EXECUTION COPY
 

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  AMERICAN DAIRY, INC.
 
as the Company

 
AMERICAN FLYING CRANE CORPORATION
as the Guarantor
 
and
 
THE BANK OF NEW YORK,
a New York banking corporation
as the Trustee
 

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INDENTURE
 
Dated June 1, 2007
 

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1.0% Guaranteed Senior Secured Convertible Notes due 2012 
 

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TABLE OF CONTENTS

       
Page
         
ARTICLE 1
             
DEFINITIONS
         
Section 1.01.
 
Definitions
 
1
Section 1.02.
 
Other Definitions
 
31
Section 1.03.
 
Rules of Construction.
 
32
         
ARTICLE 2
             
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
         
Section 2.01.
 
Designation Amount and Issue of Notes
 
33
Section 2.02.
 
Form of Notes
 
33
Section 2.03.
 
Date and Denomination of Notes; Payments of Interest
 
35
Section 2.04.
 
Execution of Notes
 
36
Section 2.05.
 
Exchange and Registration of Transfer of Notes; Restrictions on Transfer
 
36
Section 2.06.
 
Mutilated, Destroyed, Lost or Stolen Notes
 
38
Section 2.07.
 
Temporary Notes
 
39
Section 2.08.
 
Cancellation of Notes
 
40
Section 2.09.
 
Defaulted Interest
 
40
Section 2.10.
 
ISIN Numbers
 
40
Section 2.11.
 
Further Issuances
 
41
         
ARTICLE 3
             
REDEMPTION AND REPURCHASE OF NOTES
             
Section 3.01.
 
Redemption at Maturity
 
41
Section 3.02.
 
Offer to Purchase
 
41
         
ARTICLE 4
             
PARTICULAR COVENANTS OF THE COMPANY
             
Section 4.01.
 
Payment of Principal and Interest
 
44
Section 4.02.
 
Maintenance of Office or Agency
 
44
Section 4.03.
 
Provisions as to Paying Agent
 
45
Section 4.04.
 
Existence
 
46
Section 4.05.
 
Maintenance of Properties
 
46
Section 4.06.
 
Payment of Taxes and Other Claims
 
46
Section 4.07.
 
Stay, Extension and Usury Laws
 
46

 
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Section 4.08.
 
Payments for Consent
 
47
Section 4.09.
 
Incurrence of Additional Debt; Financial Covenants
 
47
Section 4.10.
 
Restricted Payments
 
47
Section 4.11.
 
Liens
 
49
Section 4.12.
 
Asset Sales
 
49
Section 4.13.
 
Restrictions on Distributions from Subsidiaries
 
51
Section 4.14.
 
Affiliate Transactions
 
52
Section 4.15.
 
Issuance or Sale of Capital Stock of Subsidiaries
 
53
Section 4.16.
 
Maintenance of Consolidated Tangible Net Worth
 
54
Section 4.17.
 
Repurchase at the Option of Holders Following a Change of Control
 
54
Section 4.18.
 
Future Guarantors
 
54
Section 4.19.
 
Business Activities; Charter Documents
 
54
Section 4.20.
 
Sale and Leaseback Transactions
 
55
Section 4.21.
 
Impairment of Security Interest
 
55
Section 4.22.
 
Amendments to Security Documents
 
55
Section 4.23.
 
Use of Proceeds
 
55
Section 4.24.
 
Maintenance of Insurance
 
56
Section 4.25.
 
Qualifying IPO
 
56
Section 4.26.
 
Repurchase Upon Termination of Trading
 
56
Section 4.27.
 
Government Approvals and Licenses; Compliance with Law
 
56
Section 4.28.
 
Engage Qualified Auditing Firms
 
57
Section 4.29.
 
Notes to Rank Senior
 
57
Section 4.30.
 
Compliance Certificate
 
57
Section 4.31.
 
Additional Interest Notice
 
58
Section 4.32.
 
Calculation of Original Issue Discount
 
58
Section 4.33.
 
Reports by the Company and Provision of Information
 
58
Section 4.34.
 
Other Notes and Other Indenture
 
59
         
ARTICLE 5
             
SUCCESSORS
             
Section 5.01.
 
Merger, Consolidation and Sale of Assets
 
59
Section 5.02.
 
Successor Corporation Substituted
 
61
         
ARTICLE 6
             
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
             
Section 6.01.
 
Events of Default
 
61
Section 6.02.
 
Payments of Notes on Default; Suit Therefor
 
65
Section 6.03.
 
Application of Monies Collected by Trustee
 
67
Section 6.04.
 
Proceedings by Noteholder
 
67
Section 6.05.
 
Proceedings by Trustee
 
68
Section 6.06.
 
Remedies Cumulative and Continuing
 
68
Section 6.07.
 
Direction of Proceedings and Waiver of Defaults by Majority of Holders of the
Combined Notes
 
69

 
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Section 6.08.
 
Notice of Default
 
69
Section 6.09.
 
Undertaking to Pay Costs
 
69
         
ARTICLE 7
             
THE TRUSTEE
             
Section 7.01.
 
Duties and Responsibilities of Trustee
 
70
Section 7.02.
 
Rights of Trustee
 
71
Section 7.03.
 
No Responsibility for Recitals, Etc
 
74
Section 7.04.
 
Trustee, Paying Agents, Conversion Agents, Collateral Agents, Common Depositary
or Registrar May Own Notes
 
74
Section 7.05.
 
Monies to Be Held in Trust
 
74
Section 7.06.
 
Compensation and Expenses of Trustee
 
74
Section 7.07.
 
Eligibility of Trustee
 
75
Section 7.08.
 
Resignation or Removal of Trustee
 
75
Section 7.09.
 
Acceptance by Successor Trustee
 
76
Section 7.10.
 
Succession by Merger
 
77
Section 7.11.
 
Trustee’s Application for Instructions from the Company
 
78
Section 7.12.
 
Reports by Trustee
 
78
Section 7.13.
 
Certain Provisions
 
78
         
ARTICLE 8
             
SUPPLEMENTAL INDENTURES
             
Section 8.01.
 
