Document:

Exhibit 4.3

 

	
 
  

 

DEPOSIT AGREEMENT

 

	
 
  

 

by and among

 

 

CHINACACHE INTERNATIONAL HOLDINGS LTD.

 

 

AND

 

 

CITIBANK, N.A.,

as Depositary,

 

 

AND

 

 

THE HOLDERS AND BENEFICIAL OWNERS OF

AMERICAN DEPOSITARY SHARES 
 ISSUED HEREUNDER

 

 

	
 
  

 

Dated as of September 30, 2010

 

 

DEPOSIT AGREEMENT

 

DEPOSIT AGREEMENT, dated as of September 30, 2010, by and among (i) CHINACACHE INTERNATIONAL HOLDINGS LTD., a company incorporated under the laws of the Cayman Islands, and its successors (the “Company”), (ii) CITIBANK, N.A., a national banking association organized under the laws of the United States of America acting in its capacity as depositary, and any successor depositary hereunder (the “Depositary”), and (iii) all Holders and Beneficial Owners of American Depositary Shares issued hereunder (all such capitalized terms as hereinafter defined).

 

W I T N E S S E T H   T H A T:

 

WHEREAS, the Company desires to establish with the Depositary an ADS facility to provide for the deposit of the Shares (as hereinafter defined) and the creation of American Depositary Shares representing the Shares so deposited; and

 

WHEREAS, the Depositary is willing to act as the Depositary for such ADS facility upon the terms set forth in the Deposit Agreement (as hereinafter defined); and

 

WHEREAS, any American Depositary Receipts issued pursuant to the terms of the Deposit Agreement are to be substantially in the form of Exhibit A attached hereto, with appropriate insertions, modifications and omissions, as hereinafter provided in the Deposit Agreement; and

 

WHEREAS, the American Depositary Shares to be issued pursuant to the terms of the Deposit Agreement are to be listed for trading on the Nasdaq Global Market; and

 

WHEREAS, the Board of Directors of the Company (or an authorized committee thereof) has duly approved the establishment of an ADS facility upon the terms set forth in the Deposit Agreement, the execution and delivery of the Deposit Agreement on behalf of the Company, and the actions of the Company and the transactions contemplated herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

All capitalized terms used, but not otherwise defined, herein shall have the meanings set forth below, unless otherwise clearly indicated:

 

Section 1.1            “ADS Record Date” shall have the meaning given to such term in Section 4.9.

 

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Section 1.2            “Affiliate” shall have the meaning assigned to such term by the Commission (as hereinafter defined) under Regulation C promulgated under the Securities Act (as hereinafter defined), or under any successor regulation thereto.

 

Section 1.3            “American Depositary Receipt(s)”, “ADR(s)” and “Receipt(s)” shall mean the certificate(s) issued by the Depositary to evidence the American Depositary Shares issued under the terms of the Deposit Agreement in the form of Certificated ADS(s) (as hereinafter defined), as such ADRs may be amended from time to time in accordance with the provisions of the Deposit Agreement.  An ADR may evidence any number of ADSs and may, in the case of ADSs held through a central depository such as DTC, be in the form of a “Balance Certificate.”

 

Section 1.4            “American Depositary Share(s)” and “ADS(s)” shall mean the rights and interests in the Deposited Securities (as hereinafter defined) granted to the Holders and Beneficial Owners pursuant to the terms and conditions of the Deposit Agreement and, if issued as Certificated ADS(s), (as hereinafter defined) the ADR(s) issued to evidence such ADSs.  ADS(s) may be issued under the terms of the Deposit Agreement in the form of (a) Certificated ADS(s) (as hereinafter defined), in which case the ADS(s) are evidenced by ADR(s), or (b) Uncertificated ADS(s) (as hereinafter defined), in which case the ADS(s) are not evidenced by ADR(s) but are reflected on the direct registration system maintained by the Depositary for such purposes under the terms of Section 2.13.  Unless otherwise specified in the Deposit Agreement or in any ADR, or unless the context otherwise requires, any reference to ADS(s) shall include Certificated ADS(s) and Uncertificated ADS(s), individually or collectively, as the context may require. Each ADS shall represent the right to receive, subject to the terms and conditions of the Deposit Agreement and the applicable ADR (if issued as a Certificated ADS) 16 Shares until there shall occur a distribution upon Deposited Securities referred to in Section 4.2 or a change in Deposited Securities referred to in Section 4.11 with respect to which additional ADSs are not issued, and thereafter each ADS shall represent the right to receive, subject to the terms and conditions of the Deposit Agreement and the applicable ADR (if issued as a Certificated ADS), the Deposited Securities determined in accordance with the terms of such Sections.

 

Section 1.5            “Applicant” shall have the meaning given to such term in Section 5.10.

 

Section 1.6            “Articles of Association” shall mean the Articles of Association of the Company, as amended and restated from time to time.

 

Section 1.7            “Beneficial Owner” shall mean, as to any ADS, any person or entity having a beneficial interest deriving from the ownership of such ADS.  A Beneficial Owner of ADSs may or may not be the Holder of such ADSs.  A Beneficial Owner shall be able to exercise any right or receive any benefit hereunder solely through the person who is the Holder of the ADSs owned by such Beneficial Owner.  Unless otherwise identified to the Depositary, a Holder shall be deemed to be the Beneficial Owner of all the ADSs registered in his/her/its name.

 

Section 1.8            “Certificated ADS(s)” shall have the meaning set forth in Section 2.13.

 

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Section 1.9            “Commission” shall mean the Securities and Exchange Commission of the United States or any successor governmental agency thereto in the United States.

 

Section 1.10         “Company” shall mean ChinaCache International Holdings Ltd., a company incorporated and existing under the laws of the Cayman Islands, and its successors.

 

Section 1.11         “Custodian” shall mean (i) as of the date hereof, Citibank, N.A. - Hong Kong Branch, having its principal office at 10/F, Harbour Front (II), 22, Tak Fung Street, Hung Hom, Kowloon, Hong Kong, as the custodian for the purposes of the Deposit Agreement, (ii) Citibank, N.A., acting as custodian of Deposited Securities pursuant to the Deposit Agreement, and (iii) any other entity that may be appointed by the Depositary pursuant to the terms of Section 5.5 as successor, substitute or additional custodian hereunder.  The term “Custodian” shall mean any Custodian individually or all Custodians collectively, as the context requires.

 

Section 1.12         “Deliver” and “Delivery” shall mean (x) when used in respect of Shares and other Deposited Securities, either (i) the physical delivery of the certificate(s) representing such securities, or (ii) the book-entry transfer and recordation of such securities on the books of the Share Registrar (as hereinafter defined) or such other applicable book-entry settlement system in which such Shares and other Deposited Securities are settlement-eligible, and (y) when used in respect of ADSs, either (i) the physical delivery of ADR(s) evidencing the ADSs, or (ii) the book-entry transfer and recordation of ADSs on the books of the Depositary or any book-entry settlement system in which the ADSs are settlement-eligible.

 

Section 1.13         “Deposit Agreement” shall mean this Deposit Agreement and all exhibits hereto, as the same may from time to time be amended and supplemented from time to time in accordance with the terms of the Deposit Agreement.

 

Section 1.14         “Depositary” shall mean Citibank, N.A., a national banking association organized under the laws of the United States, in its capacity as depositary under the terms of the Deposit Agreement, and any successor depositary hereunder.

 

Section 1.15         “Deposited Securities” shall mean Shares at any time deposited under the Deposit Agreement and any and all other securities, property and cash held by the Depositary or the Custodian in respect thereof, subject, in the case of cash, to the provisions of Section 4.8. The collateral delivered in connection with Pre-Release Transactions described in Section 5.10 shall not constitute Deposited Securities.

 

Section 1.16         “Dollars” and “$”shall refer to the lawful currency of the United States.

 

Section 1.17         “DTC” shall mean The Depository Trust Company, a national clearinghouse and the central book-entry settlement system for securities traded in the United States and, as such, the custodian for the securities of DTC Participants (as hereinafter defined) maintained in DTC, and any successor thereto.

 

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Section 1.18         “DTC Participant” shall mean any financial institution (or any nominee of such institution) having one or more participant accounts with DTC for receiving, holding and delivering the securities and cash held in DTC.  A DTC Participant may or may not be a Beneficial Owner.  If a DTC Participant is not the Beneficial Owner of the ADSs credited to its account at DTC, or of the ADSs in respect of which the DTC Participant is otherwise acting, such DTC Participant shall be deemed, for all purposes hereunder, to have all requisite authority to act on behalf of the Beneficial Owner(s) of the ADSs credited to its account at DTC or in respect of which the DTC Participant is so acting.

 

Section 1.19         “Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended from time to time.

 

Section 1.20         “Foreign Currency” shall mean any currency other than Dollars.

 

Section 1.21         “Full Entitlement ADR(s)”, “Full Entitlement ADS(s)” and “Full Entitlement Share(s)” shall have the respective meanings set forth in Section 2.12.

 

Section 1.22         “Holder(s)” shall mean the person(s) in whose name the ADSs are registered on the books of the Depositary (or the Registrar, if any) maintained for such purpose.  A Holder may or may not be a Beneficial Owner.  If a Holder is not the Beneficial Owner of the ADS(s) registered in its name, such person shall be deemed, for all purposes hereunder, to have all requisite authority to act on behalf of the Beneficial Owners of the ADSs registered in its name.

 

Section 1.23         “Partial Entitlement ADR(s)”, “Partial Entitlement ADS(s)” and “Partial Entitlement Share(s)” shall have the respective meanings set forth in Section 2.12.

 

Section 1.24         “Pre-Release Transaction” shall have the meaning set forth in Section 5.10.

 

Section 1.25         “Principal Office” shall mean, when used with respect to the Depositary, the principal office of the Depositary at which at any particular time its depositary receipts business shall be administered, which, at the date of the Deposit Agreement, is located at 388 Greenwich Street, New York, New York 10013, U.S.A.

 

Section 1.26         “Registrar” shall mean the Depositary or any bank or trust company having an office in the Borough of Manhattan, The City of New York, which shall be appointed by the Depositary to register issuances, transfers and cancellations of ADSs as herein provided, and shall include any co-registrar appointed by the Depositary for such purposes.  Registrars (other than the Depositary) may be removed and substitutes appointed by the Depositary.  Each Registrar (other than the Depositary) appointed pursuant to the Deposit Agreement shall be required to give notice in writing to the Depositary accepting such appointment and agreeing to be bound by the applicable terms of the Deposit Agreement.

 

Section 1.27         “Restricted Securities” shall mean Shares, Deposited Securities or ADSs which (i) have been acquired directly or indirectly from the Company or any of its Affiliates in a 

 

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transaction or chain of transactions not involving any public offering and are subject to resale limitations under the Securities Act or the rules issued thereunder, or (ii) are held by an officer or director (or persons performing similar functions) or other Affiliate of the Company, or (iii) are subject to other restrictions on sale or deposit under the laws of the United States, the Cayman Islands, or under a shareholder agreement or the Articles of Association  of the Company or under the regulations of an applicable securities exchange unless, in each case, such Shares, Deposited Securities or ADSs are being transferred or sold to persons other than an Affiliate of the Company in a transaction (a) covered by an effective resale registration statement, or (b) exempt from the registration requirements of the Securities Act (as hereinafter defined), and the Shares, Deposited Securities or ADSs are not, when held by such person(s), Restricted Securities.

 

Section 1.28         “Restricted ADR(s)”, “Restricted ADS(s)” and “Restricted Shares” shall have the respective meanings set forth in Section 2.14.

 

Section 1.29         “Securities Act” shall mean the United States Securities Act of 1933, as amended from time to time.

 

Section 1.30         “Share Registrar” shall mean Offshore Incorporations (Cayman) Limited   or any other institution organized under the laws of the Cayman Islands appointed by the Company to carry out the duties of registrar for the Shares, and any successor thereto.

 

Section 1.31         “Shares” shall mean the Company’s ordinary shares, par value $0.0001 per share, validly issued and outstanding and fully paid and may, if the Depositary so agrees after consultation with the Company, include evidence of the right to receive Shares; provided  that in no event shall Shares include evidence of the right to receive Shares with respect to which the full purchase price has not been paid or Shares as to which preemptive rights have theretofore not been validly waived or exercised; provided  further, however, that, if there shall occur any change in par or nominal value, split-up, consolidation, reclassification, exchange, conversion or any other event described in Section 4.11 in respect of the Shares of the Company, the term “Shares” shall thereafter, to the maximum extent permitted by law, represent the successor securities resulting from such event.

 

Section 1.32         “Uncertificated ADS(s)” shall have the meaning set forth in Section 2.13.

 

Section 1.33         “United States” and “U.S.” shall have the meaning assigned to it in Regulation S as promulgated by the Commission under the Securities Act.

 

ARTICLE II

 

APPOINTMENT OF DEPOSITARY; FORM OF RECEIPTS;
 DEPOSIT OF SHARES; EXECUTION AND
 DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS

 

Section 2.1            Appointment of Depositary.  The Company hereby appoints the Depositary as depositary for the Deposited Securities and hereby authorizes and directs the 

 

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Depositary to act in accordance with the terms and conditions set forth in the Deposit Agreement and the applicable ADRs.  Each Holder and each Beneficial Owner, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and the applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

 

Section 2.2            Form and Transferability of ADSs.

 

(a)           Form.  Certificated  ADSs shall be evidenced by definitive ADRs which shall be engraved, printed, lithographed or produced in such other manner as may be agreed upon by the Company and the Depositary.  ADRs may be issued under the Deposit Agreement in denominations of any whole number of ADSs.  The ADRs shall be substantially in the form set forth in Exhibit A to the Deposit Agreement, with any appropriate insertions, modifications and omissions, in each case as otherwise contemplated in the Deposit Agreement or required by law.  ADRs shall be (i) dated, (ii) signed by the manual or facsimile signature of a duly authorized signatory of the Depositary, (iii) countersigned by the manual or facsimile signature of a duly authorized signatory of the Registrar, and (iv) registered in the books maintained by the Registrar for the registration of issuances and transfers of ADSs.  No ADR and no Certificated  ADS evidenced thereby shall be entitled to any benefits under the Deposit Agreement or be valid or enforceable for any purpose against the Depositary or the Company, unless such ADR shall have been so dated, signed, countersigned and registered.  ADRs bearing the facsimile signature of a duly authorized signatory of the Depositary or the Registrar, who at the time of signature was a duly authorized signatory of the Depositary or the Registrar, as the case may be, shall bind the Depositary, notwithstanding the fact that such signatory has ceased to be so authorized prior to the delivery of such ADR by the Depositary.  The ADRs shall bear a CUSIP number that is different from any CUSIP number that was, is or may be assigned to any depositary receipts previously or subsequently issued pursuant to any other arrangement between the Depositary (or any other depositary) and the Company and which are not ADRs outstanding hereunder.

 

(b)           Legends.  The ADRs may be endorsed with, or have incorporated in the text thereof, such legends or recitals not inconsistent with the provisions of the Deposit Agreement as (i) may be necessary to enable the Depositary and the Company to perform their respective obligations hereunder, (ii) may be required to comply with any applicable laws or regulations, or with the rules and regulations of any securities exchange or market upon which ADSs may be traded, listed or quoted, or to conform with any usage with respect thereto, (iii) may be necessary to indicate any special limitations or restrictions to which any particular ADRs or ADSs are subject by reason of the date of issuance of the Deposited Securities or otherwise, or (iv) may be required by any book-entry system in which the ADSs are held. Holders and Beneficial Owners shall be deemed, for all purposes, to have notice of, and to be bound by, the terms and conditions of the legends set forth, in the case of Holders, on the ADR registered in the name of the 

 

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applicable Holders or, in the case of Beneficial Owners, on the ADR representing the ADSs owned by such Beneficial Owners.

 

(c)           Title.  Subject to the limitations contained herein and in the ADR, title to an ADR (and to each Certificated  ADS evidenced thereby) shall be transferable upon the same terms as a certificated security under the laws of the State of New York, provided that, in the case of Certificated ADSs, such ADR has been properly endorsed or is accompanied by proper instruments of transfer.  Notwithstanding any notice to the contrary, the Depositary and the Company may deem and treat the Holder of an ADS (that is, the person in whose name an ADS is registered on the books of the Depositary) as the absolute owner thereof for all purposes.  Neither the Depositary nor the Company shall have any obligation nor be subject to any liability under the Deposit Agreement or any ADR to any holder or any Beneficial Owner unless, in the case of a holder of ADSs,  such holder is the Holder registered on the books of the Depositary or, in the case of a Beneficial Owner, such Beneficial Owner, or the Beneficial Owner’s representative, is the Holder registered on the books of the Depositary.

 

(d)           Book-Entry Systems.  The Depositary shall make arrangements for the acceptance of the ADSs into DTC.  All ADSs held through DTC will be registered in the name of the nominee for DTC (currently “Cede & Co.”).  As such, the nominee for DTC will be the only “Holder” of all ADSs held through DTC.  Unless issued by the Depositary as Uncertificated ADSs, the ADSs registered in the name of Cede & Co. will be evidenced by one or more ADR(s) in the form of a “Balance Certificate,” which will provide that it represents the aggregate number of ADSs from time to time indicated in the records of the Depositary as being issued hereunder and that the aggregate number of ADSs represented thereby may from time to time be increased or decreased by making adjustments on such records of the Depositary and of DTC or its nominee as hereinafter provided.  Citibank, N.A. (or such other entity as is appointed by DTC or its nominee) may hold the “Balance Certificate” as custodian for DTC.  Each Beneficial Owner of ADSs held through DTC must rely upon the procedures of DTC and the DTC Participants to exercise or be entitled to any rights attributable to such ADSs.  The DTC Participants shall for all purposes be deemed to have all requisite power and authority to act on behalf of the Beneficial Owners of the ADSs held in the DTC Participants’ respective accounts in DTC and the Depositary shall for all purposes be authorized to rely upon any instructions and information given to it by DTC Participants.  So long as ADSs are held through DTC or unless otherwise required by law, ownership of beneficial interests in the ADSs registered in the name of the nominee for DTC will be shown on, and transfers of such ownership will be effected only through, records maintained by (i) DTC or its nominee (with respect to the interests of DTC Participants), or (ii) DTC Participants or their nominees (with respect to the interests of clients of DTC Participants).

 

Section 2.3            Deposit of Shares.  Subject to the terms and conditions of the Deposit Agreement and applicable law, Shares or evidence of rights to receive Shares (other than Restricted Securities) may be deposited by any person (including the Depositary in its individual capacity but subject, however, in the case of the Company or any Affiliate of the Company, to Section 5.7) at any time, whether or not the transfer books of the Company or the Share Registrar, if any, are closed, by Delivery of the Shares to the Custodian.  Every deposit of Shares shall be accompanied by the following:  (A) (i) in the case of Shares represented by certificates 

 

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issued in registered form, appropriate instruments of transfer or endorsement, in a form reasonably satisfactory to the Custodian, (ii) in the case of Shares represented by certificates in bearer form. the requisite coupons and talons pertaining thereto, and (iii) in the case of Shares delivered by book-entry transfer, confirmation of such book-entry transfer to the Custodian or that irrevocable instructions have been given to cause such Shares to be so transferred, (B) such certifications and payments (including, without limitation, the Depositary’s fees and related charges) and evidence of such payments (including, without limitation, stamping or otherwise marking such Shares by way of receipt) as may be required by the Depositary or the Custodian in accordance with the provisions of the Deposit Agreement and applicable law, (C) if the Depositary so requires, a written order directing the Depositary to issue and deliver to, or upon the written order of, the person(s) stated in such order the number of ADSs representing the Shares so deposited, (D) evidence reasonably satisfactory to the Depositary (which may be an opinion of counsel) that all necessary approvals have been granted by, or there has been compliance with the rules and regulations of, any applicable governmental agency in the Cayman Islands, and (E) if the Depositary so requires, (i) an agreement, assignment or instrument reasonably satisfactory to the Depositary or the Custodian which provides for the prompt transfer by any person in whose name the Shares are or have been recorded to the Custodian of any distribution, or right to subscribe for additional Shares or to receive other property in respect of any such deposited Shares or, in lieu thereof, such indemnity or other agreement as shall be reasonably satisfactory to the Depositary or the Custodian and (ii) if the Shares are registered in the name of the person on whose behalf they are presented for deposit, a proxy or proxies entitling the Custodian to exercise voting rights in respect of the Shares for any and all purposes until the Shares so deposited are registered in the name of the Depositary, the Custodian or any nominee.

 

Without limiting any other provision of the Deposit Agreement, the Depositary shall instruct the Custodian not to, and the Depositary shall not knowingly, accept for deposit (a) any Restricted Securities except as contemplated by Section 2.14) nor (b) any fractional Shares or fractional Deposited Securities nor (c) a number of Shares or Deposited Securities which upon application of the ADS to Shares ratio would give rise to fractional ADSs. No Shares shall be accepted for deposit unless accompanied by evidence, if any is required by the Depositary, that is reasonably satisfactory to the Depositary or the Custodian that all conditions to such deposit have been satisfied by the person depositing such Shares under the laws and regulations of the Cayman Islands and any necessary approval has been granted by any applicable governmental body in the Cayman Islands, if any.  The Depositary may issue ADSs against evidence of rights to receive Shares from the Company, any agent of the Company or any custodian, registrar, transfer agent, clearing agency or other entity involved in ownership or transaction records in respect of the Shares.  Such evidence of rights shall consist of written blanket or specific guarantees of ownership of Shares furnished by the Company or any such custodian, registrar, transfer agent, clearing agency or other entity involved in ownership or transaction records in respect of the Shares.

 

Without limitation of the foregoing, the Depositary shall not knowingly accept for deposit under the Deposit Agreement (A) any Shares or other securities required to be registered under the provisions of the Securities Act, unless (i) a registration statement is in effect as to such Shares or other securities or (ii) the deposit is made upon terms contemplated in Section 

 

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2.14, or (B) any Shares or other securities the deposit of which would violate any provisions of the Articles of Association of the Company.  For purposes of the foregoing sentence, the Depositary shall be entitled to rely upon representations and warranties made or deemed made pursuant to the Deposit Agreement and shall not be required to make any further investigation.  The Depositary will comply with written instructions of the Company (received by the Depositary reasonably in advance) not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company’s compliance with the securities laws of the United States.

 

Section 2.4            Registration and Safekeeping of Deposited Securities.  The Depositary shall instruct the Custodian upon each Delivery of certificates representing registered Shares being deposited hereunder with the Custodian (or other Deposited Securities pursuant to Article IV hereof), together with the other documents above specified, to present such certificate(s), together with the appropriate instrument(s) of transfer or endorsement, duly stamped, if applicable, to the Share Registrar for transfer and registration of the Shares (as soon as transfer and registration can be accomplished and at the expense of the person for whom the deposit is made) in the name of the Depositary, the Custodian or a nominee of either.  Deposited Securities shall be held by the Depositary or by a Custodian for the account and to the order of the Depositary or a nominee in each case on behalf of the Holders and Beneficial Owners, at such place or places as the Depositary or the Custodian shall determine.

 

Section 2.5            Issuance of ADSs.  The Depositary has made arrangements with the Custodian for the Custodian to confirm to the Depositary upon receipt of a deposit of Shares (i) that a deposit of Shares has been made pursuant to Section 2.3, (ii) that such Deposited Securities have been recorded in the name of the Depositary, the Custodian or a nominee of either on the shareholders’ register maintained by or on behalf of the Company by the Share Registrar if registered Shares have been deposited or, if deposit is made by book-entry transfer, confirmation of such transfer on the books of the Company or the applicable book-entry settlement entity, if any, (iii) that all required documents have been received, and (iv) the person(s) to whom or upon whose order ADSs are deliverable in respect thereof and the number of ADSs to be so delivered.  Such notification may be made by letter, cable, telex, SWIFT message or, at the risk and expense of the person making the deposit, by facsimile or other means of electronic transmission.  Upon receiving such notice from the Custodian, the Depositary, subject to the terms and conditions of the Deposit Agreement and applicable law, shall issue the ADSs representing the Shares so deposited to or upon the order of the person(s) named in the notice delivered to the Depositary and, if applicable,  shall execute and deliver at its Principal Office Receipt(s) registered in the name(s) requested by such person(s) and evidencing the aggregate number of ADSs to which such person(s) are entitled, but, in each case, only upon payment to the Depositary of the charges of the Depositary for accepting a deposit, issuing ADSs (as set forth in Section 5.9 and Exhibit B hereto) and all taxes and governmental charges and fees payable in connection with such deposit and the transfer of the Shares and the issuance of the ADS(s).  The Depositary shall only issue ADSs in whole numbers and deliver, if applicable, ADR(s) evidencing whole numbers of ADSs.  Nothing herein shall prohibit any Pre-Release Transaction upon the terms set forth in the Deposit Agreement.

 

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Section 2.6            Transfer, Combination and Split-up of ADRs.  The Registrar shall register the transfer of ADRs (and of the ADSs represented thereby) on the books maintained for such purpose and the Depositary shall (x) cancel such ADRs and execute new ADRs evidencing the same aggregate number of ADSs as those evidenced by the ADRs canceled by the Depositary, (y) cause the Registrar to countersign such new ADRs and (z) Deliver such new ADRs to or upon the order of the person entitled thereto, if each of the following conditions has been satisfied: (i) the ADRs have been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a transfer thereof, (ii) the surrendered ADRs have been properly endorsed or are accompanied by proper instruments of transfer (including signature guarantees in accordance with standard securities industry practice), (iii) the surrendered ADRs have been duly stamped (if required by the laws of the State of New York or of the United States), and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 and Exhibit B hereto) have been paid, subject, however, in each case, to the terms and conditions of the applicable ADRs, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

(a)           Combination & Split Up.  The Registrar shall register the split-up or combination of ADRs (and of the ADSs represented thereby) on the books maintained for such purpose and the Depositary shall (x) cancel such ADRs and execute new ADRs for the number of ADSs requested, but in the aggregate not exceeding the number of ADSs evidenced by the ADRs cancelled by the Depositary, (y) cause the Registrar to countersign such new ADRs and (z) Deliver such new ADRs to or upon the order of the Holder thereof, if each of the following conditions has been satisfied:  (i) the ADRs have been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a split-up or combination thereof, and (ii) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 and Exhibit B hereto) have been paid, subject, however, in each case, to the terms and conditions of the applicable ADRs, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

(b)           Co-Transfer Agents.  The Depositary may appoint one or more co-transfer agents for the purpose of effecting transfers, combinations and split-ups of ADRs at designated transfer offices on behalf of the Depositary and the Depositary shall notify the Company in writing upon any such appointment.  In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Holders or persons entitled to such ADRs and will be entitled to protection and indemnity to the same extent as the Depositary.  Such co-transfer agents may be removed and substitutes appointed by the Depositary and the Depositary shall notify the Company in writing of any such removal or substitution.  Each co-transfer agent appointed under this Section 2.6 (other than the Depositary) shall give notice in writing to the Depositary accepting such appointment and agreeing to be bound by the applicable terms of the Deposit Agreement.

 

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Section 2.7            Surrender of ADSs and Withdrawal of Deposited Securities.  The Holder of ADSs shall be entitled to Delivery (at the Custodian’s designated office) of the Deposited Securities at the time represented by the ADSs upon satisfaction of each of the following conditions: (i) the Holder (or a duly-authorized attorney of the Holder) has duly Delivered ADSs to the Depositary at its Principal Office (and if applicable, the ADRs evidencing such ADSs) for the purpose of withdrawal of the Deposited Securities represented thereby, (ii) if applicable and  so required by the Depositary, the ADRs Delivered to the Depositary for such purpose have been properly endorsed in blank or are accompanied by proper instruments of transfer in blank (including signature guarantees in accordance with standard securities industry practice), (iii) if so required by the Depositary, the Holder of the ADSs has executed and delivered to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be Delivered to or upon the written order of the person(s) designated in such order, and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 and Exhibit B) have been paid, subject, however, in each case, to the terms and conditions of the ADRs evidencing the surrendered ADSs, of the Deposit Agreement, of the Company’s Articles of Association and of any applicable laws and the rules of the applicable book-entry settlement entity, and to any provisions of or governing the Deposited Securities , in each case as in effect at the time thereof.

 

Upon satisfaction of each of the conditions specified above, the Depositary (i) shall cancel the ADSs Delivered to it (and, if applicable, the ADRs evidencing the ADSs so Delivered), (ii) shall direct the Registrar to record the cancellation of the ADSs so Delivered on the books maintained for such purpose, and (iii) shall direct the Custodian to Deliver, or cause the Delivery of, in each case, without unreasonable delay, the Deposited Securities represented by the ADSs so canceled together with any certificate or other document of title for the Deposited Securities, or evidence of the electronic transfer thereof (if available), as the case may be, to or upon the written order of the person(s) designated in the order delivered to the Depositary for such purpose, subject however, in each case, to the terms and conditions of the Deposit Agreement, of the ADRs evidencing the ADSs so cancelled, of the Articles of Association of the Company, of any applicable laws and of the rules of the applicable book-entry settlement entity, and to the terms and conditions of or governing the Deposited Securities, in each case as in effect at the time thereof.

 

The Depositary shall not accept for surrender ADSs representing less than one (1) Share.  In the case of the Delivery to it of ADSs representing a number other than a whole number of Shares, the Depositary shall cause ownership of the appropriate whole number of Shares to be Delivered in accordance with the terms hereof, and shall, at the discretion of the Depositary, either (i) return to the person surrendering such ADSs the number of ADSs representing any remaining fractional Share, or (ii) sell or cause to be sold the fractional Share represented by the ADSs so surrendered in a riskless capacity, in a public sale or if no public sale market is available, in a private sale, and remit the proceeds of such sale (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the person surrendering the ADSs.

 

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Notwithstanding anything else contained in any ADR or the Deposit Agreement, the Depositary may make delivery at the Principal Office of the Depositary of (i) any cash dividends or cash distributions, or (ii) any proceeds from the sale of any distributions of shares or rights, which are at the time held by the Depositary in respect of the Deposited Securities represented by the ADSs surrendered for cancellation and withdrawal.  At the request, risk and expense of any Holder so surrendering ADSs, and for the account of such Holder, the Depositary shall direct the Custodian to forward (to the extent permitted by law) any cash or other property (other than securities) held by the Custodian in respect of the Deposited Securities represented by such ADSs to the Depositary for delivery at the Principal Office of the Depositary.  Such direction shall be given by letter or, at the request, risk and expense of such Holder, by cable, telex or facsimile transmission.

 

Section 2.8                                   Limitations on Execution and Delivery, Transfer, etc. of ADSs; Suspension of Delivery, Transfer, etc.

 

(a)           Additional Requirements.  As a condition precedent to the execution and delivery, registration of issuance, transfer, split-up, combination or surrender, of any ADS, the delivery of any distribution thereon, or the withdrawal of any Deposited Securities, the Depositary or the Custodian may require (i) payment from the depositor of Shares or presenter of ADSs or of an ADR of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees and charges of the Depositary as provided in Section 5.9 and Exhibit B, (ii) the production of proof reasonably satisfactory to it as to the identity and genuineness of any signature or any other matter contemplated by Section 3.1, and (iii) compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal of Deposited Securities and (B) such reasonable regulations as the Depositary and the Company may establish consistent with the provisions of the representative ADR, if applicable, the Deposit Agreement and applicable law.

 

(b)           Additional Limitations.  The issuance of ADSs against deposits of Shares generally or against deposits of particular Shares may be suspended, or the deposit of particular Shares may be refused, or the registration of transfer of ADSs in particular instances may be refused, or the registration of transfers of ADSs generally may be suspended, during any period when the transfer books of the Company, the Depositary, a Registrar or the Share Registrar are closed or if any such action is deemed necessary or advisable by the Depositary (whereupon the Depositary shall notify the Company in writing) or the Company, in good faith, at any time or from time to time because of any requirement of law or regulation, any government or governmental body or commission or any securities exchange on which the ADSs or Shares are listed, or under any provision of the Deposit Agreement or the representative ADR(s), if applicable, or under any provision of, or governing, the Deposited Securities, or because of a meeting of shareholders of the Company or for any other reason, subject, in all cases, to Section 7.8.

 

(c)           Regulatory Restrictions.  Notwithstanding any provision of the Deposit Agreement or any ADR(s) to the contrary, Holders are entitled to surrender outstanding ADSs to 

 

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withdraw the Deposited Securities associated herewith at any time subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the deposit of Shares in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or to the withdrawal of the Deposited Securities, and (iv) other circumstances specifically contemplated by Instruction I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time).

 

Section 2.9            Lost ADRs, etc.  In case any ADR shall be mutilated, destroyed, lost, or stolen, the Depositary shall execute and deliver a new ADR of like tenor at the expense of the Holder (a) in the case of a mutilated ADR, in exchange of and substitution for such mutilated ADR upon cancellation thereof, or (b) in the case of a destroyed, lost or stolen ADR, in lieu of and in substitution for such destroyed, lost, or stolen ADR, after the Holder thereof (i) has submitted to the Depositary a written request for such exchange and substitution before the Depositary has notice that the ADR has been acquired by a bona fide purchaser, (ii) has provided such security or indemnity (including an indemnity bond) as may be required by the Depositary to save it and any of its agents harmless, and (iii) has satisfied any other reasonable requirements imposed by the Depositary, including, without limitation, evidence reasonably satisfactory to the Depositary of such destruction, loss or theft of such ADR, the authenticity thereof and the Holder’s ownership thereof.

 

Section 2.10         Cancellation and Destruction of Surrendered ADRs; Maintenance of Records.  All ADRs surrendered to the Depositary shall be canceled by the Depositary.  Canceled ADRs shall not be entitled to any benefits under the Deposit Agreement or be valid or enforceable against the Depositary or the Company for any purpose. The Depositary is authorized to destroy ADRs so canceled, provided the Depositary maintains a record of all destroyed ADRs.  Any ADSs held in book-entry form (i.e., through accounts at DTC) shall be deemed canceled when the Depositary causes the number of ADSs evidenced by the Balance Certificate to be reduced by the number of ADSs surrendered (without the need to physically destroy the Balance Certificate). .

 

Section 2.11         Escheatment.  In the event any unclaimed property relating to the ADSs, for any reason, is in the possession of Depositary and has not been claimed by the Holder thereof or cannot be delivered to the Holder thereof through usual channels, the Depositary shall, upon expiration of any applicable statutory period relating to abandoned property laws, escheat such unclaimed property to the relevant authorities in accordance with the laws of each of the relevant States of the United States.

 

Section 2.12         Partial Entitlement ADSs.  In the event any Shares are deposited which (i) entitle the holders thereof to receive a per-share distribution or other entitlement in an amount different from the Shares then on deposit or (ii) are not fully fungible (including, without limitation, as to settlement or trading) with the Shares then on deposit (the Shares then on deposit collectively, “Full Entitlement Shares” and the Shares with different entitlement, “Partial Entitlement Shares”), the Depositary shall (i) cause the Custodian to hold Partial Entitlement Shares separate and distinct from Full Entitlement Shares, and (ii) subject to the terms of the Deposit Agreement, issue ADSs representing Partial Entitlement Shares which are separate and 

 

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distinct from the ADSs representing Full Entitlement Shares, by means of separate CUSIP numbering and legending (if necessary) and, if applicable, by issuing ADRs evidencing such ADSs with applicable notations thereon (“Partial Entitlement ADSs/ADRs” and “Full Entitlement ADSs/ADRs”, respectively).  If and when Partial Entitlement Shares become Full Entitlement Shares, the Depositary shall (a) give notice thereof to Holders of Partial Entitlement ADSs and give Holders of Partial Entitlement ADRs the opportunity to exchange such Partial Entitlement ADRs for Full Entitlement ADRs, (b) cause the Custodian to transfer the Partial Entitlement Shares into the account of the Full Entitlement Shares, and (c) take such actions as are necessary to remove the distinctions between (i) the Partial Entitlement ADRs and ADSs, on the one hand, and (ii) the Full Entitlement ADRs and ADSs on the other.  Holders and Beneficial Owners of Partial Entitlement ADSs shall only be entitled to the entitlements of Partial Entitlement Shares.  Holders and Beneficial Owners of Full Entitlement ADSs shall be entitled only to the entitlements of Full Entitlement Shares. All provisions and conditions of the Deposit Agreement shall apply to Partial Entitlement ADRs and ADSs to the same extent as Full Entitlement ADRs and ADSs, except as contemplated by this Section 2.12.  The Depositary is authorized to take any and all other actions as may be necessary (including, without limitation, making the necessary notations on ADRs) to give effect to the terms of this Section 2.12.  The Company agrees to give timely written notice to the Depositary if any Shares issued or to be issued are Partial Entitlement Shares and shall assist the Depositary with the establishment of procedures enabling the identification of Partial Entitlement Shares upon Delivery to the Custodian.

 

Section 2.13         Certificated/Uncertificated ADSs.  Notwithstanding any other provision of the Deposit Agreement, the Depositary may, at any time and from time to time, issue ADSs that are not evidenced by ADRs (such ADSs, the “Uncertificated ADS(s)” and the ADS(s) evidenced by ADR(s), the “Certificated ADS(s)”).  When issuing and maintaining Uncertificated ADS(s) under the Deposit Agreement, the Depositary shall at all times be subject to (i) the standards applicable to registrars and transfer agents maintaining direct registration systems for equity securities in New York and issuing uncertificated securities under New York law, and (ii) the terms of New York law applicable to uncertificated equity securities.  Uncertificated ADSs shall not be represented by any instruments but shall be evidenced by registration in the books of the Depositary maintained for such purpose. Holders of Uncertificated ADSs, that are not subject to any registered pledges, liens, restrictions or adverse claims of which the Depositary has notice at such time, shall at all times have the right to exchange the Uncertificated ADS(s) for Certificated ADS(s) of the same type and class, subject in each case to applicable laws and any rules and regulations the Depositary may have established in respect of the Uncertificated ADSs.  Holders of Certificated ADSs shall, if the Depositary maintains a direct registration system for the ADSs, have the right to exchange the Certificated ADSs for Uncertificated ADSs upon (i) the due surrender of the Certificated ADS(s) to the Depositary for such purpose and (ii) the presentation of a written request to that effect to the Depositary, subject in each case to (a) all liens and restrictions noted on the ADR evidencing the Certificated ADS(s) and all adverse claims of which the Depositary then has notice, (b) the terms of the Deposit Agreement and the rules and regulations that the Depositary may establish for such purposes hereunder, (c) applicable law, and (d) payment of the Depositary fees and expenses applicable to such exchange of Certificated ADS(s) for Uncertificated ADS(s). Uncertificated ADSs shall in 

 

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all respects be identical to Certificated ADS(s) of the same type and class, except that (i) no ADR(s) shall be, or shall need to be, issued to evidence Uncertificated ADS(s), (ii) Uncertificated ADS(s) shall, subject to the terms of the Deposit Agreement, be transferable upon the same terms and conditions as uncertificated securities under New York law, (iii) the ownership of Uncertificated ADS(s) shall be recorded on the books of the Depositary maintained for such purpose and evidence of such ownership shall be reflected in periodic statements provided by the Depositary to the Holder(s) in accordance with applicable New York law, (iv) the Depositary may from time to time, upon notice to the Holders of Uncertificated ADSs affected thereby, establish rules and regulations, and amend or supplement existing rules and regulations, as may be deemed reasonably necessary to maintain Uncertificated ADS(s) on behalf of Holders, provided that (a) such rules and regulations do not conflict with the terms of the Deposit Agreement and applicable law, and (b) the terms of such rules and regulations are readily available to Holders upon request, (v) the Uncertificated ADS(s) shall not be entitled to any benefits under the Deposit Agreement or be valid or enforceable for any purpose against the Depositary or the Company unless such Uncertificated ADS(s) is/are registered on the books of the Depositary maintained for such purpose, (vi) the Depositary may, in connection with any deposit of Shares resulting in the issuance of Uncertificated ADSs and with any transfer, pledge, release and cancellation of Uncertificated ADSs, require the prior receipt of such documentation as the Depositary may deem reasonably appropriate, and (vii) upon termination of the Deposit Agreement, the Depositary shall not require Holders of Uncertificated ADSs to affirmatively instruct the Depositary before remitting proceeds from the sale of the Deposited Securities represented by such Holders’ Uncertificated ADSs under the terms of Section 6.2 of the Deposit Agreement.  When issuing ADSs under the terms of the Deposit Agreement, including, without limitation, issuances pursuant to Sections 2.5, 4.2, 4.3, 4.4, 4.5 and 4.11, the Depositary may in its discretion determine to issue Uncertificated ADSs rather than Certificated ADSs, unless otherwise specifically instructed by the applicable Holder to issue Certificated ADSs.  All provisions and conditions of the Deposit Agreement shall apply to Uncertificated ADSs to the same extent as to Certificated ADSs, except as contemplated by this Section 2.13.  The Depositary is authorized and directed to take any and all actions and establish any and all procedures deemed reasonably necessary to give effect to the terms of this Section 2.13.  Any references in the Deposit Agreement or any ADR(s) to the terms “American Depositary Share(s)” or “ADS(s)” shall, unless the context otherwise requires, include Certificated ADS(s) and Uncertificated ADS(s).  Except as set forth in this Section 2.13 and except as required by applicable law, the Uncertificated ADSs shall be treated as ADSs issued and outstanding under the terms of the Deposit Agreement.  In the event that, in determining the rights and obligations of parties hereto with respect to any Uncertificated ADSs, any conflict arises between (a) the terms of the Deposit Agreement (other than this Section 2.13) and (b) the terms of this Section 2.13, the terms and conditions set forth in this Section 2.13 shall be controlling and shall govern the rights and obligations of the parties to the Deposit Agreement pertaining to the Uncertificated ADSs.

 

Section 2.14         Restricted ADSs.  The Depositary shall, at the request and expense of the Company, establish procedures enabling the deposit hereunder of Shares that are Restricted Securities in order to enable the holder of such Shares to hold its ownership interests in such Restricted Shares in the form of ADSs issued under the terms hereof (such Shares, “Restricted 

 

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Shares”).  Upon receipt of a written request from the Company to accept Restricted Shares for deposit hereunder, the Depositary agrees to establish procedures permitting the deposit of such Restricted Shares and the issuance of ADSs representing the right to receive, subject to the terms of the Deposit Agreement and the applicable ADR (if issued as a Certificated ADS), such deposited Restricted Shares (such ADSs, the “Restricted ADSs,” and the ADRs evidencing such Restricted ADSs, the “Restricted ADRs”).  Notwithstanding anything contained in this Section 2.14, the Depositary and the Company may, to the extent not prohibited by law, agree to issue the Restricted ADSs in uncertificated form (“Uncertificated Restricted ADSs”) upon such terms and conditions as the Company and the Depositary may deem necessary and appropriate.  The Company shall assist the Depositary in the establishment of such procedures and agrees that it shall take all steps necessary and reasonably satisfactory to the Depositary to insure that the establishment of such procedures does not violate the provisions of the Securities Act or any other applicable laws.  The depositors of such Restricted Shares and the  Holders of the Restricted ADSs may be required prior to the deposit of such Restricted Shares, the transfer of the Restricted ADRs and the Restricted ADSs evidenced thereby or the withdrawal of the Restricted Shares represented by Restricted ADSs to provide such written certifications or agreements as the Depositary or the Company may require.  The Company shall provide to the Depositary in writing the legend(s) to be affixed to the Restricted ADRs (if the Restricted ADSs are to be issued as Certificated ADSs), or to be included in the statements issued from time to time to Holders of Uncertificated ADSs (if issued as Uncertificated Restricted ADSs), which legends shall (i) be in a form reasonably satisfactory to the Depositary and (ii) contain the specific circumstances under which the Restricted ADSs, and, if applicable, the Restricted ADRs evidencing the Restricted ADSs, may be transferred or the Restricted Shares withdrawn.  The Restricted ADSs issued upon the deposit of Restricted Shares shall be separately identified on the books of the Depositary and the Restricted Shares so deposited shall, to the extent required by law, be held separate and distinct from the other Deposited Securities held hereunder.  The Restricted Shares and the Restricted ADSs shall not be eligible for Pre-Release Transactions.  The Restricted ADSs shall not be eligible for inclusion in any book-entry settlement system, including, without limitation, DTC, and shall not in any way be fungible with the ADSs issued under the terms hereof that are not Restricted ADSs.  The Restricted ADSs, and, if applicable, the Restricted ADRs evidencing the Restricted ADSs, shall be transferable only by the Holder thereof upon delivery to the Depositary of (i) all documentation otherwise contemplated by the Deposit Agreement and (ii) an opinion of counsel reasonably satisfactory to the Depositary setting forth, inter alia, the conditions upon which the Restricted ADSs presented, and, if applicable, the Restricted ADRs evidencing the Restricted ADSs, are transferable by the Holder thereof under applicable securities laws and the transfer restrictions contained in the legend applicable to the Restricted ADSs presented for transfer.  Except as set forth in this Section 2.14 and except as required by applicable law, the Restricted ADRs and the Restricted ADSs evidenced thereby shall be treated as ADRs and ADSs issued and outstanding under the terms of the Deposit Agreement.  In the event that, in determining the rights and obligations of parties hereto with respect to any Restricted ADSs, any conflict arises between (a) the terms of the Deposit Agreement (other than this Section 2.14) and (b) the terms of (i) this Section 2.14 or (ii) the applicable Restricted ADR, the terms and conditions set forth in this Section 2.14 and of the Restricted ADR shall be controlling and shall govern the rights and obligations of the parties to 

 

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the Deposit Agreement pertaining to the deposited Restricted Shares, the Restricted ADSs and Restricted ADRs.

 

If the Restricted ADRs, the Restricted ADSs and the Restricted Shares cease to be Restricted Securities, the Depositary, upon receipt of (x) an opinion of counsel reasonably satisfactory to the Depositary setting forth, inter alia, that the Restricted ADRs, the Restricted ADSs and the Restricted Shares are not as of such time Restricted Securities, and (y) instructions from the Company to remove the restrictions applicable to the Restricted ADRs, the Restricted ADSs and the Restricted Shares, shall (i) eliminate the distinctions and separations that may have been established between the applicable Restricted Shares held on deposit under this Section 2.14 and the other Shares held on deposit under the terms of the Deposit Agreement that are not Restricted Shares, (ii) treat the newly unrestricted ADRs and ADSs on the same terms as, and fully fungible with, the other ADRs and ADSs issued and outstanding under the terms of the Deposit Agreement that are not Restricted ADRs or Restricted ADSs, (iii) take all actions necessary to remove any distinctions, limitations and restrictions previously existing under this Section 2.14 between the applicable Restricted ADRs and Restricted ADSs, respectively, on the one hand, and the other ADRs and ADSs that are not Restricted ADRs or Restricted ADSs, respectively, on the other hand, including, without limitation, by making the newly-unrestricted ADSs eligible for Pre-Release Transactions and for inclusion in the applicable book-entry settlement systems.

