Document:

exhibit_4-1.htm

     

    
      

      

    

    

      
        EXHIBIT 4.1

         

        

      

      SOLUTIA
INC.

      and

      AMERICAN
STOCK TRANSFER & TRUST COMPANY, LLC

      as
Rights Agent

       

      382
RIGHTS AGREEMENT

       

      Dated
as of July 27, 2009

      
        

         

        

      

      
        
          
            
              	 
      	 
      	 
      

            

             

            

             

            K&E
15230038.6

          

           

        

        
           

          
            

          

        

        
           

        

      

      TABLE
OF CONTENTS

       

      Page

       

       

       

      
        
          
            	
                    Section
      1.

                  	
                    Certain
      Definitions

                  	
                    1

                  

          

           

        

        
          
            	
                    Section
      2.

                  	
                    Appointment
      of Rights Agent

                  	
                    6

                  

          

           

        

        
          
            	
                    Section
      3.

                  	
                    Issuance
      of Rights Certificates

                  	
                    6

                  

          

          
             

            
              	
                      Section
      4.

                    	
                      Form
      of Rights Certificates

                    	
                      9

                    

            

            
               

              
                	
                        Section
      5.

                      	
                        Countersignature
      and Registration

                      	
                        10

                      

              

              
                 

                
                  	
                          Section
      6.

                        	
                          Transfer,
      Split-Up, Combination and Exchange of Rights Certificates; Mutilated,
      Destroyed, Lost or Stolen Rights Certificates

                        	
                          10

                        

                

                
                   

                  
                    	
                            Section
      7.

                          	
                            Exercise
      of Rights; Purchase Price; Expiration Date of Rights

                          	
                            11

                          

                  

                  
                     

                    
                      	
                              Section
      8.

                            	
                              Cancellation
      and Destruction of Rights Certificates

                            	
                              13

                            

                    

                    
                       

                      
                        	
                                Section
      9.

                              	
                                Reservation
      and Availability of Capital Stock

                              	
                                13

                              

                      

                      
                         

                        
                          	
                                  Section
      10.

                                	
                                  Preferred
      Stock Record Date

                                	
                                  14

                                

                        

                        
                           

                          
                            	
                                    Section
      11.

                                  	
                                    Adjustment
      of Purchase Price, Number and Kind of Shares or Number of
      Rights

                                  	
                                    15

                                  

                          

                          
                             

                            
                              	
                                      Section
      12.

                                    	
                                      Certificate
      of Adjusted Purchase Price or Number of Shares

                                    	
                                      22

                                    

                            

                             

                          

                        

                      

                    

                  

                

              

            

          

        

        
          	
                  Section
      13.

                	
                  Consolidation,
      Merger or Sale or Transfer of Assets, Cash Flow or Earning
      Power

                	
                  22

                

        

         

      

      
        	
                Section
      14.

              	
                Fractional
      Rights and Fractional Shares

              	
                24

              

      

       

      
        	
                Section
      15.

              	
                Rights
      of Action

              	
                25

              

      

       

      
        	
                Section
      16.

              	
                Agreement
      of Rights Holders

              	
                26

              

      

       

      
        	
                Section
      17.

              	
                Rights
      Certificate Holder Not Deemed a Stockholder

              	
                26

              

      

       

      
        	
                Section
      18.

              	
                Concerning
      the Rights Agent

              	
                27

              

      

       

      
        
          	
                  Section
      19.

                	
                  Merger
      or Consolidation or Change of Name of Rights Agent

                	
                  27

                

        

         

      

      
        	
                Section
      20.

              	
                Duties
      of Rights Agent

              	
                28

              

      

       

      
        	
                Section
      21.

              	
                Change
      of Rights Agent

              	
                30

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                Section
      22.

              	
                Issuance
      of New Rights Certificates

              	
                30

              

      

       

      
        	
                Section
      23.

              	
                Redemption
      and Termination

              	
                31

              

      

       

      
        	
                Section
      24.

              	
                Exchange

              	
                31

              

      

       

      
        	
                Section
      25.

              	
                Notice
      of Certain Events

              	
                32

              

      

       

      
        	
                Section
      26.

              	
                Notices

              	
                33

              

      

       

      
        	
                Section
      27.

              	
                Supplements
      and Amendments

              	
                34

              

      

       

      
        	
                Section
      28.

              	
                Successors

              	
                34

              

      

       

      
        	
                Section
      29.

              	
                Determinations
      and Actions by the Board, etc

              	
                34

              

      

       

      
        	
                Section
      30.

              	
                Benefits
      of this Agreement

              	
                35

              

      

       

      
        	
                Section
      31.

              	
                Severability

              	
                35

              

      

       

      
        	
                Section
      32.

              	
                Governing
      Law

              	
                35

              

      

       

      
        	
                Section
      33.

              	
                Counterparts

              	
                35

              

      

       

      
        	
                Section
      34.

              	
                Descriptive
      Headings

              	
                36

              

      

      

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          ii 

        

        
           

          
            

          

        

        
           

        

      

      EXHIBITS

       

      
        	
                Exhibit
      A

              	
                --

              	
                Form
      of Certificate of Designation, Preferences and Rights of Series A
      Participating Preferred Stock

              
	
                Exhibit
      B

              	
                --

              	
                Form
      of Rights Certificate

              
	
                Exhibit
      C

              	
                --

              	
                Form
      of Summary of Rights

              

      

      

       

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

           

        

        
          iii 

          
            

          

        

        
           

        

      

      382 RIGHTS
AGREEMENT

       

      382
RIGHTS AGREEMENT, dated as of July 27, 2009 (this “Agreement”), between
Solutia Inc., a Delaware corporation (the “Company”), and
American Stock Transfer & Trust Company, LLC, a New York limited liability
trust company (the “Rights
Agent”).

       

      W I T N E S S E T
H:

       

      WHEREAS,
(a) the Company and certain of its Subsidiaries (as hereinafter defined) have
generated certain Tax Benefits (as hereinafter defined) for United States
federal income tax purposes; (b) the Company desires to avoid an “ownership
change” within the meaning of Section 382 of the Code (as hereinafter defined),
and thereby preserve the Company’s current ability to utilize such Tax Benefits,
and (c) in furtherance of such objective, the Company desires to enter into this
Agreement; and

       

      WHEREAS,
on July 27, 2009 (the “Rights Dividend Declaration
Date”), the Board of Directors of the Company (the “Board”) authorized
and declared a dividend distribution of one Right (as hereinafter defined) for
each share of Common Stock (as hereinafter defined) of the Company outstanding
at the close of business on July 28, 2009 (the “Record Date”), and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock issued between the Record Date (whether originally issued or
delivered from the Company’s treasury) and the Distribution Date (as hereinafter
defined), each Right initially representing the right to purchase 1/10,000th of
a share of Series A Participating Preferred Stock, par value $0.01 per share, of
the Company (the “Preferred Stock”)
having the rights, powers and preferences set forth in the form of Certificate
of Designation, Preferences and Rights attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the “Rights”).

       

      NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:

       

      Section
1. Certain
Definitions.  For
purposes of this Agreement, the following terms have the meanings
indicated:

       

      (a) “Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates
of such Person, is or becomes the Beneficial Owner of 4.99% or more of the
shares of Common Stock then outstanding, regardless of whether or not such
Person continues to be the Beneficial Owner of 4.99% or more of the shares of
Common Stock then outstanding; provided, however, that an
“Acquiring Person” shall not include (i) an Exempt Person or (ii) Existing
Holder.  Notwithstanding the foregoing: (A) no Person shall become an
“Acquiring Person” solely as a result of (x) a reduction in the number of shares
of Common Stock outstanding due to the repurchase of shares of Common Stock by
the Company, (y) a dividend or distribution paid or made by the Company on the
outstanding shares of Common Stock or pursuant to a split or subdivision of the
outstanding shares of Common Stock, and/or (z) an Exempt Transaction; and (B) if
the Board determines in good faith that a Person who would otherwise be an
“Acquiring Person” has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an “Acquiring Person”, then such Person shall not
be deemed to be or have become an “Acquiring Person” at any time for any
purposes of this Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b) “Act” shall mean the
Securities Act of 1933, as amended.

       

      (c) “Affiliate” and “Associate” shall have
the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.

       

      (d) “Agreement” shall have
the meaning set forth in the preamble to this Agreement, as it may from time to
time be supplemented, amended, renewed, restated or extended pursuant to the
applicable provisions hereof.

       

      (e) A Person
shall be deemed the “Beneficial Owner” of,
and shall be deemed to “Beneficially Own,”
and have “Beneficial
Ownership” of, any securities:

       

      (i) which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, owns or has the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of one or
more conditions (whether or not within the control of such Person), compliance
with regulatory requirements or otherwise) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “Beneficially Own,”
under this subparagraph (A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person’s Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person’s Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or
pursuant to Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;

       

      (ii) which
such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of
(as determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “Beneficially Own,”
any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding (whether or not in writing) to vote such security
if such agreement, arrangement or understanding (A) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act and (B) is not reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report);

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (iii) which are
Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with respect to which such Person (or any of
such Person’s Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (f)) or disposing of any voting
securities of the Company; or

       

      (iv) which
such Person actually owns (directly or indirectly) or would be deemed to
actually or constructively own pursuant to Section 382 of the Code and the
Treasury Regulations promulgated thereunder.

       

      Notwithstanding
the foregoing, nothing in this paragraph (e) shall cause a Person engaged in
business as an underwriter of securities to be the “Beneficial Owner” of, or to
“Beneficially Own,” any securities acquired through such Person’s participation
in good faith in a firm commitment underwriting until the expiration of forty
days after the date of such acquisition, and then only if such securities
continue to be owned by such Person at such expiration of forty
days.

       

      (f) “Business Day” shall
mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.

       

      (g) “Close of Business” on
any given date shall mean 5:00 P.M., New York City time, on such date; provided, however, that if such
date is not a Business Day, it shall mean 5:00 P.M., New York City time, on the
next succeeding Business Day.

       

      (h) “Common Stock” shall
mean the Common Stock, par value $0.01 per share, of the Company or any other
shares of capital stock of the Company into which such stock shall be
reclassified or changed, except that “Common Stock” when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such
Person.

       

      (i) “Company” shall have
the meaning set forth in the preamble to this Agreement until a successor
corporation or entity shall have become such or until a Principal Party shall
assume, and thereafter be liable for, all obligations and duties of the Company
hereunder pursuant to the applicable provisions of this Agreement, and
thereafter, “Company” shall mean such successor or Principal Party,
respectively.

       

      (j) “Company’s Bylaws”
shall mean the Amended and Restated Bylaws of the Company, as the same may be
amended after the date hereof.

       

      (k) “Company’s Charter”
shall mean the Second Amended and Restated Certificate of Incorporation of the
Company, as the same may be amended after the date hereof.

       

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

       

      (m) “Distribution Date”
shall mean the earlier of (i) the Close of Business on the 10th
Business Day (or such later date as may be determined by the Board before the
occurrence of the Distribution Date) after the Stock Acquisition Date, or (ii)
the close of business on the 10th
Business Day (or such later date as may be determined by the Board before the
occurrence of the Distribution Date) after the Tender Offer Commencement Date;
provided, however, that if
either of the Stock Acquisition Date or the Tender Offer Commencement Date
occurs after the date of this Agreement and on or prior to the Record Date, then
the Distribution Date shall be the Record Date.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

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

       

      (o) “Exempt Person” shall
mean the Company or any Subsidiary of the Company and any employee benefit plan
of the Company, or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan.

       

      (p) “Exempt Transaction”
shall mean any transaction that the Board determines, in its sole discretion, is
exempt from this Agreement, which determination shall be made in the sole and
absolute discretion of the Board, upon request by any Person prior to the date
upon which such Person would otherwise become an Acquiring Person, including,
without limitation, if the Board determines that (i) neither the Beneficial
Ownership of shares of Common Stock by such Person, directly or indirectly, as a
result of such transaction nor any other aspect of such transaction would
jeopardize or endanger the availability to the Company of the Tax Benefits or
(ii) such transaction is otherwise in the best interests of the
Company.

       

      (q) “Existing Holder”
shall mean any Person that, as of the date hereof, is the Beneficial Owner of
4.99% or more of the shares of Common Stock outstanding unless and until such
Existing Holder acquires Beneficial Ownership of one or more additional shares
of Common Stock (other than as a result of a dividend or distribution paid or
made by the Company on the outstanding shares of Common Stock or pursuant to a
split or subdivision of the outstanding shares of Common Stock) unless, upon
becoming the Beneficial Owner of such additional share(s), such Existing Holder
is not then the Beneficial Owner of 4.99% or more of the then outstanding shares
of Common Stock.

       

      (r) “Expiration Date”
shall mean shall mean the earliest of (i) the Final Expiration Date, (ii) the
time at which the Rights are redeemed as provided in Section
23 hereof, (iii) the time at which the Rights are exchanged as provided in
Section
24 hereof, (iv) the date on which the Board determines that this Agreement
is no longer necessary for the preservation of material valuable Tax Benefits,
and (v) the beginning of a taxable year of the Company to which the Board
determines that no Tax Benefits may be carried forward.

       

      (s) “Final Expiration
Date” shall mean the date upon which the Rights expire and shall be the
earlier of 5:00 P.M., New York City time on July 27, 2012, unless the Rights are
previously redeemed, exchanged or terminated.

       

      (t) “Person” shall mean
any individual, firm, corporation, partnership, limited liability company,
trust, association, syndicate or other entity and includes an unincorporated
group of persons who, by formal or informal agreement or arrangement (whether or
not in writing), have embarked on a common purpose or act.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (u) “Preferred Stock”
shall have the meaning set forth in the recitals to this Agreement, and, to the
extent that there are not a sufficient number of shares of Series A
Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of preferred stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Participating Preferred Stock.

       

      (v) “Section 11(a)(ii)
Event” shall mean any event described in Section 11(a)(ii)
hereof.

       

      (w) “Stock Acquisition
Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include a report filed or amended pursuant to
Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such or that discloses information which reveals
the existence of an Acquiring Person, or such earlier date as a majority of the
Board becomes aware of the existence of an Acquiring Person.

       

      (x) “Subsidiary” shall
mean, with reference to any Person, any corporation or other entity of which an
amount of securities or other ownership interest having ordinary voting power
sufficient to elect at least a majority of the directors or other Persons having
similar functions of such corporation or other entity are at the time, directly
or indirectly, Beneficially Owned, or otherwise controlled by such
Person.

       

      (y) “Tax Benefits” shall
mean the net operating loss carryovers, capital loss carryovers, general
business credit carryovers, alternative minimum tax credit carryovers and
foreign tax credit carryovers, as well as any loss or deduction attributable to
a “net unrealized built-in loss” within the meaning of Section 382 of the Code
and the Treasury Regulations promulgated thereunder, of the Company or any of
its Subsidiaries.

       

      (z) “Tender Offer Commencement
Date” shall mean the date that a tender or exchange offer or other
transaction by any Person (other than an Exempt Person) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if, upon consummation thereof, such Person
would become an Acquiring Person.

       

      (aa) “Treasury Regulations”
shall mean final, temporary and proposed regulation of the Department of
Treasury under the Code and any successor regulation, including any amendments
thereto.

       

      (bb) “Triggering Event”
shall mean any Section 11(a)(ii) Event or any Section 13 Event.

       

      (cc) The
following terms shall have the meanings defined for such terms in the Sections
set forth below:

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
        	
                Term

              	
                Section

              
	
                Adjustment
      Shares

              	
                11(a)(ii)

              
	
                Board

              	
                Recitals

              
	
                Common
      Stock Equivalents

              	
                11(a)(iii)

              
	
                Current
      Market Price

              	
                11(d)(i)

              
	
                Current
      Value

              	
                11(a)(iii)

              
	
                Equivalent
      Preferred Stock

              	
                11(b)

              
	
                Exchange
      Ratio

              	
                24

              
	
                Existing
      Holder

              	
                1(a)

              
	
                Grandfathered
      Holder

              	
                1(a)

              
	
                NASDAQ

              	
                11(d)(i)

              
	
                Original
      Rights

              	
                1(e)(i)

              
	
                Preferred
      Stock

              	
                Recitals

              
	
                Principal
      Party

              	
                13(b)

              
	
                Purchase
      Price

              	
                4(a)

              
	
                Record
      Date

              	
                Recitals

              
	
                Redemption
      Price

              	
                23(a)

              
	
                Rights

              	
                Recitals

              
	
                Rights
      Agent

              	
                Preamble

              
	
                Rights
      Certificate

              	
                3(a)

              
	
                Rights
      Dividend Declaration Date

              	
                Recitals

              
	
                Section
      11(a)(ii) Event

              	
                11(a)(ii)

              
	
                Section
      11(a)(ii) Trigger Date

              	
                11(a)(iii)

              
	
                Section
      13 Event

              	
                13(a)

              
	
                Spread

              	
                11(a)(iii)

              
	
                Substitution
      Period

              	
                11(a)(iii)

              
	
                Summary
      of Rights

              	
                3(b)

              
	
                Trading
      Day

              	
                11(d)(i)

              

      

      

       

      Section
2. Appointment of Rights
Agent.  The
Company hereby appoints the Rights Agent to act as rights agent for the Company
and the holders of the Rights (who, in accordance with Section 3 hereof, shall
prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment.  The Company may from time to time appoint
such co-rights agents as it may deem necessary or desirable.