Supplemental Indentures Without Consent of Noteholders
 
79
Section 8.02.
 
Supplemental Indenture with Consent of Noteholders
 
80
Section 8.03.
 
Effect of Supplemental Indenture
 
82
Section 8.04.
 
Notation on Notes
 
82
Section 8.05.
 
Evidence of Compliance of Supplemental Indenture to Be Furnished to Trustee
 
82
         
ARTICLE 9
             
GUARANTEES
             
Section 9.01.
 
Guarantee
 
83
Section 9.02.
 
Limitation on Guarantor Liability
 
84
Section 9.03.
 
Execution and Delivery of Guarantee
 
85
Section 9.04.
 
Guarantors May Consolidate, etc., on Certain Terms
 
86
Section 9.05.
 
Releases Following Merger, Consolidation or Sale of Assets, Etc
 
86
         
ARTICLE 10
             
COLLATERAL AND SECURITY
             
Section 10.01.
 
Security Documents
 
87

 
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Section 10.02.
 
Future Guarantor Pledgors
 
88
Section 10.03.
 
Recording and Opinions
 
89
Section 10.04.
 
Release of Collateral
 
90
Section 10.05.
 
Authorization of Actions to Be Taken by the Trustee Under the Security Documents
 
91
Section 10.06.
 
Authorization of Receipt of Funds by the Trustee Under the Security Documents
 
91
Section 10.07.
 
Termination of Security Interest
 
91
         
ARTICLE 11
             
SATISFACTION AND DISCHARGE OF INDENTURE
             
Section 11.01.
 
Discharge of Indenture
 
91
Section 11.02.
 
Deposited Monies to Be Held in Trust by Trustee
 
92
Section 11.03.
 
Paying Agent to Repay Monies Held
 
92
Section 11.04.
 
Return of Unclaimed Monies
 
93
Section 11.05.
 
Reinstatement
 
93
         
ARTICLE 12
             
THE NOTEHOLDERS
             
Section 12.01.
 
Action by Noteholders
 
93
Section 12.02.
 
Proof of Execution by Noteholders
 
93
Section 12.03.
 
Who Are Deemed Absolute Owners
 
94
Section 12.04.
 
Company-owned Notes Disregarded
 
94
Section 12.05.
 
Revocation of Consents; Future Holders Bound
 
94
         
ARTICLE 13
             
MEETINGS OF NOTEHOLDERS
             
Section 13.01.
 
Purpose of Meetings
 
95
Section 13.02.
 
Call of Meetings by Company or Noteholders
 
95
Section 13.03.
 
Qualifications for Voting
 
96
Section 13.04.
 
Regulations
 
96
Section 13.05.
 
Voting
 
96
Section 13.06.
 
No Delay of Rights by Meeting
 
97
         
ARTICLE 14
             
CONVERSION OF NOTES
             
Section 14.01.
 
Right to Convert
 
97
Section 14.02.
 
Exercise of Conversion Right; Issuance of Common Stock on Conversion; No
Adjustment for Interest or Dividends
 
98
Section 14.03.
 
Cash Payments in Lieu of Fractional Shares
 
99

 
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Section 14.04.
 
Conversion Rate
 
99
Section 14.05.
 
Adjustment of Conversion Rate
 
100
Section 14.06.
 
Effect of Reclassification, Consolidation, Merger or Sale
 
109
Section 14.07.
 
Taxes on Shares Issued
 
110
Section 14.08.
 
Reservation of Shares; Shares to Be Fully Paid; Compliance with Governmental
Requirements; Listing of Common Stock
 
110
Section 14.09.
 
Responsibility of Trustee
 
111
Section 14.10.
 
Notice to Holders Prior to Certain Actions
 
111
Section 14.11.
 
Shareholder Rights Plans
 
112
         
ARTICLE 15
             
MISCELLANEOUS PROVISIONS
             
Section 15.01.
 
Provisions Binding on Company’s Successors
 
112
Section 15.02.
 
Official Acts by Successor Corporation
 
112
Section 15.03.
 
Addresses for Notices, Etc.
 
113
Section 15.04.
 
Governing Law
 
114
Section 15.05.
 
Evidence of Compliance with Conditions Precedent; Certificates to Trustee
 
114
Section 15.06.
 
Legal Holidays
 
114
Section 15.07.
 
Company Responsible for Making Calculations
 
114
Section 15.08.
 
Benefits of Indenture
 
114
Section 15.09.
 
Table of Contents, Headings, Etc.
 
115
Section 15.10.
 
Authenticating Agent
 
115
Section 15.11.
 
Indenture and Notes Solely Corporate Obligations
 
116
Section 15.12.
 
Execution in Counterparts
 
116
Section 15.13.
 
Severability
 
116

 
Exhibit A
-
FORM OF NOTE
Exhibit B
-
FORM OF NOTATION OF GUARANTEE
Exhibit C
-
FORM OF CERTIFICATE OF TRANSFER
Exhibit D
-
FORM OF RESTRICTIVE LEGEND FOR COMMON STOCK ISSUED UPON CONVERSION
Exhibit E
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FORM OF SECURITY DOCUMENTS

 
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INDENTURE
 
INDENTURE dated June 1, 2007, between AMERICAN DAIRY, INC., a Utah corporation
(hereinafter called the “Company”), the parties listed on the signature pages
hereto, and THE BANK OF NEW YORK, a New York banking corporation, as trustee
hereunder (hereinafter called the “Trustee”).
 