 

ARTICLE III

 

CERTAIN OBLIGATIONS OF HOLDERS
 AND BENEFICIAL OWNERS OF ADSs

 

Section 3.1            Proofs, Certificates and Other Information.  Any person presenting Shares for deposit, any Holder and any Beneficial Owner may be required, and every Holder and Beneficial Owner agrees, from time to time to provide to the Depositary and the Custodian such proof of citizenship or residence, taxpayer status, payment of all applicable taxes or other governmental charges, exchange control approval, legal or beneficial ownership of ADSs and Deposited Securities, compliance with applicable laws, the terms of the Deposit Agreement or the ADR(s) evidencing the ADSs and the provisions of, or governing, the Deposited Securities, to execute such certifications and to make such representations and warranties, and to provide such other information and documentation (or, in the case of Shares in registered form presented for deposit, such information relating to the registration on the books of the Company or of the Share Registrar) as the Depositary or the Custodian may deem necessary or proper or as the Company may reasonably require by written request to the Depositary consistent with its obligations under the Deposit Agreement and the applicable ADR(s). The Depositary and the Registrar, as applicable, may withhold the execution or delivery or registration of transfer of any ADR or ADS or the distribution or sale of any dividend or distribution of rights or of the proceeds thereof or, to the extent not limited by the terms of Section 7.8, the delivery of any Deposited Securities until such proof or other information is filed or such certifications are executed, or such representations and warranties are made, or such other documentation or information provided, in each case to the Depositary’s, the Registrar’s and the Company’s satisfaction.  At the Company’s sole cost and expense, the Depositary shall provide the Company, in a timely manner, with copies or originals if necessary and appropriate of (i) any 

 

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such proofs of citizenship or residence, taxpayer status, or exchange control approval or copies of written representations and warranties which it receives from Holders and Beneficial Owners, and (ii) any other information or documents which the Company may reasonably request and which the Depositary shall request and receive from any Holder or Beneficial Owner or any person presenting Shares for deposit or ADSs for cancellation, transfer or withdrawal.  Nothing herein shall obligate the Depositary to (i) obtain any information for the Company if not provided by the Holders or Beneficial Owners, or (ii) verify or vouch for the accuracy of the information so provided by the Holders or Beneficial Owners.

 

Section 3.2            Liability for Taxes and Other Charges.  Any tax or other governmental charge payable by the Custodian or by the Depositary with respect to any Deposited Securities, ADSs or ADRs shall be payable by the Holders and Beneficial Owners to the Depositary.  The Company, the Custodian and/or the Depositary may withhold or deduct from any distributions made in respect of Deposited Securities, and may sell in a riskless principal capacity in a public sale or if no public market is available, in a private sale, for the account of a Holder and/or Beneficial Owner any or all of the Deposited Securities and apply such distributions and sale proceeds in payment of, any taxes (including applicable interest and penalties) or charges that are or may be payable by Holders or Beneficial Owners in respect of the ADSs, Deposited Securities and ADRs, the Holder and the Beneficial Owner remaining liable for any deficiency.  The Custodian may refuse the deposit of Shares and the Depositary may refuse to issue ADSs, to deliver ADRs, register the transfer of ADSs, register the split-up or combination of ADRs and (subject to Section 7.8) the withdrawal of Deposited Securities until payment in full of such tax, charge, penalty or interest is received.  Every Holder and Beneficial Owner agrees to indemnify the Depositary, the Company, the Custodian, and any of their respective agents, officers, directors, employees and Affiliates for, and to hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any tax benefit obtained for such Holder and/or Beneficial Owner.

 

Section 3.3            Representations and Warranties on Deposit of Shares.  Each person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that (i) such Shares and the certificates therefor are duly authorized, validly issued, fully paid, non-assessable and legally obtained by such person, (ii) all preemptive (and similar) rights, if any, with respect to such Shares have been validly waived or exercised, (iii) the person making such deposit is duly authorized so to do, (iv) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and (v) the Shares presented for deposit are not, and the ADSs issuable upon such deposit will not be, Restricted Securities (except as contemplated in Section 2.14), and (vi) the Shares presented for deposit have not been stripped of any rights or entitlements.  Such representations and warranties shall survive the deposit and withdrawal of Shares, the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs.  If any such representations or warranties are false in any way, the Company and the Depositary shall be authorized, at the cost and expense of the person depositing Shares, to take any and all actions necessary to correct the consequences thereof.

 

Section 3.4            Compliance with Information Requests. Notwithstanding any other provision of the Deposit Agreement or any ADR(s), each Holder and Beneficial Owner agrees to 

 

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comply with requests from the Company pursuant to applicable law, the rules and requirements of Nasdaq Stock Market LLC, and any other stock exchange on which the Shares or ADSs are, or will be, registered, traded or listed or the Articles of Association of the Company, which are made to provide information, inter alia, as to the capacity in which such Holder or Beneficial Owner owns ADSs (and Shares as the case may be) and regarding the identity of any other person(s) interested in such ADSs and the nature of such interest and various other matters, whether or not they are Holders and/or Beneficial Owners at the time of such request. The Depositary agrees to use its reasonable efforts to forward, upon the request of the Company and at the Company’s expense, any such request from the Company to the Holders and to forward to the Company any such responses to such requests received by the Depositary.

 

Section 3.5            Ownership Restrictions.  Notwithstanding any other provision in the Deposit Agreement or any ADR, the Company may restrict transfers of the Shares where such transfer might result in ownership of Shares exceeding limits imposed by applicable law or the Articles of Association of the Company.  The Company may also restrict, in such manner as it deems appropriate, transfers of the ADSs where such transfer may result in the total number of Shares represented by the ADSs owned by a single Holder or Beneficial Owner to exceed any such limits. The Company may, in its sole discretion but subject to applicable law, instruct the Depositary to take action with respect to the ownership interest of any Holder or Beneficial Owner in excess of the limits set forth in the preceding sentence, including, but not limited to, the imposition of restrictions on the transfer of ADSs, the removal or limitation of voting rights or mandatory sale or disposition on behalf of a Holder or Beneficial Owner of the Shares represented by the ADSs held by such Holder or Beneficial Owner in excess of such limitations, if and to the extent such disposition is permitted by applicable law and the Articles of Association of the Company.  Nothing herein shall be interpreted as obligating the Depositary or the Company to ensure compliance with the ownership restrictions described in this Section 3.5.

 

Section 3.6            Reporting Obligations and Regulatory Approvals. Applicable laws and regulations may require holders and beneficial owners of Shares, including the Holders and Beneficial Owners of ADSs, to satisfy reporting requirements and obtain regulatory approvals in certain circumstances.  Holders and Beneficial Owners of ADSs are solely responsible for determining and complying with such reporting requirements and obtaining such approvals. Each Holder and each Beneficial Owner hereby agrees to make such determination, file such reports, and obtain such approvals to the extent and in the form required by applicable laws and regulations as in effect from time to time.  Neither the Depositary, the Custodian, the Company or any of their respective agents or affiliates shall be required to take any actions whatsoever on behalf of Holders or Beneficial Owners to determine or satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.

 

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ARTICLE IV

 

THE DEPOSITED SECURITIES

 

Section 4.1            Cash Distributions.  Whenever the Company intends to make a distribution of a cash dividend or other cash distribution, the Company shall give notice thereof to the Depositary at least twenty (20) days  (or such other number of days as the Depositary and the Company may from time to time agree to)  prior to the proposed distribution specifying, inter  alia, the record date applicable for determining the holders of Deposited Securities entitled to receive such distribution.  Upon the timely receipt of such notice, the Depositary shall establish an ADS Record Date upon the terms described in Section 4.9.  Upon receipt of confirmation from the Custodian of the receipt of any cash dividend or other cash distribution on any Deposited Securities, or upon receipt of proceeds from the sale of any Deposited Securities or any other entitlements held in respect of Deposited Securities under the terms hereof, the Depositary will (i) if at the time of receipt thereof any amounts received in a Foreign Currency can, in the judgment of the Depositary (pursuant to Section 4.8), be converted on a practicable basis into Dollars transferable to the United States, promptly convert or cause to be converted such cash dividend, distribution or proceeds into Dollars (on the terms described in Section 4.8), (ii) if applicable and unless previously established, establish the ADS Record Date upon the terms described in Section 4.9, and (iii) distribute promptly the amount thus received (net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the Holders entitled thereto as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date.  The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Holder a fraction of one cent, and any balance not so distributed shall be held by the Depositary (without liability for interest thereon) and shall be added to and become part of the next sum received by the Depositary for distribution to Holders of ADSs outstanding at the time of the next distribution.  If the Company, the Custodian or the Depositary is required to withhold and does withhold from any cash dividend or other cash distribution in respect of any Deposited Securities an amount on account of taxes, duties or other governmental charges, the amount distributed to Holders on the ADSs representing such Deposited Securities shall be reduced accordingly.  Such withheld amounts shall be forwarded by the Company, the Custodian or the Depositary to the relevant governmental authority.  Evidence of payment thereof by the Company shall be forwarded by the Company to the Depositary upon request.

 

Section 4.2            Distribution in Shares.  Whenever the Company intends to make a distribution that consists of a dividend in, or free distribution of, Shares, the Company shall give notice thereof to the Depositary at least twenty (20) days (or such other number of days as the Depositary and the Company may from time to time agree to)  prior to the proposed distribution, specifying, inter  alia, the record date applicable to holders of Deposited Securities entitled to receive such distribution.  Upon the timely receipt of such notice from the Company, the Depositary shall establish the ADS Record Date upon the terms described in Section 4.9.  Upon receipt of confirmation from the Custodian of the receipt of the Shares so distributed by the Company, the Depositary shall either (i) subject to Section 5.9, distribute to the Holders as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date, additional ADSs, which represent in the aggregate the number of Shares received as such 

 

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dividend, or free distribution, subject to the other terms of the Deposit Agreement (including, without limitation, (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes), or (ii) if additional ADSs are not so distributed, take all actions necessary so that each ADS issued and outstanding after the ADS Record Date shall, to the extent permissible by law, thenceforth also represent rights and interests in the additional integral number of Shares distributed upon the Deposited Securities represented thereby (net of (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes).  In lieu of delivering fractional ADSs, the Depositary shall sell the number of Shares or ADSs, as the case may be, represented by the aggregate of such fractions, in a riskless principal capacity in a public sale or if no public market is available, in a private sale, and distribute the net proceeds upon the terms described in Section 4.1.  In the event that the Depositary determines that any distribution in property (including Shares) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, or, if the Company in the fulfillment of its obligation under Section 5.7, has furnished an opinion of U.S. counsel determining that Shares must be registered under the Securities Act or other laws in order to be distributed to Holders (and no such registration statement has been declared effective), the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable, and the Depositary shall distribute the net proceeds of any such sale (after deduction of (a) taxes and (b) fees and charges of, and expenses incurred by, the Depositary) to Holders entitled thereto upon the terms described in Section 4.1.  The Depositary shall hold and/or distribute any unsold balance of such property in accordance with the provisions of the Deposit Agreement.

 

Section 4.3            Elective Distributions in Cash or Shares.  Whenever the Company intends to make a distribution payable at the election of the holders of Shares in cash or in additional Shares, the Company shall give notice thereof to the Depositary at least forty five (45) days (or such other number of days as the Depositary and the Company may from time to time agree to)  prior to the proposed distribution  specifying, inter  alia, the record date applicable to holders of Deposited Securities entitled to receive such elective distribution and whether or not it wishes such elective distribution to be made available to Holders of ADSs.  Upon the timely receipt of a notice indicating that the Company wishes such elective distribution to be made available to Holders of ADSs, the Depositary shall consult with the Company to determine, and the Company shall assist the Depositary in its determination, whether it is lawful and reasonably practicable to make such elective distribution available to the Holders of ADSs. The Depositary shall make such elective distribution available to Holders only if (i) the Company shall have requested in a timely manner that the elective distribution be made available to Holders, (ii) the Depositary shall have determined that such distribution is reasonably practicable and (iii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7.  If the above conditions are not satisfied, the Depositary shall establish an ADS Record Date on the terms described in Section 4.9 and, to the extent permitted by law, distribute to the Holders, on the basis of the same determination as is made in the Cayman Islands in respect of the Shares for which no election is made, either (X) cash upon the terms described in Section 4.1 or (Y) additional ADSs representing such additional Shares upon the terms described in Section 4.2.  If the above conditions are satisfied, the Depositary shall establish an ADS Record Date on the 

 

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terms described in Section 4.9 and establish procedures to enable Holders to elect the receipt of the proposed distribution in cash or in additional ADSs.  The Company shall assist the Depositary in establishing such procedures to the extent necessary.  If a Holder elects to receive the proposed distribution (X) in cash, the distribution shall be made upon the terms described in Section 4.1, or (Y) in ADSs, the distribution shall be made upon the terms described in Section 4.2.  Nothing herein shall obligate the Depositary to make available to Holders a method to receive the elective distribution in Shares (rather than ADSs).  There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Shares.

 

Section 4.4            Distribution of Rights to Purchase Additional ADSs.

 

(a)           Distribution to ADS Holders.  Whenever the Company intends to distribute to the holders of the Deposited Securities rights to subscribe for additional Shares, the Company shall give notice thereof to the Depositary  at least forty five (45)  days (or such other number of days as the Depositary and the Company may from time to time agree to) prior to the proposed distribution specifying, inter  alia, the record date applicable to holders of Deposited Securities entitled to receive such distribution and whether or not it wishes such rights to be made available to Holders of ADSs.  Upon the timely receipt of a notice indicating that the Company wishes such rights to be made available to Holders of ADSs, the Depositary shall consult with the Company to determine, and the Company shall assist the Depositary in its determination, whether it is lawful and reasonably practicable to make such rights available to the Holders.  The Depositary shall make such rights available to Holders only if (i) the Company shall have requested in a timely manner that such rights be made available to Holders, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7, and (iii) the Depositary shall have determined that such distribution of rights is reasonably practicable.  In the event any of the conditions set forth above are not satisfied or if the Company requests that the rights not be made available to Holders of ADSs, the Depositary shall proceed with the sale of the rights as contemplated in Section 4.4(b) below.  In the event all conditions set forth above are satisfied, the Depositary shall establish an ADS Record Date (upon the terms described in Section 4.9) and establish procedures to (x) distribute rights to purchase additional ADSs (by means of warrants or otherwise), (y) to enable the Holders to exercise such rights (upon payment of the subscription price and of the applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes), and (z) to deliver ADSs upon the valid exercise of such rights.  The Company shall assist the Depositary to the extent necessary in establishing such procedures.  Nothing herein shall obligate the Depositary to make available to the Holders a method to exercise rights to subscribe for Shares (rather than ADSs).

 

(b)           Sale of Rights.  If (i) the Company does not request the Depositary, in a timely manner, to make the rights available to Holders or requests that the rights not be made available to Holders, (ii) the Depositary fails to receive satisfactory documentation within the terms of Section 5.7 or determines it is not reasonably practicable to make the rights available to Holders, or (iii) any rights made available are not exercised and appear to be about to lapse, the Depositary shall determine whether it is lawful and reasonably practicable to sell such rights, in a riskless principal capacity, at such place and upon such terms (including public or private sale) as it may deem practicable.  The Company shall assist the Depositary to the extent necessary to 

 

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determine such legality and practicability.  The Depositary shall, upon such sale, convert and distribute proceeds of such sale (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) upon the terms set forth in Section 4.1.

 

(c)           Lapse of Rights.  If the Depositary is unable to make any rights available to Holders upon the terms described in Section 4.4(a) or to arrange for the sale of the rights upon the terms described in Section 4.4(b), the Depositary shall allow such rights to lapse.

 

The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holders in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or exercise, or (iii) the content of any materials forwarded to the Holders on behalf of the Company in connection with the rights distribution.

 

Notwithstanding anything to the contrary in this Section 4.4, if registration (under the Securities Act or any other applicable law) of the rights or the securities to which any rights relate may be required in order for the Company to offer such rights or such securities to Holders and to sell the securities represented by such rights, the Depositary will not distribute such rights to the Holders (i) unless and until a registration statement under the Securities Act (or other applicable law) covering such offering is in effect or (ii) unless the Company furnishes the Depositary opinion(s) of counsel for the Company in the United States and counsel to the Company in any other applicable country in which rights would be distributed, in each case reasonably satisfactory to the Depositary, to the effect that the offering and sale of such securities to Holders and Beneficial Owners are exempt from, or do not require registration under, the provisions of the Securities Act or any other applicable laws.  A liquid market for rights may not exist, and this may adversely affect (1) the ability of the Depositary to dispose of such rights or (2) the amount the Depositary would realize upon disposal of rights.

 

In the event that the Company, the Depositary or the Custodian shall be required to withhold and does withhold from any distribution of property (including rights) an amount on account of taxes or other governmental charges, the amount distributed to the Holders of ADSs representing such Deposited Securities shall be reduced accordingly.  In the event that the Depositary determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable to pay any such taxes or charges.

 

There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to receive or exercise rights on the same terms and conditions as the holders of Shares or be able to exercise such rights.  Nothing herein shall obligate the Company to file any registration statement in respect of any rights or Shares or other securities to be acquired upon the exercise of such rights.

 

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Section 4.5            Distributions Other Than Cash, Shares or Rights to Purchase Shares.

 

(a)           Whenever the Company intends to distribute to the holders of Deposited Securities property other than cash, Shares or rights to purchase additional Shares, the Company shall give timely notice thereof to the Depositary and shall indicate whether or not it wishes such distribution to be made to Holders of ADSs.  Upon receipt of a notice indicating that the Company wishes such distribution be made to Holders of ADSs, the Depositary shall consult with the Company, and the Company shall assist the Depositary, to determine whether such distribution to Holders is lawful and reasonably practicable.  The Depositary shall not make such distribution unless (i) the Company shall have requested the Depositary to make such distribution to Holders, (ii) the Depositary shall have received satisfactory documentation within the terms of Section 5.7, and (iii) the Depositary shall have determined that such distribution is reasonably practicable.

 

(b)           Upon receipt of satisfactory documentation and the request of the Company to distribute property to Holders of ADSs and after making the requisite determinations set forth in (a) above, the Depositary shall distribute the property so received to the Holders of record, as of the ADS Record Date, in proportion to the number of ADSs held by them respectively and in such manner as the Depositary may deem practicable for accomplishing such distribution (i) upon receipt of payment or net of the applicable fees and charges of, and expenses incurred by, the Depositary, and (ii) net of any taxes withheld.  The Depositary may dispose of all or a portion of the property so distributed and deposited, in such amounts and in such manner (including public or private sale) as the Depositary may deem practicable or necessary to satisfy any taxes (including applicable interest and penalties) or other governmental charges applicable to the distribution.

 

(c)           If (i) the Company does not request the Depositary to make such distribution to Holders or requests not to make such distribution to Holders, (ii) the Depositary does not receive satisfactory documentation within the terms of Section 5.7, or (iii) the Depositary determines that all or a portion of such distribution is not reasonably practicable, the Depositary shall sell or cause such property to be sold in a public or private sale, at such place or places and upon such terms as it may deem practicable and shall (i) cause the proceeds of such sale, if any, to be converted into Dollars and (ii) distribute the proceeds of such conversion received by the Depositary (net of applicable (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) to the Holders as of the ADS Record Date upon the terms of Section 4.1.  If the Depositary is unable to sell such property, the Depositary may dispose of such property for the account of the Holders in any way it deems reasonably practicable under the circumstances.

 

Section 4.6            Distributions with Respect to Deposited Securities in Bearer Form.  Subject to the terms of this Article IV, distributions in respect of Deposited Securities that are held by the Depositary in bearer form shall be made to the Depositary for the account of the respective Holders of ADS(s) with respect to which any such distribution is made upon due presentation by the Depositary or the Custodian to the Company of any relevant coupons, talons, or certificates.  The Company shall promptly notify the Depositary of such distributions. The Depositary or the Custodian shall promptly present such coupons, talons or certificates, as the case may be, in connection with any such distribution.

 

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Section 4.7            Redemption.  If the Company intends to exercise any right of redemption in respect of any of the Deposited Securities, the Company shall give notice thereof to the Depositary at least forty five (45) days (or such other number of days as the Depositary and the Company may from time to time agree to)  prior to the intended date of redemption which notice shall set forth the particulars of the proposed redemption.  Upon timely receipt of (i) such notice and (ii) satisfactory documentation given by the Company to the Depositary within the terms of Section 5.7, and only if the Depositary shall have determined that such proposed redemption is practicable, the Depositary shall provide to each Holder a notice setting forth the intended exercise by the Company of the redemption rights and any other particulars set forth in the Company’s notice to the Depositary.  The Depositary shall instruct the Custodian to present to the Company the Deposited Securities in respect of which redemption rights are being exercised against payment of the applicable redemption price. Upon receipt of confirmation from the Custodian that the redemption has taken place and that funds representing the redemption price have been received, the Depositary shall convert, transfer, and distribute the proceeds (net of applicable (a) fees and charges of, and the expenses incurred by, the Depositary, and (b) taxes), retire ADSs and cancel ADRs, if applicable, upon delivery of such ADSs by Holders thereof and the terms set forth in Sections 4.1 and 6.2.  If less than all outstanding Deposited Securities are redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as may be determined by the Depositary.  The redemption price per ADS shall be the dollar equivalent of the per share amount received by the Depositary (adjusted to reflect the ADS(s)-to-Share(s) ratio) upon the redemption of the Deposited Securities represented by ADSs (subject to the terms of Section 4.8 and the applicable fees and charges of, and expenses incurred by, the Depositary, and taxes) multiplied by the number of Deposited Securities represented by each ADS redeemed.

 

Section 4.8            Conversion of Foreign Currency.  Whenever the Depositary or the Custodian shall receive Foreign Currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, which in the judgment of the Depositary can at such time be converted on a practicable basis, by sale or in any other manner that it may determine in accordance with applicable law, into Dollars transferable to the United States and distributable to the Holders entitled thereto, the Depositary shall convert or cause to be converted, by sale or in any other manner that it may determine, such Foreign Currency into Dollars, and shall distribute such Dollars (net of any applicable fees, any reasonable and customary expenses incurred in such conversion and any expenses incurred on behalf of the Holders in complying with currency exchange control or other governmental requirements) in accordance with the terms of the applicable sections of the Deposit Agreement.  If the Depositary shall have distributed warrants or other instruments that entitle the holders thereof to such Dollars, the Depositary shall distribute such Dollars to the holders of such warrants and/or instruments upon surrender thereof for cancellation, in either case without liability for interest thereon. Such distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Holders on account of any application of exchange restrictions or otherwise.

 

If such conversion or distribution generally or with regard to a particular Holder can be effected only with the approval or license of any government or agency thereof, the Depositary shall have authority to file such application for approval or license, if any, as it may deem desirable.  In no event, however, shall the Depositary be obligated to make such a filing.

 

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If at any time the Depositary shall determine that in its judgment the conversion of any Foreign Currency and the transfer and distribution of proceeds of such conversion received by the Depositary is not practicable or lawful, or if any approval or license of any governmental authority or agency thereof that is required for such conversion, transfer and distribution is denied or, in the opinion of the Depositary, not obtainable at a reasonable cost or within a reasonable period, the Depositary may, in its discretion, (i) make such conversion and distribution in Dollars to the Holders for whom such conversion, transfer and distribution is lawful and practicable, (ii) distribute the Foreign Currency (or an appropriate document evidencing the right to receive such Foreign Currency) to Holders for whom this is lawful and practicable or (iii) hold (or cause the Custodian to hold) such Foreign Currency (without liability for interest thereon) for the respective accounts of the Holders entitled to receive the same.

 

Section 4.9            Fixing of ADS Record Date.  Whenever the Depositary shall receive notice of the fixing of a record date by the Company for the determination of holders of Deposited Securities entitled to receive any distribution (whether in cash, Shares, rights, or other distribution), or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each ADS, or whenever the Depositary shall receive notice of any meeting of, or solicitation of consents or proxies of, holders of Shares or other Deposited Securities, or whenever the Depositary shall find it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary shall fix a record date (the “ADS Record Date”) for the determination of the Holders of ADS(s) who shall be entitled to receive such distribution, to give instructions for the exercise of voting rights at any such meeting, to give or withhold such consent, to receive such notice or solicitation or to otherwise take action, or to exercise the rights of Holders with respect to such changed number of Shares represented by each ADS or for any other reason.  The Depositary shall make reasonable efforts to establish the ADS Record Date as closely as possible to the applicable record date for the Deposited Securities (if any) set by the Company in the Cayman Islands.  Subject to applicable law and the provisions of Section 4.1 through 4.8 and to the other terms and conditions of the Deposit Agreement, only the Holders of ADSs at the close of business in New York on such ADS Record Date shall be entitled to receive such distribution, to give such voting instructions, to receive such notice or solicitation, or otherwise take action.

 

Section 4.10         Voting of Deposited Securities.    As soon as practicable after receipt of notice of any meeting at which the holders of Deposited Securities are entitled to vote, or of solicitation of consents or proxies from holders of Deposited Securities, the Depositary shall fix the ADS Record Date in respect of such meeting or solicitation of consent or proxy in accordance with Section 4.9.  The Depositary shall, if requested by the Company in writing in a timely manner (the Depositary having no obligation to take any further action if the request shall not have been received by the Depositary at least thirty (30) days prior to the date of such vote or meeting), at the Company’s expense and provided no U.S. legal prohibitions exist, distribute as soon as practicable after receipt thereof to Holders as of the ADS Record Date: (a) such notice of meeting or solicitation of consent or proxy, (b) a statement that the Holders at the close of business on the ADS Record Date will be entitled, subject to any applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of or governing the Deposited Securities, to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by such Holder’s ADSs, and (c) 

 

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a brief statement as to the manner in which such voting instructions may be given to the Depositary or in which voting instructions may be deemed to have been given in accordance with this Section 4.10, if no instructions are received prior to the deadline set for such purposes, to the Depositary to give a discretionary proxy to a person designated by the Company.

 

Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Holders a notice that provides Holders with, or otherwise publicize to Holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

 

The Depositary has been advised by the Company that under the Cayman Islands law as in effect as of the date of the Deposit Agreement, voting at any meeting of shareholders of the Company is by show of hands unless a poll is (before or on the declaration of the results of the show of hands) demanded.  The Depositary will not join in demanding a poll, whether or not requested to do so by Holders of ADSs.  Under the Articles of Association of the Company (in effect on the date of this Deposit Agreement) a poll may be demanded by (i) the chairman of the meeting, (ii) at least three shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting, (iii) any shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting, (iv) by a shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and holding Shares conferring a right to vote at a meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid on all shares conferring that right, or (v) if required by the rules of the Nasdaq Stock Market LLC, by any director or directors of the Company who, individually or collectively, hold proxies in respect of Shares representing 5% or more of the total voting rights at such meeting.

 

Voting instructions may be given only in respect of a number of ADSs representing an integral number of Deposited Securities. Upon the timely receipt from a Holder of ADSs as of the ADS Record Date of voting instructions in the manner specified by the Depositary, the Depositary shall endeavor, insofar as practicable and permitted under applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of the Deposited Securities, to vote, or cause the Custodian to vote, the Deposited Securities (in person or by proxy) represented by such Holder’s ADSs as follows:  (i) in the event voting takes place at a shareholders’ meeting by show of hands, the Depositary will instruct the Custodian to vote all Deposited Securities in accordance with the voting instructions received from a majority of Holders of ADSs who provided voting instructions, and (ii) in the event voting takes place at a shareholders’ meeting by poll, the Depositary will instruct the Custodian to vote the Deposited Securities in accordance with the voting instructions received from the Holders of ADSs. If the Depositary does not receive instructions from a Holder as of 

 

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the ADS Record Date on or before the date established by the Depositary for such purpose and voting takes place by poll, such Holder shall be deemed, and the Depositary shall (unless otherwise specified in the notice distributed to Holders) deem such Holder, to have instructed the Depositary to give a discretionary proxy to a person designated by the Company to vote the Deposited Securities; provided, however, that no such discretionary proxy shall be given by the Depositary with respect to any matter to be voted upon as to which the Company informs the Depositary that (A) the Company does not wish to be given such proxy, (B) substantial opposition exists from holders of Shares against the outcome for which the person designated by the Company would otherwise vote, or (C) the outcome for which the person designated by the Company would otherwise vote would materially and adversely affected the rights of holders of Deposited Securities.

 

Neither the Depositary nor the Custodian shall under any circumstances exercise any discretion as to voting and neither the Depositary nor the Custodian shall vote, attempt to exercise the right to vote, or in any way make use of for purposes of establishing a quorum or otherwise, the Deposited Securities represented by ADSs, except pursuant to and in accordance with the voting instructions received from Holders in a timely manner or as otherwise contemplated herein.  If the Depositary receives timely voting instructions from a Holder which fail to specify the manner in which the Depositary is to vote the Deposited Securities represented by such Holder’s ADSs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions. Deposited Securities represented by ADSs for which no timely voting instructions are received by the Depositary from the Holder shall not be voted except (i) in the case voting takes place at the shareholders meeting by show of hands, in which case the Depositary will instruct the Custodian to vote all Deposited Securities in accordance with the voting instructions received from a majority of Holders of ADSs who provided voting instructions and (ii) as otherwise contemplated in this Section 4.10.  Notwithstanding anything else contained herein, the Depositary shall, if so requested in writing by the Company, represent all Deposited Securities (whether or not voting instructions have been received in respect of such Deposited Securities from Holders as of the ADS Record Date) for the sole purpose of establishing quorum at a meeting of shareholders.

 

Notwithstanding anything else contained in the Deposit Agreement or any ADR, the Depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of Deposited Securities if the taking of such action would violate U.S. laws.  The Company agrees to take any and all actions reasonably necessary and as permitted by Cayman Islands law to enable Holders and Beneficial Owners to exercise the voting rights accruing to the Deposited Securities and to deliver to the Depositary an opinion of U.S. counsel addressing any actions requested to be taken if so requested by the Depositary.

 

There can be no assurance that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable the Holder to return voting instructions to the Depositary in a timely manner.

 

Section 4.11         Changes Affecting Deposited Securities.  Upon any change in nominal or par value, split-up, cancellation, consolidation or any other reclassification of Deposited 

 

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Securities, or upon any recapitalization, reorganization, merger, consolidation or sale of assets affecting the Company or to which it is a party, any securities which shall be received by the Depositary or the Custodian in exchange for, or in conversion of or replacement of or otherwise in respect of, such Deposited Securities shall, to the extent permitted by law, be treated as new Deposited Securities under the Deposit Agreement, and the ADRs shall, subject to the provisions of the Deposit Agreement and applicable law, evidence ADSs representing the right to receive such additional or replacement securities, as applicable.  In giving effect to such change, split-up, cancellation, consolidation or other reclassification of Deposited Securities, recapitalization, reorganization, merger, consolidation or sale of assets, the Depositary may, with the Company’s approval, and shall, if the Company shall so request, subject to the terms of the Deposit Agreement and receipt of an opinion of counsel to the Company reasonably satisfactory to the Depositary that such actions are not in violation of any applicable laws or regulations, (i) issue and deliver additional ADSs as in the case of a stock dividend on the Shares, (ii) amend the Deposit Agreement and the applicable ADRs, (iii) amend the applicable Registration Statement(s) on Form F-6 as filed with the Commission in respect of the ADSs, (iv) call for the surrender of outstanding ADRs to be exchanged for new ADRs, and (v) take such other actions as are appropriate to reflect the transaction with respect to the ADSs.  The Company agrees to, jointly with the Depositary, amend the Registration Statement on Form F-6 as filed with the Commission to permit the issuance of such new form of ADRs.  Notwithstanding the foregoing, in the event that any security so received may not be lawfully distributed to some or all Holders, the Depositary may, with the Company’s approval, and shall, if the Company requests, subject to receipt of an opinion of Company’s counsel reasonably satisfactory to the Depositary that such action is not in violation of any applicable laws or regulations, sell such securities at public or private sale, at such place or places and upon such terms as it may deem proper and may allocate the net proceeds of such sales (net of (a) fees and charges of, and expenses incurred by, the Depositary and (b) taxes) for the account of the Holders otherwise entitled to such securities upon an averaged or other practicable basis without regard to any distinctions among such Holders and distribute the net proceeds so allocated to the extent practicable as in the case of a distribution received in cash pursuant to Section 4.1.  The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such securities available to Holders in general or to any Holder in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or (iii) any liability to the purchaser of such securities.

 

Section 4.12         Available Information.

 

The Company is subject to the periodic reporting requirements of the Exchange Act and, accordingly, is required to file or submit certain reports with the Commission. These reports can be retrieved from the Commission’s website (www.sec.gov) and can be inspected and copied at the public reference facilities maintained by the Commission located (as of the date of the Deposit Agreement) at 100 F Street, N.E., Washington D.C.  20549.

 

Section 4.13         Reports.  The Depositary shall make available for inspection by Holders at its Principal Office any reports and communications, including any proxy soliciting materials, received from the Company which are both (a) received by the Depositary, the Custodian, or the nominee of either of them as the holder of the Deposited Securities and (b) made generally available to the holders of such Deposited Securities by the Company. The Depositary shall also

 

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provide or make available to Holders copies of such reports when furnished by the Company pursuant to Section 5.6.

 

Section 4.14         List of Holders.  Promptly upon written request by the Company, the Depositary shall furnish to it a list, as of a recent date, of the names, addresses and holdings of ADSs of all Holders.

 

Section 4.15         Taxation.  The Depositary will, and will instruct the Custodian to, forward to the Company or its agents such information from its records as the Company may reasonably request to enable the Company or its agents to file the necessary tax reports with governmental authorities or agencies. The Depositary, the Custodian or the Company and its agents may (but shall not be obligated to) file such reports as are necessary to reduce or eliminate applicable taxes on dividends and on other distributions in respect of Deposited Securities under applicable tax treaties or laws for the Holders and Beneficial Owners.  In accordance with instructions from the Company and to the extent practicable, the Depositary or the Custodian will take reasonable administrative actions to obtain tax refunds, reduced withholding of tax at source on dividends and other benefits under applicable tax treaties or laws with respect to dividends and other distributions on the Deposited Securities. As a condition to receiving such benefits, Holders and Beneficial Owners of ADSs may be required from time to time, and in a timely manner, to file such proof of taxpayer status, residence and beneficial ownership (as applicable), to execute such certificates and to make such representations and warranties, or to provide any other information or documents, as the Depositary or the Custodian may deem necessary or proper to fulfill the Depositary’s or the Custodian’s obligations under applicable law. The Holders and Beneficial Owners shall indemnify the Depositary, the Company, the Custodian and any of their respective directors, employees, agents and Affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

 

If the Company (or any of its agents) withholds from any distribution any amount on account of taxes or governmental charges, or pays any other tax in respect of such distribution (i.e., stamp duty tax, capital gains or other similar tax), the Company shall (and shall cause such agent to) remit promptly to the Depositary information about such taxes or governmental charges withheld or paid, and, if so requested, the tax receipt (or other proof of payment to the applicable governmental authority) therefor, in each case, in a form reasonably satisfactory to the Depositary.  The Depositary shall, to the extent required by U.S. law, report to Holders any taxes withheld by it or the Custodian, and, if such information is provided to it by the Company, any taxes withheld by the Company.  The Depositary and the Custodian shall not be required to provide the Holders with any evidence of the remittance by the Company (or its agents) of any taxes withheld, or of the payment of taxes by the Company, except to the extent the evidence is provided by the Company to the Depositary or the Custodian, as applicable.  Neither the Depositary nor the Custodian shall be liable for the failure by any Holder or Beneficial Owner to obtain the benefits of credits on the basis of non-U.S. tax paid against such Holder’s or Beneficial Owner’s income tax liability.

 

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The Depositary is under no obligation to provide the Holders and Beneficial Owners with any information about the tax status of the Company.  The Depositary shall not incur any liability for any tax consequences that may be incurred by Holders and Beneficial Owners on account of their ownership of the ADSs, including without limitation, tax consequences resulting from the Company (or any of its subsidiaries) being treated as a “Passive Foreign Investment Company” (in each case as defined in the U.S. Internal Revenue Code and the regulations issued thereunder) or otherwise.

 

ARTICLE V

 

THE DEPOSITARY, THE CUSTODIAN AND THE COMPANY

 

Section 5.1            Maintenance of Office and Transfer Books by the Registrar.  Until termination of the Deposit Agreement in accordance with its terms, the Registrar shall maintain in the Borough of Manhattan, the City of New York, an office and facilities for the issuance and delivery of ADSs, the acceptance for surrender of ADS(s) for the purpose of withdrawal of Deposited Securities, the registration of issuances, cancellations, transfers, combinations and split-ups of ADS(s) and, if applicable, to countersign ADRs evidencing the ADSs so issued, transferred, combined or split-up, in each case in accordance with the provisions of the Deposit Agreement.

 

The Registrar shall keep books for the registration of ADSs which at all reasonable times shall be open for inspection by the Company and by the Holders of such ADSs, provided that such inspection shall not be, to the Registrar’s knowledge after due inquiry, for the purpose of communicating with Holders of such ADSs in the interest of a business or object other than the business of the Company or other than a matter related to the Deposit Agreement or the ADSs.

 

The Registrar may close the transfer books with respect to the ADSs, at any time or from time to time, when deemed necessary or advisable by it in good faith in connection with the performance of its duties hereunder, or at the reasonable written request of the Company subject, in all cases, to Section 7.8.

 

If any ADSs are listed on one or more stock exchanges or automated quotation systems in the United States, the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registration of issuances, cancellations, transfers, combinations and split-ups of ADSs and, if applicable, to countersign ADRs evidencing the ADSs so issued, transferred, combined or split-up,  in accordance with any requirements of such exchanges or systems.  Such Registrar or co-registrars may be removed and a substitute or substitutes appointed by the Depositary. As promptly as practicable,  the Depositary shall notify the Company of any such removal or appointment.

 

Section 5.2            Exoneration. Neither the Depositary nor the Company shall be obligated to do or perform any act which is inconsistent with the provisions of the Deposit Agreement or incur any liability (i) if the Depositary or the Company shall be prevented or forbidden from, or delayed in, doing or performing any act or thing required by the terms of the Deposit Agreement, by reason of any provision of any present or future law or regulation of the United States, the 

 

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Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of the Articles of Association of the Company or any provision of or governing any Deposited Securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, acts of terrorism, revolutions, rebellions, explosions and computer failure), (ii) by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement or in the Articles of Association  of the Company or provisions of or governing Deposited Securities, (iii) for any action or inaction in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, any Beneficial Owner or authorized representative thereof, or any other person believed by it in good faith to be competent to give such advice or information, (iv) for the inability by a Holder or Beneficial Owner to benefit from any distribution, offering, right or other benefit which is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Holders of ADSs, or (v) for any consequential or punitive damages for any breach of the terms of the Deposit Agreement.

 

The Depositary, its controlling persons, its agents, any Custodian and the Company, its controlling persons and its agents may rely and shall be protected in acting upon any written notice, request or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement.

 

Section 5.3            Standard of Care.  The Company and the Depositary assume no obligation and shall not be subject to any liability under the Deposit Agreement or any ADRs to any Holder(s) or Beneficial Owner(s), except that the Company and the Depositary agree to perform their respective obligations specifically set forth in the Deposit Agreement or the applicable ADRs without negligence or bad faith.

 

Without limitation of the foregoing, neither the Depositary, nor the Company, nor any of their respective controlling persons, or agents, shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the ADSs, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required (and no Custodian shall be under any obligation whatsoever with respect to such proceedings, the responsibility of the Custodian being solely to the Depositary).

 

The Depositary and its agents shall not be liable for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any vote is cast or the effect of any vote, provided that any such action or omission is in good faith and in accordance with the terms of the Deposit Agreement.  The Depositary shall not incur any liability for any failure to determine that any distribution or action may be lawful or reasonably 

 

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practicable, for the content of any information submitted to it by the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities or for any tax consequences that may result from the ownership of ADSs, Shares or Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement, for the failure or timeliness of any notice from the Company, or for any action of or failure to act by, or any information provided or not provided by, DTC or any DTC Participant.

 

The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

 

Section 5.4            Resignation and Removal of the Depositary; Appointment of Successor Depositary.  The Depositary may at any time resign as Depositary hereunder by written notice of resignation delivered to the Company, such resignation to be effective on the earlier of (i) the 90th day after delivery thereof to the Company (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2), or (ii) the appointment by the Company of a successor depositary and its acceptance of such appointment as hereinafter provided.

 

The Depositary may at any time be removed by the Company by written notice of such removal, which removal shall be effective on the later of (i) the 90th day after delivery thereof to the Depositary (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2), or (ii) upon the appointment by the Company of a successor depositary and its acceptance of such appointment as hereinafter provided.

 

In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, the City of New York.  Every successor depositary shall be required by the Company to execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed (except as required by applicable law), shall become fully vested with all the rights, powers, duties and obligations of its predecessor (other than as contemplated in Sections 5.8 and 5.9). The predecessor depositary, upon payment of all sums due it and on the written request of the Company shall, (i) execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than as contemplated in Sections 5.8 and 5.9), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADSs and such other information relating to ADSs and Holders thereof as the successor may reasonably request.  Any such successor depositary shall promptly provide notice of its appointment to such Holders.

 

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Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.

 

Section 5.5            The Custodian.  The Depositary has initially appointed Citibank, N.A. -  Hong Kong Branch as Custodian for the purpose of the Deposit Agreement.  The Custodian or its successors in acting hereunder shall be subject at all times and in all respects to the direction of the Depositary for the Deposited Securities for which the Custodian acts as custodian and shall be responsible solely to it.  If any Custodian resigns or is discharged from its duties hereunder with respect to any Deposited Securities and no other Custodian has previously been appointed hereunder, the Depositary shall promptly appoint a substitute custodian. The Depositary shall require such resigning or discharged Custodian to Deliver the Deposited Securities held by it, together with all such records maintained by it as Custodian with respect to such Deposited Securities as the Depositary may request, to the Custodian designated by the Depositary.  Whenever the Depositary determines, in its discretion, that it is appropriate to do so, it may appoint an additional custodian with respect to any Deposited Securities, or discharge the Custodian with respect to any Deposited Securities and appoint a substitute custodian, which shall thereafter be Custodian hereunder with respect to the Deposited Securities. Immediately upon any such change, the Depositary shall give notice thereof in writing to all Holders of ADSs, each other Custodian and the Company.

 

Citibank, N.A. may at any time act as Custodian of the Deposited Securities pursuant to the Deposit Agreement, in which case any reference to Custodian shall mean Citibank, N.A. solely in its capacity as Custodian pursuant to the Deposit Agreement.  Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary shall not be obligated to give notice to the Company, any Holders of ADSs or any other Custodian of its acting as Custodian pursuant to the Deposit Agreement.

 

Upon the appointment of any successor depositary, any Custodian then acting hereunder shall, unless otherwise instructed by the Depositary, continue to be the Custodian of the Deposited Securities without any further act or writing, and shall be subject to the direction of the successor depositary.  The successor depositary so appointed shall, nevertheless, on the written request of any Custodian, execute and deliver to such Custodian all such instruments as may be proper to give to such Custodian full and complete power and authority to act on the direction of such successor depositary.

 

Section 5.6            Notices and Reports.  On or before the first date on which the Company gives notice, by publication or otherwise, of any meeting of holders of Shares or other Deposited Securities, or of any adjourned meeting of such holders, or of the taking of any action by such holders other than at a meeting, or of the taking of any action in respect of any cash or other distributions or the offering of any rights in respect of Deposited Securities, the Company shall transmit to the Depositary and the Custodian a copy of the notice thereof in the English language but otherwise in the form given or to be given to holders of Shares or other Deposited Securities. The Company shall also furnish to the Custodian and the Depositary a summary, in English, of any applicable provisions or proposed provisions of the Articles of Association of the Company that may be relevant or pertain to such notice of meeting or be the subject of a vote thereat.

 

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The Company will also transmit to the Depositary (a) an English language version of the other notices, reports and communications which are made generally available by the Company to holders of its Shares or other Deposited Securities and (b) the English-language versions of the Company’s annual reports prepared in accordance with the applicable requirements of the Commission to the extent such material is not available on the Company’s website or is not otherwise publicly available.  The Depositary shall arrange, at the request of the Company and at the Company’s expense, to provide copies thereof to all Holders or make such notices, reports and other communications available to all Holders on a basis similar to that for holders of Shares or other Deposited Securities or on such other basis as the Company may advise the Depositary or as may be required by any applicable law, regulation or stock exchange requirement. The Company has delivered to the Depositary and the Custodian a copy of the Company’s Articles of Association along with the provisions of or governing the Shares and any other Deposited Securities issued by the Company in connection with such Shares, and promptly upon any amendment thereto or change therein, the Company shall deliver to the Depositary and the Custodian  written notice of such amendment or change and, to the extent such amendment or change is not available on the Company’s website or is not otherwise publicly available, shall deliver to the Depositary and the Custodian a copy of such amendment thereto or change therein.  The Depositary may rely upon such copy for all purposes of the Deposit Agreement.

 

The Depositary will, at the expense of the Company, make available a copy of any such notices, reports or communications issued by the Company and delivered to the Depositary for inspection by the Holders of the ADSs at the Depositary’s Principal Office, at the office of the Custodian and at any other designated transfer office.

