Document:

PLACEMENT
        UNIT AGREEMENT

       

      PLACEMENT
        UNIT AGREEMENT (this
        “Agreement”) made
        as
        of this ___ day of January, 2006 among Argyle Security Acquisition Corporation,
        a Delaware corporation (the “Company”), Rodman & Renshaw, LLC (“Rodman”) and
        the undersigned (the “Purchasers”).

       

      WHEREAS,
        the Company has filed with the Securities and Exchange Commission (“SEC”) a
        registration statement on Form S-1, as amended (File No. 333-126569) (the
        “Registration Statement”), in connection with the Company’s initial public
        offering (the “IPO”) of up to 4,168,750 units, each unit (“Unit”) consisting of
        one share of the Company’s common stock, $.0001 par value (the “Common Stock”),
        and (ii) one warrant (the “Warrants”), each Warrant to purchase one share of
        Common Stock; and

       

      WHEREAS,
        the Company desires to sell in a private placement to the Purchasers (the
        “Placement”) an aggregate of 125,000 units (the “Placement Units”) substantially
        identical to the Units being issued in the IPO pursuant to the terms and
        conditions hereof and as set forth in the Registration Statement, except
        that
        the Placement Units, Common Stock and Warrants to be issued in the Placement
        shall not be registered under the Securities Act of 1933, as amended (the
        “Securities Act”);

       

      WHEREAS,
        each Purchaser desires to acquire the number of Placement Units set forth
        opposite his name on Schedule A hereto;

       

      WHEREAS,
        the Warrants included in the Placement Units shall be governed by the Warrant
        Agreement filed as an exhibit to the Registration Statement; and 

       

      WHEREAS,
        the Purchasers are entitled to registration rights with respect to the Common
        Stock and the Warrants comprising the Placement Units and the Common Stock
        underlying such Warrants (collectively, the “Registrable Securities”) on the
        terms set forth in this Agreement; and 

       

      WHEREAS,
        Rodman is acting as placement agent for the Placement.

       

      NOW,
        THEREFORE, for and in consideration of the premises and the mutual covenants
        hereinafter set forth, the parties hereto do hereby agree as
        follows:

       

      1. Purchase
        of Units.
        The
        Purchasers hereby agree, directly or through nominees, to purchase an aggregate
        of 125,000 Placement Units at a purchase price of $8.00 per Placement Unit,
        or
        an aggregate of $1,000,000 (the “Purchase Price”). Such purchases shall be in
        the names and amounts set forth on Schedule A hereto.

       

      2. Closing.
        The
        closing of the purchase and sale of the Placement Units (the “Closing”) will
        take place at such time and place as the parties may agree (the “Closing Date”),
        but in no event later than the date on which the SEC declares the Registration
        Statement effective (the “Effective Date”). On the Effective Date, the
        Purchasers shall pay the Purchase Price by wire transfer of funds to an account
        maintained by the Company. Immediately prior to the closing of the IPO, the
        Company shall deposit $892,500 of the Purchase Price into the trust account
        described in the Registration Statement (the “Trust Account”). The certificates
        for the Common Stock and Warrants comprising the Placement Units shall be
        delivered to the Purchasers promptly after the closing of the IPO. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3. Placement
        Fees.
        The
        Company agrees that Rodman is entitled to a placement fee equal to equal
        to 6%
        of the Purchase Price. Of such 6% placement fee, Rodman agrees that 4.5%
        of the
        Purchase Price ($45,000) will be deposited into and held in the Trust Account
        and will be payable to Rodman upon the consummation of a Business Combination
        (as defined herein) as described in the Registration Statement.

       

      4. Voting
        of Shares.
        If the
        Company solicits approval of its stockholders of a Business Combination,
        the
        Purchasers shall vote all of the shares of the Common Stock acquired by the
        Purchasers (i) pursuant to this Agreement, (ii) in the IPO and (iii) in the
        aftermarket in favor of the Business Combination and therefore waive any
        redemption rights they might have with respect to certain of such shares.
        As
        used herein, a “Business Combination” shall mean an acquisition by merger,
        capital stock exchange, asset or stock acquisition of, or similar business
        combination with, an operating business in the security industry selected
        by the
        Company.

       

      5. Waiver
        of Liquidation Distributions.
        In
        connection with the Placement Units purchased pursuant to this Agreement,
        the
        Purchasers hereby waive any and all right, title, interest or claim of any
        kind
        in or to any liquidating distributions by the Company in the event of a
        liquidation of the Company upon the Company's failure to timely complete
        a
        Business Combination. For purposes of clarity, any shares of Common Stock
        purchased in the IPO or the aftermarket by the Purchasers shall be eligible
        to
        receive any liquidating distributions by the Company.

       

      6. Lock-Up
        Agreement.
        The
        Purchasers shall not sell, assign, hypothecate, or transfer any of the Common
        Stock purchased pursuant to this Agreement until the earlier of consummation
        of
        a Business Combination or liquidation of the Company. In order to enforce
        this
        covenant, the undersigned agrees, if requested by Rodman, to deposit the
        Placement Units in an account to be established at Rodman.

       

      7. Representations
        and Warranties of the Purchasers.
        Each
        Purchaser hereby represents and warrants to the Company that:

       

      7.1 The
        Purchaser is an “accredited investor” as that term is defined in Rule 501 of
        Regulation D promulgated under the Securities Act.

       

      7.2 The
        Placement Units, Common Stock and Warrants are being acquired for the
        Purchaser’s own account, only for investment purposes and not with a view to, or
        for resale in connection with, any distribution or public offering thereof
        within the meaning of the Securities Act.

       

      7.3 The
        Purchaser has the full right, power and authority to enter into this Agreement
        and this Agreement is a valid and legally binding obligation of the Purchaser
        enforceable against the Purchaser in accordance with its terms.

       

      8. Registration
        Rights.

       

      8.1 Demand
        Registration.
        At any
        time and from time to time on or after the date on which the Company has
        publicly announced that it has entered into a letter of intent or made a
        comparable announcement with respect to a Business Combination, the Purchasers
        or their transferees holding a majority-in-interest of the Registrable
        Securities may make a written demand for registration under the Securities
        Act
        of all or part of their Registrable Securities (a “Demand Registration”). Any
        demand for a Demand Registration shall specify the number of Registrable
        Securities proposed to be sold and the intended method(s) of distribution
        thereof. The Company will notify all holders of Registrable Securities of
        the
        demand, and each holder of Registrable Securities who wishes to include all
        or a
        portion of such holder’s Registrable Securities in the Demand Registration (each
        such holder including shares of Registrable Securities in such registration,
        a
“Demanding Holder”) shall so notify the Company within fifteen (15) days after
        the receipt by the holder of the notice from the Company. Upon any such request,
        the Demanding Holders shall be entitled to have their Registrable Securities
        included in the Demand Registration. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      The
        Company shall, as expeditiously as possible and in any event within sixty
        (60)
        days after receipt of a request for a Demand, prepare and file with the SEC
        a
        Registration Statement on any form for which the Company then qualifies or
        which
        counsel for the Company shall deem appropriate and which form shall be available
        for the sale of all Registrable Securities to be registered thereunder in
        accordance with the intended method(s) of distribution thereof, and shall
        use
        its best efforts to cause such Registration Statement to become effective
        as
        promptly as practicable, but in no event prior to the consummation of the
        Business Combination. 

       

      The
        Company shall not be obligated to effect more than two Demand Registrations
        in
        respect of Registrable Securities.

       

      8.2 “Piggyback”
        Registration Rights.
        Subject
        to the last sentence of this Section 8.2, at any time after a Business
        Combination, if the Company shall determine to proceed with the actual
        preparation and filing of a new registration statement under the Securities
        Act
        in connection with the proposed offer and sale of any of its securities by
        it or
        any of its security holders (other than a registration statement on Form
        S-4,
        S-8 or other limited purpose form), the Company will give written notice
        of its
        determination to the Purchasers or their nominees. Upon the written request
        from
        a majority-in-interest of the Purchasers, within 15 days after receipt of
        any
        such notice from the Company, the Company will, except as herein provided,
        cause
        all of the Registrable Securities covered by such request (the “Requested
        Stock”) held by the Purchasers making such request (the “Requesting Holders”) to
        be included in such registration statement (each, a “Piggy-Back Registration”),
        all to the extent requisite to permit the sale or other disposition by the
        prospective seller or sellers of the Requested Stock; provided, further,
        that
        nothing herein shall prevent the Company from, at any time, abandoning or
        delaying any registration. If any registration pursuant to this Section 8.2
        shall be underwritten in whole or in part, the Company may require that the
        Requested Stock be included in the underwriting on the same terms and conditions
        as the securities otherwise being sold through the underwriters. In such
        event,
        the Requesting Holders shall, if requested by the underwriters, execute an
        underwriting agreement containing customary representations and warranties
        by
        selling stockholders and a lock-up on Registrable Securities not being sold.
        If
        in the good faith judgment of the managing underwriter of such public offering
        the inclusion of all of the Requested Stock would reduce the number of shares
        to
        be offered by the Company or interfere with the successful marketing of the
        shares of stock offered by the Company, the number of shares of Requested
        Stock
        otherwise to be included in the underwritten public offering may be reduced
        pro
        rata (by number of shares) among the Requesting Holders and all other holders
        of
        registration rights who have requested inclusion of their securities or excluded
        in their entirety if so required by the underwriter. To the extent only a
        portion of the Requested Stock is included in the underwritten public offering,
        those shares of Requested Stock which are thus excluded from the underwritten
        public offering and any other securities of the Company held by such holders
        shall be withheld from the market by the Holders thereof for a period, not
        to
        exceed 90 days, which the managing underwriter reasonably determines is
        necessary in order to effect the underwritten public offering. At such time
        as
        the provisions of the registration rights agreement filed as an exhibit to
        the
        Registration Statement covering the shares of Common Stock acquired by the
        Purchasers prior to the IPO may be exercised, the exercise and procedural
        provisions of such agreement, rather than the provisions of Sections 8.2,
        8.3
        and 8.4 hereof, shall govern the Registrable Securities with respect to
        Piggy-Back Registrations.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      8.3 Registration
        Procedures. To the extent required by Sections 8.1 or 8.2, the Company
        will:

       

      (a) prepare
        and file with the SEC a registration statement with respect to such securities,
        and use its best efforts to cause such registration statement to become and
        remain effective until the earlier of the date on which all of the Registrable
        Securities included in the registration statement have been disposed of in
        accordance with the intended method(s) of distribution set forth in such
        Registration Statement or three years from the effective date;

       

      (b) prepare
        and file with the SEC such amendments to such registration statement and
        supplements to the prospectus contained therein as may be necessary to keep
        such
        registration statement effective until the earlier of the date on which all
        of
        the Registrable Securities included in the registration statement have been
        disposed of in accordance with the intended method(s) of distribution set
        forth
        in such Registration Statement or three years from the effective
        date;

       

      (c) furnish
        to the holders participating in such registration and to the underwriters
        of the
        securities being registered such reasonable number of copies of the registration
        statement, preliminary prospectus, final prospectus and such other documents
        as
        such underwriters may reasonably request in order to facilitate the public
        offering of such securities;

       

      (d) use
        its
        best efforts to register or qualify the securities covered by such registration
        statement under such state securities or blue sky laws of such jurisdictions
        as
        the holders may reasonably request in writing within 20 days following the
        original filing of such registration statement, except that the Company shall
        not for any purpose be required to execute a general consent to service of
        process or to qualify to do business as a foreign corporation in any
        jurisdiction wherein it is not so qualified;

       

      (e) notify
        the holders, promptly after it shall receive notice thereof, of the time
        when
        such registration statement has become effective or a supplement to any
        prospectus forming a part of such registration statement has been
        filed;

       

      (f) notify
        the holders promptly of any request by the SEC for the amending or supplementing
        of such registration statement or prospectus or for additional
        information;

       

      (g) prepare
        and promptly file with the SEC and promptly notify such holders of the filing
        of
        such amendment or supplement to such registration statement or prospectus
        as may
        be necessary to correct any statements or omissions if, at the time when
        a
        prospectus relating to such securities is required to be delivered under
        the
        Securities Act, any event shall have occurred as the result of which any
        such
        prospectus or any other prospectus as then in effect would include an untrue
        statement of a material fact or omit to state any material fact necessary
        to
        make the statements therein, in the light of the circumstances in which they
        were made, not misleading; and 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (i) advise
        the holders, promptly after it shall receive notice or obtain knowledge thereof,
        of the issuance of any stop order by the SEC suspending the effectiveness
        of
        such registration statement or the initiation or threatening of any proceeding
        for that purpose and promptly use its best efforts to prevent the issuance
        of
        any stop order or to obtain its withdrawal if such stop order should be
        issued.

       

      The
        Purchasers shall cooperate with the Company in providing the information
        necessary to effect the registration of the Registrable Securities, including
        completion of customary questionnaires. 

       

      8.4 Expenses.
        The
        Company shall bear all costs and expenses incurred in connection with any
        Demand
        Registration pursuant to Section 8.1, any Piggy-Back Registration pursuant
        to
        Section 8.2, and all expenses incurred in performing or complying with its
        other
        obligations under this Agreement, whether or not the Registration Statement
        becomes effective, including, without limitation: (i) all registration and
        filing fees; (ii) fees and expenses of compliance with securities or “blue sky”
        laws (including fees and disbursements of counsel in connection with blue
        sky
        qualifications of the Registrable Securities); (iii) printing expenses; (iv)
        the
        Company’s internal expenses (including, without limitation, all salaries and
        expenses of its officers and employees); (v) the fees and expenses incurred
        in
        connection with the exchange listing of the Registrable Securities; (vi)
        National Association of Securities Dealers, Inc. fees; (vii) fees and
        disbursements of counsel for the Company and fees and expenses for independent
        certified public accountants retained by the Company (including the expenses
        or
        costs associated with the delivery of any opinions or comfort letters); (viii)
        the fees and expenses of any special experts retained by the Company in
        connection with such registration and (ix) the fees and expenses of one legal
        counsel selected by the holders of a majority-in-interest of the Registrable
        Securities included in such registration. The Company shall have no obligation
        to pay any underwriting discounts or selling commissions attributable to
        the
        Registrable Securities being sold by the holders thereof, which underwriting
        discounts or selling commissions shall be borne by such holders. Additionally,
        in an underwritten offering, all selling shareholders and the Company shall
        bear
        the expenses of the underwriter pro rata in proportion to the respective
        amount
        of shares each is selling in such offering.

       

      9. Waiver
        and Indemnification.
        The
        Purchasers hereby waive any and all rights to assert any present or future
        claims, including any right of rescission, against the Company, Rodman or
        the
        other underwriters in the IPO with respect to their purchase of the Placement
        Units, and each Purchaser agrees jointly and severally to indemnify and hold
        the
        Company, Rodman and the other underwriters in the IPO harmless from all losses,
        damages or expenses that relate to claims or proceedings brought against
        the
        Company, Rodman or such other underwriters by any Purchaser of the Placement
        Units or their transferees, heirs, assigns or any subsequent holders of the
        Placement Units.

       

      10. Counterparts;
        Facsimile.
        This
        Agreement may be executed in any number of counterparts, each of which when
        so
        executed shall be deemed to be an original and all of which taken together
        shall
        constitute one and the same instrument. This Agreement or any counterpart
        may be
        executed via facsimile transmission, and any such executed facsimile copy
        shall
        be treated as an original.

       

      11.Governing
        Law.
        This
        Agreement shall for all purposes be deemed to be made under and shall be
        construed in accordance with the laws of the State of New York. Each of the
        parties hereby agrees that any action, proceeding or claim against it arising
        out of or relating in any way to this Agreement shall be brought and enforced
        in
        the courts of the State of New York or the United States District Court for
        the
        Southern District of New York, and irrevocably submits to such jurisdiction,
        which jurisdiction shall be exclusive. Each of the parties hereby waives
        any
        objection to such exclusive jurisdiction and that such courts represent an
        inconvenient forum.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the undersigned have executed this Agreement as of the __
        day
        of December, 2005.