WITNESSETH:
 
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the
issue of its 1.0% Guaranteed Senior Secured Convertible Notes due 2012
(hereinafter called the “Notes”), in an aggregate principal amount not to exceed
$80,000,000 and, to provide the terms and conditions upon which the Notes are to
be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
 
WHEREAS, for its lawful corporate purposes, each Guarantor has duly authorized
the issue of its Guarantee of the Notes and, to provide the terms and conditions
upon which the Guarantee is to be issued and delivered, each Guarantor has duly
authorized the execution and delivery of this Indenture; and
 
WHEREAS, the Notes, the certificate of authentication to be borne by the Notes,
a form of notation of Guarantee, a form of Assignment, a form of Purchase Notice
and a form of Conversion Notice to be borne by the Notes are to be substantially
in the forms hereinafter provided for; and
 
WHEREAS, all acts and things necessary to make the Notes, when executed by the
Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute this Indenture a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized,
 
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
 
That in order to declare the terms and conditions upon which the Notes are, and
are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
 
ARTICLE 1

 
DEFINITIONS
 
Section 1.01.   Definitions.
 
The terms defined in this Section (except as herein otherwise expressly provided
or unless the context otherwise requires) for all purposes of this Indenture and
of any indenture supplemental hereto shall have the respective meanings
specified in this Section. All other terms used in this Indenture that are
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires) shall have the meanings assigned to such
terms in the Securities Act as in force at the date of the execution of this
Indenture. The words “herein”, “hereof”, “hereunder” and words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision. The terms defined in this Article include the plural as well
as the singular.
 

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“Additional Amounts” means, with respect to any Note:
 
(a) an amount equal to 3.0% of the principal amount of such Note due and payable
by the Company to the holder thereof if a Qualifying IPO has not occurred on or
before, or the listing of the Common Stock on the exchange on which the
Qualifying IPO has been effected has not been maintained as of, December 1,
2008, such Additional Amounts being due and payable no later than December 8,
2008; and
 
(b) an amount equal to 1.0% of the principal amount of such Note due and payable
by the Company to the holder thereof if on May 1, 2008, if the Company has not
complied with Section 4.28(a); and
 
(c) an amount equal to 1.0% of the principal amount of such Note due and payable
by the Company to the holder thereof if on or before April 15 of the year
subsequent to any fiscal year (starting with fiscal year 2009) for which the
Company has not complied with Section 4.28(b).
 
For all purposes of this Indenture, the term “premium” shall include Additional
Amounts, if any, with respect to the Notes.
 
“Additional Assets” means:
 
(a) any Property (other than cash, Cash Equivalent and securities) to be owned
by the Company or any of its Subsidiaries and used in a Related Business; or
 
(b) Capital Stock of a Person that becomes a Subsidiary of the Company as a
result of the acquisition of such Capital Stock by the Company or another
Subsidiary of the Company from any Person other than the Company or an Affiliate
of the Company; provided, however, that, in the case of clause (b), such
Subsidiary is primarily engaged in a Related Business.
 
“Additional Interest” means (a) an annual rate of interest equal to 5.0% payable
on the outstanding Notes if no Qualifying IPO has occurred on or before December
1, 2008, such interest accruing from and including such date (or, if Interest
has been paid since such date, from and including the most recent interest
payment date thereafter) to but excluding each date of payment thereof and (b)
any additional interest payable pursuant to Section 2(d) of the Registration
Rights Agreement.
 
“AFC” means American Flying Crane Corporation, a Delaware corporation and a
wholly-owned Subsidiary of the Company,.
 
“Affiliate” of any specified Person means:
 
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(a) any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person, or
 
(b) any other Person who is a director or officer of:
 
(1) such specified Person,
 
(2) any Subsidiary of such specified Person, or
 
(3) any Person described in clause (a) above.
 
For the purposes of this definition, “control,” when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing. For purposes of Section 4.12 and Section
4.14 and the definition of “Additional Assets” only, “Affiliate” shall also mean
any Beneficial Owner of shares representing 5% or more of the total voting power
of the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such Beneficial Owner pursuant
to the first sentence hereof. Notwithstanding the foregoing, in no event shall
Citadel Equity Fund Ltd. or any of its Affiliates be considered an Affiliate of
the Company.
 
“Applicable Procedures” means, with respect to any transfer, repurchase or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of Euroclear and Clearstream that apply to such transfer, repurchase
or exchange.
 
“Asset Sale” means any sale, lease, transfer, issuance or other disposition (or
series of related sales, leases, transfers, issuances or dispositions) by the
Company or any of its Subsidiaries, including any disposition by means of a
merger, consolidation or similar transaction (each referred to for the purposes
of this definition as a “disposition”), of
 
(a) any shares of Capital Stock of a Subsidiary of the Company (other than
directors’ qualifying shares), or
 
(b) any other Property of the Company or any of its Subsidiaries outside of the
ordinary course of business of the Company or such Subsidiary,
 
other than, in the case of clause (a) or (b) above,
 
(1) any disposition by a Subsidiary of the Company to the Company or by the
Company or one of its Subsidiaries to a Wholly Owned Subsidiary,
 
(2) any disposition that constitutes a Permitted Investment or Restricted
Payment permitted by Section 4.10,
 
(3) any disposition effected in compliance with the first paragraph of Section
5.01,
 
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(4) any disposition of inventory of the Company or any of its Subsidiaries in
the ordinary course of business, or inventory or other property that in the
reasonable judgment of the Company have become uneconomic, obsolete or worn out,
 
(5) the sale or discount of accounts receivable in connection with the
compromise or collection thereof in the ordinary course of business, and
 
(6) any disposition in a single transaction or a series of related transactions
of assets for aggregate consideration of less than $2.5 million.
 
“Attributable Debt” in respect of a Sale and Leaseback Transaction means, at any
date of determination,
 
(a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the
amount of Debt represented thereby according to the definition of “Capital Lease
Obligations,” and
 
(b) in all other instances, the present value (discounted at the weighted
average interest rate borne by the Notes, compounded annually in the most
recently completed twelve months) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such Sale and
Leaseback Transaction (including any period for which such lease has been
extended).
 