 

Section 5.7            Issuance of Additional Shares, ADSs etc.  The Company agrees that in the event it or any of its Affiliates proposes (i) an issuance, sale or distribution of additional Shares, (ii) an offering of rights to subscribe for Shares or other Deposited Securities, (iii) an issuance or assumption of securities convertible into or exchangeable for Shares, (iv) an issuance of rights to subscribe for securities convertible into or exchangeable for Shares, (v) an elective dividend of cash or Shares, (vi) a redemption of Deposited Securities, (vii) a meeting of holders of Deposited Securities, or solicitation of consents or proxies, relating to any reclassification of securities, merger or consolidation or transfer of assets, (viii) any assumption, reclassification, recapitalization, reorganization, merger, consolidation or sale of assets which affects the Deposited Securities, or (ix) a distribution of securities other than Shares, it will obtain U.S. legal advice and take all steps necessary to ensure that the proposed transaction does not violate the registration provisions of the Securities Act, or any other applicable laws (including, without limitation, the Investment Company Act of 1940, as amended, the Exchange Act and the securities laws of the states of the U.S.).  In support of the foregoing, the Company will furnish to the Depositary (a) a written opinion of U.S. counsel (reasonably satisfactory to the Depositary) stating whether such transaction (1) requires a registration statement under the Securities Act to be in effect or (2) is exempt from the registration requirements of the Securities Act and (b) an opinion of the Cayman Islands counsel (reasonably satisfactory to the Depositary) stating that (1) making the transaction available to Holders and Beneficial Owners does not violate the laws or regulations of the Cayman Islands and (2) all requisite regulatory consents and approvals have been obtained in the Cayman Islands.  If the filing of a registration statement is required, the Depositary shall not have any obligation to proceed with the transaction unless it shall have 

 

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received evidence reasonably satisfactory to it that such registration statement has been declared effective.  If, being advised by counsel, the Company determines that a transaction is required to be registered under the Securities Act, the Company will either (i) register such transaction to the extent necessary, (ii) alter the terms of the transaction to avoid the registration requirements of the Securities Act or (iii) direct the Depositary to take specific measures, in each case as contemplated in the Deposit Agreement, to prevent such transaction from violating the registration requirements of the Securities Act.  The Company agrees with the Depositary that neither the Company nor any of its Affiliates will at any time (i) deposit any Shares or other Deposited Securities, either upon original issuance or upon a sale of Shares or other Deposited Securities previously issued and reacquired by the Company or by any such Affiliate, or (ii) issue additional Shares, rights to subscribe for such Shares, securities convertible into or exchangeable for Shares or rights to subscribe for such securities or distribute securities other than Shares, unless such transaction and the securities issuable in such transaction do not violate the registration provisions of the Securities Act, or any other applicable laws (including, without limitation, the Investment Company Act of 1940, as amended, the Exchange Act and the securities laws of the states of the U.S.).

 

Notwithstanding anything else contained in the Deposit Agreement, nothing in the Deposit Agreement shall be deemed to obligate the Company to file any registration statement in respect of any proposed transaction.

 

Section 5.8            Indemnification.  The Depositary agrees to indemnify the Company and its directors, officers, employees, agents and Affiliates against, and hold each of them harmless from, any direct loss, liability, tax, charge or expense of any kind whatsoever (including, but not limited to, the reasonable fees and expenses of counsel) which may arise out of acts performed or omitted by the Depositary and the Custodian (for so long as the Custodian is a branch of Citibank, N.A.) under the terms hereof due to the negligence or bad faith of the Depositary or the Custodian, as applicable.

 

The Company agrees to indemnify the Depositary, the Custodian and any of their respective directors, officers, employees, agents and Affiliates against, and hold each of them harmless from, any direct loss, liability, tax, charge or expense of any kind whatsoever (including, but not limited to, the reasonable fees and expenses of counsel) that may arise (a) out of or in connection with any offer, issuance, sale, resale, transfer, deposit or withdrawal of ADRs, ADSs, the Shares, or other Deposited Securities, as the case may be, (b) out of or as a result of any offering documents in respect thereof or (c) out of acts performed or omitted, including, but not limited to, any delivery by the Depositary on behalf of the Company of information regarding the Company in connection with the Deposit Agreement, the ADRs, the ADSs, the Shares, or any Deposited Securities, in any such case (i) by the Depositary, the Custodian or any of their respective directors, officers, employees, agents and Affiliates, except to the extent such loss, liability, tax, charge or expense is due to the negligence or bad faith of any of them, or (ii) by the Company or any of its directors, officers, employees, agents and Affiliates.  The Company shall not indemnify the Depositary or the Custodian against any liability or expense arising out of (1) a Pre-Release Transaction or (2) information relating to the Depositary or any Custodian, as the case may be, furnished in writing by the Depositary to the Company expressly for use in any registration statement, proxy statement, prospectus or 

 

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preliminary prospectus or any other offering documents relating to the ADRs, the ADSs or any Deposited Securities represented by the ADSs.

 

The obligations set forth in this Section shall survive the termination of the Deposit Agreement and the succession or substitution of any party hereto.

 

Any person seeking indemnification hereunder (an “indemnified person”) shall notify the person from whom it is seeking indemnification (the “indemnifying person”) of the commencement of any indemnifiable action or claim promptly after such indemnified person becomes aware of such commencement (provided that the failure to make such notification shall not affect such indemnified person’s rights to seek indemnification except to the extent the indemnifying person is materially prejudiced by such failure) and shall consult in good faith with the indemnifying person as to the conduct of the defense of such action or claim that may give rise to an indemnity hereunder, which defense shall be reasonable in the circumstances.  No indemnified person shall compromise or settle any action or claim that may give rise to an indemnity hereunder without the consent of the indemnifying person, which consent shall not be unreasonably withheld.

 

Section 5.9            Fees and Charges of Depositary.  The Company, the Holders, the Beneficial Owners, and persons depositing Shares or surrendering ADSs for cancellation and withdrawal of Deposited Securities shall be required to pay to the Depositary the Depositary’s fees and related charges identified as payable by them respectively in the Fee Schedule attached hereto as Exhibit B.  All fees and charges so payable may, at any time and from time to time, be changed by agreement between the Depositary and the Company, but, in the case of fees and charges payable by Holders and Beneficial Owners, only in the manner contemplated in Section 6.1.  The Depositary shall provide, without charge, a copy of its latest fee schedule to anyone upon request.

 

Depositary Fees payable upon (i) deposit of Shares against issuance of ADSs and (ii) surrender of ADSs for cancellation and withdrawal of Deposited Securities will be charged by the Depositary to the person to whom the ADSs so issued are delivered (in the case of ADS issuances) and to the person who delivers the ADSs for cancellation to the Depositary (in the case of ADS cancellations).  In the case of ADSs issued by the Depositary into DTC or presented to the Depositary via DTC, the ADS issuance and cancellation fees will be payable to the Depositary by the DTC Participant(s) receiving the ADSs from the Depositary or the DTC Participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the Beneficial Owner(s) and will be charged by the DTC Participant(s) to the account(s) of the applicable Beneficial Owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time.  Depositary fees in respect of distributions and the Depositary services fee are payable to the Depositary by Holders as of the applicable ADS Record Date established by the Depositary.  In the case of distributions of cash, the amount of the applicable Depositary fees is deducted by the Depositary from the funds being distributed. In the case of distributions other than cash and the Depositary service fee, the Depositary will invoice the applicable Holders as of the ADS Record Date established by the Depositary.  For ADSs held through DTC, the Depositary fees for distributions other than cash and the Depositary service fee are charged by the Depositary to the DTC Participants in accordance with the 

 

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procedures and practices prescribed by DTC from time to time and the DTC Participants in turn charge the amount of such fees to the Beneficial Owners for whom they hold ADSs.

 

The Depositary may reimburse the Company for certain expenses incurred by the Company in respect of the ADS program established pursuant to the Deposit Agreement, by making available a portion of the Depositary fees charged in respect of the ADS program or otherwise, upon such terms and conditions as the Company and the Depositary agree from time to time.  The Company shall pay to the Depositary such fees and charges and reimburse the Depositary for such out-of-pocket expenses as the Depositary and the Company may agree from time to time. Responsibility for payment of such charges and reimbursements may from time to time be changed by agreement between the Company and the Depositary.  Unless otherwise agreed, the Depositary shall present its statement for such expenses and fees or charges to the Company once every three months.  The charges and expenses of the Custodian are for the sole account of the Depositary.

 

The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement.  As to any Depositary, upon the resignation or removal of such Depositary as described in Section 5.4, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

 

Section 5.10         Pre-Release Transactions.  Subject to the further terms and provisions of this Section 5.10, the Depositary, its Affiliates and their agents, on their own behalf, may own and deal in any class of securities of the Company and its Affiliates and in ADSs.  In its capacity as Depositary, the Depositary shall not lend Shares or ADSs; provided, however, that the Depositary may (i) issue ADSs prior to the receipt of Shares pursuant to Section 2.3 and (ii) deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities pursuant to Section 2.7, including ADSs which were issued under (i) above but for which Shares may not have been received (each such transaction a “Pre-Release Transaction”).  The Depositary may receive ADSs in lieu of Shares under (i) above and receive Shares in lieu of ADSs under (ii) above.  Each such Pre-Release Transaction will be (a) subject to a written agreement whereby the person or entity (the “Applicant”) to whom ADSs or Shares are to be delivered (w) represents that at the time of the Pre-Release Transaction the Applicant or its customer owns the Shares or ADSs that are to be delivered by the Applicant under such Pre-Release Transaction, (x) agrees to indicate the Depositary as owner of such Shares or ADSs in its records and to hold such Shares or ADSs in trust for the Depositary until such Shares or ADSs are delivered to the Depositary or the Custodian, (y) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares or ADSs, and (z) agrees to any additional restrictions or requirements that the Depositary deems appropriate, (b) at all times fully collateralized with cash, U.S. government securities or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than five (5) business days’ notice and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate.  The Depositary will normally limit the number of ADSs and Shares involved in such Pre-Release Transactions at any one time to thirty percent (30%) of the ADSs outstanding (without giving effect to ADSs outstanding under (i) above), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate.

 

38

 

The Depositary may also set limits with respect to the number of ADSs and Shares involved in Pre-Release Transactions with any one person on a case-by-case basis as it deems appropriate.  The Depositary may retain for its own account any compensation received by it in conjunction with the foregoing. Collateral provided pursuant to (b) above, but not the earnings thereon, shall be held for the benefit of the Holders (other than the Applicant).

 

Section 5.11         Restricted Securities Owners.  The Company agrees to advise in writing each of the persons or entities who, to the knowledge of the Company, holds Restricted Securities that such Restricted Securities are ineligible for deposit hereunder (except under the circumstances contemplated in Section 2.14) and, to the extent practicable, shall require each of such persons to represent in writing that such person will not deposit Restricted Securities hereunder (except under the circumstances contemplated in Section 2.14).

 

ARTICLE VI

 

AMENDMENT AND TERMINATION

 

Section 6.1            Amendment/Supplement.  Subject to the terms and conditions of this Section 6.1 and applicable law, the ADRs outstanding at any time, the provisions of the Deposit Agreement and the form of ADR attached hereto and to be issued under the terms hereof may at any time and from time to time be amended or supplemented by written agreement between the Company and the Depositary in any respect which they may deem necessary or desirable without the prior written consent of the Holders or Beneficial Owners.  Any amendment or supplement which shall impose or increase any fees or charges (other than charges in connection with foreign exchange control regulations, and taxes and other governmental charges, delivery and other such expenses), or which shall otherwise materially prejudice any substantial existing right of Holders or Beneficial Owners, shall not, however, become effective as to outstanding ADSs until the expiration of thirty (30) days after notice of such amendment or supplement shall have been given to the Holders of outstanding ADSs.  Notice of any amendment to the Deposit Agreement or any ADR shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders and Beneficial Owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the Commission’s, the Depositary’s or the Company’s website or upon request from the Depositary).  The parties hereto agree that any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs to be settled solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to materially prejudice any substantial rights of Holders or Beneficial Owners.  Every Holder and Beneficial Owner at the time any amendment or supplement so becomes effective shall be deemed, by continuing to hold such ADSs, to consent and agree to such amendment or supplement and to be bound by the Deposit Agreement and the ADR, if applicable, as amended or supplemented thereby. In no event shall any amendment or supplement impair the right of the Holder to surrender such ADS and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.  Notwithstanding the foregoing, if any governmental

 

39

 

 

body should adopt new laws, rules or regulations which would require an amendment of, or supplement to, the Deposit Agreement to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and any ADRs at any time in accordance with such changed laws, rules or regulations.  Such amendment or supplement to the Deposit Agreement and any ADRs in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance with such laws, rules or regulations.

 

Section 6.2            Termination.  The Depositary shall, at any time at the written direction of the Company, terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination. If ninety (90) days shall have expired after (i) the Depositary shall have delivered to the Company a written notice of its election to resign, or (ii) the Company shall have delivered to the Depositary a written notice of the removal of the Depositary, and, in either case, a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.4 of the Deposit Agreement, the Depositary may terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  The date so fixed for termination of the Deposit Agreement in any termination notice so distributed by the Depositary to the Holders of ADSs is referred to as the “Termination Date”.  Until the Termination Date, the Depositary shall continue to perform all of its obligations under the Deposit Agreement, and the Holders and Beneficial Owners will be entitled to all of their rights under the Deposit Agreement.

 

If any ADSs shall remain outstanding after the Termination Date, the Registrar and the Depositary shall not, after the Termination Date, have any obligation to perform any further acts under the Deposit Agreement, except that the Depositary shall, subject, in each case, to the terms and conditions of the Deposit Agreement, continue to (i) collect dividends and other distributions pertaining to Deposited Securities, (ii) sell securities and other property received in respect of Deposited Securities, (iii) deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any securities or other property, in exchange for ADSs surrendered to the Depositary (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (iv) take such actions as may be required under applicable law in connection with its role as Depositary under the Deposit Agreement.

 

At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and shall after such sale hold un-invested the net proceeds of such sale, together with any other cash then held by it under the Deposit Agreement, in an un-segregated account and without liability for interest, for the pro - rata benefit of the Holders whose ADSs have not theretofore been surrendered. After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement except (i) to account for such net proceeds and other cash (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable 

 

40

 

taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (ii) as may be required at law in connection with the termination of the Deposit Agreement.  After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement, except for its obligations to the Depositary under Sections 5.8, 5.9 and 7.6 of the Deposit Agreement.  The obligations under the terms of the Deposit Agreement of Holders and Beneficial Owners of ADSs outstanding as of the Termination Date shall survive the Termination Date and shall be discharged only when the applicable ADSs are presented by their Holders to the Depositary for cancellation under the terms of the Deposit Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1            Counterparts.  The Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts together shall constitute one and the same agreement. Copies of the Deposit Agreement shall be maintained with the Depositary and shall be open to inspection by any Holder during business hours.

 

Section 7.2            No Third-Party Beneficiaries.  The Deposit Agreement is for the exclusive benefit of the parties hereto (and their successors) and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person, except to the extent specifically set forth in the Deposit Agreement.  Nothing in the Deposit Agreement shall be deemed to give rise to a partnership or joint venture among the parties nor establish a fiduciary or similar relationship among the parties.  The parties hereto acknowledge and agree that (i) the Depositary and its Affiliates may at any time have multiple banking relationships with the Company and its Affiliates, (ii) the Depositary and its Affiliates may be engaged at any time in transactions in which parties adverse to the Company or the Holders or Beneficial Owners may have interests and (iii) nothing contained in the Deposit Agreement shall (a) preclude the Depositary or any of its Affiliates from engaging in such transactions or establishing or maintaining such relationships, and (b) obligate the Depositary or any of its Affiliates to disclose such transactions or relationships or to account for any profit made or payment received in such transactions or relationships.

 

Section 7.3            Severability.  In case any one or more of the provisions contained in the Deposit Agreement or in the ADRs should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby.

 

Section 7.4            Holders and Beneficial Owners as Parties; Binding Effect.  The Holders and Beneficial Owners from time to time of ADSs issued hereunder shall be parties to the Deposit Agreement and shall be bound by all of the terms and conditions hereof and of any ADR evidencing their ADSs by acceptance thereof or any beneficial interest therein.

 

41

 

Section 7.5            Notices.  Any and all notices to be given to the Company shall be deemed to have been duly given if personally delivered or sent by mail, air courier or cable, telex or facsimile transmission, confirmed by letter personally delivered or sent by mail or air courier, addressed to ChinaCache International Holdings Ltd., 6/F, Block A, Galaxy Plaza, No.10 Jiuxianqiao Road Middle, Chaoyang District, Beijing 100015, the People’s Republic of China, Attention: Robert Yong Sha, Chief Financial Officer (facsimile number: (86-10) 6437 4251), or to any other address which the Company may specify in writing to the Depositary.

 

Any and all notices to be given to the Depositary shall be deemed to have been duly given if personally delivered or sent by mail, air courier or cable, telex or facsimile transmission, confirmed by letter personally delivered or sent by mail or air courier, addressed to Citibank, N.A., 388 Greenwich Street, New York, New York 10013, U.S.A., Attention: Depositary Receipts Department (facsimile number: 212-816-6865), or to any other address which the Depositary may specify in writing to the Company.

 

Any and all notices to be given to any Holder shall be deemed to have been duly given if (a) personally delivered or sent by mail or cable, telex or facsimile transmission, confirmed by letter, addressed to such Holder at the address of such Holder as it appears on the books of the Depositary or, if such Holder shall have filed with the Depositary a request that notices intended for such Holder be mailed to some other address, at the address specified in such request, or (b) if a Holder shall have designated such means of notification as an acceptable means of notification under the terms of the Deposit Agreement, by means of electronic messaging addressed for delivery to the e-mail address designated by the Holder for such purpose.  Notice to Holders shall be deemed to be notice to Beneficial Owners for all purposes of the Deposit Agreement.  Failure to notify a Holder or any defect in the notification to a Holder shall not affect the sufficiency of notification to other Holders or to the Beneficial Owners of ADSs held by such other Holders.

 

Delivery of a notice sent by mail, air courier or cable, telex or facsimile transmission shall be deemed to be effective at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a cable, telex or facsimile transmission) is deposited, postage prepaid, in a post-office letter box or delivered to an air courier service, without regard for the actual receipt or time of actual receipt thereof by a Holder.  The Depositary or the Company may, however, act upon any cable, telex or facsimile transmission received by it from any Holder, the Custodian, the Depositary, or the Company, notwithstanding that such cable, telex or facsimile transmission shall not be subsequently confirmed by letter.

 

Delivery of a notice by means of electronic messaging shall be deemed to be effective at the time of the initiation of the transmission by the sender (as shown on the sender’s records), notwithstanding that the intended recipient retrieves the message at a later date, fails to retrieve such message, or fails to receive such notice on account of its failure to maintain the designated e-mail address, its failure to designate a substitute e-mail address or for any other reason.

 

Section 7.6            Governing Law and Jurisdiction.  The Deposit Agreement and the ADRs shall be interpreted in accordance with, and all rights hereunder and thereunder and provisions hereof and thereof shall be governed by, the laws of the State of New York applicable 

 

42

 

to contracts made and to be wholly performed in that State.  Notwithstanding anything contained in the Deposit Agreement, any ADR or any present or future provisions of the laws of the State of New York, the rights of holders of Shares and of any other Deposited Securities and the obligations and duties of the Company in respect of the holders of Shares and other Deposited Securities, as such, shall be governed by the laws of the Cayman Islands (or, if applicable, such other laws as may govern the Deposited Securities).

 

Except as set forth in the following paragraph of this Section 7.6, the Company and the Depositary agree that the federal or state courts in the City of New York shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute between them that may arise out of or in connection with the Deposit Agreement and, for such purposes, each irrevocably submits to the non-exclusive jurisdiction of such courts. The Company hereby irrevocably designates, appoints and empowers Law Debenture Corporate Services Inc. (the “Agent”) now at 400 Madison Avenue, 4th Floor, New York, New York 10017 as its authorized agent to receive and accept for and on its behalf, and on behalf of its properties, assets and revenues, service by mail of any and all legal process, summons, notices and documents that may be served in any suit, action or proceeding brought against the Company in any federal or state court as described in the preceding sentence or in the next paragraph of this Section 7.6.  If for any reason the Agent shall cease to be available to act as such, the Company agrees to designate a new agent in New York on the terms and for the purposes of this Section 7.6 reasonably satisfactory to the Depositary. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding against the Company, by service by mail of a copy thereof upon the Agent (whether or not the appointment of such Agent shall for any reason prove to be ineffective or such Agent shall fail to accept or acknowledge such service), with a copy mailed to the Company by registered or certified air mail, postage prepaid, to its address provided in Section 7.5.  The Company agrees that the failure of the Agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon.

 

Notwithstanding the foregoing, the Depositary and the Company unconditionally agree that in the event that a Holder or Beneficial Owner brings a suit, action or proceeding against (a) the Company, (b) the Depositary in its capacity as Depositary under the Deposit Agreement or (c) against both the Company and the Depositary, in any such case, in any state or federal court of the United States, and the Depositary or the Company have any claim, for indemnification or otherwise, against each other arising out of the subject matter of such suit, action or proceeding, then the Company and the Depositary may pursue such claim against each other in the state or federal court in the United States in which such suit, action, or proceeding is pending and, for such purposes, the Company and the Depositary irrevocably submit to the non-exclusive jurisdiction of such courts.  The Company agrees that service of process upon the Agent in the manner set forth in the preceding paragraph shall be effective service upon it for any suit, action or proceeding brought against it as described in this paragraph.

 

The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceedings brought in any court as provided in this Section 7.6, and hereby further 

 

43

 

irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, and agrees not to plead or claim, any right of immunity from legal action, suit or proceeding, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, from execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, and consents to such relief and enforcement against it, its assets and its revenues in any jurisdiction, in each case with respect to any matter arising out of, or in connection with, the Deposit Agreement, any ADR or the Deposited Securities.

 

No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement.  The provisions of this Section 7.6 shall survive any termination of the Deposit Agreement, in whole or in part.

 

Section 7.7            Assignment. Subject to the provisions of Section 5.4, the Deposit Agreement may not be assigned by either the Company or the Depositary.

 

Section 7.8            Compliance with U.S. Securities Laws. Notwithstanding anything in the Deposit Agreement to the contrary, the withdrawal or delivery of Deposited Securities will not be suspended by the Company or the Depositary except as would be permitted by Instruction I.A.(1) of the General Instructions to Form F-6 Registration Statement, as amended from time to time, under the Securities Act.

 

Section 7.9            Cayman Islands Law References.  Any summary of the laws and regulations of the Cayman Islands and of the terms of the Company’s Articles of Association set forth in the Deposit Agreement have been provided by the Company solely for the convenience of Holders, Beneficial Owners and the Depositary.  While such summaries are believed by the Company to be accurate as of the date of the Deposit Agreement, (i) they are summaries and as such may not include all aspects of the materials summarized applicable to a Holder or Beneficial Owner, and (ii) these laws and regulations and the Company’s Articles of Association may change after the date of the Deposit Agreement.  Neither the Depositary nor the Company has any obligation under the terms of the Deposit Agreement to update any such summaries.

 

Section 7.10         Titles and References.

 

(a)           Deposit Agreement.  All references in the Deposit Agreement to exhibits, articles, sections, subsections, and other subdivisions refer to the exhibits, articles, sections, subsections and other subdivisions of the Deposit Agreement unless expressly provided otherwise.  The words “the Deposit Agreement”, “herein”, “hereof”, “hereby”, “hereunder”, and words of similar import refer to the Deposit Agreement as a whole as in effect at the relevant time between the Company, the Depositary and the Holders and Beneficial Owners of ADSs and not to any particular subdivision unless expressly so limited.  Pronouns in masculine, feminine 

 

44

 

and neuter gender shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa unless the context otherwise requires. Titles to sections of the Deposit Agreement are included for convenience only and shall be disregarded in construing the language contained in the Deposit Agreement.  References to “applicable laws and regulations” shall refer to laws and regulations applicable to ADRs, ADSs or Deposited Securities as in effect at the relevant time of determination, unless otherwise required by law or regulation.

 

(b)           ADRs.  All references in any ADR(s) to paragraphs, exhibits, articles, sections, subsections, and other subdivisions refer to the paragraphs, exhibits, articles, sections, subsections and other subdivisions of the ADR(s) in question unless expressly provided otherwise.  The words “the Receipt”, “the ADR”, “herein”, “hereof”, “hereby”, “hereunder”, and words of similar import used in any ADR refer to the ADR as a whole and as in effect at the relevant time, and not to any particular subdivision unless expressly so limited.  Pronouns in masculine, feminine and neuter gender in any ADR shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa unless the context otherwise requires.  Titles to paragraphs of any ADR are included for convenience only and shall be disregarded in construing the language contained in the ADR.  References to “applicable laws and regulations” shall refer to laws and regulations applicable to ADRs, ADSs or Deposited Securities as in effect at the relevant time of determination, unless otherwise required by law or regulation.

 

45

 

IN WITNESS WHEREOF, CHINACACHE INTERNATIONAL HOLDINGS LTD. and CITIBANK, N.A. have duly executed the Deposit Agreement as of the day and year first above set forth and all Holders and Beneficial Owners shall become parties hereto upon acceptance by them of ADSs issued in accordance with the terms hereof, or upon acquisition of any beneficial interest therein.

 

	
 
  	
CHINACACHE INTERNATIONAL HOLDINGS LTD.
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Song Wang
  
	
 
  	
 
  	
Name: Song Wang
  
	
 
  	
 
  	
Title: Chairman of the Board of Directors and 
 Chief Executive Officer
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
CITIBANK, N.A.
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Robert Franz
  
	
 
  	
 
  	
Name: Robert Franz
  
	
 
  	
 
  	
Title: Vice President
  
				

 

46

 

EXHIBIT A

 

[FORM OF ADR]

 

	
Number:                                     
  	
CUSIP NUMBER: 
  

 

	
 
  	
American Depositary Shares (each American Depositary Share representing the right to receive 16 ordinary shares, of ChinaCache International Holdings Ltd.)
  

 

AMERICAN DEPOSITARY RECEIPT

 

FOR

 

AMERICAN DEPOSITARY SHARES

 

representing

 

DEPOSITED ORDINARY SHARES

 

of

 

CHINACACHE INTERNATIONAL HOLDINGS LTD.

 

(Incorporated under the laws of the Cayman Islands)

 

CITIBANK, N.A., a national banking association organized and existing under the laws of the United States of America, as depositary (the “Depositary”), hereby certifies that                           is the owner of                              American Depositary Shares (hereinafter “ADS”), representing deposited ordinary shares, including evidence of rights to receive such ordinary shares (the “Shares”), of ChinaCache International Holdings Ltd., a company incorporated under the laws of the Cayman Islands (the “Company”).  As of the date of the Deposit Agreement (as hereinafter defined), each ADS represents the right to receive 16 Shares deposited under the Deposit Agreement with the Custodian, which at the date of execution of the Deposit Agreement is Citibank, N.A. — Hong Kong Branch (the “Custodian”).  The ADS(s)-to-Share(s) ratio is subject to amendment as provided in Articles IV and VI of the Deposit Agreement.  The Depositary’s Principal Office is located at 388 Greenwich Street, New York, New York 10013, U.S.A.

 

(1)           The Deposit Agreement.  This American Depositary Receipt is one of an issue of American Depositary Receipts (“ADRs”), all issued and to be issued upon the terms and 

 

A-1

 

conditions set forth in the Deposit Agreement, dated as of                         , 2010 (as amended and supplemented from time to time, the “Deposit Agreement”), by and among the Company, the Depositary, and all Holders and Beneficial Owners from time to time of ADSs issued thereunder. The Deposit Agreement sets forth the rights and obligations of Holders and Beneficial Owners of ADSs and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Shares and held thereunder (such Shares, securities, property and cash are herein called “Deposited Securities”).  Copies of the Deposit Agreement are on file at the Principal Office of the Depositary and with the Custodian.  Each Holder and each Beneficial Owner, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement, shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

 

The statements made on the face and reverse of this ADR are summaries of certain provisions of the Deposit Agreement and the Articles of Association  of the Company (as in effect on the date of the signing of the Deposit Agreement) and are qualified by and subject to the detailed provisions of the Deposit Agreement and the Articles of Association, to which reference is hereby made.  All capitalized terms used herein which are not otherwise defined herein shall have the meanings ascribed thereto in the Deposit Agreement.  The Depositary makes no representation or warranty as to the validity or worth of the Deposited Securities.  The Depositary has made arrangements for the acceptance of the ADSs into DTC.  Each Beneficial Owner of ADSs held through DTC must rely on the procedures of DTC and the DTC Participants to exercise and be entitled to any rights attributable to such ADSs.  The Depositary may issue Uncertificated ADSs subject, however, to the terms and conditions of Section 2.13 of the Deposit Agreement.

 

(2)           Withdrawal of Deposited Securities. The Holder of this ADR (and of the ADSs evidenced hereby) shall be entitled to Delivery (at the Custodian’s designated office) of the Deposited Securities at the time represented by the ADSs evidenced hereby upon satisfaction of each of the following conditions: (i) the Holder (or a duly authorized attorney of the Holder) has duly Delivered to the Depositary at its Principal Office the ADSs evidenced hereby (and, if applicable, this ADR) for the purpose of withdrawal of the Deposited Securities represented thereby, (ii) if applicable and so required by the Depositary, this ADR Delivered to the Depositary for such purpose has been properly endorsed in blank or is accompanied by proper instruments of transfer in blank (including signature guarantees in accordance with standard securities industry practice), (iii) if so required by the Depositary, the Holder of the ADSs has executed and delivered to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn to be Delivered to or upon the written order of the person(s) designated in such order, and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in 

 

A-2

 

Section 5.9 of, and Exhibit B to, the Deposit Agreement) have been paid,  subject, however, in each case, to the terms and conditions of this ADR evidencing the surrendered ADSs, of the Deposit Agreement, of the Company’s Articles of Association, of any applicable laws and the rules of the applicable book-entry settlement entity, and to any provisions of or governing the Deposited Securities, in each case as in effect at the time thereof.

 

Upon satisfaction of each of the conditions specified above, the Depositary (i) shall cancel the ADSs Delivered to it (and, if applicable, the ADR(s) evidencing the ADSs so Delivered), (ii) shall direct the Registrar to record the cancellation of the ADSs so Delivered on the books maintained for such purpose, and (iii) shall direct the Custodian to Deliver, or cause the Delivery of, in each case, without unreasonable delay, the Deposited Securities represented by the ADSs so canceled together with any certificate or other document of title for the Deposited Securities, or evidence of the electronic transfer thereof (if available), as the case may be, to or upon the written order of the person(s) designated in the order delivered to the Depositary for such purpose, subject however, in each case, to the terms and conditions of the Deposit Agreement, of this ADR evidencing the ADS so cancelled, of the Articles of Association  of the Company, of any applicable laws and of the rules of the applicable book-entry settlement entity, and to the terms and conditions of or governing the Deposited Securities, in each case as in effect at the time thereof.

 

The Depositary shall not accept for surrender ADSs representing less than one (1) Share.  In the case of Delivery to it of ADSs representing a number other than a whole number of Shares, the Depositary shall cause ownership of the appropriate whole number of Shares to be Delivered in accordance with the terms hereof, and shall, at the discretion of the Depositary, either (i) return to the person surrendering such ADSs the number of ADSs representing any remaining fractional Share, or (ii) sell or cause to be sold the fractional Share represented by the ADSs so surrendered in a riskless principal capacity in a public sale or if no public market is available, in a private sale, and remit the proceeds of such sale (net of (a) applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes withheld) to the person surrendering the ADSs. Notwithstanding anything else contained in this ADR or the Deposit Agreement, the Depositary may make delivery at the Principal Office of the Depositary of (i) any cash dividends or cash distributions, or (ii) any proceeds from the sale of any distributions of shares or rights, which are at the time held by the Depositary in respect of the Deposited Securities represented by the ADSs surrendered for cancellation and withdrawal.  At the request, risk and expense of any Holder so surrendering ADSs represented by this ADR, and for the account of such Holder, the Depositary shall direct the Custodian to forward (to the extent permitted by law) any cash or other property (other than securities) held by the Custodian in respect of the Deposited Securities represented by such ADSs to the Depositary for delivery at the Principal Office of the Depositary.  Such direction shall be given by letter or, at the request, risk and expense of such Holder, by cable, telex or facsimile transmission.

 

(3)           Transfer, Combination and Split-Up of ADRs.  The Registrar shall register the transfer of this ADR (and of the ADSs represented hereby) on the books maintained for such purpose and the Depositary shall (x) cancel this ADR and execute new ADRs evidencing the same aggregate number of ADSs as those evidenced by this ADR when canceled by the Depositary, (y) cause the Registrar to countersign such new ADRs, and (z) Deliver such new

 

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ADRs to or upon the order of the person entitled thereto, if each of the following conditions has been satisfied:  (i) this ADR has been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a transfer thereof, (ii) this surrendered ADR has been properly endorsed or is accompanied by proper instruments of transfer (including signature guarantees in accordance with standard securities industry practice), (iii) this surrendered ADR has been duly stamped (if required by the laws of the State of New York or of the United States), and (iv) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and governmental charges (as are set forth in Section 5.9 of, and Exhibit B to, the Deposit Agreement) have been paid, subject, however, in each case, to the terms and conditions of this ADR, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

The Registrar shall register the split-up or combination of this ADR (and of the ADSs represented hereby) on the books maintained for such purpose and the Depositary shall (x) cancel this ADR and execute new ADRs for the number of ADSs requested, but in the aggregate not exceeding the number of ADSs evidenced by this ADR canceled by the Depositary, (y) cause the Registrar to countersign such new ADRs, and (z) Deliver such new ADRs to or upon the order of the Holder thereof, if each of the following conditions has been satisfied:  (i) this ADR has been duly Delivered by the Holder (or by a duly authorized attorney of the Holder) to the Depositary at its Principal Office for the purpose of effecting a split-up or combination hereof, and (ii) all applicable fees and charges of, and expenses incurred by, the Depositary and all applicable taxes and government charges (as are set forth in Section 5.9 of, and Exhibit B to, the Deposit Agreement) have been paid, subject, however, in each case, to the terms and conditions of this ADR, of the Deposit Agreement and of applicable law, in each case as in effect at the time thereof.

 

(4)           Pre-Conditions to Registration, Transfer, Etc.  As a condition precedent to the execution and delivery, the registration of issuance, transfer, split-up, combination or surrender, of any ADR, the delivery of any distribution thereon, or the withdrawal of any Deposited Securities, the Depositary or the Custodian may require (i) payment from the depositor of Shares or presenter of ADSs or of an ADR of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees and charges of the Depositary as provided in Section 5.9 and Exhibit B to the Deposit Agreement and in this ADR, (ii) the production of proof reasonably satisfactory to it as to the identity and genuineness of any signature or any other matters contemplated in Section 3.1 of the Deposit Agreement, and (iii) compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal of Deposited Securities and (B) such reasonable regulations as the Depositary and the Company may establish consistent with the provisions of this ADR, the Deposit Agreement and applicable law.

 

The issuance of ADSs against deposits of Shares generally or against deposits of particular Shares may be suspended, or the deposit of particular Shares may be refused, or the registration of transfer of ADSs in particular instances may be refused, or the registration of transfer of ADSs generally may be suspended, during any period when the transfer books of the 

 

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Company, the Depositary, a Registrar or the Share Registrar are closed or if any such action is deemed necessary or advisable by the Depositary  (whereupon the Depositary shall notify the Company) or the Company, in good faith, at any time or from time to time because of any requirement of law or regulation, any government or governmental body or commission or any securities exchange on which the Shares or ADSs are listed, or under any provision of the Deposit Agreement or this ADR, or under any provision of, or governing, the Deposited Securities, or because of a meeting of shareholders of the Company or for any other reason, subject, in all cases to paragraph (24) and Section 7.8 of the Deposit Agreement. Notwithstanding any provision of the Deposit Agreement or this ADR to the contrary, Holders are entitled to surrender outstanding ADSs to withdraw the Deposited Securities associated therewith at any time subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the deposit of Shares in connection with voting at a shareholders’ meeting or the payment of dividends, (ii) the payment of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the ADSs or the withdrawal of the Deposited Securities, and (iv) other circumstances specifically contemplated by Instruction I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time).

 

(5)           Compliance With Information Requests.  Notwithstanding any other provision of the Deposit Agreement or this ADR, each Holder and Beneficial Owner of the ADSs represented hereby agrees to comply with requests from the Company pursuant to applicable law, the rules and requirements of the Nasdaq Stock Market LLC, and of any other stock exchange on which Shares or ADSs are, or will be, registered, traded or listed, or the Articles of Association  of the Company, which are made to provide information, inter alia, as to the capacity in which such Holder or Beneficial Owner owns ADSs (and Shares, as the case may be) and regarding the identity of any other person(s) interested in such ADSs and the nature of such interest and various other matters, whether or not they are Holders and/or Beneficial Owners at the time of such request.  The Depositary agrees to forward, upon the request of the Company and at the Company’s expense, any such request from the Company to the Holders and to forward to the Company any such responses to such requests received by the Depositary.

 

(6)           Ownership Restrictions.  Notwithstanding any provision of this ADR or of the Deposit Agreement, the Company may restrict transfers of the Shares where such transfer might result in ownership of Shares exceeding limits imposed by applicable law or the Articles of Association of the Company.  The Company may also restrict, in such manner as it deems appropriate, transfers of the ADSs where such transfer may result in the total number of Shares represented by the ADSs owned by a single Holder or Beneficial Owner to exceed any such limits. The Company may, in its sole discretion but subject to applicable law, instruct the Depositary to take action with respect to the ownership interest of any Holder or Beneficial Owner in excess of the limits set forth in the preceding sentence, including but not limited to, the imposition of restrictions on the transfer of ADSs, the removal or limitation of voting rights or mandatory sale or disposition on behalf of a Holder or Beneficial Owner of the Shares represented by the ADSs held by such Holder or Beneficial Owner in excess of such limitations, if and to the extent such disposition is permitted by applicable law and the Articles of Association of the Company.  Nothing herein or in the Deposit Agreement shall be interpreted as 

 

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obligating the Depositary or the Company to ensure compliance with the ownership restrictions described herein or in Section 3.5 of the Deposit Agreement.

 

Applicable laws and regulations may require holders and beneficial owners of Shares, including the Holders and Beneficial Owners of ADSs, to satisfy reporting requirements and obtain regulatory approvals in certain circumstances.  Holders and Beneficial Owners of ADSs are solely responsible for determining and complying with such reporting requirements, and for obtaining such approvals.  Each Holder and each Beneficial Owner hereby agrees to make such determination, file such reports, and obtain such approvals to the extent and in the form required by applicable laws and regulations as in effect from time to time.  Neither the Depositary, the Custodian, the Company or any of their respective agents or affiliates shall be required to take any actions whatsoever on behalf of Holders or Beneficial Owners to determine and satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.

 

(7)           Liability of Holder for Taxes and Other Charges.  Any tax or other governmental charge payable by the Custodian or by the Depositary with respect to any ADR or any Deposited Securities or ADSs shall be payable by the Holders and Beneficial Owners to the Depositary.  The Company, the Custodian and/or Depositary may withhold or deduct from any distributions made in respect of Deposited Securities and may sell in a riskless principal capacity in a public sale or if no public market is available, in a private sale, for the account of a Holder and/or Beneficial Owner any or all of the Deposited Securities and apply such distributions and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges that are payable by Holders or Beneficial owners in respect of the ADSs, Deposited Securities and ADRs, the Holder and the Beneficial Owner hereof remaining liable for any deficiency.  The Custodian may refuse the deposit of Shares and the Depositary may refuse to issue ADSs, to deliver ADRs, register the transfer of ADSs, register the split-up or combination of ADRs and (subject to paragraph (24) hereof and Section 7.8 of the Deposit Agreement) the withdrawal of Deposited Securities until payment in full of such tax, charge, penalty or interest is received.  Every Holder and Beneficial Owner agrees to indemnify the Depositary, the Company, the Custodian, and any of their respective agents, officers, directors, employees and Affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any tax benefit obtained for such Holder and/or Beneficial Owner.

 

(8)           Representations and Warranties of Depositors.  Each person depositing Shares under the Deposit Agreement shall be deemed thereby to represent and warrant that (i) such Shares and the certificates therefor are duly authorized, validly issued, fully paid, non-assessable and legally obtained by such person, (ii) all preemptive (and similar) rights, if any, with respect to such Shares have been validly waived or exercised, (iii) the person making such deposit is duly authorized so to do, (iv) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and (v) the Shares presented for deposit are not, and the ADSs issuable upon such deposit will not be, Restricted Securities (except as contemplated in Section 2.14 of the Deposit Agreement), and (vi) the Shares presented for deposit have not been stripped of any rights or entitlements.  Such representations and warranties shall survive the deposit and withdrawal of Shares, the issuance and cancellation of 

 

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ADSs in respect thereof and the transfer of such ADSs.  If any such representations or warranties are false in any way, the Company and the Depositary shall be authorized, at the cost and expense of the person depositing Shares, to take any and all actions necessary to correct the consequences thereof.

 

(9)           Proofs, Certificates and Other Information.  Any person presenting Shares for deposit, and any Holder and any Beneficial Owner may be required, and every Holder and Beneficial Owner agrees, from time to time to provide to the Depositary and the Custodian such proof of citizenship or residence, taxpayer status, payment of all applicable taxes or other governmental charges, exchange control approval, legal or beneficial ownership of ADSs and Deposited Securities, compliance with applicable laws, the terms of the Deposit Agreement or the ADR(s) evidencing the ADSs and the provisions of, or governing, the Deposited Securities, to execute such certifications and to make such representations and warranties, and to provide such other information and documentation (or, in the case of Shares in registered form presented for deposit, such information relating to the registration on the books of the Company or of the Shares Registrar) as the Depositary or the Custodian may deem necessary or proper or as the Company may reasonably require by written request to the Depositary consistent with its obligations under the Deposit Agreement and the applicable ADR(s).  The Depositary and the Registrar, as applicable, may withhold the execution or delivery or registration of transfer of any ADR or ADS or the distribution or sale of any dividend or distribution of rights or of the proceeds thereof or, to the extent not limited by paragraph (24) and Section 7.8 of the Deposit Agreement, the delivery of any Deposited Securities until such proof or other information is filed or such certifications are executed, or such representations are made or such other information or documentation are provided, in each case to the Depositary’s, the Registrar’s and the Company’s satisfaction.

 

(10)         Charges of Depositary.  The Depositary shall charge the following fees:

 

(i)                                    Issuance Fee:  to any person depositing Shares or to whom ADSs are issued upon the deposit of Shares, a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) so issued under the terms of the Deposit Agreement (excluding issuances as a result of distributions described in paragraph (iv) below);

 

(ii)                                Cancellation Fee:  to any person surrendering ADSs for cancellation and withdrawal of Deposited Securities or to any person to whom Deposited Securities are delivered, a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) surrendered;

 

(iii)                            Cash Distribution Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held for the distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements);

 

(iv)                               Stock Distribution/Rights Exercise Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held for 

 

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(a) the distribution of stock dividends or other free stock distributions or (b)  the exercise of rights to purchase additional ADSs;

 

(v)                                   Other Distribution Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held for the distribution of securities other than ADSs or rights to purchase additional ADSs; and

 

(vi)                               Depositary Services Fee:  to any Holder of ADS(s), a fee not in excess of U.S. $5.00 per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the Depositary.

 

Holders, Beneficial Owners, persons depositing Shares and persons surrendering ADSs for cancellation and for the purpose of withdrawing Deposited Securities shall be responsible for the following charges:

 

(a)                                  taxes (including applicable interest and penalties) and other governmental charges;

 

(b)                                 such registration fees as may from time to time be in effect for the registration of Shares or other Deposited Securities on the share register and applicable to transfers of Shares or other Deposited Securities to or from the name of the Custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively;

 

(c)                                  such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing or withdrawing Shares or Holders and Beneficial Owners of ADSs;

 

(d)                                 the expenses and charges incurred by the Depositary in the conversion of foreign currency;

 

(e)                                  such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Shares, Deposited Securities, ADSs and ADRs; and

 

(f)                                    the fees and expenses incurred by the Depositary, the Custodian, or any nominee in connection with the delivery or servicing of Deposited Securities.

 

All fees and charges may, at any time and from time to time, be changed by agreement between the Depositary and Company but, in the case of fees and charges payable by Holders or Beneficial Owners, only in the manner contemplated by paragraph (22) of this ADR and as contemplated in the Deposit Agreement.  The Depositary will provide, without charge, a copy of its latest fee schedule to anyone upon request.

 

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Depositary Fees payable upon (i) deposit of Shares against issuance of ADSs and (ii) surrender of ADSs for cancellation and withdrawal of Deposited Securities will be charged by the Depositary to the person to whom the ADSs so issued are delivered (in the case of ADS issuances) and to the person who delivers the ADSs for cancellation to the Depositary (in the case of ADS cancellations).  In the case of ADSs issued by the Depositary into DTC or presented to the Depositary via DTC, the ADS issuance and cancellation fees will be payable to the Depositary by the DTC Participant(s) receiving the ADSs from the Depositary or the DTC Participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the Beneficial Owner(s) and will be charged by the DTC Participant(s) to the account(s) of the applicable Beneficial Owner(s) in accordance with the procedures and practices of the DTC participant(s) as in effect at the time.  Depositary fees in respect of distributions and the Depositary services fee are payable to the Depositary by Holders as of the applicable ADS Record Date established by the Depositary.  In the case of distributions of cash, the amount of the applicable Depositary fees is deducted by the Depositary from the funds being distributed.  In the case of distributions other than cash and the Depositary service fee, the Depositary will invoice the applicable Holders as of the ADS Record Date established by the Depositary.  For ADSs held through DTC, the Depositary fees for distributions other than cash and the Depositary service fee are charged by the Depositary to the DTC Participants in accordance with the procedures and practices prescribed by DTC from time to time and the DTC Participants in turn charge the amount of such fees to the Beneficial Owners for whom they hold ADSs.

 

The Depositary may reimburse the Company for certain expenses incurred by the Company in respect of the ADS program established pursuant to the Deposit Agreement, by making available a portion of the Depositary fees charged in respect of the ADS program or otherwise, upon such terms and conditions as the Company and the Depositary may agree from time to time.  The Company shall pay to the Depositary such fees and charges and reimburse the Depositary for such out-of-pocket expenses as the Depositary and the Company may agree from time to time.  Responsibility for payment of such charges and reimbursements may from time to time be changed by agreement between the Company and the Depositary. Unless otherwise agreed, the Depositary shall present its statement for such expenses and fees or charges to the Company once every three months.  The charges and expenses of the Custodian are for the sole account of the Depositary.

 

The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement.  As to any Depositary, upon the resignation or removal of such Depositary as described in Section 5.4 of the Deposit Agreement, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

 

(11)         Title to ADRs.  It is a condition of this ADR, and every successive Holder of this ADR by accepting or holding the same consents and agrees, that title to this ADR (and to each ADS evidenced hereby) shall be transferable upon the same terms as a certificated security under the laws of the State of New York, provided that, in the case of Certificated ADSs, such ADR has been properly endorsed or is accompanied by proper instruments of transfer.  Notwithstanding any notice to the contrary, the Depositary and the Company may deem and treat the Holder of this ADR (that is, the person in whose name this ADR is registered on the books of 

 

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the Depositary) as the absolute owner thereof for all purposes.  Neither the Depositary nor the Company shall have any obligation nor be subject to any liability under the Deposit Agreement or this ADR to any holder of this ADR or any Beneficial Owner unless, in the case of a holder of ADSs, such holder is the Holder of this ADR registered on the books of the Depositary or, in the case of a Beneficial Owner, such Beneficial Owner or the Beneficial Owner’s representative is the Holder registered on the books of the Depositary.