       

      ARGYLE
        SECURITY ACQUISITION CORPORATION

       

      By:
        __________________________________________

       

      Bob
        Marbut, Chairman and CEO

       

      RODMAN
        & RENSHAW, LLC

       

      By:
        __________________________________________

       

       

       

      ARGYLE
        NEW VENTURES L.P.

       

      By:
        Argyle Communications Inc., its general partner

       

      By:
        ________________________

       

      Name:
        Bob
        Marbut

       

      Title:
        

       

      ARGYLE
        JOINT VENTURE

       

      By:________________________

       

      Bob
        Marbut, ___________

       

      

      ________________________

      Ron
        Chaimovski

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        A

       

      
Argyle
        New Ventures L.P.

       

      Argyle
        Joint Venture

       

      Ron Chaimovski

      
 

      
        
          
          

        

        
          7EXHIBIT
      4.1

     

    CERADYNE,
      INC.

     

    _____________________

     

    INDENTURE

     

    Dated
      as of December 19, 2005

     

    _____________________

     

    UNION
      BANK OF CALIFORNIA, N.A.

     

    Trustee

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TABLE
      OF CONTENTS

    

      Page

      
        	
              
	
                
                  ARTICLE
                    I

                  DEFINITIONS
                    AND INCORPORATION BY REFERENCE

                

              
	
                Section
                  1.1.

              	
                Definitions.

              	
                1

              
	
                Section
                  1.2.

              	
                Other
                  Definitions.

              	
                5

              
	
                Section
                  1.3.

              	
                Incorporation
                  by Reference of Trust Indenture Act

              	
                5

              
	
                Section
                  1.4.

              	
                Rules
                  of Construction

              	
                5

              
	 
	
                ARTICLE
                  II

                THE
                  SECURITIES

              
	
                Section
                  2.1.

              	
                Issuable
                  in Series

              	
                6

              
	
                Section
                  2.2.

              	
                Establishment
                  of Terms of Series of Securities

              	
                6

              
	
                Section
                  2.3.

              	
                Execution
                  and Authentication

              	
                8

              
	
                Section
                  2.4.

              	
                Registrar
                  and Paying Agent

              	
                9

              
	
                Section
                  2.5.

              	
                Paying
                  Agent to Hold Money in Trust

              	
                9

              
	
                Section
                  2.6.

              	
                Securityholder
                  Lists

              	
                10

              
	
                Section
                  2.7.

              	
                Transfer
                  and Exchange

              	
                10

              
	
                Section
                  2.8.

              	
                Mutilated,
                  Destroyed, Lost and Stolen Securities

              	
                10

              
	
                Section
                  2.9.

              	
                Outstanding
                  Securities

              	
                11

              
	
                Section
                  2.10.

              	
                Treasury
                  Securities

              	
                11

              
	
                Section
                  2.11.

              	
                Temporary
                  Securities

              	
                12

              
	
                Section
                  2.12.

              	
                Cancellation

              	
                12

              
	
                Section
                  2.13.

              	
                Defaulted
                  Interest

              	
                12

              
	
                Section
                  2.14.

              	
                Global
                  Securities.

              	
                12

              

         

        
          	
                  ARTICLE
                    III

                  REDEMPTION

                
	
                  Section
                    3.1.

                	
                  Notice
                    to Trustee

                	
                  13

                
	
                  Section
                    3.2.

                	
                  Selection
                    of Securities to be Redeemed

                	
                  14

                
	
                  Section
                    3.3.

                	
                  Notice
                    of Redemption

                	
                  14

                
	
                  Section
                    3.4.

                	
                  Effect
                    of Notice of Redemption

                	
                  14

                
	
                  Section
                    3.5.

                	
                  Deposit
                    of Redemption Price

                	
                  14

                
	
                  Section
                    3.6.

                	
                  Securities
                    Redeemed in Part

                	
                  15

                
	 
	
                  ARTICLE
                    IV

                  COVENANTS

                
	
                  Section
                    4.1.

                	
                  Payment
                    of Principal and Interest

                	
                  15

                
	
                  Section
                    4.2.

                	
                  SEC
                    Reports

                	
                  15

                
	
                  Section
                    4.3.

                	
                  Compliance
                    Certificate

                	
                  15

                
	
                  Section
                    4.4.

                	
                  Stay,
                    Extension and Usury Laws

                	
                  15

                
	
                  Section
                    4.5.

                	
                  Corporate
                    Existence

                	
                  15

                
	
                  Section
                    4.6.

                	
                  Taxes

                	
                  16

                

        

         

         

        
          
             

          

          
            -i-

            
              

            

          

          
             

          

        

        
           

          TABLE
            OF CONTENTS

          

            Page

          

        

        
          	 
	
                  ARTICLE
                    V

                  SUCCESSORS

                
	
                  Section
                    5.1.

                	
                  When
                    Company May Merge, Etc

                	
                  16

                
	
                  Section
                    5.2.

                	
                  Successor
                    Corporation Substituted

                	
                  16

                
	 
	
                  ARTICLE
                    VI

                  DEFAULTS
                    AND REMEDIES

                
	
                  Section
                    6.1.

                	
                  Events
                    of Default

                	
                  16

                
	
                  Section
                    6.2.

                	
                  Acceleration
                    of Maturity; Rescission and Annulment

                	
                  18

                
	
                  Section
                    6.3.

                	
                  Collection
                    of Indebtedness and Suits for Enforcement by Trustee

                	
                  19

                
	
                  Section
                    6.4.

                	
                  Trustee
                    May File Proofs of Claim

                	
                  19

                
	
                  Section
                    6.5.

                	
                  Trustee
                    May Enforce Claims Without Possession of Securities

                	
                  20

                
	
                  Section
                    6.6.

                	
                  Application
                    of Money Collected

                	
                  20

                
	
                  Section
                    6.7.

                	
                  Limitation
                    on Suits

                	
                  20

                
	
                  Section
                    6.8.

                	
                  Unconditional
                    Right of Holders to Receive Principal and Interest

                	
                  21

                
	
                  Section
                    6.9.

                	
                  Restoration
                    of Rights and Remedies

                	
                  21

                
	
                  Section
                    6.10.

                	
                  Rights
                    and Remedies Cumulative

                	
                  21

                
	
                  Section
                    6.11.

                	
                  Delay
                    or Omission Not Waiver

                	
                  21

                
	
                  Section
                    6.12.

                	
                  Control
                    by Holders

                	
                  22

                
	
                  Section
                    6.13.

                	
                  Waiver
                    of Past Defaults

                	
                  22

                
	
                  Section
                    6.14.

                	
                  Undertaking
                    For Costs

                	
                  22

                
	 
	
                  ARTICLE
                    VII

                  TRUSTEE

                
	
                  Section
                    7.1.

                	
                  Duties
                    of Trustee.

                	
                  22

                
	
                  Section
                    7.2.

                	
                  Rights
                    of Trustee.

                	
                  24

                
	
                  Section
                    7.3.

                	
                  Individual
                    Rights of Trustee

                	
                  24

                
	
                  Section
                    7.4.

                	
                  Trustee’s
                    Disclaimer

                	
                  24

                
	
                  Section
                    7.5.

                	
                  Notice
                    of Defaults

                	
                  24

                
	
                  Section
                    7.6.

                	
                  Reports
                    by Trustee to Holders

                	
                  25

                
	
                  Section
                    7.7.

                	
                  Compensation
                    and Indemnity

                	
                  25

                
	
                  Section
                    7.8.

                	
                  Replacement
                    of Trustee

                	
                  25

                
	
                  Section
                    7.9.

                	
                  Successor
                    Trustee by Merger, Etc

                	
                  26

                
	
                  Section
                    7.10.

                	
                  Eligibility;
                    Disqualification

                	
                  26

                
	
                  Section
                    7.11.

                	
                  Preferential
                    Collection of Claims Against Company

                	
                  27

                
	 
	
                  ARTICLE
                    VIII

                  SATISFACTION
                    AND DISCHARGE; DEFEASANCE

                
	
                  Section
                    8.1.

                	
                  Satisfaction
                    and Discharge of Indenture

                	
                  27

                
	
                  Section
                    8.2.

                	
                  Application
                    of Trust Funds; Indemnification.

                	
                  28

                
	
                  Section
                    8.3.

                	
                  Legal
                    Defeasance of Securities of Any Series

                	
                  28

                
	
                  Section
                    8.4.

                	
                  Covenant
                    Defeasance

                	
                  30

                
	
                  Section
                    8.5.

                	
                  Repayment
                    to Company

                	
                  31

                

           

           

          
            
               

            

            
              -ii-

              
                

              

            

            
               

            

          

           

          
            TABLE
              OF CONTENTS

            

              Page

            

          

          
            	 
	
                    ARTICLE
                      IX

                    AMENDMENTS
                      AND WAIVERS

                  
	
                    Section
                      9.1.

                  	
                    Without
                      Consent of Holders

                  	
                    31

                  
	
                    Section
                      9.2.

                  	
                    With
                      Consent of Holders

                  	
                    31

                  
	
                    Section
                      9.3.

                  	
                    Limitations

                  	
                    32

                  
	
                    Section
                      9.4.

                  	
                    Compliance
                      with Trust Indenture Act

                  	
                    32

                  
	
                    Section
                      9.5.

                  	
                    Revocation
                      and Effect of Consents

                  	
                    32

                  
	
                    Section
                      9.6.

                  	
                    Notation
                      on or Exchange of Securities

                  	
                    33

                  
	
                    Section
                      9.7.

                  	
                    Trustee
                      Protected

                  	
                    33

                  
	 
	
                    ARTICLE
                      X

                    MISCELLANEOUS

                  
	
                    Section
                      10.1.

                  	
                    Trust
                      Indenture Act Controls

                  	
                    33

                  
	
                    Section
                      10.2.

                  	
                    Notices

                  	
                    33

                  
	
                    Section
                      10.3.

                  	
                    Communication
                      by Holders with other Holders

                  	
                    34

                  
	
                    Section
                      10.4.

                  	
                    Certificate
                      and Opinion as to Conditions Precedent

                  	
                    34

                  
	
                    Section
                      10.5.

                  	
                    Statements
                      Required in Certificate or Opinion

                  	
                    34

                  
	
                    Section
                      10.6.

                  	
                    Rules
                      by Trustee and Agents

                  	
                    35

                  
	
                    Section
                      10.7.

                  	
                    Legal
                      Holidays

                  	
                    35

                  
	
                    Section
                      10.8.

                  	
                    No
                      Recourse Against Others

                  	
                    35

                  
	
                    Section
                      10.9.

                  	
                    Counterparts

                  	
                    35

                  
	
                    Section
                      10.10.

                  	
                    Governing
                      Laws

                  	
                    35

                  
	
                    Section
                      10.11.

                  	
                    No
                      Adverse Interpretation of Other Agreements

                  	
                    35

                  
	
                    Section
                      10.12.

                  	
                    Successors

                  	
                    35

                  
	
                    Section
                      10.13.

                  	
                    Severability

                  	
                    35

                  
	
                    Section
                      10.14.

                  	
                    Table
                      of Contents, Headings, Etc

                  	
                    35

                  
	
                    Section
                      10.15.

                  	
                    Securities
                      in a Foreign Currency or in ECU

                  	
                    35

                  
	
                    Section
                      10.16.

                  	
                    Judgment
                      Currency

                  	
                    36

                  
	 
	
                    ARTICLE
                      XI

                    SINKING
                      FUNDS

                  
	
                    Section
                      11.1.

                  	
                    Applicability
                      of Article

                  	
                    37

                  
	
                    Section
                      11.2.

                  	
                    Satisfaction
                      of Sinking Fund Payments with Securities

                  	
                    37

                  
	
                    Section
                      11.3.

                  	
                    Redemption
                      of Securities for Sinking Fund

                  	
                    37

                  

          

        

      

      

       

    

    
      
         

      

      
        -iii-

        
          

        

      

      
         

      

    

     

    CERADYNE,
      INC.

     

    Reconciliation
      and tie between Trust Indenture Act of 1939 and 

    Indenture,
      dated as of December 19, 2005

    
      
        	 	 	 
	
                Section.
                  310(a)(1)

              	 	
                7.10

              
	
                (a)(2)

              	 	
                7.10

              
	
                (a)(3)

              	 	
                Not
                  Applicable

              
	
                (a)(4)

              	 	
                Not
                  Applicable

              
	
                (a)(5)

              	 	
                7.10

              
	
                (b)

              	 	
                7.10

              
	
                Section.
                  311(a)

              	 	
                7.11

              
	
                (b)

              	 	
                7.11

              
	
                (c)

              	 	
                Not
                  Applicable

              
	
                Section.
                  312(a)

              	 	
                2.6

              
	
                (b)

              	 	
                10.3

              
	
                (c)

              	 	
                10.3

              
	
                Section.
                  313(a)

              	 	
                7.6

              
	
                (b)(1)

              	 	
                7.6

              
	
                (b)(2)

              	 	
                7.6

              
	
                (c)(1)

              	 	
                7.6

              
	
                (d)

              	 	
                7.6

              
	
                Section.
                  314(a)

              	 	
                4.2,
                  10.5

              
	
                (b)

              	 	
                Not
                  Applicable

              
	
                (c)(1)

              	 	
                10.4

              
	
                (c)(2)

              	 	
                10.4

              
	
                (c)(3)

              	 	
                Not
                  Applicable

              
	
                (d)

              	 	
                Not
                  Applicable

              
	
                (e)

              	 	
                10.5

              
	
                (f)

              	 	
                Not
                  Applicable

              
	
                Section.
                  315(a)

              	 	
                7.1

              
	
                (b)

              	 	
                7.5

              
	
                (c)

              	 	
                7.1

              
	
                (d)

              	 	
                7.1

              
	
                (e)

              	 	
                6.14

              
	
                Section.
                  316(a)

              	 	
                2.10

              
	
                (a)(1)(A)

              	 	
                6.12

              
	
                (a)(1)(B)

              	 	
                6.13

              
	
                (b)

              	 	
                6.8

              
	
                Section.
                  317(a)(1)

              	 	
                6.3

              
	
                (a)(2)

              	 	
                6.4

              
	
                (b)

              	 	
                2.5

              
	
                Section.
                  318(a)

              	 	
                10.1

              

      

    

    

 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Indenture
      dated as of December 19, 2005 between Ceradyne, Inc., a Delaware corporation
      (“Company”), and Union Bank of California, N.A., a national banking association
      (“Trustee”).

     

    Each
      party agrees as follows for the benefit of the other party and for the equal
      and
      ratable benefit of the Holders of the Securities issued under this
      Indenture.

     

    ARTICLE
      I

    DEFINITIONS
      AND INCORPORATION BY REFERENCE

     

    Section
      1.1.  Definitions.

     

    “Additional
      Amounts” means any additional amounts which are required hereby or by any
      Security, under circumstances specified herein or therein, to be paid by the
      Company in respect of certain taxes imposed on Holders specified therein and
      which are owing to such Holders.

     

    “Affiliate”
      of any specified person means any other person directly or indirectly
      controlling or controlled by or under direct or indirect common control with
      such specified person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
      common control with”), as used with respect to any person, shall mean the
      possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of such person, whether through the
      ownership of voting securities or by agreement or otherwise.

     

    “Agent”
      means any Registrar, Paying Agent or Service Agent.

     

    “Authorized
      Newspaper” means a newspaper in an official language of the country of
      publication customarily published at least once a day for at least five days
      in
      each calendar week and of general circulation in the place in connection with
      which the term is used. If it shall be impractical in the opinion of the Trustee
      to make any publication of any notice required hereby in an Authorized
      Newspaper, any publication or other notice in lieu thereof that is made or
      given
      by the Trustee shall constitute a sufficient publication of such
      notice.

     

    “Bearer”
      means anyone in possession from time to time of a Bearer Security.