“Average Life” means, as of any date of determination, with respect to any Debt
or Preferred Stock, the quotient obtained by dividing:
 
(a) the sum of the product of the numbers of years (rounded to the nearest
one-twelfth of one year) from the date of determination to the dates of each
successive scheduled principal payment of such Debt or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by
 
(b) the sum of all such payments.
 
“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law
for the relief of debtors, or the law of any other jurisdiction relating to
bankruptcy, insolvency, winding up, liquidation, reorganization or relief of
debtors.
 
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as such term is used in Section 13(d)(3)
of the Exchange Act), such “person” shall be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition or passage of
time. The terms “Beneficially Owns” and “Beneficially Owned” have a
corresponding meaning.
 
“Board of Directors” means (1) in respect of a corporation, the board of
directors of the corporation, or (except if used in the definition of “Change of
Control”) any duly authorized committee thereof; and (2) in respect of any other
Person, the board or committee of that Person serving an equivalent function.
 
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“Board Resolution” of a Person means a copy of a resolution (in form and
substance satisfactory to the Trustee) certified by the secretary or an
assistant secretary (or individual performing comparable duties) of the
applicable Person to have been duly adopted by the Board of Directors of such
Person and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
 
“Business Day” means any day other than a Legal Holiday.
 
“Capital Expenditures” means expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Lease Obligations which is capitalized on the consolidated balance sheet of the
Company and its Subsidiaries) by the Company and its Subsidiaries that, in
conformity with GAAP, are included in “additions to property, plant and
equipment” on the consolidated balance sheet of the Company and its
Subsidiaries.
 
“Capital Lease Obligations” means any obligation under a lease that is required
to be capitalized for financial reporting purposes in accordance with GAAP; and
the amount of Debt represented by such obligation shall be the capitalized
amount of such obligations determined in accordance with GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty. For purposes of Section
4.11 a Capital Lease Obligation shall be deemed secured by a Lien on the
Property being leased.
 
“Capital Stock” means, with respect to any Person, any shares or other
equivalents (however designated) of any class of corporate stock or partnership
interests or any other participations, rights, warrants, options or other
interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
 
“Capital Stock Sale Proceeds” means the aggregate cash proceeds received by the
Company from the issuance or sale (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any such
Subsidiary for the benefit of their employees) by the Company of its Capital
Stock (other than Disqualified Stock) after the Issue Date, net of attorneys’
fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
 
“Cash Equivalents” means any of the following:
 
(a) Investments in U.S. Government Securities maturing within 365 days of the
date of acquisition thereof;
 
(b) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 90 days of the date of acquisition thereof
issued by a bank or trust company organized under the laws of the United States
of America or any state thereof having capital, surplus and undivided profits
aggregating in excess of $500 million and whose long-term debt is rated “A-3” or
“A-” or higher according to Moody’s or S&P (or such similar equivalent rating by
at least one “nationally recognized statistical rating organization” (as defined
in Rule 436 under the Securities Act));
 
5

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(c) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) entered into with:
 
(1) a bank meeting the qualifications described in clause (b) above, or
 
(2) any primary government securities dealer reporting to the Market Reports
Division of the Federal Reserve Bank of New York;
 
(d) Investments in commercial paper, maturing not more than 90 days after the
date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America with a rating at the time as of which any Investment therein is made of
“P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or
such similar equivalent rating by at least one “nationally recognized
statistical rating organization” (as defined in Rule 436 under the Securities
Act));
 
(e) direct obligations (or certificates representing an ownership interest in
such obligations) of any state of the United States of America (including any
agency or instrumentality thereof) for the payment of which the full faith and
credit of such state are pledged and which are not callable or redeemable at the
issuer’s option, provided that:
 
(1) the long-term debt of such state is rated “A-3” or “A-” or higher according
to Moody’s or S&P (or such similar equivalent rating by at least one “nationally
recognized statistical rating organization” (as defined in Rule 436 under the
Securities Act)), and
 
(2) such obligations mature within 180 days of the date of acquisition thereof;
and
 
(f) time deposit accounts, certificates of deposit and money market deposits
with (i) Bank of China, Industrial and Commercial Bank of China, China
Construction Bank and China Merchants Bank or (ii) any other bank or trust
company organized under the laws of the PRC whose long-term debt is rated as
high or higher than any of those banks.
 
“Change of Control” means the occurrence of any of the following events:
 
(a) the Permitted Holders cease to be the Beneficial Owners, directly or
indirectly, of at least 30% of the total voting power of the Voting Stock of the
Company, whether as a result of the issuance of securities of the Company, any
merger, consolidation, liquidation or dissolution of the Company, any direct or
indirect transfer of securities by the Permitted Holders or otherwise (for
purposes of this definition of “Chang of Control”, the Permitted Holders will be
deemed to Beneficially Own any Voting Stock of a specified corporation held by a
parent corporation so long as the Permitted Holders Beneficially Own, directly
or indirectly, in the aggregate more than 30% of the total voting power of the
Voting Stock of such parent corporation); or
 
(c) any “person” or “group” of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted
Holders, acquires Control of the Company. The term “Control” as used in the
preceding sentence means the right to appoint and/or remove all or the majority
of the members of the Company’s Board of Directors or other governing body,
whether obtained directly or indirectly, and whether obtained by ownership of
share capital, the possession of voting rights, contract or otherwise; or
 
6

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(c) any “person” or “group” of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted
Holders, is or becomes the Beneficial Owner, directly or indirectly, of a
greater percentage of the total voting power of the Voting Stock of the Company
(or its successor by merger, consolidation or purchase of all or substantially
all of its assets) than the Permitted Holders (for the purposes of this
definition of “Change of Control”, such person or group shall be deemed to
Beneficially Own any Voting Stock of a specified corporation held by a parent
corporation so long as such person or group Beneficially Owns, directly or
indirectly, in the aggregate more than 30% of the total voting power of the
Voting Stock of such parent corporation); or
 