 

(12)         Validity of ADR.  The Holder(s) of this ADR (and the ADSs represented hereby) shall not be entitled to any benefits under the Deposit Agreement or be valid or enforceable for any purpose against the Depositary or the Company unless this ADR has been (i) dated, (ii) signed by the manual or facsimile signature of a duly-authorized signatory of the Depositary, (iii) countersigned by the manual or facsimile signature of a duly-authorized signatory of the Registrar, and (iv) registered in the books maintained by the Registrar for the registration of issuances and transfers of ADRs.  An ADR bearing the facsimile signature of a duly-authorized signatory of the Depositary or the Registrar, who at the time of signature was a duly authorized signatory of the Depositary or the Registrar, as the case may be, shall bind the Depositary, notwithstanding the fact that such signatory has ceased to be so authorized prior to the delivery of such ADR by the Depositary.

 

(13)         Available Information; Reports; Inspection of Transfer Books.

 

The Company is subject to the periodic reporting requirements of the Exchange Act and, accordingly, is required to file or submit certain reports with the Commission. These reports can be retrieved from the Commission’s website (www.sec.gov) and can be inspected and copied at the public reference facilities maintained by the Commission located (as of the date of the Deposit Agreement) at 100 F Street, N.E., Washington D.C.  20549.  The Depositary shall make available for inspection by Holders at its Principal Office any reports and communications, including any proxy soliciting materials, received from the Company which are both (a) received by the Depositary, the Custodian, or the nominee of either of them as the holder of the Deposited Securities and (b) made generally available to the holders of such Deposited Securities by the Company.  The Depositary shall also provide or make available to Holders copies of such reports when furnished by the Company pursuant to Section 5.6 of the Deposit Agreement.

 

The Registrar shall keep books for the registration of ADSs which at all reasonable times shall be open for inspection by the Company and by the Holders of such ADSs, provided that such inspection shall not be, to the Registrar’s knowledge after due inquiry, for the purpose of communicating with Holders of such ADSs in the interest of a business or object other than the business of the Company or other than a matter related to the Deposit Agreement or the ADSs.

 

The Registrar may close the transfer books with respect to the ADSs, at any time or from time to time, when deemed necessary or advisable by it in good faith in connection with the performance of its duties hereunder, or at the reasonable written request of the Company subject, in all cases, to paragraph (24).

 

Dated:

 

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CITIBANK, N.A.

Transfer Agent and Registrar
  	
CITIBANK, N.A.

as Depositary
  
	
 
  	
 
  
	
 
  	
 
  
	
By:
  	
 
  	
 
  	
By:
  	
 
  
	
 
  	
Authorized Signatory
  	
 
  	
 
  	
Authorized Signatory
  

 

The address of the Principal Office of the Depositary is 388 Greenwich Street, New York, New York 10013, U.S.A.

 

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[FORM OF REVERSE OF ADR]

 

SUMMARY OF CERTAIN ADDITIONAL PROVISIONS

 

OF THE DEPOSIT AGREEMENT

 

(14)         Dividends and Distributions in Cash, Shares, etc.  Upon the timely receipt by the Depositary of a notice from the Company that it intends to make a distribution of a cash dividend or other cash distribution, the Depositary shall establish an ADS Record Date upon the terms described in Section 4.9 of the Deposit Agreement.  Upon receipt of confirmation from the Custodian of receipt of any cash dividend or other cash distribution on any Deposited Securities, or upon receipt of proceeds from the sale of any Deposited Securities or of any entitlements held in respect of Deposited Securities under the terms of the Deposit Agreement, the Depositary will (i) if at the time of receipt thereof any amounts received in a Foreign Currency can in the judgment of the Depositary (upon the terms of Section 4.8 of the Deposit Agreement), be converted on a practicable basis into Dollars transferable to the United States, promptly convert or cause to be converted such cash dividend, distribution or proceeds into Dollars (upon the terms of Section 4.8 of the Deposit Agreement), (ii) if applicable and unless previously established, establish the ADS Record Date upon the terms described in Section 4.9 of the Deposit Agreement, and (iii) distribute promptly the amount thus received (net of (a) the fees and charges of the Depositary set forth in paragraph 10, and expenses incurred by, the Depositary and (b) taxes withheld) to the Holders entitled thereto as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date.  The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Holder a fraction of one cent, and any balance not so distributed shall be held by the Depositary (without liability for interest thereon) and shall be added to and become part of the next sum received by the Depositary for distribution to Holders of ADSs outstanding at the time of the next distribution.  If the Company, the Custodian or the Depositary is required to withhold and does withhold from any cash dividend or other cash distribution in respect of any Deposited Securities an amount on account of taxes, duties or other governmental charges, the amount distributed to Holders on the ADSs representing such Deposited Securities shall be reduced accordingly.  Such withheld amounts shall be forwarded by the Company, the Custodian or the Depositary to the relevant governmental authority. Evidence of payment thereof by the Company shall be forwarded by the Company to the Depositary upon request.

 

Upon the timely receipt by the Depositary of a notice from the Company that it intends to make a distribution that consists of a dividend in, or free distribution of Shares, the Depositary shall establish an ADS Record Date upon the terms described in Section 4.9 of the Deposit Agreement.  Upon receipt of confirmation from the Custodian of the receipt of the Shares so distributed by the Company, the Depositary shall either (i) subject to Section 5.9 of the Deposit Agreement, distribute to the Holders as of the ADS Record Date in proportion to the number of ADSs held as of the ADS Record Date, additional ADSs, which represent in the aggregate the number of Shares received as such dividend, or free distribution, subject to the other terms of the Deposit Agreement (including, without limitation, (a) the applicable fees and charges of, and expenses incurred by, the Depositary and (b) taxes), or (ii) if additional ADSs are not so

 

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distributed, take all actions necessary so that each ADS issued and outstanding after the ADS Record Date shall, to the extent permissible by law, thenceforth also represent rights and interest in the additional integral number of Shares distributed upon the Deposited Securities represented thereby (net of (a) the fees and charges of the Depositary set forth in paragraph 10, and applicable expenses incurred by, the Depositary, and (b) taxes).  In lieu of delivering fractional ADSs, the Depositary shall sell the number of Shares or ADSs, as the case may be, represented by the aggregate of such fractions, in a riskless principal capacity in a public sale or if no public market is available, in a private sale, and distribute the net proceeds upon the terms set forth in Section 4.1 of the Deposit Agreement.

 

In the event that the Depositary determines that any distribution in property (including Shares) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, or, if the Company in the fulfillment of its obligations under Section 5.7 of the Deposit Agreement, has furnished an opinion of U.S. counsel determining that Shares must be registered under the Securities Act or other laws in order to be distributed to Holders (and no such registration statement has been declared effective), the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable, and the Depositary shall distribute the net proceeds of any such sale (after deduction of (a) taxes and (b) the fees and charges of the Depositary set forth in paragraph 10, and the expenses incurred by, the Depositary) to Holders entitled thereto upon the terms of Section 4.1 of the Deposit Agreement.  The Depositary shall hold and/or distribute any unsold balance of such property in accordance with the provisions of the Deposit Agreement.

 

Upon the timely receipt of a notice indicating that the Company wishes an elective distribution in cash or Shares to be made available to Holders of ADSs upon the terms described in the Deposit Agreement, the Company and the Depositary shall determine whether such distribution is lawful and reasonably practicable.  If so, the Depositary shall, subject to the terms and conditions of the Deposit Agreement, establish an ADS Record Date according to paragraph (16) and establish procedures to enable the Holder hereof to elect to receive the proposed distribution in cash or in additional ADSs.  If a Holder elects to receive the distribution in cash, the distribution shall be made as in the case of a distribution in cash.  If the Holder hereof elects to receive the distribution in additional ADSs, the distribution shall be made as in the case of a distribution in Shares upon the terms described in the Deposit Agreement.  If such elective distribution is not reasonably practicable or if the Depositary did not receive satisfactory documentation set forth in the Deposit Agreement, the Depositary shall establish an ADS Record Date upon the terms of Section 4.9 of the Deposit Agreement and, to the extent permitted by law, distribute to Holders, on the basis of the same determination as is made in the Cayman Islands in respect of the Shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional Shares, in each case, upon the terms described in the Deposit Agreement.  Nothing herein or in the Deposit Agreement shall obligate the Depositary to make available to the Holder hereof a method to receive the elective distribution in Shares (rather than ADSs).  There can be no assurance that the Holder hereof will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Shares.

 

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Upon the timely receipt by the Depositary of a notice indicating that the Company wishes rights to subscribe for additional Shares to be made available to Holders of ADSs, the Depositary upon consultation with the Company, shall determine, whether it is lawful and reasonably practicable to make such rights available to the Holders.  The Depositary shall make such rights available to any Holders only if (i) the Company shall have requested in a timely manner that such rights be made available to Holders, (ii) the Depositary shall have received the documentation contemplated in the Deposit Agreement, and (iii) the Depositary shall have determined that such distribution of rights is reasonably practicable.  If such conditions are not satisfied, the Depositary shall sell the rights as described below.  In the event all conditions set forth above are satisfied, the Depositary shall establish an ADS Record Date (upon the terms described in Section 4.9 of the Deposit Agreement) and establish procedures (x) to distribute rights to purchase additional ADSs (by means of warrants or otherwise), (y) to enable the Holders to exercise such rights (upon payment of the subscription price and of the applicable (a) fees and charges of the Depositary set forth in paragraph 10, and expenses incurred by, the Depositary and (b) taxes), and (z) to deliver ADSs upon the valid exercise of such rights.  Nothing herein or in the Deposit Agreement shall obligate the Depositary to make available to the Holders a method to exercise rights to subscribe for Shares (rather than ADSs).  If (i) the Company does not request the Depositary in a timely manner to make the rights available to Holders or requests that the rights not be made available to Holders, (ii) the Depositary fails to receive satisfactory documentation within the terms of Section 5,7 of the Deposit Agreement or determines it is not reasonably practicable to make the rights available to Holders, or (iii) any rights made available are not exercised and appear to be about to lapse, the Depositary shall determine whether it is lawful and reasonably practicable to sell such rights, in a riskless principal capacity, at such place and upon such terms (including public and private sale) as it may deem practicable.  The Depositary shall, upon such sale, convert and distribute proceeds of such sale (net of applicable (a) the fees and charges of the Depositary set forth in paragraph 10, and the reasonable, and the expenses incurred by, the Depositary and (b) taxes) upon the terms hereof and of Section 4.1 of the Deposit Agreement.  If the Depositary is unable to make any rights available to Holders upon the terms described in Section 4.4(a) of the Deposit Agreement or to arrange for the sale of the rights upon the terms described in Section 4.4(b) of the Deposit Agreement, the Depositary shall allow such rights to lapse.  The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such rights available to Holders in general or any Holders in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale or exercise, or (iii) the content of any materials forwarded to the ADS Holders on behalf of the Company in connection with the rights distribution.

 

Notwithstanding anything herein or in the Deposit Agreement to the contrary, if registration (under the Securities Act or any other applicable law) of the rights or the securities to which any rights relate may be required in order for the Company to offer such rights or such securities to Holders and to sell the securities represented by such rights, the Depositary will not distribute such rights to the Holders (i) unless and until a registration statement under the Securities Act (or other applicable law) covering such offering is in effect or (ii) unless the Company furnishes the Depositary opinion(s) of counsel for the Company in the United States and counsel to the Company in any other applicable country in which rights would be distributed, in each case reasonably satisfactory to the Depositary, to the effect that the offering 

 

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and sale of such securities to Holders and Beneficial Owners are exempt from, or do not require registration under, the provisions of the Securities Act or any other applicable laws.  In the event that the Company, the Depositary or the Custodian shall be required to withhold and does withhold from any distribution of property (including rights) an amount on account of taxes or other governmental charges, the amount distributed to the Holders of ADSs representing such Deposited Securities shall be reduced accordingly.  In the event that the Depositary determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charges which the Depositary is obligated to withhold, the Depositary may dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner, including by public or private sale, as the Depositary deems necessary and practicable to pay any such taxes or charges.  A liquid market for rights may not exist, and this may adversely affect (1) the ability of the Depositary to dispose of such rights or (2) the amount the Depositary would realize upon disposal of rights.

 

There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to exercise rights on the same terms and conditions as the holders of Shares or be able to exercise such rights.  Nothing herein or in the Deposit Agreement shall obligate the Company to file any registration statement in respect of any rights or Shares or other securities to be acquired upon the exercise of such rights.

 

Upon receipt of a notice indicating that the Company wishes property other than cash, Shares or rights to purchase additional Shares, to be made to Holders of ADSs, the Depositary shall determine whether such distribution to Holders is lawful and reasonably practicable.  The Depositary shall not make such distribution unless (i) the Company shall have requested the Depositary to make such distribution to Holders, (ii) the Depositary shall have received the documentation contemplated in the Deposit Agreement, and (iii) the Depositary shall have determined that such distribution is reasonably practicable. Upon satisfaction of such conditions, the Depositary shall distribute the property so received to the Holders of record, as of the ADS Record Date, in proportion to the number of ADSs held by them respectively and in such manner as the Depositary may deem practicable for accomplishing such distribution (i) upon receipt of payment or net of the fees and charges of the Depositary set forth in paragraph 10, and expenses incurred by, the Depositary, and (ii) net of any taxes withheld.  The Depositary may dispose of all or a portion of the property so distributed and deposited, in such amounts and in such manner (including public or private sale) as the Depositary may deem practicable or necessary to satisfy any taxes (including applicable interest and penalties) or other governmental charges applicable to the distribution.

 

If the conditions above are not satisfied, the Depositary shall sell or cause such property to be sold in a public or private sale, at such place or places and upon such terms as it may deem practicable and shall (i) cause the proceeds of such sale, if any, to be converted into Dollars and (ii) distribute the proceeds of such conversion received by the Depositary (net of applicable (a) fees and charges of the Depositary set forth in paragraph 10, and expenses incurred by, the Depositary and (b) taxes) to the Holders as of the ADS Record Date upon the terms hereof and of the Deposit Agreement.  If the Depositary is unable to sell such property, the Depositary may dispose of such property for the account of the Holders in any way it deems reasonably practicable under the circumstances.

 

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(15)         Redemption.  Upon timely receipt of (i) a notice from the Company that it intends to exercise a right of redemption in respect of the Deposited Securities, and (ii) satisfactory documentation given by the Company to the Depositary within the terms of Section 4.7 of the Deposit Agreement, and only if the Depositary shall have determined that such proposed redemption is practicable, the Depositary shall provide to each Holder a notice setting forth the Company’s intention to exercise the redemption rights and any other particulars set forth in the Company’s notice to the Depositary.  Upon receipt of confirmation that the redemption has taken place and that funds representing the redemption price have been received, the Depositary shall convert, transfer, distribute the proceeds (net of applicable (a) fees and charges of the Depositary set forth in paragraph 10, and expenses incurred by, the Depositary, and (b) taxes), retire ADSs and cancel ADRs, if applicable, upon delivery of such ADSs by Holders thereof upon the terms set forth in Sections 4.1 and 6.2 of the Deposit Agreement.  If less than all outstanding Deposited Securities are redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as may be determined by the Depositary.  The redemption price per ADS shall be the dollar equivalent of the per share amount received by the Depositary (adjusted to reflect the ADS(s)-to-Share(s) ratio) upon the redemption of the Deposited Securities represented by ADSs (subject to the terms of Section 4.8 of the Deposit Agreement and the applicable fees and charges of, and expenses incurred by, the Depositary, and taxes) multiplied by the number of Deposited Securities represented by each ADS redeemed.

 

(16)         Fixing of ADS Record Date.  Whenever the Depositary shall receive notice of the fixing of a record date by the Company for the determination of holders of Deposited Securities entitled to receive any distribution (whether in cash, Shares, rights or other distribution), or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each ADS, or whenever the Depositary shall receive notice of any meeting of, or solicitation of consents or proxies of, holders of Shares or other Deposited Securities, or whenever the Depositary shall find it necessary or convenient in connection with the giving of any notice, solicitation of any consent or any other matter, the Depositary shall fix a record date (“ADS Record Date”) for the determination of the Holders of ADSs who shall be entitled to receive such distribution, to give instructions for the exercise of voting rights at any such meeting, to give or withhold such consent, to receive such notice or solicitation or to otherwise take action, or to exercise the rights of Holders with respect to such changed number of Shares represented by each ADS. The Depositary shall make reasonable efforts to establish the ADS Record Date as closely as possible to the applicable record date for the Deposited Securities (if any) set by the Company.  Subject to applicable law and the terms and conditions of this ADR and Sections 4.1 through 4.8 of the Deposit Agreement, only the Holders of ADSs at the close of business in New York on such ADS Record Date shall be entitled to receive such distributions, to give such instructions, to receive such notice or solicitation, or otherwise take action.

 

(17)         Voting of Deposited Securities.  As soon as practicable after receipt of notice of any meeting at which the holders of Deposited Securities are entitled to vote, or of solicitation of consents or proxies from holders of Deposited Securities, the Depositary shall fix the ADS Record Date in respect of such meeting or solicitation of consent or proxy in accordance with Section 4.9 of the Deposit Agreement.  The Depositary shall, if requested by the Company in writing in a timely manner (the Depositary having no obligation to take any further action if the 

 

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request shall not have been received by the Depositary at least thirty (30) days prior to the date of such vote or meeting), at the Company’s expense and provided no U.S. legal prohibitions exist, distribute as soon as practicable after receipt thereof to Holders as of the ADS Record Date: (a) such notice of meeting or solicitation of consent or proxy, (b) a statement that the Holders at the close of business on the ADS Record Date will be entitled, subject to any applicable law, the provisions of the Deposit Agreement, the Articles of Association of the Company and the provisions of or governing the Deposited Securities, to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by such Holder’s ADSs, and (c) a brief statement as to the manner in which such voting instructions may be given to the Depositary in which voting instructions may be deemed to have been given in accordance with this Section 4.10, if no instructions are received prior to the deadline set for such purposes, to the Depositary to give a discretionary proxy to a person designated by the Company.

 

Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Holders a notice that provides Holders with, or otherwise publicize to Holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

 

The Depositary has been advised by the Company that under the Cayman Islands law as in effect as of the date of the Deposit Agreement, voting at any meeting of shareholders of the Company is by show of hands unless a poll is (before or on the declaration of the results of the show of hands) demanded.  The Depositary will not join in demanding a poll, whether or not requested to do so by Holders of ADSs.  Under the Articles of Association of the Company (in effect on the date of this Deposit Agreement) a poll may be demanded by (i) the chairman of the meeting, (ii) at least three shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting, (iii) any shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting, (iv) by a shareholder or shareholders present in person or in the case of a shareholder being a corporation by its duly authorized representative or by proxy and holding Shares conferring a right to vote at a meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid on all shares conferring that right, or (v) if required by the rules of the Nasdaq Stock Market LLC, by any director or directors of the Company who, individually or collectively, hold proxies in respect of Shares representing 5% or more of the total voting rights at such meeting.

 

Voting instructions may be given only in respect of a number of ADSs representing an integral number of Deposited Securities. Upon the timely receipt from a Holder of ADSs as of the ADS Record Date of voting instructions in the manner specified by the Depositary, the Depositary shall endeavor, insofar as practicable and permitted under applicable law, the provisions of the Deposit Agreement, Articles of Association of the Company and the provisions of the Deposited 

 

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Securities, to vote, or cause the Custodian to vote, the Deposited Securities (in person or by proxy) represented by such Holder’s ADSs as follows:  (i) in the event voting takes place at a shareholders’ meeting by show of hands, the Depositary will instruct the Custodian to vote all Deposited Securities in accordance with the voting instructions received from a majority of Holders of ADSs who provided voting instructions, and (ii) in the event voting takes place at a shareholders’ meeting by poll, the Depositary will instruct the Custodian to vote the Deposited Securities in accordance with the voting instructions received from the Holders of ADSs.  If the Depositary does not receive instructions from a Holder as of the ADS Record Date on or before the date established by the Depositary for such purpose and voting takes place by poll, such Holder shall be deemed, and the Depositary shall (unless otherwise specified in the notice distributed to Holders) deem such Holder, to have instructed the Depositary to give a discretionary proxy to a person designated by the Company to vote the Deposited Securities; provided, however, that no such discretionary proxy shall be given by the Depositary with respect to any matter to be voted upon as to which the Company informs the Depositary that (A) the Company does not wish to be given such proxy, (B) substantial opposition exists from holders of Shares against the outcome for which the person designated by the Company would otherwise vote, or (C) the outcome for which the person designated by the Company would otherwise vote would materially and adversely affected the rights of holders of Deposited Securities.

 

Neither the Depositary nor the Custodian shall under any circumstances exercise any discretion as to voting and neither the Depositary nor the Custodian shall vote, attempt to exercise the right to vote, or in any way make use of for purposes of establishing a quorum or otherwise, the Deposited Securities represented by ADSs, except pursuant to and in accordance with the voting instructions received from Holders in a timely manner or as otherwise contemplated herein.  If the Depositary receives timely voting instructions from a Holder which fail to specify the manner in which the Depositary is to vote the Deposited Securities represented by such Holder’s ADSs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions. Deposited Securities represented by ADSs for which no timely voting instructions are received by the Depositary from the Holder shall not be voted except (i) in the case voting takes place at the shareholders’ meeting by show of hands, in which case the Depositary will instruct the Custodian to vote all Deposited Securities in accordance with the voting instructions received from a majority of Holders of ADSs who provided voting instructions and (ii) as otherwise contemplated in Section 4.10 of the Deposit Agreement.  Notwithstanding anything else contained herein or in the Deposit Agreement, the Depositary shall, if so requested in writing by the Company, represent all Deposited Securities (whether or not voting instructions have been received in respect of such Deposited Securities from Holders as of the ADS Record Date) for the sole purpose of establishing quorum at a meeting of shareholders.

 

Notwithstanding anything else contained in the Deposit Agreement or any ADR, the Depositary shall not have any obligation to take any action with respect to any meeting, or solicitation of consents or proxies, of holders of Deposited Securities if the taking of such action would violate U.S. laws.  The Company agrees to take any and all actions reasonably necessary and as permitted by Cayman Islands law to enable Holders and Beneficial Owners to exercise the 

 

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voting rights accruing to the Deposited Securities and to deliver to the Depositary an opinion of U.S. counsel addressing any actions requested to be taken if so requested by the Depositary.  There can be no assurance that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable the Holder to return voting instructions to the Depositary in a timely manner.

 

(18)         Changes Affecting Deposited Securities.  Upon any change in nominal or par value, split-up, cancellation, consolidation or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger, consolidation or sale of assets affecting the Company or to which it is a party, any securities which shall be received by the Depositary or the Custodian in exchange for, or in conversion of or replacement of or otherwise in respect of, such Deposited Securities shall, to the extent permitted by law, be treated as new Deposited Securities under the Deposit Agreement, and the ADRs shall, subject to the provisions of the Deposit Agreement and applicable law, evidence ADSs representing the right to receive such additional or replacement securities, as applicable.  In giving effect to such change, split-up, cancellation, consolidation or other reclassification of Deposited Securities, recapitalization, reorganization, merger, consolidation or sale of assets, the Depositary may, with the Company’s approval, and shall, if the Company shall so request, subject to the terms of the Deposit Agreement and receipt of an opinion of counsel to the Company reasonably satisfactory to the Depositary that such actions are not in violation of any applicable laws or regulations, (i) issue and deliver additional ADSs as in the case of a stock dividend on the Shares, (ii) amend the Deposit Agreement and the applicable ADRs, (iii) amend the applicable Registration Statement(s) on Form F-6 as filed with the Commission in respect of the ADSs, (iv) call for the surrender of outstanding ADRs to be exchanged for new ADRs, and (v) take such other actions as are appropriate to reflect the transaction with respect to the ADSs.  Notwithstanding the foregoing, in the event that any security so received may not be lawfully distributed to some or all Holders, the Depositary may, with the Company’s approval, and shall, if the Company requests, subject to receipt of an opinion of Company’s counsel reasonably satisfactory to the Depositary that such action is not in violation of any applicable laws or regulations, sell such securities at public or private sale, at such place or places and upon such terms as it may deem proper and may allocate the net proceeds of such sales (net of (a) the fees and charges of  the Depositary set forth in paragraph 10, and expenses incurred by, the Depositary and (b) taxes) for the account of the Holders otherwise entitled to such securities upon an averaged or other practicable basis without regard to any distinctions among such Holders and distribute the net proceeds so allocated to the extent practicable as in the case of a distribution received in cash pursuant to Section 4.1 of the Deposit Agreement.  The Depositary shall not be responsible for (i) any failure to determine that it may be lawful or practicable to make such securities available to Holders in general or any Holder in particular, (ii) any foreign exchange exposure or loss incurred in connection with such sale, or (iii) any liability to the purchaser of such securities.

 

(19)         Exoneration.  Neither the Depositary nor the Company shall be obligated to do or perform any act which is inconsistent with the provisions of the Deposit Agreement or incur any liability (i) if the Depositary or the Company shall be prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the Deposit Agreement and this ADR, by reason of any provision of any present or future law or regulation of the United States, the Cayman Islands or 

 

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any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of the Articles of Association of the Company or any provision of or governing any Deposited Securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, acts of terrorism, revolutions, rebellions, explosions and computer failure), (ii) by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement or in the Articles of Association of the Company or provisions of or governing Deposited Securities, (iii) for any action or inaction in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, any Beneficial Owner or authorized representative thereof, or any other person believed by it in good faith to be competent to give such advice or information, (iv) for the inability by a Holder or Beneficial Owner to benefit from any distribution, offering, right or other benefit which is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement, made available to Holders of ADSs or (v) for any consequential or punitive damages for any breach of the terms of the Deposit Agreement.  The Depositary, its controlling persons, its agents, any Custodian and the Company, its controlling persons and its agents may rely and shall be protected in acting upon any written notice, request or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.  No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement or this ADR.

 

(20)         Standard of Care.  The Company and the Depositary assume no obligation and shall not be subject to any liability under the Deposit Agreement or this ADR to any Holder(s) or Beneficial Owner(s), except that the Company and Depositary agree to perform their respective obligations specifically set forth in the Deposit Agreement and this ADR without negligence or bad faith.  Without limitation of the foregoing, neither the Depositary, nor the Company, nor any of their respective controlling persons, or agents, shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the ADSs, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required (and no Custodian shall be under any obligation whatsoever with respect to such proceedings, the responsibility of the Custodian being solely to the Depositary).  The Depositary and its agents shall not be liable for any failure to carry out any instructions to vote any of the Deposited Securities, or for the manner in which any vote is cast or the effect of any vote, provided that any such action or omission is in good faith and in accordance with the terms of the Deposit Agreement.  The Depositary shall not incur any liability for any failure to determine that any distribution or action may be lawful or reasonably practicable, for the content of any information submitted to it by the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities or for any tax consequences that may result from the ownership of ADSs, Shares or Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement, for the failure or timeliness of any notice from the Company, or for any action or failure to act by, or any information provided or not provided by, DTC or any DTC participant.

 

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The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or bad faith while it acted as Depositary.

 

(21)         Resignation and Removal of the Depositary; Appointment of Successor Depositary.  The Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of resignation delivered to the Company, such resignation to be effective on the earlier of (i) the 90th day after delivery thereof to the Company (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2 of the Deposit Agreement), or (ii) upon the appointment by the Company of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement.  The Depositary may at any time be removed by the Company by written notice of such removal, which removal shall be effective on the later of (i) the 90th day after delivery thereof to the Depositary (whereupon the Depositary shall be entitled to take the actions contemplated in Section 6.2 of the Deposit Agreement), or (ii) upon the appointment by the Company of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement.  In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, the City of New York.  Every successor depositary shall be required by the Company to execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed (except as required by applicable law), shall become fully vested with all the rights, powers, duties and obligations of its predecessor (other than as contemplated in Sections 5.8 and 5.9 of the Deposit Agreement).  The predecessor depositary, upon payment of all sums due it and on the written request of the Company, shall (i) execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than as contemplated in Sections 5.8 and 5.9 of the Deposit Agreement), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADSs and such other information relating to ADSs and Holders thereof as the successor may reasonably request. Any such successor depositary shall promptly provide notice of its appointment to such Holders.  Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of the Depositary without the execution or filing of any document or any further act.

 

(22)         Amendment/Supplement.  Subject to the terms and conditions of this paragraph 22, the Deposit Agreement and applicable law, this ADR and any provisions of the Deposit Agreement may at any time and from time to time be amended or supplemented by written agreement between the Company and the Depositary in any respect which they may deem necessary or desirable without the prior written consent of the Holders or Beneficial Owners.  Any amendment or supplement which shall impose or increase any fees or charges (other than charges in connection with foreign exchange control regulations, and taxes and other governmental charges, delivery and other such expenses), or which shall otherwise materially prejudice any substantial existing right of Holders or Beneficial Owners, shall not, however, 

 

A-21

 

become effective as to outstanding ADSs until the expiration of thirty (30) days after notice of such amendment or supplement shall have been given to the Holders of outstanding ADSs.  Notice of any amendment to the Deposit Agreement or any ADR shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders and Beneficial Owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the Commission’s, the Depositary’s or the Company’s website or upon request from the Depositary).  The parties hereto agree that any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs to be settled solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to materially prejudice any substantial rights of Holders or Beneficial Owners.  Every Holder and Beneficial Owner at the time any amendment or supplement so becomes effective shall be deemed, by continuing to hold such ADSs, to consent and agree to such amendment or supplement and to be bound by the Deposit Agreement and this ADR, if applicable, as amended or supplemented thereby.  In no event shall any amendment or supplement impair the right of the Holder to surrender such ADS and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law. Notwithstanding the foregoing, if any governmental body should adopt new laws, rules or regulations which would require an amendment of, or supplement to, the Deposit Agreement to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and this ADR at any time in accordance with such changed laws, rules or regulations.  Such amendment or supplement to the Deposit Agreement and this ADR in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance with such laws, rules or regulations.

 

(23)         Termination.  The Depositary shall, at any time at the written direction of the Company, terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  If ninety (90) days shall have expired after (i) the Depositary shall have delivered to the Company a written notice of its election to resign, or (ii) the Company shall have delivered to the Depositary a written notice of the removal of the Depositary, and, in either case, a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.4 of the Deposit Agreement, the Depositary may terminate the Deposit Agreement by distributing notice of such termination to the Holders of all ADSs then outstanding at least thirty (30) days prior to the date fixed in such notice for such termination.  The date so fixed for termination of the Deposit Agreement in any termination notice so distributed by the Depositary to the Holders of ADSs is referred to as the “Termination Date”.  Until the Termination Date, the Depositary shall continue to perform all of its obligations under the Deposit Agreement, and the Holders and Beneficial Owners will be entitled to all of their rights under the Deposit Agreement.  If any ADSs shall remain outstanding after the Termination Date, the Registrar and the Depositary shall not, after the Termination Date, have any obligation to perform any further acts under the Deposit Agreement, except that the Depositary shall, subject, in each case, to the terms and conditions of the Deposit Agreement, continue to (i) 

 

A-22

 

collect dividends and other distributions pertaining to Deposited Securities, (ii) sell securities and other property received in respect of Deposited Securities, (iii) deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any securities or other property, in exchange for ADSs surrendered to the Depositary (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (iv) take such actions as may be required under applicable law in connection with its role as Depositary under the Deposit Agreement. At any time after the Termination Date, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and shall after such sale hold un-invested the net proceeds of such sale, together with any other cash then held by it under the Deposit Agreement, in an un-segregated account and without liability for interest, for the pro - rata benefit of the Holders whose ADSs have not theretofore been surrendered.  After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement except (i) to account for such net proceeds and other cash (after deducting, or charging, as the case may be, in each case, the fees and charges of, and expenses incurred by, the Depositary, and all applicable taxes or governmental charges for the account of the Holders and Beneficial Owners, in each case upon the terms set forth in Section 5.9 of the Deposit Agreement), and (ii) as may be required at law in connection with the termination of the Deposit Agreement.  After the Termination Date, the Company shall be discharged from all obligations under the Deposit Agreement, except for its obligations to the Depositary under Sections 5.8, 5.9 and 7.6 of the Deposit Agreement.  The obligations under the terms of the Deposit Agreement of Holders and Beneficial Owners of ADSs outstanding as of the Termination Date shall survive the Termination Date and shall be discharged only when the applicable ADSs are presented by their Holders to the Depositary for cancellation under the terms of the Deposit Agreement.

 

(24)         Compliance with U.S. Securities Laws.  Notwithstanding any provisions in this ADR or the Deposit Agreement to the contrary, the withdrawal or delivery of Deposited Securities will not be suspended by the Company or the Depositary except as would be permitted by Instruction I.A.(1) of the General Instructions to the Form F-6 Registration Statement, as amended from time to time, under the Securities Act.

 

(25)         Certain Rights of the Depositary; Limitations.  Subject to the further terms and provisions of this paragraph (25) and Section 5.10 of the Deposit Agreement, the Depositary, its Affiliates and their agents, on their own behalf, may own and deal in any class of securities of the Company and its Affiliates and in ADSs.  The Depositary may issue ADSs against evidence of rights to receive Shares from the Company, any agent of the Company or any custodian, registrar, transfer agent, clearing agency or other entity involved in ownership or transaction records in respect of the Shares.  Such evidence of rights shall consist of written blanket or specific guarantees of ownership of Shares.  In its capacity as Depositary, the Depositary shall not lend Shares or ADSs; provided, however, that the Depositary may (i) issue ADSs prior to the receipt of Shares pursuant to Section 2.3 of the Deposit Agreement and (ii) deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities pursuant to Section 2.7 of the Deposit Agreement, including ADSs which were issued under (i) above but for which Shares may not have been received (each such transaction a “Pre-Release Transaction”).  The

 

A-23

 

Depositary may receive ADSs in lieu of Shares under (i) above and receive Shares in lieu of ADSs under (ii) above.  Each such Pre-Release Transaction will be (a) subject to a written agreement whereby the person or entity (the “Applicant”) to whom ADSs or Shares are to be delivered (w) represents that at the time of the Pre-Release Transaction the Applicant or its customer owns the Shares or ADSs that are to be delivered by the Applicant under such Pre-Release Transaction, (x) agrees to indicate the Depositary as owner of such Shares or ADSs in its records and to hold such Shares or ADSs in trust for the Depositary until such Shares or ADSs are delivered to the Depositary or the Custodian, (y) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares or ADSs and (z) agrees to any additional restrictions or requirements that the Depositary deems appropriate, (b) at all times fully collateralized with cash, U.S. government securities or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than five (5) business days’ notice and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate.  The Depositary will normally limit the number of ADSs and Shares involved in such Pre-Release Transactions at any one time to thirty percent (30%) of the ADSs outstanding (without giving effect to ADSs outstanding under (i) above), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate.  The Depositary may also set limits with respect to the number of ADSs and Shares involved in Pre-Release Transactions with any one person on a case by case basis as it deems appropriate.  The Depositary may retain for its own account any compensation received by it in conjunction with the foregoing.  Collateral provided pursuant to (b) above, but not earnings thereon, shall be held for the benefit of the Holders (other than the Applicant).

 

A-24

 

(ASSIGNMENT AND TRANSFER SIGNATURE LINES)

 

FOR VALUE RECEIVED, the undersigned Holder hereby sell(s), assign(s) and transfer(s) unto                                                              whose taxpayer identification number is                                                and whose address including postal zip code is                                 , the within ADS and all rights thereunder, hereby irrevocably constituting and appointing                                                  attorney-in-fact to transfer said ADS on the books of the Depositary with full power of substitution in the premises.

 

	
Dated:
  	
 
  	
Name:
  	
 
  
	
 
  	
 
  	
 
  	
By:
  
	
 
  	
 
  	
 
  	
Title:
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
NOTICE: The signature of the Holder to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.

 

If the endorsement be executed by an attorney, executor, administrator, trustee or guardian, the person executing the endorsement must give his/her full title in such capacity and proper evidence of authority to act in such capacity, if not on file with the Depositary, must be forwarded with this ADR.
  
	
 
  	
 
  	
 
  
	
SIGNATURE GUARANTEED
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
All endorsements or assignments of ADRs must be guaranteed by a member of a Medallion Signature Program approved by the Securities Transfer Association, Inc.
  

 

Legends

 

[The ADRs issued in respect of Partial Entitlement American Depositary Shares shall bear the following legend on the face of the ADR:  “This ADR evidences ADSs representing ‘partial entitlement’ ordinary shares of ChinaCache International Holdings Ltd. and as such do not entitle the holders thereof to the same per-share entitlement as other ordinary shares (which are ‘full entitlement’ ordinary shares) issued and outstanding at such time.  The ADSs represented by this ADR shall entitle holders to distributions and entitlements identical to other ADSs when the ordinary shares represented by such ADSs become ‘full entitlement’ ordinary shares.”]

 

A-25

 

EXHIBIT B

 

FEE SCHEDULE

 

DEPOSITARY FEES AND RELATED CHARGES

 

All capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Deposit Agreement.

 

I.                                         Depositary Fees

 

The Company, the Holders, the Beneficial Owners and the persons depositing Shares or surrendering ADSs for cancellation agree to pay the following fees of the Depositary:

 

	
Service
  	
 
  	
Rate
  	
 
  	
By Whom Paid
  
	
(1)                                 Issuance of ADSs upon deposit of Shares (excluding issuances as a result of distributions described in paragraph (4) below).
  	
 
  	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) issued.
  	
 
  	
Person depositing Shares or person receiving ADSs.
  
	
 
  	
 
  	
 
  	
 
  	
 
  
	
(2)                                 Delivery of Deposited Securities against surrender of ADSs.
  	
 
  	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) surrendered.
  	
 
  	
Person surrendering ADSs for the purpose of withdrawal of Deposited Securities or person to whom Deposited Securities are delivered.
  
	
 
  	
 
  	
 
  	
 
  	
 
  
	
(3)                                 Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements).
  	
 
  	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
  	
 
  	
Person to whom distribution is made.
  
	
 
  	
 
  	
 
  	
 
  	
 
  
	
(4)                                 Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs.
  	
 
  	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
  	
 
  	
Person to whom distribution is made.
  
	
 
  	
 
  	
 
  	
 
  	
 
  
	
(5)                                 Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spin-off shares).
  	
 
  	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held.
  	
 
  	
Person to whom distribution is made.
  

 

B-1

 

	
6)                                     Depositary Services.
  	
 
  	
Up to U.S. $5.00 per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the Depositary.
  	
 
  	
Person holding ADSs on the applicable record date(s) established by the Depositary.
  

 

II.                                     Charges

 

Holders, Beneficial Owners, persons depositing Shares and persons surrendering ADSs for cancellation and for the purpose of withdrawing Deposited Securities shall be responsible for the following charges:

 

(i)                                     taxes (including applicable interest and penalties) and other governmental charges;

 

(ii)                                  such registration fees as may from time to time be in effect for the registration of Shares or other Deposited Securities on the share register and applicable to transfers of Shares or other Deposited Securities to or from the name of the Custodian, the Depositary or any nominees upon the making of deposits and withdrawals, respectively;

 

(iii)                               such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the Deposit Agreement to be at the expense of the person depositing or withdrawing Shares or Holders and Beneficial Owners of ADSs;

 

(iv)                              the expenses and charges incurred by the Depositary in the conversion of foreign currency;

 

(v)                                 such fees and expenses as are incurred by the Depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to Shares, Deposited Securities, ADSs and ADRs; and

 

(vi)                              the fees and expenses incurred by the Depositary, the Custodian, or any nominee in connection with the servicing or delivery of Deposited Securities.

 

B-2

 

TABLE OF CONTENTS

 

	
ARTICLE I
  	
 
  
	
 
  	
 
  
	
DEFINITIONS
  	
1
  
	
Section 1.1        “ADS Record Date”
  	
1
  
	
Section 1.2        “Affiliate”
  	
2
  
	
Section 1.3        “American Depositary Receipt(s)”, “ADR(s)” and “Receipt(s)”
  	
2
  
	
Section 1.4        “American Depositary Share(s)” and “ADS(s)”
  	
2
  
	
Section 1.5        “Applicant”
  	
2
  
	
Section 1.6        “Articles of Association” shall mean the Articles of Association of the Company, as amended and restated from time to time
  	
2
  
	
Section 1.7        “Beneficial Owner”
  	
2
  
	
Section 1.8        “Certificated ADS(s)”
  	
2
  
	
Section 1.9        “Commission”
  	
3
  
	
Section 1.10      “Company”
  	
3
  
	
Section 1.11      “Custodian”
  	
3
  
	
Section 1.12      “Deliver” and “Delivery”
  	
3
  
	
Section 1.13      “Deposit Agreement”
  	
3
  
	
Section 1.14      “Depositary”
  	
3
  
	
Section 1.15      “Deposited Securities”
  	
3
  
	
Section 1.16      “Dollars” and “$”
  	
3
  
	
Section 1.17      “DTC”
  	
3
  
	
Section 1.18      “DTC Participant”
  	
4
  
	
Section 1.19      “Exchange Act”
  	
4
  
	
Section 1.20      “Foreign Currency”
  	
4
  
	
Section 1.21      “Full Entitlement ADR(s)”, “Full Entitlement ADS(s)” and “Full Entitlement Share(s)”
  	
4
  
	
Section 1.22      “Holder(s)”
  	
4
  
	
Section 1.23      “Partial Entitlement ADR(s)”, “Partial Entitlement ADS(s)” and “Partial Entitlement Share(s)”
  	
4
  
	
Section 1.24      “Pre-Release Transaction”
  	
4
  
	
Section 1.25      “Principal Office”
  	
4
  
	
Section 1.26      “Registrar”
  	
4
  
	
Section 1.27      “Restricted Securities”
  	
4
  
	
Section 1.28      “Restricted ADR(s)”, “Restricted ADS(s)” and “Restricted Shares”
  	
5
  
	
Section 1.29      “Securities Act”
  	
5
  
	
Section 1.30      “Share Registrar”
  	
5
  
	
Section 1.31      “Shares”
  	
5
  
	
Section 1.32      “Uncertificated ADS(s)”
  	
5
  
	
Section 1.33      “United States” and “U.S.”
  	
5
  
	
 
  	
 
  
	
ARTICLE II
  	
 
  
	
 
  	
 
  
	
APPOINTMENT OF DEPOSITARY; FORM OF RECEIPTS; DEPOSIT OF SHARES; EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
  	
5
  
	
Section 2.1        Appointment of Depositary
  	
5
  

 

 

	
Section 2.2        Form and Transferability of ADSs
  	
6
  
	
Section 2.3        Deposit of Shares
  	
7
  
	
Section 2.4        Registration and Safekeeping of Deposited Securities
  	
9
  
	
Section 2.5        Issuance of ADSs
  	
9
  
	
Section 2.6        Transfer, Combination and Split-up of ADRs
  	
10
  
	
Section 2.7        Surrender of ADSs and Withdrawal of Deposited Securities
  	
11
  
	
Section 2.8        Limitations on Execution and Delivery, Transfer, etc. of ADSs; Suspension of Delivery, Transfer, etc.
  	
12
  
	
Section 2.9        Lost ADRs, etc.
  	
13
  
	
Section 2.10      Cancellation and Destruction of Surrendered ADRs; Maintenance of Records
  	
13
  
	
Section 2.11      Escheatment
  	
13
  
	
Section 2.12      Partial Entitlement ADSs
  	
13
  
	
Section 2.13      Certificated/Uncertificated ADSs
  	
14
  
	
Section 2.14      Restricted ADSs
  	
15
  
	
 
  	
 
  
	
ARTICLE III
  	
 
  
	
 
  	
 
  
	
CERTAIN OBLIGATIONS OF HOLDERS AND BENEFICIAL OWNERS OF ADSs
  	
17
  
	
Section 3.1        Proofs, Certificates and Other Information
  	
17
  
	
Section 3.2        Liability for Taxes and Other Charges
  	
18
  
	
Section 3.3        Representations and Warranties on Deposit of Shares
  	
18
  
	
Section 3.4        Compliance with Information Requests
  	
18
  
	
Section 3.5        Ownership Restrictions
  	
19
  
	
Section 3.6        Reporting Obligations and Regulatory Approvals
  	
19
  
	
Applicable laws and regulations may require holders and beneficial owners of Shares, including the Holders and Beneficial Owners of ADSs, to satisfy reporting requirements and obtain regulatory approvals in certain circumstances
  	
19
  
	
 
  	
 
  
	
ARTICLE IV
  	
 
  
	
 
  	
 
  
	
THE DEPOSITED SECURITIES
  	
20
  
	
Section 4.1        Cash Distributions
  	
20
  
	
Section 4.2        Distribution in Shares
  	
20
  
	
Section 4.3        Elective Distributions in Cash or Shares
  	
21
  
	
Section 4.4        Distribution of Rights to Purchase Additional ADSs
  	
22
  
	
Section 4.5        Distributions Other Than Cash, Shares or Rights to Purchase Shares
  	
24
  
	
Section 4.6        Distributions with Respect to Deposited Securities in Bearer Form
  	
24
  
	
Section 4.7        Redemption
  	
25
  
	
Section 4.8        Conversion of Foreign Currency
  	
25
  
	
Section 4.9        Fixing of ADS Record Date
  	
26
  
	
Section 4.10      Voting of Deposited Securities
  	
26
  
	
Section 4.11      Changes Affecting Deposited Securities
  	
28
  
	
Section 4.12      Available Information
  	
29
  
	
Section 4.13      Reports
  	
29
  
	
Section 4.14      List of Holders
  	
30
  
	
Section 4.15      Taxation
  	
30
  

 

 

	
ARTICLE V
  	
 
  
	
 
  	
 
  
	
THE DEPOSITARY, THE CUSTODIAN AND THE COMPANY
  	
31
  
	
Section 5.1        Maintenance of Office and Transfer Books by the Registrar
  	
31
  
	
Section 5.2        Exoneration
  	
31
  
	
Section 5.3        Standard of Care
  	
32
  
	
Section 5.4        Resignation and Removal of the Depositary; Appointment of Successor Depositary
  	
33
  
	
Section 5.5        The Custodian
  	
34
  
	
Section 5.6        Notices and Reports
  	
34
  
	
Section 5.7        Issuance of Additional Shares, ADSs etc.
  	