     

    “Bearer
      Security” means any Security, including any interest coupon appertaining
      thereto, that does not provide for the identification of the Holder
      thereof.

     

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

     

    “Board
      Resolution” means a copy of a resolution certified by the Secretary or an
      Assistant Secretary of the Company to have been adopted by the Board of
      Directors or pursuant to authorization by the Board of Directors and to be
      in
      full force and effect on the date of the certificate and delivered to the
      Trustee.

     

    “Business
      Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate
      or supplemental indenture hereto for a particular Series, any day except a
      Saturday, Sunday or a legal holiday in The City of New York or The City of
      Costa
      Mesa, California on which banking institutions are authorized or required by
      law, regulation or executive order to close.

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    “Company”
      means the party named as such above until a successor replaces it and thereafter
      means the successor.

     

    “Company
      Order” means a written order signed in the name of the Company by two Officers,
      one of whom must be the Company’s principal executive officer, principal
      financial officer or principal accounting officer.

     

    “Company
      Request” means a written request signed in the name of the Company by any
      Officer and delivered to the Trustee.

     

    “Corporate
      Trust Office” means the office of the Trustee at which at any particular time
      its corporate trust business shall be principally administered.

     

    “Default”
      means any event which is, or after notice or passage of time or both would
      be,
      an Event of Default.

     

    “Depository”
      means, with respect to the Securities of any Series issuable or issued in whole
      or in part in the form of one or more Global Securities, the person designated
      as Depository for such Series by the Company, which Depository shall be a
      clearing agency registered under the Exchange Act; and if at any time there
      is
      more than one such person, “Depository” as used with respect to the Securities
      of any Series shall mean the Depository with respect to the Securities of such
      Series.

     

    “Discount
      Security” means any Security that provides for an amount less than the stated
      principal amount thereof to be due and payable upon declaration of acceleration
      of the maturity thereof pursuant to Section 6.2.

     

    “Dollars”
      means the currency of the United States of America.

     

    “ECU”
      means the European Currency Unit as determined by the Commission of the European
      Union.

     

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

     

    “Foreign
      Currency” means any currency or currency unit issued by a government other than
      the government of the United States of America.

     

    “Foreign
      Government Obligations” means with respect to Securities of any Series that are
      denominated in a Foreign Currency, (i) direct obligations of the government
      that issued or caused to be issued such currency for the payment of which
      obligations its full faith and credit is pledged or (ii) obligations of a
      person controlled or supervised by or acting as an agency or instrumentality
      of
      such government the timely payment of which is unconditionally guaranteed as
      a
      full faith and credit obligation by such government, which, in either case
      under
      clauses (i) or (ii), are not callable or redeemable at the option of the issuer
      thereof.

     

    “Global
      Security” or “Global Securities” means a Security or Securities, as the case may
      be, in the form established pursuant to Section 2.2 evidencing all or part
      of a Series of Securities, issued to the Depository for such Series or its
      nominee, and registered in the name of such Depository or nominee.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    “Holder”
      or “Securityholder” means a person in whose name a Security is registered or the
      holder of a Bearer Security.

     

    “Indenture”
      means this Indenture as amended or supplemented from time to time and shall
      include the form and terms of particular Series of Securities established as
      contemplated hereunder.

     

    “interest”
      with respect to any Discount Security which by its terms bears interest only
      after Maturity, means interest payable after Maturity.

     

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

     

    “Officer”
      means the Chairman of the Board, any President, any Vice-President, the Chief
      Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer or
      any
      Assistant Secretary of the Company.

     

    “Officers’
      Certificate” means a certificate signed by two Officers, one of whom must be the
      Company’s principal executive officer, principal financial officer or principal
      accounting officer.

     

    “Opinion
      of Counsel” means a written opinion of legal counsel who is acceptable to the
      Trustee. The counsel may be an employee of or counsel to the
      Company.

     

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

     

    “principal”
      of a Security means the principal of the Security plus, when appropriate, the
      premium, if any, on, and any Additional Amounts in respect of, the
      Security.

     

    “Responsible
      Officer” means any officer of the Trustee in its Corporate Trust Office and also
      means, with respect to a particular corporate trust matter, any other officer
      to
      whom any corporate trust matter is referred because of his or her knowledge
      of
      and familiarity with a particular subject.

     

    “SEC”
      means the Securities and Exchange Commission.

     

    “Securities”
      means the debentures, notes or other debt instruments of the Company of any
      Series authenticated and delivered under this Indenture.

     

    “Series”
      or “Series of Securities” means each series of debentures, notes or other debt
      instruments of the Company created pursuant to Sections 2.1 and 2.2
      hereof.

     

    “Significant
      Subsidiary” means (i) any direct or indirect Subsidiary of the Company that
      would be a “significant subsidiary” as defined in Article 1, Rule 1-02
      of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as
      amended, as such regulation is in effect on the date hereof, or (ii) any
      group of direct or indirect Subsidiaries of the Company that, taken together
      as
      a group, would be a “significant subsidiary” as defined in Article 1,
      Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities
      Act of 1933, as amended, as such regulation is in effect on the date
      hereof.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

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

     

    “Subsidiary”
      of any specified person means any corporation of which at least a majority
      of
      the outstanding stock having by the terms thereof ordinary voting power for
      the
      election of directors of such corporation (irrespective of whether or not at
      the
      time stock of any other class or classes of such corporation shall have or
      might
      have voting power by reason of the happening of any contingency) is at the
      time
      directly or indirectly owned by such person, or by one or more other
      Subsidiaries, or by such person and one or more other Subsidiaries.

     

    “TIA”
      means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb)
      as in effect on the date of this Indenture; provided, however, that in the
      event
      the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the
      extent required by any such amendment, the Trust Indenture Act as so
      amended.

     

    “Trustee”
      means the person named as the “Trustee” in the first paragraph of this
      instrument until a successor Trustee shall have become such pursuant to the
      applicable provisions of this Indenture, and thereafter “Trustee” shall mean or
      include each person who is then a Trustee hereunder, and if at any time there
      is
      more than one such person, “Trustee” as used with respect to the Securities of
      any Series shall mean the Trustee with respect to Securities of that
      Series.

     

    “U.S.
      Government Obligations” means securities which 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 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, and which in the case of (i) and
      (ii) are not callable or redeemable at the option of the issuer thereof, and
      shall also include a depository receipt issued by a bank or trust company as
      custodian with respect to any such U.S. Government Obligation or a specific
      payment of interest on or principal of any such U.S. Government Obligation
      held
      by such custodian for the account of the holder of a depository receipt,
      provided that (except as required by law) such custodian is not authorized
      to
      make any deduction from the amount payable to the holder of such depository
      receipt from any amount received by the custodian in respect of the U.S.
      Government Obligation evidenced by such depository receipt.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    Section
      1.2.  Other
      Definitions.

     

    
      	
              Term

            	 	
              Defined
                in Section

            	 
	
              “Bankruptcy
                Law”

            	 	 	
              6.1

            	 
	
              “Custodian”

            	 	 	
              6.1

            	 
	
              “Event
                of Default”

            	 	 	
              6.1

            	 
	
              “Journal”

            	 	 	
              10.15

            	 
	
              “Judgment
                Currency”

            	 	 	
              10.16

            	 
	
              “Legal
                Holiday”

            	 	 	
              10.7

            	 
	
              “mandatory
                sinking fund payment”

            	 	 	
              11.1

            	 
	
              “Market
                Exchange Rate”

            	 	 	
              10.15

            	 
	
              “New
                York Banking Day”

            	 	 	
              10.16

            	 
	
              “optional
                sinking fund payment”

            	 	 	
              11.1

            	 
	
              “Paying
                Agent”

            	 	 	
              2.4

            	 
	
              “Registrar”

            	 	 	
              2.4

            	 
	
              “Required
                Currency”

            	 	 	
              10.16

            	 
	
              “Service
                Agent”

            	 	 	
              2.4

            	 
	
              “successor
                person”

            	 	 	
              5.1

            	 

    

    

    Section
      1.3.  Incorporation
      by Reference of Trust Indenture Act.
      Whenever this Indenture refers to a provision of the TIA, the provision is
      incorporated by reference in and made a part of this Indenture. The following
      TIA terms used in this Indenture have the following meanings:

     

    “Commission”
      means the SEC.

     

    “indenture
      securities” means the Securities.

     

    “indenture
      security holder” means a Securityholder.

     

    “indenture
      to be qualified” means this Indenture.

     

    “indenture
      trustee” or “institutional trustee” means the Trustee.

     

    “obligor”
      on the indenture securities means the Company and any successor obligor upon
      the
      Securities.

     

    All
      other
      terms used in this Indenture that are defined by the TIA, defined by TIA
      reference to another statute or defined by SEC rule under the TIA and not
      otherwise defined herein are used herein as so defined.

     

    Section
      1.4.  Rules
      of Construction.
      Unless
      the context otherwise requires:

     

    (a)  a
      term
      has the meaning assigned to it;

     

    (b)  an
      accounting term not otherwise defined has the meaning assigned to it in
      accordance with generally accepted accounting principles;

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (c)  references
      to “generally accepted accounting principles” shall mean generally accepted
      accounting principles in effect as of the time when and for the period as to
      which such accounting principles are to be applied;

     

    (d)  “or”
is
      not exclusive;

     

    (e)  words
      in
      the singular include the plural, and in the plural include the singular;
      and

     

    (f)  provisions
      apply to successive events and transactions.

     

    ARTICLE
      II

    THE
      SECURITIES

     

    Section
      2.1.  Issuable
      in Series.
      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. All Securities of a Series shall be identical except as may be set
      forth
      in a Board Resolution, a supplemental indenture or an Officers’ Certificate
      detailing the adoption of the terms thereof pursuant to the authority granted
      under a Board Resolution. In the case of Securities of a Series to be issued
      from time to time, the Board Resolution, Officers’ Certificate or supplemental
      indenture may provide for the method by which specified terms (such as interest
      rate, maturity date, record date or date from which interest shall accrue)
      are
      to be determined. Securities may differ between Series in respect of any
      matters, provided that all Series of Securities shall be equally and ratably
      entitled to the benefits of the Indenture.

     

    Section
      2.2.  Establishment
      of Terms of Series of Securities.
      At or
      prior to the issuance of any Securities within a Series, the following shall
      be
      established (as to the Series generally, in the case of Subsection 2.2.1 and
      either as to such Securities within the Series or as to the Series generally
      in
      the case of Subsections 2.2.2 through 2.2.21) by a Board Resolution, a
      supplemental indenture or an Officers’ Certificate pursuant to authority granted
      under a Board Resolution:

     

    2.2.1.  the
      title
      of the Series (which shall distinguish the Securities of that particular Series
      from the Securities of any other Series); 

     

    2.2.2.  the
      price
      or prices (expressed as a percentage of the principal amount thereof) at which
      the Securities of the Series will be issued; 

     

    2.2.3.  any
      limit
      upon the aggregate principal amount of the Securities of the Series which may
      be
      authenticated and delivered under this Indenture (except for Securities
      authenticated and delivered upon registration of transfer of, or in exchange
      for, or in lieu of, other Securities of the Series pursuant to Section 2.7,
      2.8, 2.11, 3.6 or 9.6);

     

    2.2.4.  the
      date
      or dates on which the principal of the Securities of the Series is
      payable;

     

    2.2.5.  the
      rate
      or rates (which may be fixed or variable) per annum or, if applicable, the
      method used to determine such rate or rates (including, but not limited to,
      any
      commodity, commodity index, stock exchange index or financial index) at which
      the Securities of the Series shall bear interest, if any, the date or dates
      from
      which such interest, if any, shall accrue, the date or dates on which such
      interest, if any, shall commence and be payable and any regular record date
      for
      the interest payable on any interest payment date;

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    2.2.6.  the
      place
      or places where the principal of and interest, if any, on the Securities of
      the
      Series shall be payable, or the method of such payment, if by wire transfer,
      mail or other means;

     

    2.2.7.  if
      applicable, the period or periods within which, the price or prices at which
      and
      the terms and conditions upon which the Securities of the Series may be
      redeemed, in whole or in part, at the option of the Company; 

     

    2.2.8.  the
      obligation, if any, of the Company to redeem or purchase the Securities of
      the
      Series pursuant to any sinking fund or analogous provisions 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;

     

    2.2.9.  the
      dates, if any, on which and the price or prices at which the Securities of
      the
      Series will be repurchased by the Company at the option of the Holders thereof
      and other detailed terms and provisions of such repurchase
      obligations;

     

    2.2.10.  if
      other
      than denominations of $1,000 and any integral multiple thereof, the
      denominations in which the Securities of the Series shall be
      issuable;

     

    2.2.11.  the
      forms
      of the Securities of the Series in bearer or fully registered form (and, if
      in
      fully registered form, whether the Securities will be issuable as Global
      Securities);

     

    2.2.12.  if
      other
      than the principal amount thereof, the portion of the principal amount of the
      Securities of the Series that shall be payable upon declaration of acceleration
      of the maturity thereof pursuant to Section 6.2; 

     

    2.2.13.  the
      currency of denomination of the Securities of the Series, which may be Dollars
      or any Foreign Currency, including, but not limited to, the ECU, and if such
      currency of denomination is a composite currency other than the ECU, the agency
      or organization, if any, responsible for overseeing such composite
      currency;

     

    2.2.14.  the
      designation of the currency, currencies or currency units in which payment
      of
      the principal of and interest, if any, on the Securities of the Series will
      be
      made;

     

    2.2.15.  if
      payments of principal of or interest, if any, on the Securities of the Series
      are to be made in one or more currencies or currency units other than that
      or
      those in which such Securities are denominated, the manner in which the exchange
      rate with respect to such payments will be determined;

     

    2.2.16.  the
      manner in which the amounts of payment of principal of or interest, if any,
      on
      the Securities of the Series will be determined, if such amounts may be
      determined by reference to an index based on a currency or currencies or by
      reference to a commodity, commodity index, stock exchange index or financial
      index;

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    2.2.17.  the
      provisions, if any, relating to any security provided for the Securities of
      the
      Series;

     

    2.2.18.  any
      addition to or change in the Events of Default which applies to any Securities
      of the Series and any change in the right of the Trustee or the requisite
      Holders of such Securities to declare the principal amount thereof due and
      payable pursuant to Section 6.2;

     

    2.2.19.  any
      addition to or change in the covenants set forth in Articles IV or V which
      applies to Securities of the Series;

     

    2.2.20.  any
      other
      terms of the Securities of the Series (which terms shall not be inconsistent
      with the provisions of this Indenture, except as permitted by Section 9.1,
      but which may modify or delete any provision of this Indenture insofar as it
      applies to such Series); and

     

    2.2.21.  any
      depositories, interest rate calculation agents, exchange rate calculation agents
      or other agents with respect to Securities of such Series if other than those
      appointed herein.

     

    All
      Securities of any one Series need not be issued at the same time and may be
      issued from time to time, consistent with the terms of this Indenture, if so
      provided by or pursuant to the Board Resolution, supplemental indenture or
      Officers’ Certificate referred to above, and the authorized principal amount of
      any Series may not be increased to provide for issuances of additional
      Securities of such Series, unless otherwise provided in such Board Resolution,
      supplemental indenture or Officers’ Certificate.

     

    Section
      2.3.  Execution
      and Authentication.
      Two
      Officers shall sign the Securities for the Company by manual or facsimile
      signature.

     

    If
      an
      Officer whose signature is on a Security no longer holds that office at the
      time
      the Security is authenticated, the Security shall nevertheless be
      valid.

     

    A
      Security shall not be valid until authenticated by the manual signature of
      the
      Trustee or an authenticating agent. The signature shall be conclusive evidence
      that the Security has been authenticated under this Indenture.