       

      Section
3. Issuance of Rights
Certificates.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (a) Until the
Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of paragraph (b) or (c) of this Section 3) by the balances indicated in the
book-entry account system of the transfer agent for the Common Stock registered
in the names of the holders of the Common Stock (which shares of Common Stock
shall also be deemed to represent certificates for Rights) or, in the case of
certificated shares, the certificates for the Common Stock registered in the
names of the holders of the Common Stock (which certificates for Common Stock
shall also be deemed to be certificates for Rights), and not by separate
certificates, and (ii) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company).  As soon as practicable after the Distribution Date, the
Rights Agent will send by first-class, insured, postage-prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form of Exhibit B
hereto (the “Rights
Certificates”), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein.  In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights.  As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.  The Company shall promptly notify the Rights Agent in
writing upon the occurrence of the Distribution Date.  Until such
notice is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that the Distribution Date has not
occurred.

       

      (b) On or as
promptly as practicable after the Record Date, the Company shall send by first
class, postage prepaid mail, to each record holder of shares of Common Stock as
of the Record Date a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the “Summary of Rights”),
at the address of such holder shown on the records of the Company as of such
date.  The Company will make available the Summary of Rights to any
holder of Rights who may so request from time to time prior to the Expiration
Date.  With respect to the Common Stock outstanding as of the Record
Date, or issued subsequent to the Record Date, unless and until the Distribution
Date shall occur, the Rights will be evidenced by the balances indicated in the
book-entry account system of the transfer agent for the Common Stock or, in the
case of certificated shares, such certificates for the Common Stock, and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights.  Until the earlier of the Distribution Date or
the Expiration Date, the transfer of any shares of Common Stock in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.

       

      (c) Rights
shall be issued in respect of all shares of Common Stock which are issued
(whether originally issued or from the Company’s treasury) after the Record Date
but prior to the earlier of the Distribution Date or the Expiration Date and
shall bear the following legends:

       

      (i) Confirmation
and account statements sent to holders of shares of Common Stock in book-entry
form (which shares of Common Stock shall also be deemed to represent
certificates for Rights) shall bear the following legend:

       

      “The
shares of Common Stock, par value $0.01 per share, of Solutia Inc. (the “Company”) entitle the
holder hereof to certain Rights as set forth in the 382 Rights Agreement between
the Company and the Rights Agent thereunder (the “Rights Agent”) dated
as of July 27, 2009, as it may be amended, restated, renewed or extended from
time to time (the “Rights Agreement”),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Rights Agent.  Under
certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by the shares
to which this statement relates.  The Rights Agent will mail to the
holder of shares to which this statement relates a copy of the Rights Agreement,
as in effect on the date of mailing, without charge, promptly after receipt of a
written request therefor.  Under certain circumstances set forth in
the Rights Agreement, Rights Beneficially Owned (as such term is defined in the
Rights Agreement) by any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.”

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      With
respect to shares of Common Stock in book-entry form for which there has been
sent a confirmation or account statement containing the foregoing legend, until
the earlier of (A) the Distribution Date or (B) the Expiration Date, the Rights
associated with the Common Stock represented by such shares of Common Stock
shall be evidenced by such shares of Common Stock alone and registered holders
of Common Stock shall also be the registered holders of the associated Rights,
and the transfer of any of such shares of Common Stock shall also constitute the
transfer of the Rights associated with such shares of Common Stock.

       

      (ii) In the
case of certificated shares, certificates representing shares of Common Stock
(which certificates shall also be deemed to be certificates for Rights) shall
bear the following legend if such certificates are issued after the Record Date
but prior to the earlier of the Distribution Date or the Expiration
Date:

       

      “This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the 382 Rights Agreement between Solutia Inc. (the “Company”) and the
Rights Agent thereunder (the “Rights Agent”) dated
as of July 27, 2009, as it may be amended, restated, renewed or extended from
time to time (the “Rights Agreement”),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Rights Agent.  Under
certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate.  The Rights Agent will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of mailing,
without charge, promptly after receipt of a written request
therefor.  Under certain circumstances set forth in the Rights
Agreement, Rights Beneficially Owned (as such term is defined in the Rights
Agreement) by any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.”

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      With
respect to such certificates containing the foregoing legend, until the earlier
of (A) the Distribution Date or (B) the Expiration Date, the Rights associated
with the Common Stock represented by such certificates shall be evidenced by
such certificates alone and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates.

       

      Section
4. Form of Rights
Certificates.

       

      (a) The
Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage.  Subject to the provisions of Section 11 and Section
22 hereof, the Rights Certificates, whenever distributed, shall be dated as of
the Record Date and on their face shall entitle the holders thereof to purchase
such number of 1/10,000th of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per 1/10,000th of a
share, the “Purchase
Price”), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

       

      (b) Any
Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22
hereof that represents Rights Beneficially Owned by (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the Board, in its sole
discretion, has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:

       

      The
Rights represented by this Rights Certificate are or were Beneficially Owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights
Agreement).  Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in
Section 7(e) of the Rights Agreement.

       

      
        
          
          

        

        
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      Section
5. Countersignature and
Registration.

       

      (a) The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its President or any Vice President
(or more senior officer) of the Company, either manually or by facsimile
signature, and shall have affixed thereto the Company’s seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature.  The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature and shall not be valid for any purpose unless so
countersigned.  In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

       

      (b) Following
the Distribution Date, the Rights Agent will keep, or cause to be kept, at its
principal office or offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder.  Such books
shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

       

      Section
6. Transfer, Split-Up,
Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.

       

      (a) Subject
to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing Rights that may have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of 1/10,000th of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitles such holder (or former holder in the
case of a transfer) to purchase.  Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices of the Rights Agent
designated for such purpose.  Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request.  Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e), Section 14 hereof and Section 24 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested.  The Company may require payment
from the holder of a Rights Certificate of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (b) Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate, if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

       

      Section
7. Exercise of Rights; Purchase
Price; Expiration Date of Rights.

       

      (a) Subject
to Section 7(e) hereof, at any time on or after the Distribution Date (or, if
the Distribution Date is the Record Date, 10 Business Days after the
Distribution Date), but prior to the Expiration Date, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or
in part upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of 1/10,000th of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable

       

      (b) The
Purchase Price for each 1/10,000th of a share of Preferred Stock pursuant to the
exercise of a Right initially shall be $45.00, shall be subject to adjustment
from time to time as provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below.

       

      (c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per
1/10,000th of a share of Preferred Stock (or other shares, securities, cash or
other assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall, subject to
Sections 7(f) and 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of 1/10,000th of a share of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights hereunder with
a depositary agent, requisition from the depositary agent depositary receipts
representing such number of 1/10,000th of a share of Preferred Stock as are to
be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or, upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate.  The
payment of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check or bank
draft payable to the order of the Company.  In the event that the
Company is obligated to issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.  The Company reserves the right
to require prior to the occurrence of a Triggering Event that, upon any exercise
of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock would be issued.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      (d) In case
the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.

       

      (e) Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Section 11(a)(ii) Event, any Rights Beneficially Owned by (i) an Acquiring
Person (or an Associate or Affiliate of an Acquiring Person), (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect of the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise.  The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of Rights
Certificates or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of its Affiliates,
Associates or transferees hereunder.

       

      (f) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates of such Beneficial Owner as
the Company shall reasonably request.

       

      
        
          
          

        

        
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      Section
8. Cancellation and Destruction
of Rights Certificates.  All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement.  The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof.  The Rights Agent
shall deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the
Company.

       

      Section
9. Reservation and Availability
of Capital Stock.

       

      (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.

       

      (b) So long
as the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.

       

      (c) The
Company shall use its best efforts to (i) file, as soon as practicable following
the earliest date after the first occurrence of a Section 11(a)(ii) Event on
which the consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii) hereof, a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights.  The Company will also
take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights.  The Company may temporarily suspend,
for a period of time not to exceed 90 days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective.  Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension has
been rescinded.  In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective.  Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law, or a registration statement shall not have been
declared effective.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      (d) The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all 1/10,000th of a share of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and
nonassessable.

       

      (e) The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Rights Certificates and of any
certificates for a number of 1/10,000th of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of
Rights.  The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of 1/10,000th of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in respect of a name other than that of the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise, nor shall the Company be required to issue or deliver any certificates
(or make any entries in the book-entry account system of the transfer agent) for
a number of 1/10,000th of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificates at
the time of surrender) or until it has been established to the Company’s
satisfaction that no such tax is due.

       

      Section
10. Preferred Stock Record
Date.  Each
person in whose name any certificate or entry in the book-entry account system
of the transfer agent for a number of 1/10,000th of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate or entry in the book-entry account system shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate or entry in
the book-entry account system shall be dated, the next succeeding Business Day
on which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open.  Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      Section
11. Adjustment of Purchase
Price, Number and Kind of Shares or Number of Rights.  The
Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

       

      (a) (i)           In
the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock,
(B) subdivide or split the outstanding shares of Preferred Stock, (C) combine or
consolidate the outstanding shares of Preferred Stock into a smaller number of
shares, through a reverse stock split or otherwise, or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, split, combination, consolidation or reclassification, and
the number and kind of shares of Preferred Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, split, combination, consolidation or
reclassification.  If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.

       

      (ii) In the
event any Person shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person, unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section 13(a) hereof, then,
promptly following the later of the occurrence of such event and the Record
Date, proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of 1/10,000th of a share
of Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of 1/10,000th of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the “Purchase Price” for
each Right and for all purposes of this Agreement) by 50% of the Current Market
Price  per share of Common Stock on the date of such first occurrence
(such number of shares, the “Adjustment
Shares”).

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      (iii) In the
event that the number of treasury shares and shares of Common Stock which are
authorized by the Company’s Charter, but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall (A) determine the
value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”), and
(B) with respect to each Right (subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment Shares, upon the exercise of a Right
and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including shares, or units of shares, of preferred stock, such as the Preferred
Stock, which the Board has deemed to have essentially the same value or economic
rights as shares of Common Stock (such shares of preferred stock being referred
to as “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value (less the amount of any reduction in the Purchase Price), where
such aggregate value has been determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the Board; provided, however, that if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the
Spread.  For purposes of the preceding sentence, the term “Spread” shall mean
the excess of (i) the Current Value over (ii) the Purchase Price.  If
the Board determines in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full of
the Rights, the 30 day period set forth above may be extended to the extent
necessary, but not more than 90 days after the Section 11(a)(ii) Trigger Date,
in order that the Company may seek stockholder approval for the authorization of
such additional shares (such 30 day period, as it may be extended, is herein
called the “Substitution
Period”).  To the extent that the Company determines that
action should be taken pursuant to the first and/or third sentences of this
Section 11(a)(iii), the Company (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and
(2) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such stockholder approval for such
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof.  In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.  For purposes of this Section
11(a)(iii), the value of each Adjustment Share shall be the Current Market Price
per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the per
share or per unit value of any Common Stock Equivalent shall be deemed to equal
the Current Market Price per share of the Common Stock on such
date.

       

      
        
          
          

        

        
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      (b) In case
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within 45 days after such record date) Preferred
Stock (or shares having the same rights, privileges and preferences as the
shares of Preferred Stock (“Equivalent Preferred
Stock”)) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible).  In case such subscription price may be paid by delivery
of consideration, part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the
Rights.  Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation.  Such adjustment shall be made successively whenever such
a record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

       

      (c) In case
the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation),
cash (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or evidences of indebtedness, or of subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price per share of
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock, and the denominator of which
shall be such Current Market Price per share of Preferred Stock.  Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      (d) (i)           For
the purpose of any computation hereunder, other than computations made pursuant
to Section 11(a)(iii) hereof, the “Current Market Price”
per share of Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock for the 30 consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the Current Market Price per share
of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 10 consecutive Trading
Days immediately following such date; provided, however, that in the
event that the Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination, consolidation, reverse
stock split or reclassification of such Common Stock, and the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination, consolidation, reverse stock split or reclassification shall not
have occurred prior to the commencement of the requisite 30 Trading Day or 10
Trading Day period, as set forth above, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account ex-dividend
trading.  The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”) or such
other system then in use, or, if on any such date the shares of Common Stock are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Stock selected by the Board.  If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
as determined in good faith by the Board shall be used.  The term
“Trading Day”
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business
Day.  If the Common Stock is not publicly held or not so listed or
traded, Current Market Price per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.

       

      
        
          
          

        

        
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      (ii) For the
purpose of any computation hereunder, the Current Market Price per share of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof).  If the Current Market Price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the Current Market Price per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such number may
be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price per share of the Common
Stock.  If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.

       

      (e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the case may
be.  Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) 3 years from the date of the transaction which mandates such adjustment,
or (ii) the Expiration Date.

       

      (f) If as a
result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like terms to any such
other shares.

       

      (g) All
Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of 1/10,000th of a share of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.

       

      (h) Unless
the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of 1/10,000th of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i) multiplying (x) the
number of 1/10,000th of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      (i) The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of
1/10,000th of a share of Preferred Stock purchasable upon the exercise of a
Right.  Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of 1/10,000th of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment.  Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
1/10,000th) obtained by dividing the Purchase Price in effect immediately prior
to adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price.  The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made.  This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement.  If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment.  Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public
announcement.

       

      (j) Irrespective
of any adjustment or change in the Purchase Price or the number of 1/10,000th of
a share of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per 1/10,000th of a share and the number of 1/10,000th of a share
which were expressed in the initial Rights Certificates issued
hereunder.

       

      (k) Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then stated value, if any, of the number of 1/10,000th of a share of
Preferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable such
number of 1/10,000th of a share of Preferred Stock at such adjusted Purchase
Price.

       

      (l) In any
case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuance to the holder
of any Right exercised after such record date the number of 1/10,000th of a
share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of 1/10,000th of a
share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder’s right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.

       

      
        
          
          

        

        
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      (m) Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that in
their good faith judgment the Board shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
wholly for cash of any shares of Preferred Stock at less than the Current Market
Price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such
stockholders.

       

      (n) The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
other than pursuant to a pro
rata dividend and/or distribution to all of the then current holders of
Common Stock, sell or transfer (or permit any Subsidiary to sell or transfer),
in one transaction, or a series of related transactions, assets, cash flow or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the “Principal Party” for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.

       

      (o) The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.

       

      (p) Anything
in this Agreement to the contrary notwithstanding, except as provided in the
following sentence, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, through
a reverse stock split or otherwise, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction the numerator which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

       

      
        
          
          

        

        
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      Section
12. Certificate of Adjusted
Purchase Price or Number of Shares.  Whenever
an adjustment is made as provided in Section 11 and Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred Stock
and the Common Stock, a copy of such certificate and (c) if a Distribution Date
has occurred, mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a share of
Common Stock) in accordance with Section 26 hereof.  The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained.

       

      Section
13. Consolidation, Merger or
Sale or Transfer of Assets, Cash Flow or Earning Power.

       

      (a) In the
event that, following the Stock Acquisition Date, directly or indirectly, (x)
the Company shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall, other than pursuant to pro rata dividend and/or
distribution to all of the then current holders of Common Stock, sell or
otherwise transfer (or one or more of its Subsidiaries) shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets, cash
flow or earning power aggregating more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o) hereof) (each
event referred to in clauses (x)-(z), a “Section 13 Event”),
then, and in each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and freely tradeable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of 1/10,000th of a
share of Preferred Stock for which a Right is exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such 1/10,000th of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence of a Section
11(a)(ii) Event), and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the “Purchase Price”
for each Right and for all purposes of this Agreement) by 50% of the Current
Market Price (determined pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation of such Section
13 Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term “Company” shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including the reservation of a sufficient
number of shares of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      (b) “Principal Party”
shall mean:

       

      (i) in the
case of any transaction described in clause (x) or (y) of the first sentence of
Section 13(a) hereof, the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to such merger or consolidation; and

       

      (ii) in the
case of any transaction described in clause (z) of the first sentence of Section
13(a) hereof, the Person that is the party receiving the greatest portion of the
assets, cash flow or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any
such case, (1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding 12 month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, “Principal Party” shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.

       

      (c) The
Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent confirming that the requirements of Section
13(a) and Section 13(b) hereof shall promptly be performed in accordance with
their terms and further providing that, as soon as practicable after the date of
any consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      (i) prepare
and file a registration statement under the Act, with respect to the Rights and
the securities purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
Expiration Date;

       

      (ii) take all
such other action as may be necessary to enable the Principal Party to issue the
securities purchasable upon exercise of the Rights, including the registration
or qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities on such
exchanges and trading markets as may be necessary or appropriate;
and

       

      (iii) deliver
to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange
Act.

       

      (d) The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.  In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section
13(a).

       

      Section
14. Fractional Rights and
Fractional Shares.

       

      (a) The
Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights.  In lieu of such
fractional Rights, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable.  The closing price of the
Rights for any Trading Day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights, selected by the Board.  If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board shall be used.

