such series shall be payable;

 

(m)          if
the principal of or interest on the Securities of the series is to be payable,
at the election of the Issuer or a Holder thereof, in a currency other than
that in which the Securities are denominated, the period or periods within
which, and the terms and conditions upon which, such election may be made;

 

(n)           if
the amount of payments of principal of and interest on the Securities of the
series may be determined with reference to an index based on a currency other
than that in which the Securities of the series are denominated, the manner in
which such amounts shall be determined;

 

(o)           whether
and upon what terms the Securities may be defeased;

 

(p)           whether
and under what circumstances the Issuer will pay additional amounts on the
Securities of any series in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Issuer will have the option
to redeem such Securities rather than pay such additional amounts;

 

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

 

(r)            any
trustees, authenticating or paying agents, transfer agents or registrars or any
other agents with respect to the Securities of such series;

 

(s)           any
other events of default or covenants with respect to the Securities of such
series in addition to or in lieu of those contained in this Indenture;

 

(t)            if
the Securities of the series may be issued in exchange for surrendered
Securities of another series, or for other securities of the Issuer, pursuant
to the terms of such Securities or securities or of any agreement entered into
by the Issuer, the ratio of 

 

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the principal amount of the Securities of the series to be issued to
the principal amount of the Securities or securities to be surrendered in
exchange, and any other material terms of the exchange; and

 

(u)           any
other terms of the series.

 

The Issuer may from time to time, without notice to or the consent of
the holders of any series of Securities, create and issue further Securities of
any such series ranking equally with the Securities of such series in all
respects (or in all respects other than the payment of interest accruing prior
to the issue date of such further Securities or except for the first payment of
interest following the issue date of such further Securities).  Such further Securities may be consolidated
and form a single series with the Securities of such series and have the same
terms as to status, redemption or otherwise as the Securities of such series.

 

Section 2.04           Authentication
and Delivery of Securities.  The
Issuer may deliver Securities of any series executed by the Issuer to the
Trustee for authentication together with the applicable documents referred to
below in this Section, and the Trustee shall thereupon authenticate and deliver
such Securities to or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order.  The maturity
date, original issue date, interest rate and any other terms of the Securities
of such series shall be determined by or pursuant to such Issuer Order and
procedures.  If provided for in such
procedures, such Issuer Order may authorize authentication and delivery
pursuant to oral instructions from the Issuer or its duly authorized agent,
which instructions shall be promptly confirmed in writing.  In authenticating such Securities and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to Section 6.01)
shall be fully protected in relying upon:

 

(a)           an
Issuer Order requesting such authentication and setting forth delivery
instructions if the Securities are not to be delivered to the Issuer;

 

(b)           any
Board Resolution, Officer’s Certificate and/or executed supplemental indenture
referred to in Sections 2.01 and 2.03 by or pursuant to which the forms and
terms of the Securities were established;

 

(c)           an
Officer’s Certificate setting forth the form or forms and terms of the Securities
stating that the form or forms and terms of the Securities have been
established pursuant to Sections 2.01 and 2.03 and comply with this Indenture,
and covering such other matters as the Trustee may reasonably request; and

 

(d)           an
Opinion of Counsel to the effect that:

 

(i)            the
form or forms and terms of such Securities have been established pursuant to
Sections 2.01 and 2.03 and comply with this Indenture,

 

(ii)           the
authentication and delivery of such Securities by the Trustee are authorized
under the provisions of this Indenture,

 

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(iii)          such
Securities when authenticated and delivered by the Trustee and issued by the
Issuer in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and binding obligations of the Issuer, and

 

(iv)          all
laws and requirements in respect of the execution and delivery by the Issuer of
the Securities have been complied with,

 

and
covering such other matters as the Trustee may reasonably request.

 

The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Issuer or
if the Trustee in good faith by its board of directors or board of trustees,
executive committee, or a trust committee of directors or trustees or
Responsible Officers shall determine that such action would expose the Trustee
to personal liability to existing Holders or would affect the Trustee’s own
rights, duties or immunities under the Securities, this Indenture or otherwise.

 

The Issuer shall execute and the Trustee shall, in accordance with this
Section with respect to the Securities of a series, authenticate and deliver
one or more Global Securities that (i) shall represent and shall be
denominated in an amount equal to the aggregate principal amount of all of the
Securities of such series issued and not yet cancelled, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or the nominee of such Depositary, (iii) shall be delivered by the Trustee
to such Depositary or pursuant to such Depositary’s instructions and (iv) shall
bear a legend substantially to the following effect: “Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to the
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.”

 

Each Depositary designated pursuant to this Section must, at the
time of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934 and any
other applicable statute or regulation.

 

Section 2.05           Execution
of Securities.  The Securities
shall be signed on behalf of the Issuer by the chairman of its Board of
Directors, any vice chairman of its Board of Directors, its chief executive
officer, its principal financial officer, its president, any vice president or
its treasurer.  Such signatures may be the
manual or facsimile signatures of the present or any future such officers.  Typographical and other minor errors or
defects in any such reproduction of any such signature shall not affect the
validity or enforceability of any Security that has been duly authenticated and
delivered by the Trustee.

 

In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of

 

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the Issuer; and any Security may be signed on behalf of the Issuer by such
persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.

 

Section 2.06           Certificate
of Authentication.  Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee by the manual
signature of one of its authorized officers, shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose.  The execution of such certificate by the
Trustee upon any Security executed by the Issuer shall be conclusive evidence
that the Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.

 

Section 2.07           Denomination
and Date of Securities; Payments of Interest.  The Securities of each series shall be
issuable in denominations established as contemplated by Section 2.03 or,
if not so established, in denominations of $1,000 and any integral multiple
thereof.  The Securities of each series
shall be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.  Unless otherwise
indicated in a Board Resolution, Officer’s Certificate or supplemental
indenture for a particular series, interest will be calculated on the basis of
a 360-day year of twelve 30-day months.

 

Each Security shall be dated the date of its authentication.  The Securities of each series shall bear
interest, if any, from the date, and such interest shall be payable on the dates,
established as contemplated by Section 2.03.

 

The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series with
respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer, exchange or conversion of such Security
subsequent to the record date and prior to such interest payment date, except
if and to the extent the Issuer shall default in the payment of the interest
due on such interest payment date for such series, in which case such defaulted
interest shall be paid to the Persons in whose names Outstanding Securities for
such series are registered at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on behalf
of the Issuer to the Holders of Securities not less than 15 days preceding such
subsequent record date.  The term “record
date” as used with respect to any interest payment date (except a date for
payment of defaulted interest) for the Securities of any series shall mean the
date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.03, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the 15th day of the next preceding calendar month or, if such interest payment
date is the 15th day of a calendar month, the first day of such calendar month,
whether or not such record date is a Business Day.

 

Section 2.08           Registration,
Transfer and Exchange.  The
Issuer will keep at each office or agency to be maintained for the purpose as
provided in Section 3.02 for each series of 

 

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Securities a register or registers in which, subject to such reasonable
regulations as it may prescribe, it will provide for the registration of
Securities of such series and the registration of transfer of Securities of
such series.  Such register shall be in
written form in the English language or in any other form capable of being
converted into such form within a reasonable time.  At all reasonable times such register or
registers shall be open for inspection by the Trustee.

 

Upon due presentation for registration of transfer of any Security of
any series at any such office or agency to be maintained for the purpose as
provided in Section 3.02, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate and
original issue date in authorized denominations for a like aggregate principal
amount.

 

At the option of the Holder thereof, Securities of any series (except a
Global Security) may be exchanged for a Security or Securities of such series
having authorized denominations and an equal aggregate principal amount, upon
surrender of such Securities to be exchanged at the agency of the Issuer that
shall be maintained for such purpose in accordance with Section 3.02 and
upon payment, if the Issuer shall so require, of the charges hereinafter
provided.  Whenever any Securities are so
surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.  All Securities
surrendered upon any exchange or transfer provided for in this Indenture shall
be promptly cancelled and disposed of by the Trustee and the Trustee will
deliver a certificate of disposition thereof to the Issuer.

 

All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder or his or her attorney duly authorized in writing.

 

The Issuer may require payment of a sum sufficient to cover any stamp
or other tax or other governmental charge that may be imposed in connection
with any exchange or registration of transfer of Securities.  No service charge shall be made for any such
transaction.

 

The Issuer shall not be required to exchange or register a transfer of (a) any
Securities of any series for a period of 15 days next preceding the first
mailing of notice of redemption of Securities of such series to be redeemed or (b) any
Securities selected, called or being called for redemption, in whole or in
part, except, in the case of any Security to be redeemed in part, the portion
thereof not so to be redeemed.

 

Notwithstanding any other provision of this Section 2.08, unless
and until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.

 

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If at any time the Depositary for the Securities of a series notifies
the Issuer that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the Securities
of a series shall no longer be eligible under Section 2.04, the Issuer
shall appoint a successor Depositary with respect to the Securities of such
series.  If a successor Depositary for
the Securities of such series is not appointed by the Issuer within 90 days
after the Issuer receives such notice or becomes aware of such ineligibility,
the Issuer’s election pursuant to Section 2.03 that the Securities of such
series be represented by a Global Security shall no longer be effective and the
Issuer will execute, and the Trustee, upon receipt of an Officer’s Certificate
for the authentication and delivery of definitive Securities of such series,
will authenticate and deliver, Securities of such series in definitive
registered form, in any authorized denominations, in an aggregate principal
amount equal to the principal amount of the Global Security or Securities
representing the Securities of such series, in exchange for such Global
Security or Securities.