     

    The
      Trustee shall at any time, and from time to time, authenticate Securities for
      original issue in the principal amount provided in the Board Resolution,
      supplemental indenture hereto or Officers’ Certificate, upon receipt by the
      Trustee of a Company Order. Such Company Order may authorize authentication
      and
      delivery pursuant to oral or electronic instructions from the Company or its
      duly authorized agent or agents, which oral instructions shall be promptly
      confirmed in writing. Each Security shall be dated the date of its
      authentication unless otherwise provided by a Board Resolution, a supplemental
      indenture hereto or an Officers’ Certificate.

     

    The
      aggregate principal amount of Securities of any Series outstanding at any time
      may not exceed any limit upon the maximum principal amount for such Series
      set
      forth in the Board Resolution, supplemental indenture hereto or Officers’
Certificate delivered pursuant to Section 2.2, except as provided in
      Section 2.8.

     

    Prior
      to
      the issuance of Securities of any Series, the Trustee shall have received and
      (subject to Section 7.2) shall be fully protected in relying on:
      (a) the Board Resolution, supplemental indenture hereto or Officers’
Certificate establishing the form of Securities of that Series or of Securities
      within that Series and the terms of Securities of that Series or of Securities
      within that Series, (b) an Officers’ Certificate complying with
      Section 10.4, and (c) an Opinion of Counsel complying with
      Section 10.4.

     

    
      
         

      

      
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    The
      Trustee shall have the right to decline to authenticate and deliver any
      Securities of such Series: (a) if the Trustee, being advised by counsel,
      determines that such action may not lawfully be taken; or (b) if the
      Trustee in good faith by its board of directors or trustees, executive committee
      or a trust committee of directors and/or vice-presidents shall determine that
      such action would expose the Trustee to personal liability to Holders of any
      then outstanding Series of Securities.

     

    The
      Trustee may appoint an authenticating agent acceptable to the Company to
      authenticate Securities. An authenticating agent may authenticate Securities
      whenever the Trustee may do so. Each reference in this Indenture to
      authentication by the Trustee includes authentication by such agent. An
      authenticating agent has the same rights as an Agent to deal with the Company
      or
      an Affiliate of the Company.

     

    Section
      2.4.  Registrar
      and Paying Agent.
      The
      Company shall maintain, with respect to each Series of Securities, at the place
      or places specified with respect to such Series pursuant to Section 2.2, an
      office or agency where Securities of such Series may be presented or surrendered
      for payment (“Paying Agent”), where Securities of such Series may be surrendered
      for registration of transfer or exchange (“Registrar”) and where notices and
      demands to or upon the Company in respect of Securities of such Series and
      this
      Indenture may be served (“Service Agent”). The Registrar shall keep a register
      with respect to each Series of Securities and to their transfer and exchange.
      The Company will give prompt written notice to the Trustee of the name and
      address, and any change in the name or address, of each Registrar, Paying Agent
      or Service Agent. If at any time the Company shall fail to maintain any such
      required Registrar, Paying Agent or Service Agent or shall fail to furnish
      the
      Trustee with the name and address thereof, such presentations, surrenders,
      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, surrenders, notices and demands.

     

    The
      Company may also from time to time designate one or more co-registrars,
      additional paying agents or additional service agents and may from time to
      time
      rescind such designations; provided, however, that no such designation or
      rescission shall in any manner relieve the Company of its obligations to
      maintain a Registrar, Paying Agent and Service Agent in each place so specified
      pursuant to Section 2.2 for Securities of any Series for such purposes. The
      Company will give prompt written notice to the Trustee of any such designation
      or rescission and of any change in the name or address of any such co-registrar,
      additional paying agent or additional service agent. The term “Registrar”
includes any co-registrar; the term “Paying Agent” includes any additional
      paying agent; and the term “Service Agent” includes any additional service
      agent.

     

    The
      Company hereby appoints the Trustee the initial Registrar, Paying Agent and
      Service Agent for each Series unless another Registrar, Paying Agent or Service
      Agent, as the case may be, is appointed prior to the time Securities of that
      Series are first issued.

     

    Section
      2.5.  Paying
      Agent to Hold Money in Trust.
      The
      Company shall require each Paying Agent other than the Trustee to agree in
      writing that the Paying Agent will hold in trust, for the benefit of
      Securityholders of any Series of Securities, or the Trustee, all money held
      by
      the Paying Agent for the payment of principal of or interest on the Series
      of
      Securities, and will notify the Trustee of any default by the Company in making
      any such payment. While any such default continues, the Trustee may require
      a
      Paying Agent to pay all money held by it to the Trustee. The Company at any
      time
      may require a Paying Agent to pay all money held by it to the Trustee. Upon
      payment over to the Trustee, the Paying Agent (if other than the Company or
      a
      Subsidiary of the Company) shall have no further liability for the money. If
      the
      Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate
      and hold all money held by it as Paying Agent in a separate trust fund for
      the
      benefit of Securityholders of any Series of Securities.

     

    
      
         

      

      
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    Section
      2.6.  Securityholder
      Lists.
      The
      Trustee shall preserve in as current a form as is reasonably practicable the
      most recent list available to it of the names and addresses of Securityholders
      of each Series of Securities and shall otherwise comply with TIA
      Section 312(a). If the Trustee is not the Registrar, the Company shall
      furnish to the Trustee at least ten days before each interest payment date
      and
      at such other times as the Trustee may request in writing a list, in such form
      and as of such date as the Trustee may reasonably require, of the names and
      addresses of Securityholders of each Series of Securities.

     

    Section
      2.7.  Transfer
      and Exchange.
      Where
      Securities of a Series are presented to the Registrar or a co-registrar with
      a
      request to register a transfer or to exchange them for an equal principal amount
      of Securities of the same Series, the Registrar shall register the transfer
      or
      make the exchange if its requirements for such transactions are met. To permit
      registrations of transfers and exchanges, the Trustee shall authenticate
      Securities at the Registrar’s request. No service charge shall be made for any
      registration of transfer or exchange (except as otherwise expressly permitted
      herein), but the Company may require payment of a sum sufficient to cover any
      transfer tax or similar governmental charge payable in connection therewith
      (other than any such transfer tax or similar governmental charge payable upon
      exchanges pursuant to Sections 2.11, 3.6 or 9.6).

     

    Neither
      the Company nor the Registrar shall be required (a) to issue, register the
      transfer of, or exchange Securities of any Series for the period beginning
      at
      the opening of business fifteen days immediately preceding the mailing of a
      notice of redemption of Securities of that Series selected for redemption and
      ending at the close of business on the day of such mailing, or (b) to
      register the transfer of or exchange Securities of any Series selected, called
      or being called for redemption as a whole or the portion being redeemed of
      any
      such Securities selected, called or being called for redemption in
      part.

     

    Section
      2.8.  Mutilated,
      Destroyed, Lost and Stolen Securities.
      If any
      mutilated Security is surrendered to the Trustee, the Company shall execute
      and
      the Trustee shall authenticate and deliver in exchange therefor a new Security
      of the same Series and of like tenor and principal amount and bearing a number
      not contemporaneously outstanding.

     

    If
      there
      shall be delivered to the Company and the Trustee (i) evidence to their
      satisfaction of the destruction, loss or theft of any Security and
      (ii) such security or indemnity as may be required by them to save each of
      them and any agent of either of them harmless, then, in the absence of notice
      to
      the Company or the Trustee that such Security has been acquired by a bona fide
      purchaser, the Company shall execute and upon its request the Trustee shall
      authenticate and make available for delivery, in lieu of any such destroyed,
      lost or stolen Security, a new Security of the same Series and of like tenor
      and
      principal amount and bearing a number not contemporaneously
      outstanding.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    In
      case
      any such mutilated, destroyed, lost or stolen Security has become or is about
      to
      become due and payable, the Company in its discretion may, instead of issuing
      a
      new Security, pay such Security.

     

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

     

    Every
      new
      Security of any Series issued pursuant to this Section in lieu of any destroyed,
      lost or stolen Security shall constitute an original additional contractual
      obligation of the Company, whether or not the destroyed, lost or stolen Security
      shall be at any time enforceable by anyone, and shall be entitled to all the
      benefits of this Indenture equally and proportionately with any and all other
      Securities of that Series duly issued hereunder.

     

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

     

    Section
      2.9.  Outstanding
      Securities.
      The
      Securities outstanding at any time are all the Securities authenticated by
      the
      Trustee except for those canceled by it, those delivered to it for cancellation,
      those reductions in the interest on a Global Security effected by the Trustee
      in
      accordance with the provisions hereof and those described in this Section as
      not
      outstanding.

     

    If
      a
      Security is replaced pursuant to Section 2.8, it ceases to be outstanding
      until the Trustee receives proof satisfactory to it that the replaced Security
      is held by a bona fide purchaser.

     

    If
      the
      Paying Agent (other than the Company, a Subsidiary of the Company or an
      Affiliate of any thereof) holds on the Maturity of Securities of a Series money
      sufficient to pay such Securities payable on that date, then on and after that
      date such Securities of the Series cease to be outstanding and interest on
      them
      ceases to accrue.

     

    A
      Security does not cease to be outstanding because the Company or an Affiliate
      of
      the Company holds the Security.

     

    In
      determining whether the Holders of the requisite principal amount of outstanding
      Securities have given any request, demand, authorization, direction, notice,
      consent or waiver hereunder, the principal amount of a Discount Security that
      shall be deemed to be outstanding for such purposes shall be the amount of
      the
      principal thereof that would be due and payable as of the date of such
      determination upon a declaration of acceleration of the Maturity thereof
      pursuant to Section 6.2.

     

    Section
      2.10.  Treasury
      Securities.
      In
      determining whether the Holders of the required principal amount of Securities
      of a Series have concurred in any request, demand, authorization, direction,
      notice, consent or waiver, Securities of a Series owned by the Company or an
      Affiliate of the Company shall be disregarded, except that for the purposes
      of
      determining whether the Trustee shall be protected in relying on any such
      request, demand, authorization, direction, notice, consent or waiver only
      Securities of a Series that the Trustee knows are so owned shall be so
      disregarded.

     

    
      
         

      

      
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    Section
      2.11.  Temporary
      Securities.
      Until
      definitive Securities are ready for delivery, the Company may prepare and the
      Trustee shall authenticate temporary Securities upon a Company Order. Temporary
      Securities shall be substantially in the form of definitive Securities but
      may
      have variations that the Company considers appropriate for temporary Securities.
      Without unreasonable delay, the Company shall prepare and the Trustee, upon
      request, shall authenticate definitive Securities of the same Series and date
      of
      Maturity in exchange for temporary Securities. Until so exchanged, temporary
      Securities shall have the same rights under this Indenture as the definitive
      Securities.

     

    Section
      2.12.  Cancellation.
      The
      Company at any time may deliver Securities to the Trustee for cancellation.
      The
      Registrar and the Paying Agent shall forward to the Trustee any Securities
      surrendered to them for registration of transfer, exchange or payment. The
      Trustee shall cancel all Securities surrendered for transfer, exchange, payment,
      replacement or cancellation and shall destroy such canceled Securities (subject
      to the record retention requirement of the Exchange Act) and deliver a
      certificate of such destruction to the Company, unless the Company otherwise
      directs. The Company may not issue new Securities to replace Securities that
      it
      has paid or delivered to the Trustee for cancellation.

     

    Section
      2.13.  Defaulted
      Interest.
      If the
      Company defaults in a payment of interest on a Series of Securities, it shall
      pay the defaulted interest, plus, to the extent permitted by law, any interest
      payable on the defaulted interest, to the persons who are Securityholders of
      the
      Series on a subsequent special record date. The Company shall fix the record
      date and payment date. At least 30 days before the record date, the Company
      shall mail to the Trustee and to each Securityholder of the Series a notice
      that
      states the record date, the payment date and the amount of interest to be paid.
      The Company may pay defaulted interest in any other lawful manner.

     

    Section
      2.14.  Global
      Securities.

     

    2.14.1.  Terms
      of Securities.
      A Board
      Resolution, a supplemental indenture hereto or an Officers’ Certificate shall
      establish whether Securities of a Series shall be issued in whole or in part
      in
      the form of one or more Global Securities and the Depository for such Global
      Security or Securities.

     

    2.14.2.  Transfer
      and Exchange.
      Notwithstanding any provisions to the contrary contained in Section 2.7 of
      the Indenture and in addition thereto, any Global Security shall be exchangeable
      pursuant to Section 2.7 of the Indenture for Securities registered in the
      names of Holders other than the Depository for such Security or its nominee
      only
      if (i) such Depository notifies the Company that it is unwilling or unable
      to continue as Depository for such Global Security or if at any time such
      Depository ceases to be a clearing agency registered under the Exchange Act,
      and, in either case, the Company fails to appoint a successor Depository within
      90 days of such event, (ii) the Company executes and delivers to the
      Trustee an Officers’ Certificate to the effect that such Global Security shall
      be so exchangeable or (iii) an Event of Default with respect to the
      Securities represented by such Global Security shall have happened and be
      continuing. Any Global Security that is exchangeable pursuant to the preceding
      sentence shall be exchangeable for Securities registered in such names as the
      Depository shall direct in writing in an aggregate principal amount equal to
      the
      principal amount of the Global Security with like tenor and terms.

     

    Except
      as
      provided in this Section 2.14.2, a Global Security may not be transferred
      except as a whole by the Depository with respect to such Global Security to
      a
      nominee of such Depository, by a nominee of such Depository to such Depository
      or another nominee of such Depository or by the Depository or any such nominee
      to a successor Depository or a nominee of such a successor
      Depository.

     

    
      
         

      

      
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    2.14.3.  Legend.
      Any
      Global Security issued hereunder shall bear a legend in substantially the
      following form:

     

    “This
      Security is a Global Security within the meaning of the Indenture hereinafter
      referred to and is registered in the name of the Depository or a nominee of
      the
      Depository. This Security is exchangeable for Securities registered in the
      name
      of a person other than the Depository or its nominee only in the limited
      circumstances described in the Indenture, and may not be transferred except
      as a
      whole by the Depository to a nominee of the Depository, by a nominee of the
      Depository to the Depository or another nominee of the Depository or by the
      Depository or any such nominee to a successor Depository or a nominee of such
      a
      successor Depository.”

     

    2.14.4.  Acts
      of Holders.
      The
      Depository, as a Holder, may appoint agents and otherwise authorize participants
      to give or take any request, demand, authorization, direction, notice, consent,
      waiver or other action which a Holder is entitled to give or take under the
      Indenture.

     

    2.14.5.  Payments.
      Notwithstanding the other provisions of this Indenture, unless otherwise
      specified as contemplated by Section 2.2, payment of the principal of and
      interest, if any, on any Global Security shall be made to the Holder
      thereof.

     

    2.14.6.  Consents,
      Declaration and Directions.
      Except
      as provided in Section 2.14.5, the Company, the Trustee and any Agent shall
      treat a person as the Holder of such principal amount of outstanding Securities
      of such Series represented by a Global Security as shall be specified in a
      written statement of the Depository with respect to such Global Security, for
      purposes of obtaining any consents, declarations, waivers or directions required
      to be given by the Holders pursuant to this Indenture.

     

    2.14.7.  CUSIP
      Numbers.
      The
      Company in issuing the Securities may use “CUSIP” numbers (if then generally in
      use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption
      as a convenience to Holders; provided that any such notice may state that no
      representation is made as to the correctness of such numbers either as printed
      on the Securities or as contained in any notice of a redemption and that
      reliance may be placed only on the other elements of identification printed
      on
      the Securities, and any such redemption shall not be affected by any defect
      in
      or omission of such numbers.

     

    ARTICLE
      III

    REDEMPTION

     

    Section
      3.1.  Notice
      to Trustee.
      The
      Company may, with respect to any Series of Securities, reserve the right to
      redeem and pay the Series of Securities or may covenant to redeem and pay the
      Series of Securities or any part thereof prior to the Stated Maturity thereof
      at
      such time and on such terms as provided for in such Securities. If a Series
      of
      Securities is redeemable and the Company wants or is obligated to redeem prior
      to the Stated Maturity thereof all or part of the Series of Securities pursuant
      to the terms of such Securities, it shall notify the Trustee of the redemption
      date and the principal amount of Series of Securities to be redeemed. The
      Company shall give the notice at least 45 days before the redemption date (or
      such shorter notice as may be acceptable to the Trustee).