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      (b) The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one ten-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one ten-thousandth of a share of
Preferred Stock).  In lieu of fractional shares of Preferred Stock
that are not integral multiples of one ten-thousandth of a share of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one ten-thousandth of a share
of Preferred Stock.  For purposes of this Section 14(b), the current
market value of one ten-thousandth of a share of Preferred Stock shall be one
ten-thousandth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.

       

      (c) Following
the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock.  In
lieu of fractional shares of Common Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of 1 share of Common Stock.  For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be the closing price
per share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) on
the Trading Day immediately prior to the date of such exercise.

       

      (d) The
holder of a Right by the acceptance of the Rights expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise of
a Right, except as permitted by this Section 14.

       

      Section
15. Rights of
Action.  All
rights of action in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
may, in the holder’s own behalf and for the holder’s own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, the holder’s right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this
Agreement.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      Section
16. Agreement of Rights
Holders.  Every
holder of a Right by accepting the same consents and agrees with the Company and
the Rights Agent and with every other holder of a Right that:

       

      (a) prior to
the Distribution Date, the Rights will be transferable only in connection with
the transfer of shares of Common Stock;

       

      (b) after the
Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
fully executed;

       

      (c) subject
to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may
deem and treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated balance indicated in the book-entry account
system of the transfer agent for the Common Stock or, in the case of
certificated shares, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Rights Certificates or the
associated balance indicated in the book-entry account system of the transfer
agent for the Common Stock or, in the case of certificated shares, the
associated Common Stock certificate, made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be
required to be affected by any notice to the contrary; and

       

      (d) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company
must use its reasonable best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.

       

      Section
17. Rights Certificate Holder
Not Deemed a Stockholder.  No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of 1/10,000th of
a share of Preferred Stock or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      Section
18. Concerning the Rights
Agent.

       

      (a) The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct (each as determined by
a court of competent jurisdiction) on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.

       

      (b) The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or the
balance indicated in the book-entry account system of the transfer agent for the
Common Stock or, in the case of certificated shares, certificate for Common
Stock, or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.

       

      Section
19. Merger or Consolidation or
Change of Name of Rights Agent.

       

      (a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to the corporate trust, stock transfer or other
stockholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; but only if such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.  In
case at the time such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

       

      (b) In case
at any time the name of the Rights Agent shall be changed and at such time any
of the Rights Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      Section
20. Duties of Rights
Agent.  The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:

       

      (a) The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.

       

      (b) Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including the identity
of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.

       

      (c) The
Rights Agent shall be liable hereunder only for its own gross negligence, bad
faith or willful misconduct (each as determined by a court of competent
jurisdiction), provided, however, that the
Rights Agent shall under no circumstances be liable for indirect, consequential,
special or punitive damages hereunder.  Anything herein to the
contrary notwithstanding, any liability of the Rights Agent under this Agreement
will be limited in the aggregate to an amount equal to three times the amount of
fees paid by the Company to the Rights Agent.

       

      (d) The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Rights Certificates or be
required to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed to
have been made by the Company only.

       

      (e) The
Rights Agent shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11, Section 13 or
Section 24 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

      (f) The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.

       

      (g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.

       

      (h) The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement.  Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other Person.

       

      (i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or agents or for any
loss to the Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable
care was exercised in the selection and continued employment
thereof.

       

      (j) No
provision of this Agreement shall require the Rights Agent to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder (other than internal costs incurred by the Rights Agent
in providing services to the Corporation in the ordinary course of its business
as Rights Agent) or in the exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.

       

      (k) If, with
respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause (1) and/or (2) thereof, the Rights
Agent shall not take any further action with respect to such requested exercise
or transfer without first consulting with the Company.

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      Section
21. Change of Rights
Agent.  The
Rights Agent or any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days’ notice in writing mailed to the
Company, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and, if such resignation occurs after the
Distribution Date, to the registered holders of the Rights Certificates by
first-class mail.  The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days’ notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and Preferred Stock, by registered or certified mail, and,
if such removal occurs after the Distribution Date, to the holders of the Rights
Certificates by first-class mail.  If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent.  If the Company shall fail to
make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent.  Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a legal business entity
organized and doing business under the laws of the United States or any State
thereof, in good standing, having an office in the State of New York, which is
authorized under such laws to exercise corporate trust, stock transfer or
stockholder services powers and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a legal business entity described in clause (a) of this
sentence.  After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose.  Not later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and the Preferred Stock, and,
if such appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates.  Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.

       

      Section
22. Issuance of New Rights
Certificates.  Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement.  In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, granted or awarded as
of the Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      Section
23. Redemption and
Termination.

       

      (a) The Board
may, at its option, at any time prior to the earlier of (i) Distribution Date,
or (ii) the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.001 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption
Price”).  Notwithstanding anything contained in this Agreement
to the contrary, the Rights shall not be exercisable after the first occurrence
of a Section 11(a)(ii) Event until such time as the Company’s right of
redemption hereunder has expired.  The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the Current
Market Price, as defined in Section 11(d)(i) hereof, of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by the
Board.

       

      (b) Immediately
upon the action of the Board ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held.  Promptly after the action of
the Board ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder’s last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock.  Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice.  Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made.

       

      Section
24. Exchange.

       

      (a) The Board
may, at its option, at any time after the Stock Acquisition Date, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to Section 7(e) hereof or Rights that have
been exercised pursuant to Section 7 hereof) for Common Stock at an exchange
ratio of 1 share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the “Exchange
Ratio”).  Notwithstanding the foregoing, the Board shall not be
empowered to effect such exchange at any time after any Person (other than an
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock of the Company
then outstanding.

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      (b) Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio.  The Company shall promptly give
public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange.  The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent.  Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.  Each such notice of exchange will
state the method by which the exchange of the Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged.  Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.

       

      (c) In any
exchange pursuant to this Section 24, the Company, at its option, may substitute
Preferred Stock (or Equivalent Preferred Stock, as such term is defined in
paragraph (b) of Section 11 hereof) for Common Stock exchangeable for Rights, at
the initial rate of one ten-thousandth of a share of Preferred Stock (or
Equivalent Preferred Stock) for each share of Common Stock, as appropriately
adjusted to reflect stock splits, stock dividends and other similar transactions
after the date hereof.

       

      (d) In the
event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.

       

      (e) The
Company shall not be required to issue fractions of shares of Common Stock or,
in the case of certificated shares, to distribute certificates which evidence
fractional shares of Common Stock.  In lieu of such fractional shares
of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock.  For the
purposes of this subsection (e), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.

       

      Section
25. Notice of Certain
Events.

       

      (a) In case
the Company shall propose, at any time after the Distribution Date, (i) to pay
any dividend payable in stock of any class to the holders of Preferred Stock or
to make any other distribution to the holders of Preferred Stock (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or warrants
to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or, other than pursuant to a pro rata dividend and/or
distribution to all of the then current holders of Common Stock, to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock, whichever shall be the
earlier.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

      (b) In case
any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.

       

      Section
26. Notices.  Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Rights Agent with
the Company) as follows:

       

      Solutia
Inc.

      575
Maryville Centre Drive

      P.O. Box
66760

      St.
Louis, Missouri 63166

      Attention:  General
Counsel

      (314)
674-8703 (facsimile)

      (314)
674-5362 (telephone)

      

      Subject
to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing by the Rights Agent with the Company) as follows:

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

      American
Stock Transfer & Trust Company, LLC

       

      59 Maiden
Lane

       

      New York,
New York 10038

       

      Attention:  Felix
Orihuela

       

      718-765-8719
(facsimile)

       

      718-921-8360
(telephone)

       

      Notices
or demands authorized by this Agreement to be given or made by the Company or
the Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

       

      Section
27. Supplements and
Amendments.  Prior
to the Distribution Date, the Company and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of shares of Common Stock, including, without
limitation, to change the Final Expiration Date to another date, including an
earlier date.  From and after the Distribution Date, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person).  Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or
amendment.  Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.  Notwithstanding anything herein to the contrary,
this Agreement may not be amended (other than pursuant to clauses (i) or (ii) of
the preceding sentence) at a time when the Rights are not
redeemable.  Notwithstanding anything herein to the contrary, the
Rights Agent may, but shall not be obligated to, enter into any supplement or
amendment that affects the Rights Agent’s own rights, duties, obligations or
immunities under this Agreement.

       

      Section
28. Successors.  All
the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

       

      Section
29. Determinations and Actions
by the Board, etc.  For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock or any other class of capital stock outstanding at any particular
time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act.  The Board shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or as may be
necessary or advisable in the administration of this Agreement, including the
right and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board, or any of the directors on the Board to any liability to the holders of
the Rights.

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

      Section
30. Benefits of this
Agreement.  Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).

       

      Section
31. Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the 10th
Business Day following the date of such determination by the
Board.  Without limiting the foregoing, if any provision requiring a
specific group of directors of the Company to act is held to by any court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
such determination shall then be made by the Board in accordance with applicable
law and the Company’s Charter and the Company’s Bylaws.

       

      Section
32. Governing
Law.  This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts made and to be performed entirely within such
State.

       

      Section
33. Counterparts.  This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

      Section
34. Descriptive
Headings.  Descriptive
headings of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.

       

      

      {Signature
page follows.}

      
        
          
            
              	 
      	 
      	 
      

            

             

            K&E
15230038.6

          

           

        

        
          36 

          
            

          

        

        
           

        

      

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

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	 
      	
                                              SOLUTIA
      INC.

                                            
	 
      	 
      	 
      
	 	 By: 	 /s/
      Paul J. Berra, III
	 
      	 Name:	 Paul
      J. Berra, III 
	 	 Title:	 Senior
      Vice President, General
	 	 	 Counsel
      and Chief Administrative Officer
	 	 	 
	 	 	 
	 
      	
                                              AMERICAN
      STOCK TRANSFER & TRUST COMPANY, LLC

                                            
	 
      	 
      	 
      
	 
      	 By:	
                                              /s/
      Herbert J. Lemmer

                                            
	 	 Name:	Herbert
      J. Lemmer
	 	 Title:	Vice
      President

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
          
            
              	 
      	 
      	 
      

            

             

            K&E
15230038.6

          

           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
A

       

      FORM
OF

       

      CERTIFICATE
OF DESIGNATION, PREFERENCES AND

       

      RIGHTS OF
SERIES A PARTICIPATING PREFERRED STOCK

       

      of

       

      Solutia
Inc.

       

      Pursuant
to Section 151 of the General Corporation Law

       

      of the
State of Delaware

       

      We, the
undersigned officers of Solutia Inc., a Delaware corporation (the “Corporation”),
pursuant to the provisions of Sections 103 and 151 of the General Corporation
Law of the State of Delaware, do hereby state and certify that pursuant to the
authority vested in the Board of Directors of the Corporation (the “Board”) by the Second
Amended and Restated Certificate of
Incorporation of the Corporation, the Board on July 27, 2009, duly adopted the
following resolution creating a series of 30,000 shares of Preferred
Stock designated as Series A Participating Preferred Stock:

       

      RESOLVED,
that pursuant to the authority vested in the Board in accordance with the
provisions of its Second Amended and Restated Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and hereby is
created, and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:

       

      Section
1 Designation and
Amount.  The
shares of such series shall be designated as “Series A Participating Preferred
Stock” and the number of shares constituting such series shall be
30,000.

       

      Section
2 Dividends and
Distributions.

       

      (A) Subject
to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Participating Preferred Stock shall be entitled to receive, when, as
and if declared by the Board out of funds legally available for the purpose,
quarterly dividends payable in cash on the 15th day of
March, June, September and December in each year (each such date being referred
to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $0.10 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the common stock, par
value $0.01 per share, of the Corporation (the “Common Stock”), since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Participating Preferred Stock.  In
the event the Corporation shall at any time after the Rights Dividend
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock, through a reverse stock split or otherwise, into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      (B) The
Corporation shall declare a dividend or distribution on the Series A
Participating Preferred Stock as provided in Paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.10 per share on the
Series A Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

       

      (C) Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Participating Preferred
Stock, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares of Series A Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding.  The Board may
fix a record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.

       

      Section
3 Voting
Rights.  The
holders of shares of Series A Participating Preferred Stock shall have the
following voting rights:

       

      (A) Subject
to the provision for adjustment hereinafter set forth, each share of Series A
Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on
all matters submitted to a vote of the stockholders of the
Corporation.  In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
through a reverse stock split or otherwise, then in each such case the number of
votes per share to which holders of shares of Series A Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      (B) Except as
otherwise provided herein or by law, the holders of shares of Series A
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.

       

      (C) (i) If at
any time dividends on any Series A Participating Preferred Stock shall be in
arrears in an amount equal to 6 quarterly dividends thereon, the occurrence of
such contingency shall mark the beginning of a period (herein called a “default period”)
which shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Participating Preferred Stock then outstanding
shall have been declared and paid or set apart for payment.  During
each default period, all holders of Preferred Stock (including holders of the
Series A Participating Preferred Stock) with dividends in arrears in an amount
equal to 6 quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect 2 directors.

       

      (ii) During
any default period, such voting right of the holders of Series A Participating
Preferred Stock may be exercised initially at a special meeting called pursuant
to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders; provided that such
voting right shall not be exercised unless the holders of 10% in number of
shares of Preferred Stock outstanding shall be present in person or by
proxy.  The absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Preferred Stock of such voting
right.  At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect directors to fill such
vacancies, if any, in the Board as may then exist up to 2 directors or, if such
right is exercised at an annual meeting, to elect 2 directors.  If the
number which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to make
such increase in the number of directors as shall be necessary to permit the
election by them of the required number.  After the holders of the
Preferred Stock shall have exercised their right to elect directors in any
default period and during the continuance of such period, the number of
directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A
Participating Preferred Stock.

       

      (iii) Unless
the holders of Preferred Stock shall, during an existing default period, have
previously exercised their right to elect directors, the Board may order, or any
stockholder or stockholders owning in the aggregate not less than 10% of the
total number of shares of Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Preferred Stock,
which meeting shall thereupon be called by the President, a Vice-President or
the Secretary of the Corporation.  Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to vote pursuant
to this Paragraph (C)(iii) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation.  Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after such order
or request or in default of the calling of such meeting within 60 days after
such order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10% of the
total number of shares of Preferred Stock
outstanding.  Notwithstanding the provisions of this Paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

      (iv) In any
default period, the holders of Common Stock, and other classes of stock of the
Corporation if applicable, shall continue to be entitled to elect the whole
number of directors until the holders of Preferred Stock shall have exercised
their right to elect 2 directors voting as a class, after the exercise of which
right (x) the directors so elected by the holders of Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board may (except as provided in Paragraph (C)(ii) of this Section 3) be
filled by vote of a majority of the remaining directors theretofore elected by
the holders of the class of stock which elected the director whose office shall
have become vacant.  References in this Paragraph (C) to directors
elected by the holders of a particular class of stock shall include directors
elected by such directors to fill vacancies as provided in clause (y) of the
foregoing sentence.

       

      (v) Immediately
upon the expiration of a default period, (x) the right of the holders of
Preferred Stock as a class to elect directors shall cease, (y) the term of any
directors elected by the holders of Preferred Stock as a class shall terminate,
and (z) the number of directors shall be such number as may be provided for in
the certificate of incorporation or by-laws irrespective of any increase made
pursuant to the provisions of Paragraph (C)(ii) of this Section 3 (such number
being subject, however, to change thereafter in any manner provided by law or in
the certificate of incorporation or by-laws).  Any vacancies in the
Board effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors.

       

      (D) Except as
set forth herein, holders of Series A Participating Preferred Stock shall have
no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.

       

      Section
4 Certain
Restrictions.

       

      (A) Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

      (i) declare
or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series A
Participating Preferred Stock;

       

      (ii) declare
or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Participating Preferred Stock, except dividends
paid ratably on the Series A Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;

       

      (iii) redeem or
purchase or otherwise acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Participating Preferred Stock; provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Participating Preferred Stock; or

       

      (iv) purchase
or otherwise acquire for consideration any shares of Series A Participating
Preferred Stock, or any shares of stock ranking on a parity with the Series A
Participating Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board) to all holders of such
shares upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.

       

      (B) The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under Paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.

       

      Section
5 Reacquired
Shares.  Any
shares of Series A Participating Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof.  All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board, subject to the conditions and
restrictions on issuance set forth herein.

       

      Section
6 Liquidation, Dissolution or
Winding Up.

       

      (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Participating Preferred Stock shall have
received an amount equal to $1,000 per share of Series A Participating Preferred
Stock, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the “Series A Liquidation
Preference”).  Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series A Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the “Common
Adjustment”) equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock) (such number in clause
(ii), the “Adjustment
Number”).  Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Participating Preferred Stock and Common Stock,
respectively, holders of Series A Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

      (B) In the
event, however, that there are not sufficient assets available to permit payment
in full of the Series A Liquidation Preference and the liquidation preferences
of all other series of preferred stock, if any, which rank on a parity with the
Series A Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences.  In the event, however, that there
are not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.