35
  
	
Section 5.8        Indemnification
  	
36
  
	
Section 5.9        Fees and Charges of Depositary
  	
37
  
	
Section 5.10      Pre-Release Transactions
  	
38
  
	
Section 5.11      Restricted Securities Owners
  	
39
  
	
 
  	
 
  
	
ARTICLE VI
  	
 
  
	
 
  	
 
  
	
AMENDMENT AND TERMINATION
  	
39
  
	
Section 6.1        Amendment/Supplement
  	
39
  
	
Section 6.2        Termination
  	
40
  
	
 
  	
 
  
	
ARTICLE VII
  	
 
  
	
 
  	
 
  
	
MISCELLANEOUS
  	
41
  
	
Section 7.1        Counterparts
  	
41
  
	
Section 7.2        No Third-Party Beneficiaries
  	
41
  
	
Section 7.3        Severability
  	
41
  
	
Section 7.4        Holders and Beneficial Owners as Parties; Binding Effect
  	
41
  
	
Section 7.5        Notices
  	
42
  
	
Section 7.6        Governing Law and Jurisdiction
  	
42
  
	
Section 7.7        Assignment
  	
44
  
	
Section 7.8        Compliance with U.S. Securities Laws
  	
44
  
	
Section 7.9        Cayman Island Law References
  	
44
  
	
Section 7.10      Titles and References
  	
44
  
	
 
  	
 
  
	
EXHIBITS
  	
 
  
	
Form of ADR
  	
A-1
  
	
Fee Schedule
  	
B-1Cross Border Resources, Inc.: Exhibit 4.1 - Filed by newsfilecorp.com

PURE ENERGY GROUP, INC. 
AND
PURE GAS PARTNERS
II, L.P. 

as Issuer 

to

FIRST SECURITY BANK 

as
Trustee and Paying Agent

TRUST INDENTURE

Dated as of March 1, 2005

 

 

 

WITH RESPECT TO 
ISSUANCE OF 
$5,500,000 
7 1/2%
DEBENTURES
SERIES 2005

This Instrument Prepared by:

JACK, LYON & JONES, P.A.

425 West Capitol Avenue, Suite 3400 
Little Rock, Arkansas 72201

1

TABLE OF CONTENTS

(This Table of Contents is not a part of the Trust Indenture

and is only for convenience of reference.)

	Parties 	6 
	Recitals 	6 
	Granting
      Clauses 	7 
	 	  
	  ARTICLE I   
	 
	  DEFINITIONS     
	 	  	  
	Section 1.01. 	Definitions
      	9 
	Section 1.02. 	Interpretation 	14 
	 	  	  
	  ARTICLE II  
	 
	  THE DEBENTURES  
	 
	Section 2.01. 	Authorized Amount of the
      Debentures 	15 
	Section 2.02. 	Details of
      the Debentures 	15

	Section 2.03. 	Debenture Form 	15 
	Section 2.04. 	Payment
    	15

	Section 2.05. 	Execution 	16 
	Section 2.06. 	Unconditional Obligation 	16

	Section 2.07. 	Authentication 	16 
	Section 2.08. 	Delivery of
      the Debentures 	16

	Section 2.09. 	Mutilated, Destroyed or Lost
      Debentures 	17 
	Section 2.10. 	Negotiability, Registration and Transfer of the Debentures
      	17

	Section 2.11. 	Cancellation 	19 
	Section 2.12. 	Superior
      Obligations 	19

	Section 2.13. 	Superior Obligations
      Restricted 	20 
	Section 2.14. 	Parity
      Obligations 	20
	Section 2.15. 	Subordinate Obligations
    	21 
	Section 2.16. 	Prohibition
      Against Pledge of Accounts Receivable 	21

	Section 2.17. 	Book Entry Debentures
	22 
	 	  	  
	 
	  ARTICLE III     
	 
	  REDEMPTION   
	 
	Section 3.01. 	Privilege of
      Redemption and Redemption Prices 	23

	Section 3.02. 	Issuer’s Election to Redeem;
      Notice to Trustee 	23 

2

	Section 3.03. 	Selection by
      Trustee of Debentures To Be Redeemed; Sequential Redemptions 	23

	Section 3.04. 	Notice of Redemption 	24
	Section 3.05. 	Reserved
    	25

	Section 3.06. 	Effect of Notice of
      Redemption 	25 
	Section 3.07. 	Debentures
      Redeemed in Part 	26

	Section 3.08. 	Mandatory Sinking Fund
      Redemption 	26 
	Section 3.09. 	Extraordinary Optional Redemption of the Debentures
	27

	Section 3.10. 	Optional Redemption of the
      Debentures 	29 
	Section 3.11. 	Mandatory
      Redemption of Debentures from Excess Insurance or Condemnation Proceeds
      	29

	Section 3.12. 	Optional Redemption of the
      Debentures from Excess Funds 	30
	Section 3.13. 	Mandatory
      Redemption Upon Default Under Operating Line of Credit or Parity
      Obligation 	30

	 
	 
	  ARTICLE IV  
	 
	  GENERAL COVENANTS  
	 
	Section 4.01. 	Payment of Principal,
      Premium, if any, and Interest 	30
	Section 4.02. 	Performance
      of Covenants 	30
	Section 4.03. 	Instruments of Further
      Assurance 	31
	Section 4.04. 	Recordation
      and Filing 	31
	Section 4.05. 	Inspection of Books 	31
	Section 4.06. 	Rates and
      Charges 	31
	Section 4.07. 	Taxes, Charges and
      Assessments 	31
	Section 4.08. 	Encumbrances
      	31
	Section 4.09. 	Insurance 	32
	Section 4.10. 	Damage or
      Destruction; Condemnation 	32
	Section 4.11. 	Revenues To Be Used As
      Provided In Indenture 	33
	Section 4.12. 	Accounting;
      Continuing Disclosure 	33
	Section 4.13. 	Existence 	33
	Section 4.14. 	Operation
      and Maintenance of Facilities; Disposition of Assets 	34
	Section 4.15. 	 Notification to
      Operating Line of Credit Bank	 34
	Section 4.16. 	Certain
      Information Available Upon Transfer	 34
	 
	 
	  ARTICLE V  
	 
	  FUNDS AND DEPOSITS  
	 
	Section 5.01. 	Debenture Fund 	34 
	Section 5.02. 	Project Fund
      	35

	Section 5.03 	Disbursements from Project
      Fund 	35 
	Section 5.04 	Costs of
      Issuance Account 	37

3

ARTICLE VI

SECURITY FOR THE DEBENTURES

	Section 6.01. 	Security for
      the Debentures 	37

	 
	  ARTICLE VII     
	 
	  INVESTMENTS     
	 
	Section 7.01. 	Investment
      of Monies 	38

	Section 7.02. 	Investment Earnings 	38 
	Section 7.03. 	Valuation of
      Funds 	38

	Section 7.04. 	Responsibility of Trustee
      	39
	 	  	  
	  ARTICLE VIII  
	 	  	  
	  DISCHARGE OF LIEN  
	 	  	  
	Section 8.01. 	Discharge of Lien 	39 
	Section 8.02. 	Debentures
      Deemed Paid 	39

	Section 8.03. 	Non-Presentment of
      Debentures 	39 
	 
	  ARTICLE IX  
	 
	DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND
      DEBENTURE 
	  HOLDERS 
	 
	Section 9.01. 	Events of
      Default 	40

	Section 9.02. 	Acceleration 	41 
	Section 9.03. 	Other
      Remedies; Rights of Debenture Holders 	41

	Section 9.04. 	Right of Debenture Holders
      to Direct Proceedings 	42 
	Section 9.05. 	Appointment
      of Receiver 	42

	Section 9.06. 	Waiver 	42 
	Section 9.07. 	Application
      of Monies 	43
	Section 9.08. 	Remedies Vested in Trustee
      	44 
	Section 9.09. 	Rights and
      Remedies of Debenture Holders 	44

	Section 9.10. 	Termination of Proceedings
      	45 
	Section 9.11. 	Waivers of
      Events of Default 	45

	 
	  ARTICLE X   
	 
	  TRUSTEE AND PAYING
      AGENTS  
	 
	Section 10.01. 	Acceptance
      of Trusts 	45

	Section 10.02. 	Fees, Charges and Expenses
      of Trustee and Paying Agents; Trustee’s Prior Lien 	49 

4

	Section
      10.03. 	Notice
      to Debenture Holders of Default 	49
      
	Section
      10.04. 	Intervention
      by Trustee 	49
      
	Section
      10.05. 	Merger
      or Consolidation of Trustee 	50
	Section
      10.06. 	Resignation
      by Trustee 	50
	Section
      10.07. 	Removal
      of Trustee 	50
      
	Section
      10.08. 	Appointment
      of Successor Trustee 	50
      
	Section
      10.09. 	Concerning
      Any Successor Trustee 	50
      
	Section
      10.10. 	Reliance
      Upon Instruments 	51
      
	Section
      10.11. 	Appointment
      of Co-Trustee 	51
      
	Section
      10.12. 	Designation
      and Succession of Paying Agents 	52
      
	 
	  ARTICLE XI  
	 
	  SUPPLEMENTAL INDENTURES 
	 
	Section
      11.01. 	Supplemental
      Indentures Not Requiring Consent of Debenture Holders 	52
      
	Section
      11.02. 	Supplemental
      Indentures Requiring Consent of Debenture Holders 	53
      
	Section
      11.03. 	Effect
      of Supplemental Indentures 	54
      
	Section
      11.04. 	Execution
      of Supplemental Indenture 	54
      
	 
	  ARTICLE XII     
	 
	  MISCELLANEOUS     
	 
	Section
      12.01. 	Consents,
      etc. of Debenture Holders 	54
      
	Section
      12.02. 	Notices
      	55
      
	Section
      12.03. 	Limitation
      of Rights 	55
      
	Section
      12.04. 	Severability
      	56
      
	Section
      12.05. 	Consent
      to Jurisdiction; Applicable Provisions of Law; Forum Selection 	56
      
	Section
      12.06. 	Counterparts
      	56
      
	Section
      12.07. 	Successors
      and Assigns 	57
	Section
      12.08. 	Captions
      	57
	Section
      12.09. 	Photocopies
      and Reproductions 	57
	Section
      12.10. 	Debentures
      Owned by Issuer 	57
	Section
      12.11. 	Effectiveness
      of Indenture 	57
      
	 	  	  
	Signatures and Seals 
	Acknowledgments 
	 
	Exhibit
      A - Form of Debenture 	A-1
      
	Exhibit
      B - Form of Investor Letter 	B-1
      
	Exhibit
      B-1 - Form of Accredited Investor Questionnaire 	B-5
	Exhibit
      C - Trustee’s Fee Schedule 	C-1
      
	Exhibit D - Issuer’s Written Request 	D-1 

5

TRUST INDENTURE

     THIS TRUST INDENTURE
(“Indenture”), dated as of March 1, 2005, by and between Pure Energy Group
Inc. (“Corporation”), a Texas corporation, its operating subsidiary, Pure Gas
Partners II, L.P. (“Partnership”), a Texas limited partnership, each existing by
virtue of the laws of the State of Texas, as party of the first part
(collectively, Corporation and Partnership are referred to as “Issuer”); and
First Security Bank, not in its individual capacity but solely as trustee under
this Indenture between Issuer and First Security Bank (“Trustee”), a banking
corporation organized under and existing by virtue of the laws of the State of
Arkansas and the United States of America, as party of the second part.

W I T N E S S E T H:

     WHEREAS, in accordance
with the provisions of the Authorizing Instruments (defined herein), Issuer
proposes to issue its 7 1/2% Debentures, Series 2005 (“the Debentures”) in the
aggregate principal amount of $5,500,000, for the purpose of financing the final
payments of Corporation pursuant to Corporation’s Second Plan of Reorganization
approved by the United States Bankruptcy Court, Western District of Texas, San
Antonio Division, on December 2, 2002 (the “Court Case”); to pay off the
outstanding balance of the Operating Line of Credit (defined herein); to provide
working capital for Issuer; and to fund capitalized interest on the Debentures
through September 1, 2005(collectively, the "Project"). The Issuer will pay
certain costs related to issuance of the Debentures from sources other than the
proceeds of the Debentures; and 

     WHEREAS, Corporation is
authorized and empowered under the provisions of its Articles of Incorporation,
Bylaws and the laws of the State of Texas, including,
particularly, the Texas Business Corporation Act, and Partnership is
authorized and empowered under the provisions of its Certificate of Limited
Partnership, Agreement of Limited Partnership and the laws of the State of
Texas, including, particularly, the Texas Revised Uniform Limited
Partnership Act, pursuant to which the Debentures are issued (collectively, the
“Authorizing Instruments”), to issue and sell its Debentures and to expend the
proceeds thereof to finance or refinance the costs of acquisition, construction,
reconstruction, improvement, enlargement, betterment or extension of its
business and properties; and

     WHEREAS, Issuer has
determined to enter into this Indenture to authorize the issuance of and to
secure the Debentures by granting to Trustee a pledge and assignment of the
interests and other rights herein contained, and certain funds created hereby;
and

     WHEREAS, the Debentures
are to be dated, bear interest, mature and be subject to redemption as
hereinafter in this Indenture set forth in detail; and

     WHEREAS, the execution and
delivery of this Indenture and the issuance of the Debentures have been in all
respects duly and validly confirmed, authorized and approved by an Authorizing Resolution adopted and approved by
Corporation’s Board of Directors as of February 25, 2005, and a Joint
Authorizing Resolution adopted and approved by Corporation’s Board of Directors
and the General Partner of the Partnership as of February 25, 2005; and

6

     WHEREAS, all things
necessary to make the Debentures, when authenticated by Trustee and issued in
the State of Texas as in this Indenture provided, the valid, binding and legal
obligations of Issuer according to the import thereof, and to constitute this
Indenture a valid pledge of the Revenues (hereinafter defined) to the payment of
the principal of, premium, if any, and interest on the Debentures, to be secured
by the security interests hereinafter provided, as specified in and in
accordance with the provisions hereof, have been done and performed, and the
creation, execution and delivery of this Indenture and the creation, execution,
issuance and delivery of the Debentures, subject to the terms hereof, have in
all respects been duly authorized;

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

GRANTING CLAUSES

     That Issuer, in consideration of
the premises and the acceptance by Trustee of the trusts hereby created and of
the purchase and acceptance of the Debentures by the owners thereof, and of the
sum of One Dollar, lawful money of the United States of America, to it duly paid
by Trustee at or before the execution and delivery of these presents, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, in order to secure the payment of the principal of, interest on
and premium due with respect to the Debentures according to their tenor and
effect and to secure the performance and observance by Issuer of all the
covenants expressed or implied herein and in the Debentures, does hereby jointly
and severally transfer, pledge, assign, and hypothecate the following to
Trustee, and its successors in trust and assigns forever, for the securing of
the performance of the obligations of Issuer hereinafter set forth:

GRANTING CLAUSE FIRST

     All rights of Issuer in and to
the Revenues (defined herein) subject and subordinate only to the prior superior
lien of the Operating Line of Credit (defined herein). 

GRANTING CLAUSE SECOND

     All moneys and securities from
time to time held by Trustee in the Debenture Fund and Project Fund (as
hereinafter defined) established under the terms of this Indenture, including
moneys received from the investment of such Funds, except for moneys deposited
with or paid to Trustee for the redemption of Debentures, notice of the
redemption of which has been duly given.

7

GRANTING CLAUSE THIRD

     Any and all other property,
rights, and interests of every kind and nature from time to time hereafter by
delivery or by writing of any kind granted, alienated, demised, released,
conveyed, assigned, transferred, mortgaged, pledged, hypothecated, or otherwise
subjected hereto, as and for additional security herewith, by Issuer or any
other person on its behalf or with its written consent, to Trustee and Trustee
is hereby authorized to receive any and all property thereof at any and all
times and to hold and apply the same subject to the terms hereof.

     TO HAVE AND TO HOLD all and
singular the Trust Estate, whether now owned or hereafter acquired, unto Trustee
and its successors in said trust and assigns forever;

     IN TRUST NEVERTHELESS, upon the
terms and trusts herein set forth for the equal and proportionate benefit,
security, and protection of all present and future Owners of the Debentures,
from time to time, issued under and secured by this Indenture without privilege,
priority, or distinction as to the lien or otherwise of any of the Debentures
over any of the other Debentures;

     PROVIDED, HOWEVER, that if
Issuer, its successors or assigns, shall well and truly pay, or cause to be
paid, the principal of and interest on the Debentures due or to become due
thereon, at the times and in the manner set forth in the Debentures according to
the true intent and meaning thereof, and shall cause the payments to be made on
the Debentures as required under Article II hereof, or shall provide, as
permitted hereby, for the payment thereof by depositing with Trustee the entire
amount due or to become due thereon, and shall well and truly cause to be kept,
performed, and observed all of its covenants and conditions pursuant to the
terms of this Indenture, and shall pay or cause to be paid to Trustee all sums
of money due or to become due to it in accordance with the terms and provisions
hereof, then upon the final payment thereof this Indenture and the rights hereby
granted shall cease, determine, and be void; otherwise this Indenture shall
remain in full force and effect,

     THIS INDENTURE FURTHER
WITNESSETH, and it is expressly declared, that all Debentures issued and secured
hereunder are to be issued, authenticated, and delivered and all said property,
rights, and interests, and any other amounts hereby assigned and pledged are to
be dealt with and disposed of under, upon, and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses, and purposes as herein
expressed, and Issuer has agreed and covenanted, and does hereby agree and
covenant, with Trustee and with the Owners of the Debentures as follows:

[END OF RECITALS AND GRANTING CLAUSES]

8

ARTICLE I

DEFINITIONS

     Section 1.01. Definitions.
In addition to the words and terms elsewhere defined in this Indenture, the
following words and terms as used in this Indenture shall have the following
meanings:

     “Additional Debentures” means
debentures issued under this Indenture or any supplemental indenture hereto in
conformance with the provisions of Section 2.14 hereunder.

     “Annual Debt Service” means, with
respect to all or any particular amount of Debentures, Additional Debentures,
Superior Obligations, Parity Obligations, or Subordinate Obligations as the case
may be, the Debt Service for any particular Fiscal Year required to be paid or
set aside during such Fiscal Year, less the amount of such payment which
is provided from the proceeds of the sale of Debentures or Parity Obligations or
from sources other than Revenues.

     “Authorized Denominations” means
$25,000 and $5,000 increments in excess thereof.

     “Authorized Issuer
Representative” means the officer of Issuer appointed by the Board of Directors
of Issuer to be the executive officer of Issuer for all purposes of the Project
and this Indenture. The initial Authorized Issuer Representative is Larry B.
Cochran, Chief Executive Officer of Issuer.

     “Authorizing Instruments” means,
collectively, the Articles of Incorporation of Corporation originally dated
August 18, 1999, as amended, the Bylaws, the Authorizing Resolution of Issuer
dated as of February 25, 2005, the Texas Business Corporation Act, the
Certificate of Limited Partnership of the Partnership originally dated February
24, 2004, the Agreement of Limited Partnership of Partnership originally dated
February 27, 2004, the Texas Revised Uniform Limited Partnership Act and the
laws of the State of Texas, pursuant to which the Debentures are issued.

     “Business Day” means any day
other than (a) a Saturday or a Sunday, or (b) a day on which commercial banks in
the city where the Principal Office of Trustee is located, initially Searcy,
Arkansas, are authorized or required by law or executive order to close.

     “Closing Date” means the date
upon which there is an exchange of the Debentures for the proceeds representing
the purchase price for the Debentures by the original purchaser or purchasers
thereof.

     “Code” means the Internal Revenue
Code of 1986, as now or hereafter amended, and applicable regulations issued or
proposed thereunder.

9

     “Costs of Issuance” means all
costs paid or incurred by Issuer in connection with the issuance of the
Debentures.

     “Debenture Fund” means the fund
by that name created and established in Section 5.01 of this Indenture.

     “Debentures” means the 7 1/2%
Debentures issued by Issuer pursuant to this Indenture.

     “Debt Service” means, with
respect to all or any particular amount of the Debentures, Additional
Debentures, Superior Obligations, Parity Obligations, and/or Subordinate
Obligations as the case may be, the total as of any particular date of
computation and for any particular period of the scheduled amount of interest
and amortization of principal payable on such Debentures, Additional Debentures,
Superior Obligations, Parity Obligations, and/or Subordinate Obligations as the
case may be, excluding amounts scheduled during such period which relate to
principal which has been retired before the beginning of such period.

     “Event of Default” means any event of default specified in
Section 9.01 hereof.

     “Facilities” means land,
buildings, structures, machinery, equipment and all related or necessary
property, tangible or intangible, constituting Issuer’s Facilities, including,
but not limited to, all buildings, equipment and machinery thereon and the
fixtures attached thereto, and to which Issuer has right, title or ownership, in
whole or undivided part, and, if in undivided part, then to the extent of
Issuer’s right, title or ownership therein.

     “Fiscal Year” means the 12-month
period used, at any time, by Issuer for accounting purposes with respect to
Issuer, which may be the calendar year.

     “Government Securities” means:
(i) direct obligations of, or obligations the payment of the principal of and
interest on which is fully guaranteed by, the United States of America; (ii)
obligations issued or guaranteed by any instrumentality or agency of the United
States of America, whether now existing or hereafter organized, including but
not limited to those of the Federal Financing Bank, the members of the Farm
Credit System Financial Assistance Corporation, whether individually or
consolidated, Federal Home Loan Banks, the Export-Import Bank, Government
National Mortgage Association and the Tennessee Valley Authority, (iii)
evidences of ownership of proportionate interests in future interest or
principal payments on obligations specified in clause (i) of this definition
held by a bank or trust company as custodian, under which the owner of the
investment is the real party in interest and has the right to proceed directly
and individually against the obligor on the underlying obligations described in
clause (i) of this definition, and which underlying obligations are not
available to satisfy any claim of the custodian or any person claiming through
the custodian or to whom the custodian may be obligated; (iv) municipal
obligations, the payment of the principal of, interest on and redemption
premium, if any, on which are irrevocably secured by obligations described in
clause (i) of this definition and which obligations have been deposited in an escrow account which is irrevocably pledged to
the payment of the principal of, interest on and redemption premium, if any, on
such municipal obligations; (v) obligations issued by any state of the United
States; and (vi) municipal obligations the payment of the principal of and
interest on which are insured; provided, however, the obligations
described in clauses (v) and (vi) of this definition shall also be rated in one
of the top two highest rating categories (without regard to any gradation within
such category) by both Moody’s and S&P or, upon the discontinuance of either
or both of such services, any other nationally recognized rating service or
services.

10

     “Holder” or “Debenture Holder” or
“Owner” means the registered owner of any Debenture.

     “Indenture” means this Trust
Indenture dated as of March 1, 2005, between Issuer and Trustee, pursuant to
which the Debentures are issued, and any amendments and supplements hereto.

     “Interest Payment Date” and
“Payment Date” means: (a) March 1 and September 1 of each year, beginning
September 1, 2005; (b) for the Debentures subject to redemption in whole or in
part on any date, the date of such redemption; and (c) for all Debentures, any
date determined pursuant to Section 9.07 of this Indenture.

     “Investment Securities” means any
of the following obligations or securities: (i) Government Securities; (ii)
bankers acceptances, certificates of deposit or time deposits of any bank, trust
company or savings and loan association (including any investment in pools of
such bankers acceptances, certificates of deposit or time deposits), which to
the extent that such obligations are not insured by the Federal Deposit
Insurance Corporation are collateralized at all times in amounts and by
obligations as shall be permitted by State law; (iii) any repurchase, reverse
repurchase or investment agreement with any bank or trust company organized
under the laws of any state of the United States or any national banking
association, insurance company, or government bond dealer reporting to, trading
with, and recognized as a primary dealer by the Federal Reserve Bank of New York
and a member of the Security Investors Protection Corporation, which agreement
is secured by any one or more of the securities described in clauses (i), (ii)
or (iii) of the definition of Government Securities; provided,
that, Issuer has a perfected first security interest in the collateral
and that Issuer or its agent has possession of the collateral and that such
collateral is held free and clear of claims by third parties; (iv) Guaranteed
Investment Contracts; (v) any mutual fund(s) rated in the highest applicable
rating categories established by Moody’s or S&P consisting entirely of
Government Securities; or (vi) any other instrument or mutual fund specified in
Section 7.01. 

     “Investor Letter” means a written
instrument signed by each original purchaser of the Debentures and each
transferee of a Debenture in substantially the same form as that attached hereto
as Exhibit B.

     “Issuer” means, collectively,
Pure Energy Group, Inc., a corporation organized and existing under the laws of
the State of Texas, including, particularly, the Texas Business Corporation Act, and its operating subsidiary Pure Gas
Partners II, L.P., a limited partnership organized and existing under the laws
of the State of Texas, including, particularly, the Texas Revised
Uniform Limited Partnership Act.

11

     “Moody’s” means Moody’s Investors
Service, a corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, and, if such corporation shall be
dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, “Moody’s” shall be deemed to refer to any other nationally
recognized securities rating agency designated by Issuer.

     “Net Revenues” means Revenues,
less those Operation and Maintenance Expenses that are allowable for
federal tax purposes in the calculation of taxable income and as reported by
Issuer on its federal tax returns, exclusive of depreciation and
amortization.

     “Operating Line of Credit” means
the existing $5,000,000 operating line of credit issued by Texas Capital Bank,
N.A., San Antonio, Texas, or its successor. The Operating Line of Credit is also
defined as the “Superior Obligations.” As of the Closing Date, the Operating
Line of Credit constitutes Issuer’s only Superior Obligation.

     “Operation and Maintenance
Expenses” means, for any period, all ordinary and necessary expenses of
operation, repair, maintenance and insuring of the Facilities under generally
accepted accounting principles, except that there shall not be included: (i) any
allowance for depreciation; or (ii) any deposits or transfers to the credit of
the Debenture Fund or any other fund or account created for the payment of debt
service on the Debentures or Subordinate Obligations secured by a pledge of
Revenues or Net Revenues as permitted under this Indenture.

     “Outstanding” means, when used
with reference to the Debentures, as of any particular date, the aggregate of
all Debentures authenticated and delivered under this Indenture except:

     Debentures cancelled at or prior to
such date or delivered to or acquired by Trustee at or prior to such date for
cancellation;

     Debentures deemed to be paid in
accordance with Article VIII of this Indenture; and

     Debentures in lieu of or in exchange
or substitution for which other Debentures shall have been authenticated and
delivered pursuant to this Indenture.

     “Parity Obligations” means
obligations of Issuer on a parity with the lien of the Debentures and this
Indenture, including Additional Debentures, issued or incurred in accordance
with Section 2.14 of this Indenture.

12

     “Paying Agent” means any bank or
trust company named by Issuer as the place at which the principal of and
premium, if any, and interest on the Debentures are payable. Until changed in
writing by Issuer, Trustee shall be the Paying Agent.

     “Permitted Encumbrances” means:
(i) the prior and superior lien of Texas Capital Bank, or its successor, related
to the Operating Line of Credit; (ii) any lien for the security of the
Debentures, or for the security of any subordinate indebtedness permitted
pursuant to Section 2.15; (iii) liens for taxes, assessments and other
governmental charges not then delinquent or which can be paid without penalty,
(iv) herefor, inchoate mechanics’ and materialmen’s liens; (v) workmen’s,
repairmen’s, warehousemen’s, and carriers’ liens and other similar liens, if
any, arising in the ordinary course of business; (vi) any easements,
restrictions, mineral, oil, gas and mining rights and reservations, zoning laws
and defects in title or other encumbrances to which Facilities may be subject
because of their acquisition, construction and installation as part of the
Project; and (vii) debt incurred in the ordinary course of business for the
purchase or lease of furniture, fixtures and other equipment (including
vehicles) for use by Issuer’s Facilities; provided, that, such debt shall
be subordinate to the provisions of this Indenture and may be secured only by a
purchase money security interest in the furniture, fixtures and equipment.

     “Principal Office” means with
respect to Issuer, the office of Issuer at 153 Treeline Park, San Antonio, Texas
78209; provided, that, for purposes of all activities related to
payments and registration on the Debentures, such office shall be c/o Trustee,
First Security Bank, 314 N. Spring Street, Searcy, Arkansas 72143,
Attention: Corporate Trust Administration.

     “Prior Obligation” means the
final payments of Issuer pursuant to Issuer’s Second Plan of Reorganization
approved by the United States Bankruptcy Court, Western District of Texas, San
Antonio Division, on December 2, 2002.

     “Project” means the retirement of
the Prior Obligation, the payment of the Operating Line of Credit to zero
($0.00) balance, the infusion of working capital into Issuer and the funding of
capitalized interest on the Debentures through September 1, 2005.

     “Qualified Accountant” means a
certified public accountant in the regular employ or hire of Issuer, including,
but not limited to, the chief financial officer, or an independent firm of
certified public accountants .

     “Record Date” means, with respect
to any Interest Payment Date or Payment Date of the Debentures, the fifteenth
(15th) day of the calendar month next preceding the month in which
such Interest Payment Date or Payment Date falls.

     “Revenues” means all gross
receipts, including sales, royalties, payments received in connection with net
royalty interests, fees, tolls, rates, rentals, and other charges levied and
collected in connection with, and all other income and receipts of whatever kind
or character derived by Issuer from the operation of their business and properties. Revenues shall specifically include, but shall not
be limited to: (i) revenues from all exploration and development contracts and
all other fees charged or revenues earned by Issuer to or from customers,
development partners, property operators or others, whether individual,
commercial or public, (ii) general fees and other charges levied or derived in
connection with Issuer’s oil and gas exploration and development business, (iii)
investment income on all funds held by Trustee pursuant to the provisions of the
Indenture, and (iv) investment income on all funds held by Issuer or any
depositories for Issuer.

13

     “S&P” means Standard &
Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., its
successors and their assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, “S&P” shall be deemed to refer to any other nationally recognized
securities rating agency designated by Issuer.

     “Special Counsel” means Jack,
Lyon & Jones, P.A. or any other firm of nationally recognized municipal bond
counsel selected by Issuer and acceptable to Trustee.

     “State” means the State of Texas.

     “Subordinate Obligations” means
debt obligations of Issuer secured by a pledge of Revenues that is subordinate
to the lien thereon securing the payment of the Debentures, permitted by the
provisions of Section 2.15 of this Indenture.

     “Trustee” means the banking
corporation or association or trust company designated as trustee in this
Indenture, and its successor or successors as such trustee. The original Trustee
is First Security Bank, an Arkansas state bank, Searcy, Arkansas.

     “Trust Estate” means the property
described in the granting clauses of this Indenture.

     “Written Request” means any
written request, letter or similar document from Issuer to Trustee and signed by
the Authorized Issuer Representative, including, but not limited to, the initial
written closing and delivery instructions.

     Section 1.02.
Interpretation. The words “hereof,” “herein,” “hereunder” and
“hereto” and other words of similar import refer to this Indenture in its
entirety.

     The terms “agree” and
“agreements” contained herein are intended to include and mean “covenant” and
“covenants.”

     References to Articles, Sections
and other subdivisions of this Indenture are to the designated Articles,
Sections and other subdivisions of this Indenture.

     The headings of this Indenture
are for convenience only and shall not define or limit the provisions
hereof.

14

     Any references made (a) in any
gender shall be deemed to have been made in all genders and (b) in the singular
or plural number shall be deemed to have been made, respectively, in the plural
or singular number as well.

     Any reference to particular
sections or subsections of the Code or the Act shall include any successor
provisions of law or regulations to the extent the same shall apply to the
Debentures.

ARTICLE II

THE DEBENTURES

     Section 2.01. Authorized
Amount of Debentures. No Debentures may be issued under the provisions of
this Indenture except in accordance with this Article II. The total principal
amount of the Debentures that may be issued is hereby expressly limited to
$5,500,000, except as provided in Section 2.09 and Section 2.12 hereof.

     Section 2.02. Details of
Debentures. The Debentures: (i) shall be designated “Pure Energy Group, Inc.
(and its subsidiary) 7 1/2% Debentures, Series 2005,” maturing on March 1, 2015;
(ii) shall be in the aggregate principal amount of $5,500,000; (iii) shall be
dated as of March 1, 2005; (iv) shall bear interest from such date at the rates
hereinafter provided until paid, with interest-only payments to be paid
semi-annually on March 1 and September 1, of each year, commencing September 1,
2005, and continuing through March 1, 2008, and interest and principal payment
to be paid semi-annually thereafter, commencing September 1, 2008; and (v) shall
be issued in denominations of $25,000 each, or in $5,000 integral multiples in
excess thereof.

     Section 2.03. Debenture
Form. The Debentures shall be issued as fully registered Debentures without
coupons. The Debentures and Trustee’s certificate of authentication to be
endorsed thereon shall be in substantially the form set forth in Exhibit A
hereto, with appropriate variations, insertions and omissions as permitted or
required by this Indenture. 

     Section 2.04. Payment.
Payments of principal of and interest on the Debentures will be made on the
date such payments are due and payable at the place and in the manner agreed
upon by Trustee and Issuer, typically not more than fifteen (15) calendar days
prior to each Payment Date. If the Debentures are in certificated form, the
principal of, interest on and premium, if any, of each Debenture will be payable
to the Owner thereof as specified on the records of Trustee on the Record Date
with respect to such Payment Date irrespective of the cancellation of such
Debenture upon any transfer or exchange thereof subsequent to such Record Date
and prior to such Payment Date, unless Issuer shall default in the payment of
interest due on such Payment Date. Each payment of principal of, interest on and
premium, if any, on each Debenture shall be paid: (a) by check or draft mailed
by first-class mail to such Owner on the Payment Date at his address as it
appears on the Debenture Register on the Record Date or, at the option of any
Owner of at least $1,000,000 in aggregate principal amount of Debentures, (b) by
wire transfer to an account within the United States designated in writing by such Owner at least fifteen (15)
calendar days prior to the Payment Date with an acknowledgment that the then
applicable wire fee of Trustee will be deducted from the wire, or (c) by
Automatic Clearinghouse Transfers at no cost to the Owner in next day funds if
such Owner shall have requested in writing a payment by such method and shall
have provided Trustee with an account number in a bank within the United States
and other necessary information for such purposes at least fifteen (15) calendar
days prior to the applicable Payment Date. In the event of any default in the
payment of principal of, interest on and premium, if any, such defaulted payment
shall be payable to the Owner of such Debenture on a Special Record Date for the
payment of such defaulted payment established by notice mailed by or on behalf
of Issuer to Owners.

15

     Section 2.05. Execution.
The Debentures shall be executed on behalf of Issuer by the manual or facsimile
signatures of its Authorized Issuer Representatives delivered in the State of
Texas and shall have impressed or imprinted thereon the seal of Issuer. A
facsimile signature shall have the same force and effect as if manually signed.
In case any officer whose manual signature or a facsimile of whose signature
shall appear on the Debentures shall cease to be such officer before the
delivery of such Debentures, such signature or such facsimile shall nevertheless
be valid and sufficient for all purposes, the same as if such official had
remained in office until delivery.

     Section 2.06. Unconditional
Obligation. The Debentures, together with interest thereon, are joint and
several unconditional obligations of Issuer, secured by the Revenues, subject
and subordinate to the prior superior lien of the Operating Line of Credit. The
Revenues shall be, and hereby are, pledged and charged to such payment in
accordance with the provisions of this Indenture. The Debentures shall be
secured by such pledge and charge and by a lien on the Revenues, all in
accordance with and subject to the conditions and provisions of this
Indenture.

     Section 2.07. Authentication.
Only such Debentures as shall have endorsed thereon a certificate of
authentication substantially in the form set forth in Exhibit A attached hereto
duly executed by Trustee shall be entitled to any right or benefit under this
Indenture. No Debenture shall be valid and obligatory for any purpose unless and
until such certificate of authentication shall have been duly executed by manual
signature of Trustee, and such certificate of Trustee upon any such Debenture
shall be conclusive evidence that such Debenture has been authenticated and
delivered under this Indenture. Trustee’s certificate of authentication on any
Debenture shall be deemed to have been executed if signed by an authorized
officer of Trustee, but it shall not be necessary that the same officer sign the
certificate of authentication on all of the Debentures issued hereunder.

     Section 2.08. Delivery of the
Debentures. Issuer shall execute and deliver to Trustee, and Trustee shall
authenticate the Debentures and deliver said Debentures to the original
purchaser or purchasers thereof as may be directed in this Section 2.08, or in
any supplemental indenture. Prior to the delivery or original issuance by
Trustee of any authenticated Debentures, there shall be delivered to
Trustee at its principal corporate trust office in the State of Arkansas:

16

      An
original executed counterpart of this Indenture;

     (b) A
Written Request to Trustee by Issuer to authenticate and deliver the Debentures
to the original purchaser or purchasers thereof upon payment to Trustee, but for
the account of Issuer, of a sum specified in such order plus accrued interest
thereon, if any, to the date of delivery;

     (c) A
copy, duly certified by the Authorized Issuer Representative, of the proceedings
of Issuer authorizing the issuance of the Debentures;

     (d) A
written opinion of Special Counsel approving the legality of the Debentures;

     (e) An
Accredited Investor Questionnaire (or a copy of the Qualified Institutional
Buyer Certification on file with or provided to Placement Agent) signed by each
of the original purchasers of the Debentures in substantially the same form as
that attached as Exhibit B-1 hereto; and

     (f) An
Investor Letter signed by each of the original purchasers of the Debentures in
substantially the same form as that attached hereto as Exhibit B.

     Section 2.09. Mutilated,
Destroyed or Lost Debentures. In case any Debenture issued hereunder shall
become mutilated or be destroyed or lost, Issuer shall, if not then prohibited
by law and if it has received no notice that such Debenture has been acquired by
a protected purchaser, cause to be executed and Trustee may authenticate and
deliver a new Debenture of like series, date, number, maturity and tenor in
exchange and substitution for and upon cancellation of such mutilated Debenture,
or in lieu of and in substitution for such Debenture destroyed or lost, upon the
holder’s paying the reasonable expenses and charges of Issuer and Trustee in
connection therewith, and, in the case of a Debenture destroyed or lost, filing
by the holder with Trustee evidence satisfactory to Trustee that such Debenture
was destroyed or lost, and of the holder’s ownership thereof, and furnishing
Issuer and Trustee with indemnity satisfactory to them. Trustee is hereby
authorized to authenticate any such new Debenture. In the event any such
Debenture shall have matured, instead of issuing a new Debenture, Issuer may pay
the same without the surrender thereof. Upon the issuance of a new Debenture
under this Section 2.09, Issuer may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of Trustee)
connected therewith.

     Section 2.10. Negotiability,
Registration and Transfer of Debentures. The Debentures shall be and shall
have all the qualities and incidents of negotiable instruments under the laws of
the State of Texas, and Debenture Holders, in accepting any Debentures, shall be
conclusively deemed to have agreed that the Debentures shall be and have all of
said qualities and incidents of negotiable instruments.

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Notwithstanding the foregoing, the Debentures shall be
transferable by the initial purchasers thereof in accordance with the provisions
of the Securities Act of 1933 and the laws of the several states.

     Issuer hereby constitutes and
appoints Trustee as Debenture registrar of Issuer, and as Debenture registrar
Trustee shall keep books for the registration and for the transfer of the
Debentures as provided in this Indenture at the Principal Office of Trustee. The
person in whose name any Debenture shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes and payment of or on
account of the principal of and interest on any such Debenture shall be made
only to or upon the order of the registered owner thereof, or the registered
owner’s legal representative, and neither Issuer, Trustee nor the Debenture
registrar shall be affected by any notice to the contrary, but such registration
may be changed as herein provided. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such Debenture to the
extent of the sum or sums so paid.

     Debentures may be transferred on
the books of registration kept by Trustee by the registered owner in person or
by the owner’s duly authorized attorney, upon surrender thereof, together with a
written instrument of transfer duly executed by the registered owner or the
owner’s duly authorized attorney, and subject to the receipt of an Investor
Letter in substantially the same form as that attached hereto as Exhibit B, as
required below. Upon surrender for transfer of any Debenture at the Principal
Office of Trustee, Issuer shall execute and Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Debenture(s) in the
same aggregate principal amount and of any authorized denomination or
denominations.

     Debentures may be exchanged at
the Principal Office of Trustee in the State of Arkansas for an equal aggregate
principal amount of Debentures of any other authorized denomination or
denominations of the same series with corresponding maturities. Issuer shall
execute and Trustee shall authenticate and deliver the Debentures which the
Debenture Holder making the exchange is entitled to receive, bearing numbers not
contemporaneously then outstanding. The execution by Issuer of any Debenture of
any denomination shall constitute full and due authorization of such
denomination and Trustee shall thereby be authorized to authenticate and deliver
such Debenture.

     Such transfers of registration or
exchanges of Debentures shall be without charge to the holders of such
Debentures, but any taxes or other governmental charges required to be paid with
respect to the same shall be paid by the holder of the Debenture requesting such
transfer or exchange as a condition precedent to the exercise of such
privilege.

     Trustee shall not be required to
transfer or exchange any Debenture during the period from and including a Record
Date to the next succeeding Interest Payment Date of such Debenture nor to
transfer or exchange any Debenture after the mailing of notice calling such
Debenture for redemption has been made, and prior to such redemption.

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     REGISTRATION AND TRANSFER OF
THE DEBENTURES IS SUBJECT TO THE TRUSTEE’S PRIOR RECEIPT OF AN INVESTOR LETTER
FROM EACH PROSPECTIVE TRANSFEREE IN SUBSTANTIALLY THE SAME FORM OF THAT ATTACHED
HERETO AS EXHIBIT B, OR AN OPINION OF SPECIAL COUNSEL THAT SUCH INVESTOR LETTER
IS NO LONGER REQUIRED.

     FURTHERMORE, RESALES OF
THE DEBENTURES ARE RESTRICTED AND MAY BE MADE ONLY IN COMPLIANCE WITH RULE 144A
TO THE EXTENT APPLICABLE UNLESS OTHERWISE ALLOWABLE UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS. PARTICULARLY, RESALES MAY BE MADE ONLY TO QUALIFIED
INSTITUTIONAL BUYERS AS DEFINED BY RULE 144A UNLESS OTHERWISE ALLOWABLE UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS AT THE TIME OF SUCH RESALE.

     Notwithstanding anything
contained herein to the contrary, the Debentures and interests therein may not
be issued, sold or transferred to any Debenture Holder other than the initial
Debenture Holder, unless (i) the initial Debenture Holder and any subsequent
Debenture Holder shall have delivered to Trustee evidence satisfactory to
Trustee that the transferee is a Qualified Institutional Buyer, as such term is
defined under Rule 144A promulgated pursuant to the Securities Act of 1933 as
long as such rule is applicable, and otherwise in accordance with federal and
state securities laws applicable at such time, and (ii) Trustee obtained a
signed Investor Letter in the same form as attached to the Indenture as Exhibit
B and attached to the Debentures, or an opinion of Special Counsel that such
Investor Letter is no longer required. The Debentures shall bear legends stating
that they are subject to the transfer restrictions described in this Section
2.10 of the Indenture. By purchasing a Debenture, the initial Debenture Holder
and any subsequent Debenture Holder shall be deemed to have agreed to the
transfer requirements contained in this Section 2.10 of the Indenture.

     Section 2.11.
Cancellation. All Debentures surrendered for payment, redemption, transfer
or exchange, if surrendered to Trustee, shall be promptly cancelled by it, and,
if surrendered to any person other than Trustee, shall be delivered to Trustee
and, if not already cancelled, shall be promptly cancelled by it. Issuer may at
any time deliver to Trustee for cancellation any Debentures previously
authenticated and delivered hereunder, which Issuer may have acquired in any
manner whatsoever, and all Debentures so delivered shall be promptly cancelled
by Trustee. All cancelled Debentures held by Trustee shall be disposed of as
directed by Issuer. Whenever in this Indenture provision is made for the
cancellation by Trustee and the delivery to Issuer of any Debentures, Trustee
may, upon the written request of Issuer, in lieu of such cancellation and
delivery, destroy such Debentures in the presence of any officer of Issuer (but
only if Issuer shall so require), and deliver a certificate of such destruction
to Issuer.

     Section 2.12. Superior
Obligations. The Debentures shall create a lien on the Revenues of Issuer
that is subject and subordinate to the prior existing lien created by the
current $5,000,000 Operating Line of Credit issued by Texas Capital Bank, N.A.,
San Antonio, Texas, or its successor. Issuer may, in its sole discretion (but
subject to the restrictions contained in the Credit Agreement governing
the Operating Line of Credit) from time to time, draw upon the Operating Line of
Credit in a principal amount not to exceed $2,500,000 of the total $5,000,000
available credit line. Issuer may, in its sole discretion from time to time,
draw an additional $2,500,000 on the Operating Line of Credit over and above the
initial $2,500,000 (the “Additional Operating Line of Credit Draw”), so long
as Issuer maintains a debt service coverage ratio of three (3) times the
Annual Debt Service obligation on the Debentures, Additional Debentures, any
Parity Obligation, any Subordinate Obligations and the Operating Line of Credit; provided, that, before any Additional Operating Line of Credit
Draw is made, Issuer shall deliver to Trustee a statement by a Qualified
Accountant reciting the opinion that, based upon necessary investigation, (i)
the Net Revenues of Issuer for the two (2) Fiscal Years immediately preceding
the Fiscal Year in which such Additional Operating Line of Credit Draw is to be
issued or made were not less than three hundred percent (300%) of the average
Annual Debt Service on all then-Outstanding Debentures, Parity Obligations, the
Operating Line of Credit and Subordinate Obligations, plus the Additional
Operating Line of Credit Draw then proposed to be issued or made, or (ii) in the
event that the proceeds of the Additional Operating Line of Credit Draw will be
used to fund an acquisition, in whole or in part of an additional business, that
the Net Revenues of Issuer, together with the audited Net Revenues of the
business to be acquired, restated on a combined basis in accordance with GAAP
procedures, for the two (2) Fiscal Years immediately preceding the Fiscal Year
in which such Additional Operating Line of Credit Draw is to be made were not
less than three hundred percent (300%) of the average Annual Debt Service on all
then-Outstanding Debentures, Parity Obligations, the Operating Line of Credit
and Subordinate Obligations, plus the Additional Operating Line of Credit Draw
then proposed to be made.

19

     No Additional Operating Line of
Credit Draw may be made unless there is no default under this Indenture at the
time such draw is to be made.