 

The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or
Securities.  In such event the Issuer
will execute, and the Trustee, upon receipt of an Officer’s Certificate for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive registered
form, in any authorized denominations, in an aggregate principal amount equal
to the principal amount of the Global Security or Securities representing such
series, in exchange for such Global Security or Securities.

 

The Depositary for such Global Security may surrender such Global
Security in exchange in whole or in part for Securities of the same series in
definitive registered form on such terms as are acceptable to the Issuer and
such Depositary.  Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,

 

(i)            to
the Person specified by such Depositary a new Security or Securities of the
same series, of any authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in exchange for such Person’s
beneficial interest in the Global Security; and

 

(ii)           to
such Depositary a new Global Security in a denomination equal to the
difference, if any, between the principal amount of the surrendered Global
Security and the aggregate principal amount of Securities authenticated and
delivered pursuant to clause (i) above.

 

Upon the exchange of a Global Security for Securities in definitive
registered form, in authorized denominations, such Global Security shall be
cancelled by the Trustee.  Securities in
definitive registered form issued in exchange for a Global Security pursuant to
this Section 2.08 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee.  The Trustee shall
deliver such Securities to or as directed by the Persons in whose names such
Securities are so registered.

 

12

 

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

 

Section 2.09           Mutilated,
Defaced, Destroyed, Lost and Stolen Securities. 
In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of any officer of the
Issuer, the Trustee shall authenticate and deliver a new Security of the same
series, maturity date, interest rate and original issue date, bearing a number
or other distinguishing symbol not contemporaneously outstanding, in exchange
and substitution for the mutilated or defaced Security, or in lieu of and substitution
for the Security so destroyed, lost or stolen. 
In every case the applicant for a substitute Security shall furnish to
the Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as may be required by them to indemnify and defend and to
save each of them harmless and, in every case of destruction, loss or theft,
evidence to their satisfaction of the destruction, loss or theft of such
Security and of the ownership thereof and in the case of mutilation or defacement
shall surrender the Security to the Trustee.

 

Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.  In case any Security which has matured or is
about to mature or has been called for redemption in full, or is being
surrendered for conversion in full, shall become mutilated or defaced or be
destroyed, lost or stolen, the Issuer may, instead of issuing a substitute
Security (with the Holder’s consent, in the case of convertible Securities),
pay or authorize the payment of the same or convert, or authorize conversion of
the same (without surrender thereof except in the case of a mutilated or
defaced Security), if the applicant for such payment shall furnish to the
Issuer and to the Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them may require to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Issuer and the Trustee and any agent of the Issuer or the
Trustee evidence to their satisfaction of the destruction, loss or theft of
such Security and of the ownership thereof.

 

Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the Issuer, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone and shall be entitled to all the benefits of
(but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities of such
series duly authenticated and delivered hereunder.  All Securities shall be held and owned upon
the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment or
conversion of mutilated, defaced or destroyed, lost or stolen Securities and
shall preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.

 

13

 

Section 2.10           Cancellation
of Securities; Destruction Thereof.  All
Securities surrendered for exchange for Securities of the same series or for
payment, redemption, registration of transfer, conversion or for credit against
any payment in respect of a sinking or analogous fund, if surrendered to the
Issuer or any agent of the Issuer or the Trustee, shall be delivered to the
Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture.  The Trustee shall dispose of cancelled
Securities held by it and deliver a certificate of disposition to the Issuer.  If the Issuer shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the Debt represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.

 

Section 2.11           Temporary
Securities.  Pending the
preparation of definitive Securities for any series, the Issuer may execute and
the Trustee shall authenticate and deliver temporary Securities for such series
(printed, lithographed, typewritten or otherwise reproduced, in each case in
form satisfactory to the Trustee). 
Temporary Securities of any series shall be issuable in any authorized
denomination, and substantially in the form of the definitive Securities of
such series but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Issuer
with the concurrence of the Trustee as evidenced by the execution and
authentication thereof.  Temporary
Securities may contain such reference to any provisions of this Indenture as
may be appropriate.  Every temporary
Security shall be executed by the Issuer and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Securities. 
Without unreasonable delay the Issuer shall execute and shall furnish
definitive Securities of such series and thereupon temporary Securities of such
series may be surrendered in exchange therefor without charge at each office or
agency to be maintained by the Issuer for that purpose pursuant to Section 3.02
and the Trustee shall authenticate and deliver in exchange for such temporary
Securities of such series an equal aggregate principal amount of definitive
Securities of the same series having authorized denominations.  Until so exchanged, the temporary Securities
of any series shall be entitled to the same benefits under this Indenture as
definitive Securities of such series, unless the benefits of the temporary
Securities are limited pursuant to Section 2.03.

 

ARTICLE 3

COVENANTS OF THE ISSUER

 

Section 3.01           Payment
of Principal and Interest.  The
Issuer covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay or cause to be paid the principal of, and
interest on, each of the Securities of such series (together with any
additional amounts payable pursuant to the terms of such Securities) at the
place or places, at the respective times and in the manner provided in such
Securities and in this Indenture.  The
interest on Securities (together with any additional amounts payable pursuant
to the terms of such Securities) shall be payable only to or upon the written
order of the Holders thereof and at the option of the Issuer may be paid by
mailing checks for such interest payable to or upon the written order of such
Holders at their last addresses as they appear on the Security register of the
Issuer.

 

Section 3.02           Offices
for Payments, Etc.  The Issuer
will maintain (i) in
              ,
an agency where the Securities of each series may be presented for payment, an
agency where the 

 

14

 

Securities of each series may be presented for exchange and conversion,
if applicable, as provided in this Indenture and an agency where the Securities
of each series may be presented for registration of transfer as in this
Indenture provided and (ii) such further agencies in such places as may be
determined for the Securities of such series pursuant to Section 2.03.

 

The Issuer will maintain in
                    ,
an agency where notices and demands to or upon the Issuer in respect of the
Securities of any series or this Indenture may be served.

 

The Issuer will give to the Trustee written notice of the location of
each such agency and of any change of location thereof.  In case the Issuer shall fail to maintain any
agency required by this Section to be located in
                    ,
or shall fail to give such notice of the location or of any change in the
location of any of the above agencies, presentations and demands may be made
and notices may be served at the Corporate Trust Office of the Trustee.

 

The Issuer may from time to time designate one or more additional
agencies where the Securities of a series may be presented for payment, where
the Securities of that series may be presented for exchange or conversion, if
applicable, as provided in this Indenture and pursuant to Section 2.03 and
where the Securities of that series may be presented for registration of
transfer as in this Indenture provided, and the Issuer may from time to time
rescind any such designation, as the Issuer may deem desirable or expedient; provided, however,
that no such designation or rescission shall in any manner relieve the Issuer
of its obligation to maintain the agencies provided for in this Section.  The Issuer will give to the Trustee prompt
written notice of any such designation or rescission thereof.

 

Section 3.03           Appointment
to Fill a Vacancy in Office of Trustee.  The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.10, a Trustee, so that
there shall at all times be a Trustee with respect to each series of Securities
hereunder.

 

Section 3.04           Paying
Agents.  Whenever the Issuer
shall appoint a paying agent other than the Trustee with respect to the
Securities of any series, it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section,

 

(a)           that
it will hold all sums received by it as such agent for the payment of the
principal of or interest on the Securities of such series (whether such sums
have been paid to it by the Issuer or by any other obligor on the Securities of
such series) in trust for the benefit of the Holders of the Securities of such
series or of the Trustee,

 

(b)           that
it will give the Trustee notice of any failure by the Issuer (or by any other
obligor on the Securities of such series) to make any payment of the principal
of or interest on the Securities of such series when the same shall be due and
payable, and

 

(c)           that
at any time during the continuance of any such failure, upon the written
request of the Trustee, it will forthwith pay to the Trustee all sums so held
in trust by such paying agent.

 

15

 

The Issuer will, on or prior to each due date of the principal of or
interest on the Securities of such series, deposit with the paying agent a sum
sufficient to pay such principal or interest so becoming due, and (unless such
paying agent is the Trustee) the Issuer will promptly notify the Trustee of any
failure to take such action.

 

If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest on the Securities of such series, set aside, segregate and hold
in trust for the benefit of the Holders of the Securities of such series a sum
sufficient to pay such principal or interest so becoming due.  The Issuer will promptly notify the Trustee
of any failure to take such action.

 

Anything in this Section to the contrary notwithstanding, but
subject to Section 10.01, the Issuer may at any time, for the purpose of
obtaining a satisfaction and discharge with respect to one or more or all
series of Securities hereunder, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust for any such series by the Issuer or
any paying agent hereunder, as required by this Section, such sums to be held
by the Trustee upon the trusts herein contained.

 

Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to
the provisions of Sections 10.03 and 10.04.

 

Section 3.05           Written
Statement to Trustee.  So long
as any Securities are Outstanding hereunder, the Issuer will deliver to the
Trustee, within 120 days after the end of each fiscal year of the Issuer ending
after the date hereof, a written statement covering the previous fiscal year,
signed by two of its officers (which need not comply with Section 11.05),
stating that in the course of the performance of their duties as officers of
the Issuer they would normally have knowledge of any default by the Issuer in
the performance or fulfillment of any covenant, agreement or condition
contained in this Indenture, stating whether or not they have knowledge of any
such default and, if so, specifying each such default of which the signers have
knowledge and the nature thereof.