       

      (C) In the
event the Corporation shall at any time after the Rights Dividend Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, through a reverse stock split or
otherwise, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

       

      Section
7 Consolidation, Merger,
etc.  In
case the Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series A Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged.  In the event the Corporation shall at any
time after the Rights Dividend Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, through a reverse stock split or otherwise, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

       

      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

      Section
8 No
Redemption.  The
shares of Series A Participating Preferred Stock shall not be
redeemable.

       

      Section
9 Ranking.  The
Series A Participating Preferred Stock shall rank junior to all other series of
the Corporation’s Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.

       

      Section
10 Amendment.  At
any time when any shares of Series A Participating Preferred Stock are
outstanding, the Second Amended and Restated Certificate of
Incorporation of the Corporation nor this Certificate of Designation shall be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Participating Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Participating Preferred
Stock, voting separately as a class.

       

      Section
11 Fractional
Shares.  Series
A Participating Preferred Stock may be issued in fractions of a share which
shall entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Participating
Preferred Stock.

       

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          A-7 

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm
the foregoing as true under the penalties of perjury this 27th day of July
2009.

       

      
        
          
            
              
                
                  	 	 By:	 /s/ Paul J. Berra, III	 
	 	 Name:	 Paul
      J. Berra, III	 
	 	 Title:	 Senior
      Vice President, General	 
	 	 	 Counsel
      and Chief Administrative Officer	 

                

              

            

          

        

      

      
         

      

       

      Attest:

                          

      
        
          
            
              
                
                  	
                          By:

                        	
                          /s/
      David P. McCool

                        	 
      
	
                          Name:

                        	
                          David
      P. McCool

                        	 
      
	
                          Title:

                        	
                          Vice
      President and Assistant Secretary

                        	 
      

                

              

            

          

        

      

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          A-8 

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
B

       

      [Form of
Rights Certificate]

       

      Certificate
No. R-________ Rights

       

      NOT
EXERCISABLE AFTER 5:00 P.M., NEW YORK CITY TIME ON JULY 27, 2012, UNLESS THE
RIGHTS ARE PREVIOUSLY REDEEMED, EXCHANGED OR TERMINATED.  THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.  [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]

       

       

      Rights
Certificate

       

      Solutia
Inc.

       

      This
certifies that ______________________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the 382 Rights
Agreement, dated as of July 27, 2009 (the “Rights Agreement”),
as it may be amended, restated, renewed or extended from time to time, between
Solutia Inc., a Delaware corporation (the “Company”), and
American Stock Transfer & Trust Company, LLC, a New York limited liability
trust company (the “Rights Agent”), to
purchase from the Company at any time prior to 5:00 P.M., New York City time on
July 27, 2012, unless the Rights are previously redeemed, exchanged or
terminated, at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one ten-thousandth of a fully paid,
non-assessable share of Series A Participating Preferred Stock (the “Preferred Stock”) of
the Company, at a purchase price of $45.00 per one ten-thousandth of a share
(the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and related Certificate duly
executed.  The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of July 27, 2009, based on the Preferred Stock as
constituted at such date.  The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement) that a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued.

       

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

      Upon the
occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are Beneficially
Owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.

       

      As
provided in the Rights Agreement, the Purchase Price and the number and kind of
shares of Preferred Stock or other securities, which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events.

       

      This
Rights Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights
Agreement.  Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.

       

      This
Rights Certificate, with or without other Rights Certificates, upon surrender at
the office of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
1/10,000th of a share of Preferred Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase.  If this Rights Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.

       

      Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at its option at any time prior to
the earlier of (A) the Distribution Date (as such term is defined in the Rights
Agreement), and (B) the Final Expiration Date (as such term is defined in the
Rights Agreement), at a redemption price of $0.001 per Right.

       

      No
fractional shares of Preferred Stock will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one ten-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.  The Company, at its election, may require that a number of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

      No holder
of this Rights Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give
consent to or withhold consent from any corporate action, or, to receive notice
of meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

       

      This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.

       

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          B-3 

        

        
           

          
            

          

        

        
           

        

      

      WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.

       

      Dated as
of _________ __, ____.

       

      
        	
                ATTEST:

              	 
      	
                Solutia
      Inc.

              
	 
      	 
      	 
      
	
                 

                _____________________

                Secretary

              	 
      	
                By: ______________________________          

                Title:

              
	 
      	 
      	 
      
	
                Countersigned:

              	 
      	 
      
	
                [·]

              	 
      	 
      
	 
      	 
      	 
      
	
                By:        __________________________                                                      

                Authorized
      Signature

              	 
      	 
      

      

       

      [Form of
Reverse Side of Rights Certificate]

       

       

      FORM OF
ASSIGNMENT

       

      (To be
executed by the registered holder if such holder desires to transfer the Rights
Certificate.)

       

      FOR VALUE
RECEIVED                                                                                                                                

      hereby
sells, assigns and transfers
unto                                                                                                                                

      

      (Please
print name and address of transferee)

       

      

      this
Rights Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________ Attorney, to
transfer the within Rights Certificate on the books of the within named Company,
with full power of substitution.

       

      Dated:
__________________,__

       

       

      ___________________________________

      Signature

       

      Signature
Guaranteed:

       

      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

      Certificate

       

      The
undersigned hereby certifies by checking the appropriate boxes
that:

       

      (1) this
Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);

       

      (2) after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.

       

      
        	
                Dated:
      _______________, __

              	 
      	
                _______________________________

                Signature:

              

      

       

      (d)           Signature
Guaranteed:

       

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

           

        

        
          B-5 

          
            

          

        

        
           

        

      

      NOTICE

       

      The
signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.

       

      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          B-6 

        

        
           

          
            

          

        

        
           

        

      

      FORM OF ELECTION TO
PURCHASE

       

      (To be
executed if holder desires to exercise Rights

       

      represented
by the Rights Certificate.)

       

      To:
SOLUTIA INC.

       

      The
undersigned hereby irrevocably elects to exercise __________ Rights represented
by this Rights Certificate to purchase the shares of Preferred Stock issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of and
delivered to:

       

      Please
insert social security

       

      or other
identifying number

       

       

      

        
          

        

      

      (Please
print name and address)

       

     

      
        

      

    

    
      

      If such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:

       

      Please
insert social security

       

       

      or other
identifying number

       

    
      
        

      

    

    (Please
print name and address)

     

    

      
        

      

    

     

      
        

      

    

     

      
        

      

    

    

    

     

    Dated:
_______________,__

     

    _______________________________

    Signature:

     

    Signature
Guaranteed:

     

    

    
      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          B-7 

        

        
           

          
            

          

        

        
           

        

      

    

    

    Certificate

     

    The
undersigned hereby certifies by checking the appropriate boxes
that:

     

    (1) the
Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);

     

    (2) after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Rights Certificate from any Person who is,
was or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.

     

    Dated:
_______________,__

     

    _______________________________

    Signature:

     

    Signature
Guaranteed:

     

    

    
      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

           

        

        
          B-8 

          
            

          

        

        
           

        

      

    

    

    NOTICE

     

    The
signature to the foregoing Election to Purchase and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change
whatsoever.

     

    

    
      
        
          
            
              	 
      	
                       

                    	 
      

            

             

            K&E
15230038.6

          

          B-9 

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
C

     

    FORM
OF

     

    SUMMARY
OF RIGHTS TO PURCHASE

     

    STOCK
UNDER 382 RIGHTS AGREEMENT

     

    On July
27, 2009, the Board of Directors (the “Board”) of Solutia
Inc. (the “Company”) authorized
and declared a dividend distribution of one right (a “Right”) for each
outstanding share of Common Stock, par value $0.01 per share, of the Company
(the “Common
Stock”), to stockholders of record at the close of business on July 28,
2009 (the “Record
Date”).  Each Right entitles the registered holder to purchase
from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series A
Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”) at
a purchase price of $45.00 per Unit, subject to adjustment (the “Purchase
Price”).  The description and terms of the Rights are set forth
in a 382 Rights Agreement, dated as of July 27, 2009 (the “Rights Agreement”),
by and between the Company and American Stock Transfer & Trust Company, LLC,
a New York limited liability trust company, as Rights Agent.  The
Rights are intended to avoid an “ownership change” within the meaning of Section
382 of the Internal Revenue Code of 1986, as amended (the “Code”), and thereby
preserve the current ability of the Company to utilize certain net operating
loss carryovers and other tax benefits of the Company and its subsidiaries (the
“Tax
Benefits”).

     

    Initially,
the Rights will be attached to the shares of Common Stock underlying the
balances indicated in the book-entry account system of the transfer agent for
the Common Stock or, in the case of certificated shares, all Common Stock
certificates representing shares then outstanding, and no separate rights
certificates (“Rights
Certificates”) will be distributed.  Subject to certain
exceptions specified in the Rights Agreement, the Rights will separate from the
Common Stock and a distribution date (a “Distribution Date”)
will occur upon the earlier of (i) 10 business days (or such later date as the
Board shall determine) following a public announcement that a person or group of
affiliated or associated persons has become an Acquiring Person (as described
below) or (ii) 10 business days (or such later date as the Board shall
determine) following the commencement of a tender offer, exchange offer or other
transaction that, upon consummation thereof, would result in a person or group
of affiliated or associated persons becoming an Acquiring
Person.  Until the Distribution Date, (A) the Rights will be evidenced
by the balances indicated in the book-entry account system of the transfer agent
for the Common Stock registered in the names of the holders of the Common Stock
or, in the case of certificated shares, the Common Stock certificates, and will
be transferred with and only with such shares or, in the case of certificated
shares, Common Stock certificates, (B) confirmation and account statements sent
to the holders of shares of Common Stock in book-entry form or, in the case of
certificated shares, new Common Stock certificates issued after the Record Date,
will contain a notation incorporating the Rights Agreement by reference and (C)
the transfer of any shares of Common Stock or, in the case of certificated
shares, certificates for Common Stock, outstanding will also constitute the
transfer of the Rights associated with such shares of Common Stock or, in the
case of certificated shares, the Common Stock represented by such
certificates.  Pursuant to the Rights Agreement, the Company reserves
the right to require prior to the occurrence of a Triggering Event (as defined
below) that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

    An
Acquiring Person is any person or group of affiliated or associated persons who
is or becomes the beneficially owner of 4.99% or more of the shares of Common
Stock outstanding other than as a result of repurchases of stock by the Company,
dividends or distributions by the Company or certain inadvertent actions by
stockholders.  Beneficial ownership is determined as provided in the
Rights Agreement and generally includes, without limitation, any ownership of
securities a Person would be deemed to actually or constructively own for
purposes of Section 382 of the Code or the Treasury Regulations promulgated
thereunder.  The Rights Agreement provides that the following shall
not be deemed an Acquiring Person for purposes of the Rights Agreement: (i) the
Company or any Subsidiary of the Company and any employee benefit plan of the
Company, or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan; or (ii) any person that, as of July 27, 2009, is the beneficial owner of
4.99% or more of the shares of Common Stock outstanding (such person, an “Existing Holder”)
unless and until such Existing Holder acquires beneficial ownership of one or
more additional shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding shares of Common
Stock or pursuant to a split or subdivision of the outstanding shares of Common
Stock) and after such acquisition is the beneficial owner of 4.99% or more of
the then outstanding shares of Common Stock.

     

    The
Rights Agreement provides that a Person shall not become an Acquiring Person for
purpose of the Rights Agreement in a transaction that the Board determines, in
its sole discretion, is exempt from the Rights Agreement, which determination
shall be made in the sole and absolute discretion of the Board, upon request by
any Person prior to the date upon which such Person would otherwise become an
Acquiring Person, including, without limitation, if the Board determines that
(i) neither the beneficial ownership of shares of Common Stock by such Person,
directly or indirectly, as a result of such transaction nor any other aspect of
such transaction would jeopardize or endanger the availability to the Company of
the Tax Benefits or (ii) such transaction is otherwise in the best interests of
the Company.

     

    The
Rights are not exercisable until the Distribution Date and will expire on the
earliest of (i) 5:00 P.M., New York City time on July 27, 2012 (the “Final Expiration
Date”), (ii) the time at which the Rights are redeemed or exchanged as
provided in the Rights Agreement, (iii) the date on which the Board determines
that this Agreement is no longer necessary for the preservation of material
valuable Tax Benefits, and (iv) the beginning of a taxable year of the Company
to which the Board determines that no Tax Benefits may be carried
forward.

     

    As soon
as practicable after the Distribution Date, Rights Certificates will be mailed
to holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
represent the Rights.

     

    In the
event that a person or group of affiliated or associated persons becomes an
Acquiring Person, each holder of a Right will thereafter have the right to
receive, upon exercise on or after the Distribution Date, Common Stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a value equal to two times the exercise price of the
Right.  Notwithstanding any of the foregoing, following the occurrence
of the event set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, Beneficially Owned by any
Acquiring Person will be null and void.

     

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

    For
example, at an exercise price of $45.00 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following the event set forth
in the preceding paragraph would entitle its holder to purchase $90.00 worth of
Common Stock (or other consideration, as noted above) for
$45.00.  Assuming that the Common Stock had a per share value of $9.00
at such time, the holder of each valid Right would be entitled to purchase ten
shares of Common Stock for $45.00.

     

    In the
event that, at any time following the first date of public announcement that a
person has become an Acquiring Person or that discloses information which
reveals the existence of an Acquiring Person or such earlier date as a majority
of the Board becomes aware of the existence of an Acquiring Person (any such
date, the “Stock
Acquisition Date”), (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger or other business combination transaction
in which the Company is the surviving corporation and the Common Stock of the
Company is changed or exchanged, or (iii) other than pursuant to a pro rata dividend and/or
distribution to all of the then current holders of Common Stock, 50% or more of
the Company’s assets, cash flow or earning power is sold or transferred, each
holder of a Right (except Rights which have previously been voided as set forth
above) shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the Purchase
Price.  The events set forth in this paragraph and in the second
preceding paragraph are referred to as the “Triggering
Events.”

     

    At any
time after a the Stock Acquisition Date and prior to the acquisition by such
person or group of 50% or more of the outstanding Common Stock, the Board may
exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, for Common Stock or Preferred Stock at an
exchange ratio of one share of Common Stock, or one ten-thousandth of a share of
Preferred Stock (or of a share of a class or series of the Company’s preferred
stock having equivalent rights, preferences and privileges), per Right (subject
to adjustment).

     

    
      
        
        

      

      
        C-3

        
          

        

      

      
        
        

      

    

    The
Purchase Price payable, and the number of Units of Preferred Stock or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).

     

    With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase
Price.  No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.

     

    At any
time until the earlier of (A) the Distribution Date or (B) the Final Expiration
Date, the Company may redeem the Rights in whole, but not in part, at a price of
$0.001 per Right.  Immediately upon the action of the Board ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $0.001 redemption price.

     

    Until a
Right is exercised, the holder thereof, as such, will have no separate rights as
a stockholder of the Company, including the right to vote or to receive
dividends in respect of Rights.  While the distribution of the Rights
generally should not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company or in the event of the
redemption of the Rights as set forth above.

     

    Any of
the provisions of the Rights Agreement may be amended by the Board prior to the
Distribution Date, including, without limitation, to change the Final Expiration
Date to another date, including an earlier date.  After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights, or to shorten or lengthen any time
period under the Rights Agreement.

     

    A copy of
the Rights Agreement has been or will be filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A or Current
Report on Form 8-K.  A copy of the Rights Agreement is available free
of charge from the Rights Agent.  This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by
reference.

     

    

     

    C-4

    
      K&E
15230038.6Exhibit 4.5

 

FORM OF SENIOR INDENTURE

 

ENERNOC, INC.,

 

ISSUER

 

and

 

[                    ],

 

TRUSTEE

 

 

INDENTURE

 

Dated as of [                   
], 200[   ]

 

 

Senior Debt Securities

 

 

CROSS-REFERENCE TABLE(1)

 

	
  Section of

  Trust Indenture Act Section of

  of 1939, as amended

  	
   

  	
  Section of

  Indenture

  
	
   

  	
   

  	
   

  
	
  310(a)

  	
   

  	
  7.09

  
	
  310(b)

  	
   

  	
  7.08,
  7.10

  
	
  310(c)

  	
   

  	
  Inapplicable

  
	
  311(a)

  	
   

  	
  7.13

  
	
  311(b)

  	
   

  	
  7.13

  
	
  311(c)

  	
   

  	
  Inapplicable

  
	
  312(a)

  	
   

  	
  5.01,
  5.02(a)

  
	
  312(b)

  	
   

  	
  5.02(c)

  
	
  312(c)

  	
   

  	
  5.02(c)

  
	
  313(a)

  	
   

  	
  5.04(a)

  
	
  313(b)

  	
   

  	
  5.04(b)

  
	
  313(c)

  	
   

  	
  5.04(a),
  5.04(b), 5.04(b)

  
	
  313(d)

  	
   

  	
  5.04(c)

  
	
  314(a)

  	
   

  	
  5.03,
  3.05(c)

  
	
  314(b)

  	
   

  	
  Inapplicable

  
	
  314(c)

  	
   

  	
  13.05

  
	
  314(d)

  	
   

  	
  Inapplicable

  
	
  314(e)

  	
   

  	
  13.05

  
	
  314(f)

  	
   

  	
  Inapplicable

  
	
  315(a)

  	
   

  	
  7.01(b),
  7.02

  
	
  315(b)

  	
   

  	
  5.04(d)

  
	
  315(c)

  	
   

  	
  7.01

  
	
  315(d)

  	
   

  	
  7.01,
  7.02

  
	
  315(e)

  	
   

  	
  6.07

  
	
  316(a)

  	
   

  	
  6.06,
  8.04

  
	
  316(b)

  	
   

  	
  6.04

  
	
  316(c)

  	
   

  	
  8.01

  
	
  317(a)

  	
   

  	
  6.02

  
	
  317(b)

  	
   

  	
  4.03

  
	
  318(a)

  	
   

  	
  13.06

  

 

(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(2)

 

(2) 
This Table of Contents does not constitute part of the Indenture and shall not
have any bearing on the interpretation of any of its terms or provisions

 

 

INDENTURE,
dated as of [     ], 200[  ], between
EnerNOC, Inc., a Delaware corporation (the “Company”), and [     ],
as trustee (the “Trustee”):

 

WHEREAS,
for its lawful corporate purposes, the Company has duly authorized the
execution and delivery of this Indenture to provide for the issuance of
unsecured debt securities (hereinafter referred to as the “Securities”), in an
unlimited aggregate principal amount to be issued from time to time in one or
more series as in this Indenture provided, as registered Securities without
coupons, to be authenticated by the certificate of the Trustee;

 

WHEREAS,
to provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and

 

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

 

NOW,
THEREFORE, in consideration of the premises and the purchase of the Securities
by the holders thereof, it is mutually covenanted and agreed as follows for the
equal and ratable benefit of the holders of Securities:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01               Definitions of Terms.