     Section 2.13. Additional
Superior Obligations Restricted. Subject to the preexisting and prior
superior lien of the Operating Line of Credit and the parity lien of any
properly issued Parity Obligations described below, from and after the issuance
of any of the Debentures and for so long as any of the Debentures are
Outstanding, Issuer shall not create or permit the creation of any lien or
indebtedness, or issue any notes, debentures, bonds, warrants, certificates or
other obligations or evidences of indebtedness payable in any manner from the
Revenues or otherwise from the Trust Estate which: (i) will in any way be
superior to or rank on a parity with the Debentures, or (ii) will in any way be
secured by a lien and charge on the Revenues prior to or equal with the lien,
pledge and charge created herein for the security of the Debentures and the
Operating Line of Credit, or (iii) will be payable prior to or equal with the
payments to be made from the Revenues into the Debenture Fund and from said
Debenture Fund for the payment of the Debentures.

     Section 2.14. Parity
Obligations. Issuer shall not be permitted to create or permit the creation
of indebtedness payable from the Revenues on an equal and parity basis with the
lien of this Indenture, except, with respect to Additional Debentures
issued in strict compliance with this Indenture or other permissible forms of
debt as set forth below (collectively, the “Permissible Parity Debt”).
Before any Permissible Parity Debt is issued or incurred, there shall be
delivered to Trustee the items required for the issuance of Debentures by
Section 2.08 of this Indenture, plus a statement by a Qualified Accountant
reciting the opinion, based upon necessary investigation, (i) that the Net
Revenues of Issuer for the two (2) Fiscal Years immediately preceding the Fiscal
Year in which such Permissible Parity Debt are to be issued or incurred were not
less than three hundred percent (300%) of the average Annual Debt Service on all
then-Outstanding Debentures, the Operating Line of Credit, any Parity Debt and
Subordinate Obligations, plus the Permissible Parity Debt then proposed to be
issued or incurred, or (ii) in the event that the proceeds of the Permissible
Parity Debt will be used to fund the acquisition, in whole or in part of an
additional business, that the Net Revenues of Issuer, together with the audited
Net Revenues of the business to be acquired, restated on a combined basis in
accordance with GAAP procedures, for the two (2) Fiscal Years immediately
preceding the Fiscal Year in which such Permissible Parity Debt are to be issued
or incurred were not less than three hundred percent (300%) of the average
Annual Debt Service on all then-Outstanding Debentures, the Operating Line of
Credit, any Parity Debt and Subordinate Obligations, plus the Permissible Parity
Debt then proposed to be issued or incurred.

20

     No Permissible Parity Debt shall
be issued or incurred unless there is no default at the time of issuance under
this Indenture or Operating Line of Credit.

     Section 2.15. Subordinate
Obligations. Nothing in this Indenture shall prevent Issuer from authorizing
and issuing notes, bonds, debentures, debenture anticipation notes, warrants,
certificates or other obligations or evidences of indebtedness, the payment of
the principal of and premium, if any, and interest on which shall be made from
Revenues or from a special fund to be established and maintained from Revenues;
provided, that, payments from Revenues or from a special fund to
be established and maintained from Revenues, and the lien and charge on such
Revenues, shall be made junior and subordinate to the lien, pledge and charge
created herein for the security and payment of the Debentures and other payments
under this Indenture, including, without limitation, the following payments out
of Revenues into the Debenture Fund. Nothing contained herein shall prohibit
Issuer from incurring debt in the ordinary course of business for the purchase
or lease of furniture, fixtures and other equipment (including vehicles) for use
by Issuer; provided, that, such debt shall be subordinate to the
provisions of this Indenture and may be secured only by a purchase money
security interest in the furniture, fixtures and equipment so acquired.

     Notwithstanding anything herein
to the contrary, no Subordinate Obligations shall be issued unless there is no
Event of Default at the time of issuance under this Indenture.

     Section 2.16. Prohibition
Against Pledge of Accounts Receivable. From and after the issuance of any of
the Debentures and for so long as any of the Debentures are Outstanding, Issuer
shall not create or permit the creation of any indebtedness, or issue any notes,
debentures, bonds, warrants, certificates or other obligations or evidences of
indebtedness payable in any manner from or make any hypothecation, pledge, assignment, sale or grant of Issuer’s
accounts receivable or any other source of Revenues.

21

     Section 2.17. Book Entry
Debentures. The Debentures shall initially be issued as book-entry
Debentures and shall be registered in the name of Cede & Co., as nominee of
The Depository Trust Company (“DTC”) and delivered to DTC in New York, New York,
prior to the Closing Date or maintained by Trustee under appropriate custodial
agreements with DTC, as the case may be. Trustee and Issuer acknowledge that
Issuer has executed and delivered a Blanket Letter of Representations with DTC.
All payments of principal of and redemption premium, if any, and interest on the
book entry Debentures and all notices with respect thereto, including notices of
full or partial redemption, shall be made and given at the times and in the
manner set out in the Letter of Representations. The terms and provisions of the
Letter of Representations shall govern in the event of any inconsistency between
the provisions of this Indenture and the Letter of Representations. The Letter
of Representations may be amended without Debenture Holder consent.

     The book-entry registration
system for all of the book entry Debentures may be terminated and certificates
delivered to and registered in the name of the Holders, under either of the
following circumstances:

(a) DTC notifies Issuer and Trustee
that it is no longer willing or able to act as Securities Depository for the
book entry Debentures and a successor Securities Depository for the book entry
Debentures is not appointed by Issuer prior to the effective date of such
discontinuation; or 

(b) Issuer determines that continuation
of the book-entry system through DTC (or a successor securities depository) is
not in the best interest of Issuer.

     In the event a successor
Securities Depository is appointed by Issuer, the book-entry Debentures will be
registered in the name of such successor Securities Depository or its nominee.
In the event certificates are required to be issued to Beneficial Owners,
Trustee and Issuer shall be fully protected in relying upon a certificate of DTC
or any DTC participant as to the identity of and the principal amount of book
entry Debentures held by such Beneficial Owners.

     Once registered in book-entry
only form, the Holders of the Debentures will not receive physical delivery of
Debentures, except as provided herein. For so long as there is a Securities
Depository for the Debentures, all of such Debentures shall be registered in the
name of the nominee of the Securities Depository, all transfers of beneficial
ownership interests in such Debentures will be made in accordance with the rules
of the Securities Depository, and no investor or other party purchasing,
selling, or otherwise transferring beneficial ownership of such Debentures is to
receive, hold, or deliver any physical evidence of any Debentures. Issuer and
Trustee shall have no responsibility or liability for transfers of beneficial
ownership interests in such Debentures.

22

     Issuer and Trustee will recognize
the Securities Depository or its nominee as the Debenture Holder of book-entry
Debentures for all purposes, including receipt of payments, notices, and voting;
provided, Trustee may recognize votes by or on behalf of Beneficial
Owners as if such votes were made by Debenture Holders of a related portion of
the Debentures when such votes are received in compliance with an omnibus proxy
of the Securities Depository or otherwise pursuant to the rules of the
Securities Depository or the provisions of the Letter of Representations or
other comparable evidence delivered to Trustee by the Debenture Holders.

     With respect to book entry
Debentures, Issuer and Trustee shall be entitled to treat the Person in whose
name such Debenture is registered as the absolute owner of such Debenture for
all purposes of this Indenture, and neither Issuer nor Trustee shall have any
responsibility or obligation to any Beneficial Owner of such book entry
Debenture. Without limiting the immediately preceding sentence, neither Issuer
nor Trustee shall have any responsibility or obligation with respect to: (a) the
accuracy of the records of any Securities Depository or any of other Person with
respect to any ownership interest in book-entry Debentures, (b) the delivery to
any Person, other than a Debenture Holder, of any notice with respect to
book-entry Debentures, including any notice of redemption or refunding, (c) the
selection of the particular Debentures or portions thereof to be redeemed or
refunded in the event of a partial redemption or refunding of part of the
Debentures Outstanding, or (d) the payment to any Person, other than a Debenture
Holder, of any amount with respect to the principal of or redemption premium, if
any, or interest on book-entry Debentures.

ARTICLE III

REDEMPTION

     Section 3.01. Privilege of
Redemption and Redemption Prices. The Debentures shall be subject to
redemption prior to maturity in the manner provided in this Article III.

     Section 3.02. Issuer’s
Election to Redeem; Notice to Trustee. The Debentures shall be subject to
optional redemption by Issuer as set forth in Sections 3.08, 3.09, 3.10 and 3.12
hereof, which written direction shall be evidenced by a Written Request to
Trustee. In case of any such optional redemption, the Written Request of Issuer
shall, at least thirty (30) calendar days prior to the redemption date (unless a
shorter notice shall be satisfactory to Trustee), be delivered to Trustee
notifying Trustee of such redemption date and of the principal amount of the
Debentures to be redeemed and of the redemption price for the Debentures to be
redeemed.

     Section 3.03. Selection by Trustee of Debentures to Be
Redeemed; Sequential Redemptions. If less than all of the Outstanding
Debentures are to be redeemed, Trustee shall redeem the Debentures in inverse
order of maturity (and by lot or in such manner as Trustee shall deem fair and
appropriate within each maturity) in Authorized Denominations in amounts in
proportion to the principal amount of each maturity subject to the Mandatory Sinking Fund provisions of Section
3.08 of the Indenture (if applicable). After any partial redemption of the
Debentures which leaves the Debentures Outstanding in a principal amount of less
than $25,000, Trustee shall apply the next prepayment of principal (whether by
Extraordinary Optional Redemption, Optional Redemption, or Mandatory Sinking
Fund Redemption pursuant to Section 3.08, 3.09, 3.10 or 3.12 hereof) to the
Debentures until the principal of the Debentures shall be paid in full.
Notwithstanding the foregoing with respect to the selection of Debentures to be
redeemed in the event of a partial redemption, so long as DTC or its nominee is
the sole registered Owner of the Debentures, the Trustee shall follow the
procedure for redemption and notices as set forth in DTC’s operational
arrangements, as in effect at the time. 

23

     For all purposes of this
Indenture, unless the context otherwise requires, all provisions relating to the
redemption of the Debentures shall relate, in the case of any Debenture redeemed
or to be redeemed only in part, to the portion of the principal of such
Debenture which has been or is to be redeemed.

     Section 3.04. Notice of
Redemption. When Trustee receives the Written Request from Issuer to redeem
any Debentures in accordance with the Indenture, identifying the Debentures or
portions thereof to be redeemed, Trustee will give notice of the redemption of
such Debentures, which is to be given by mailing a copy of the redemption notice
by first class mail, postage prepaid, or by overnight delivery service, within
five (5) Business Days of the receipt by Trustee of the Written Request of
Issuer pursuant to Section 3.02 to the registered Owner (Cede & Co., so long
as it is the registered owner in the book-entry system) of each Debenture to be
redeemed in whole or in part at the address shown on the registration books
maintained by Trustee. Each notice of redemption will state: (i) the maturities
of the Debentures to be redeemed, (ii) the redemption date, (iii) the place or
places where amounts due upon such redemption will be payable, (iv) if less than
all of the Debentures are to be redeemed, the letters and number or other
distinguishing marks of such Debentures so to be redeemed, (v) the CUSIP number
(if any), (vi) the date of such notice, (vii) the issuance date for the
Debentures to be redeemed, (viii) the interest rate of the Debentures to be
redeemed, (ix) the redemption price, (x) Trustee’s name and the address of
Trustee’s Principal Office, (xi) the complete official name of the Debentures,
and (xii) in the case of the Debentures to be redeemed in part, such notice will
also specify the respective portions of the principal amount thereof to be
redeemed. Such notice will further state that on such date there will become due
and payable upon each Debenture to be redeemed the redemption price thereof (or
the redemption price of the specified portions of the principal thereof in the
case of the Debentures to be redeemed in part only), together with interest
accrued to the redemption date, and that from and after such date interest
thereon will cease to accrue and be payable. A defect in, or failure to give,
notice of redemption with respect to any Debenture will not invalidate the
notice of redemption of any other Debenture(s) for which notice of redemption
has been properly given.

     The Trustee is also required to
send a copy of such notice by first class mail, by facsimile transmission or
overnight delivery service for receipt not less than thirty (30) calendar days before such redemption date to the following: The
Depository Trust Company, and Standard and Poor’s Called Note Record, 55 Water
Street - 45th Floor, New York, New York 10041; provided, however, that such mailing or transmission will not be a condition
precedent to such redemption of the Debentures. If the Debentures are no longer
in book entry form on the date of redemption, the Trustee also is to mail or
transmit a notice of redemption, in the manner and in the form described above,
to any Debenture Holder who has not delivered the Debentures for redemption
within sixty (60) calendar days after the redemption date.

24

     So long as and at any time the
Debentures are in physical registered form Trustee also is to mail or transmit a
notice of redemption, in the manner and in the form described above, to any
Debenture Holder who has not delivered Debentures for redemption within sixty
(60) calendar days after the redemption date.

     Any notice mailed as provided
above will be conclusively presumed to have been duly given, whether or not the
Holder of such Debenture(s) or such other intended recipient receives such
notice.

     Unless the Debentures are to be
redeemed from the proceeds of refunding Debentures and except with respect to
the mandatory redemption of the Debentures as described in Section 3.11 hereof,
Issuer shall deposit with Trustee monies fully sufficient to pay the redemption
price (including any premium, if applicable) of the Debentures to be redeemed
plus accrued interest, if any, prior to giving notice of redemption, except in
the event of a notice that is subject to a conditional call of the Debentures to
be redeemed.

     Upon notice of redemption having
been duly given as aforesaid, and monies being held by Trustee for payment of
the redemption price of, plus accrued interest to the redemption date on the
Debentures to be redeemed, the Debentures (or portions thereof) so called for
redemption on the redemption date designated in such notice will become due and
payable at the redemption price, plus accrued interest thereon to the redemption
date, specified in such notice and interest on the Debentures so called for
redemption will cease to accrue. Said Debentures (or portions thereof) will
cease to be entitled to any benefit or security under the Indenture, and the
Holders of said Debentures will have no rights in respect thereof except to
receive payment of said redemption price, plus accrued interest to the
redemption date.

     Section 3.05. [Reserved.]

     Section 3.06. Effect of Notice
of Redemption. Notice having been given in the manner and under the
conditions hereinabove provided, and monies for payment of the redemption price
being held by Trustee as provided in Section 3.04 of this Indenture, (a) the
Debentures, or portions of the Debentures, so called for redemption shall, on
the date fixed for redemption designated in such notice, become due and payable
at the redemption price provided for redemption of such Debentures, or portions
of the Debentures, on such date and interest on the Debentures, or portions of
the Debentures, so called for redemption shall cease to accrue, (b) upon
surrender of the Debentures, or portions of the Debentures, so called for
redemption in accordance with such notice, such Debentures, or portions of the
Debentures, shall be paid at the applicable redemption price, (c) such
Debentures, or portions of the Debentures, shall cease to be entitled to any
lien, benefit or security under this Indenture, and (d) the Holders of said
Debentures, or portions of the Debentures, shall have no rights in respect
thereof except to receive payment of the redemption price thereof.

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     Section 3.07. Debentures
Redeemed in Part. Any Debenture which is to be redeemed only in part, except
by mandatory redemption pursuant to Section 3.11 hereof, shall be surrendered to
Trustee (with, if Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to Trustee duly executed by the
Holders thereof or his attorney duly authorized in writing) and the appropriate
officials of Issuer shall execute and Trustee shall authenticate and deliver to
the Holders of such Debenture, without service charge, a new Debenture or
Debentures, of any Authorized Denomination, having the same maturity and
interest rate, in an aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Debenture so surrendered. All partial
redemptions shall be effected in accordance with Section 3.03 hereof.

     Section 3.08. Mandatory
Sinking Fund Redemption. The Debentures are subject to mandatory sinking
fund redemption prior to maturity in part, with the Debentures to be redeemed
being selected by lot by the Trustee in such manner as the Trustee may
determine, at the redemption price of one hundred percent (100%) of the
principal amount thereof plus accrued interest to the date fixed for redemption,
without premium, in the amounts and on the dates as follows:

$5,500,000 Term Debenture due March 1, 2015

	Redemption Date 	Principal Amount 
	09/01/2008 	$195,000.00 
	03/01/2009 	200,000.00 
	09/01/2009 	245,000.00 
	03/01/2010 	245,000.00 
	09/01/2010 	300,000.00 
	03/01/2011 	300,000.00 
	09/01/2011 	360,000.00 
	03/01/2012 	360,000.00 
	09/01/2012 	470,000.00 
	03/01/2013 	475,000.00 
	09/01/2013 	545,000.00 
	03/01/2014 	545,000.00 
	09/01/2014 	630,000.00 
	03/01/2015 * 	630,000.00 
	* Maturity 	 

     At its option, to be exercised on
or before the thirtieth (30th) day next preceding any mandatory
sinking fund redemption date, Issuer (provided that no Event of Default shall
have occurred and be continuing), may: (i) deliver to Trustee for cancellation
the Debentures of the applicable maturity or portions thereof (in
Authorized Denominations) in any aggregate principal amount desired and (ii)
receive a credit in respect of its mandatory sinking fund redemption obligation
for any Debentures of the same maturity (in Authorized Denominations) which
prior to said date have been purchased or redeemed (otherwise than through
mandatory sinking fund redemption pursuant to this Section) and cancelled by
Trustee and not theretofore applied as a credit against any mandatory sinking
fund redemption obligation for the same maturity. Each such Debenture or portion
thereof so delivered or previously purchased or redeemed and cancelled by
Trustee shall be credited by Trustee at one hundred percent (100%) of the
principal amount thereof against the obligation to redeem Debentures of the same
maturity on such mandatory sinking fund redemption date, and any excess over
such amount shall be credited against future mandatory sinking fund redemption
obligations for the same maturity in chronological order, and the principal
amount of the Debentures of said maturity so to be redeemed shall be accordingly
reduced.

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     Issuer will, on or before the
thirtieth (30th) calendar day next preceding each such mandatory
sinking fund redemption date, furnish Trustee with its certificate indicating
whether and to what extent the provisions of (i) and (ii) of the preceding
paragraph are to be availed of with respect to such mandatory sinking fund
redemption payment.

     Section 3.09. Extraordinary
Optional Redemption of Debentures. The Debentures are subject to
extraordinary optional redemption (which redemption shall be mandatory in the
circumstances provided in subsection (d) below) as a whole or in part upon the
occurrence of any of the following events with respect to Issuer’s Facilities,
at a redemption price equal to the principal amount of the Debentures then
Outstanding to be so redeemed, plus accrued interest to the date fixed for such
redemption (which date shall be the earliest practicable date in accordance with
the Indenture) and without premium:

     (a) Any
one of Issuer’s production wells or other Facilities, or any part thereof, is so
demolished, destroyed or damaged that, in the commercially reasonable judgment
of Issuer, all or a portion of the well or facility cannot be restored or
rebuilt with available funds to a profitable condition within the term of
business interruption insurance covering the operations of Issuer and the net
proceeds resulting from such casualty are more than the lesser of $500,000 or
the Outstanding principal amount of all Debentures;

     (b) All
or a portion of Issuer’s production wells or other Facilities shall have been
taken under the exercise of the power of eminent domain by any governmental
authority or so much of Issuer’s wells or facilities is taken or is so
diminished in value that the remainder thereof cannot, in the judgment of
Issuer, continue to be operated profitably for the purpose for which it was
being used immediately prior to such taking or diminution and the proceeds
resulting from such condemnation are more than the lesser of $500,000 or the
Outstanding principal amount of all Debentures;

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     (c) On
any date upon not less than ninety (90) calendar days’ prior written notice in
the event of the occurrence of a “Change in Control” of Issuer, unless waived by
Holders of not less than seventy-five percent (75%) of Debentures Outstanding.
The term "Change in Control" means the happening of any one or more of the
following events:

     (i)
Approval by the shareholders of Corporation or the partners of Partnership of
the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act"), excluding, for this purpose, the present shareholders or
partners of Issuer, individually or as a member of a group, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of either the then outstanding “Voting
Securities” (meaning, the shares of common stock of Issuer entitled to vote) or
the combined voting power of Issuer's then outstanding Voting Securities
entitled to vote generally in the election of the board of directors of Issuer
(“the Board"); 

     (ii)
Individuals who, as of the Effective Date, constitute the Board (herein called
the "Incumbent Board"), cease for any reason to constitute at least a majority
of the Board; provided, that, any person becoming a member of the
Board subsequent to the Effective Date whose election, or nomination for
election by shareholders of Corporation or the partners of Partnership, was
approved by a vote of at least a majority of the Voting Securities of Issuer
entitled to vote thereon (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Board, as such term is used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be,
considered as though such person were a member of the Incumbent Board; 

     (iii)
Approval by the shareholders of Corporation or the partners of Partnership of a
reorganization, merger or consolidation of Issuer, in each case, with respect to
which persons who were the shareholders or partners of Issuer immediately prior
to such reorganization, merger or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the Voting Securities or combined voting
power entitled to vote generally in the election of directors, as the case may
be, of the reorganized, merged or consolidated entity's then outstanding Voting
Securities; or 

     (iv)
Approval by the shareholders of Corporation or the partners of Partnership of
liquidation or dissolution of, or the sale, lease, exchange or other disposition
of all or substantially all of the assets of, Issuer.

     (d) If
any of the circumstances described in subsections (a), (b) and (c) above shall
occur within six (6) months of the final maturity of the Debentures, all
Debentures shall be redeemed on the earliest practicable date at a price
equal to the principal amount thereof plus interest accrued to the redemption
date.

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     Except as provided in subsection
(d) above, Issuer may exercise the option reserved in Section 3.09 of the
Indenture only within six (6) months following the date that a condition has
occurred which gives rise to a right of redemption under the Indenture.

     In the event that less than all
of the Debentures are redeemed by operation of the foregoing, the Debentures to
be redeemed shall be selected by Trustee in inverse order among the then
outstanding maturities (and by lot or in such manner as Trustee shall deem fair
and appropriate within each maturity) thereof according to the relationship
borne by the outstanding principal amount of each such maturity to the total
amount to be applied to redemption of the Debentures.

     Section 3.10. Optional
Redemption of the Debentures. At any time on or after March 1, 2008, the
Debentures are subject to redemption at the option of the Issuer, in part on any
Payment Date and in whole at any time, at a redemption price as set forth in the
table below, plus accrued interest to such date (less than all of such
Debentures to be selected as provided in Section 3.03 of the Indenture), which
date shall be the first day of the month, or Payment Date (as applicable),
succeeding such direction from the Issuer for which notice of redemption may be
given:

	Redemption Dates 	Price or Amount 
	March 1, 2008, through February 28, 2009 	103% 
	March 1, 2009, through February 28, 2010 	102% 
	March 1, 2010, through February 28, 2011 	101% 
	Including and
      After March 1, 2011 	Par 

     In case of any such optional
redemption, Issuer shall, at least thirty (30) calendar days prior to the
redemption date (unless a shorter notice shall be satisfactory to Trustee),
deliver a Written Request to Trustee notifying Trustee of such redemption date
and of the principal amount of Debentures to be redeemed.

     Section 3.11. Mandatory
Redemption of the Debentures from Excess Insurance or Condemnation Proceeds.
The Debentures are subject to mandatory redemption upon a Written Request from
Issuer to Trustee as a whole or in part at the principal amount thereof plus
accrued interest thereon to the date of redemption, but without premium, from
the net proceeds of any insurance policy or condemnation award remaining after
the repair, replacement, or improvement of all or any portion of the Facilities,
in the amount certified in the Written Request by Issuer to Trustee. The
redemption date shall be the earliest practicable date selected by Trustee at
the direction of Issuer. The Debentures shall be redeemed only in $25,000
increments in inverse order of all maturities of such Debentures subject to
mandatory redemption, as applicable in the priority set forth in the first
sentence of this Section. Any excess amount shall be used to pay principal on the Debentures, on the
first Principal Payment Date on or after said redemption date.

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     Section 3.12. Optional
Redemption of the Debentures from Excess Funds. The Debentures are subject
to redemption at the option of Issuer, upon Written Request from Issuer to
Trustee, as a whole or in part at the principal amount thereof, plus accrued
interest thereon to the date of redemption, but without premium, from excess
funds in the Project Fund after payment of the Prior Obligation and pay off of
the outstanding balance of the Operating Line of Credit, in the event Issuer
determines not to apply such excess funds to working capital. The redemption
date shall be the earliest practicable date selected by Trustee at the direction
of Issuer. The Debentures shall be redeemed only in $25,000 increments across
all maturities of such Series subject to mandatory redemption, as applicable in
the priority set forth in this Trust Indenture. Any excess amount shall be used
to pay principal on the Debentures, on the first principal payment date on or
after said redemption date.

     Section 3.13. Mandatory
Redemption Upon Default Under Operating Line of Credit or Parity
Obligations. Upon the occurrence of an event of default under the Operating
Line of Credit or any Parity Obligations, if issued and Outstanding, the
Debentures shall be redeemed in whole from available monies in the Debenture
Fund, and, to the extent necessary, from the Revenues of Issuer, at a redemption
price equal to one hundred percent (100%) of the principal amount of the
Debentures being redeemed, plus accrued interest to the date of redemption, on
the earliest date for which notice of redemption can be given in accordance with
the provisions of this Indenture.

ARTICLE IV

GENERAL COVENANTS

     Section 4.01. Payment of
Principal, Premium, if any, and Interest. Issuer covenants that it will
promptly pay or cause to be paid the principal of and premium, if any, and
interest on every Debenture issued under this Indenture at the place, on the
dates and in the manner provided herein and in the Debentures according to the
true intent and meaning thereof. The principal, premium, if any, and interest
(except interest paid from the proceeds from the sale of the Debentures and
accrued interest) are general obligations of Issuer payable from the Trust
Estate, which is hereby specifically pledged to the payment thereof in the
manner and to the extent herein specified, and form any other funds or assets of
Issuer other than the Trust Estate.

     Section 4.02. Performance of
Covenants. Issuer covenants that it will faithfully perform at all times any
and all covenants, undertakings, stipulations and provisions contained in this
Indenture, in any and every Debenture executed, authenticated and delivered
hereunder, and in all ordinances pertaining hereto. Issuer covenants that it is
duly authorized under the Constitution and laws of the State of Texas,
including, particularly, and without limitation, the Authorizing
Instruments, to issue the Debentures authorized hereby and to execute this Indenture and to make the
pledge and covenants in the manner and to the extent herein set forth, that all
action on its part for the issuance of the Debentures and the execution and
delivery of this Indenture has been duly and effectively taken, and that the
Debentures in the hands of the holders and owners thereof are and will be valid
and enforceable obligations of Issuer according to the import thereof.

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     Section 4.03. Instruments of
Further Assurance. Issuer covenants that it will do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, such
indenture or indentures supplemental hereto and such further acts, instruments
and transfers as Trustee may reasonably require for better assuring,
transferring, mortgaging, pledging, assigning and confirming unto Trustee the
Trust Estate.

     Section 4.04. Recordation and
Filing. Issuer authorizes Trustee to record and file this Indenture, such
security agreements, financing statements, and all supplements thereto and other
instruments as may be required from time to time to be kept, in such manner and
in such places as may be required by law in order to fully preserve and protect
the security of the owners of the Debentures and the rights of Trustee
hereunder, and to perfect the security interests created by this Indenture.

     Section 4.05. Inspection of
Books. All books and documents in the possession of Issuer relating to the
Project, the Facilities and the Revenues shall at all reasonable times be open
to inspection by such accountants or other agencies as Trustee may from time to
time designate and by the Qualified Accountant.

     Section 4.06. Rates and Charges. Issuer covenants
that:

     (a) It
will use its best efforts in a commercially reasonable manner to fix its rates
and charges at such a level so as to maintain Net Revenues, in a level
sufficient to pay the Debt Service on the Debentures, the Prior Obligation and
the Parity Obligations, including Additional Debentures; and

     (b) At
all times while the Debentures are Outstanding, it will levy its fees and
charges to customers.

     Section 4.07. Taxes, Charges
and Assessments. Issuer covenants that it will promptly pay all lawful
taxes, charges, assessments, imposts and governmental charges at any time levied
or assessed upon or against Issuer’s Facilities, its Revenues or any part
thereof; provided, however, that nothing contained in this Section
4.07 shall require Issuer to cause to be paid any such taxes, assessments,
imposts or charges so long as the validity thereof is being contested in good
faith and by appropriate legal proceedings.

     Section 4.08. Encumbrances.
Issuer covenants that it will not create or suffer to be created any lien or
charge upon the Facilities or any part thereof (other than Permitted
Encumbrances) or upon the Revenues, except in accordance with the provisions of
this Indenture, and that, from Revenues, it will pay or cause to be discharged, or will make adequate provision to satisfy and
discharge, within sixty (60) calendar days after the same shall accrue, all
lawful claims and demands for labor, materials, supplies or other objects which,
if unpaid, might by law become a lien upon the Facilities or any part thereof or
upon the Revenues; provided, however, that nothing in this Section
4.08 contained shall require Issuer to pay or cause to be discharged, or make
provision for, any such lien or charge so long as the validity thereof shall be
contested in good faith and by appropriate legal proceedings. Nothing contained
herein shall prohibit Issuer from incurring debt in the ordinary course of
business for the purchase of furniture, fixtures and other equipment for use by
Issuer’s Facilities; provided, that, such debt shall be subordinate to
the provisions of this Indenture and may be secured only by a purchase money
security interest in the furniture, fixtures and equipment.

31

     Section 4.09. Insurance.
Issuer covenants that, to the extent comparable protection is not otherwise
provided, it will keep the Facilities insured against loss or damage, and will
maintain public liability and property damage insurance against claims for
bodily injury or death and damage to property occurring upon, in, or about the
Facilities, in each case in an amount and against such risks as are usually
insured against in connection with similar facilities and undertakings as the
Facilities. Issuer further covenants, to the extent comparable protection is not
otherwise provided, that it will maintain adequate fidelity insurance or bonds
on all officers or employees responsible for handling funds of the Facilities.
All insurance required by this Section shall be effected with reputable
insurance companies selected by Issuer, which usually insure risks similar in
nature and monetary exposure. Policies of insurance provided for herein shall
name Trustee as a beneficiary to the extent of its interest under this
Indenture. Copies of certificates of the insurance provided for herein, or
summaries thereof, shall be placed on file with Trustee.

     Section 4.10. Damage or
Destruction; Condemnation. Issuer covenants and agrees that in the event of
damage to or destruction of the Facilities, or if all or any part of the
Facilities shall be taken under the exercise of eminent domain, it will
immediately notify Trustee.

     All insurance money paid or net
amounts awarded shall be paid to Issuer, and Issuer shall proceed to restore,
repair, replace or rebuild the Facilities as nearly as possible to the condition
they were in immediately prior to such damage or condemnation, to the extent
that the same may be feasible, subject to such alterations as Issuer may elect
to make. If the insurance money or net amounts awarded shall be insufficient to
pay all costs of the restoration, Issuer shall pay the deficiency and shall
nevertheless proceed to complete the restoration and pay the cost thereof. Any
balance of the insurance or condemnation proceeds remaining over and above the
cost of the restoration shall be considered Revenues of Issuer.

     Issuer’s obligations to make all
payments set forth herein and to perform all other covenants and agreements on
its part to be performed shall not be affected by any such damage or destruction
or condemnation.

32

     Notwithstanding the foregoing
provisions of this Section, Issuer shall not be required to repair, restore,
replace or rebuild the Facilities, or any part thereof, if Issuer shall elect
pursuant to Section 3.09 above to redeem prior to maturity on the next possible
redemption date all of the Debentures then Outstanding, together with accrued
interest to the redemption date, and to pay all charges, fees and expenses
necessarily incurred and required to be incurred in connection with such
redemption, and all other amounts then owing by Issuer. In that event, the
proceeds of all insurance or condemnation awards shall be placed in and become
part of the Debenture Fund. If there be any deficiency in the monies on deposit
in the Debenture Fund after the deposit of all such proceeds, Issuer shall
immediately deposit therein the amount of the deficiency.

     Section 4.11. Revenues to Be
Used As Provided In Indenture. Issuer covenants that no Revenues will be
used for any purpose other than as provided in this Indenture, and that no
contract or contracts will be entered into or any action taken by which the
rights of Trustee or of the Debenture Holders might be impaired or diminished.
Issuer further covenants that it will adopt such resolutions and such rules and
regulations as may be necessary or appropriate to carry out the obligations of
Issuer under the provisions of this Indenture and the Authorizing
Instruments.

     Section 4.12. Accounting;
Continuing Disclosure. Issuer covenants that it will keep the funds and
accounts created hereunder separate from all other funds and accounts of Issuer,
and that it will keep accurate records of all items of cost and of all
expenditures relating to the Facilities, and of the collection and application
of Revenues, in accordance with generally accepted accounting principles
consistently applied (“GAAP”). Such records and accounts shall be open to
inspection by Trustee under reasonable circumstances.

     Issuer further covenants that, at
the end of each Fiscal Year, it will cause its Financial Statements to be
prepared in accordance with its customary practices and in accordance with GAAP
for that Fiscal Year pertaining to the Facilities and Revenues by a Qualified
Accountant, and will provide its annual audited Financial Statements and such
other information as may be required by a separate disclosure agreement entered
into between Issuer and Trustee to the Debenture Holders.

     Section 4.13. Existence.
Issuer covenants that it will maintain the existence of the Corporation as a
corporation and the Partnership as a limited partnership and will not, without
the prior written consent of not less than seventy-five percent (75%) of the
Debenture Holders, sell all or substantially all of the assets of Issuer or
enter into any agreement to or consummate any merger, consolidation
reorganization, liquidation or other similar transaction of Issuer with any
other person or entity; provided, however, so long as any such
restructuring involves only the direct transfer of all of Issuer’s assets and
assumption of not less than one hundred percent (100%) of Issuer’s liabilities
and obligations, including the liabilities and obligations of Issuer hereunder,
Issuer shall only be required to provide notice to Trustee pursuant to other
provisions of this Indenture.

33

     Section 4.14. Operation and
Maintenance of Facilities; Disposition of Facilities Assets. Issuer
covenants that it will continuously operate the Facilities in a diligent fashion
in accordance with prudent practice and as a revenue-producing undertaking in
compliance with all applicable laws and regulations and all the covenants and
obligations under this Indenture.

     Issuer further covenants that it
will maintain the Facilities in sound condition and repair, that it will not
sell or otherwise dispose of any property necessary to the proper operation of
the Facilities or to the maintenance of Revenues, and that it will not enter
into any lease or agreement which will impair or impede the operation of the
Facilities or adversely affect the rights of the Debenture Holders.

     Section 4.15. Notification to
Operating Line of Credit Bank. Issuer covenants that it will provide written
notification prior to the Closing Date to Texas Capital Bank, N.A., San Antonio,
Texas, or its successor, that Issuer has agreed, as a term of this Indenture, to
seek an Additional Operating Line of Credit Draw from Texas Capital Bank or its
successor only upon compliance with the requirements of Section 2.12
herein.

     Section 4.16. Certain
Information Available Upon Transfer. Issuer covenants that the Holder of the
Debentures, and any prospective Qualified Institutional Buyer that may purchase
a Debenture from any Holder, may, upon request of the Holder, obtain from the
Issuer the following information: a very brief statement of the nature of the
business of Issuer and the products and services it offers; Issuer’s most recent
balance sheet and profit and loss and retained earnings statements. Presently
the Issuer’s financial statements are unaudited. Issuer covenants to comply with
the requirements of Rule 144A(d)(4).

ARTICLE V

FUNDS AND DEPOSITS

     Section 5.01. Debenture
Fund. There is hereby created and ordered established with Trustee a special
fund, in the name of Issuer, to be designated “Pure Energy Group, Inc. Debenture
Fund” (the “Debenture Fund”). From the proceeds of the sale of the Debentures,
the sum of approximately $25,208.33 (the exact amount to be set forth in the
final Written Request from Issuer to Trustee on the Closing Date) representing
accrued interest together with capitalized interest in the amount of $206,250.00
for the interest payment due September 1, 2005 shall be deposited into the
Debenture Fund and used to pay interest on the Debentures as it becomes due.

     It shall be the unconditional
obligation of Issuer to make payments into the Debenture Fund as follows:

     (a) On or
before the fifteenth (15th) calendar day of each February and August,
there shall be paid by Issuer into the Debenture Fund, beginning on the fifteenth (15th) calendar
day of February 2006 following the last Payment Date for which payment of
interest on the Debentures has been provided from sources other than Net
Revenues, and continuing on the fifteenth (15th) calendar day of each
February and September thereafter until all outstanding Debentures with interest
thereon have been paid in full, or provision made for such payment, a sum (to be
computed by Trustee) that shall be equal to the installment of interest coming
due on the Debentures (whether at maturity, upon mandatory redemption, or
otherwise) on the then next Payment Date, plus one-half (1/2) of Trustee’s and
Paying Agent’s annual fees for the Debentures.

34

     (b) On or
before the fifteenth (15th) calendar day of each February and August,
there shall be paid by Issuer into the Debenture Fund, beginning on the
fifteenth (15th) calendar day of February 2008, the installment of
principal coming due on the Debentures (whether at maturity, upon mandatory
redemption, or otherwise) on the then next Payment Date, plus one-half (1/2) of
Trustee’s and Paying Agent’s annual fees for the Debentures (to the extent not
otherwise already paid by Issuer).

     All monies in the Debenture Fund
shall be used solely for the purpose of paying Annual Debt Service on the
Debentures or for any redemption of the Debentures, plus Trustee’s and Paying
Agent’s fees, except as herein specifically provided. Trustee shall withdraw
from the Debenture Fund, on the date of any principal or interest payment, an
amount equal to the amount of such payment for the sole purpose of paying the
same plus Trustee’s and Paying Agent’s fees, which direction Trustee hereby
accepts.

     Section 5.02. Project Fund.
There is hereby created and ordered established with Trustee a special fund
in the name of Issuer, designated “Pure Energy Group, Inc. Project Fund” (“the
Project Fund”). Within the Project Fund, there shall be created the Costs of
Issuance Account. From the proceeds of the sale of the Debentures, the sum of
approximately $4,667,190 (with the exact amount to be provided by Issuer to
Trustee in a Written Request delivered prior to the Closing Date) shall be
deposited into the Project Fund. From funds other than the proceeds of the
Debentures the Issuer shall deposit an additional sum into the Costs of Issuance
Account as provided in Section 5.09 below. The deposit of $4,667,190 into the
Project Fund will be used in part to finance the final payments of Issuer
pursuant to Issuer’s Second Plan of Reorganization approved by the United States
Bankruptcy Court, Western District of Texas, San Antonio Division, on December
2, 2002 (the “Court Case”), and to pay off the outstanding balance of the
Operating Line of Credit. Funds will be held in the Project Fund until the Prior
Obligation and Outstanding Line of Credit can be paid in full. Once the Prior
Obligation and the Outstanding Line of Credit are paid in full, the remainder
will be disbursed to Issuer to use as working capital, or applied to the
redemption of the Debentures, as set forth in Section 3.12 above.

     Section 5.03. Disbursements
from Project Fund. Payments from the Project Fund shall be made only in
accordance with the provisions of this section. Before any such payment shall be
made, there shall be filed with Trustee a requisition certificate in the form
attached hereto as Exhibit D. Each requisition shall specify:

35

     (a) The
name of the person, firm or corporation to whom payment is to be made;

     (b) The amount
of the payment;

     (c) The
purpose of the payment;

     (d) That
the payment is for (i) refinancing a Prior Obligation, (ii) payment upon the
Operating Line of Credit, or (iii) for a working capital expenditure of Issuer,
with a copy of invoice, statement or other evidence attached as appropriate;

     (e) That
the disbursement shall not render inaccurate any of the representations or
covenants with respect thereto contained in this Indenture; and

     (f) That
the requisition has not been the basis of any previous disbursement from the
Project Fund.

     Upon receipt of each Written
Request and accompanying certificate, Trustee shall pay the obligations set
forth in the requisition out of money in the Project Fund, and each such
obligation shall be paid by check signed by one or more officers or employees of
Trustee designated for such purpose by Trustee or by wire transfer. In making
such payments, Trustee may rely upon such Written Request and accompanying
certificate and shall be indemnified and held harmless by Issuer for, from and
against any actions taken in accordance with said Written Request and
accompanying certificate. If for any reason Issuer should decide not to pay any
item in a requisition, it shall give written notice of such decision to Trustee
and if Trustee thereof has not already made payment, upon receipt of such notice
Trustee shall not make such payment.

     All Written Requests,
requisitions, certificates, and notices received by Trustee as conditions of
payment from the Project Fund may be relied upon by Trustee and shall be
retained by Trustee until six (6) years after payment of the last requisition,
subject at all reasonable times to examination by Issuer and the Owners.

     Upon delivery of a certificate of
the Authorized Issuer Representative stating that all costs and expenditures
from which monies in the Project Fund was derived have been paid, Trustee shall
transfer the balance of monies in the Project Fund to the Debenture Fund for use
in payment of interest on the Debentures on the next Interest Payment Date and
the Project Fund shall be closed. Notwithstanding the foregoing, in the event
that not all of the funds in the Project Fund have been expended upon the
written certificate of the Authorized Issuer Representative, as provided above,
within twelve (12) months of the Closing Date, Trustee shall transfer the
balance of monies in the Project Fund to the Debenture Fund for use in payment
of interest on the Debentures on the next Payment Date and the Project Fund
shall be closed.

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     Section 5.04. Costs of
Issuance Account. There is hereby created and established with Trustee a
special account within the Project Fund, in the name of Issuer, to be designated
“Pure Energy Group, Inc. Debenture Costs of Issuance Account” (the “Costs of
Issuance Account”).

     From funds provided by the
Issuer, the sum of approximately $[50,000.00] (the exact amount to be set forth
in the final Written Request from Issuer to Trustee on the Closing Date) to pay
the costs of issuance of the Debentures issued and delivered on that date and
such other amounts as shall be delivered by Issuer for deposit therein shall be
deposited into the Costs of Issuance Account. Monies at any time held in the
Costs of Issuance Account shall be used for and applied solely to pay costs of
issuance of the Debentures, including underwriting, consultants, legal,
printing, publication, trustee, paying agent and financial advisory fees and
expenses. Payments from the Costs of Issuance Account shall be made by Trustee,
upon receipt of a Written Request, signed by the Authorized Issuer
Representative. Upon receipt of each such Written Request, Trustee shall pay
each such item directly to the person or party entitled thereto as named in such
authorization, or, if directed by Issuer, shall deliver to Issuer a check, draft
or warrant in an amount sufficient for the payment thereof. Nothing in the
Section 5.04 or elsewhere in this Indenture shall be construed to prohibit the
Issuer from directly paying some or all of the Costs of Issuance without
utilizing the Costs of Issuance Account. 

     Upon delivery of a certificate of
the Authorized Issuer Representative stating that all costs of issuance of the
Debentures from which monies in the Costs of Issuance Account was derived have
been paid, Trustee shall transfer the balance of monies in the Costs of Issuance
Account to the Debenture Fund for use in payment of interest on the Debentures
on the next Interest Payment Date and the Costs of Issuance Account shall be
closed. Notwithstanding the foregoing, in the event that not all of the funds in
the Costs of Issuance Account have been expended upon the written certificate of
the Authorized Issuer Representative, as provided above, within six (6) months
of the Closing, Trustee shall transfer the balance of monies in the Costs of
Issuance Account to the Debenture Fund for use in payment of interest on the
Debentures on the next Interest Payment Date and the Costs of Issuance Account
shall be closed.

ARTICLE VI

SECURITY FOR THE DEBENTURES

     Section 6.01. Security for the
Debentures. The Debentures are joint and several general obligations of
Issuer, and are secured by the following: (a) all Revenues of Issuer, subject
and subordinate to the prior and superior lien of the Operating Line of Credit;
and (b) all money held in the funds and accounts created under this Indenture
(except the Costs of Issuance Account), together with investment earnings
thereon prior to disbursement in accordance with this Indenture (“the Trust
Estate”). The Debentures are not secured by a pledge of or a lien upon
any specific item of property, real or personal, of Issuer. The Debentures are specifically issued
subject and subordinate to the prior and superior lien of the $5,000,000
Operating Line of Credit.

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ARTICLE VII

INVESTMENTS

     Section 7.01. Investment of
Monies. Monies held for the credit of any fund or account established under
this Indenture and held by Trustee shall be invested and reinvested by Trustee
upon direction of Issuer in Investment Securities. Monies held for the credit of
any fund or account established under this Indenture and held by Trustee or any
other bank hereunder selected by Issuer shall be invested and reinvested by
Issuer in such manner as is permitted by the investment policies and procedures
of Issuer. All such investments shall mature, or be subject to redemption by the
holder thereof at the option of the holder, not later than the date or dates on
which the money held for credit of the particular fund shall be required for the
purposes intended. For all purposes hereunder, Issuer hereby instructs Trustee
to invest all monies held by it pursuant to this Indenture in a “government
money market account” until such time as Issuer provides alternate instruction
under this Section.

     Section 7.02. Investment
Earnings. Investment Securities or other investments purchased with monies
held in or attributable to any fund or account held by Trustee or any other bank
under the provisions of this Indenture shall be deemed at all times to be a part
of such fund or account and the income or interest earned, profits realized or
losses suffered by a fund or account due to the investment thereof shall be
retained in, credited or charged, as the case may be, to such fund or account
unless otherwise provided pursuant to this Indenture.

     Section 7.03. Valuation of
Funds. In determining the value of any fund or account held by Trustee under
this Indenture, Trustee shall credit Investment Securities at the fair market
value thereof, as determined by Trustee by any method selected by Trustee in its
reasonable discretion. No less frequently than annually, and in any event within
thirty (30) calendar days prior to the end of each Fiscal Year, Trustee shall
determine the value of each fund and account held by it hereunder and shall
report such determination to Issuer. To the extent that any loss or reduction in
value reduces the value of any fund or account to a level lower than ninety
percent (90%) of the level required under this Indenture, such loss or reduction
shall be made up as set forth in Article V hereof.

     Trustee shall sell or present for
redemption any Investment Securities as necessary in order to provide money for
the purpose of making any payment required hereunder, and Trustee shall not be
liable for any loss resulting from any such sale.

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     Section 7.04. Responsibility
of Trustee. Trustee shall not be responsible or liable for any loss suffered
in connection with any investment of monies made by it at the direction of
Issuer.