 

ARTICLE 4

SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE

 

Section 4.01           Issuer
to Furnish Trustee Information as to Names and  Addresses of Securityholders.  The Issuer covenants and agrees
that it will furnish or cause to be furnished to the Trustee a list in such
form as the Trustee may reasonably require of the names and addresses of the
Holders of the Securities of each series pursuant to Section 312 of the
Trust Indenture Act of 1939:

 

(a)           semiannually
and not more than 15 days after each record date for the payment of interest on
such Securities, as hereinabove specified, as of such record date and on dates
to be determined pursuant to Section 2.03 for non-interest bearing
Securities in each year, and

 

(b)           at
such other times as the Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request as of a date not more than 15 days
prior to the time such information is furnished, provided, that, if and so long as the Trustee shall 

 

16

 

be the Security registrar (the “Security Registrar”)
for such series, such list shall not be required to be furnished.

 

Section 4.02           Reports
by the Issuer.  The Issuer
covenants to comply with Section 314(a) of the Trust Indenture Act
insofar as it relates to information, documentations, and other reports which
the Issuer may be required to file with the Commission pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934.

 

Section 4.03           Reports
by the Trustee.  Any Trustee’s
report required under Section 313(a) of the Trust Indenture Act of
1939 shall be transmitted on or before
             in
each year following the date hereof, so long as any Securities are Outstanding
hereunder, and shall be dated as of a date convenient to the Trustee but no
more than 60 nor less than 45 days prior thereto.  The Trustee shall comply with Sections
313(b), 313(c) and 313(d) of the Trust Indenture Act.

 

Section 4.04           Preservation of
Information; Communication with Securityholders.  (a) The Trustee shall preserve,
in as current a form as is reasonably practicable, all information as to the
names and addresses of the holders of Securities contained in the most recent
list furnished to it as provided in Section 4.01 and as to the names and
addresses of holders of Securities received by the Trustee in its capacity as
Security Registrar (if acting in such capacity).

 

(b)           The
Trustee may destroy any list furnished to it as provided in Section 4.01
upon receipt of a new list so furnished.

 

(c)           Securityholders
may communicate as provided in Section 312(b) of the Trust Indenture
Act with other Securityholders with respect to their rights under this
Indenture or under the Securities.  The
Issuer, the Trustee, the Security Registrar and any other Person shall have the
protection of Section 312(c) of the Trust Indenture Act.

 

ARTICLE 5

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

 

Section 5.01           Event
of Default Defined; Acceleration of Maturity; Waiver  of Default.  “Event of Default”, with respect to Securities
of any series wherever used herein, means each one of the following events
which shall have occurred and be continuing (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

 

(a)           default
in the payment of any installment of interest upon any of the Securities of
such series as and when the same shall become due and payable, and continuance
of such default for a period of 60 days (or such other period as may be
established for the Securities of such series as contemplated by Section 2.03);
or

 

(b)           default
in the payment of all or any part of the principal on any of the Securities of
such series as and when the same shall become due and payable either at
maturity, upon redemption, by declaration or otherwise, and the continuance of
such 

 

17

 

default for five days (or such other period as may be established for
the Securities of such series as contemplated by Section 2.03); or

 

(c)           default
in the performance, or breach, of any covenant or warranty of the Issuer in
respect of the Securities of such series (other than a covenant or warranty in
respect of the Securities of such series a default in the performance or breach
of which is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Issuer by the Trustee or to
the Issuer and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of all series affected thereby, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default”
hereunder; or

 

(d)           a
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Issuer in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator
(or similar official) of the Issuer or for all or substantially all of its
property and assets or ordering the winding up or liquidation of its affairs,
and such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or

 

(e)           the
Issuer shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any such law, or
consent to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of the
Issuer or for any substantial part of its property and assets, or make any
general assignment for the benefit of creditors; or

 

(f)            any
other Event of Default provided for in such series of Securities.

 

If an Event of Default described in clauses (a), (b), (c) or (f) occurs
and is continuing, then, and in each and every such case, unless the principal
of all of the Securities of such series shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities of such series then Outstanding hereunder
(each such series voting as a separate class) by notice in writing to the
Issuer (and to the Trustee if given by Securityholders), may declare the entire
principal (or, if the Securities of such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all Securities of such series and the interest accrued
thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.  If an Event of Default described in clauses (d) or
(e) occurs and is continuing, then and in each and every such case, the
entire principal (or, if any Securities are Original Issue Discount Securities,
such portion of the principal as may be specified in the terms thereof) of all
the Securities then Outstanding and interest accrued thereon, if any, shall
become immediately due and payable.

 

The foregoing provisions, however, are subject to the condition that
if, at any time after the principal (or, if the Securities are Original Issue
Discount Securities, such portion of the 

 

18

 

principal as may be specified in the terms thereof) of the Securities
of any series (or of all the Securities, as the case may be) shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Securities of such series (or of
all the Securities, as the case may be) and the principal of any and all
Securities of such series (or of all the Securities, as the case may be) which
shall have become due otherwise than by acceleration (with interest upon such
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series, (or at the respective
rates of interest or Yields to Maturity of all the Securities, as the case may
be) to the date of such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee, its agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee except as a result of negligence or bad faith,
and if any and all Events of Default under the Indenture, other than the
non-payment of the principal of Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein—then and in every such case the Holders of a majority in aggregate
principal amount of all the Securities of such series, each series voting as a
separate class, (or of all the Securities, as the case may be, voting as a
single class) then Outstanding, by written notice to the Issuer and to the
Trustee, may waive all defaults with respect to such series (or with respect to
all the Securities, as the case may be) and rescind and annul such declaration
and its consequences, but no such waiver or rescission and annulment shall
extend to or shall affect any subsequent default or shall impair any right
consequent thereon.

 

For all purposes under this Indenture, if a portion of the principal of
any Original Issue Discount Securities shall have been accelerated and declared
due and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration has been rescinded and annulled, the principal
amount of such Original Issue Discount Securities shall be deemed, for all
purposes hereunder, to be such portion of the principal thereof as shall be due
and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.

 

Section 5.02           Collection
of Debt by Trustee; Trustee May Prove Debt.  The Issuer covenants that (a) in
case default shall be made in the payment of any installment of interest on any
of the Securities of any series when such interest shall have become due and
payable, and such default shall have continued for a period of 30 days or (b) in
case default shall be made in the payment of all or any part of the principal
of any of the Securities of any series when the same shall have become due and
payable, and such default shall have continued for a period of five days,
whether upon maturity of the Securities of such series or upon any redemption
or by declaration or otherwise—then, upon demand of the Trustee, the Issuer
will pay to the Trustee for the benefit of the Holders of the Securities of such
series the whole amount that then shall have become due and payable on all
Securities of such series for principal or interest, as the case may be (with
interest to the date of such payment upon the overdue principal and, to the
extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest 

 

19

 

at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in the Securities of such
series); and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including reasonable
compensation to the Trustee and each predecessor trustee, their respective
agents, attorneys and counsel, and any expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor trustee except as a
result of its negligence or bad faith.

 

In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or other obligor upon such
Securities and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Securities, wherever situated, the moneys
adjudged or decreed to be payable.

 

In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or its property, or in case of any other comparable judicial
proceedings relative to the Issuer or other obligor upon the Securities of any
series, or to the creditors or property of the Issuer or such other obligor,
the Trustee, irrespective of whether the principal of any Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in
such proceedings or otherwise:

 

(i)            to
file and prove a claim or claims for the whole amount of principal and interest
(or, if the Securities of any series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of such
series) owing and unpaid in respect of the Securities of any series, and to
file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each predecessor
trustee, except as a result of negligence or bad faith) and of the
Securityholders allowed in any judicial proceedings relative to the Issuer or
other obligor upon the Securities of any series, or to the creditors or
property of the Issuer or such other obligor,

 

(ii)           unless
prohibited by applicable law and regulations, to vote on behalf of the Holders
of the Securities of any series in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in comparable
proceedings, and

 

20

 

(iii)          to
collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute all amounts received with respect to the claims
of the Securityholders and of the Trustee on their behalf; and any trustee,
receiver or liquidator, custodian or other similar official is hereby
authorized by each of the Securityholders to make payments to the Trustee, and,
in the event that the Trustee shall consent to the making of payments directly
to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor trustee except as a result of negligence or bad faith and all
other amounts due to the Trustee or any predecessor trustee pursuant to Section 6.06.

 

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar person.

 

All rights of action and of asserting claims under this Indenture, or
under any of the Securities of any series, may be enforced by the Trustee
without the possession of any of the Securities of such series or the production
thereof on any trial or other proceedings relative thereto, and any such action
or proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Securities in respect of which such
action was taken.

 

In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Securities in respect to which such action was taken, and it
shall not be necessary to make any Holders of such Securities parties to any
such proceedings.

 

Section 5.03           Application
of Proceeds.  Any moneys
collected by the Trustee pursuant to this Article in respect of any series
shall be applied in the following order at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of principal
or interest, upon presentation of the several Securities in respect of which
monies have been collected and stamping (or otherwise noting) thereon the
payment, or issuing Securities of such series in reduced principal amounts in
exchange for the presented Securities of like series if only partially paid, or
upon surrender thereof if fully paid:

 

FIRST:  To the payment of all
amounts due to the Trustee or any predecessor trustee pursuant to Section 6.06;

 

21

 

SECOND:  In case the principal of
the Securities of such series in respect of which moneys have been collected
shall not have become and be then due and payable, to the payment of interest
on the Securities of such series in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue installments of interest at
the same rate as the rate of interest or Yield to Maturity (in the case of
Original Issue Discount Securities) specified in such Securities, such payments
to be made ratably to the Persons entitled thereto, without discrimination or
preference;

 

THIRD:  In case the principal of
the Securities of such series in respect of which moneys have been collected
shall have become and shall be then due and payable, to the payment of the
whole amount then owing and unpaid upon all the Securities of such series for
principal and interest, with interest upon the overdue principal, and (to the
extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the same rate as the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) specified in the
Securities of such series; and in case such moneys shall be insufficient to pay
in full the whole amount so due and unpaid upon the Securities of such series,
then to the payment of such principal and interest or Yield to Maturity,
without preference or priority of principal over interest or Yield to Maturity,
or of interest or Yield to Maturity over principal, or of any installment of
interest over any other installment of interest, or of any Security of such
series over any other Security of such series, ratably to the aggregate of such
principal and accrued and unpaid interest or Yield to Maturity; and

 

FOURTH:  To the payment of the
remainder, if any, to the Issuer or any other Person lawfully entitled thereto.