 

The
terms defined in this Section (except as in this Indenture otherwise
expressly provided or unless the context otherwise requires) for all purposes
of this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section and shall include the plural
as well as the singular. All other terms used in this Indenture that are
defined in the Trust Indenture Act of 1939, as amended, or that are by
reference in such Act defined in the Securities Act of 1933, as amended (except
as herein otherwise expressly provided or unless the context otherwise
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 the execution of this
instrument.

 

“Authenticating
Agent” means an authenticating agent with respect to all or any of the series
of Securities appointed with respect to all or any series of the Securities by
the Trustee pursuant to Section 2.10.

 

“Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.

 

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

 

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“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification.

 

“Business
Day” means, with respect to any series of Securities, any day other than a day
on which Federal or State banking institutions in the Borough of Manhattan, The
City of New York, are authorized or obligated by law, executive order or
regulation to close.

 

“Certificate”
means a certificate signed by the principal executive officer, the principal
financial officer or the principal accounting officer of the Company. The
Certificate need not comply with the provisions of Section 13.05.

 

“Company”
means EnerNOC, Inc., a corporation duly organized and existing under the
laws of the State of Delaware, and, subject to the provisions of Article Ten,
shall also include its successors and assigns.

 

“Corporate
Trust Office” means the office of the Trustee at which, at any particular time,
its corporate trust business shall be principally administered, which office at
the date hereof is located at [                ],
except that whenever a provision herein refers to an office or agency of the
Trustee in the Borough of Manhattan, The City of New York, such office is
located, at the date hereof, at [                ].

 

“Custodian”
means any receiver, trustee, assignee, liquidator, or similar official under
any Bankruptcy Law.

 

“Default”
means any event, act or condition that with notice or lapse of time, or both,
would constitute an Event of Default.

 

“Depositary”
means, with respect to Securities of any series, for which the Company shall
determine that such Securities will be issued as a Global Security, The
Depository Trust Company, New York, New York, another clearing agency, or any
successor registered as a clearing agency under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or other applicable statute or
regulation, which, in each case, shall be designated by the Company pursuant to
either Section 2.01 or 2.11.

 

“Event
of Default” means, with respect to Securities of a particular series any event
specified in Section 6.01, continued for the period of time, if any,
therein designated.

 

“Global
Security” means, with respect to any series of Securities, a Security executed
by the Company and delivered by the Trustee to the Depositary or pursuant to
the Depositary’s instruction, all in accordance with the Indenture, which shall
be registered in the name of the Depositary or its nominee.

 

“Governmental
Obligations” means securities that are (i) direct obligations of the
United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and
acting as an agency or 

 

2

 

instrumentality
of the United States of America, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America that, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depositary receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended) as custodian with respect to any such Governmental Obligation or a
specific payment of principal of or interest on any such Governmental
Obligation held by such custodian for the account of the holder of such
depositary receipt; provided, however, that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depositary receipt from any amount received by the custodian
in respect of the Governmental Obligation or the specific payment of principal
of or interest on the Governmental Obligation evidenced by such depositary
receipt.

 

“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.

 

“Indenture”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into in accordance with the terms hereof.

 

“Interest
Payment Date,” when used with respect to any installment of interest on a
Security of a particular series, means the date specified in such Security or
in a Board Resolution or in an indenture supplemental hereto with respect to
such series as the fixed date on which an installment of interest with respect
to Securities of that series is due and payable.

 

“Officers’
Certificate” means a certificate signed by the Chief Executive Officer or the
President or a Senior Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company that is
delivered to the Trustee in accordance with the terms hereof. Each such
certificate shall include the statements provided for in Section 13.05, if
and to the extent required by the provisions thereof.

 

“Opinion
of Counsel” means an opinion in writing of legal counsel, who may be an
employee of or counsel for the Company, that is delivered to the Trustee in
accordance with the terms hereof. Each such opinion shall include the
statements provided for in Section 13.05, if and to the extent required by
the provisions thereof.

 

“Outstanding,”
when used with reference to Securities of any series, means, subject to the
provisions of Section 8.04, as of any particular time, all Securities of
that series theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Securities theretofore canceled by the Trustee or
any paying agent, or delivered to the Trustee or any paying agent for
cancellation or that have previously been canceled; (b) Securities or
portions thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been
set aside and segregated in trust by the Company (if the Company shall act as
its own paying agent); provided, however, that if such Securities or portions
of such Securities 

 

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are
to be redeemed prior to the maturity thereof, notice of such redemption shall
have been given as in Article Three provided, or provision satisfactory to
the Trustee shall have been made for giving such notice; and (c) Securities
in lieu of or in substitution for which other Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.07.

 

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

 

“Predecessor
Security” of any particular Security means every previous Security evidencing
all or a portion of the same debt as that evidenced by such particular
Security; and, for the purposes of this definition, any Security authenticated
and delivered under Section 2.07 in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the lost, destroyed or
stolen Security.

 

“Responsible
Officer” when used with respect to the Trustee means the Chief Executive
Officer, the President, any Senior Vice President, the Secretary, the
Treasurer, any trust officer, any corporate trust officer 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.

 

“Securities”
means the debt Securities authenticated and delivered under this Indenture.

 

“Securityholder,”
“holder of Securities,” “registered holder” or other similar term, means the
Person or Persons in whose name or names a particular Security shall be
registered on the books of the Company kept for that purpose in accordance with
the terms of this Indenture.

 

“Subsidiary”
means, with respect to any Person, (i) any corporation at least a majority
of whose outstanding Voting Stock shall at the time be owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, (ii) any general partnership,
joint venture or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person, or
by one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries and (iii) any limited partnership of which such Person or any
of its Subsidiaries is a general partner.

 

“Trustee”
means [                ],
and, subject to the provisions of Article Seven, shall also include its
successors and assigns, and, if at any time there is more than one Person
acting in such capacity hereunder, “Trustee” shall mean each such Person. The
term “Trustee” as used with respect to a particular series of the Securities
shall mean the trustee with respect to that series.

 

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“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended, subject to
the provisions of Sections 9.01, 9.02 and 10.01, as in effect at the date of
execution of this instrument.

 

“Voting
Stock,” as applied to stock of any Person, means shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person having ordinary voting power for the election of the directors
(or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.

 

ARTICLE II

 

ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION

AND EXCHANGE OF SECURITIES

 

SECTION 2.01               Designation and Terms of Securities.

 

(a)           The aggregate principal amount of Securities that
may be authenticated and delivered under this Indenture is unlimited. The
Securities may be issued in one or more series up to the aggregate principal
amount of Securities of that series from time to time authorized by or pursuant
to a Board Resolution of the Company or pursuant to one or more indentures
supplemental hereto. Prior to the initial issuance of Securities of any series,
there shall be established in or pursuant to a Board Resolution, and set forth
in an Officers’ Certificate, or established in one or more indentures
supplemental hereto:

 

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

 

(2)           any limit upon the aggregate principal amount of the
Securities of that 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 that
series);

 

(3)           the date or dates on which the principal of the
Securities of the series is payable and the place(s) of payment;

 

(4)           the rate or rates at which the Securities of the
series shall bear interest or the manner of calculation of such rate or rates,
if any;

 

(5)           the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest will be payable or
the manner of determination of such Interest Payment Dates, the place(s) of
payment, and the record date for the determination of holders to whom interest
is payable on any such Interest Payment Dates;

 

(6)           the right, if any, to extend the interest payment
periods and the duration of such extension;

 

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(7)           the period or periods within which, the price or
prices at 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 Company;

 

(8)           the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or analogous
provisions (including payments made in cash in satisfaction of future sinking
fund obligations) or at the option of a holder thereof and the period or
periods within which, the price or prices at which, and the terms and
conditions upon which, Securities of the series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;

 

(9)           the form of the Securities of the series including
the form of the certificate of authentication for such series;

 

(10)         if other than denominations of one thousand U.S.
dollars ($1,000) or any integral multiple thereof, the denominations in which
the Securities of the series shall be issuable;

 

(11)         any and all other terms with respect to such series
(which terms shall not be inconsistent with the terms of this Indenture, as
amended by any supplemental indenture) including any terms which may be
required by or advisable under United States laws or regulations or advisable
in connection with the marketing of Securities of that series;

 

(12)         whether the Securities are issuable as a Global
Security and, in such case, the identity of the Depositary for such series;

 

(13)         whether the Securities will be convertible into
shares of common stock or other securities of the Company and, if so, the terms
and conditions upon which such Securities will be so convertible, including the
conversion price and the conversion period;

 

(14)         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 pursuant to Section 6.01;
and

 

(15)         any additional or different Events of Default or
restrictive covenants provided for with respect to the Securities of the
series.

 

All
Securities of any one series shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant to any such
Board Resolution or in any indentures supplemental hereto.

 

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

 

6

 

Securities
of any particular series may be issued at various times, with different dates
on which the principal or any installment of principal is payable, with
different rates of interest, if any, or different methods by which rates of
interest may be determined, with different dates on which such interest may be
payable and with different redemption dates.

 

SECTION 2.02               Form of Securities and Trustee’s
Certificate.

 

The
Securities of any series and the Trustee’s certificate of authentication to be
borne by such Securities shall be substantially of the tenor and purport as set
forth in one or more indentures supplemental hereto or as provided in a Board
Resolution and as set forth in an Officers’ Certificate and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Securities of that series may be listed, or to conform
to usage.

 

SECTION 2.03               Denominations; Provisions for Payment.

 

The
Securities shall be issuable as registered Securities and in the denominations
of one thousand U.S. dollars ($1,000) or any integral multiple thereof, subject
to Section 2.01(10). The Securities of a particular series shall bear
interest payable on the dates and at the rate specified with respect to that
series. The principal of and the interest on the Securities of any series, as
well as any premium thereon in case of redemption thereof prior to maturity,
shall be payable in the coin or currency of the United States of America that
at the time is legal tender for public and private debt, at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
the City and State of New York. Each Security shall be dated the date of its
authentication. Interest on the Securities shall be computed on the basis of a
360-day year composed of twelve 30-day months.

 

The
interest installment on any Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date for Securities of that series
shall be paid to the Person in whose name said Security (or one or more
Predecessor Securities) is registered at the close of business on the regular
record date for such interest installment. In the event that any Security of a
particular series or portion thereof is called for redemption and the
redemption date is subsequent to a regular record date with respect to any
Interest Payment Date and prior to such Interest Payment Date, interest on such
Security will be paid upon presentation and surrender of such Security as
provided in Section 3.03.

 

Any
interest on any Security that is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date for Securities of the same series
(herein called “Defaulted Interest”) shall forthwith cease to be payable to the
registered holder on the relevant regular record date by virtue of having been
such holder; and such Defaulted 

 

7

 

Interest
shall be paid by the Company, at its election, as provided in clause (1) or
clause (2) below:

 

(1)           The Company may make payment of any Defaulted
Interest on Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of business on a
special record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner: the Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each such Security
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than 15 nor less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such special record date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment
of such Defaulted Interest and the special record date therefor to be mailed,
first class postage prepaid, to each Securityholder at his or her address as it
appears in the Security Register (as hereinafter defined), not less than 10
days prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
such Securities (or their respective Predecessor Securities) are registered on
such special record date.

 

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

 

Unless
otherwise set forth in a Board Resolution or one or more indentures
supplemental hereto establishing the terms of any series of Securities pursuant
to Section 2.01 hereof, the term “regular record date” as used in this Section with
respect to a series of Securities with respect to any Interest Payment Date for
such series shall mean either the fifteenth day of the month immediately
preceding the month in which an Interest Payment Date established for such
series pursuant to Section 2.01 hereof shall occur, if such Interest
Payment Date is the first day of a month, or the last day of the month
immediately preceding the month in which an Interest Payment Date established
for such series pursuant to Section 2.01 hereof shall occur, if such
Interest Payment Date is the fifteenth day of a month, whether or not such date
is a Business Day.

 

Subject
to the foregoing provisions of this Section, each Security of a series
delivered under this Indenture upon transfer of or in exchange for or in lieu
of any other 

 

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Security
of such series shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Security.

 

SECTION 2.04               Execution and Authentications.

 

The
Securities shall be signed on behalf of the Company by its Chief Executive
Officer, its President, or one of its Senior Vice Presidents, or its Treasurer,
or one of its Assistant Treasurers, or its Secretary, or one of its Assistant
Secretaries, under its corporate seal attested by its Secretary or one of its
Assistant Secretaries. Signatures may be in the form of a manual or facsimile signature.
The Company may use the facsimile signature of any Person who shall have been a
Chief Executive Officer or President or Senior Vice President thereof, or of
any Person who shall have been a Secretary or Assistant Secretary thereof,
notwithstanding the fact that at the time the Securities shall be authenticated
and delivered or disposed of such Person shall have ceased to be the Chief
Executive Officer or the President or a Senior Vice President, or the Secretary
or an Assistant Secretary, of the Company. The seal of the Company may be in
the form of a facsimile of such seal and may be impressed, affixed, imprinted
or otherwise reproduced on the Securities. The Securities may contain such
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication by the
Trustee.

 

A
Security shall not be valid until authenticated manually by an authorized
signatory of the Trustee, or by an Authenticating Agent. Such signature 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. At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver Securities of
any series executed by the Company to the Trustee for authentication, together
with a written order of the Company for the authentication and delivery of such
Securities, signed by its Chief Executive Officer or its President or any
Senior Vice President and its Secretary or any Assistant Secretary, and the
Trustee in accordance with such written order shall authenticate and deliver
such Securities.

 

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 7.01) shall be fully
protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.

 

The
Trustee shall not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the Trustee’s own
rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner that is not reasonably acceptable to the Trustee.

 

SECTION 2.05               Registration of Transfer and Exchange.

 

(a)           Securities of any series may be exchanged upon
presentation thereof at the office or agency of the Company designated for such
purpose in the Borough of 

 

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Manhattan, the City and State of New York, for other Securities of such
series of authorized denominations, and for a like aggregate principal amount,
upon payment of a sum sufficient to cover any tax or other governmental charge
in relation thereto, all as provided in this Section. In respect of any
Securities so surrendered for exchange, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in exchange therefor
the Security or Securities of the same series that the Securityholder making
the exchange shall be entitled to receive, bearing numbers not
contemporaneously outstanding.

 

(b)           The Company shall keep, or cause to be kept, at its
office or agency designated for such purpose in the Borough of Manhattan, the
City and State of New York, or such other location designated by the Company a
register or registers (herein referred to as the “Security Register”) in which,
subject to such reasonable regulations as it may prescribe, the Company shall
register the Securities and the transfers of Securities as in this Article provided
and which at all reasonable times shall be open for inspection by the Trustee.
The registrar for the purpose of registering Securities and transfer of
Securities as herein provided shall be appointed as authorized by a Board
Resolution (the “Security Registrar”).

 

Upon
surrender for transfer of any Security at the office or agency of the Company
designated for such purpose, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in the name of the
transferee or transferees a new Security or Securities of the same series as
the Security presented for a like aggregate principal amount.

 

All
Securities presented or surrendered for exchange or registration of transfer,
as provided in this Section, shall be accompanied (if so required by the
Company or the Security Registrar) by a written instrument or instruments of
transfer, in form satisfactory to the Company or the Security Registrar, duly
executed by the registered holder or by such holder’s duly authorized attorney
in writing.

 

(c)           No service charge shall be made for any exchange or
registration of transfer of Securities, or issue of new Securities in case of
partial redemption of any series, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge in relation thereto,
other than exchanges pursuant to Section 2.06, Section 3.03(b) and
Section 9.04 not involving any transfer.