     

    
      
         

      

      
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    Section
      3.2.  Selection
      of Securities to be Redeemed.
      Unless
      otherwise indicated for a particular Series by a Board Resolution, a
      supplemental indenture or an Officers’ Certificate, if less than all the
      Securities of a Series are to be redeemed, the Trustee shall select Securities
      of the Series to be redeemed in any manner that the Trustee deems fair and
      appropriate. The Trustee shall make the selection from Securities of the Series
      outstanding not previously called for redemption. The Trustee may select for
      redemption portions of the principal of Securities of the Series that have
      denominations larger than $1,000. Securities of the Series and portions of
      them
      it selects shall be in amounts of $1,000 or whole multiples of $1,000 or, with
      respect to Securities of any Series issuable in other denominations pursuant
      to
      Section 2.2.10, the minimum principal denomination for each Series and
      integral multiples thereof. Provisions of this Indenture that apply to
      Securities of a Series called for redemption also apply to portions of
      Securities of that Series called for redemption.

     

    Section
      3.3.  Notice
      of Redemption.
      Unless
      otherwise indicated for a particular Series by a Board Resolution, a
      supplemental indenture hereto or an Officers’ Certificate, at least 30 days but
      not more than 60 days before a redemption date, the Company shall mail a notice
      of redemption by first-class mail to each Holder whose Securities are to be
      redeemed and if any Bearer Securities are outstanding, publish on one occasion
      a
      notice in an Authorized Newspaper.

     

    The
      notice shall identify the Securities of the Series to be redeemed and shall
      state:

     

    (a)  the
      redemption date;

     

    (b)  the
      redemption price;

     

    (c)  the
      name
      and address of the Paying Agent;

     

    (d)  that
      Securities of the Series called for redemption must be surrendered to the Paying
      Agent to collect the redemption price; 

     

    (e)  that
      interest on Securities of the Series called for redemption ceases to accrue
      on
      and after the redemption date; and

     

    (f)  any
      other
      information as may be required by the terms of the particular Series or
      Securities of a Series being redeemed.

     

    At
      the
      Company’s request, the Trustee shall give the notice of redemption in the
      Company’s name and at its expense.

     

    Section
      3.4.  Effect
      of Notice of Redemption.
      Once
      notice of redemption is mailed or published as provided in Section 3.3,
      Securities of a Series called for redemption become due and payable on the
      redemption date and at the redemption price. A notice of redemption may not
      be
      conditional. Upon surrender to the Paying Agent, such Securities shall be paid
      at the redemption price plus accrued interest to the redemption
      date.

     

    Section
      3.5.  Deposit
      of Redemption Price.
      On or
      before the redemption date, the Company shall deposit with the Paying Agent
      money sufficient to pay the redemption price of and accrued interest, if any,
      on
      all Securities to be redeemed on that date.

     

    
      
         

      

      
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    Section
      3.6.  Securities
      Redeemed in Part.
      Upon
      surrender of a Security that is redeemed in part, the Trustee shall authenticate
      for the Holder a new Security of the same Series and the same Maturity equal
      in
      principal amount to the unredeemed portion of the Security
      surrendered.

     

    ARTICLE
      IV

    COVENANTS

     

    Section
      4.1.  Payment
      of Principal and Interest.
      The
      Company covenants and agrees for the benefit of the Holders of each Series
      of
      Securities that it will duly and punctually pay the principal of and interest,
      if any, on Securities of that Series in accordance with the terms of such
      Securities and this Indenture.

     

    Section
      4.2.  SEC
      Reports.
      The
      Company shall deliver to the Trustee, within 15 days after it files them with
      the SEC, 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 SEC
      may
      by rules and regulations prescribe) which the Company is required to file with
      the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company
      also shall comply with the other provisions of TIA
      Section 314(a).

     

    Section
      4.3.  Compliance
      Certificate.
      The
      Company shall deliver to the Trustee, within 90 days after the end of each
      fiscal year of the Company, an Officers’ Certificate stating that a review of
      the activities of the Company and its Subsidiaries during the preceding fiscal
      year has been made under the supervision of the signing Officers with a view
      to
      determining whether the Company has kept, observed, performed and fulfilled
      its
      obligations under this Indenture, and further stating, as to each such Officer
      signing such certificate, that to the best of such Officer’s knowledge the
      Company has kept, observed, performed and fulfilled each and every covenant
      contained in this Indenture and is not in default in the performance or
      observance of any of the terms, provisions and conditions hereof (or, if a
      Default or Event of Default shall have occurred, describing all such Defaults
      or
      Events of Default of which such Officer may have knowledge).

     

    The
      Company will, so long as any of the Securities are outstanding, deliver to
      the
      Trustee, forthwith upon becoming aware of any Default or Event of Default,
      an
      Officers’ Certificate specifying such Default or Event of Default and what
      action the Company is taking or proposes to take with respect
      thereto.

     

    Section
      4.4.  Stay,
      Extension and Usury Laws.
      The
      Company covenants (to the extent that it may lawfully do so) that it will not
      at
      any time insist upon, plead, or in any manner whatsoever claim or take the
      benefit or advantage of, any stay, extension or usury law wherever enacted,
      now
      or at any time hereafter in force, which may affect the covenants or the
      performance of this Indenture or the Securities; and the Company (to the extent
      it may lawfully do so) hereby expressly waives all benefit or advantage of
      any
      such law and covenants that it will not, by resort to any such law, hinder,
      delay or impede the execution of any power herein granted to the Trustee, but
      will suffer and permit the execution of every such power as though no such
      law
      has been enacted.

     

    Section
      4.5.  Corporate
      Existence.
      Subject
      to Article V, the Company will do or cause to be done all things necessary
      to preserve and keep in full force and effect its corporate existence and the
      corporate, partnership or other existence of each Significant Subsidiary in
      accordance with the respective organizational documents of each Significant
      Subsidiary and the rights (charter and statutory), licenses and franchises
      of
      the Company and its Significant Subsidiaries; provided, however, that the
      Company shall not be required to preserve any such right, license or franchise,
      or the corporate, partnership or other existence of any Significant Subsidiary,
      if the Board of Directors shall determine that the preservation thereof is
      no
      longer desirable in the conduct of the business of the Company and its
      Subsidiaries taken as a whole and that the loss thereof is not adverse in any
      material respect to the Holders.

     

    
      
         

      

      
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    Section
      4.6.  Taxes.
      The
      Company shall, and shall cause each of its Significant Subsidiaries to, pay
      prior to delinquency all taxes, assessments and governmental levies, except
      as
      contested in good faith and by appropriate proceedings.

     

    ARTICLE
      V

    SUCCESSORS

     

    Section
      5.1.  When
      Company May Merge, Etc.
      The
      Company shall not consolidate with or merge into, or convey, transfer or lease
      all or substantially all of its properties and assets to, any person (a
“successor person”), and may not permit any person to merge into, or convey,
      transfer or lease its properties and assets substantially as an entirety to,
      the
      Company, unless:

     

    (a)  the
      successor person (if any) is a corporation, partnership, trust or other entity
      organized and validly existing under the laws of any U.S. domestic jurisdiction
      and expressly assumes the Company’s obligations on the Securities and under this
      Indenture and

     

    (b)  immediately
      after giving effect to the transaction, no Default or Event of Default, shall
      have occurred and be continuing.

     

    The
      Company shall deliver to the Trustee, prior to the consummation of the proposed
      transaction, an Officers’ Certificate to the foregoing effect and an Opinion of
      Counsel stating that the proposed transaction and such supplemental indenture
      comply with this Indenture.

     

    Section
      5.2.  Successor
      Corporation Substituted.
      Upon
      any consolidation or merger, or any sale, lease, conveyance or other disposition
      of all or substantially all of the assets of the Company in accordance with
      Section 5.1, the successor corporation formed by such consolidation or into
      or with which the Company is merged or to which such sale, lease, conveyance
      or
      other disposition is made shall execute a written assumption of the Company’s
      obligations under this Indenture and upon such assumption shall succeed to,
      and
      be substituted for, and may exercise every right and power of, the Company
      under
      this Indenture with the same effect as if such successor person has been named
      as the Company herein; provided, however, that the predecessor Company in the
      case of a sale, lease, conveyance or other disposition shall not be released
      from the obligation to pay the principal of and interest, if any, on the
      Securities.

     

    ARTICLE
      VI

    DEFAULTS
      AND REMEDIES

     

    Section
      6.1.  Events
      of Default.
“Event
      of Default,” wherever used herein with respect to Securities of any Series,
      means any one of the following events, unless in the establishing Board
      Resolution, supplemental indenture or Officers’ Certificate, it is provided that
      such Series shall not have the benefit of said Event of Default:

     

    
      
         

      

      
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    (a)  default
      in the payment of any interest on any Security of that Series when it becomes
      due and payable, and continuance of such default for a period of 30 days (unless
      the entire amount of such payment is deposited by the Company with the Trustee
      or with a Paying Agent prior to the expiration of such period of 30 days);
      or

     

    (b)  default
      in the payment of the principal of any Security of that Series at its Maturity;
      or

     

    (c)  default
      in the deposit of any sinking fund payment, when and as due in respect of any
      Security of that Series; or

     

    (d)  default
      in the performance or breach of any covenant or warranty of the Company in
      this
      Indenture (other than a covenant or warranty that has been included in this
      Indenture solely for the benefit of Series of Securities other than that
      Series), which default continues uncured for a period of 60 days after there
      has
      been given, by registered or certified mail, to the Company by the Trustee
      or to
      the Company and the Trustee by the Holders of at least 25% in principal amount
      of the outstanding Securities of that Series a written notice specifying such
      default or breach and requiring it to be remedied and stating that such notice
      is a “Notice of Default” hereunder; or

     

    (e)  the
      Company or any of its Significant Subsidiaries 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,

     

    (iv)  makes
      a
      general assignment for the benefit of its creditors, or

     

    (v)  generally
      is unable to pay its debts as the same become due; or

     

    (f)  a
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that:

     

    (i)  is
      for
      relief against the Company or any of its Significant Subsidiaries in an
      involuntary case,

     

    (ii)  appoints
      a Custodian of the Company or any of its Significant Subsidiaries or for all
      or
      substantially all of its property, or

     

    (iii)  orders
      the liquidation of the Company or any of its Significant Subsidiaries, and
      the
      order or decree remains unstayed and in effect for 60 days; or 

     

    (g)  any
      other
      Event of Default provided with respect to Securities of that Series, which
      is
      specified in a Board Resolution, a supplemental indenture hereto or an Officers’
Certificate, in accordance with Section 2.2.18.

     

    
      
         

      

      
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    The
      term
“Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law
      for the relief of debtors. The term “Custodian” means any receiver, trustee,
      assignee, liquidator or similar official under any Bankruptcy Law.

     

    Section
      6.2.  Acceleration
      of Maturity; Rescission and Annulment.
      If an
      Event of Default with respect to Securities of any Series at the time
      outstanding occurs and is continuing (other than an Event of Default referred
      to
      in Section 6.1(e) or (f)) then in every such case the Trustee or the
      Holders of not less than 25% in principal amount of the outstanding Securities
      of that Series may declare the principal amount (or, if any Securities of that
      Series are Discount Securities, such portion of the principal amount as may
      be
      specified in the terms of such Securities) of and accrued and unpaid interest,
      if any, on all of the Securities of that Series to be due and payable
      immediately, by a notice in writing to the Company (and to the Trustee if given
      by Holders), and upon any such declaration such principal amount (or specified
      amount) and accrued and unpaid interest, if any, shall become immediately due
      and payable. If an Event of Default specified in Section 6.1(e) or (f)
      shall occur, the principal amount (or specified amount) of and accrued and
      unpaid interest, if any, on all outstanding Securities shall ipso facto become
      and be immediately due and payable without any declaration or other act on
      the
      part of the Trustee or any Holder.

     

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

     

    (a)  the
      Company has paid or deposited with the Trustee a sum sufficient to
      pay:

     

    (i)  all
      overdue interest, if any, on all Securities of that Series,

     

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

     

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

     

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

     

    (b)  all
      Events of Default with respect to Securities of that Series, other than the
      non-payment of the principal of Securities of that Series which have become
      due
      solely by such declaration of acceleration, have been cured or waived as
      provided in Section 6.13.

     

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

     

    
      
         

      

      
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    Section
      6.3.  Collection
      of Indebtedness and Suits for Enforcement by Trustee.
      The
      Company covenants that if

     

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

     

    (b)  default
      is made in the payment of principal of any Security at the Maturity thereof,
      or

     

    (c)  default
      is made in the deposit of any sinking fund payment when and as due by the terms
      of a Security,

     

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

     

    If
      the
      Company fails to pay such amounts forthwith upon such demand, the Trustee,
      in
      its own name and as trustee of an express trust, may institute a judicial
      proceeding for the collection of the sums so due and unpaid, may prosecute
      such
      proceeding to judgment or final decree and may enforce the same against the
      Company or any other obligor upon such Securities and collect the moneys
      adjudged or deemed to be payable in the manner provided by law out of the
      property of the Company or any other obligor upon such Securities, wherever
      situated.

     

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

     

    Section
      6.4.  Trustee
      May File Proofs of Claim.
      In case
      of the pendency of any receivership, insolvency, liquidation, bankruptcy,
      reorganization, arrangement, adjustment, composition or other judicial
      proceeding relative to the Company or any other obligor upon the Securities
      or
      the property of the Company or of such other obligor or their creditors, the
      Trustee (irrespective of whether the principal of the Securities shall then
      be
      due and payable as therein expressed or by declaration or otherwise and
      irrespective of whether the Trustee shall have made any demand on the Company
      for the payment of overdue principal or interest) shall be entitled and
      empowered, by intervention in such proceeding or otherwise, 

     

    (a)  to
      file
      and prove a claim for the whole amount of principal and interest owing and
      unpaid in respect of the Securities and to file such other papers or documents
      as may be necessary or advisable in order to have the claims of the Trustee
      (including any claim for the reasonable compensation, expenses, disbursements
      and advances of the Trustee, its agents and counsel) and of the Holders allowed
      in such judicial proceeding, and

     

    
      
         

      

      
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    (b)  to
      collect and receive any moneys or other property payable or deliverable on
      any
      such claims and to distribute the same, and any custodian, receiver, assignee,
      trustee, liquidator, sequestrator or other similar official in any such judicial
      proceeding is hereby authorized by each Holder to make such payments to the
      Trustee and, in the event that the Trustee shall consent to the making of such
      payments directly to the Holders, to pay to the Trustee any amount due it for
      the reasonable compensation, expenses, disbursements and advances of the
      Trustee, its agents and counsel, and any other amounts due the Trustee under
      Section 7.7.

     

    Nothing
      herein contained shall be deemed to authorize the Trustee to authorize or
      consent to or accept or adopt on behalf of any Holder any plan of
      reorganization, arrangement, adjustment or composition affecting the Securities
      or the rights of any Holder thereof or to authorize the Trustee to vote in
      respect of the claim of any Holder in any such proceeding.

     

    Section
      6.5.  Trustee
      May Enforce Claims Without Possession of Securities.
      All
      rights of action and claims under this Indenture or the Securities may be
      prosecuted and enforced by the Trustee without the possession of any of the
      Securities or the production thereof in any proceeding relating thereto, and
      any
      such proceeding instituted by the Trustee shall be brought in its own name
      as
      trustee of an express trust, and any recovery of judgment shall, after provision
      for the payment of the reasonable compensation, expenses, disbursements and
      advances of the Trustee, its agents and counsel, be for the ratable benefit
      of
      the Holders of the Securities in respect of which such judgment has been
      recovered.