 

Section 5.04           Suits
for Enforcement.  In case an
Event of Default has occurred, has not been waived and is continuing, the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, either at law
or in equity or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.

 

Section 5.05           Restoration
of Rights on Abandonment of Proceedings.  In case the Trustee shall have proceeded to
enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee, then and in every such case the Issuer and the
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Issuer, the Trustee and
the Securityholders shall continue as though no such proceedings had been
taken.

 

Section 5.06           Limitations
on Suits by Securityholders. 
No Holder of any Security of any series shall have any right by virtue
or by availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Indenture, or for the appointment of a trustee, receiver,
liquidator, custodian or 

 

22

 

other similar official or for any other remedy hereunder, unless such
Holder previously shall have given to the Trustee written notice of default and
of the continuance thereof, as hereinbefore provided, and unless also the
Holders of not less than 25% in aggregate principal amount of the Securities of
such series then Outstanding shall have made written request upon the Trustee
to institute such action or proceedings in its own name as trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 5.09; it being understood
and intended, and being expressly covenanted by the Holder of every Security
with every other Holder and the Trustee, that no one or more Holders of
Securities of any series shall have any right in any manner whatever by virtue
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other such Holder of Securities, or to obtain or
seek to obtain priority over or preference to any other such Holder or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all Holders of Securities of
the applicable series.  For the protection
and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

 

Section 5.07           Unconditional
Right of Securityholders to Institute Certain  Suits. 
Notwithstanding any other provision in this Indenture and any provision
of any Security, the right of any Holder of any Security to receive payment of
the principal of and interest on such Security on or after the respective due
dates expressed in such Security, or to institute suit for the enforcement of
any such payment on or after such respective dates, or for the enforcement of
such conversion right, shall not be impaired or affected without the consent of
such Holder.

 

Section 5.08           Powers
and Remedies Cumulative; Delay or Omission Not  Waiver of Default.  Except as provided in Section 5.06, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Securities is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

No delay or omission of the Trustee or of any Holder of Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein; and, subject to Section 5.06, every power and remedy given by
this Indenture or by law to the Trustee or to the Holders of Securities may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders of Securities.

 

Section 5.09           Control
by Holders of Securities.  The
Holders of a majority in aggregate principal amount of the Securities of each
series affected (with each series voting as a separate class) at the time
Outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or 

 

23

 

power conferred on the Trustee with respect to the Securities of such
series by this Indenture; provided,
that such direction shall not be otherwise than in accordance with law and the
provisions of this Indenture and provided, further, that (subject to the
provisions of Section 6.01) the Trustee shall have the right to decline to
follow any such direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may not lawfully be taken
or if the Trustee in good faith by its board of directors, the executive
committee, or a trust committee of directors or Responsible Officers of the
Trustee shall determine that the action or proceedings so directed would
involve the Trustee in personal liability or if the Trustee in good faith shall
so determine that the actions or forbearances specified in or pursuant to such
direction would be unduly prejudicial to the interests of Holders of the
Securities of all series so affected not joining in the giving of said
direction, it being understood that (subject to Section 6.01) the Trustee
shall have no duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders.

 

Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.

 

Section 5.10           Waiver
of Past Defaults.  Prior to
the declaration of the acceleration of the maturity of the Securities of any
series as provided in Section 5.01, the Holders of a majority in aggregate
principal amount of the Securities of such series at the time Outstanding may
on behalf of the Holders of all the Securities of such series waive any past
default in the performance of any of the covenants contained herein or
established pursuant to Section 2.03 with respect to such series and its
consequences, except an uncured default in the payment of the principal of (or
premium, if any), or interest on, any of the Securities of that series as and
when the same shall become due by the terms of such Securities.  In the case of any such waiver, the Issuer,
the Trustee and the Holders of the Securities of such series shall be restored
to their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

 

Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

 

Section 5.11           Trustee
to Give Notice of Default. 
The Trustee shall, within 90 days after the occurrence of a default with
respect to the Securities of any series, give notice of all defaults with
respect to that series known to the Trustee to all Holders of Securities of
such series in the manner and to the extent provided in Section 4.03,
unless in each case such defaults shall have been cured before the mailing or
publication of such notice (the term “defaults”
for the purpose of this Section being hereby defined to mean any event or
condition which is, or with notice or lapse of time or both would become, an
Event of Default); provided, that,
except in the case of default in the payment of the principal of or interest on
any of the Securities of such series, or in the payment of any sinking fund
installment on such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors or trustees and/or Responsible Officers of the
Trustee in good faith 

 

24

 

determines that the withholding of such notice is in the interests of
the Securityholders of such series.

 

Section 5.12           Right
of Court to Require Filing of Undertaking to Pay  Costs. 
All parties to this Indenture agree, and each Holder of any Security by
his or her acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder or
group of Securityholders of any series holding in the aggregate more than 10%
in aggregate principal amount of the Securities of such series, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security of such series,
on or after the respective due dates expressed in such Security or established
pursuant to this Indenture.

 

ARTICLE 6

CONCERNING THE TRUSTEE

 

Section 6.01           Duties
and Responsibilities of the Trustee; During Default;  Prior to Default.  With respect to the Holders of any series of
Securities issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Securities of a particular series and after the
curing or waiving of all Events of Default which may have occurred with respect
to such series, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. 
In case an Event of Default with respect to the Securities of a series
has occurred (which has not been cured or waived), the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.

 

No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct.

 

Section 6.02           Certain
Rights of the Trustee.  In
furtherance of and subject to the Trust Indenture Act of 1939 and subject to Section 6.01:

 

(a)           in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture;
but, in the case of any such statements, certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;

 

25

 

(b)           the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;

 

(c)           the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders pursuant to Section 5.09 relating to the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture;

 

(d)           none of the provisions contained in this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such liability is not reasonably assured to it;

 

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

 

(f)            any request, direction, order or demand of
the Issuer mentioned herein shall be sufficiently evidenced by an Officer’s
Certificate (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a copy thereof certified by the secretary or an assistant
secretary of the Issuer;

 

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

 

(h)           the Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture at the
request, order or direction of any of the Securityholders pursuant to the
provisions of this Indenture, unless such Securityholders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;

 

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

 

(j)            prior to the occurrence of an Event of
Default hereunder and after the curing or waiving of all Events of Default, the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
security, or other paper or document unless requested in writing so to do 

 

26

 

by the Holders of not less than a majority in aggregate principal
amount of the Securities of all series affected then Outstanding; provided, that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such investigation shall be paid by the Issuer or,
if paid by the Trustee or any predecessor trustee, shall be repaid by the
Issuer upon demand; and

 

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

 

Section 6.03           Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds
Thereof.  The recitals
contained herein and in the Securities, except the Trustee’s certificates of
authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same.  The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Securities.  The Trustee shall not be accountable for the
use or application by the Issuer of any of the Securities or of the proceeds
thereof.

 

Section 6.04           Trustee and Agents May Hold Securities;
Collections, Etc.  The Trustee
or any agent of the Issuer or the Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not the Trustee or such agent and may otherwise deal with
the Issuer and receive, collect, hold and retain collections from the Issuer
with the same rights it would have if it were not the Trustee or such agent.

 

Section 6.05           Moneys Held by Trustee.  Subject to the provisions of Section 10.04
hereof, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. 
Neither the Trustee nor any agent of the Issuer or the Trustee shall be
under any liability for interest on any moneys received by it hereunder.

 

Section 6.06           Compensation and Indemnification of Trustee and Its
Prior  Claim.  The Issuer covenants and agrees to
pay to the Trustee from time to time, and the Trustee shall be entitled to,
such reasonable compensation (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) as the
Issuer and the Trustee may from time to time agree in writing and, except as
otherwise expressly provided herein, the Issuer covenants and agrees to pay or
reimburse the Trustee and each predecessor trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on
behalf of it in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of
its counsel and of all agents and other persons not regularly in its employ)
except any such expense, disbursement or advance as may 

 

27

 

arise from its negligence or bad faith.  The Issuer also covenants to indemnify the
Trustee and each predecessor trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim of
liability in the premises.  The
obligations of the Issuer under this Section to compensate and indemnify
the Trustee and each predecessor trustee and to pay or reimburse the Trustee
and each predecessor trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture.  Such
additional indebtedness shall be a senior claim to that of the Securities upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the benefit of the Holders of particular Securities, and the
Securities are hereby subordinated to such senior claim.

 

Section 6.07           Right of Trustee to Rely on Officer’s Certificate,
Etc.  Subject to Sections 6.01
and 6.02, whenever in the administration of the trusts of this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officer’s
Certificate delivered to the Trustee, and such certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.

 

Section 6.08           Disqualification; Conflicting Interests.  If the Trustee has or shall
acquire any “conflicting interest” within the meaning of Section 310(b) of
the Trust Indenture Act, the Trustee and the Issuer shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture
Act.

 

Section 6.09           Persons Eligible for Appointment as Trustee.  The Trustee for each series of
Securities hereunder shall at all times be a corporation having a combined
capital and surplus of at least $50,000,000 and shall be eligible in accordance
with the provisions of Section 310(a) of the Trust Indenture Act of
1939.  If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of a Federal, State or District of Columbia supervising or examining authority,
then, for the purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.