 

(d)           The Company shall not be required (1) to issue,
exchange or register the transfer of any Securities during a period beginning
at the opening of business 15 days before the day of the mailing of a notice of
redemption of less than all the Outstanding Securities of the same series and
ending at the close of business on the day of such mailing, nor (2) to
register the transfer of or exchange any Securities of any series or portions
thereof called for redemption. The provisions of this Section 2.05 are,
with respect to any Global Security, subject to Section 2.11 hereof.

 

10

 

SECTION 2.06               Temporary Securities.

 

Pending
the preparation of definitive Securities of any series, the Company may
execute, and the Trustee shall authenticate and deliver, temporary Securities
(printed, lithographed or typewritten) of any authorized denomination. Such
temporary Securities shall be substantially in the form of the definitive
Securities in lieu of which they are issued, but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all
as may be determined by the Company. Every temporary Security of any series shall
be executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Securities of such series. Without unnecessary delay the Company
will execute and will furnish definitive Securities of such series and
thereupon any or all temporary Securities of such series may be surrendered in
exchange therefor (without charge to the holders), at the office or agency of
the Company designated for the purpose in the Borough of Manhattan, the City
and State of New York, and the Trustee shall authenticate and such office or
agency shall deliver in exchange for such temporary Securities an equal
aggregate principal amount of definitive Securities of such series, unless the
Company advises the Trustee to the effect that definitive Securities need not
be executed and furnished until further notice from the Company. Until so
exchanged, the temporary Securities of such series shall be entitled to the
same benefits under this Indenture as definitive Securities of such series
authenticated and delivered hereunder.

 

SECTION 2.07               Mutilated, Destroyed, Lost or Stolen
Securities.

 

In
case any temporary or definitive Security shall become mutilated or be
destroyed, lost or stolen, the Company (subject to the next succeeding
sentence) shall execute, and upon the Company’s request, the Trustee (subject
as aforesaid) shall authenticate and deliver, a new Security of the same
series, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Security, or in lieu of and in substitution for
the Security so destroyed, lost or stolen. In every case the applicant for a
substituted Security shall furnish to the Company and the Trustee such security
or indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the destruction,
loss or theft of the applicant’s Security and of the ownership thereof. The
Trustee may authenticate any such substituted Security and deliver the same
upon the written request or authorization of any officer of the Company. Upon
the issuance of any substituted Security, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. In case any Security that has
matured or is about to mature shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Security) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as they may require to save
each of them harmless, and, in case of destruction, loss or theft, 

 

11

 

evidence
to the satisfaction of the Company and the Trustee of the destruction, loss or
theft of such Security and of the ownership thereof.

 

Every
replacement Security issued pursuant to the provisions of this Section shall
constitute an additional contractual obligation of the Company whether or not
the mutilated, destroyed, lost or stolen Security shall be found at any time,
or be enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of the
same series duly issued hereunder. All Securities shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Securities,
and shall preclude (to the extent lawful) 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.

 

SECTION 2.08               Cancellation.

 

All
Securities surrendered for the purpose of payment, redemption, exchange or
registration of transfer shall, if surrendered to the Company or any paying
agent, 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 required or permitted by any of the provisions of
this Indenture. On request of the Company at the time of such surrender, the
Trustee shall deliver to the Company canceled Securities held by the Trustee.
In the absence of such request the Trustee may dispose of canceled Securities
in accordance with its standard procedures and deliver a certificate of
disposition to the Company. If the Company shall otherwise acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and
until the same are delivered to the Trustee for cancellation.

 

SECTION 2.09               Benefits of Indenture.

 

Nothing
in this Indenture or in the Securities, express or implied, shall give or be
construed to give to any Person, other than the parties hereto and the holders
of the Securities, any legal or equitable right, remedy or claim under or in
respect of this Indenture, or under any covenant, condition or provision herein
contained; all such covenants, conditions and provisions being for the sole
benefit of the parties hereto and of the holders of the Securities.

 

SECTION 2.10               Authenticating Agent.

 

So
long as any of the Securities of any series remain Outstanding there may be an
Authenticating Agent for any or all such series of Securities which the Trustee
shall have the right to appoint. Said Authenticating Agent shall be authorized
to act on behalf of the Trustee to authenticate Securities of such series
issued upon exchange, transfer or partial redemption thereof, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the 

 

12

 

Trustee
hereunder. All references in this Indenture to the authentication of Securities
by the Trustee shall be deemed to include authentication by an Authenticating
Agent for such series. Each Authenticating Agent shall be acceptable to the
Company and shall be a corporation that has a combined capital and surplus, as
most recently reported or determined by it, sufficient under the laws of any
jurisdiction under which it is organized or in which it is doing business to
conduct a trust business, and that is otherwise authorized under such laws to
conduct such business and is subject to supervision or examination by Federal
or State authorities. If at any time any Authenticating Agent shall cease to be
eligible in accordance with these provisions, it shall resign immediately.

 

Any
Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Company. Upon resignation, termination or cessation of eligibility of
any Authenticating Agent, the Trustee may appoint an eligible successor
Authenticating Agent acceptable to the Company. Any successor Authenticating
Agent, upon acceptance of its appointment hereunder, shall become vested with
all the rights, powers and duties of its predecessor hereunder as if originally
named as an Authenticating Agent pursuant hereto.

 

SECTION 2.11               Global Securities.

 

(a)           If the Company shall establish pursuant to Section 2.01
that the Securities of a particular series are to be issued as a Global
Security, then the Company shall execute and the Trustee shall, in accordance
with Section 2.04, authenticate and deliver, a Global Security that (1) shall
represent, and shall be denominated in an amount equal to the aggregate principal
amount of, all of the Outstanding Securities of such series, (2) shall be
registered in the name of the Depositary or its nominee, (3) shall be
delivered by the Trustee to the Depositary or pursuant to the Depositary’s
instruction and (4) shall bear a legend substantially to the following
effect: “Except as otherwise provided in Section 2.11 of the Indenture,
this Security may be transferred, in whole but not in part, only to another
nominee of the Depositary or to a successor Depositary or to a nominee of such
successor Depositary.”

 

(b)           Notwithstanding the provisions of Section 2.05,
the Global Security of a series may be transferred, in whole but not in part
and in the manner provided in Section 2.05, only to another nominee of the
Depositary for such series, or to a successor Depositary for such series
selected or approved by the Company or to a nominee of such successor
Depositary.

 

(c)           If at any time the Depositary for a series of the
Securities notifies the Company that it is unwilling or unable to continue as
Depositary for such series or if at any time the Depositary for such series
shall no longer be registered or in good standing under the Exchange Act, or
other applicable statute or regulation, and a successor Depositary for such
series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be,
this Section 2.11 shall no longer be applicable to the Securities of such
series and the 

 

13

 

Company will execute and, subject to Section 2.05, the Trustee
will authenticate and deliver the Securities of such series in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
of such series in exchange for such Global Security. In addition, the Company
may at any time determine that the Securities of any series shall no longer be
represented by a Global Security and that the provisions of this Section 2.11
shall no longer apply to the Securities of such series. In such event the
Company will execute and, subject to Section 2.05, the Trustee, upon
receipt of an Officers’ Certificate evidencing such determination by the Company,
will authenticate and deliver the Securities of such series in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
of such series in exchange for such Global Security. Upon the exchange of the
Global Security for such Securities in definitive registered form without
coupons, in authorized denominations, the Global Security shall be canceled by
the Trustee. Such Securities in definitive registered form issued in exchange
for the Global Security pursuant to this Section 2.11(c) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the Depositary for delivery to the Persons in whose names such
Securities are so registered.

 

ARTICLE III

 

REDEMPTION OF SECURITIES AND SINKING FUND PROVISIONS

 

SECTION 3.01               Redemption.

 

The
Company may redeem the Securities of any series issued hereunder on and after
the dates and in accordance with the terms established for such series pursuant
to Section 2.01 hereof.

 

SECTION 3.02               Notice of Redemption.

 

(a)           In case the Company shall desire to exercise such
right to redeem all or, as the case may be, a portion of the Securities of any
series in accordance with the right reserved so to do, the Company shall, or
shall cause the Trustee to, give notice of such redemption to holders of the
Securities of such series to be redeemed by mailing, first class postage
prepaid, a notice of such redemption not less than 30 days and not more than 90
days before the date fixed for redemption of that series to such holders at
their last addresses as they shall appear upon the Security Register unless a
shorter period is specified in the Securities to be redeemed. Any notice that
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the registered holder receives the notice. In
any case, failure duly to give such notice to the holder of any Security of any
series designated for redemption in whole or in part, or any defect in the
notice, shall not affect the validity of the proceedings for the redemption of
any other Securities of such series or any other series. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the 

 

14

 

terms of such Securities or elsewhere in this Indenture, the Company
shall furnish the Trustee with an Officers’ Certificate evidencing compliance
with any such restriction.

 

Each
such notice of redemption shall specify the date fixed for redemption and the
redemption price at which Securities of that series are to be redeemed, and
shall state that payment of the redemption price of such Securities to be
redeemed will be made at the office or agency of the Company in the Borough of
Manhattan, the City and State of New York, upon presentation and surrender of
such Securities, that interest accrued to the date fixed for redemption will be
paid as specified in said notice, that from and after said date interest will
cease to accrue and that the redemption is for a sinking fund, if such is the
case. If less than all the Securities of a series are to be redeemed, the
notice to the holders of Securities of that series to be redeemed in whole or
in part shall specify the particular Securities to be so redeemed. In case any Security
is to be redeemed in part only, the notice that relates to such Security shall
state the portion of the principal amount thereof to be redeemed, and shall
state that on and after the redemption date, 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.

 

(b)           If less than all the Securities of a series are to
be redeemed, the Company shall give the Trustee at least 45 days’ notice in
advance of the date fixed for redemption as to the aggregate principal amount
of Securities of the series to be redeemed, and thereupon the Trustee shall
select, by lot or in such other manner as it shall deem appropriate and fair in
its discretion and that may provide for the selection of a portion or portions
(equal to one thousand U.S. dollars ($1,000) or any integral multiple thereof)
of the principal amount of such Securities of a denomination larger than
$1,000, the Securities to be redeemed and shall thereafter promptly notify the
Company in writing of the numbers of the Securities to be redeemed, in whole or
in part. The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its Chief Executive Officer or its
President or any Senior Vice President, instruct the Trustee or any paying
agent to call all or any part of the Securities of a particular series for
redemption and to give notice of redemption in the manner set forth in this
Section, such notice to be in the name of the Company or its own name as the
Trustee or such paying agent may deem advisable. In any case in which notice of
redemption is to be given by the Trustee or any such paying agent, the Company
shall deliver or cause to be delivered to, or permit to remain with, the
Trustee or such paying agent, as the case may be, such Security Register,
transfer books or other records, or suitable copies or extracts therefrom,
sufficient to enable the Trustee or such paying agent to give any notice by
mail that may be required under the provisions of this Section.

 

SECTION 3.03               Payment Upon Redemption.

 

(a)           If the giving of notice of redemption shall have
been completed as above provided, the Securities or portions of Securities of
the series to be redeemed 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
interest on such Securities or portions of Securities shall cease to accrue on
and after the date fixed for redemption, unless the Company shall default in
the 

 

15

 

payment of such redemption price and accrued interest with respect to
any such Security or portion thereof. On presentation and surrender of such
Securities on or after the date fixed for redemption at the place of payment
specified in the notice, said Securities shall be paid and redeemed at the
applicable redemption price for such series, together with interest accrued
thereon to the date fixed for redemption (but if the date fixed for redemption
is an interest payment date, the interest installment payable on such date
shall be payable to the registered holder at the close of business on the
applicable record date pursuant to Section 2.03).

 

(b)           Upon presentation of any Security of such series
that is to be redeemed in part only, the Company shall execute and the Trustee
shall authenticate and the office or agency where the Security is presented
shall deliver to the holder thereof, at the expense of the Company, a new
Security of the same series of authorized denominations in principal amount
equal to the unredeemed portion of the Security so presented.

 

SECTION 3.04               Sinking Fund.

 

The
provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to any sinking
fund for the retirement of Securities of a series, except as otherwise
specified as contemplated by Section 2.01 for Securities of such series.

 

The
minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a “mandatory sinking fund
payment,” and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an “optional sinking
fund payment”. If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 3.05. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

 

SECTION 3.05               Satisfaction of Sinking Fund Payments with
Securities.

 

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

 

SECTION 3.06               Redemption of Securities for Sinking Fund.

 

Not
less than 45 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers’ Certificate
specifying the 

 

16

 

amount
of the next ensuing sinking fund payment for that series pursuant to the terms
of the series, the portion thereof, if any, that is to be satisfied by
delivering and crediting Securities of that series pursuant to Section 3.05
and the basis for such credit and will, together with such Officers’
Certificate, deliver to the Trustee any Securities to be so delivered. Not less
than 30 days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 3.02 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 3.02. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Section 3.03.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.01               Payment of Principal, Premium and Interest.

 

The
Company will duly and punctually pay or cause to be paid the principal of (and
premium, if any) and interest on the Securities of that series at the time and
place and in the manner provided herein and established with respect to such
Securities.

 

SECTION 4.02               Maintenance of Office or Agency.

 

So
long as any series of the Securities remain Outstanding, the Company agrees to
maintain an office or agency in the Borough of Manhattan, the City and State of
New York, with respect to each such series and at such other location or
locations as may be designated as provided in this Section 4.02, where (a) Securities
of that series may be presented for payment, (b) Securities of that series
may be presented as herein above authorized for registration of transfer and
exchange, and (c) notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be given or served, such
designation to continue with respect to such office or agency until the Company
shall, by written notice signed by its Chief Executive Officer or its President
or a Senior Vice President and delivered to the Trustee, designate some other
office or agency for such purposes or any of them. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, notices and demands.

 

SECTION 4.03               Paying Agents.

 

(a)           If the Company shall appoint one or more paying
agents for all or any series of the Securities, other than the Trustee, the
Company will cause each 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:

 

(1)           that it will hold all sums held by it as such agent
for the payment of the principal of (and premium, if any) or interest on the
Securities of that series (whether 

 

17

 

such sums have been paid to it by the Company or by any other obligor
of such Securities) in trust for the benefit of the Persons entitled thereto;

 

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

 

(3)           that it will, at any time during the continuance of
any failure referred to in the preceding paragraph (a)(2) above, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such paying agent; and

 

(4)           that it will perform all other duties of paying agent
as set forth in this Indenture.

 

(b)           If the Company shall act as its own paying agent
with respect to any series of the Securities, it will on or before each due
date of the principal of (and premium, if any) or interest on Securities of
that series, set aside, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay such principal (and premium,
if any) or interest so becoming due on Securities of that series until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and will promptly notify the Trustee of such action, or any failure (by it or
any other obligor on such Securities) to take such action. Whenever the Company
shall have one or more paying agents for any series of Securities, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities of that series, deposit with the paying agent a sum sufficient
to pay the principal (and premium, if any) or interest so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such paying agent is the Trustee)
the Company will promptly notify the Trustee of this action or failure so to
act.

 

(c)           Notwithstanding anything in this Section to the
contrary, (1) the agreement to hold sums in trust as provided in this Section is
subject to the provisions of Section 11.05, and (2) the Company may
at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or direct any paying agent to
pay, to the Trustee all sums held in trust by the Company or such paying agent,
such sums to be held by the Trustee upon the same terms and conditions as those
upon which such sums were held by the Company or such paying agent; and, upon
such payment by any paying agent to the Trustee, such paying agent shall be
released from all further liability with respect to such money.

 

SECTION 4.04               Appointment to Fill Vacancy in Office of
Trustee.

 

The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.10, a Trustee,
so that there shall at all times be a Trustee hereunder.

 

18

 

ARTICLE V

 

SECURITYHOLDERS’ LISTS AND REPORTS BY THE
COMPANY

AND THE TRUSTEE

 

SECTION 5.01                                            Company to
Furnish Trustee Names and Addresses of Securityholders.

 

The Company will furnish or cause to be furnished to
the Trustee (a) on each regular record date (as defined in Section 2.03)
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the holders of each series of Securities as of such regular record
date, provided that the Company shall not be obligated to furnish or cause to
be furnished such list at any time that the list shall not differ in any
respect from the most recent list furnished to the Trustee by the Company and (b) at
such other times as the Trustee may request in writing within 30 days after the
receipt by the Company of any such request, a list of similar form and content
as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that, in either case, no such list need be furnished for any
series for which the Trustee shall be the Security Registrar.

 

SECTION 5.02                                            Preservation Of
Information; Communications 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 5.01
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 5.01 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 Company, the Trustee, the Security
Registrar and any other Person shall have the protection of the Trust Indenture
Act Section 312(c).

 

SECTION 5.03                                            Reports by the
Company.

 

(a)                                  The Company
covenants and agrees to file with the Trustee, within 15 days after the Company
is required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file information, documents
or reports pursuant to either of such sections, then to file with the Trustee
and the Commission, in accordance with the rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic 

 

19

 

information, documents and reports that may
be required pursuant to Section 13 of the Exchange Act, in respect of a
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations.