(d) the sale, transfer, assignment, lease, conveyance or other disposition,
directly or indirectly, of all or substantially all the Property of the Company
and its Subsidiaries, considered as a whole (other than a disposition of such
Property as an entirety or virtually as an entirety to a Wholly Owned Subsidiary
or one or more Permitted Holders), shall have occurred, or the Company merges,
consolidates or amalgamates with or into any other Person (other than one or
more Permitted Holders) or any other Person (other than one or more Permitted
Holders) merges, consolidates or amalgamates with or into the Company, in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Company is reclassified into or exchanged for cash, securities or other
Property, other than any such transaction where:
 
(1) the outstanding Voting Stock of the Company is reclassified into or
exchanged for other Voting Stock of the Company or for Voting Stock of the
Surviving Person, and
 
(2) the holders of the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly, not less than a majority of the Voting
Stock of the Company or the Surviving Person immediately after such transaction
and in substantially the same proportion as before the transaction; or
 
(e)  Continuing Directors cease for any reason to constitute a majority of the
Board of Directors of the Company then in office; or
 
(f)  the shareholders of the Company shall have approved any plan of liquidation
or dissolution of the Company.
 
“Clearstream” means Clearstream Banking, société anonyme, and any successor
thereto.
 
“Closing Sale Price” of the shares of Common Stock on any date means (i) if
Common Stock is primarily traded on a securities exchange, the last sale price
on such securities exchange on the applicable day, or if no sale occurred on
such day, the mean between the closing “bid” and “asked” prices on such day,
(ii) if the principal market for Common Stock is in the over-the-counter market,
the closing sale price on the applicable day as published by The NASDAQ Stock
Market, Inc. or similar organization, or if such price is not so published on
such day, the mean between the closing “bid” and “asked” prices, if available,
on such day, which prices may be obtained from any reputable pricing service,
broker or dealer, and (iii) if neither clause (i) nor clause (ii) is applicable,
the Fair Market Value as determined in good faith by the Board of Directors of
the Company or an Independent Financial Advisor, as applicable. The Closing Sale
Price shall be determined based on regular market hours without reference to
extended after hours trading or pre-market trading.
 
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“Code” means the U.S. Internal Revenue Code of 1986, as amended.
 
“Collateral” means all the collateral described in the Security Documents.
 
“Collateral Agent” means The Bank of New York, and any successor collateral
agent appointed pursuant to the terms of this Indenture.
 
“Combined Notes” means the Notes and the Other Notes, considered as a single
series for the purpose of voting of the Notes and the Other Notes and actions
taken by the Combined Noteholders, including without limitation, Articles 6 and
12.
 
“Combined Noteholders” means the Noteholders of the Notes and the Other Notes,
acting as holders of a single series of the Combined Notes for the purpose of
voting and taking actions with respect to the Notes and the Other Notes,
including without limitation, Articles 6 and 12.
 
“Commission” means the U.S. Securities and Exchange Commission.
 
“Commodity Price Protection Agreement” means, in respect of a Person, any
forward contract, commodity swap agreement, commodity option agreement or other
similar agreement or arrangement designed to protect such Person against
fluctuations in commodity prices.
 
“Common Depositary” means, with respect to the Notes issuable or issued in
global form, The Bank of New York Depository (Nominees) Limited, or registered
assigns, as the Common Depositary for Euroclear and Clearstream with respect to
the Notes, and any and all successors thereto appointed as depositary hereunder
and having become such pursuant to the applicable provisions of this Indenture.
 
“Common Stock” means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 14.06, however, shares issuable on conversion of Notes shall include
only shares of the class designated as common stock of the Company at the date
of this Indenture (namely, the Common Stock, par value $0.001) or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company; provided that, if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable on conversion
shall be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
 
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“Company” means the corporation named as the “Company” in the first paragraph of
this Indenture, and, subject to the provisions of Article 5 and Section 14.06,
shall include its successors and assigns.
 
“Consolidated Interest Expense” means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries, plus, to the extent
not included in such total interest expense, and to the extent Incurred by the
Company or its Subsidiaries, without duplication,
 
(a) interest expense attributable to leases constituting part of a Sale and
Leaseback Transaction and to Capital Lease Obligations,
 
(b) amortization of debt discount and debt issuance cost, including commitment
fees,
 
(c) capitalized interest,
 
(d) non-cash interest expense,
 
(e) commissions, discounts and other fees and charges owed with respect to
letters of credit and banker’s acceptance financing,
 
(f) net costs associated with Hedging Obligations (including amortization of
fees),
 
(g) Disqualified Stock Dividends (other than dividends payable in Capital Stock
other than Disqualified Stock),
 
(h) Preferred Stock Dividends (other than dividends payable in Capital Stock
other than Disqualified Stock) of Subsidiaries,
 
(i) interest accruing on any Debt of any other Person to the extent such Debt is
guaranteed by the Company or any of its Subsidiaries, and
 
(j) the cash contributions to any employee stock ownership plan or similar
trust, if any and to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Debt Incurred by such plan or trust.
 
“Consolidated Net Income” means, for any period, the net income (loss) of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
 
(a) any net income (loss) of any Person (other than the Company) if such Person
is not a Subsidiary of the Company, except that:
 
(1) subject to the exclusions contained in clauses (c), (d) and (e) below,
equity of the Company and its consolidated Subsidiaries in the net income of any
such Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash distributed by such Person during such period to
the Company or any of its Subsidiaries as a dividend or other distribution
(subject, in the case of a dividend or other distribution to such Subsidiary, to
the limitations contained in clause (b) below), and
 
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(2) the equity of the Company and its consolidated Subsidiaries in a net loss of
any such Person for such period shall be included in determining such
Consolidated Net Income,
 
(b) any net income (loss) of any Subsidiary of the Company if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions, directly or indirectly, to the Company, except
that:
 
(1) subject to the exclusions contained in clauses (c), (d) and (e) below, the
equity of the Company and its consolidated Subsidiaries in the net income of any
such Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash distributed by such Subsidiary during
such period to the Company or another of its Subsidiaries as a dividend or other
distribution (subject, in the case of a dividend or other distribution to
another Subsidiary of the Company, to the limitation contained in this clause),
and
 
(2) the equity of the Company and its consolidated Subsidiaries in a net loss of
any such Subsidiary for such period shall be included in determining such
Consolidated Net Income,
 
(c) any gain (but not loss) realized upon the sale or other disposition of any
Property of the Company or any of its consolidated Subsidiaries (including
pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business,
 
(d) any extraordinary gain or loss, and
 
(e) the cumulative effect of a change in accounting principles.
 