 

Section 6.10           Resignation and Removal; Appointment of Successor
Trustee.  (a)  The Trustee,
or any trustee or trustees hereafter appointed, may at any time resign with
respect to one or more or all series of Securities by giving written notice of
resignation to the Issuer and by mailing notice of such resignation to the
Holders of then Outstanding Securities of each series affected at their
addresses as they shall appear on the Security register.  Upon receiving such notice of resignation,
the Issuer shall promptly appoint a successor trustee or trustees with respect
to the applicable series by written instrument in duplicate, executed by
authority of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee or
trustees.  If no successor trustee shall
have been so appointed with respect to any series and have accepted appointment
within 30 days after the mailing of 

 

28

 

such notice of resignation, the resigning
trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.12, on behalf of himself or herself
and all others similarly situated, petition any such court for the appointment
of a successor trustee.  Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.

 

(b)           In case at any time any of the following
shall occur:

 

(i)            the Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture Act of 1939 with
respect to any series of Securities after written request therefor by the
Issuer or by any Securityholder who has been a bona fide Holder of a Security
or Securities of such series for at least six months; or

 

(ii)           the Trustee shall cease to be eligible in
accordance with the provisions of Section 310(a) of the Trust
Indenture Act of 1939 and shall fail to resign after written request therefor
by the Issuer or by any Securityholder; or

 

(iii)          the Trustee shall become incapable of acting
with respect to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its property shall
be appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation;

 

then,
in any such case, (A) the Issuer may remove the Trustee with respect to
the applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors of the Issuer, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, (B) subject
to Section 315(e) of the Trust Indenture Act of 1939, any
Securityholder who has been a bona fide Holder of a Security or Securities of
such series for at least six months may on behalf of himself or herself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee with respect
to such series. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a successor trustee.

 

(c)           The Holders of a majority in aggregate
principal amount of the Securities of each series at the time Outstanding may
at any time remove the Trustee with respect to Securities of such series and
appoint a successor trustee with respect to the Securities of such series, with
the consent of the Issuer, by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in Section 7.01
of the action in that regard taken by the Securityholders.

 

(d)           Any resignation or removal of the Trustee
with respect to any series and any appointment of a successor trustee with
respect to such series pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 6.11.

 

29

 

Section 6.11           Acceptance of Appointment by Successor Trustee.  Any successor trustee appointed as
provided in Section 6.10 shall execute and deliver to the Issuer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee with respect to
all or any applicable series shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all
rights, powers, duties and obligations with respect to such series of its
predecessor hereunder, with like effect as if originally named as trustee for
such series hereunder; but, nevertheless, on the written request of the Issuer
or of the successor trustee, upon payment of its charges then unpaid, the
trustee ceasing to act shall, subject to Section 10.04, pay over to the
successor trustee all moneys at the time held by it hereunder and shall execute
and deliver an instrument transferring to such successor trustee all such
rights, powers, duties and obligations. 
Upon request of any such successor trustee, the Issuer shall execute any
and all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.  Any trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.

 

If a successor trustee is appointed with respect to the Securities of
one or more (but not all) series, the Issuer, the predecessor trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor trustee with respect to
the Securities of any series as to which the predecessor trustee is not
retiring shall continue to be vested in the predecessor trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.

 

No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of
such acceptance such successor trustee shall be qualified under the provisions
of Section 310(b) of the Trust Indenture Act of 1939 and eligible
under the provisions of Section 310(a) of the Trust Indenture Act of
1939.

 

Upon acceptance of appointment by any successor trustee as provided in
this Section 6.11, the Issuer shall mail notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the Security register.  If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section 6.10.  If the Issuer fails to mail such notice
within ten days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be given at the expense of the
Issuer.

 

Section 6.12           Merger, Conversion, Consolidation or Succession to
Business of Trustee.  Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to the corporate trust
business of the 

 

30

 

Trustee, shall be the successor of the
Trustee hereunder; provided, that
such corporation shall be qualified under the provisions of Section 310(b) of
the Trust Indenture Act of 1939 and eligible under the provisions of Section 310(a) of
the Trust Indenture Act of 1939, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.

 

In case, at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor trustee and
deliver such Securities so authenticated; and, in case at that time any of the Securities
of any series shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the
right to adopt the certificate of authentication of any predecessor trustee or
to authenticate Securities of any series in the name of any predecessor trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.

 

Section 6.13           Preferential
Collection of Claims Against the Issuer.  The Trustee shall comply with Section 311(a) of
the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of
the Trust Indenture Act.  A Trustee who
has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent included therein.

 

ARTICLE 7

CONCERNING THE SECURITYHOLDERS

 

Section 7.01           Evidence of Action Taken by Securityholders.  Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by a specified percentage in principal
amount of the Securityholders of any or all series may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such specified percentage of Securityholders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee.  Proof of execution of
any instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Sections 6.01 and 6.02)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Article.

 

Section 7.02           Proof of Execution of Instruments and of Holding of
Securities. 
Subject to Sections 6.01 and 6.02, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee
or in such manner as shall be satisfactory to the Trustee.  The holding of Securities shall be proved by
the Security register or by a certificate of the registrar thereof.  The Issuer may set a record date for purposes
of determining the identity of Holders of any series entitled to vote or
consent to any action referred to in Section 7.01, which record date may
be set at any time or from time to time by notice to the Trustee, for any date
or dates (in the case of any adjournment or reconsideration) not more than 60
days nor less than five days prior to the proposed date of 

 

31

 

such vote or consent, and thereafter,
notwithstanding any other provisions hereof, only Holders of such series of
record on such record date shall be entitled to so vote or give such consent or
revoke such vote or consent.  Notice of
such record date may be given before or after any request for any action
referred to in Section 7.01 is made by the Issuer.

 

Section 7.03           Holders to Be Treated as Owners.  The Issuer, the Trustee and any
agent of the Issuer or the Trustee may deem and treat the Person in whose name
any Security shall be registered upon the Security register for such series as
the absolute owner of such Security (whether or not such Security shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of, and,
subject to the provisions of this Indenture, interest on, such Security and for
all other purposes; and neither the Issuer nor the Trustee nor any agent of the
Issuer or the Trustee shall be affected by any notice to the contrary.  All such payments so made to any such Person,
or upon his or her order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for moneys payable.

 

Section 7.04           Securities Owned by Issuer Deemed Not
Outstanding.  In determining
whether the Holders of the requisite aggregate principal amount of Outstanding
Securities of any or all series have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Issuer or any
other obligor on the Securities with respect to which such determination is
being made or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer or any other obligor
on the Securities with respect to which such determination is being made shall
be disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Securities which the Trustee knows are so owned shall be so disregarded.  Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon the
Securities or any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuer or any other obligor on
the Securities.  In case of a dispute as
to such right, the advice of counsel shall be full protection in respect of any
decision made by the Trustee in accordance with such advice.

 

Section 7.05           Right of Revocation of Action Taken.  At any time prior to (but not
after) the evidencing to the Trustee, as provided in Section 7.01, of the
taking of any action by the Holders of the percentage in aggregate principal
amount of the Securities of any or all series, as the case may be, specified in
this Indenture in connection with such action, any Holder of a Security the
serial number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security.  Except as aforesaid, any such
action taken by the Holder of any Security shall be conclusive and binding upon
such Holder and upon all future Holders and owners of such Security and of any
Securities issued in exchange or substitution therefor or on registration of
transfer thereof, irrespective of whether or not any notation in regard thereto
is made upon any such Security.  Any
action taken by the Holders of the percentage in aggregate principal amount of
the Securities of any or all series, as the case 

 

32

 

may be, specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities affected by such action.

 

ARTICLE 8

SUPPLEMENTAL INDENTURES

 

Section 8.01           Supplemental Indentures Without Consent of
Securityholders.  The Issuer, when authorized by a
resolution of its Board of Directors, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental hereto in form
satisfactory to the Trustee for one or more of the following purposes:

 

(a)           to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Securities of one or more series any
property or assets;

 

(b)           to evidence the succession of another
corporation to the Issuer, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of the
Issuer pursuant to Article 9;

 

(c)           to add to the covenants of the Issuer such
further covenants, restrictions, conditions or provisions as its Board of
Directors and the Trustee shall consider to be for the protection of the
Holders of Securities, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default permitting the enforcement of all
or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such
additional covenant, restriction, condition or provision such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such an Event of
Default or may limit the remedies available to the Trustee upon such an Event
of Default or may limit the right of the Holders of a majority in aggregate
principal amount of the Securities of such series to waive such an Event of
Default;

 

(d)           to cure any ambiguity or to correct or
supplement any provision contained herein or in any supplemental indenture
which may be defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to conform this Indenture or any
supplemental indenture to the description of the Securities set forth in any
prospectus or prospectus supplement related to such series of Securities;

 

(e)           to provide for or add guarantors for the
Securities of one or more series;

 

(f)            to establish the form or terms of
Securities of any series as permitted by Sections 2.01 and 2.03;

 

(g)           to evidence and provide for the acceptance
of appointment hereunder by a successor trustee with respect to the Securities
of one or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one trustee, pursuant to the requirements
of Section 6.11;

 

33

 

(h)           to add to, delete from or revise the
conditions, limitations and restrictions on the authorized amount, terms,
purposes of issue, authentication and delivery of any series of Securities, as
herein set forth;

 

(i)            to make any change to the Securities of any
series so long as no Securities of such series are Outstanding; and

 

(j)            to make any other change that does not
adversely affect the interests of the Holders of the Securities in any material
respect.