     

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

     

    First:
      To
      the payment of all amounts due the Trustee under Section 7.7;
      and

     

    Second:
      To the payment of the amounts then due and unpaid for principal of and interest
      on the Securities in respect of which or for the benefit of which such money
      has
      been collected, ratably, without preference or priority of any kind, according
      to the amounts due and payable on such Securities for principal and interest,
      respectively; and

     

    Third:
      To
      the Company.

     

    Section
      6.7.  Limitation
      on Suits.
      No
      Holder of any Security of any Series shall have any right to institute any
      proceeding, judicial or otherwise, with respect to this Indenture, or for the
      appointment of a receiver or trustee, or for any other remedy hereunder,
      unless

     

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

     

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

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    Section
      6.8.  Unconditional
      Right of Holders to Receive Principal and Interest.
      Notwithstanding any other provision in this Indenture, the Holder of any
      Security shall have the right, which is absolute and unconditional, to receive
      payment of the principal of, premium and interest, if any, on such Security
      on
      the Stated Maturity or Stated Maturities expressed in such Security (or, in
      the
      case of redemption, on the redemption date) and to institute suit for the
      enforcement of any such payment, and such rights shall not be impaired without
      the consent of such Holder.

     

    Section
      6.9.  Restoration
      of Rights and Remedies.
      If the
      Trustee or any Holder has instituted any proceeding to enforce any right or
      remedy under this Indenture and such proceeding has been discontinued or
      abandoned for any reason, or has been determined adversely to the Trustee or
      to
      such Holder, then and in every such case, subject to any determination in such
      proceeding, the Company, the Trustee and the Holders shall be restored severally
      and respectively to their former positions hereunder and thereafter all rights
      and remedies of the Trustee and the Holders shall continue as though no such
      proceeding had been instituted.

     

    Section
      6.10.  Rights
      and Remedies Cumulative.
      Except
      as otherwise provided with respect to the replacement or payment of mutilated,
      destroyed, lost or stolen Securities in Section 2.8, no right or remedy
      herein conferred upon or reserved to the Trustee or to the Holders is intended
      to be exclusive of any other right or remedy, and every right and remedy shall,
      to the extent permitted by law, be cumulative and in addition to every other
      right and remedy given hereunder or now or hereafter existing at law or in
      equity or otherwise. The assertion or employment of any right or remedy
      hereunder, or otherwise, shall not prevent the concurrent assertion or
      employment of any other appropriate right or remedy.

     

    Section
      6.11.  Delay
      or Omission Not Waiver.
      No
      delay or omission of the Trustee or of any Holder of any Securities to exercise
      any right or remedy accruing upon any Event of Default shall impair any such
      right or remedy or constitute a waiver of any such Event of Default or an
      acquiescence therein. Every right and remedy given by this Article or by law
      to
      the Trustee or to the Holders may be exercised from time to time, and as often
      as may be deemed expedient, by the Trustee or by the Holders, as the case may
      be.

     

    
      
         

      

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

     

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

     

    (b)  the
      Trustee may take any other action deemed proper by the Trustee which is not
      inconsistent with such direction, and

     

    (c)  subject
      to the provisions of Section 6.1, the Trustee shall have the right to
      decline to follow any such direction if the Trustee in good faith shall, by
      a
      Responsible Officer of the Trustee, determine that the proceeding so directed
      would involve the Trustee in personal liability.

     

    Section
      6.13.  Waiver
      of Past Defaults.
      The
      Holders of not less than a majority in principal amount of the outstanding
      Securities of any Series may on behalf of the Holders of all the Securities
      of
      such Series waive any past Default hereunder with respect to such Series and
      its
      consequences, except a Default (i) in the payment of the principal of or
      interest on any Security of such Series (provided, however, that the Holders
      of
      a majority in principal amount of the outstanding Securities of any Series
      may
      rescind an acceleration and its consequences, including any related payment
      default that resulted from such acceleration) and (ii) in respect of a covenant
      or provision hereof which cannot be modified or amended without the consent
      of
      the Holder of each outstanding Security of such Series affected. Upon any such
      waiver, such Default shall cease to exist, and any Event of Default arising
      therefrom shall be deemed to have been cured, for every purpose of this
      Indenture; but no such waiver shall extend to any subsequent or other Default
      or
      impair any right consequent thereon.

     

    Section
      6.14.  Undertaking
      For Costs.
      All
      parties to this Indenture agree, and each Holder of any Security by his
      acceptance thereof shall be deemed to have agreed, that any court may in its
      discretion require, in any suit for the enforcement of any right or remedy
      under
      this Indenture, or in any suit against the Trustee for any action taken,
      suffered or omitted by it as Trustee, the filing by any party litigant in such
      suit of an undertaking to pay the costs of such suit, and that such court may
      in
      its discretion assess reasonable costs, including reasonable attorneys’ fees,
      against any party litigant in such suit, having due regard to the merits and
      good faith of the claims or defenses made by such party litigant; but the
      provisions of this Section shall not apply to any suit instituted by the
      Company, to any suit instituted by the Trustee, to any suit instituted by any
      Holder, or group of Holders, holding in the aggregate more than 10% in principal
      amount of the outstanding Securities of any Series, or to any suit instituted
      by
      any Holder for the enforcement of the payment of the principal of or interest
      on
      any Security on or after the Stated Maturity or Stated Maturities expressed
      in
      such Security (or, in the case of redemption, on the redemption
      date).

     

    ARTICLE
      VII

    TRUSTEE

     

    Section
      7.1.  Duties
      of Trustee.

     

    (a)  If
      an
      Event of Default has occurred and is continuing, the Trustee shall exercise
      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 man would exercise or use under the
      circumstances in the conduct of his own affairs.

     

    
      
         

      

      
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    (b)  Except
      during the continuance of an Event of Default:

     

    (i)  The
      Trustee need perform only those duties that are specifically set forth in this
      Indenture and no others.

     

    (ii)  In
      the
      absence of bad faith on its part, the Trustee may conclusively rely, as to
      the
      truth of the statements and the correctness of the opinions expressed therein,
      upon Officers’ Certificates or Opinions of Counsel furnished to the Trustee and
      conforming to the requirements of this Indenture; however, in the case of any
      such Officers’ Certificates or Opinions of Counsel which by any provisions
      hereof are specifically required to be furnished to the Trustee, the Trustee
      shall examine such Officers’ Certificates and Opinions of Counsel to determine
      whether or not they conform to the requirements of this Indenture.

     

    (c)  The
      Trustee may not be relieved from liability for its own negligent action, its
      own
      negligent failure to act or its own willful misconduct, except
      that:

     

    (i)  This
      paragraph does not limit the effect of paragraph (b) of this
      Section.

     

    (ii)  The
      Trustee shall not be liable for any error of judgment made in good faith by
      a
      Responsible Officer, unless it is proved that the Trustee was negligent in
      ascertaining the pertinent facts.

     

    (iii)  The
      Trustee shall not be liable with respect to any action taken, suffered or
      omitted to be taken by it with respect to Securities of any Series in good
      faith
      in accordance with the direction of the Holders of a majority in principal
      amount of the outstanding Securities of such Series 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 such Series.

     

    (d)  Every
      provision of this Indenture that in any way relates to the Trustee is subject
      to
      paragraph (a), (b) and (c) of this Section.

     

    (e)  The
      Trustee may refuse to perform any duty or exercise any right or power unless
      it
      receives indemnity satisfactory to it against any loss, liability or
      expense.

     

    (f)  The
      Trustee shall not be liable for interest on any money received by it except
      as
      the Trustee may agree in writing with the Company. Money held in trust by the
      Trustee need not be segregated from other funds except to the extent required
      by
      law.

     

    (g)  No
      provision of this Indenture shall require the Trustee to risk its own funds
      or
      otherwise incur any financial liability in the performance of any of its duties,
      or in the exercise of any of its rights or powers, if it shall have reasonable
      grounds for believing that repayment of such funds or adequate indemnity against
      such risk is not reasonably assured to it.

     

    
      
         

      

      
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    (h)  The
      Paying Agent, the Registrar and any authenticating agent shall be entitled
      to
      the protections, immunities and standard of care as are set forth in paragraphs
      (a), (b) and (c) of this Section with respect to the Trustee.

     

    (i)  The
      Trustee shall not be deemed to have knowledge of any default or Event of Default
      unless a Responsible Officer has actual knowledge of such default or Event
      of
      Default.

     

    Section
      7.2.  Rights
      of Trustee.

     

    (a)  The
      Trustee may rely on and shall be protected in acting or refraining from acting
      upon any document believed by it to be genuine and to have been signed or
      presented by the proper person. The Trustee need not investigate any fact or
      matter stated in the document.

     

    (b)  Before
      the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
      action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.

     

    (c)  The
      Trustee may act through agents and shall not be responsible for the misconduct
      or negligence of any agent appointed with due care. No Depository shall be
      deemed an agent of the Trustee and the Trustee shall not be responsible for
      any
      act or omission by any Depository.

     

    (d)  The
      Trustee shall not be liable for any action it takes or omits to take in good
      faith which it believes to be authorized or within its rights or
      powers.

     

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

     

    (f)  The
      Trustee shall be under no obligation to exercise any of the rights or powers
      vested in it by this Indenture at the request or direction of any of the Holders
      of Securities unless such Holders shall have offered to the Trustee reasonable
      security or indemnity against the costs, expenses and liabilities which might
      be
      incurred by it in compliance with such request or direction.

     

    Section
      7.3.  Individual
      Rights of Trustee.
      The
      Trustee in its individual or any other capacity may become the owner or pledgee
      of Securities and may otherwise deal with the Company or an Affiliate of the
      Company with the same rights it would have if it were not Trustee. Any Agent
      may
      do the same with like rights. The Trustee is also subject to Sections 7.10
      and 7.11.

     

    Section
      7.4.  Trustee’s
      Disclaimer.
      The
      Trustee makes no representation as to the validity or adequacy of this Indenture
      or the Securities, it shall not be accountable for the Company’s use of the
      proceeds from the Securities, and it shall not be responsible for any statement
      in the Securities other than its authentication.

     

    Section
      7.5.  Notice
      of Defaults.
      If a
      Default or Event of Default occurs and is continuing with respect to the
      Securities of any Series and if it is known to a Responsible Officer of the
      Trustee, the Trustee shall mail to each Securityholder of the Securities of
      that
      Series and, if any Bearer Securities are outstanding, publish on one occasion
      in
      an Authorized Newspaper, notice of a Default or Event of Default within 90
      days
      after it occurs or, if later, after a Responsible Officer of the Trustee has
      knowledge of such Default or Event of Default. Except in the case of a Default
      or Event of Default in payment of principal of or interest on any Security
      of
      any Series, the Trustee may withhold the notice if and so long as its corporate
      trust committee or a committee of its Responsible Officers in good faith
      determines that withholding the notice is in the interests of Securityholders
      of
      that Series.

     

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

     

    Section
      7.6.  Reports
      by Trustee to Holders.
      Within
      60 days after May 15 in each year, the Trustee shall transmit by mail to all
      Securityholders, as their names and addresses appear on the register kept by
      the
      Registrar and, if any Bearer Securities are outstanding, publish in an
      Authorized Newspaper, a brief report dated as of such May 15, in accordance
      with, and to the extent required under, TIA Section 313.

     

    A
      copy of
      each report at the time of its mailing to Securityholders of any Series shall
      be
      filed with the SEC and each stock exchange on which the Securities of that
      Series are listed. The Company shall promptly notify the Trustee when Securities
      of any Series are listed on any stock exchange.

     

    Section
      7.7.  Compensation
      and Indemnity.
      The
      Company shall pay to the Trustee from time to time reasonable compensation
      for
      its services. The Trustee’s compensation shall not be limited by any law on
      compensation of a trustee of an express trust. The Company shall reimburse
      the
      Trustee upon request for all reasonable out-of-pocket expenses incurred by
      it.
      Such expenses shall include the reasonable compensation and expenses of the
      Trustee’s agents and counsel.

     

    The
      Company shall indemnify the Trustee (including the cost of defending itself)
      against any loss, liability or expense incurred by it except as set forth in
      the
      next paragraph in the performance of its duties under this Indenture as Trustee
      or Agent. The Trustee shall notify the Company promptly of any claim for which
      it may seek indemnity. The Company shall defend the claim and the Trustee shall
      cooperate in the defense. The Trustee may have separate counsel and the Company
      shall pay the reasonable fees and expenses of such counsel. The Company need
      not
      pay for any settlement made without its consent, which consent shall not be
      unreasonably withheld. This indemnification shall apply to officers, directors,
      employees, shareholders and agents of the Trustee.

     

    The
      Company need not reimburse any expense or indemnify against any loss or
      liability incurred by the Trustee or by any officer, director, employee,
      shareholder or agent of the Trustee through negligence or bad
      faith.

     

    To
      secure
      the Company’s payment obligations in this Section, the Trustee shall have a lien
      prior to the Securities of any Series on all money or property held or collected
      by the Trustee, except that held in trust to pay principal and interest on
      particular Securities of that Series.

     

    When
      the
      Trustee incurs expenses or renders services after an Event of Default specified
      in Section 6.1(e) or (f) occurs, the expenses and the compensation for the
      services are intended to constitute expenses of administration under any
      Bankruptcy Law.

     

    Section
      7.8.  Replacement
      of Trustee.
      A
      resignation or removal of the Trustee and appointment of a successor Trustee
      shall become effective only upon the successor Trustee’s acceptance of
      appointment as provided in this Section.

     

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

     

    The
      Trustee may resign with respect to the Securities of one or more Series by
      so
      notifying the Company at least 30 days prior to the date of the proposed
      resignation. The Holders of a majority in principal amount of the Securities
      of
      any Series may remove the Trustee with respect to that Series by so notifying
      the Trustee and the Company. The Company may remove the Trustee with respect
      to
      Securities of one or more Series if:

     

    (a)  the
      Trustee fails to comply with Section 7.10;

     

    (b)  the
      Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
      with respect to the Trustee under any Bankruptcy Law;

     

    (c)  a
      Custodian or public officer takes charge of the Trustee or its property;
      or

     

    (d)  the
      Trustee becomes incapable of acting.

     

    If
      the
      Trustee resigns or is removed or if a vacancy exists in the office of Trustee
      for any reason, the Company shall promptly appoint a successor Trustee. Within
      one year after the successor Trustee takes office, the Holders of a majority
      in
      principal amount of the then outstanding Securities may appoint a successor
      Trustee to replace the successor Trustee appointed by the Company.

     

    If
      a
      successor Trustee with respect to the Securities of any one or more Series
      does
      not take office within 60 days after the retiring Trustee resigns or is removed,
      the retiring Trustee, the Company or the Holders of at least 10% in principal
      amount of the Securities of the applicable Series may petition any court of
      competent jurisdiction for the appointment of a successor Trustee.

     

    If
      the
      Trustee with respect to the Securities of any one or more Series fails to comply
      with Section 7.10, any Securityholder of the applicable Series may petition
      any court of competent jurisdiction for the removal of the Trustee and the
      appointment of a successor Trustee.

     

    A
      successor Trustee shall deliver a written acceptance of its appointment to
      the
      retiring Trustee and to the Company. Immediately after that, the retiring
      Trustee shall transfer all property held by it as Trustee to the successor
      Trustee subject to the lien provided for in Section 7.7, the resignation or
      removal of the retiring Trustee shall become effective, and the successor
      Trustee shall have all the rights, powers and duties of the Trustee with respect
      to each Series of Securities for which it is acting as Trustee under this
      Indenture. A successor Trustee shall mail a notice of its succession to each
      Securityholder of each such Series and, if any Bearer Securities are
      outstanding, publish such notice on one occasion in an Authorized Newspaper.
      Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
      the Company’s obligations under Section 7.7 hereof shall continue for the
      benefit of the retiring trustee with respect to expenses and liabilities
      incurred by it prior to such replacement.

     

    Section
      7.9.  Successor
      Trustee by Merger, Etc.
      If the
      Trustee consolidates with, merges or converts into, or transfers all or
      substantially all of its corporate trust business to, another corporation,
      the
      successor corporation without any further act shall be the successor
      Trustee.