“Consolidated Net Worth” means the total of the amounts shown on the
consolidated balance sheet of the Company and its Subsidiaries as of the end of
the most recent Fiscal Quarter of the Company ending prior to the taking of any
action for the purpose of which the determination is being made, as:
 
(a) the par or stated value of all outstanding Capital Stock of the Company,
plus
 
(b) paid-in capital or capital surplus relating to such Capital Stock, plus
 
(c) any retained earnings or earned surplus, less:
 
(1) any accumulated deficit, and
 
(2) any amounts attributable to Disqualified Stock or any equity security
convertible into or exchangeable for Debt, the cost of treasury stock and the
principal amount of any promissory notes receivable from the sale of Capital
Stock of the Company or any of its Subsidiaries, each item to be determined in
conformity with GAAP.
 
“Consolidated Tangible Net Worth” means, as of any date of determination, the
Consolidated Net Worth less the Intangible Assets.
 
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“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors who (a) was a member of the Board of Directors on the date of
this Indenture or (b) was nominated for election to the Board of Directors by,
or whose election was ratified with the approval of, a majority of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
 
“Conversion Price” as of any day will equal $100,000 divided by the Conversion
Rate as of such date.
 
“Corporate Trust Office” shall be the address of the Trustee specified in
Section 15.03 hereof, or such other address as to which the Trustee may give
notice to the Company.
 
“Credit Facilities” means, with respect to the Operating Subsidiaries, one or
more debt or commercial paper facilities with banks or other institutional
lenders in the PRC providing for revolving credit loans, term loans, receivables
or inventory financing (including through the sale of receivables or inventory
to such lenders or to special purpose, bankruptcy remote entities formed to
borrow from such lenders against such receivables or inventory) or trade letters
of credit, in each case together with any Refinancings thereof by any lender or
syndicate of lenders.
 
“Currency Exchange Protection Agreement” means, in respect of a Person, any
foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
 
“Custodian” means, with respect to the Notes issuable or issued in global form,
the Person specified in Section 2.02(e) as Custodian with respect to the Notes,
and any and all successors thereto appointed as custodian hereunder and having
become such pursuant to the applicable provisions of this Indenture.
 
“Debt” means, with respect to any Person on any date of determination (without
duplication):
 
(a) the principal of and premium (if any) in respect of:
 
(1) debt of such Person for money borrowed, and
 
(2) debt evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable;
 
(b) all Capital Lease Obligations of such Person and all Attributable Debt in
respect of Sale and Leaseback Transactions entered into by such Person;
 
(c) all obligations of such Person representing the deferred purchase price of
Property, all conditional sale obligations of such Person and all obligations of
such Person under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business);
 
(d) all obligations of such Person for the reimbursement of any obligor on any
letter of credit, banker’s acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (a) through (c) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit);
 
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(e) the amount of all obligations of such Person with respect to the Repayment
of any Disqualified Stock or, with respect to any Subsidiary of such Person, any
Preferred Stock (but excluding, in each case, any accrued dividends);
 
(f) all obligations of the type referred to in clauses (a) through (e) above of
other Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any guarantee;
 
(g) all obligations of the type referred to in clauses (a) through (f) above of
other Persons secured by any Lien on any Property of such Person (whether or not
such obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the Fair Market Value of such Property and the amount
of the obligation so secured; and
 
(h) to the extent not otherwise included in this definition, Hedging Obligations
of such Person.
 
The amount of Debt of any Person at any date shall be the outstanding balance,
or the accreted value of such Debt in the case of Debt issued with original
issue discount, at such date of all unconditional obligations as described above
and the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date. The amount of Debt
represented by a Hedging Obligation shall be equal to the notional amount of
such Hedging Obligation.
 
“Default” means any event which is, or after notice or passage of time or both
would be, an Event of Default.
 
“Definitive Note” means a certificated Note registered in the name of the holder
thereof and issued in accordance with Section 2.05 or 2.07 hereof, in
substantially the form of Exhibit A hereto except that such Note shall not bear
the Global Note Legend and shall not have the “Schedule of Exchanges of
Interests in the Global Note” attached thereto.
 
“Disqualified Stock” means any Capital Stock of the Company or any of its
Subsidiaries that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in either case at the option of the
holder thereof) or otherwise:
 
(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise,
 
(b) is or may become redeemable or repurchaseable at the option of the holder
thereof (except that any Capital Stock that would constitute Disqualified Stock
solely because the holders of such Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a Change of
Control or an Asset Sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.10 hereof), in whole or in part, or
 
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(c) is convertible or exchangeable at the option of the holder thereof for Debt
or Disqualified Stock,
 
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Stated Maturity of the Notes.
 
“Disqualified Stock Dividends” means all dividends with respect to Disqualified
Stock of the Company held by Persons other than a Wholly Owned Subsidiary. The
amount of any such dividend shall be equal to the quotient obtained by dividing
such dividend by the difference between one and the maximum statutory federal
income tax rate (expressed as a decimal number between 1 and 0) then applicable
to the Company.
 
“Domestic Subsidiary” means any Subsidiary of the Company other than (a) a
Foreign Subsidiary or (b) a Subsidiary of a Foreign Subsidiary.
 