 

The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Securities at the
time Outstanding, notwithstanding any of the provisions of Section 8.02.

 

Section 8.02           Supplemental Indentures With Consent of
Securityholders.  With the
consent (evidenced as provided in Article 7) of the Holders of not less
than a majority in aggregate principal amount of the Securities at the time
Outstanding of all series affected by such supplemental indenture (voting as
one class), the Issuer, when authorized by a resolution of its Board of
Directors, and the Trustee may, from time to time and at any time, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities of each such series; provided, that no such supplemental
indenture shall, without the consent of the Holder of each Security so
affected, (a) extend the final maturity of any Security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption thereof, or make
the principal thereof (including any amount in respect of original issue
discount) or interest thereon payable in any currency other than that provided
in the Securities or in accordance with the terms thereof, or reduce the amount
of the principal of an Original Issue Discount Security that would be due and
payable upon an acceleration of the maturity thereof pursuant to Section 5.01
or the amount thereof provable in bankruptcy pursuant to Section 5.02, or
impair or affect the right of any Securityholder to institute suit for the
payment or conversion thereof or, if the Securities provide therefor, any right
of repayment at the option of the Securityholder, or modify any of the
provisions of this paragraph except to increase any required percentage or to
provide that certain other provisions cannot be modified or waived without the
consent of the Holder of each Security so affected; provided, that no consent of any Holder of any Security
shall be necessary under this Section 8.02 to permit the Trustee and the
Issuer to execute supplemental indentures pursuant to Section 8.01(e) of
this Indenture, or (b) reduce the aforesaid percentage of Securities of
any series, the consent of the Holders of which is required for any such
supplemental indenture.

 

34

 

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

 

Upon the request of the Issuer, accompanied by a copy of a resolution
of the Board of Directors certified by the secretary or an assistant secretary
of the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid and other documents, if any, required by Section 7.01, the
Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee’s own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.

 

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

 

Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give a notice thereof to the Holders of then Outstanding Securities of
each series affected thereby, by mailing a notice thereof by first-class mail
to such Holders at their addresses as they shall appear on the Security
register, and in each case such notice shall set forth in general terms the
substance of such supplemental indenture. 
Any failure of the Issuer to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.

 

Section 8.03           Effect of Supplemental Indenture.  Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities
of each series affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.

 

Section 8.04           Documents to Be Given to Trustee.  The Trustee, subject to the
provisions of Sections 6.01 and 6.02, may receive an Officer’s Certificate and
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article 8 complies with the applicable
provisions of this Indenture.

 

Section 8.05           Notation on Securities in Respect of Supplemental
Indentures. 
Securities of any series authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this Article may
bear a notation in form approved by the Trustee for such series as to any
matter provided for by such supplemental indenture or as to any action taken by
Securityholders.  If the Issuer or the
Trustee shall so determine, new Securities of any series so modified as to conform,
in the opinion of the Trustee and the Board of Directors, to any 

 

35

 

modification of this Indenture contained in
any such supplemental indenture may be prepared by the Issuer, authenticated by
the Trustee and delivered in exchange for the Securities of such series then
Outstanding.

 

ARTICLE 9

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

Section 9.01           Issuer May Consolidate, Etc., on Certain
Terms.  The Issuer shall not
consolidate with or merge into any other Person (in a transaction in which the
Issuer is not the surviving corporation) or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless (a) the
Person formed by such consolidation or into which the Issuer is merged or the
Person which acquires by conveyance or transfer, or which leases, the
properties and assets of the Issuer substantially as an entirety shall be (i) a
corporation, limited liability company, partnership or trust, (ii) shall
be organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and (iii) shall
expressly assume, by an indenture supplemental hereto, executed and delivered
to the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of and any premium and interest on all the Securities
and the performance or observance of every covenant of this Indenture on the
part of the Issuer to be performed, by supplemental indenture satisfactory in
form to the Trustee, executed and delivered to the Trustee, by the Person (if
other than the Issuer) formed by such consolidation or into which the Issuer
shall have been merged or by the Person which shall have acquired the Issuer’s
assets; (b) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Issuer or any
Subsidiary as a result of such transaction as having been incurred by the
Issuer or such Subsidiary at the time of such transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing; and (c) the
Issuer has delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer or
lease and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and that
all conditions precedent herein provided for relating to such transaction have
been complied with.

 

The conditions of (a)(ii) above shall not apply in the case of a
corporation or entity not organized under the laws of the United States of
America, any State thereof or the District of Columbia which shall agree, in
form satisfactory to the Trustee, (i) to subject itself to the
jurisdiction of the United States district court for the Southern District of
New York and (ii) to indemnify and hold harmless the holders of all
Securities against (A) any tax, assessment or governmental charge imposed
on such holders by a jurisdiction other than the United States or any political
subdivision or taxing authority thereof or therein with respect to, and
withheld on the making of, any payment of principal or interest on such
Securities and which would not have been so imposed and withheld had such
consolidation, merger, sale or conveyance not been made and (B) any tax,
assessment or governmental charge imposed on or relating to, and any costs or
expenses involved in, such consolidation, merger, sale or conveyance.

 

The restrictions in this Section 9.01 shall not apply to (i) the
merger or consolidation of the Issuer with one of its affiliates, if the Board
of Directors determines in good faith that the purpose of such transaction is
principally to change the Issuer’s State of incorporation or convert 

 

36

 

the Issuer’s form of organization to another form, or (ii) the
merger of the Issuer with or into a single direct or indirect wholly owned
Subsidiary pursuant to Section 251(g) (or any successor provision) of
the General Corporation Law of the State of Delaware.

 

Nothing contained in this Article shall apply to, limit or impose
any requirements upon the consolidation or merger of any Person into the Issuer
where the Issuer is the survivor of such transaction, or the acquisition by the
Issuer, by purchase or otherwise, of all or any part of the property of any
other Person (whether or not affiliated with the Issuer).

 

Section 9.02           Successor Issuer Substituted.  Upon any consolidation of the
Issuer with, or merger of the Issuer into, any other Person or any conveyance,
transfer or lease of the properties and assets of the Issuer substantially as
an entirety in accordance with Section 9.01, the successor Person formed
by such consolidation or into which the Issuer is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture with
the same effect as if such successor Person had been named as the Issuer
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities.

 

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

 

ARTICLE 10

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

 

Section 10.01         Satisfaction and Discharge of Indenture.  (a)  If at any time (i) the Issuer
shall have paid or caused to be paid the principal of and interest on all the
Securities of any series Outstanding hereunder (other than Securities of such
series which have been destroyed, lost or stolen and which have been replaced
or paid as provided in Section 2.09) as and when the same shall have
become due and payable, or (ii) the Issuer shall have delivered to the
Trustee for cancellation all Securities of any series theretofore authenticated
(other than any Securities of such series which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Section 2.09)
or (iii) in the case of any series of Securities the exact amount
(including the currency of payment) of principal of and interest due on which
on the dates referred to in clause (B) below can be determined at the time
of making the deposit referred to in such clause, (A) all the Securities
of such series not theretofore delivered to the Trustee for cancellation shall
have become due and payable, or are by their terms to become due and payable
within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (B) the Issuer shall have irrevocably deposited or caused
to be deposited with the Trustee as trust funds the entire amount in cash
(other than moneys repaid by the Trustee or any paying agent to the Issuer in
accordance with Section 10.04) or, in the case of any series of Securities
the payments on which may only be made in Dollars, direct obligations of the
United States of America, backed by its full faith and credit (“U.S. Government Obligations”), maturing as
to principal and interest in such amounts and at such times as will insure the
availability of cash sufficient to pay on any subsequent interest payment date
all interest due on such interest payment date on the Securities of such 

 

37

 

series and to pay at maturity or upon
redemption all Securities of such series (in each case other than any
Securities of such series which shall have been destroyed, lost or stolen and
which shall have been replaced or paid as provided in Section 2.09) not
theretofore delivered to the Trustee for cancellation, including principal and
interest due or to become due to such date of maturity, as the case may be, and
if, in any such case, the Issuer shall also pay or cause to be paid all other
sums payable hereunder by the Issuer, including amounts due the Trustee
pursuant to Section 6.06, with respect to Securities of such series, then
this Indenture shall cease to be of further effect with respect to Securities
of such series (except as to (1) rights of registration of transfer,
conversion and exchange of Securities of such series and the Issuer’s right of
optional redemption, (2) substitution of mutilated, defaced, destroyed,
lost or stolen Securities, (3) rights of Holders of Securities to receive
payments of principal thereof and interest thereon upon the original stated due
dates therefor (but not upon acceleration) and remaining rights of the Holders
to receive mandatory sinking fund payments, if any, (4) the rights
(including the Trustee’s rights under Section 10.05) and immunities of the
Trustee hereunder and the Trustee’s obligations under Sections 10.02 and 10.04,
(5) the rights of the Holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them and (6) the obligations of the Issuer under Section 3.02),
and the Trustee, on demand of the Issuer accompanied by an Officer’s
Certificate and an Opinion of Counsel which complies with Section 11.05
and at the cost and expense of the Issuer, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture with respect
to such series; provided, that
the rights of Holders of the Securities to receive amounts in respect of
principal of and interest on the Securities held by them shall not be delayed
longer than required by then- applicable mandatory rules or policies of
any securities exchange upon which the Securities are listed.  The Issuer agrees to reimburse the Trustee
for any costs or expenses thereafter reasonably and properly incurred and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Securities of
such series.