     

    Section
      7.10.  Eligibility;
      Disqualification.
      This
      Indenture shall always have a Trustee who satisfies the requirements of TIA
      Section 310(a)(1), (2) and (5). The Trustee shall always have a combined
      capital and surplus of at least $25,000,000 as set forth in its most recent
      published annual report of condition. The Trustee shall comply with TIA
      Section 310(b).

     

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

     

    Section
      7.11.  Preferential
      Collection of Claims Against Company.
      The
      Trustee is subject to TIA Section 311(a), excluding any creditor
      relationship listed in TIA Section 311(b). A Trustee who has resigned or
      been removed shall be subject to TIA Section 311(a) to the extent
      indicated.

     

    ARTICLE
      VIII

    SATISFACTION
      AND DISCHARGE; DEFEASANCE

     

    Section
      8.1.  Satisfaction
      and Discharge of Indenture.
      This
      Indenture shall upon Company Order cease to be of further effect (except as
      hereinafter provided in this Section 8.1), and the Trustee, at the expense
      of the Company, shall execute proper instruments acknowledging satisfaction
      and
      discharge of this Indenture, when

     

    (a)  either

     

    (i)  all
      Securities theretofore authenticated and delivered (other than Securities that
      have been destroyed, lost or stolen and that have been replaced or paid) have
      been delivered to the Trustee for cancellation; or

     

    (ii)  all
      such
      Securities not theretofore delivered to the Trustee for
      cancellation

     

    (1)  have
      become due and payable, or 

     

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

     

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

     

    (4)  are
      deemed paid and discharged pursuant to Section 8.3, as
      applicable;

     

    and
      the
      Company, in the case of (1), (2) or (3) above, has irrevocably deposited or
      caused to be deposited with the Trustee as trust funds in trust an amount
      sufficient for the purpose of paying and discharging the entire indebtedness
      on
      such Securities not theretofore delivered to the Trustee for cancellation,
      for
      principal and interest to the date of such deposit (in the case of Securities
      which have become due and payable on or prior to the date of such deposit)
      or to
      the Stated Maturity or redemption date, as the case may be;

     

    (b)  the
      Company has paid or caused to be paid all other sums payable hereunder by the
      Company; and

     

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

     

    Notwithstanding
      the satisfaction and discharge of this Indenture, the obligations of the Company
      to the Trustee under Section 7.7, and, if money shall have been deposited
      with the Trustee pursuant to clause (a) of this Section, the provisions of
      Sections 2.4, 2.7, 2.8, 8.1 8.2 and 8.5 shall survive.

     

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

     

    Section
      8.2.  Application
      of Trust Funds; Indemnification.

     

    (a)  Subject
      to the provisions of Section 8.5, all money deposited with the Trustee
      pursuant to Section 8.1, all money and U.S. Government Obligations or
      Foreign Government Obligations deposited with the Trustee pursuant to
      Section 8.3 or 8.4 and all money received by the Trustee in respect of U.S.
      Government Obligations or Foreign Government Obligations deposited with the
      Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied
      by it, in accordance with the provisions of the Securities and this Indenture,
      to the payment, either directly or through any Paying Agent (including the
      Company acting as its own Paying Agent) as the Trustee may determine, to the
      persons entitled thereto, of the principal and interest for whose payment such
      money has been deposited with or received by the Trustee or to make mandatory
      sinking fund payments or analogous payments as contemplated by Sections 8.3
      or 8.4.

     

    (b)  The
      Company shall pay and shall indemnify the Trustee against any tax, fee or other
      charge imposed on or assessed against U.S. Government Obligations or Foreign
      Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the
      interest and principal received in respect of such obligations other than any
      payable by or on behalf of Holders.

     

    (c)  The
      Trustee shall deliver or pay to the Company from time to time upon Company
      Request any U.S. Government Obligations or Foreign Government Obligations or
      money held by it as provided in Sections 8.3 or 8.4 which, in the opinion
      of a nationally recognized firm of independent certified public accountants
      expressed in a written certification thereof delivered to the Trustee, are
      then
      in excess of the amount thereof which then would have been required to be
      deposited for the purpose for which such U.S. Government Obligations or Foreign
      Government Obligations or money were deposited or received. This provision
      shall
      not authorize the sale by the Trustee of any U.S. Government Obligations or
      Foreign Government Obligations held under this Indenture.

     

    Section
      8.3.  Legal
      Defeasance of Securities of Any Series.
      Unless
      this Section 8.3 is otherwise specified, pursuant to Section 2.2.20,
      to be inapplicable to Securities of any Series, the Company shall be deemed
      to
      have paid and discharged the entire indebtedness on all the outstanding
      Securities of such Series on the 91st day after the date of the deposit referred
      to in subparagraph (d) hereof, and the provisions of this Indenture, as it
      relates to such outstanding Securities of such Series, shall no longer be in
      effect (and the Trustee, at the expense of the Company, shall, at Company
      Request, execute proper instruments acknowledging the same), except as
      to:

     

    (a)  the
      rights of Holders of Securities of such Series to receive, from the trust funds
      described in subparagraph (d) hereof, (i) payment of the principal of and
      each installment of principal of and interest on the outstanding Securities
      of
      such Series on the Stated Maturity of such principal or installment of principal
      or interest and (ii) the benefit of any mandatory sinking fund payments
      applicable to the Securities of such Series on the day on which such payments
      are due and payable in accordance with the terms of this Indenture and the
      Securities of such Series;

     

    (b)  the
      provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and

     

    (c)  the
      rights, powers, trust and immunities of the Trustee hereunder;

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

     

    provided
      that, the following conditions shall have been satisfied:

     

    (d)  the
      Company shall have deposited or caused to be deposited irrevocably with the
      Trustee as trust funds in trust for the purpose of making the following
      payments, specifically pledged as security for and dedicated solely to the
      benefit of the Holders of such Securities (i) in the case of Securities of
      such Series denominated in Dollars, cash in Dollars (or such other money or
      currencies as shall then be legal tender in the United States) and/or U.S.
      Government Obligations, or (ii) in the case of Securities of such Series
      denominated in a Foreign Currency (other than a composite currency), money
      and/or Foreign Government Obligations, which through the payment of interest
      and
      principal in respect thereof, in accordance with their terms, will provide
      (and
      without reinvestment and assuming no tax liability will be imposed on such
      Trustee), not later than one day before the due date of any payment of money,
      an
      amount in cash, sufficient, in the opinion of a nationally recognized firm
      of
      independent public accountants expressed in a written certification thereof
      delivered to the Trustee, to pay and discharge each installment of principal
      (including mandatory sinking fund or analogous payments) of and interest, if
      any, on all the Securities of such Series on the dates such installments of
      interest or principal are due;

     

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

     

    (f)  no
      Default or Event of Default with respect to the Securities of such Series shall
      have occurred and be continuing on the date of such deposit or during the period
      ending on the 91st day after such date;

     

    (g)  the
      Company shall have delivered to the Trustee an Officers’ Certificate and an
      Opinion of Counsel to the effect that (i) the Company has received from, or
      there has been published by, the Internal Revenue Service a ruling, or
      (ii) since the date of execution of this Indenture, there has been a change
      in the applicable Federal income tax law, in either case to the effect that,
      and
      based thereon such Opinion of Counsel shall confirm that, the Holders of the
      Securities of such Series will not recognize income, gain or loss for Federal
      income tax purposes as a result of such deposit, defeasance and discharge and
      will be subject to Federal income tax on the same amount and in the same manner
      and at the same times as would have been the case if such deposit, defeasance
      and discharge had not occurred;

     

    (h)  the
      Company shall have delivered to the Trustee an Officers’ Certificate stating
      that the deposit was not made by the Company with the intent of preferring
      the
      Holders of the Securities of such Series over any other creditors of the company
      or with the intent of defeating, hindering, delaying or defrauding any other
      creditors of the Company; 

     

    (i)  such
      deposit shall not result in the trust arising from such deposit constituting
      an
      investment company (as defined in the Investment Company Act of 1940, as
      amended), or such trust shall be qualified under such Act or exempt from
      regulation thereunder; and

     

    (j)  the
      Company shall have delivered to the Trustee an Officers’ Certificate and an
      Opinion of Counsel, each stating that all conditions precedent provided for
      relating to the defeasance contemplated by this Section have been complied
      with.

     

    
      
         

      

      
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    Section
      8.4.  Covenant
      Defeasance.
      Unless
      this Section 8.4 is otherwise specified pursuant to Section 2.2.20 to
      be inapplicable to Securities of any Series, on and after the 91st day after
      the
      date of the deposit referred to in subparagraph (a) hereof, the Company may
      omit
      to comply with any term, provision or condition set forth under
      Sections 4.2, 4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional
      covenants contained in a supplemental indenture hereto for a particular Series
      of Securities or a Board Resolution or an Officers’ Certificate delivered
      pursuant to Section 2.2.20 (and the failure to comply with any such
      covenants shall not constitute a Default or Event of Default under
      Section 6.1) with respect to the Securities of such Series, provided that
      the following conditions shall have been satisfied:

     

    (a)  With
      reference to this Section 8.4, the Company has deposited or caused to be
      irrevocably deposited (except as provided in Section 8.2(c)) with the
      Trustee as trust funds in trust, specifically pledged as security for, and
      dedicated solely to, the benefit of the Holders of such Securities (i) in
      the case of Securities of such Series denominated in Dollars, cash in Dollars
      (or such other money or currencies as shall then be legal tender in the United
      States) and/or U.S. Government Obligations, or (ii) in the case of
      Securities of such Series denominated in a Foreign Currency (other than a
      composite currency), money and/or Foreign Government Obligations, which through
      the payment of interest and principal in respect thereof, in accordance with
      their terms, will provide (and without reinvestment and assuming no tax
      liability will be imposed on such Trustee), not later than one day before the
      due date of any payment of money, an amount in cash, sufficient, in the opinion
      of a nationally recognized firm of independent certified public accountants
      expressed in a written certification thereof delivered to the Trustee, to pay
      principal and interest, if any, on and any mandatory sinking fund in respect
      of
      the Securities of such Series on the dates such installments of interest or
      principal are due;

     

    (b)  Such
      deposit will not result in a breach or violation of, or constitute a default
      under, this Indenture or any other agreement or instrument to which the Company
      is a party or by which it is bound;

     

    (c)  No
      Default or Event of Default with respect to the Securities of such Series shall
      have occurred and be continuing on the date of such deposit or during the period
      ending on the 91st day after such date;

     

    (d)  the
      Company shall have delivered to the Trustee an Opinion of Counsel confirming
      that Holders of the Securities of such Series will not recognize income, gain
      or
      loss for federal income tax purposes as a result of such deposit and defeasance
      and will be subject to federal income tax on the same amounts, in the same
      manner and at the same times as would have been the case if such deposit and
      defeasance had not occurred;

     

    (e)  the
      Company shall have delivered to the Trustee an Officers’ Certificate stating the
      deposit was not made by the Company with the intent of preferring the Holders
      of
      the Securities of such Series over any other creditors of the Company or with
      the intent of defeating, hindering, delaying or defrauding any other creditors
      of the Company; and 

     

    (f)  The
      Company shall have delivered to the Trustee an Officers’ Certificate and an
      Opinion of Counsel, each stating that all conditions precedent herein provided
      for relating to the defeasance contemplated by this Section have been complied
      with.

     

    
      
         

      

      
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    Section
      8.5.  Repayment
      to Company.
      The
      Trustee and the Paying Agent shall pay to the Company upon request any money
      held by them for the payment of principal and interest that remains unclaimed
      for two years. After that, Securityholders entitled to the money must look
      to
      the Company for payment as general creditors unless an applicable abandoned
      property law designates another person.

     

    ARTICLE
      IX

    AMENDMENTS
      AND WAIVERS

     

    Section
      9.1.  Without
      Consent of Holders.
      The
      Company and the Trustee may amend or supplement this Indenture or the Securities
      of one or more Series without the consent of any Securityholder:

     

    (a)  to
      cure
      any ambiguity, defect or inconsistency; 

     

    (b)  to
      comply
      with Article V;

     

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

     

    (d)  to
      make
      any change that does not adversely affect the rights of any
      Securityholder;

     

    (e)  to
      provide for the issuance of and establish the form and terms and conditions
      of
      Securities of any Series as permitted by this Indenture;

     

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

     

    (g)  to
      comply
      with requirements of the SEC in order to effect or maintain the qualification
      of
      this Indenture under the TIA.

     

    Section
      9.2.  With
      Consent of Holders.
      The
      Company and the Trustee may enter into a supplemental indenture with the written
      consent of the Holders of at least a majority in principal amount of the
      outstanding Securities of each Series affected by such supplemental indenture
      (including consents obtained in connection with a tender offer or exchange
      offer
      for the Securities of such Series), for the purpose of adding any provisions
      to
      or changing in any manner or eliminating any of the provisions of this Indenture
      or of any supplemental indenture or of modifying in any manner the rights of
      the
      Securityholders of each such Series. Except as provided in Section 6.13,
      the Holders of at least a majority in principal amount of the outstanding
      Securities of each Series affected by such waiver by notice to the Trustee
      (including consents obtained in connection with a tender offer or exchange
      offer
      for the Securities of such Series) may waive compliance by the Company with
      any
      provision of this Indenture or the Securities with respect to such
      Series.

     

    It
      shall
      not be necessary for the consent of the Holders of Securities under this
      Section 9.2 to approve the particular form of any proposed supplemental
      indenture or waiver, but it shall be sufficient if such consent approves the
      substance thereof. After a supplemental indenture or waiver under this section
      becomes effective, the Company shall mail to the Holders of Securities affected
      thereby and, if any Bearer Securities affected thereby are outstanding, publish
      on one occasion in an Authorized Newspaper, a notice briefly describing the
      supplemental indenture or waiver. Any failure by the Company to mail or publish
      such notice, or any defect therein, shall not, however, in any way impair or
      affect the validity of any such supplemental indenture or waiver.

     

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

     

    Section
      9.3.  Limitations.
      Without
      the consent of each Securityholder affected, an amendment or waiver may
      not:

     

    (a)  change
      the amount of Securities whose Holders must consent to an amendment, supplement
      or waiver;

     

    (b)  reduce
      the rate of or extend the time for payment of interest (including default
      interest) on any Security;

     

    (c)  reduce
      the principal or premium on or change the Stated Maturity of any Security or
      reduce the amount of, or postpone the date fixed for, the payment of any sinking
      fund or analogous obligation;

     

    (d)  reduce
      the principal amount of Discount Securities payable upon acceleration of the
      maturity thereof;

     

    (e)  waive
      a
      Default or Event of Default in the payment of the principal of, premium on
      or
      interest, if any, on any Security (except a rescission of acceleration of the
      Securities of any Series by the Holders of at least a majority in principal
      amount of the outstanding Securities of such Series and a waiver of the payment
      default that resulted from such acceleration);

     

    (f)  make
      the
      principal of or interest, if any, on any Security payable in any currency other
      than that stated in the Security;

     

    (g)  make
      any
      change in Sections 6.8, 6.13 or 9.3 (this sentence); or

     

    (h)  waive
      a
      redemption payment with respect to any Security or change any of the provisions
      with respect to the redemption of any Securities.

     

    Section
      9.4.  Compliance
      with Trust Indenture Act.
      Every
      amendment to this Indenture or the Securities of one or more Series shall be
      set
      forth in a supplemental indenture hereto that complies with the TIA as then
      in
      effect.

     

    Section
      9.5.  Revocation
      and Effect of Consents.
      Until
      an amendment or waiver becomes effective, a consent to it by a Holder of a
      Security is a continuing consent by the Holder and every subsequent Holder
      of a
      Security or portion of a Security that evidences the same debt as the consenting
      Holder’s Security, even if notation of the consent is not made on any Security.
      However, any such Holder or subsequent Holder may revoke the consent as to
      his
      Security or portion of a Security if the Trustee receives the notice of
      revocation before the date the amendment or waiver becomes
      effective.