ARTICLE VIII

DISCHARGE OF LIEN

     Section 8.01. Discharge of
Lien. If Issuer shall pay or cause to be paid to the Owners of the
Debentures all of the principal, premium, if any, and interest to become due
thereon at the times and in the manner stipulated therein, and if Issuer shall
keep, perform and observe all and singular the covenants and promises in the
Debentures and in this Indenture expressed as to be kept, performed and observed
by it on its part, then these presents and the estate and rights hereby granted
shall cease, determine and be void, and thereupon Trustee shall cancel and
discharge the lien of this Indenture, and execute and deliver to Issuer such
instruments in writing as shall be requisite to satisfy the lien hereof, and
reconvey to Issuer the estate hereby conveyed, and assign and deliver to Issuer
any property at the time subject to the lien of this Indenture which may then be
in its possession, except monies or Government Securities held by it for the
payment of the principal of and premium, if any, and interest on the
Debentures.

     Section 8.02. Debentures
Deemed Paid. Any Debenture shall be deemed to be paid within the meaning of
this Article VIII when payment of the principal of and premium, if any, and
interest on such Debenture (whether at maturity or upon redemption as provided
in this Indenture, or otherwise), either: (i) shall have been made or caused to
be made in accordance with the terms thereof; or (ii) shall have been provided
for by irrevocably depositing with Trustee, in trust and irrevocably set aside
exclusively for such payment, (1) monies sufficient to make such payment or (2)
obligations described in subsection (i) of the definition of Government
Securities, maturing as to principal and interest in such amount and at such
times as will provide sufficient monies to make such payment, and all necessary
and proper fees, compensation and expenses of Trustee and any Paying Agent
pertaining to the Debentures with respect to which such deposit is made shall
have been paid or the payment thereof provided for to the satisfaction of
Trustee and any said Paying Agent. Any deposit of monies or obligations to be
irrevocably set aside for payment of the Debentures shall be accompanied by a
verification report prepared by a Qualified Accountant or other verification
agent satisfactory to Trustee and Issuer to the effect that the payment of the
principal of, premium, if any, and interest on the Debentures with respect to
which such deposit is being made has been provided for in the manner set forth
in this Indenture.

     Section 8.03. Non-Presentment
of Debentures. In the event any Debentures shall not be presented for
payment when the principal thereof becomes due, either at maturity or otherwise,
or at the date fixed for redemption thereof, if there shall have been deposited
with Trustee for that purpose, or left in trust if previously so deposited, funds sufficient to pay the principal thereof, and premium, if
any, together with all interest unpaid and due thereon, to the due date thereof,
for the benefit of the holder thereof, all liability of Issuer to the holder
thereof for the payment of the principal thereof, premium if any, and interest
thereon, shall forthwith cease, determine and be completely discharged, and
thereupon it shall be the duty of Trustee to hold, subject to applicable escheat
laws, such fund or funds, without liability for interest thereon, for the
benefit of the holder of such Debenture, who shall thereafter be restricted
exclusively to such fund or funds, for any claim of whatever nature on his part
under this Indenture or on, or with respect to, the Debenture.

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ARTICLE IX

     DEFAULT PROVISIONS AND REMEDIES

OF TRUSTEE AND DEBENTURE HOLDERS

     Section 9.01. Events of
Default. Each of the following is an “Event of Default” under the Indenture:

     (a)
Default in the due and punctual payment of any interest on any Debenture;

     (b)
Default in the due and punctual payment of the principal of or premium, if any,
on any Debenture, whether at the stated maturity thereof, or upon proceedings
for redemption thereof, or upon the maturity thereof by declaration;

     (c)
Default in the payment of any other amount required to be paid under this
Indenture;

     (d)
Default in compliance with Section 2.14 of this Indenture regarding the issuance
of Additional Debentures or in Section 2.12 of this Indenture regarding the
making of an Additional Line of Credit Draw; 

     (e)
Default in the performance or observance of any other of the material covenants,
agreements or conditions contained in the Indenture or in the Debentures issued
thereunder, or in the covenants, agreements or conditions of the Operating Line
of Credit or any Superior, Parity or Subordinate Obligations (except for debt
incurred in the ordinary course of business for the purchase or lease of
fixtures and other equipment (including vehicles) for use by the Issuer so long
as such debt shall be subordinate to the provisions of the Indenture and may be
secured only by a purchase money security interest in the fixtures and
equipment), if issued and Outstanding, and continuance thereof for a period of
ninety (90) calendar days (or such shorter period as may apply under the
covenants, agreements or conditions of the Operating Line of Credit or any
Superior, Parity or Subordinate Obligations) after written notice specifying
such failure and requesting that it be
remedied shall have been given to Issuer by Trustee, which shall give such
notice at the written request of Debenture Holders of not less than ten percent
(10%) in aggregate principal amount of the Debentures then Outstanding, unless
Holders of an aggregate principal amount of the Debentures not less than the
aggregate principal amount of the Debentures the Holders of which requested such
notice, as the case may be, shall agree in writing to an extension of such
period prior to its expiration; provided, however, if the failure
stated in the notice cannot be corrected within the applicable period, the
Holders will not unreasonably withhold its consent to an extension of such time
if corrective action is instituted by Issuer within such period and is being
diligently pursued;

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     (f) The
filing of any lien, other than those permitted by the Indenture, upon any assets
of Issuer, including the Facilities, or the filing of a petition in bankruptcy
by or against Issuer under the United States Bankruptcy Code or the commencement
of a proceeding by or against Issuer under any other law concerning insolvency,
reorganization or bankruptcy.

     The term “default” as used above
shall also mean and include any default by Issuer in the performance or
observance of any of the covenants, agreements or conditions on its part
contained in this Indenture, the Outstanding Debentures hereunder, and any
Superior, Parity or Subordinate Obligation (except for debt incurred in the
ordinary course of business for the purchase or lease of fixtures and other
equipment (including vehicles) for use by Issuer so long as such debt shall be
subordinate to the provisions of the Indenture and may be secured only by a
purchase money security interest in the fixtures and equipment), if issued and
Outstanding, exclusive of any period of grace required to constitute a default
an “Event of Default” as hereinabove provided.

     Section 9.02. Acceleration.
Upon the occurrence of an Event of Default, and upon the written request of
the Holders of twenty-five percent (25%) in aggregate principal amount of the
Debentures Outstanding hereunder, Trustee shall, by notice in writing delivered
to Issuer, declare the principal of all the Debentures then Outstanding,
together with any premium and the interest accrued thereon, immediately due and
payable, and such principal and interest shall thereupon become and be
immediately due and payable.

     Section 9.03. Other Remedies;
Rights of Debenture Holders. Upon the occurrence of an Event of Default,
Trustee may, as an alternative, pursue any available remedy by suit at law or in
equity, including, without limitation, mandamus to enforce the payment of the
principal of and premium, if any, and interest on the Debentures then
Outstanding hereunder.

     If an Event of Default shall have
occurred, and if it shall have been requested so to do by the Holders of
twenty-five percent (25%) in aggregate principal amount of the Debentures
Outstanding hereunder and if it shall have been indemnified as provided in
Section 10.01 hereof, Trustee shall be obligated to exercise such one or more of
the rights and powers conferred upon it by this Section 9.03 as
Trustee, being advised by counsel, shall deem most expedient in the interests of
the Debenture Holders.

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     No remedy by the terms of this
Indenture conferred upon or reserved to Trustee (or to the Debenture Holders) is
intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to any other remedy given hereunder
or now or hereafter existing at law or in equity or by statute.

     No delay or omission to exercise
any right or power accruing upon any default or Event of Default shall impair
any such right or power or shall be construed to be a waiver of any such default
or Event of Default or acquiescence therein; and every such right and power may
be exercised from time to time and as often as may be deemed expedient.

     No waiver of any default or Event
of Default hereunder, whether by Trustee or by the Debenture Holders, shall
extend to or shall affect any subsequent default or Event of Default or shall
impair any rights or remedies consequent thereon.

     Section 9.04. Right of
Debenture Holders to Direct Proceedings. Anything in this Indenture to the
contrary notwithstanding, the holders of a majority in aggregate principal
amount of the Debentures Outstanding hereunder shall have the right, at any
time, by an instrument or instruments in writing executed and delivered to
Trustee, to direct the method and place of conducting all proceedings to be
taken in connection with the enforcement of the terms and conditions of this
Indenture, or for the appointment of a receiver or any other proceeding
hereunder; provided, that, such direction shall not be otherwise
than in accordance with the provisions of law and of this Indenture.

     Section 9.05. Appointment of
Receiver. Upon the occurrence of an Event of Default, and upon the filing of
a suit or other commencement of judicial proceedings to enforce the rights of
Trustee and of the Debenture Holders under this Indenture, Trustee shall be
entitled to the appointment of a receiver or receivers of Issuer’s Facilities
and of the tolls, rents, revenues, issues, earnings, income, products and
profits thereof, including, without limitation, the Trust Estate, pending such
proceedings with such powers as the court making such appointment shall
confer.

     Section 9.06. Waiver. In
case of an Event of Default on its part, as aforesaid, to the extent that such
rights may then lawfully be waived, neither Issuer nor anyone claiming through
Issuer or under Issuer shall or will set up, claim or seek to take advantage of
any appraisement, valuation, stay, extension or redemption laws now or
thereafter in force, in order to prevent or hinder the enforcement of this
Indenture, but Issuer, for itself and all who may claim through or under it,
hereby waives, to the extent that it lawfully may do so, the benefit of all such
laws and all right of appraisement and redemption to which it may be entitled
under the laws of the State.

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     Section 9.07. Application of
Monies. Available monies remaining after discharge of costs, charges and
liens prior to this Indenture shall be applied by Trustee as follows:

     (a)
Unless the principal of all the Debentures shall have become or shall have been
declared due and payable, all such monies shall be applied:

     First: To the payment of any
fees and expenses of Trustee as may be due and owing or incurred by Trustee in
connection with the performance of its obligations hereunder;

     Second: To the payment to the
persons entitled thereto of all installments of interest then due, in the order
of the maturity of the installments of such interest, and, if the amount
available shall not be sufficient to pay in full any particular installment,
then to the payment ratably, according to the amounts due on such installment,
to the persons entitled thereto, without any discrimination or privilege;

     Third: To the payment to the
persons entitled thereto of the unpaid principal of any of the Debentures which
shall have become due (other than Debentures called for redemption for the
payment of which monies are held pursuant to the provisions of this Indenture),
in the order of their due dates, with interest on such Debentures from the
respective dates upon which they become due, and, if the amount available shall
not be sufficient to pay in full the Debentures due on any particular date,
together with such interest, then to the payment ratably, according to the
amount of principal due on such date, to the persons entitled thereto without
any discrimination or privilege of any Debenture over any other Debenture and
without preference or priority of principal over interest or of interest over
principal; and

     Fourth: To the payment of the
interest on and the principal of the Debentures, and to the redemption of
Debentures, all in accordance with the provisions of Article V of this
Indenture.

     (b) If
the principal of all the Debentures shall have become due or shall have been
declared due and payable, all such monies shall be applied first to the payment
of any fees and expenses of Trustee as may be due and owing or incurred by
Trustee in connection with the performance of its obligations hereunder, and
secondly to the payment of the interest then due and unpaid upon the Debentures,
and then to the payment of the principal then due and unpaid upon the
Debentures, in each case without preference or priority of any Debenture over
any other Debenture, ratably, according to the amounts due respectively for
principal and interest, to the person entitled thereto.

     (c) If
the principal of all the Debentures shall have been declared due and payable,
and if such declaration shall thereafter have been rescinded and annulled under the provisions of this
Article IX then, subject to the provisions of paragraph (b) of this Section
9.07, in the event that the principal of all the Debentures shall later become
due or be declared due and payable, the monies shall be applied in accordance
with the provisions of paragraph (a) of this Section 9.07.

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     Whenever monies are to be applied
by Trustee pursuant to the provisions of this Section 9.07, such monies shall be
applied by it at such times, and from time to time, as it shall determine,
having due regard to the amount of such monies available for application and the
likelihood of additional monies becoming available for such application in the
future. Whenever Trustee shall apply such funds, it shall fix the date (which
shall be an Interest Payment Date unless otherwise directed by a majority in
aggregate principal amount of the Debenture Holders upon which such application
is to be made and upon such date interest on the amounts of principal to be paid
on such dates shall cease to accrue. Trustee shall give such notice as it may
deem appropriate of the deposit with it of any such monies and of the fixing of
any such date and shall not be required to make payment to the holder of any
Debenture until such Debenture shall be presented to Trustee for appropriate
endorsement or for cancellation if fully paid.

     Section 9.08. Remedies Vested
in Trustee. All rights of action (including the right to file proof of
claim) under this Indenture or under any of the Debentures may be enforced by
Trustee without the possession of any of the Debentures or the production
thereof in any trial or other proceeding relating thereto, and any such suit or
proceeding instituted by Trustee shall be brought in its name as Trustee,
without the necessity of joining as plaintiffs or defendants any holders of the
Debentures hereby secured, and any recovery of judgment shall be for the equal
benefit of the holders of the Outstanding Debentures.

     Section 9.09. Rights and
Remedies of Debenture Holders. No holder of any Debenture shall have any
right to institute any suit, action or proceeding in equity or at law for the
enforcement of this Indenture or for the execution of any trust hereof or for
the appointment of a receiver or any other remedy hereunder, unless a default
has occurred of which Trustee has been notified as provided in subsection (g) of
Section 10.01, or of which by said subsection it is deemed to have notice, nor
unless such default shall have become an Event of Default and the holders of
twenty-five percent (25%) in aggregate principal amount of Debentures
Outstanding hereunder shall have made written request to Trustee and shall have
offered it reasonable opportunity either to proceed to exercise the powers
hereinbefore granted or to institute such action, suit or proceeding in its own
name, nor unless also they have offered to Trustee indemnity as provided in
Section 10.01, nor unless Trustee shall thereafter fail or refuse to exercise
the powers hereinbefore granted, or to institute such action, suit or proceeding
in its own name; and such notification, request and offer of indemnity are
hereby declared in every such case, at the option of Trustee, to be conditions
precedent to the execution of the powers and trusts of this Indenture, and to
any action or cause of action for the enforcement of this Indenture or for the
appointment of a receiver or for any other remedy hereunder; it being understood
and intended that no one or more holders of the Debentures shall have any right
in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by action of
the holder or holders or to enforce any right hereunder except in the manner
herein provided, and that all proceedings at law or in equity shall be
instituted, held and maintained in the manner herein provided for the equal
benefit of the holders of all Debentures Outstanding hereunder. Nothing in this
Indenture contained shall, however, affect or impair the right of any Debenture
Holders to enforce the payment of the principal of and premium, if any, and
interest on any Debentures at and after the maturity thereof, or the obligation
of Issuer to pay the principal of and premium, if any, and interest on each of
the Debentures issued hereunder to the respective holders thereof at the time
and place in said Debentures expressed.

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     Section 9.10. Termination of
Proceedings. In case Trustee shall have proceeded to enforce any right under
this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to Trustee, then and in every such case Issuer
and Trustee shall be restored to their former positions and rights hereunder
with respect to the property herein conveyed, and all rights, remedies and
powers of Trustee shall continue as if no such proceedings had been taken,
except to the extent Trustee is legally bound by such adverse determination.

     Section 9.11. Waivers of
Events of Default. Trustee may, and upon the written request of the
Debenture Holders of not less than twenty-five percent (25%) in principal amount
of all Debentures Outstanding hereunder shall, waive any Event of Default
hereunder and its consequences and rescind any declaration of maturity of
principal; provided, however, there shall not be waived any Event
of Default described in clause (a) or (b) of the first paragraph of Section 9.01
hereof, unless prior to such waiver or rescission all arrears of principal (due
otherwise than by declaration) and interest, and all expenses of Trustee and
Paying Agent, shall have been paid or provided for. In case of any such waiver
or rescission Issuer, Trustee and the Debenture Holders shall be restored to
their former positions and rights hereunder respectively, but no such waiver or
rescission shall extend to any subsequent or other default, or impair any right
subsequent thereon.

ARTICLE X

TRUSTEE AND PAYING AGENTS

     Section 10.01. Acceptance of
Trusts. Trustee hereby accepts the trust imposed upon it by this Indenture
and agrees to perform said trust, but only upon and subject to the following
expressed terms and conditions:

     (a)
Trustee may execute any of the trusts or powers hereof and perform any duties
required of it by or through attorneys, agents, receivers or employees, and
shall be entitled to advice of counsel concerning all matters of trusts hereof
and its duties hereunder, and may in all cases pay reasonable compensation to
all such attorneys, agents, receivers and employees as may reasonably be
employed in connection with the trusts hereof. Trustee may act upon the opinion or advice of any
attorney, surveyor, engineer or accountant selected by it in the exercise of
reasonable care, or, if selected or retained by Issuer prior to the occurrence
of a default of which Trustee has been notified as provided in subsection (g) of
this Section 10.01, or of which by said subsection Trustee is deemed to have
notice, approved by Trustee in the exercise of such care. Trustee shall not be
responsible for any loss or damage resulting from an action or non-action in
accordance with any such opinion or advice.

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     (b)
Trustee shall not be responsible for any recital herein, or in the Debentures
(except in respect to the certificate of Trustee endorsed on such Debentures),
or collecting any insurance monies, or for the validity of the execution by
Issuer of this Indenture or of any supplemental indentures or instruments of
further assurance, or for the sufficiency of the security, including, without
limitation, for the Debentures issued hereunder or intended to be secured
hereby, or otherwise as to the maintenance of the security hereof; except that
in the event Trustee enters into possession of a part or all of the property
herein conveyed pursuant to any provision of this Indenture, it shall use due
diligence in preserving such property; and Trustee shall not be bound to
ascertain or inquire as to the performance or observance of any covenants,
conditions and agreements aforesaid as to the condition of the property herein
conveyed.

     (c)
Trustee may become the owner of the Debentures secured hereby with the same
rights which it would have if Trustee.

     (d)
Trustee shall be protected in acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram or other paper or document
believed by it, in the exercise of reasonable care, to be genuine and correct
and to have been signed or sent by the proper person or persons. Any action
taken by Trustee pursuant to this Indenture upon the request or authority or
consent of the owner of any Debenture secured hereby, shall be conclusive and
binding upon all future owners of the same Debenture and upon the Debentures
issued in exchange therefor or in place thereof.

     (e) As to
the existence or nonexistence of any fact or as to the sufficiency or validity
of any instrument, paper or proceeding, Trustee shall be entitled to rely upon a
certificate of Issuer signed by its Chairman of the Board and attested by the
Authorized Issuer Representative as sufficient evidence of the facts therein
contained and prior to the occurrence of a default of which it has been notified
as provided in subsection (g) of this Section 10.01, or of which by that
subsection it is deemed to have notice, and shall also be at liberty to accept a
similar certificate to the effect that any particular dealing, transaction, or
action is necessary or expedient, but may at its discretion, at the reasonable
expense of Issuer, in every case secure such further evidence as it may think
necessary or advisable but shall in no case be bound to secure the same. Trustee
may accept a certificate of the Authorized Issuer Representative of Issuer under
its seal to the effect that a resolution in the form therein set forth has been
adopted by Issuer as conclusive evidence that such
resolution has been duly adopted, and is in full force and effect.

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     (f) The
permissive right of Trustee to do things enumerated in this Indenture shall not
be construed as a duty of Trustee, and Trustee shall be answerable only for its
own gross negligence or willful misconduct.

     (g)
Trustee shall not be required to take notice or be deemed to have notice of any
default hereunder unless Trustee shall be specifically notified in writing of
such default by Issuer or by the holders of at least ten percent (10%) in
aggregate principal amount of Debentures Outstanding hereunder and all notices
or other instruments required by this Indenture to be delivered to Trustee must,
in order to be effective, be delivered to the office of Trustee, and in the
absence of such notice so delivered, Trustee may conclusively assume there is no
such default except as aforesaid.

     (h)
Trustee shall not be personally liable for any debts contracted or for damages
to persons or to personal property injured or damaged, or for salaries or
non-fulfillment of contracts during any period in which it may be in the
possession of or managing the real and tangible personal property as in this
Indenture provided.

     (i) At
any and all reasonable times Trustee, and its duly authorized agents, attorneys,
experts, engineers, accountants and representatives, shall have the right fully
to inspect any and all of the property herein conveyed, including all books,
papers and records of Issuer pertaining to Issuer, its Facilities, the Project
and the Debentures, and to take such memoranda from and in regard thereto as may
be desired.

     (j)
Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the
premises.

     (k)
Notwithstanding anything elsewhere in this Indenture contained, Trustee shall
have the right, but shall not be required, to demand, in respect of the
authentication of any Debentures, the withdrawal of any cash, the release of any
property, or any action whatsoever within the purview of this Indenture, any
showings, certificates, opinions, appraisals or other information, or corporate
action or evidence thereof, in addition to that by the terms hereof required as
a condition of such action by Trustee, deemed desirable for the purpose of
establishing the right of Issuer to the authentication of any Debentures, the
withdrawal of any cash, the release of any property, or the taking of any other
action by Trustee.

     (l)
Before taking any action hereunder, Trustee may require that it be furnished an
indemnity satisfactory to it for the reimbursement to it of all expenses to
which it may be put and to protect it against all liability, except liability which is adjudicated to have
resulted from the gross negligence or willful misconduct of Trustee, by reason
of any action so taken by Trustee, and Trustee shall have no obligation to take
any action hereunder unless it has received such indemnity.

47

     (m) No
implied covenants or obligations shall be read into this Indenture against
Trustee.

     (n) In
case an Event of Default has occurred and is continuing, Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs.

     (o) No
provision of this Indenture shall be construed to relieve Trustee from liability
for its own grossly negligent action, its own grossly negligent failure to act,
or its own willful misconduct, except that:

     (1)
Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer of Trustee, unless it shall be proved that Trustee was
negligent in ascertaining the pertinent facts; and

     (2)
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of the
Debentures in accordance with this Indenture, relating to the time, method, and
place of conducting any proceeding for any remedy available to Trustee, or
exercising any trust or power conferred upon Trustee, under this Indenture.

     (p)
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the eligibility of or affording protection
to Trustee shall be subject to the provisions of this Section.

     (q)
Trustee shall not be liable for interest on any money received by it except as
Trustee may agree with Issuer.

     (r) No
provision of this Indenture shall require Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, 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 or liability is not reasonably assured to
it. In determining that such repayment or indemnity is not reasonably assured to
it, Trustee must consider not only the likelihood of repayment or indemnity by
or on behalf of Issuer but also the likelihood of repayment or indemnity from
amounts payable to it from the Trust Estate pursuant to the terms hereof.

48

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

     (t)
Trustee shall be entitled to the rights, immunities and protections set forth in
Article X hereof in the exercise or performance of its duties, rights and
obligations under the Applicable Documents.

     Section 10.02. Fees, Charges
and Expenses of Trustee and Paying Agents; Trustee’s Prior Lien. Trustee and
any Paying Agent shall be entitled to payment and/or reimbursement by Issuer for
reasonable fees for services rendered hereunder and all advances, counsel fees
and other expenses reasonably and necessarily made or incurred in and about the
execution of the trusts created by this Indenture. In this regard, it is
understood that Issuer pledges no funds or revenues other than the Revenues,
subject and subordinate to the prior superior lien of the Operating Line of
Credit, to the payment of any obligation of Issuer set forth in this Indenture,
including the obligations set forth in this Section 10.02, but nothing herein
shall be construed as prohibiting Issuer from using any other funds and revenues
for the payment of any of its obligations under this Indenture. Upon an Event of
Default by Issuer, but only upon an Event of Default, Trustee shall have a first
lien with right of payment prior to payment on account of principal or interest
of any Debenture issued hereunder upon the Trust Estate for such reasonable and
necessary fees, charges, and expenses incurred by Trustee.

    Trustee’s fee schedule shall be as set forth
in Exhibit C, attached hereto.

     Issuer agrees to indemnify
Trustee and its agents for, and to hold them harmless against, any loss,
liability, or expense incurred without gross negligence or bad faith on their
part, arising out of or in connection with the acceptance or administration of
this trust, including the reasonable costs and expenses of defending themselves
against any claim or liability in connection with the exercise or performance of
any of their powers or duties hereunder.

     Section 10.03. Notice to
Debenture Holders of Default. If a default occurs of which Trustee is
pursuant to the provisions of Section 10.01(g) deemed to have or is given
notice, Trustee shall give notice to each owner of Debentures then Outstanding
within ninety (90) calendar days of receipt of such notice.

     Section 10.04. Intervention by
Trustee. In any judicial proceeding to which Issuer is a party and which in
the opinion of Trustee and its counsel has a substantial bearing on the
interests of holders of Debentures issued hereunder, Trustee shall intervene on
behalf of Debenture Holders if requested in writing to do so by the holders of
at least ten percent (10%) of the aggregate principal amount of Debentures
Outstanding hereunder. The rights and obligations of Trustee under this Section
10.04 are subject to the approval of the court having jurisdiction in the
premises.

49

     Section 10.05. Merger or
Consolidation of Trustee. Any bank or trust company to which Trustee may be
merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any bank or trust company resulting from any such sale, merger, consolidation
or transfer to which it is a party, ipso facto, shall be and become
successor trustee hereunder and vested with all of the title to the whole
property or Trust Estate and all the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution
or filing of any instrument or any further act, deed, or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that such successor trustee shall have capital
and surplus of at least $10 million.

     Section 10.06. Resignation by
Trustee. Trustee and any successor trustee may at any time resign from the
trusts hereby created by giving written notice to Issuer and the Debenture
Holders, and such resignation shall take effect upon the appointment of a
successor trustee by a court of competent jurisdiction, the Debenture Holders or
by Issuer. Such notice may be served personally or sent by registered mail (to
Issuer) or first class mail (to the Debenture Holders).

     Section 10.07. Removal of
Trustee. Trustee may be removed at any time by an instrument or concurrent
instruments in writing delivered to Trustee and to Issuer, and signed by the
holders of a majority in aggregate principal amount of Debentures Outstanding
hereunder.

     Section 10.08. Appointment of
Successor Trustee. In case Trustee hereunder shall resign or be removed, or
be dissolved, or shall be in course of dissolution or liquidation, or otherwise
become incapable of acting hereunder, or in case it shall be taken under the
control of any public officer or officers, or of a receiver appointed by the
court, a successor may be appointed by the holders of a majority in aggregate
principal amount of Debentures Outstanding hereunder, by an instrument or
concurrent instruments in writing signed by such Debenture Holders, or by their
attorneys in fact, duly authorized; provided, nevertheless, that
in case of such vacancy Issuer by an instrument executed and signed by its
Chairman of the Board and attested by its Authorized Issuer Representative under
its seal, shall appoint a temporary trustee to fill such vacancy until a
successor trustee shall be appointed by the Debenture Holders in the manner
above provided. Any such temporary trustee appointed by Issuer shall immediately
and without further act be superseded by the trustee appointed by such Debenture
Holders. Every such temporary trustee and every such successor trustee shall be
a trust company or bank in good standing, having capital and surplus of not less
than $10 million. In the event that Trustee has resigned and no successor has
been appointed hereunder, Trustee may, at the expense of Issuer, petition a
court of competent jurisdiction for the appointment of a successor.

     Section 10.09. Concerning Any
Successor Trustee. Every successor or temporary trustee appointed hereunder
shall execute, acknowledge and deliver to its predecessor and also to Issuer an
instrument in writing accepting such appointment hereunder, and thereupon such
successor or temporary trustee, without any further act or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessor;
but such predecessor shall, nevertheless, on the written request of Issuer or of
its successor trustee, execute and deliver an instrument transferring to such
successor all the estate, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor trustee shall deliver all
securities, monies and any other property held by it as trustee hereunder to its
successor. Should any instrument in writing from Issuer be required by any
successor trustee for more fully and certainly vesting in such successor the
estates, rights, powers and duties hereby vested or intended to be vested in the
predecessor trustee, any and all such instruments in writing shall, on request,
be executed, acknowledged, and delivered by Issuer. The resignation of any
trustee and the instrument or instruments removing any trustee and appointing a
successor hereunder, together with all other instruments provided for in this
Article X shall, at the expense of Issuer, be forthwith filed and/or recorded by
the successor trustee in each recording office where the Indenture shall have
been filed and/or recorded.

50

     Section 10.10. Reliance Upon
Instruments. The resolutions, opinions, certificates and other instruments
provided for in this Indenture may be accepted and relied upon by Trustee as
conclusive evidence of the facts and conclusions stated therein and shall be
full warrant, protection and authority to Trustee for its actions taken
hereunder.

     Section 10.11. Appointment of
Co-Trustee. Issuer and Trustee shall have power to appoint and, upon the
request of Trustee, Issuer shall for such purpose join with Trustee in the
execution of all instruments necessary or proper to appoint another corporation
or one or more persons approved by Trustee, either to act as co-trustee or
co-trustees jointly with Trustee of all or any of the property subject to the
lien hereof, with such powers as may be provided in the instrument of
appointment and to vest in such corporation or person or persons as such
co-trustee any property, title, right or power deemed necessary or desirable. In
the event that Issuer shall not have joined in such appointment within fifteen
(15) calendar days after the receipt by it of a request so to do, Trustee alone
shall have the power to make such appointment, and provide to Issuer in writing
notice of such appointment. Should any deed, conveyance or instrument in writing
from Issuer be required by the co-trustee so appointed for more fully and
certainly vesting in and confirming to such co-trustee such properties, rights,
powers, trusts, duties and obligations, any and all such deeds, conveyances and
instruments in writing shall, on request, be executed, acknowledged and
delivered by Issuer. Every such co-trustee shall, to the extent permitted by
law, be appointed subject to the following provisions and conditions,
namely:

     (a) The
Debentures shall be authenticated and delivered, and all powers, duties,
obligations and rights conferred upon Trustee in respect of the custody of all
money and securities pledged or deposited hereunder, shall be exercised solely
by Trustee; 

     (b)
Trustee, at any time by an instrument in writing, may remove any such separate
Trustee or co-trustee; and

51

     (c) No
trustee hereunder shall be liable for the acts or omissions of any other trustee
appointed hereunder.

     Every instrument, other than this
Indenture, appointing any such co-trustee shall refer to this Indenture and the
conditions of this Article X expressed, and upon the acceptance in writing by
such co-trustee, the co-trustee shall be vested with the estate or property
specified in such instrument, jointly with Trustee (except insofar as local law
makes it necessary for any separate trustee to act alone), subject to all the
trusts, conditions and provisions of this Indenture. Any such co-trustee may at
any time, by an instrument in writing, constitute Trustee as the co-trustee’s
agent or attorney-in-fact with full power and authority, to the extent
authorized by law, to do all acts and things and exercise all discretion
authorized or permitted by the co-trustee, for and on behalf of the co-trustee
and in the co-trustee’s name. In case any co-trustee shall die, become incapable
of acting, resign or be removed, all the estate, properties, rights, powers,
trusts, duties and obligations of said co-trustee shall vest in and be exercised
by Trustee until the appointment of a new trustee or a successor to such
co-trustee.

     Section 10.12. Designation and
Succession of Paying Agents. Trustee and any other banks or trust companies
designated as Paying Agent or Paying Agents in any supplemental indenture or in
an instrument appointing a successor Trustee shall be the Paying Agent or Paying
Agents for the Debentures.

     Any bank or trust company with
which or into which any Paying Agent may be merged or consolidated, or to which
the assets and business of such Paying Agent may be sold, shall be deemed the
successor of such Paying Agent for the purposes of this Indenture. If the
position of Paying Agent shall become vacant for any reason, Issuer shall,
within thirty (30) calendar days thereafter, appoint such bank or trust company
as shall be specified by Issuer as such Paying Agent to fill such vacancy;
provided, however, that, if Issuer shall fail to appoint such
Paying Agent within said period, Trustee shall make such appointment.

     The Paying Agents shall enjoy the
same protective provisions in the performance of their duties hereunder as are
specified in Section 10.01 hereof with respect to Trustee insofar as such
provisions may be applicable.

ARTICLE XI

SUPPLEMENTAL INDENTURES

     Section 11.01. Supplemental
Indentures Not Requiring Consent of Debenture Holders. Issuer and Trustee
may, from time to time and at any time, without the consent of or notice to the
Debenture Holders, enter into supplemental indentures as follows:

     (a) to
cure any formal defect, omission, inconsistency or ambiguity in this
Indenture;

52

     (b) to
grant to or confer or impose upon Trustee for the benefit of the Debenture
Holders any additional rights, remedies, powers, authority, security,
liabilities or duties which may lawfully be granted, conferred or imposed and
which are not contrary to or inconsistent with this Indenture as theretofore in
effect, provided that no such additional liabilities or duties shall be imposed
upon Trustee without its consent;

     (c) to
add to the covenants and agreements of, and limitations and restrictions upon,
Issuer in this Indenture other covenants, agreements, limitations and
restrictions to be observed by Issuer which are not contrary to or inconsistent
with this Indenture as theretofore in effect;

     (d) to
confirm, as further assurance, any pledge under, and the subjection to any
claim, lien or pledge created or to be created by, this Indenture, of the Trust
Estate or of any other monies, securities or funds;

     (e) to
comply with the requirements of the Trust Indenture Act of 1939, as from time to
time amended, if applicable;

     (f) to
authorize the issuance and sale of one or more series of additional Debentures,
provided that the same are Permissible Parity Debt or Subordinate Obligations;
or

     (g) to
modify, alter, amend or supplement this Indenture in any other respect which is
not materially adverse to the Debenture Holders and which does not involve a
change described in clause (a), (b), (c), (d), (e) or (f) of this Section 11.01
and which, in the judgment of Trustee, is not to the prejudice of Trustee.

     Section 11.02. Supplemental
Indentures Requiring Consent of Debenture Holders. Subject to the terms and
provisions contained in this Section, and not otherwise, the holders of not less
than two-thirds (2/3) in aggregate principal amount of the Debentures then
Outstanding shall have the right, from time to time, anything contained in this
Indenture to the contrary notwithstanding to consent to and approve the
execution by Issuer and Trustee of such indenture or indentures supplemental
hereto as shall be deemed necessary and desirable by Issuer for the purpose of
modifying, altering, amending, adding to, or rescinding, in any particular, any
of the terms or provisions contained in this Indenture or in any supplemental
indenture; provided, however, that nothing herein contained shall
permit or be construed as permitting (a) an extension of the maturity (or
mandatory redemption date) of the principal of or the interest on any Debenture
issued hereunder, or (b) a reduction in the principal amount of or redemption
premium or rate of interest on any Debenture issued hereunder, or (c) the
creation of any lien on the Trust Estate or any part thereof, except as
hereinbefore expressly permitted, or (d) a privilege or priority of any
Debenture(s) over any other Debenture(s), or (e) a reduction in the aggregate
principal amount of the Debentures required for consent to such supplemental
indenture, or (f) deprive the holder of any Debenture then Outstanding of the
lien hereby created on the Trust Estate. Nothing herein contained, however,
shall be construed as making necessary the approval of Debenture Holders of the execution of any
supplemental indenture as provided in Section 11.01 of this Article XI.

53

     If, at any time, Issuer shall
request Trustee to enter into any supplemental indenture for any of the purposes
of this Section or Section 11.01, Trustee shall, at the expense of Issuer, cause
notice of the proposed execution of such supplemental indenture to be mailed by
first class mail to each registered owner of the Debentures. Such notice shall
briefly set forth the nature of the proposed supplemental indenture and shall
state that copies thereof are on file at the principal office of Trustee for
inspection by Debenture Holders. Trustee shall not, however, be subject to any
liability to any Debenture Holder by reason of its failure to mail such notice,
and any such failure shall not affect the validity of such supplemental
indenture when consented to and approved as provided in this Section 11.02. If
the holders of not less than two-thirds (2/3) in aggregate principal amount of
the Debentures Outstanding at the time of the execution of any such supplemental
indenture shall have consented to and approved the execution thereof as herein
provided, no holder of any Debenture shall have any right to object to any of
the terms and provisions contained therein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or
restrain Trustee or Issuer from executing the same or from taking any action
pursuant to the provisions thereof.

     Section 11.03. Effect of
Supplemental Indentures. Upon the execution of any supplemental indenture
entered into pursuant to Section 11.01 or 11.02 hereof, this Indenture shall be
deemed to be modified and amended in accordance therewith.

     Section 11.04. Execution of
Supplemental Indenture. Prior to the execution of any amendment or
supplemental indenture hereunder, Trustee shall be entitled to receive and rely
upon an officer’s certificate of Issuer and an opinion of counsel to the effect
that the amendment or supplemental indenture conforms to and is permitted by the
terms of this Indenture and all conditions precedent thereto have been
satisfied.

ARTICLE XII

MISCELLANEOUS

     Section 12.01. Consents,
etc. of Debenture Holders. Any request, direction,
objection or other instrument required by this Indenture to be signed and
executed by the Debenture Holders may be in any number of concurrent writings of
similar tenor and may be signed or executed by such Debenture Holders in person
or by agent appointed in writing. Proof of the execution of any such request,
direction, objection or other instrument or of the writing appointing any such
agent and of the ownership of the Debentures, if made in the following manner,
shall be sufficient for any of the purposes of this Indenture, and shall be
conclusive in favor of Trustee with regard to any action taken by it under such
request or other instrument, namely:

54

     (a) The
fact and date of the execution by any person of any such writing may be proved
by the certificate of any officer in any jurisdiction who by law has power to
take acknowledgments within such jurisdiction that the person signing such
writing acknowledged before such officer the execution thereof, or by an
affidavit of any witness to such execution.

     (b) The
fact of ownership of Debentures and the amount or amounts, numbers, and other
identification of such Debentures, and the date of holding the same shall be
proved by the registration books of Issuer maintained by Trustee as Debenture
registrar.

     Section 12.02. Notices.
Except as otherwise provided in this Indenture, all notices, certificates or
other communications shall be sufficiently given and shall be deemed given when
mailed by registered or certified mail, postage prepaid, to Issuer or Trustee.
Notices, certificates or other communications shall be sent to the following
addresses:

	 	 Issuer: 	Pure Energy Group, Inc. 
	 	 	153 Treeline Park 
	 	 	San Antonio, TX 78209 
	 	 	Attention: Mr. Larry Cochran 
	 	 	Telephone: (210) 226-6700 
	 	 	Facsimile: (210) 930-3967 
	 	 	 
	 	 	And: 
	 	 	 
	 	 	Pure Gas Partners II, L.P. 
	 	 	153 Treeline Park 
	 	 	San Antonio, TX 78209 
	 	 	Attention: Mr. Larry Cochran 
	 	 	Telephone: (210) 226-6700 
	 	 	Facsimile: (210) 930-3967 
	 	 	 
	 	 Trustee: 	First Security Bank 
	 	 	314 N. Spring Street 
	 	 	Searcy, AR 72143 
	 	 	Attention: Corporate Trust Dept. 
	 	 	Telephone: (501) 279-3420 
	 	 	Facsimile: (501) 278-2175 

Any of the foregoing may, by notice given hereunder, designate
any further or different addresses to which subsequent notices, certificates or
other communications shall be sent.

     Section 12.03. Limitation of
Rights. With the exception of rights herein expressly conferred, nothing
expressed or mentioned in or to be implied from this Indenture, or the
Debentures issued hereunder, is intended or shall be construed to give to any person or company other than the parties hereto, and the
holders of the Debentures secured by this Indenture any legal or equitable
rights, remedy, or claim under or in respect to this Indenture or any covenants,
conditions, and provisions hereof being intended to be and being for the sole
exclusive benefit of the parties hereto and the holders of the Debentures hereby
secured as herein provided.

55

     Section 12.04. Severability.
If any provisions of this Indenture shall be held or deemed to be or shall,
in fact, be inoperative or unenforceable as applied in any particular case in
any jurisdiction or jurisdictions or in all jurisdictions or in all cases
because it conflicts with any provisions or any constitution or statute or rule
of public policy, or for any other reason, such circumstances shall not have the
effect of rendering the provision in question inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to any extent
whatever.

     The invalidity of any one or more
phrases, sentences, clauses or paragraphs in this Indenture contained shall not
affect the remaining portions of this Indenture or any part thereof.

     Section 12.05. Consent to
Jurisdiction; Applicable Provisions of Law; Forum Selection. Issuer hereby
requests, and the parties hereby agree, that this Indenture shall be governed by
the laws of the State of Texas applicable to agreements made and to be performed
wholly within that state, irrespective of such state’s choice-of-law principles,
and that all actions or proceedings arising in connection with this Indenture
shall be tried and litigated exclusively in the State and Federal courts located
in the State of Texas. This choice of venue is intended by the parties to be
mandatory and not permissive in nature, and to preclude the possibility of
litigation between the parties with respect to or arising out of this Indenture
in any jurisdiction other than that specified in this paragraph. Each party
hereby waives any right it may have to assert the doctrine of forum non
conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this paragraph, and stipulates that the
State and Federal courts located in the State of Texas, shall have in personal
jurisdiction and venue over each of them for the purpose of litigating any
dispute, controversy, or proceeding arising out of or related to this Indenture.
Each party hereby authorizes and accepts service of process sufficient for
personal jurisdiction in any action against it as contemplated by this Section
by registered or certified mail, return receipt requested, postage prepaid, to
its address for the giving of notices as set forth in this Indenture, or in the
manner set forth in Section 12.02 of this Indenture for the giving of notice.
Any final judgment rendered against a party in any action or proceeding shall be
conclusive as to the subject of such final judgment and may be enforced in other
jurisdictions in any manner provided by law.

     Section 12.06.
Counterparts. This Indenture may be executed in several counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.

56

     Section 12.07. Successors and
Assigns. All the covenants, stipulations, provisions, agreements, rights,
remedies and claims of the parties hereto in this Indenture contained shall bind
and inure to the benefit of their successors and assigns.

     Section 12.08. Captions.
The captions or headings in this Indenture are for convenience only and in no
way define, limit or describe the scope or intent of any provisions or sections
of this Indenture.

     Section 12.09. Photocopies and
Reproductions. A photocopy or other reproduction of this Indenture may be
filed as a financing statement pursuant to the Uniform Commercial Code, although
the signatures of Issuer and Trustee in such reproduction are not original
manual signatures.

     Section 12.10. Debentures
Owned by Issuer. In determining whether Debenture Holders of the requisite
aggregate principal amount of the Debentures have concurred in any direction,
consent or waiver under this Indenture, Debentures which are owned by Issuer
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination, except that, for the purpose of determining whether Trustee
shall be protected in relying on any such direction, consent or waiver, only
Debentures which Trustee knows are so owned shall be so disregarded. Debentures
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of Trustee the pledgee’s right so to
act with respect to such Debentures and that the pledgee is not Issuer. In case
of a dispute as to such right, any decision by Trustee taken upon the advice of
counsel shall be full protection to Trustee.

     Section 12.11. Effectiveness
of Indenture. This Indenture shall become effective only upon execution by
Trustee.

[Remainder of Page Left Intentionally Blank]

57

     IN WITNESS WHEREOF, Issuer has
caused these presents to be signed in its name and behalf by its President and
its corporate seal to be hereunto affixed and attested by its Secretary and, to
evidence its acceptance of the trust hereby created, Trustee has caused these
presents to be signed in its behalf by its duly authorized officers and its
corporate seal to be hereto affixed.

	 	PURE ENERGY GROUP, INC. 
	 	  
	 	           
             /s/ Larry B. Cochran 
	 	By:
__________________________________

	 	           
             Larry B. Cochran, C.E.O. and 
	 	           
             Authorized Issuer Representative  

                
/s/ David P. Crews

ATTEST_______________________________

             
           David P. Crews,
Chairman

               
(SEAL)

	 	PURE GAS PARTNERS II, L.P. 
	 	By: Pure Energy Group, Inc., General
      Partner 
	 	  
	 	           
             /s/ Larry B. Cochran 
	 	By:
___________________________________
  
	 	           
             Larry B. Cochran, C.E.O. 

                
/s/ David P. Crews

ATTEST_______________________________

             
           David P. Crews,
Chairman 

               
(SEAL)

[SIGNATURE PAGE TO TRUST INDENTURE]

58

	 	FIRST SECURITY BANK, not in its
      individual 
	 	capacity but solely as trustee under this

	 	Indenture dated as of March 1, 2005, between
  
	 	Pure Energy Group, Inc., Pure Gas Partners II,
    
	 	L.P. and First Security Bank. 
	 	  
	 	  
	 	          
      /s/ Frank Faust 
	 	By:  
      __________________________________ 
	 	Title: SVP & TO 

ATTEST:

         /s/ James
Stake

By: ______________________________

Title: SVP

[SIGNATURE PAGE TO TRUST INDENTURE]

59

ACKNOWLEDGMENT

	STATE OF ARKANSAS 	) 
	  	)ss. 
	COUNTY OF PULAKSI 	) 

     Before me a Notary Public, duly
commissioned, qualified and acting within and for the State and county
aforesaid, appeared in person the within named Larry B. Cochran and David P.
Crews of the Pure Energy Group, Inc., to me personally known, who stated that
they was duly authorized in their respective capacities to execute the foregoing
instrument for and in the name of Issuer, and further stated and acknowledged
that they had signed, executed and delivered the foregoing instrument for the
consideration, uses and purposes therein mentioned and set forth.

     IN TESTIMONY WHEREOF, I have
hereunto set my hand and official seal this ___ day of March, 2005.

	 	 
	 	Notary Public 

My Commission expires: 
______________________
(SEAL)

[ACKNOWLEDGMENT PAGE TO TRUST INDENTURE]

60

ACKNOWLEDGMENT

	STATE OF ARKANSAS 	) 
	  	)ss. 
	COUNTY OF PULASKI 	) 

     Before me a Notary Public, duly
commissioned, qualified and acting within and for the State and county
aforesaid, appeared in person the within named Larry B. Cochran and David P.
Crews of the Pure Energy Group, Inc., the General Partner of Pure Gas Partners
II, L.P., to me personally known, who stated that they was duly authorized in
their respective capacities to execute the foregoing instrument for and in the
name of Issuer, and further stated and acknowledged that they had signed,
executed and delivered the foregoing instrument for the consideration, uses and
purposes therein mentioned and set forth.

     IN TESTIMONY WHEREOF, I have
hereunto set my hand and official seal this ___ day of March, 2005.

	 	 
	 	Notary Public 

My Commission expires: 
______________________
(SEAL)

61

ACKNOWLEDGMENT

	STATE OF ARKANSAS 	) 
	  	)ss. 
	COUNTY OF PULASKI 	) 

     Before me a Notary Public, duly
commissioned, qualified and acting within and for the State and county
aforesaid, appeared in person the within named _______________and
_______________, the _______________and the 
_______________, respectively,
of First Security Bank, to me personally known, who stated that they were duly
authorized in their respective capacities to execute the foregoing instrument
for and in the name of the bank, and further stated and acknowledged that they
had signed, executed and delivered the foregoing instrument for the
consideration, uses and purposes therein mentioned and set forth.

     IN TESTIMONY WHEREOF, I have
hereunto set my hand and official seal this ___ day of March, 2005.