 

(b)                                 The Company
covenants and agrees to file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from to time by the Commission,
such additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants provided for in this Indenture
as may be required from time to time by such rules and regulations.

 

(c)                                  The Company
covenants and agrees to transmit by mail, first class postage prepaid, or
reputable overnight delivery service that provides for evidence of receipt, to
the Securityholders, as their names and addresses appear upon the Security
Register, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section as
may be required by rules and regulations prescribed from time to time by
the Commission.

 

SECTION 5.04                                            Reports by the
Trustee.

 

(a)                                  On or before [        ]
in each year in which any of the Securities are Outstanding, the Trustee shall
transmit by mail, first class postage prepaid, to the Securityholders, as their
names and addresses appear upon the Security Register, a brief report dated as
of the preceding [        ], if and to
the extent required under Section 313(a) of the Trust Indenture Act.

 

(b)                                 The Trustee
shall comply with Sections 313(b), 313(c) and 313(d) of the Trust
Indenture Act.

 

(c)                                  A copy of each
such report shall, at the time of such transmission to Securityholders, be
filed by the Trustee with the Company, with each stock exchange upon which any
Securities are listed (if so listed) and also with the Commission. The Company
agrees to notify the Trustee when any Securities become listed on any stock
exchange.

 

(d)                                 If an Event of
Default occurs and is continuing and the Trustee receives actual notice of such
Event of Default, the Trustee shall mail to each Securityholder notice of the
uncured Event of Default within 90 days after the occurrence thereof. Except in
the case of an Event of Default in payment of principal of, or interest on, any
Securities, or in the payment of any sinking or purchase fund installment, the
Trustee may withhold the notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Securityholders.

 

20

 

ARTICLE VI

 

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

 

SECTION 6.01                                            Events of
Default.

 

(a)                                  Whenever used
herein with respect to Securities of a particular series, “Event of Default”
means any one or more of the following events that has occurred and is
continuing:

 

(1)                                  the Company
defaults in the payment of any installment of interest upon any of the
Securities of that series, as and when the same shall become due and payable,
and such default continues for a period of 90 days; provided, however, that a
valid extension of an interest payment period by the Company in accordance with
the terms of any indenture supplemental hereto, shall not constitute a default
in the payment of interest for this purpose;

 

(2)                                  the Company
defaults in the payment of the principal of (or premium, if any, on) any of the
Securities of that series as and when the same shall become due and payable
whether at maturity, upon redemption, by declaration or otherwise, or in any
payment required by any sinking or analogous fund established with respect to
that series; provided, however, that a valid extension of the maturity of such
Securities in accordance with the terms of any indenture supplemental hereto
shall not constitute a default in the payment of principal or premium, if any;

 

(3)                                  the Company
fails to observe or perform any other of its covenants or agreements with
respect to that series contained in this Indenture or otherwise established
with respect to that series of Securities pursuant to Section 2.01 hereof
(other than a covenant or agreement that has been expressly included in this
Indenture solely for the benefit of one or more series of Securities other than
such series) for a period of 90 days after the date on which written notice of
such failure, requiring the same to be remedied and stating that such notice is
a “Notice of Default” hereunder, shall have been given to the Company by the
Trustee, by registered or certified mail, or to the Company and the Trustee by
the holders of at least 25% in principal amount of the Securities of that
series at the time Outstanding;

 

(4)                                  the Company
pursuant to or within the meaning of any Bankruptcy Law (i) commences a
voluntary case, (ii) consents to the entry of an order for relief against
it in an involuntary case, (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property or (iv) makes
a general assignment for the benefit of its creditors; or

 

(5)                                  a court of
competent jurisdiction enters an order under any Bankruptcy Law that (i) is
for relief against the Company in an involuntary case, (ii) appoints a
Custodian of the Company for all or substantially all of its property or (iii) orders
the liquidation of the Company, and the order or decree remains unstayed and in
effect for 90 days.

 

(b)                                 In each and
every such case, unless the principal of all the Securities of that 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 that
series then 

 

21

 

Outstanding hereunder, by notice in writing
to the Company (and to the Trustee if given by such Securityholders), may
declare the principal of all the Securities of that series to be due and
payable immediately, and upon any such declaration the same shall become and
shall be immediately due and payable.

 

(c)                                  At any time
after the principal of the Securities of that series 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
holders of a majority in aggregate principal amount of the Securities of that
series then Outstanding hereunder, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if: (1) the
Company has paid or deposited with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Securities of that series and the
principal of (and premium, if any, on) all Securities of that series that shall
have become due otherwise than by acceleration (with interest upon such
principal and premium, if any, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Securities of that series to the date of such
payment or deposit) and any amount payable to the Trustee under Section 7.06,
and (2) any and all other Events of Default under the Indenture with
respect to such series, other than the nonpayment of principal on Securities of
that series that shall not have become due by their terms, shall have been
remedied or waived as provided in Section 6.06.

 

No such rescission and annulment shall extend to or
shall affect any subsequent default or impair any right consequent thereon.

 

(d)                                 In case the
Trustee shall have proceeded to enforce any right with respect to Securities of
that series under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee, then and
in every such case, subject to any determination in such proceedings, the
Company and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceedings had been
taken.

 

SECTION 6.02                                            Suits for
Enforcement by Trustee.

 

(a)                                  If an Event of
Default specified in Section 6.01(a)(1) or (2) hereof occurs and
is continuing, 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 proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or other obligor
upon the Securities of that series and collect the moneys adjudged or decreed
to be payable in the manner provided by law out of the property of the Company
or other obligor upon the Securities of that series, wherever situated.

 

22

 

(b)                                 In case of any
receivership, insolvency, liquidation, bankruptcy, reorganization,
readjustment, arrangement, composition or judicial proceedings affecting the
Company, or its creditors or property, the Trustee shall have power to
intervene in such proceedings and take any action therein that may be permitted
by the court and shall (except as may be otherwise provided by law) be entitled
to file such proofs of claim and other papers and documents as may be necessary
or advisable in order to have the claims of the Trustee and of the holders of
Securities of a series allowed for the entire amount due and payable by the
Company under this Indenture at the date of institution of such proceedings and
for any additional amount that may become due and payable by the Company after
such date, and to collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after the deduction
of the amount payable to the Trustee under Section 7.06; and any receiver,
assignee or trustee in bankruptcy or reorganization is hereby authorized by
each of the holders of Securities of such series to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of such
payments directly to such Securityholders, to pay to the Trustee any amount due
it under Section 7.06.

 

(c)                                  All rights of
action and of asserting claims under this Indenture, or under any of the terms
established with respect to Securities of a series, may be enforced by the
Trustee without the possession of any of such Securities, or the production
thereof at any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after
provision for payment to the Trustee of any amounts due under Section 7.06,
be for the ratable benefit of the holders of the Securities of such series.

 

In case of an Event of Default hereunder, 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 of 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.

 

Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of that 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.

 

SECTION 6.03                                            Application of
Moneys Collected.

 

Any moneys collected by the Trustee pursuant to this
Article with respect to a particular series of Securities 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 premium, if any)
or interest, upon presentation of the Securities of that series, and notation
thereon the payment, if only partially paid, and upon surrender thereof if
fully paid:

 

23

 

FIRST:                                   To the payment
of costs and expenses of collection and of all amounts payable to the Trustee
under Section 7.06; and

 

SECOND:                    To the payment of the
amounts then due and unpaid upon Securities of such series for principal (and
premium, if any) and interest, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities for principal
(and premium, if any) and interest, respectively.

 

SECTION 6.04                                            Limitation on
Suits.

 

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 suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (a) such holder previously shall
have given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Securities of such series specifying
such Event of Default, as hereinbefore provided; (b) 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, suit or proceeding in its own name as trustee hereunder; (c) such
holder or holders 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; (d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity, shall have failed to institute any such
action, suit or proceeding; and (e) during such 60-day period, the holders
of a majority in principal amount of the Securities of that series shall not
have given the Trustee a direction inconsistent with the request.

 

Notwithstanding anything contained herein to the
contrary, the right of any holder of any Security to receive payment of the
principal of (and premium, if any) and interest on such Security, as therein
provided, on or after the respective due dates expressed in such Security (or
in the case of redemption, on the redemption date), or to institute suit for
the enforcement of any such payment on or after such respective dates or
redemption date, shall not be impaired or affected without the consent of such
holder. By accepting a Security hereunder it is expressly understood, intended
and covenanted by the taker and holder of every Security of such series with
every other such taker and holder and the Trustee, that no one or more holders
of Securities of such series shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such 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 such 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.

 

24

 

SECTION 6.05                                            Rights and Remedies
Cumulative; Delay or Omission Not Waiver.

 

(a)                                  All powers and
remedies given by this Article to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any other powers and remedies available to the Trustee or the holders of the
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such Securities.

 

(b)                                 No delay or
omission of the Trustee or of any holder of any of the 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 default or on acquiescence therein; and, subject to the
provisions of Section 6.04, every power and remedy given by this Article or
by law to the Trustee or the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.

 

SECTION 6.06                                            Control by
Securityholders.

 

The holders of a majority in aggregate principal
amount of the Securities of any series at the time Outstanding, determined in
accordance with Section 8.01, shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee with respect
to such series; provided, however, that such direction shall not be in conflict
with any rule of law or with this Indenture or be unduly prejudicial to
the rights of holders of Securities of any other series at the time Outstanding
determined in accordance with Section 8.01. Subject to the provisions of Section 7.01,
the Trustee shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer or Officers of the
Trustee, determine that the proceeding so directed would involve the Trustee in
personal liability. The holders of a majority in aggregate principal amount of
the Securities of any series at the time Outstanding affected thereby,
determined in accordance with Section 8.01, may on behalf of the holders
of all of the Securities of such series waive any past default in the
performance of any of the covenants contained herein or established pursuant to
Section 2.01 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 otherwise than by acceleration
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal and any premium has been deposited with
the Trustee (in accordance with Section 6.01(c)). Upon any such waiver,
the default covered thereby shall be deemed to be cured for all purposes of
this Indenture and the Company, 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.

 

SECTION 6.07                                            Undertaking to
Pay Costs.

 

All parties to this Indenture agree, and each holder
of any Securities by such holder’s acceptance thereof shall be deemed to have
agreed, that any court may in its 

 

25

 

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 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, holding more than 10% in aggregate principal amount of the
Outstanding Securities of any 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 VII

 

CONCERNING THE TRUSTEE

 

SECTION 7.01                                            Certain Duties
and Responsibilities of Trustee.

 

(a)                                  The Trustee,
prior to the occurrence of an Event of Default with respect to the Securities
of a series and after the curing of all Events of Default with respect to the
Securities of that series that may have occurred, shall undertake to perform
with respect to the Securities of such series such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants shall
be read into this Indenture against the Trustee. In case an Event of Default
with respect to the Securities of a series has occurred (that has not been
cured or waived), the Trustee shall exercise with respect to Securities of that
series 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 own affairs.

 

(b)                                 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, except that:

 

(1)                                  prior to the
occurrence of an Event of Default with respect to the Securities of a series
and after the curing or waiving of all such Events of Default with respect to
that series that may have occurred:

 

(i)                                     the duties and
obligations of the Trustee shall with respect to the Securities of such series
be determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable with respect to the Securities of such series
except for the performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and

 

(ii)                                  in the absence
of bad faith on the part of the Trustee, the Trustee may with respect to the
Securities of such series conclusively rely, as to the truth 

 

26

 

of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case
of any such certificates or opinions that 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;

 

(2)                                  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;

 

(3)                                  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 of not less
than a majority in principal amount of the Securities of any series at the time
Outstanding relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Indenture with respect to the Securities
of that series; and

 

(4)                                  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 is reasonable ground for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably assured to
it.

 

SECTION 7.02                                            Certain Rights
of Trustee.

 

Except as otherwise provided in Section 7.01:

 

(a)                                  The Trustee may
rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, 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;

 

(b)                                 Any request,
direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by a Board Resolution or an instrument signed in the
name of the Company, by the Chief Executive Officer or the President or any
Senior Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer thereof (unless other evidence in respect
thereof is specifically prescribed herein);

 

(c)                                  The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted hereunder in good faith and in reliance
thereon;

 

(d)                                 The Trustee
shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request, order or direction of any of the 

 

27

 

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 that may be incurred therein or thereby; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon the occurrence of
an Event of Default with respect to a series of the Securities (that has not
been cured or waived) to exercise with respect to Securities of that series
such of the rights and powers vested in it by this Indenture, and to 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 own affairs;

 

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

 

(f)                                    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, bond, security or other papers or documents,
unless requested in writing so to do by the holders of not less than a majority
in principal amount of the Outstanding Securities of the particular series
affected thereby (determined as provided in Section 8.04); provided,
however, 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 costs, expenses or
liabilities as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand; and

 

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

 

SECTION 7.03                                            Trustee Not
Responsible for Recitals or Issuance or Securities.

 

(a)                                  The recitals
contained herein and in the Securities shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same.

 

(b)                                 The Trustee makes
no representations as to the validity or sufficiency of this Indenture or of
the Securities.

 

(c)                                  The Trustee
shall not be accountable for the use or application by the Company of any of
the Securities or of the proceeds of such Securities, or for the use or
application of any moneys paid over by the Trustee in accordance with any
provision of this Indenture or established pursuant to Section 2.01, or
for the use or application of any moneys received by any paying agent other
than the Trustee.

 

28

 

SECTION 7.04                                            May Hold
Securities.

 

The
Trustee or any paying agent or Security Registrar, 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 Trustee, paying agent or Security
Registrar.

 

SECTION 7.05                                            Moneys Held in
Trust.

 

Subject
to the provisions of Section 11.05, 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 law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.

 

SECTION 7.06                                            Compensation
and Reimbursement.

 

(a)                                  The Company covenants and
agrees to pay to the Trustee, 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 Company
and the Trustee may from time to time agree in writing, for all services
rendered by it in the execution of the trusts hereby created and in the
exercise and performance of any of the powers and duties hereunder of the
Trustee, and, except as otherwise expressly provided herein, the Company will
pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee 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 Persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also covenants to
indemnify the Trustee (and its officers, agents, directors and employees) for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on the part of the Trustee and arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim of liability in
the premises.

 

(b)                                 The obligations of the
Company under this Section to compensate and indemnify the Trustee and to
pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior 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.

 

SECTION 7.07                                            Reliance on
Officers’ Certificate.

 

Except
as otherwise provided in Section 7.01, whenever in the administration of
the provisions 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 to take 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 Officers’ Certificate delivered to 

 

29

 

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 to be taken by it under the provisions of this Indenture
upon the faith thereof.

 

SECTION 7.08                                            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
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

 

SECTION 7.09                                            Corporate
Trustee Required; Eligibility.

 

There
shall at all times be a Trustee with respect to the Securities issued hereunder
which shall at all times be a corporation organized and doing business under
the laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or other Person permitted to act
as trustee by the Commission, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid 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. The Company may not, nor may any
Person directly or indirectly controlling, controlled by or under common
control with the Company, serve as Trustee. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
specified in Section 7.10.

 

SECTION 7.10                                            Resignation and
Removal; Appointment of Successor.

 

(a)                                  The Trustee or any successor
hereafter appointed, may at any time resign with respect to the Securities of
one or more series by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to the
Securityholders of such series, as their names and addresses appear upon the
Security Register. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee with respect to Securities of such series
by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
mailing of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee with
respect to Securities of such series, or any Securityholder of that series who
has been a bona fide holder of a Security or Securities for at least six months
may on behalf of himself 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.

 

30

 

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

 

(1)                                  the Trustee
shall fail to comply with the provisions of Section 7.08 after written
request therefor by the Company or by any Securityholder who has been a bona
fide holder of a Security or Securities for at least six months; or

 

(2)                                  the Trustee
shall cease to be eligible in accordance with the provisions of Section 7.09
and shall fail to resign after written request therefor by the Company or by
any such Securityholder; or

 

(3)                                  the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or
of its property shall be appointed or consented to, 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,
the Company may remove the Trustee with respect to all Securities and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, unless the
Trustee’s duty to resign is stayed as provided herein, any Securityholder who
has been a bona fide holder of a Security or Securities for at least six months
may, on behalf of that holder and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. 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 any series at the time
Outstanding may at any time remove the Trustee with respect to such series by
so notifying the Trustee and the Company and may appoint a successor Trustee
for such series with the consent of the Company.

 

(d)                                 Any resignation or removal
of the Trustee and appointment of a successor trustee with respect to the
Securities of a series pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.11.

 

(e)                                  Any successor trustee
appointed pursuant to this Section may be appointed with respect to the
Securities of one or more series or all of such series, and at any time there
shall be only one Trustee with respect to the Securities of any particular
series.

 

SECTION 7.11                                            Acceptance of
Appointment By Successor.

 

(a)                                  In case of the appointment
hereunder of a successor trustee with respect to all Securities, every such successor
trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor trustee, such
retiring Trustee shall, 

 

31

 

upon payment of its charges, execute and deliver an instrument
transferring to such successor trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring Trustee hereunder.