 

(b)           The following provisions shall apply to the
Securities of each series unless specifically otherwise provided in a Board
Resolution, Officer’s Certificate or indenture supplemental hereto provided
pursuant to Section 2.03.  In
addition to discharge of the Indenture pursuant to the next preceding
paragraph, in the case of any series of Securities the exact amounts (including
the currency of payment) of principal of and interest subsequently due on which
can be determined at the time of making the deposit referred to in clause (A)(1) below,
the Issuer shall be deemed to have paid and discharged the entire Debt on all
the Securities of such a series on the 121st day after the date of the deposit
referred to in clause (A)(1) below, and the provisions of this Indenture
with respect to the Securities of such series shall no longer be in effect
(except as to (i) rights of registration of transfer, conversion and
exchange of Securities of such series, (ii) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Securities, (iii) rights of Holders of
Securities to receive payments of principal thereof and interest thereon, upon
the original stated due dates therefor (but not upon acceleration) and
remaining rights of the Holders to receive sinking fund payments, if any, (iv) the
rights (including the Trustee’s rights under Section 10.05) and immunities
of the Trustee hereunder and the Trustee’s obligations with respect to the
Securities of such series under Sections 10.02 and 10.04, (v) the rights
of the Holders of Securities of such series as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to 

 

38

 

all or any of them and (vi) the obligations of the Issuer under Section 3.02)
and the Trustee, at the expense of the Issuer, shall at the Issuer’s request,
execute proper instruments acknowledging the same, if

 

(A)          with reference to this provision the Issuer
has irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities of such
series (1) cash in an amount, or (2) in the case of any series of Securities
the payments on which may only be made in Dollars, U.S. Government Obligations,
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash or (3) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (x) the principal and interest on all Securities of such
series on the date that such principal or interest is due and payable and (y) any
mandatory sinking fund payments on the day on which such payments are due and
payable in accordance with the terms of the Indenture and the Securities of
such series;

 

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

 

(C)           the Issuer has delivered to the Trustee an
Officer’s Certificate and an opinion of independent legal counsel satisfactory
to the Trustee to the effect that the Issuer has received from, or there has
been published by, the Internal Revenue Service a ruling to the effect that
Holders of the Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to Federal income tax on the same amount and
in the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred; and

 

(D)          the Issuer has delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance contemplated by
this provision have been complied with, and the Opinion of Counsel shall also
state that such deposit does not violate applicable law.

 

Section 10.02         Application by Trustee of Funds Deposited for Payment
of  Securities.  Subject to Section 10.04, all
moneys deposited with the Trustee (or other trustee) pursuant to Section 10.01
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Issuer acting as its own paying agent),
to the Holders of the particular Securities of such series for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and 

 

39

 

interest; but such money need not be
segregated from other funds except to the extent required by law.

 

Section 10.03         Repayment of Moneys Held by Paying Agent.  In connection with the
satisfaction and discharge of this Indenture with respect to Securities of any
series, all moneys then held by any paying agent under the provisions of this Indenture
with respect to such series of Securities shall, upon demand of the Issuer, be
repaid to it or paid to the Trustee and thereupon such paying agent shall be
released from all further liability with respect to such moneys.

 

Section 10.04         Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years.  Any moneys deposited with or paid
to the Trustee or any paying agent for the payment of the principal of or
interest on any Security of any series and not applied but remaining unclaimed
for two years after the date upon which such principal or interest shall have
become due and payable, shall be repaid to the Issuer by the Trustee for such
series or such paying agent, and the Holder of the Securities of such series
shall thereafter look only to the Issuer for any payment which such Holder may
be entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease.

 

Section 10.05         Indemnity for U.S. Government Obligations.  The Issuer shall pay and indemnify
the Trustee against any tax, fee or other charge imposed on or assessed against
the U.S. Government Obligations deposited pursuant to Section 10.01 or the
principal or interest received in respect of such obligations.

 

ARTICLE 11

MISCELLANEOUS PROVISIONS

 

Section 11.01         No Recourse.  No
recourse under or upon any obligation, covenant or agreement of this Indenture,
or of any Security, or for any claim based thereon or otherwise in respect
thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, of the Issuer or of any predecessor
or successor corporation, either directly or through the Issuer or any such
predecessor or successor corporation, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Issuer or of
any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of
the obligations, covenants or agreements contained in this Indenture or in any
of the Securities or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of such Securities.

 

40

 

Section 11.02         Provisions of Indenture for the Sole Benefit of
Parties and  Holders of
Securities.  Nothing in this
Indenture or in the Securities, expressed or implied, shall give or be
construed to give to any person, firm or corporation, other than the parties
hereto and their successors and the Holders of the Securities any legal or
equitable right, remedy or claim under this Indenture or under any covenant or
provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and of the Holders of
the Securities.

 

Section 11.03         Successors and Assigns of Issuer Bound by
Indenture.  All the covenants,
stipulations, promises and agreements contained in this Indenture by or on
behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.

 

Section 11.04         Notices and Demands on Issuer, Trustee and Holders of
Securities. 
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer may be given or served by being deposited
postage prepaid, first-class mail (except as otherwise specifically provided
herein) addressed (until another address of the Issuer is filed by the Issuer
with the Trustee) to Watts Water Technologies, Inc., 815 Chestnut Street,
North Andover, Massachusetts 01845, Attn: General Counsel.  Any notice, direction, request or demand by
the Issuer or any Holder of Securities to or upon the Trustee shall be deemed
to have been sufficiently given or made, for all purposes, if given or made at
              ,
                ,
Attn:
              .

 

Where this Indenture provides for notice to Holders of Securities, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his or her last address as it appears in the Security register.  In any case where notice to such Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders.

 

In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.

 

In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice of any event to Holders
of Securities when said notice is required to be given pursuant to any
provision of this Indenture or of the Securities, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice. 
Neither the failure to give notice, nor any defect in any notice so
given, to any particular Holder of a Security shall affect the sufficiency of
such notice with respect to other Holders of Securities given as provided
above.

 

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

 

41

 

Section 11.05         Officer’s
Certificates and Opinions of Counsel; Statements  to Be Contained Therein.  Upon any application or demand by
the Issuer to the Trustee to take any action under any of the provisions of
this Indenture, the Issuer shall furnish to the Trustee an Officer’s
Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

 

Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture shall include (a) a
statement that the person making such certificate or opinion has read such
covenant or condition, (b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based, (c) a statement that,
in the opinion of such person, he or she has made such examination or
investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with
and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.

 

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

 

Any certificate, statement or opinion of an officer of
the Issuer or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants in the employ of the Issuer, unless such officer or
counsel, as the case may be, knows that the certificate or opinion or
representations with respect to the accounting matters upon which his or her
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous.

 

Any certificate or opinion of any independent firm of
public accountants filed with and directed to the Trustee shall contain a
statement that such firm is independent.

 

Section 11.06         Payments
Due on Saturdays, Sundays and Holidays.  If
the date of maturity of interest on or principal of the Securities of any
series or the date fixed for redemption or repayment of any such Security, or
the last day on which a Holder has the right to convert any Security, shall not
be a Business Day, then payment of interest or principal, or any conversion, 

 

42

 

need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date of maturity or the date fixed for redemption or on such last
day for conversion, and no interest shall accrue for the period after such
date.

 

Section 11.07         Conflict
of Any Provision of Indenture With Trust  Indenture Act of 1939.  If
and to the extent that any provision of this Indenture limits, qualifies or
conflicts with another provision included in this Indenture by operation of
Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, such
incorporated provision shall control.

 

Section 11.08         New
York Law to Govern.  This
Indenture and each Security shall be deemed to be a contract under the laws of
the State of New York, and for all purposes shall be construed in accordance
with the laws of such State, except as may otherwise be required by mandatory
provisions of law.

 

Section 11.09         Counterparts.  This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

 

Section 11.10         Effect
of Headings.  The Article and
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

 

Section 11.11         Actions
by Successor.  Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Issuer shall and may be
done and performed with like force and effect by the corresponding board,
committee or officer of any corporation that shall at the time be the lawful
successor of the Issuer.

 

Section 11.12         Severability.  In case any one or more of the provisions
contained in this Indenture or in the Securities of any series shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Indenture or of such Securities, but this Indenture and such
Securities shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.

 

ARTICLE 12

REDEMPTION OF SECURITIES AND SINKING FUNDS

 

Section 12.01         Applicability
of Article.  The provisions of
this Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series, except as otherwise specified, as contemplated by Section 2.03
for Securities of such series.

 

Section 12.02         Notice
of Redemption; Partial Redemptions.  Notice
of redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders of
Securities of such series at their last addresses as they shall appear upon the
Security register.  Any notice which is
given in the manner herein provided shall be conclusively presumed to have 

 

43

 

been duly given, whether or not the Holder receives the notice.  Failure to give notice or any defect in the
notice to the Holder of any Security of a series designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security of such series.

 

The notice of redemption to each such Holder shall
specify the principal amount of each Security of such series held by such
Holder to be redeemed, the date fixed for redemption, the redemption price, the
place or places of payment, that payment will be made upon presentation and
surrender of such Securities, that such redemption is pursuant to the mandatory
or optional sinking fund, or both, if such be the case, that interest accrued
to the date fixed for redemption will be paid as specified in such notice and
that on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue and shall also specify, if applicable, the
conversion price then in effect and the date on which the right to convert such
Securities or the portions thereof to be redeemed will expire.  In case any Security of a series is to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Security, a new Security or
Securities of such series in principal amount equal to the unredeemed portion
thereof will be issued.

 

The notice of redemption of Securities of any series
to be redeemed at the option of the Issuer shall be given by the Issuer or, at
the Issuer’s request, by the Trustee in the name and at the expense of the
Issuer.