“EBITDA” means, for any period, an amount equal to, for the Company and its
consolidated Subsidiaries:
 
(a) the sum of Consolidated Net Income for such period, plus the following to
the extent reducing Consolidated Net Income for such period:
 
(1) the provision for taxes based on income or profits or utilized in computing
net loss,
 
(2) Consolidated Interest Expense,
 
(3) depreciation,
 
(4) amortization of intangibles, and
 
(5) any other non-cash items (other than any such non-cash item to the extent
that it represents an accrual of, or reserve for, cash expenditures in any
future period or amortization of a prepaid cash expense paid in a period prior
to the period that is subject to calculation), minus
 
(b) all non-cash items increasing Consolidated Net Income for such period.
 
Notwithstanding the foregoing clause (a), the provision for taxes and the
depreciation, amortization and non-cash items of a Subsidiary of the Company
shall be added to Consolidated Net Income to compute EBITDA only to the extent
(and in the same proportion) that the net income of such Subsidiary was included
in calculating Consolidated Net Income and only if a corresponding amount would
be permitted at the date of determination to be dividended to the Company by
such Subsidiary without prior approval (that has not been obtained), pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Subsidiary or its shareholders.
 
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“Euroclear” means Euroclear Bank, S.A./N.V., and any successor thereto.
 
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, as in effect from time to
time.
 
“Ex-Dividend Time” means, with respect to any distribution on shares of Common
Stock, the first date on which the shares of Common Stock trade regular way on
the principal securities market on which the shares of Common Stock are then
traded without the right to receive such distribution.
 
“Fair Market Value” means, with respect to any Property at the time of
determination, the price that could be negotiated in an arm’s-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
Market Value shall be determined, except as otherwise provided,
 
(a) if such Property has a Fair Market Value equal to or less than $1.0 million,
by any Officer of the Company,
 
(b) if such Property has a Fair Market Value in excess of $1.0 million, by a
majority of the Board of Directors and evidenced by a Board Resolution delivered
to the Trustee, or
 
(c) if such Property has a Fair Market Value in excess of $5.0 million, by an
Independent Financial Advisor and evidenced by a written opinion from such
Independent Financial Advisor dated within 30 days of the relevant transaction
delivered to the Trustee.
 
“Fehei” means Heilongjiang Feihe Dairy Co., Limited, a limited liability company
organized and existing under the laws of the PRC and a wholly-owned Subsidiary
of AFC.
 
“Financial and Operational Trigger” means, for the Company and its Subsidiaries
on a consolidated basis, that net income for a fiscal year shall be less than
the US dollar amount (or its equivalent in RMB, calculated at the exchange rate
for conversion of US dollars into RMB quoted by the People’s Bank of China on
the last Business Day of such Fiscal Quarter) indicated in the table below
opposite such fiscal year:

Fiscal Year Ending
 
Net Income
December 31, 2007
 
$24.2 million
December 31, 2008
 
$34.7 million
December 31, 2009
 
$50.6 million

The calculation of “net income” for the purposes of this definition shall be as
reported in the Company’s audited financial statements for the applicable fiscal
year, and shall be made in accordance with GAAP consistently applied, after
deducting “income tax expense” and the amount, if any, for minority interest
that may arise, but without adding any “other comprehensive income” or any
extraordinary income and without deducting any non-cash interest expense.
 
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“Fiscal Quarter” means each of the three month periods ending on March 31, June
30, September 30 and December 31.
 
“Foreign Subsidiary” means any Subsidiary of the Company which is not organized
under the laws of the United States of America or any State thereof or the
District of Columbia.
 
“GAAP” means United States generally accepted accounting principles as in effect
on the Issue Date, including those set forth in:
 
(a) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants,
 
(b) the statements and pronouncements of the Financial Accounting Standards
Board,
 
(c) such other statements by such other entity as approved by a significant
segment of the accounting profession, and
 
(d) the rules and regulations of the Commission governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the Commission.
 
All ratios and computations based on GAAP contained in this Indenture will be
computed in conformity with GAAP.
 
“Global Note Legend” means the legend set forth on all Global Notes issued under
this Indenture.
 
“Global Notes” means the global Notes in the form of Exhibit A hereto issued in
accordance with Article 2 hereof.
 
“Governmental Approval” means any authorization of or by, consent of, approval
of, license from, ruling of, permit from, tariff by, rate of, certification by,
exemption from, filing with (except any filing relating to the perfection of
security interests), variance from, claim of, order from, judgment from, decree
of, publication to or by, notice to, declaration of or with or registration by
or with any Governmental Authority, whether tacit or express.
 
“Governmental Authority” means any federal, state, national, provincial,
municipal, local, territorial or other government department, ministry
(including local counterparts thereof), commission, board, agency, regulatory
authority, instrumentality, judicial or administrative body, domestic or
foreign.
 
“guarantee” means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
 
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(a)  to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise), or
 
(b)  entered into for the purpose of assuring in any other manner the obligee
against loss in respect thereof (in whole or in part);
 
provided, however, that the term “guarantee” shall not include:
 
(1) endorsements for collection or deposit in the ordinary course of business,
or
 
(2) a contractual commitment by one Person to invest in another Person for so
long as such Investment is reasonably expected to constitute a Permitted
Investment under clause (a), (b) or (c) of the definition of “Permitted
Investment.”
 
The term “guarantee” used as a verb has a corresponding meaning. The term
“guarantor” shall mean any Person Guaranteeing any obligation.
 
“Guarantee” means the Guarantee of the Notes by each of the Guarantors pursuant
to Article 9 and in the form of the Guarantee attached as Exhibit B and any
additional Guarantee of the Notes to be executed by any Subsidiary of the
Company pursuant to Section 4.18.
 
“Guarantor” means AFC, and any other Subsidiary of the Company that becomes a
Guarantor pursuant to Section 4.18 or who otherwise executes and delivers a
supplemental indenture (in form satisfactory to the Trustee) to the Trustee
providing for a Guarantee; provided that any Person constituting a Guarantor as
described above shall cease to constitute a Guarantor when its respective
Guarantee is released in accordance with the terms of this Indenture.
 