     

    Any
      amendment or waiver once effective shall bind every Securityholder of each
      Series affected by such amendment or waiver unless it is of the type described
      in any of clauses (a) through (h) of Section 9.3. In that case, the
      amendment or waiver shall bind each Holder of a Security who has consented
      to it
      and every subsequent Holder of a Security or portion of a Security that
      evidences the same debt as the consenting Holder’s Security.

     

    
      
         

      

      
        -32-

        
          

        

      

      
         

      

    

     

    Section
      9.6.  Notation
      on or Exchange of Securities.
      The
      Trustee may place an appropriate notation about an amendment or waiver on any
      Security of any Series thereafter authenticated. The Company in exchange for
      Securities of that Series may issue and the Trustee shall authenticate upon
      request new Securities of that Series that reflect the amendment or
      waiver.

     

    Section
      9.7.  Trustee
      Protected.
      In
      executing, or accepting the additional trusts created by, any supplemental
      indenture permitted by this Article or the modifications thereby of the trusts
      created by this Indenture, the Trustee shall be entitled to receive, and
      (subject to Section 7.1) shall be fully protected in relying upon, an
      Opinion of Counsel stating that the execution of such supplemental indenture
      is
      authorized or permitted by this Indenture. The Trustee shall sign all
      supplemental indentures, except that the Trustee need not sign any supplemental
      indenture that adversely affects its rights.

     

    ARTICLE
      X

    MISCELLANEOUS

     

    Section
      10.1.  Trust
      Indenture Act Controls.
      If any
      provision of this Indenture limits, qualifies, or conflicts with another
      provision which is required or deemed to be included in this Indenture by the
      TIA, such required or deemed provision shall control.

     

    Section
      10.2.  Notices.
      Unless
      otherwise provided herein, any notice or communication by the Company or the
      Trustee to the other shall be in writing and delivered in person or by courier,
      telegraphed, telexed or by facsimile transmission or mailed by first-class
      mail
      as follows:

     

    
      
        
          	
                  if
                    to the Company:

                	
                  Ceradyne,
                    Inc.

                
	 	
                  3169
                    Red Hill Avenue

                
	 	
                  Costa
                    Mesa, California 92626

                
	 	
                  Attention:
                    Chief Financial Officer

                
	 	
                  Facsimile:
                    (714) 549-5787

                
	 	 
	
                  with
                    a copy to:

                	
                  Stradling
                    Yocca Carlson & Rauth

                
	 	
                  660
                    Newport Center Drive, Suite 1600

                
	 	
                  Newport
                    Beach, California 92660

                
	 	
                  Attention:
                    Robert E. Rich

                
	 	
                  Facsimile:
                    (949) 725-4100

                
	 	 
	
                  if
                    to the Trustee:

                	
                  Union
                    Bank of California, N.A.

                
	 	
                  120
                    South San Pedro Street, 4th
                    Floor

                
	 	
                  Los
                    Angeles, California 90012

                
	 	
                  Attention:
                    Corporate Trust Department

                
	 	
                  Facsimile:
                    (213) 972-5694

                
	 	 

        

      

    

    The
      Company or the Trustee by notice to the other may designate additional or
      different addresses for subsequent notices or communications.

     

    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    

     

    Any
      notice or communication to a Securityholder shall be mailed by first-class
      mail
      to his address shown on the register kept by the Registrar and, if any Bearer
      Securities are outstanding, published in an Authorized Newspaper. Failure to
      mail a notice or communication to a Securityholder of any Series or any defect
      in it shall not affect its sufficiency with respect to other Securityholders
      of
      that or any other Series.

     

    If
      a
      notice or communication is mailed in the manner provided above, within the
      time
      prescribed, it is duly given, whether or not the Securityholder receives it.
      If
      a notice or communication is delivered in person, by courier, telegraphed,
      telexed or by facsimile transmission (with confirmation of receipt) within
      the
      time prescribed, it is duly given.

     

    If
      the
      Company mails a notice or communication to Securityholders, it shall mail a
      copy
      to the Trustee and each Agent at the same time.

     

    Section
      10.3.  Communication
      by Holders with other Holders.
      Securityholders of any Series may communicate pursuant to TIA
      Section 312(b) with other Securityholders of that Series or any other
      Series with respect to their rights under this Indenture or the Securities
      of
      that Series or all Series. The Company, the Trustee, the Registrar and anyone
      else shall have the protection of TIA Section 312(c).

     

    Section
      10.4.  Certificate
      and Opinion as to Conditions Precedent.
      Upon
      any request or application by the Company to the Trustee to take any action
      under this Indenture, the Company shall furnish to the Trustee:

     

    (a)  an
      Officers’ Certificate stating that, in the opinion of the signers, all
      conditions precedent, if any, provided for in this Indenture relating to the
      proposed action have been complied with; and

     

    (b)  an
      Opinion of Counsel stating that, in the opinion of such counsel, all such
      conditions precedent have been complied with.

     

    Section
      10.5.  Statements
      Required in Certificate or Opinion.
      Each
      certificate or opinion with respect to compliance with a condition or covenant
      provided for in this Indenture (other than a certificate provided pursuant
      to
      TIA Section 314(a)(4)) shall comply with the provisions of TIA
      Section 314(e) and shall include:

     

    (a)  a
      statement that the person making such certificate or opinion has read such
      covenant or condition;

     

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

     

    (c)  a
      statement that, in the opinion of such person, he 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

     

    (d)  a
      statement as to whether or not, in the opinion of such person, such condition
      or
      covenant has been complied with.

     

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

     

    Section
      10.6.  Rules
      by Trustee and Agents.
      The
      Trustee may make reasonable rules for action by or a meeting of Securityholders
      of one or more Series. Any Agent may make reasonable rules and set reasonable
      requirements for its functions.

     

    Section
      10.7.  Legal
      Holidays.
      Unless
      otherwise provided by Board Resolution, Officers’ Certificate or supplemental
      indenture for a particular Series, a “Legal Holiday” is any day that is not a
      Business Day. If a payment date is a Legal Holiday at a place of payment,
      payment may be made at that place on the next succeeding day that is not a
      Legal
      Holiday, and no interest shall accrue for the intervening period.

     

    Section
      10.8.  No
      Recourse Against Others.
      A
      director, officer, employee or stockholder, as such, of the Company shall not
      have any liability for any obligations of the Company under the Securities
      or
      the Indenture or for any claim based on, in respect of or by reason of such
      obligations or their creation. Each Securityholder by accepting a Security
      waives and releases all such liability. The waiver and release are part of
      the
      consideration for the issue of the Securities.

     

    Section
      10.9.  Counterparts.
      This
      Indenture may be executed in any number of counterparts and by the parties
      hereto in separate counterparts, each of which when so executed shall be deemed
      to be an original and all of which taken together shall constitute one and
      the
      same agreement.

     

    Section
      10.10.  Governing
      Laws.
      THIS
      INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
      NEW
      YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT
      REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

     

    Section
      10.11.  No
      Adverse Interpretation of Other Agreements.
      This
      Indenture may not be used to interpret another indenture, loan or debt agreement
      of the Company or a Subsidiary. Any such indenture, loan or debt agreement
      may
      not be used to interpret this Indenture.

     

    Section
      10.12.  Successors.
      All
      agreements of the Company in this Indenture and the Securities shall bind its
      successor. All agreements of the Trustee in this Indenture shall bind its
      successor.

     

    Section
      10.13.  Severability.
      In case
      any provision in this Indenture or in the Securities shall be invalid, illegal
      or unenforceable, the validity, legality and enforceability of the remaining
      provisions shall not in any way be affected or impaired thereby.

     

    Section
      10.14.  Table
      of Contents, Headings, Etc.
      The
      Table of Contents, Cross Reference Table, and headings of the Articles and
      Sections of this Indenture have been inserted for convenience of reference
      only,
      are not to be considered a part hereof, and shall in no way modify or restrict
      any of the terms or provisions hereof.

     

    Section
      10.15.  Securities
      in a Foreign Currency or in ECU.
      Unless
      otherwise specified in a Board Resolution, a supplemental indenture hereto
      or an
      Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture
      with respect to a particular Series of Securities, whenever for purposes of
      this
      Indenture any action may be taken by the Holders of a specified percentage
      in
      aggregate principal amount of Securities of all Series or all Series affected
      by
      a particular action at the time outstanding and, at such time, there are
      outstanding Securities of any Series which are denominated in a coin or currency
      other than Dollars (including ECUs), then the principal amount of Securities
      of
      such Series which shall be deemed to be outstanding for the purpose of taking
      such action shall be that amount of Dollars that could be obtained for such
      amount at the Market Exchange Rate at such time. For purposes of this
      Section 10.15, “Market Exchange Rate” shall mean the noon Dollar buying
      rate in New York City for cable transfers of that currency as published by
      the
      Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market
      Exchange Rate shall mean the rate of exchange determined by the Commission
      of
      the European Union (or any successor thereto) as published in the Official
      Journal of the European Union (such publication or any successor publication,
      the “Journal”). If such Market Exchange Rate is not available for any reason
      with respect to such currency, the Trustee shall use, in its sole discretion
      and
      without liability on its part, such quotation of the Federal Reserve Bank of
      New
      York or, in the case of ECUs, the rate of exchange as published in the Journal,
      as of the most recent available date, or quotations or, in the case of ECUs,
      rates of exchange from one or more major banks in The City of New York or in
      the
      country of issue of the currency in question or, in the case of ECUs, in
      Luxembourg or such other quotations or, in the case of ECUs, rates of exchange
      as the Trustee, upon consultation with the Company, shall deem appropriate.
      The
      provisions of this paragraph shall apply in determining the equivalent principal
      amount in respect of Securities of a Series denominated in currency other than
      Dollars in connection with any action taken by Holders of Securities pursuant
      to
      the terms of this Indenture.

     

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

     

    All
      decisions and determinations of the Trustee regarding the Market Exchange Rate
      or any alternative determination provided for in the preceding paragraph shall
      be in its sole discretion and shall, in the absence of manifest error, be
      conclusive to the extent permitted by law for all purposes and irrevocably
      binding upon the Company and all Holders.

     

    Section
      10.16.  Judgment
      Currency.
      The
      Company agrees, to the fullest extent that it may effectively do so under
      applicable law, that (a) if for the purpose of obtaining judgment in any
      court it is necessary to convert the sum due in respect of the principal of
      or
      interest or other amount on the Securities of any Series (the “Required
      Currency”) into a currency in which a judgment will be rendered (the “Judgment
      Currency”), the rate of exchange used shall be the rate at which in accordance
      with normal banking procedures the Trustee could purchase in The City of New
      York the Required Currency with the Judgment Currency on the day on which final
      unappealable judgment is entered, unless such day is not a New York Banking
      Day,
      then, the rate of exchange used shall be the rate at which in accordance with
      normal banking procedures the Trustee could purchase in The City of New York
      the
      Required Currency with the Judgment Currency on the New York Banking Day
      preceding the day on which final unappealable judgment is entered and
      (b) its obligations under this Indenture to make payments in the Required
      Currency (i) shall not be discharged or satisfied by any tender, any
      recovery pursuant to any judgment (whether or not entered in accordance with
      subsection (a)), in any currency other than the Required Currency, except to
      the
      extent that such tender or recovery shall result in the actual receipt, by
      the
      payee, of the full amount of the Required Currency expressed to be payable
      in
      respect of such payments, (ii) shall be enforceable as an alternative or
      additional cause of action for the purpose of recovering in the Required
      Currency the amount, if any, by which such actual receipt shall fall short
      of
      the full amount of the Required Currency so expressed to be payable, and
      (iii) shall not be affected by judgment being obtained for any other sum
      due under this Indenture. For purposes of the foregoing, “New York Banking Day”
means any day except a Saturday, Sunday or a legal holiday in The City of New
      York on which banking institutions are authorized or required by law, regulation
      or executive order to close.

     

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

     

    ARTICLE
      XI

    SINKING
      FUNDS

     

    Section
      11.1.  Applicability
      of Article.
      The
      provisions of this Article shall be applicable to any sinking fund for the
      retirement of the Securities of a Series, except as otherwise permitted or
      required by any form of Security of such Series issued pursuant to this
      Indenture.

     

    The
      minimum amount of any sinking fund payment provided for by the terms of the
      Securities of any Series is herein referred to as a “mandatory sinking fund
      payment” and any other amount provided for by the terms of Securities of such
      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 11.2. Each
      sinking fund payment shall be applied to the redemption of Securities of any
      Series as provided for by the terms of the Securities of such
      Series.

     

    Section
      11.2.  Satisfaction
      of Sinking Fund Payments with Securities.
      The
      Company may, in satisfaction of all or any part of any sinking fund payment
      with
      respect to the Securities of any Series to be made pursuant to the terms of
      such
      Securities (1) deliver outstanding Securities of such Series to which such
      sinking fund payment is applicable (other than any of such Securities previously
      called for mandatory sinking fund redemption) and (2) apply as credit
      Securities of such Series to which such sinking fund payment is applicable
      and
      which have been redeemed either at the election of the Company pursuant to
      the
      terms of such Series of Securities (except pursuant to any mandatory sinking
      fund) or through the application of permitted optional sinking fund payments
      or
      other optional redemptions pursuant to the terms of such Securities, provided
      that such Securities have not been previously so credited. Such Securities
      shall
      be received by the Trustee, together with an Officers’ Certificate with respect
      thereto, not later than 15 days prior to the date on which the Trustee begins
      the process of selecting Securities for redemption, and shall be credited for
      such purpose by the Trustee at the 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. If as a result of the delivery or
      credit of Securities in lieu of cash payments pursuant to this
      Section 11.2, the principal amount of Securities of such Series to be
      redeemed in order to exhaust the aforesaid cash payment shall be less than
      $100,000, the Trustee need not call Securities of such Series for redemption,
      except upon receipt of a Company Order that such action be taken, and such
      cash
      payment shall be held by the Trustee or a Paying Agent and applied to the next
      succeeding sinking fund payment, provided, however, that the Trustee or such
      Paying Agent shall from time to time upon receipt of a Company Order pay over
      and deliver to the Company any cash payment so being held by the Trustee or
      such
      Paying Agent upon delivery by the Company to the Trustee of Securities of that
      Series purchased by the Company having an unpaid principal amount equal to
      the
      cash payment required to be released to the Company.

     

    Section
      11.3.  Redemption
      of Securities for Sinking Fund.
      Not
      less than 45 days (unless otherwise indicated in the Board Resolution,
      supplemental indenture hereto or Officers’ Certificate in respect of a
      particular Series of Securities) prior to each sinking fund payment date for
      any
      Series of Securities, the Company will deliver to the Trustee an Officers’
Certificate specifying the amount of the next ensuing mandatory sinking fund
      payment for that Series pursuant to the terms of that Series, the portion
      thereof, if any, which is to be satisfied by payment of cash and the portion
      thereof, if any, which is to be satisfied by delivering and crediting of
      Securities of that Series pursuant to Section 11.2, and the optional
      amount, if any, to be added in cash to the next ensuing mandatory sinking fund
      payment, and the Company shall thereupon be obligated to pay the amount therein
      specified. Not less than 30 days (unless otherwise indicated in the Board
      Resolution, Officers’ Certificate or supplemental indenture in respect of a
      particular Series of Securities) 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 3.2 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 3.3. Such notice having been duly given,
      the redemption of such Securities shall be made upon the terms and in the manner
      stated in Sections 3.4, 3.5 and 3.6.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK.]

     

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

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

     

    CERADYNE,
      INC.

     

    By:

      
        

      

    

    Name:

    Its:

     

     

    UNION
      BANK OF CALIFORNIA, N.A.

     

    By:

      
        

      

    

    Name:

    Its:

    
      	 	 	 	 
	 	 	 	 
	
              -38-

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