 

On or before the redemption date specified in the
notice of redemption given as provided in this Section, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is acting
as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.04)
an amount of money sufficient to redeem on the redemption date all the
Securities of such series so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption.  If any Security called for
redemption is converted pursuant hereto, any money deposited with the Trustee
or any paying agent or so segregated and held in trust for the redemption of
such Security shall be paid to the Issuer upon the Issuer’s request, or, if
then held by the Issuer, shall be discharged from such trust.  The Issuer will deliver to the Trustee at
least 70 days prior to the date fixed for redemption (unless a shorter time
period shall be acceptable to the Trustee) an Officer’s Certificate (which need
not comply with Section 11.05) stating the aggregate principal amount of
Securities to be redeemed.  In case of a
redemption at the election of the Issuer prior to the expiration of any
restriction on such redemption, the Issuer shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders pursuant to this Section,
an Officer’s Certificate stating that such restriction has been complied with.

 

If less than all the Securities of a series are to be
redeemed, the Trustee shall select, in such manner as it shall deem appropriate
and fair, Securities of such series to be redeemed in whole or in part.  Securities may be redeemed in part in
multiples equal to the minimum authorized denomination for Securities of such
series or any multiple thereof.  The
Trustee shall promptly notify the Issuer in writing of the Securities of such
series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed.  For all purposes of this
Indenture, unless the context otherwise requires, 

 

44

 

all provisions relating to the redemption of Securities of any series
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.  If any Security
selected for partial redemption is surrendered for conversion after such
selection, the converted portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption.

 

Section 12.03         Payment
of Securities Called for Redemption.  If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said
date) interest on the Securities or portions of Securities so called for
redemption shall cease to accrue, and, except as provided in Sections 6.05 and
10.04, such Securities shall cease from and after the date fixed for redemption
to be convertible into Common Stock, if applicable, and to be entitled to any
benefit or security under this Indenture, and the Holders thereof shall have no
right in respect of such Securities except the right to receive the redemption
price thereof and unpaid interest to the date fixed for redemption.  On presentation and surrender of such
Securities at a place of payment specified in said notice, said Securities or
the specified portions thereof shall be paid and redeemed by the Issuer at the
applicable redemption price, together with interest accrued thereon to the date
fixed for redemption; provided,
that payment of interest becoming due on or prior to the date fixed for
redemption shall be payable to the Holders of such Securities registered as
such on the relevant record date subject to the terms and provisions of
Sections 2.03 and 2.07 hereof.

 

If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the rate
of interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security and, if applicable, such Security shall remain
convertible into Common Stock until the principal of such Security shall have
been paid or duly provided for.

 

Upon presentation of any Security redeemed in part
only, the Issuer shall execute and the Trustee shall authenticate and deliver
to or on the order of the Holder thereof, at the expense of the Issuer, a new
Security or Securities of such series, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.

 

Section 12.04         Exclusion
of Certain Securities from Eligibility for  Selection for Redemption.  Securities shall be excluded from
eligibility for selection for redemption if they are identified by registration
and certificate number in an Officer’s Certificate delivered to the Trustee at
least 40 days prior to the last date on which notice of redemption may be given
as being owned of record and beneficially by, and not pledged or hypothecated
by either (a) the Issuer or (b) an entity specifically identified in
such written statement as directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer.

 

Section 12.05         Mandatory
and Optional Sinking Funds.  The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any series is herein referred to as a “mandatory sinking fund payment”, and any payment in excess of
such minimum 

 

45

 

amount provided for by the terms of the Securities of any series is
herein referred to as an “optional sinking
fund  payment”.  The date on which a sinking fund payment is
to be made is herein referred to as the “sinking
fund payment date”.

 

In lieu of making all or any part of any mandatory
sinking fund payment with respect to any series of Securities in cash, the
Issuer may at its option (a) deliver to the Trustee Securities of such
series theretofore purchased or otherwise acquired (except upon redemption
pursuant to the mandatory sinking fund) by the Issuer or receive credit for
Securities of such series (not previously so credited) theretofore purchased or
otherwise acquired (except as aforesaid) by the Issuer and delivered to the
Trustee for cancellation pursuant to Section 2.10 and, if applicable,
receive credit for Securities (not previously so credited) converted into Common
Stock and so delivered to the Trustee for cancellation, (b) receive credit
for optional sinking fund payments (not previously so credited) made pursuant
to this Section, or (c) receive credit for Securities of such series (not
previously so credited) redeemed by the Issuer through any optional redemption
provision contained in the terms of such series.  Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price
specified in such Securities.

 

On or before the 60th day next preceding each sinking
fund payment date for any series, the Issuer will deliver to the Trustee an
Officer’s Certificate (which need not contain the statements required by Section 11.05)
(a) specifying the portion of the mandatory sinking fund payment to be
satisfied by payment of cash and the portion to be satisfied by credit of
Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series has theretofore been so credited, (c) stating
that no defaults in the payment of interest or Events of Default with respect
to such series have occurred (which have not been waived or cured) and are
continuing and (d) stating whether or not the Issuer intends to exercise
its right to make an optional sinking fund payment with respect to such series
and, if so, specifying the amount of such optional sinking fund payment which
the Issuer intends to pay on or before the next succeeding sinking fund payment
date.  Any Securities of such series to be
credited and required to be delivered to the Trustee in order for the Issuer to
be entitled to credit therefor as aforesaid which have not theretofore been
delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10
to the Trustee with such Officer’s Certificate (or reasonably promptly
thereafter if acceptable to the Trustee). 
Such Officer’s Certificate shall be irrevocable and upon its receipt by
the Trustee the Issuer shall become unconditionally obligated to make all the
cash payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. 
Failure of the Issuer, on or before any such 60th day, to deliver such
Officer’s Certificate and Securities specified in this paragraph, if any, shall
not constitute a default but shall constitute, on and as of such date, the
irrevocable election of the Issuer that the mandatory sinking fund payment for
such series due on the next succeeding sinking fund payment date shall be paid
entirely in cash without the option to deliver or credit Securities of such
series in respect thereof.

 

If the sinking fund payment or payments (mandatory or
optional or both) to be made in cash on the next succeeding sinking fund
payment date plus any unused balance of any preceding sinking fund payments
made in cash shall exceed $50,000 (or the equivalent thereof in any Foreign
Currency or a lesser sum in Dollars or in any Foreign Currency if the Issuer
shall so request) with respect to the Securities of any particular series, such
cash shall be applied on the 

 

46

 

next succeeding sinking fund payment date to the redemption of
Securities of such series at the sinking fund redemption price together with
accrued interest to the date fixed for redemption.  If such amount shall be $50,000 (or the
equivalent thereof in any Foreign Currency) or less and the Issuer makes no
such request then it shall be carried over until a sum in excess of $50,000 (or
the equivalent thereof in any Foreign Currency) is available.  The Trustee shall select, in the manner
provided in Section 12.02, for redemption on such sinking fund payment
date a sufficient principal amount of Securities of such series to absorb said
cash, as nearly as may be, and shall (if requested in writing by the Issuer)
inform the Issuer of the serial numbers of the Securities of such series (or
portions thereof) so selected.  The
Trustee, in the name and at the expense of the Issuer (or the Issuer, if it
shall so request the Trustee in writing), shall cause notice of redemption of
the Securities of such series to be given in substantially the manner provided
in Section 12.02 (and with the effect provided in Section 12.03) for
the redemption of Securities of such series in part at the option of the
Issuer.  The amount of any sinking fund
payments not so applied or allocated to the redemption of Securities of such
series shall be added to the next cash sinking fund payment for such series and,
together with such payment, shall be applied in accordance with the provisions
of this Section.  Any and all sinking
fund moneys held on the stated maturity date of the Securities of any
particular series (or earlier, if such maturity is accelerated), which are not
held for the payment or redemption of particular Securities of such series,
shall be applied, together with other moneys, if necessary, sufficient for the
purpose, to the payment of the principal of, and interest on, the Securities of
such series at maturity.  The Issuer’s
obligation to make a mandatory or optional sinking fund payment shall
automatically be reduced by an amount equal to the sinking fund redemption
price allocable to any Securities or portions thereof called for redemption
pursuant to the preceding paragraph on any sinking fund payment date and
converted into Common Stock; provided
that, if the Trustee is not the
conversion agent for the Securities, the Issuer or such conversion agent shall
give the Trustee written notice prior to the date fixed for redemption of the
principal amount of Securities or portions thereof so converted.

 

On or before each sinking fund payment date, the
Issuer shall pay to the Trustee in cash or shall otherwise provide for the
payment of all interest accrued to the date fixed for redemption on Securities
to be redeemed on the next following sinking fund payment date.

 

The Trustee shall not redeem or cause to be redeemed
any Securities of a series with sinking fund moneys or give any notice of
redemption of Securities for such series by operation of the sinking fund
during the continuance of a default in payment of interest on such Securities
or of any Event of Default except that, where the mailing of notice of
redemption of any Securities shall theretofore have been made, the Trustee
shall redeem or cause to be redeemed such Securities, provided that it shall
have received from the Issuer a sum sufficient for such redemption.  Except as aforesaid, any moneys in the
sinking fund for such series at the time when any such default or Event of Default
shall occur, and any moneys thereafter paid into the sinking fund, shall,
during the continuance of such default or Event of Default, be deemed to have
been collected under Article 5 and held for the payment of all such
Securities.  In case such Event of
Default shall have been waived as provided in Section 5.10, or the default
cured on or before the 60th day preceding the sinking fund payment date in any
year, such moneys shall thereafter be applied on the next succeeding sinking
fund payment date in accordance with this Section to the redemption of
such Securities.

 

47

 

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed as of
                          .

 

 

	
   

  	
  WATTS
  WATER TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
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48

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