	 	 
	 	Notary Public 

My Commission expires

__________________________
(SEAL)

[ACKNOWLEDGMENT PAGE TO TRUST INDENTURE]

62

EXHIBIT A TO TRUST INDENTURE

Form of Debenture

THIS DEBENTURE HAS NOT BEEN REVIEWED,
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES DEPARTMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

     THIS DEBENTURE MAY BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF BY AN INVESTOR ONLY IN COMPLIANCE WITH
RULE 144A PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURTIES ACT OF 1933 AND OTHER FEDERAL AND STATE SECURITIES LAWS THAT MAY BE
APPLICABLE AT SUCH TIME. SPECIFICALLY, RESALES OF THIS DEBENTURE MAY ONLY BE
MADE TO QUALIFIED INSTITUTIONAL BUYERS AS SUCH TERM IS DEFINED BY RULE 144A AND
OTHERWISE AS ALLOWED UNDER APPLICABLE STATE OR FEDERAL SECURITIES LAWS AT SUCH
TIME.

     THIS DEBENTURE IS SUBJECT TO THE
TRANSFER RESTRICTIONS CONTAINED ON THE CONCLUSION HEREOF AND SET FORTH IN
SECTION 2.10 OF THE INDENTURE.

	No. R05-1 	$5,500,000.00 

UNITED STATES OF AMERICA 
STATE OF TEXAS
PURE
ENERGY GROUP, INC. 
(AND ITS SUBSIDIARY) 
7 1/2 %
DEBENTURES
SERIES 2005

	Interest Rate: 7.50% 	Maturity Date: March 1, 2015 
	Yield: 8.00% Price: 96.608% 	  
	Date of Debenture: March 1, 2005 	           
                   CUSIP: 74623F AA 6 
	Registered Owner: Cede & Co. 
	Principal Amount: Five Million, Five Hundred
      Thousand and No/100 Dollars 
	KNOW ALL MEN BY THESE PRESENTS:

     That PURE ENERGY GROUP, INC., a
Texas corporation (“Corporation”), and PURE GAS PARTNERS II, L.P., a Texas
limited partnership (“Partnership”), each organized and existing by virtue of
the laws of the State of Texas (collectively “Issuer”), for value received,
promise to pay to the registered owner shown above, or registered assigns, on
the maturity date shown above, but solely from the source and in the manner hereinafter set forth, the principal amount shown above,
and in like manner to pay interest on said amount from the date hereof until
payment of such principal amount has been made or duly provided for, at the rate
of interest per annum shown above, such interest to be payable semi-annually on
March 1 and September 1 of each year, commencing on September 1, 2005, with
principal and interest payable semiannually on each March 1 and September 1
commencing September 1, 2008, except as the provisions hereinafter set forth
with respect to redemption of this Debenture prior to maturity may become
applicable hereto. The principal of, interest on and premium, if any, on this
Debenture are payable in lawful money of the United States of America by the
principal corporate trust office of First Security Bank, Searcy, Arkansas, or
its successor or successors, as trustee (“Trustee”), to the registered owner of
this Debenture as shown on the Debenture register at the close of business on
the fifteenth (15th) day of the calendar month next preceding the
month in which such Payment Date shall fall, by check or draft mailed to each
registered owner at the owner’s address as it appears on the Debenture
registration books of Issuer kept by Trustee or at such other address as is
furnished to Trustee in writing by such registered owner. At the written request
to Trustee of any registered owner of Debentures (as defined below) in the
aggregate principal amount of at least $1,000,000, interest payments shall be
made by electronic wire transfer in immediately available funds to a bank in the
continental United States. Initially, the Debentures will be registered in the
name of Cede & Co., as nominee of the Depository Trust Company (“DTC”), New
York, New York, to which principal and interest payments on the Debentures will
be made so long as Cede & Co. is the registered owner of the Debentures.

A-1

     This Debenture, designated “Pure
Energy Group, Inc. (and its subsidiary), 7 1/2% Debentures Series 2005,” is one
of a series of Debentures in the aggregate original principal amount of
$5,500,000 (the “Debentures”), issued to finance the final payments of Issuer
pursuant to Issuer’s Second Plan of Reorganization approved by the United States
Bankruptcy Court, Western District of Texas, San Antonio Division, on December
2, 2002 (the “Court Case”); to pay off the outstanding balance of the Operating
Line of Credit; to provide working capital for Issuer; and to fund capitalized
interest on the Debentures through September 1, 2005 (the "Project"). The Issuer
will pay certain costs related to issuance of the Debentures from sources of
funds other than the proceeds of the Debentures. The Debentures are issued under
and are secured and entitled to the protection given by a Trust Indenture dated
as of March 1, 2005 (the “Indenture”), duly executed and delivered by Issuer to
Trustee. The Debentures issued under the Indenture are referred to collectively
hereinafter as “the Debentures.” Reference is hereby made to the Indenture and
all indentures supplemental thereto for the provisions, among others, with
respect to the nature and extent of the security, the rights, duties and
obligations of Issuer, Trustee and the registered owners of the Debentures, and
the terms upon which the Debentures are issued and secured.

     The Debentures are issued
pursuant to and in full compliance with the Constitution and laws of the State
of Texas, as well as the Articles of Incorporation and Bylaws of Corporation,
and the Texas Business Corporation Act, the Certificate of Limited Partnership
and Agreement of Limited Partnership of Partnership and the Texas Revised Uniform Limited Partnership Act (collectively, the
“Authorizing Instruments”), and pursuant to an Authorizing Resolution adopted
and approved by Corporation’s Board of Directors as of February 25, 2005, and a
Joint Authorizing Resolution adopted and approved by Corporation’s Board of
Directors and the General Partner of the Partnership as of February 25, 2005,
which authorized the execution and delivery of the Indenture.

A-2

     The Owners of the Debentures have
no security interest in any property or facilities of Issuer, but rather only a
security interest in (i) the Revenues of Issuer, subject and subordinate to the
prior superior lien of the existing $5,000,000 Operating Line of Credit, and
(ii) any property or funds transferred by us to and held by Trustee under the
Indenture; legal procedures connected with the exercise of remedies available
may cause delays in the collection of funds available for payment of debt
service on the Debentures.

     REFERENCE IS HEREBY MADE TO THE
ADDITIONAL PROVISIONS OF THIS DEBENTURE SET FORTH ON THE REVERSE SIDE HEREOF
WHICH FOR ALL PURPOSES SHALL HAVE THE SAME EFFECT AS IF SET FORTH HEREIN.

     IT IS HEREBY CERTIFIED, RECITED
AND DECLARED that all acts, conditions and things required to exist, happen and
be performed precedent to and in the issuance of the Debentures do exist, have
happened and have been performed in due time, form and manner as required by
law; and that the revenues pledged to the payment of the principal of and
premium, if any, and interest on the Debentures as the same become due and
payable will be sufficient in amount for that purpose. Interest will be
calculated on the basis of a 360 day year of twelve (12) thirty (30) day
months.

     This Debenture shall not be valid
or become obligatory for any purpose or be entitled to any security or benefit
under the Indenture until the Certificate of Authentication hereon shall have
been signed by Trustee.

A-3

     IN WITNESS WHEREOF, PURE ENERGY
GROUP, INC. and PURE GAS PARTNERS II, L.P. have caused this Debenture to be
executed by its Authorized Issuer Representative, thereunto duly authorized (by
their manual or facsimile signatures), and its corporate seal to be affixed or
imprinted hereon, all as of the date hereof shown above.

	 	PURE ENERGY GROUP, INC. 
	 	  
	 	  
	 	  
	 	By:
  
	 	       Larry B. Cochran,
      President and CEO 
	 	       Authorized Issuer
      Representative 

ATTEST

___________________________
David P. Crews, Chairman

             (S
E A L)

	 	PURE GAS PARTNERS II, L.P. 
	 	  
	 	By: Pure Energy Group, Inc., its General
      Partner 
	 	  
	 	  
	 	  
	 	By:
  
	 	       Larry B. Cochran,
      President and CEO 
	 	       Authorized Issuer
      Representative 

A-4

(Form of Trustee’s Certificate)

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This Debenture is one of the
Debentures of the issue described in and issued under the provisions of the
within mentioned Indenture.

	 	FIRST SECURITY BANK, not in its
      individual 
	 	capacity but solely as trustee under this
      Indenture 
	 	dated as of March 1, 2005, between Pure
      Energy 
	 	Group, Inc., Pure Gas Partners II, L.P., and
      First 
	 	Security Bank 
	 	  
	 	  
	 	  
	 	By:
  
	 	         
      Authorized Signature 

A-5

PURE ENERGY GROUP, INC. 
(and its subsidiary) 
7 1/2%
DEBENTURES
SERIES 2005 

(Reverse Side of Debenture) 

ADDITIONAL PROVISIONS

     The Debentures will be general
obligations of Issuer secured by: (i) all Revenues (defined in the Indenture) of
Issuer, subject and subordinate to the prior and superior lien of the Operating
Line of Credit (defined in the Indenture) and (ii) all money held in the funds
and accounts created under the Indenture (except the Costs of Issuance Account)
hereinafter called the “Security”), payable from the sources of revenue pledged
and assigned therefor by Issuer pursuant to the Indenture dated as of March 1,
2005 (the “Indenture”), between Issuer and Trustee.

     The Debentures will be issued to
finance the final payments of Issuer pursuant to Issuer’s Second Plan of
Reorganization approved by the United States Bankruptcy Court, Western District
of Texas, San Antonio Division, on December 2, 2002 (the “Court Case”); to pay
off the outstanding balance of the Operating Line of Credit; to provide working
capital for Issuer; and to fund capitalized interest on the Debentures through
September 1, 2005 (the "Project"). The Issuer will pay certain costs related to
issuance of the Debentures from sources of funds other than the proceeds of the
Debentures.

     Provision has been made in the
Indenture for the creation and maintenance of a Debenture Fund (and for the
payment into the Debenture Fund of sufficient amounts of Issuer Revenues to pay
the principal of and premium, if any, and interest on the Debentures when due).
Issuer covenants in the Indenture to use its best efforts in a commercially
reasonably manner to maintain rates and charges for Issuer’s Facilities’
services and operations, together with other sources of income which will
produce Revenues in each fiscal year sufficient to pay the Debt Service on all
outstanding indebtedness and subordinate obligations of Issuer secured by Issuer
Revenues in any fiscal year thereafter.

     The holder of this Debenture
shall have no right to enforce the provisions of the Indenture or to institute
action to enforce the covenants therein, or to take any action with respect to
any event of default under the Indenture, or to institute, appear in or defend
any suit or other proceeding with respect thereto, except as provided in the
Indenture. In certain events, on the conditions, in the manner and with the
effect set forth in the Indenture, the principal of all the Debentures issued
under the Indenture and then outstanding may be declared and may become due and
payable before the stated maturity thereof, together with accrued interest
thereon.

A-6

     Modifications or alterations of
the Indenture, or of any indenture supplemental thereto, may be made only to the
extent and in the circumstances permitted by the Indenture. The Debentures shall
be subject to redemption prior to maturity as follows:

     Extraordinary Optional
Redemption of Debentures. The Debentures are subject to extraordinary
optional redemption (which redemption shall be mandatory in the circumstances
provided in subsection (f) below) as a whole or in part upon the occurrence of
any of the following events with respect to Issuer’s Facilities, at a redemption
price equal to the principal amount of the Debentures then Outstanding to be so
redeemed, plus accrued interest to the date fixed for such redemption (which
date shall be the earliest practicable date in accordance with Section 3.04
hereof) and without premium:

     (a) Any
one of Issuer’s Facilities, or any part thereof, is so demolished, destroyed or
damaged that, in the commercially reasonable judgment of Issuer, all or a
portion of the Facility cannot be restored or rebuilt with available funds to a
profitable condition within the term of business interruption insurance covering
the operations of Issuer and the net proceeds resulting from such casualty are
more than the lesser of $500,000 or the Outstanding principal amount of all
Debentures;

     (b) All
or a portion of Issuer’s Facilities shall have been taken under the exercise of
the power of eminent domain by any governmental authority or so much of Issuer’s
Facilities is taken or is so diminished in value that the remainder thereof
cannot, in the judgment of Issuer, continue to be operated profitably for the
purpose for which it was being used immediately prior to such taking or
diminution and the proceeds resulting from such condemnation are more than the
lesser of $100,000 or the Outstanding principal amount of all Debentures; or

     (c) On
any date upon not less than ninety (90) calendar days’ prior written notice in
the event of the occurrence of a “Change in Control” of Issuer, unless waived by
Holders of not less than seventy-five percent (75%) of Debentures Outstanding.
The term "Change in Control" means the happening of any one or more of the
following events:

     (i)
Approval by the shareholders of Issuer (including the limited partners of Pure
Gas Partners II, L.P., the operating subsidiary of the Company), of the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act"), excluding, for this purpose, the present shareholders of Issuer,
individually or as a member of a group, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%)
or more of either the then outstanding “Voting Securities” (meaning, the shares
of common stock of Issuer entitled to vote) or the combined voting power of
Issuer's then outstanding Voting Securities entitled to vote generally in the
election of the board of directors of Issuer (“the Board"); 

A-7

     (ii)
Individuals who, as of the Effective Date, constitute the Board (herein called
the "Incumbent Board"), cease for any reason to constitute at least a majority
of the Board; provided, that, any person becoming a member of the
Board subsequent to the Effective Date whose election, or nomination for
election by Issuer's shareholders (including the limited partners of Pure Gas
Partners II, L.P., the operating subsidiary of Issuer), was approved by a vote
of at least a majority of the Voting Securities of Issuer entitled to vote
thereon (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Board, as such term is used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall be,
considered as though such person were a member of the Incumbent Board; 

     (iii)
Approval by the shareholders of Issuer (including the limited partners of Pure
Gas Partners II, L.P., the operating subsidiary of Issuer) of a reorganization,
merger or consolidation of Issuer, in each case, with respect to which persons
who were the shareholders of Issuer immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the Voting Securities or combined voting power entitled to vote
generally in the election of directors, as the case may be, of the reorganized,
merged or consolidated entity's then outstanding Voting Securities; or 

     (iv)
Approval by the shareholders of Issuer (including the limited partners of Pure
Gas Partners II, L.P., the operating subisidary of Issuer) of liquidation or
dissolution of, or the sale, lease, exchange or other disposition of all or
substantially all of the assets of, Issuer.

     (d) If
any of the circumstances described in subsections (a), (b) and (c) above shall
occur within six (6) months of the final maturity of the Debentures, all
Debentures shall be redeemed on the earliest practicable date at a price equal
to the principal amount thereof plus interest accrued to the redemption
date.

     Except as provided in subsection
(d) above, Issuer may exercise the option reserved in Section 3.09 of the
Indenture only within six (6) months following the date that a condition has
occurred which gives rise to a right of redemption under the Indenture.

     In the event that less than all
of the Debentures are redeemed by operation of the foregoing, the Debentures to
be redeemed shall be selected by Trustee in inverse order among the then
outstanding maturities (and by lot or in such manner as Trustee shall deem fair
and appropriate within each maturity) thereof according to the relationship
borne by the outstanding principal amount of each such maturity to the total
amount to be applied to redemption of the Debentures.

A-8

     Optional Redemption of the
Debentures. At any time on or after March 1, 2008, the Debentures are
subject to redemption at the option of Issuer, in part on any Payment Date and
in whole at any time, at a redemption price as set forth in the table below,
plus accrued interest to such date (less than all of such Debentures to be
selected as provided in Section 3.03 of the Trust Indenture), which date shall
be the first day of the month, or Payment Date (as applicable), succeeding such
direction from Issuer for which notice of redemption may be given:

	Redemption Dates 	Price or Amount 
	March 1, 2008, through February 28, 2009
	103% 
	March 1, 2009, through February 28, 2010
	102% 
	March 1, 2010, through February 28, 2011
	101% 
	Including and After March 1, 2011 	Par 

     In case of any such optional
redemption, Issuer shall, at least thirty (30) calendar days prior to the
redemption date (unless a shorter notice shall be satisfactory to Trustee),
deliver a Written Request to Trustee notifying Trustee of such redemption date
and of the principal amount of Debentures to be redeemed.

     Mandatory Sinking Fund
Redemption. The Debentures are subject to mandatory sinking fund redemption
prior to maturity in part, with the Debentures to be redeemed being selected by
lot by the Trustee in such manner as the Trustee may determine, at the
redemption price of one hundred percent (100%) of the principal amount thereof
plus accrued interest to the date fixed for redemption, without premium, in the
amounts and on the dates as follows:

$5,500,000 Term Debenture due March 1, 2015

	Redemption Date 	Principal Amount 
	09/01/2008 	$195,000.00 
	03/01/2009 	200,000.00 
	09/01/2009 	245,000.00 
	03/01/2010 	245,000.00 
	09/01/2010 	300,000.00 
	03/01/2011 	300,000.00 
	09/01/2011 	360,000.00 
	03/01/2012 	360,000.00 
	09/01/2012 	470,000.00 
	03/01/2013 	475,000.00 
	09/01/2013 	545,000.00 
	03/01/2014 	545,000.00 
	09/01/2014 	630,000.00 
	03/01/2015 * 	630,000.00 
	* Maturity 	  

A-9

     At its option, to be exercised on
or before the thirtieth (30th) day next preceding any mandatory
sinking fund redemption date, Issuer (provided that no Event of Default shall
have occurred and be continuing), may: (i) deliver to Trustee for cancellation
the Debentures of the applicable maturity or portions thereof (in Authorized
Denominations) in any aggregate principal amount desired and (ii) receive a
credit in respect of its mandatory sinking fund redemption obligation for any
Debentures of the same maturity (in Authorized Denominations) which prior to
said date have been purchased or redeemed (otherwise than through mandatory
sinking fund redemption pursuant to this Section) and cancelled by Trustee and
not theretofore applied as a credit against any mandatory sinking fund
redemption obligation for the same maturity. Each such Debenture or portion
thereof so delivered or previously purchased or redeemed and cancelled by
Trustee shall be credited by Trustee at one hundred percent (100%) of the
principal amount thereof against the obligation to redeem Debentures of the same
maturity on such mandatory sinking fund redemption date, and any excess over
such amount shall be credited against future mandatory sinking fund redemption
obligations for the same maturity in chronological order, and the principal
amount of the Debentures of said maturity so to be redeemed shall be accordingly
reduced.

     Issuer will, on or before the
thirtieth (30th) calendar day next preceding each such mandatory
sinking fund redemption date, furnish Trustee with its certificate indicating
whether and to what extent the provisions of (i) and (ii) of the preceding
paragraph are to be availed of with respect to such mandatory sinking fund
redemption payment.

     Mandatory Redemption of the
Debentures from Condemnation Proceeds. The Debentures are subject to
mandatory redemption upon a Written Request from Issuer to Trustee as a whole or
in part at the principal amount thereof plus accrued interest thereon to the
date of redemption, but without premium, from the net proceeds of any insurance
policy or condemnation award remaining after the repair, replacement, or
improvement of all or any portion of the Facilities, in the amount certified in
the Written Request by Issuer to Trustee. The redemption date shall be the
earliest practicable date selected by Trustee at the direction of Issuer. The
Debentures shall be redeemed only in $25,000 increments in inverse order of all
maturities of such Debentures subject to mandatory redemption, as applicable in
the priority set forth in the first sentence of this Section. Any excess amount
shall be used to pay principal on the Debentures, on the first Principal Payment
Date on or after said redemption date.

     Optional Redemption of the
Debentures from Excess Funds. The Debentures are subject to redemption at
the option of the Issuer, upon Written Request from Issuer to Trustee as a whole
or in part at the principal amount thereof, plus accrued interest thereon to the
date of redemption, but without premium, from excess funds in the Project Fund
after payment of the Prior Obligation and pay off of the outstanding balance of
the Operating Line of Credit, in the event the Issuer determines not to apply
such excess funds to working capital. The redemption date shall be the earliest
practicable date selected by Trustee at the direction of Issuer. The Debentures
shall be redeemed only in $25,000 increments across all maturities of such
Series subject to mandatory redemption, as applicable in the priority set forth
in this Trust Indenture. Any excess amount shall be used to pay principal on
the Debentures, on the first principal payment date on or after said redemption
date.

A-10

     Mandatory Redemption Upon
Default Under Operating Line of Credit or Parity Obligations. Upon the
occurrence of an event of default under the Operating Line of Credit or any
Parity Obligations, if issued and Outstanding, the Debentures shall be redeemed
in whole from available monies in the Debenture Fund, and, to the extent
necessary, from the Revenues of Issuer, at a redemption price equal to one
hundred percent (100%) of the principal amount of the Debentures being redeemed,
plus accrued interest to the date of redemption, on the earliest date for which
notice of redemption can be given in accordance with the provisions of this
Indenture.

     If less than all of the
Debentures of any one maturity shall be called for redemption, the particular
Debentures or portions of the Debentures of such maturity to be redeemed shall
be selected by lot by Trustee in such manner as Trustee in its discretion may
determine; provided, however, that the portion of any Debenture to
be redeemed shall be in the principal amount of $25,000 or integral multiples of
$5,000 in excess thereof and that, in selecting Debentures for redemption,
Trustee shall treat each Debenture as representing that number of Debentures
which is obtained by dividing the principal amount of each Debenture by $25,000.

     This Debenture may be transferred
on the books of registration kept by Trustee by the registered owner or by his
duly authorized attorney upon surrender hereof, together with a written
instrument of transfer duly executed by the registered owner or his duly
authorized attorney, together with an investor letter as described in the
Indenture.

     The Debentures are issuable as
fully-registered Debentures without coupons in denominations of $25,000 and any
integral multiple of $5,000 in excess thereof, and will be registered in the
name of Cede & Co., as nominee of the Depository Trust Company, New York,
New York, to which principal and interest payments on the Debentures will be
made so long as Cede & Co. is the registered owner of the Debentures.
Subject to the limitations and upon payment of the charges provided in the
Indenture, Debentures may be exchanged for a like aggregate principal amount of
Debentures of other authorized denominations.

     No recourse shall be had for the
payment of the principal of or premium, if any, or interest on any of the
Debentures, or for any claim based thereon or upon any obligation, covenant or
agreement contained in the Debentures or the Indenture against any past, present
or future director, officer or employee of Issuer, as such, either directly or
through Issuer or any successor of Issuer, under any rule of law or equity,
statute or constitution or by the enforcement of any assessment or penalty or
otherwise, and all such liability of any such director, officer or employee as
such is hereby expressly waived and released as a condition of and consideration
for the issuance of any of the Debentures.

A-11

     Each Debenture Holder or
Beneficial Owner, by acceptance of a Debenture, or, in the case of a Beneficial
Owner, a beneficial interest in a Debenture, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of Issuer or the Indenture Trustee on the Debentures or under the Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee in its individual capacity or (ii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee in its individual capacity, any holder of a beneficial
interest in the Indenture Trustee or of any successor or assign of the Indenture
Trustee in its individual capacity, except as any such Person may have expressly
agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.

     This Debenture is issued with the
intent that the laws of the State of Texas will govern its construction.

     REGISTRATION AND TRANSFER OF
THIS DEBENTURE IS SUBJECT TO TRUSTEE’S PRIOR RECEIPT OF AN INVESTOR LETTER FROM
EACH PROSPECTIVE TRANSFEREE IN THE FORM OF THAT REQUIRED BY THE
INDENTURE.

     THIS DEBENTURE MAY BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF BY AN INVESTOR ONLY IN COMPLIANCE WITH
RULE 144A AND OTHER FEDERAL AND STATE SECURITIES LAWS THAT MAY BE APPLICABLE AT
SUCH TIME. SPECIFICALLY, RESALES OF THIS DEBENTURE MAY ONLY BE MADE TO QUALIFIED
INSTITUTIONAL BUYERS AS SUCH TERM IS DEFINED BY RULE 144A AND OTHERWISE AS
ALLOWED UNDER APPLICABLE STATE OR FEDERAL SECURITIES LAWS AT SUCH TIME.

     THE HOLDER OF THIS DEBENTURE,
AND ANY PROSPECTIVE QUALIFIED INSTITUTIONAL BUYER THAT MAY PURCHASE THIS
DEBENTURE FROM ANY HOLDER, MAY, UPON REQUEST OF THE HOLDER, OBTAIN FROM THE
ISSUER THE FOLLOWING INFORMATION: a very brief statement of the nature of
the business of Issuer and the products and services it offers; Issuer’s most
recent balance sheet and profit and loss and retained earnings statements.
Presently the Issuer’s financial statements are unaudited. Issuer covenants to
comply with the requirements of Rule 144A(d)(4).

     Notwithstanding anything
contained herein to the contrary, the Debentures and interests therein may not
be issued, sold or transferred to any Debenture Holder other than the initial
Debenture Holder, unless (i) the initial Debenture Holder and any subsequent
Debenture Holder shall have delivered to Trustee evidence satisfactory to
Trustee that the transferee is an Accredited Investor, as such term is defined
under Rule 501(a) of Regulation D promulgated pursuant to the Securities Act of
1933, and (ii) Trustee obtained a signed Investor Letter in the same form as
attached to the Indenture as Exhibit B and attached to the Debentures. The
Debentures shall bear legends stating that they are subject to the transfer
restriction described in Section 2.10 of the Indenture. By purchasing a
Debenture, the initial Debenture Holder and any subsequent Debenture Holder
shall be deemed to have agreed to the transfer requirements contained in Section
2.10 of the Indenture.

A-12

(Form of Assignment)

ASSIGNMENT

     The following abbreviations, when
used in the inscription on this Series 2005 Debenture or in the assignment
below, shall be construed as though they were written out in full according to
applicable laws or regulations:

	 	TEN COM 	- 	as tenants in common 
	 	TEN ENT 	- 	as tenants by the entireties 
	 	JT TEN 	- 	as joint tenants with right of survivorship and
      not as tenants in common and not as community property 
	 	  	
	 	UNIF TRANS 	  	 
	 	MIN ACT 	- 	________________Custodian
  ___________________
	 	  	  	(Custodian)                                   
                  (Minor)
    
	 	  	  	 
	 	  	under Uniform Transfer to Minors Act
    
	 	 	 ________________________________
	 	  	                          
      (State) 

Additional abbreviations may be used although not in the above
list.

     FOR VALUE RECEIVED, the
undersigned, _____________________________, hereby sells, assigns, and transfers unto
_____________________________(Tax Identification or Social Security No.
_____________________________) the within Debenture and all rights thereunder
and hereby irrevocably constitutes and appoints
__________________________________attorney to transfer the within Debenture on
the books kept for registration thereof, with full power of substitution in the
premises.

	 Dated: ________________	
	 	  Signature 
	 	  
	 	
	 	 Signature Guaranteed
  

NOTICE: Signature(s) must be guaranteed by an institution which
is a participant in the Securities Transfer Agent Medallion Program (“STAMP”) or
similar program.

__________________________________

NOTICE: The signature(s) to this assignment must correspond
with the name as it appears upon the face of the within Debenture in every
particular, without alteration or enlargement or any change whatsoever.

[END OF FORM OF SERIES 2005 DEBENTURE]

A-13

EXHIBIT B TO TRUST INDENTURE

FORM OF INVESTOR LETTER

March __, 2005

	Crews & Associates, Inc. 	Pure Energy Group, Inc. 
	Placement Agent 	Issuer 
	Little Rock, AR 	San Antonio, TX 
	  	  
	Pure Gas Partners II, L.P. 	Jack, Lyon & Jones, P.A. 
	Issuer 	Special Counsel 
	San Antonio, TX 	Little Rock, AR 
	  	  
	First Security Bank 	  
	Trustee 	  
	Searcy, AR 	  

Re: $5,500,000 7 1/2% Debentures Pure Energy Group, Inc. (and
its subsidiary), Series 2005 (“the Debentures”)

Ladies and Gentlemen:

     The undersigned,
___________________________(“the Purchaser”), has purchased a principal amount
of $_____of the Debentures. In connection with such purchase, Pure Energy Group
Inc., and its operating subsidiary Pure Gas Partners II, L.P. (collectively the
“Company”) and First Security Bank (the “Trustee”) require that the Purchaser
make certain representations as to the Purchaser’s willingness to accept the
risks of investing in the Debentures, the Purchaser’s investigation of such
risks, and such other matters. Accordingly, the Purchaser represents and
warrants to the Company, the Trustee, Crews & Associates, Inc., as Placement
Agent, and Jack, Lyon & Jones, P.A., as Special Counsel, as follows:

     A. QUALIFICATION. The
Purchaser is a person who, based upon such factors as financial sophistication,
net worth and knowledge and experience in financial matters, is capable of
evaluating the merits and risks of an investment such as the Debentures. The
Purchaser can bear the economic risk of the purchase of the Debentures and has
such knowledge and experience in business and financial matters, including the
analysis of the purchase of similar investments, as to be capable of evaluating
the merits and risks of an investment in the Debentures on the basis of the
information requested and reviewed by us and our review as described herein.
Purchaser has completed and provided to the Company and Trustee an Accredited
Investor Qualification Statement and hereby represents and warrants that
Purchaser is an Accredited Investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933 (the “Securities Act”) and
summarized in the attachment hereto or a Qualified Institutional Buyer as defined by Rule 144A
promulgated under the Securities Act. 

B-1

     B. NO REGISTRATION. The
Purchaser acknowledges that the Debentures are not currently required to be,
have not been, and are not intended to be, registered under the Securities Act
or registered or otherwise qualified under the securities laws of any state or
other jurisdiction, and that any sale or other transfer of the Debentures may be
made only in accordance with such laws. The Debentures are currently not rated
by any national security rating agency.

     C. RESTRICTED TRANSFER. We
acknowledge and agree that we will only sell the Debentures to Qualified
Institutional Buyers in strict compliance with Rule 144A promulgated under the
Securities Act, if applicable, and in any event only in strict compliance with
applicable state and federal laws regarding the sale of restricted securities in
effect on the date of such transfer, as applicable. The Purchaser will not sell,
exchange, gift or otherwise transfer or convey any of the Debentures without
requiring the transferee to deliver to the Trustee an investor letter to the
same effect as this Investor Letter, as is required under the Indenture.
Purchaser acknowledges that Purchaser’s interest may not be sold, transferred or
assigned except as provided for in the Indenture.

     D. PURCHASE FOR
INVESTMENT. The Debentures are being acquired by the Purchaser for
investment and not with a view to, or for resale in connection with, any
distribution of the Debentures, other than, if applicable, a transfer of the
Debentures to a custodial arrangement or a trust whose beneficiaries or
beneficial owners are each an “accredited investor” as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act.

     E. INDEPENDENT EVALUATION.
The Purchaser has independently evaluated the factors associated with its
investment decision. The Purchaser has been given full and complete access to
and has been furnished with all information requested by the Purchaser regarding
the Debentures, as in the opinion of the Purchaser was necessary in connection
with its purchase of the Debentures. 

     F. DISCLOSURE STATEMENT.
We have carefully read the Prospectus and all attachments thereto relating
to the Debentures in its entirety and understand the risks described therein and
understand and acknowledge that there may be other risks in such an investment
that are not described therein. We acknowledge that the Debentures are a
speculative investment and that there is a high degree of risk in such
investment.

     G. SOPHISTICATION. The
Purchaser is sufficiently knowledgeable and experienced in financial and
business matters, including the purchase and ownership of oil and gas-related
securities and other obligations, to be able to evaluate the risks and merits of
the investment represented by the purchase of the Debentures, and it is capable
of and has made its own investigation of the Company, its business and facilities and the oil and gas industry in connection with its
decision to purchase the Debentures.

B-2

     H. LEGAL AUTHORIZATION.
The Purchaser is duly and legally authorized to purchase the Debentures, and
the Purchaser is duly and legally authorized to execute this Investor Letter.
The Purchaser has satisfied itself that the Debentures are a lawful investment
for it under all applicable laws.

     I. NATURE OF OBLIGATIONS.
The Purchaser understands that the Debentures are general obligations of the
Company payable from the revenues received by the Trustee from the Company, and
secured by a pledge of revenues of the company subject and subordinate to the
prior and superior lien of Texas Capital Bank, and any successor, with respect
to an operating line of credit in the maximum principal amount of $5,000,000.
The Purchaser understands that payment of the principal of, premium, if any, and
interest on the Debentures depends upon the general credit of the Company and
upon the net cash flow available from the Company.

     J. SURVIVAL. All
representations of the Purchaser contained herein shall survive the sale and
delivery of the Debentures to the Purchaser as representations of fact existing
as of the date of execution and delivery of this Investor Letter.

     K. DEFINED TERMS. The
initial capitalized terms not defined herein shall have the meaning ascribed to
such terms in the Trust Indenture which secures the payment of the
Debentures.

If the undersigned is an individual (i.e., not a
corporation, partnership, etc.): 

Please Print
Name:                 
_________________________________
        

Signature:                                 
_________________________________

Date:                                            _________________________________

If the undersigned is a corporation, partnership or other
legal entity:

Please Print Name of Entity:   
_________________________________

By (Please Print
Name):          
_________________________________

Signature:                                   
_________________________________

Title:                                             
_________________________________

Date:                                             
_________________________________

B-3

The Debentures will not be sold in violation of the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or
in violation of any securities laws of any state and then only in compliance
with Rule 144A under the Securities Act of 1933, to the extent applicable.
Specifically, resales may only be made to Qualified Institutional Buyers as such
term is defined in Rule 144A, or otherwise as allowed by applicable state and
federal securities laws at such time.

B-4

ACCREDITED INVESTOR CONFIRMATION

The categories of Accredited Investor include:

     (1) Any bank as defined in
section 3(a)(2) of the Act; or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; any insurance company as
defined in section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 if the investment decision
is made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;

     (2) Any private business
development company as defined in section 202(a)(22) of the Investment Advisers
Act of 1940; 

     (3) Any organization described in
section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts, or
similar business trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of $5,000,000;

     (4) Any director, executive
officer, or general partner of the issuer of the securities being offered or
sold, or any director, executive officer, or general partner of a general
partner of that issuer;

     (5) Any natural person whose
individual net worth, or joint net worth with that person's spouse, at the time
of his purchase exceeds $1,000,000;

     (6) Any natural person who had
individual income in excess of $200,000 in each of the two (2) most recent years
or joint income with that person's spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in the
current year;

     (7) Any trust, with total assets
in excess of $5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a sophisticated person as
described in §230.506(b)(2)(ii); and

    (8) Any entity in which all of the equity
owners are accredited investors.
(provide separate certifications
from each equity owner).

B-5

QUALIFIED INSTITUTIONAL BUYER CONFIRMATION

QUALIFIED INSTITUTIONAL BUYER SHALL MEAN:

	A. 	
      ANY OF THE FOLLOWING ENTITIES, ACTING FOR ITS OWN ACCOUNT
      OR THE ACCOUNTS OF OTHER QUALIFIED INSTITUTIONAL BUYERS, THAT IN THE
      AGGREGATE OWNS AND INVESTS ON A DISCRETIONARY BASIS AT LEAST $100 MILLION
      IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED WITH THE
ENTITY:

	 	 	 
		1. 	
      ANY INSURANCE COMPANY AS DEFINED IN SECTION
      2(A)(13) OF THE ACT;

	 	 	 
			
      NOTE: A PURCHASE BY AN INSURANCE COMPANY FOR ONE OR MORE
      OF ITS SEPARATE ACCOUNTS, AS DEFINED BY SECTION 2(A)(37) OF THE INVESTMENT
      COMPANY ACT OF 1940 (THE "INVESTMENT COMPANY ACT"), WHICH ARE NEITHER
      REGISTERED UNDER SECTION 8 OF THE INVESTMENT COMPANY ACT NOR REQUIRED TO
      BE SO REGISTERED, SHALL BE DEEMED TO BE A PURCHASE FOR THE ACCOUNT OF SUCH
      INSURANCE COMPANY.

	 	 	 
		2. 	
      ANY INVESTMENT COMPANY REGISTERED UNDER THE
      INVESTMENT COMPANY ACT OR ANY BUSINESS DEVELOPMENT COMPANY AS
      DEFINED IN SECTION 2(A)(48) OF THAT ACT;

	 	 	 
		3. 	
      ANY SMALL BUSINESS INVESTMENT COMPANY LICENSED BY
      THE U.S. SMALL BUSINESS ADMINISTRATION UNDER SECTION 301(C) OR (D) OF THE
      SMALL BUSINESS INVESTMENT ACT OF 1958;

	 	 	 
		4. 	
      ANY PLAN ESTABLISHED AND MAINTAINED BY A STATE,
      ITS POLITICAL SUBDIVISIONS, OR ANY AGENCY OR INSTRUMENTALITY OF A STATE OR
      ITS POLITICAL SUBDIVISIONS, FOR THE BENEFIT OF ITS EMPLOYEES;

	 	 	 
		5. 	
      ANY EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
      TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974;

	 	 	 
		6. 	
      ANY TRUST FUND WHOSE TRUSTEE IS A BANK OR TRUST COMPANY
      AND WHOSE PARTICIPANTS ARE EXCLUSIVELY PLANS OF THE TYPES IDENTIFIED IN
      PARAGRAPH (A)(1)(I)(D) OR (E) OF THIS SECTION, EXCEPT TRUST FUNDS THAT
      INCLUDE AS PARTICIPANTS INDIVIDUAL RETIREMENT ACCOUNTS OR H.R. 10
      PLANS.

	 	 	 
		7. 	
      ANY BUSINESS DEVELOPMENT COMPANY AS DEFINED IN
      SECTION 202(A)(22) OF THE INVESTMENT ADVISERS ACT OF
  1940;

B-6

		8. 	
      ANY ORGANIZATION DESCRIBED IN SECTION 501(C) (3) OF THE
      INTERNAL REVENUE CODE, CORPORATION (OTHER THAN A BANK AS DEFINED IN
      SECTION 3(A)(2) OF THE ACT OR A SAVINGS AND LOAN ASSOCIATION OR OTHER
      INSTITUTION REFERENCED IN SECTION 3(A)(5)(A) OF THE ACT OR A FOREIGN BANK
      OR SAVINGS AND LOAN ASSOCIATION OR EQUIVALENT INSTITUTION), PARTNERSHIP,
      OR MASSACHUSETTS OR SIMILAR BUSINESS TRUST; AND

	 	 	 
		9. 	
      ANY INVESTMENT ADVISER REGISTERED UNDER THE
      INVESTMENT ADVISERS ACT.

	 	 	 
	B. 	
      ANY DEALER REGISTERED PURSUANT TO SECTION 15 OF
      THE EXCHANGE ACT, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF OTHER
      QUALIFIED INSTITUTIONAL BUYERS, THAT IN THE AGGREGATE OWNS AND INVESTS ON
      A DISCRETIONARY BASIS AT LEAST $10 MILLION OF SECURITIES OF ISSUERS THAT
      ARE NOT AFFILIATED WITH THE DEALER, PROVIDED, THAT SECURITIES
      CONSTITUTING THE WHOLE OR A PART OF AN UNSOLD ALLOTMENT TO OR SUBSCRIPTION
      BY A DEALER AS A PARTICIPANT IN A PUBLIC OFFERING SHALL NOT BE DEEMED TO
      BE OWNED BY SUCH DEALER;

	 	 	 
	C. 	
      ANY DEALER REGISTERED PURSUANT TO SECTION 15 OF
      THE EXCHANGE ACT ACTING IN A RISKLESS PRINCIPAL TRANSACTION ON BEHALF OF A
      QUALIFIED INSTITUTIONAL BUYER;

NOTE: A REGISTERED DEALER MAY ACT AS AGENT, ON A
NON-DISCRETIONARY BASIS, IN A TRANSACTION WITH A QUALIFIED INSTITUTIONAL BUYER
WITHOUT ITSELF HAVING TO BE A QUALIFIED INSTITUTIONAL BUYER.

	D. 	
      ANY INVESTMENT COMPANY REGISTERED UNDER THE INVESTMENT
      COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNTS OF OTHER
      QUALIFIED INSTITUTIONAL BUYERS, THAT IS PART OF A FAMILY OF INVESTMENT
      COMPANIES WHICH OWN IN THE AGGREGATE AT LEAST $100 MILLION IN SECURITIES
      OF ISSUERS, OTHER THAN ISSUERS THAT ARE AFFILIATED WITH THE INVESTMENT
      COMPANY OR ARE PART OF SUCH FAMILY OF INVESTMENT COMPANIES. FAMILY OF
      INVESTMENT COMPANIES MEANS ANY TWO OR MORE INVESTMENT COMPANIES
      REGISTERED UNDER THE INVESTMENT COMPANY ACT, EXCEPT FOR A UNIT INVESTMENT
      TRUST WHOSE ASSETS CONSIST SOLELY OF SHARES OF ONE OR MORE REGISTERED
      INVESTMENT COMPANIES, THAT HAVE THE SAME INVESTMENT ADVISER (OR, IN THE
      CASE OF UNIT INVESTMENT TRUSTS, THE SAME DEPOSITOR), PROVIDED THAT, FOR
      PURPOSES OF THIS SECTION:

	 	1. 	
      EACH SERIES OF A SERIES COMPANY (AS DEFINED IN RULE 18F-2
      UNDER THE INVESTMENT COMPANY ACT ) SHALL BE DEEMED TO BE A SEPARATE
      INVESTMENT COMPANY; AND

B-7

	 	2. 	
      INVESTMENT COMPANIES SHALL BE DEEMED TO HAVE THE SAME
      ADVISER (OR DEPOSITOR) IF THEIR ADVISERS (OR DEPOSITORS) ARE
      MAJORITY-OWNED SUBSIDIARIES OF THE SAME PARENT, OR IF ONE INVESTMENT
      COMPANY'S ADVISER (OR DEPOSITOR) IS A MAJORITY- OWNED SUBSIDIARY OF THE
      OTHER INVESTMENT COMPANY'S ADVISER (OR DEPOSITOR);

	 	 	 
	 	3. 	
      ANY ENTITY, ALL OF THE EQUITY OWNERS OF WHICH ARE
      QUALIFIED INSTITUTIONAL BUYERS, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS
      OF OTHER QUALIFIED INSTITUTIONAL BUYERS; AND

	 	 	 
	 	4. 	
      ANY BANK AS DEFINED IN SECTION 3(A)(2) OF THE ACT,
      ANY SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION AS REFERENCED IN
      SECTION 3(A)(5)(A) OF THE ACT, OR ANY FOREIGN BANK OR SAVINGS AND LOAN
      ASSOCIATION OR EQUIVALENT INSTITUTION, ACTING FOR ITS OWN ACCOUNT OR THE
      ACCOUNTS OF OTHER QUALIFIED INSTITUTIONAL BUYERS, THAT IN THE AGGREGATE
      OWNS AND INVESTS ON A DISCRETIONARY BASIS AT LEAST $100 MILLION IN
      SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED WITH IT AND THAT HAS AN
      AUDITED NET WORTH OF AT LEAST $25 MILLION AS DEMONSTRATED IN ITS LATEST
      ANNUAL FINANCIAL STATEMENTS, AS OF A DATE NOT MORE THAN 16 MONTHS
      PRECEDING THE DATE OF SALE UNDER THE RULE IN THE CASE OF A U.S. BANK OR
      SAVINGS AND LOAN ASSOCIATION, AND NOT MORE THAN 18 MONTHS PRECEDING SUCH
      DATE OF SALE FOR A FOREIGN BANK OR SAVINGS AND LOAN ASSOCIATION OR
      EQUIVALENT INSTITUTION.

B-8

     The undersigned represents that
the foregoing information is true and correct in all material respects and
agrees that such information may be relied upon by Pure Energy, the Placement
Agent, and others in connection with an investment by the undersigned in the
Debentures. The undersigned agrees to furnish such additional information as is
reasonably necessary in order to verify the answers set forth below.

     The undersigned acknowledges that
in conjunction with an evaluation of the purchase of the Debentures, the
undersigned will receive certain confidential, nonpublic information regarding
Pure Energy, including without limitation, certain financial information and
information about its businesses and properties (the “Confidential
Information”). The undersigned agrees the Confidential Information will be kept
confidential and shall not, without the prior written consent of Pure Energy, be
disclosed by the undersigned, or by its agents, representatives or employees, in
any manner whatsoever, in whole or in part, to any person or entity other than
the agents, representatives or employees of the undersigned, and shall not be
used by the undersigned, its agents, representatives or employees, other than in
connection with the evaluation of a purchase of the Debentures. Moreover, the
undersigned agrees to reveal the Confidential Information only to its agents,
representatives and employees who need to know the Confidential Information for
the purpose of evaluating the purchase of the Debentures, who are informed by it
of the confidential nature of the Confidential Information and who agree to act
in accordance with the terms and conditions of this paragraph.

If the undersigned is an individual (i.e., not a
corporation, partnership, etc.): 

Please Print
Name:                    
_________________________________

Signature:                                    
_________________________________

Date:                                              
_________________________________

If the undersigned is a corporation, partnership or other
legal entity:

Please Print Name of Entity:    
_________________________________

By (Please Print
Name):            _________________________________

Signature:                                    
_________________________________

Title:                                             
_________________________________

Date:                                            
 _________________________________

B-9

     EXHIBIT C 

TRUSTEE’S FEE SCHEDULE 

$5,000 Initial Fee at Closing

$3,500 Annually each March 1st beginning March 1,
2006 (includes 10 free Debenture transfers per year; $25 per transfer
thereafter)

C-1

EXHIBIT D

ISSUER’S WRITTEN REQUEST

     $5,500,000 
7 1/2%
Debentures, 
Series 2005 
(“Debentures”) 
PURE ENERGY GROUP,
INC.
(and its subsidiary)

Written Request No. 1  

     The undersigned, Authorized Pure
Energy Group, Inc. and Pure Gas Partners II, L.P. Representative (collectively,
the “Company”), pursuant to Section 5.04 of the Trust Indenture (“Indenture”)
between Company and First Security Bank, Searcy, Arkansas Trustee (“Trustee”),
dated as of March 1, 2005, hereby requisitions funds from the Project Fund in
the amount of $__________and for the purposes set forth below pursuant to
Section 5.03 of the Indenture:

	AMOUNT: 	PAYEE (with payment
      address and instructions): 	PURPOSE: 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

	 	PURE ENERGY GROUP, INC. 
	 	 
	 	 
	 	Larry B. Cochran, CEO 
	 	Date:  
      ____________________________

D-1

	 	PURE GAS PARTNERS II, L.P. 
	 	  
	 	By: Pure Energy Group, Inc., its General
      Partner 
	 	  
	 	  
	 	
	 	Larry B. Cochran, CEO and 
	 	Authorized Issuer Representative 
	 	Date:
  _____________________________

D-2

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