 

(b)                                 In case of the appointment
hereunder of a successor trustee with respect to the Securities of one or more
(but not all) series, the Company, the retiring Trustee and each successor
trustee with respect to the Securities of one or more series shall execute and
deliver an indenture supplemental hereto wherein each successor trustee shall
accept such appointment and which (1) shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in,
each successor trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor trustee relates, (2) shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring Trustee is not retiring
shall continue to be vested in the retiring Trustee, and (3) shall add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust, that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee and that no Trustee shall be responsible for any act or failure to
act on the part of any other Trustee hereunder; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein, such
retiring Trustee shall with respect to the Securities of that or those series
to which the appointment of such successor trustee relates have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested in the Trustee under this Indenture, and each
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor trustee relates; but, on request of the Company
or any successor trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor trustee, to the extent contemplated by such
supplemental indenture, the property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor trustee relates.

 

(c)                                  Upon request of any such
successor trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor trustee all
such rights, powers and trusts referred to in paragraph (a) or (b) of
this Section, as the case may be.

 

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

 

32

 

(e)                                  Upon acceptance of
appointment by a successor trustee as provided in this Section, the Company
shall transmit notice of the succession of such trustee hereunder by mail,
first class postage prepaid, to the Securityholders, as their names and
addresses appear upon the Security Register. If the Company fails to transmit
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be transmitted at the
expense of the Company.

 

SECTION 7.12                                            Merger,
Conversion, Consolidation or Succession to Business.

 

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 Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 7.08 and eligible under the
provisions of Section 7.09, 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 any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

 

SECTION 7.13                                            Preferential
Collection of Claims Against the Company.

 

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 VIII

 

CONCERNING THE SECURITYHOLDERS

 

SECTION 8.01                                            Evidence of
Action by Securityholders.

 

Whenever
in this Indenture it is provided that the holders of a majority or specified
percentage in aggregate principal amount of the Securities of a particular
series may take any action (including the making of any demand or request, the
giving of any notice, consent or waiver or the taking of any other action), the
fact that at the time of taking any such action the holders of such majority or
specified percentage of that series have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed by such
holders of Securities of that series in Person or by agent or proxy appointed
in writing.

 

If
the Company shall solicit from the Securityholders of any series any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers’ Certificate, fix in
advance a record date for such series for the determination of Securityholders
entitled to give such request, 

 

33

 

demand,
authorization, direction, notice, consent, waiver or other action, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other
action may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date shall be
deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Securities of that
series have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the Outstanding Securities of that series shall be computed as of the
record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.

 

SECTION 8.02                                            Proof of
Execution by Securityholders.

 

Subject
to the provisions of Section 7.01, proof of the execution of any
instrument by a Securityholder (such proof will not require notarization) or his
agent or proxy and proof of the holding by any Person of any of the Securities
shall be sufficient if made in the following manner:

 

(a)                                  The fact and date of the
execution by any such Person of any instrument may be proved in any reasonable
manner acceptable to the Trustee.

 

(b)                                 The ownership of Securities
shall be proved by the Security Register of such Securities or by a certificate
of the Security Registrar thereof.

 

(c)                                  The Trustee may require such
additional proof of any matter referred to in this Section as it shall
deem necessary.

 

SECTION 8.03                                            Who May be
Deemed Owners.

 

Prior
to the due presentment for registration of transfer of any Security, the
Company, the Trustee, any paying agent and any Security Registrar may deem and
treat the Person in whose name such Security shall be registered upon the books
of the Company as the absolute owner of such Security (whether or not such
Security shall be overdue and notwithstanding any notice of ownership or
writing thereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal of (and premium,
if any) and (subject to Section 2.03) interest on such Security and for
all other purposes; and neither the Company nor the Trustee nor any paying agent
nor any Security Registrar shall be affected by any notice to the contrary.

 

SECTION 8.04                                            Certain
Securities Owned by Company Disregarded.

 

In
determining whether the holders of the requisite aggregate principal amount of
Securities of a particular series have concurred in any direction, consent or
waiver under this Indenture, the Securities of that series that are owned by
the Company or any other obligor on the Securities of that series or by any
Person directly or indirectly controlling or controlled by or under common
control with the Company or any other obligor on the 

 

34

 

Securities
of that series 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 of such series that the Trustee actually
knows are so owned shall be so disregarded. The Securities so owned that have
been pledged in good faith may be regarded as Outstanding for the purposes of
this Section, if the pledgee shall establish to the satisfaction of the Trustee
the pledgee’s right so to act with respect to such Securities and that the
pledgee is not a Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any such other
obligor. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.

 

SECTION 8.05                                            Actions Binding
on Future Securityholders.

 

At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the holders of the majority
or percentage in aggregate principal amount of the Securities of a particular
series specified in this Indenture in connection with such action, any holder
of a Security of that series that is shown by the evidence to be included in
the Securities the holders of which have consented to such action may, by
filing written notice with the Trustee, and upon proof of holding as provided
in Section 8.02, 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 Security issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether
or not any notation in regard thereto is made upon such Security. Any action
taken by the holders of the majority or percentage in aggregate principal
amount of the Securities of a particular series specified in this Indenture in
connection with such action shall be conclusively binding upon the Company, the
Trustee and the holders of all the Securities of that series.

 

ARTICLE IX

 

SUPPLEMENTAL INDENTURES

 

SECTION 9.01                                            Supplemental
Indentures Without the Consent of Securityholders.

 

In
addition to any supplemental indenture otherwise authorized by this Indenture,
the Company and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect), without the consent
of the Securityholders, for one or more of the following purposes:

 

(a)                                  to cure any ambiguity,
defect or inconsistency herein or in the Securities of any series;

 

(b)                                 to comply with Article Ten;

 

35

 

(c)                                  to provide for
uncertificated Securities in addition to or in place of certificated
Securities;

 

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

 

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

 

(f)                                    to make any change that does
not adversely affect the rights of any Securityholder in any material respect;
or

 

(g)                                 to provide for the issuance
of and establish the form and terms and conditions of the Securities of any
series as provided in Section 2.01, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or any series of Securities, or to add to the rights of the holders of any
series of Securities.

 

The
Trustee is hereby authorized to join with the Company in the execution of any
such supplemental indenture, and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture that 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 by the Company and the Trustee without the consent of the holders of
any of the Securities at the time Outstanding, notwithstanding any of the
provisions of Section 9.02.

 

SECTION 9.02                                            Supplemental
Indentures With Consent of Securityholders.

 

With
the consent (evidenced as provided in Section 8.01) of the holders of not
less than a majority in aggregate principal amount of the Securities of each
series affected by such supplemental indenture or indentures at the time
Outstanding, the Company, when authorized by Board Resolutions, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as then in effect) 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 not covered by Section 9.01
the rights of the holders of the Securities of such series under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the holders of each Security then Outstanding and
affected thereby, (i) extend the fixed maturity of any Securities of any
series, or reduce the principal amount thereof, or reduce the rate of interest
thereon, or reduce any premium payable upon the redemption thereof or (ii) reduce
the aforesaid percentage of Securities, the holders of which are required to
consent to any such supplemental indenture.

 

36

 

It
shall not be necessary for the consent of the Securityholders of any series
affected thereby 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.

 

SECTION 9.03                                            Effect of
Supplemental Indentures.

 

Upon
the execution of any supplemental indenture pursuant to the provisions of this Article or
of Section 10.01, this Indenture shall, with respect to such series, 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 Company and the holders of Securities
of the 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 9.04                                            Securities
Affected by Supplemental Indentures.

 

Securities
of any series affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions
of this Article or of Section 10.01, may bear a notation in form
approved by the Company, provided such form meets the requirements of any
exchange upon which such series may be listed, as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities
of that series so modified as to conform, in the opinion of the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Securities of that series then
Outstanding.

 

SECTION 9.05                                            Execution of
Supplemental Indentures.

 

Upon
the request of the Company, accompanied by Board Resolutions authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Securityholders required to consent
thereto as aforesaid, the Trustee shall join with the Company 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. The Trustee, subject to the provisions
of Section 7.01, may receive an Opinion of Counsel as conclusive evidence
that any supplemental indenture executed pursuant to this Article is authorized
or permitted by, and conforms to, the terms of this Article and that it is
proper for the Trustee under the provisions of this Article to join in the
execution thereof; provided, however, that such Opinion of Counsel need not be
provided in connection with the execution of a supplemental indenture that
establishes the terms of a series of Securities pursuant to Section 2.01
hereof.

 

37

 

Promptly
after the execution by the Company and the Trustee of any supplemental
indenture pursuant to the provisions of this Section, the Trustee shall
transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Securityholders of all series affected thereby as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

 

ARTICLE X

 

SUCCESSOR ENTITY

 

SECTION 10.01                                      Company May Consolidate,
Etc.

 

Nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of the Company with or into any other Person (whether
or not affiliated with the Company) or successive consolidations or mergers in
which the Company or its successor or successors shall be a party or parties,
or shall prevent any sale, conveyance, transfer or other disposition of the
property of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company or its successor or successors) authorized to
acquire and operate the same; provided, however, the Company hereby covenants
and agrees that, upon any such consolidation or merger (in each case, if the
Company is not the survivor of such transaction), sale, conveyance, transfer or
other disposition, the due and punctual payment of the principal of (premium,
if any) and interest on all of the Securities of all series in accordance with
the terms of each series, according to their tenor, and the due and punctual
performance and observance of all the covenants and conditions of this
Indenture with respect to each series or established with respect to such
series pursuant to Section 2.01 to be kept or performed by the Company
shall be expressly assumed, by supplemental indenture (which shall conform to
the provisions of the Trust Indenture Act as then in effect) satisfactory in
form to the Trustee executed and delivered to the Trustee by the entity formed
by such consolidation, or into which the Company shall have been merged, or by
the entity which shall have acquired such property.

 

SECTION 10.02                                      Successor
Entity Substituted.

 

(a)           In
case of any such consolidation, merger, sale, conveyance, transfer or other
disposition and upon the assumption by the successor entity by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to
the Trustee, of the due and punctual payment of the principal of (and premium,
if any) and interest on all of the Securities of all series Outstanding and the
due and punctual performance of all of the covenants and conditions of this
Indenture or established with respect to each series of the Securities pursuant
to Section 2.01 to be performed by the Company with respect to each
series, such successor entity shall succeed to and be substituted for the
Company with the same effect as if it had been named as the Company herein, and

 

38

 

thereupon the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.

 

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

 

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

 

SECTION 10.03                                      Evidence of
Consolidation, Etc. to Trustee.

 

The
Trustee, subject to the provisions of Section 7.01, may receive an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance, transfer or other disposition, and any such assumption, comply with
the provisions of this Article.

 

ARTICLE XI

 

SATISFACTION AND DISCHARGE

 

SECTION 11.01                                      Satisfaction
and Discharge of Indenture.

 

If
at any time:  (a) the Company shall have delivered to the
Trustee for cancellation all Securities of a series theretofore authenticated
(other than any Securities that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.07) and Securities for
whose payment money or Governmental Obligations have theretofore been deposited
in trust or segregated and held in trust by the Company (and thereupon repaid
to the Company or discharged from such trust, as provided in Section 11.05);
or (b) all such Securities of a particular 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 the Company shall deposit
or cause to be deposited with the Trustee as trust funds the entire amount in
moneys or Governmental Obligations or 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
at maturity or upon redemption all Securities of that series not theretofore delivered
to the Trustee for cancellation, including principal (and premium, if any) and
interest due or to become due to such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to
be paid all other sums payable hereunder with respect to such series by the
Company then this Indenture shall thereupon cease to be of further effect with
respect to such series except for the provisions of Sections 2.03, 2.05, 2.07,
4.01, 4.02, 4.03 and 7.10, that shall survive until the date of maturity or
redemption 

 

39

 

date,
as the case may be, and Sections 7.06 and 11.05, that shall survive to such
date and thereafter, and the Trustee, on demand of the Company and at the cost
and expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture with respect to such series.

 

SECTION 11.02                                      Discharge of
Obligations.

 

If
at any time all such Securities of a particular series not heretofore delivered
to the Trustee for cancellation or that have not become due and payable as
described in Section 11.01 shall have been paid by the Company by
depositing irrevocably with the Trustee as trust funds moneys or an amount of
Governmental Obligations sufficient to pay at maturity or upon redemption all
such Securities of that series not theretofore delivered to the Trustee for
cancellation, including principal (and premium, if any) and interest due or to
become due to such date of maturity or date fixed for redemption, as the case
may be, and if the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company with respect to such series, then after the
date such moneys or Governmental Obligations, as the case may be, are deposited
with the Trustee, the obligations of the Company under this Indenture with
respect to such series shall cease to be of further effect except for the
provisions of Sections 2.03, 2.05, 2.07, 4.01, 4.02, 4.03, 7.06, 7.10 and 11.05
hereof that shall survive until such Securities shall mature and be paid.
Thereafter, Sections 7.06 and 11.05 shall survive.

 

SECTION 11.03                                      Deposited
Moneys to be Held in Trust.

 

All
moneys or Governmental Obligations deposited with the Trustee pursuant to Sections
11.01 or 11.02 shall be held in trust and shall be available for payment as
due, either directly or through any paying agent (including the Company acting
as its own paying agent), to the holders of the particular series of Securities
for the payment or redemption of which such moneys or Governmental Obligations
have been deposited with the Trustee.

 

SECTION 11.04                                      Payment of
Moneys Held by Paying Agents.

 

In
connection with the satisfaction and discharge of this Indenture all moneys or
Governmental Obligations then held by any paying agent under the provisions of
this Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.

 

SECTION 11.05                                      Repayment to
Company.

 

Any
moneys or Governmental Obligations deposited with any paying agent or the
Trustee, or then held by the Company, in trust for payment of principal of (and
premium, if any) or interest on the Securities of a particular series that are
not applied but remain unclaimed by the holders of such Securities for at least
two years after the date upon which the principal of (and premium, if any) or
interest on such Securities shall have respectively become due and payable,
shall be repaid to the Company or (if then held by the Company) shall be
discharged from such trust; and thereupon the paying agent and 

 

40

 

the
Trustee shall be released from all further liability with respect to such
moneys or Governmental Obligations, and the holder of any of the Securities
entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof.

 

ARTICLE XII

 

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

 

SECTION 12.01                                      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 Company or of any predecessor
or successor corporation, either directly or through the Company 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 Company 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.

 

ARTICLE XIII

 

MISCELLANEOUS PROVISIONS

 

SECTION 13.01                                      Effect on
Successors and Assigns.

 

All
the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind its successors and assigns,
whether so expressed or not.

 

SECTION 13.02                                      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 Company shall
and may be done and performed with like force and effect by the corresponding
board, committee 

 

41

 

or
officer of any corporation that shall at the time be the lawful successor of
the Company.

 

SECTION 13.03                                      Notices.

 

Except
as otherwise expressly provided herein any notice or demand that 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 Company may be given
or served by being deposited first class postage prepaid in a post-office
letterbox addressed (until another address is filed in writing by the Company
with the Trustee), as follows: [                    ]. Any notice, election,
request or demand by the Company or any Securityholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made in writing at the Corporate Trust Office of the Trustee.

 

SECTION 13.04                                      Governing Law.

 

This
Indenture and each Security shall be deemed to be a contract made under the
internal laws of the State of New York, and for all purposes shall be construed
in accordance with the laws of said State.

 

SECTION 13.05                                      Compliance
Certificates and Opinions.

 

(a)           Upon
any application or demand by the Company to the Trustee to take any action
under any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers’ 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.

 

(b)           Each
certificate or opinion provided for in this Indenture and delivered to the
Trustee with respect to compliance with a condition or covenant in this
Indenture shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.

 

(c)           The
Company shall furnish to the Trustee, on [       ]
of each year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of such obligor’s compliance with all conditions and covenants under
this Indenture. For purposes of this subsection, such 

 

42

 

compliance shall be determined without regard to any period of grace or
requirement of notice provided hereunder.

 

SECTION 13.06                                      Payments on
Business Days.

 

Except
as provided pursuant to Section 2.01 pursuant to a Board Resolution, and
as set forth in an Officers’ Certificate, or established in one or more
indentures supplemental to this Indenture, in any case where the date of
maturity of interest or principal of any Security or the date of redemption of
any Security shall not be a Business Day, then payment of interest or principal
(and premium, if any) may be made on the next succeeding Business Day with the
same force and effect as if made on the nominal date of maturity or redemption,
and no interest shall accrue for the period after such nominal date.

 

SECTION 13.07                                      Conflict with
Trust Indenture Act.

 

If
and to the extent that any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.

 

SECTION 13.08                                      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 13.09                                      Separability.

 

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.

 

SECTION 13.10                                      Assignment.

 

The
Company will have the right at all times to assign any of its rights or
obligations under this Indenture to a direct or indirect wholly owned
Subsidiary of the Company, provided that, in the event of any such assignment,
the Company will remain liable for all such obligations. Subject to the
foregoing, the Indenture is binding upon and inures to the benefit of the
parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties thereto.

 

43

 

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

 

	
   

  	
  ENERNOC,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                  ],

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title

  

 

44

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