“Hedging Obligation” of any Person means any obligation of such Person pursuant
to any Interest Rate Agreement, Currency Exchange Protection Agreement,
Commodity Price Protection Agreement or any other similar agreement or
arrangement
 
“Incur” means, with respect to any Debt or other obligation of any Person, to
create, issue, incur (by merger, conversion, exchange or otherwise), extend,
assume, Guarantee or become liable in respect of such Debt or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such Debt or
obligation on the balance sheet of such Person (and “Incurrence” and “Incurred”
shall have meanings correlative to the foregoing); provided, however, that a
change in GAAP that results in an obligation of such Person that exists at such
time, and is not theretofore classified as Debt, becoming Debt shall not be
deemed an Incurrence of such Debt; and provided further, however, that any Debt
or other obligations of a Person existing at the time such Person becomes a
Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be
deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary.
 
“Indenture” means this instrument as originally executed or, if amended or
supplemented as herein provided, as so amended or supplemented.
 
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“Independent Financial Advisor” means an investment banking firm of
international standing or any third party appraiser of international standing,
provided that such firm or appraiser is not an Affiliate of the Company.
 
“Intangible Assets” shall mean as of the date of any determination thereof the
total amount of all assets of the Company and its Subsidiaries classified as
goodwill, patents, trade names, trademarks, copyrights, franchises, experimental
expense, organization expense, unamortized debt discount and expense, deferred
assets other than prepaid insurance and prepaid taxes, the excess of cost of
shares acquired over book value of related assets and such other assets as are
properly classified as “intangible assets” in accordance with GAAP.
 
“Interest” means, when used with reference to the Notes, any interest payable
under the terms of the Notes, including Additional Interest, if any.
 
“Interest Rate Agreement” means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect against fluctuations in interest rates.
 
“Investment” by any Person means any direct or indirect loan (other than
advances to customers in the ordinary course of business that are recorded as
accounts receivable on the balance sheet of such Person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation
of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence of Debt issued by, any other Person.
 
In determining the amount of any Investment made by transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such Investment.
 
“Investor Rights Agreement” means the investor rights agreement dated the Issue
Date by and among the Company, AFC, the Operating Subsidiaries, the Shareholders
and Citadel Equity Fund Ltd.
 
“Issue Date” means June 1, 2007.
 
“Legal Holiday” means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the PRC, London, England, the city in
which the Corporate Trust Office of the Trustee is located or any other place of
payment on the Notes are authorized by law, regulation or executive order to
remain closed.
 
“Leverage Ratio” means the ratio of:
 
(a) the outstanding Debt of the Company and its Subsidiaries on a consolidated
basis, to
 
(b) EBITDA for the most recently completed four Fiscal Quarters;
 
(1) if:
 
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(A)  since the beginning of such period the Company or any of its Subsidiaries
has Incurred any Debt that remains outstanding or Repaid any Debt, or
 
(B) the transaction giving rise to the need to calculate the Leverage Ratio is
an Incurrence or Repayment of Debt,
 
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Incurrence or Repayment as if such Debt was
Incurred or Repaid on the first day of such period, provided that, in the event
of any such Repayment of Debt, EBITDA for such period shall be calculated as if
the Company or such Subsidiary had not earned any interest income actually
earned during such period in respect of the funds used to Repay such Debt, and
provided further that the amount of Debt Incurred under revolving credit
facilities shall be deemed to be the average daily balance of such Debt during
such period (or any shorter period in which such facilities are in effect) and
 
(2) if
 
(A) since the beginning of such period, the Company or any of its Subsidiaries
shall have made any Asset Sale or an Investment (by merger or otherwise) in any
Subsidiary of the Company (or any Person that becomes such a Subsidiary) or an
acquisition of Property,
 
(B) the transaction giving rise to the need to calculate the Leverage Ratio is
such an Asset Sale, Investment or acquisition, or
 
(C) since the beginning of such period any Person (that subsequently became a
Subsidiary of the Company or was merged with or into the Company or any of its
Subsidiaries since the beginning of such period) shall have made such an Asset
Sale, Investment or acquisition,
 
EBITDA for such period shall be calculated after giving pro forma effect to such
Asset Sale, Investment or acquisition as if such Asset Sale, Investment or
acquisition occurred on the first day of such period.
 
If any Debt bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Debt shall be calculated as if the base
interest rate in effect for such floating rate of interest on the date of
determination had been the applicable base interest rate for the entire period
(taking into account any Interest Rate Agreement applicable to such Debt if such
Interest Rate Agreement has a remaining term in excess of 12 months). In the
event the Capital Stock of any Subsidiary of the Company is sold during the
period, the Company shall be deemed, for purposes of clause (1) above, to have
Repaid during such period the Debt of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Debt after such
sale.
 
“Lien” means, with respect to any Property of any Person, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
 
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“Material Adverse Effect” means a material adverse effect on (a) the property,
business, operations, financial condition, liabilities or capitalization of the
Company or any of its Subsidiaries, (b) the ability of any such Person to
perform its payment obligations or any of its material obligations under any of
the Transaction Documents to which such Person is a party, (c) the validity or
enforceability of any of the Transaction Documents, (d) the material rights and
remedies of the Trustee or the Collateral Agent, under any of the Transaction
Documents or (e) the timely payment of any principal or premium of, or interest
on, any of the Notes.
 
“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating
agency business thereof.
 
“Net Available Cash” from any Asset Sale means cash payments received therefrom
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to the
Property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of:
 
(a) all legal, title and recording tax expenses, commissions and other fees and
expenses incurred, and all U.S. federal, state, national, provincial, foreign
and local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Sale,
 
(b) all payments made on or in respect of any Debt that is secured by any
Property subject to such Asset Sale, in accordance with the terms of any Lien
upon such Property, or which must by its terms, or in order to obtain a
necessary consent to such Asset Sale, or by applicable law, be repaid out of the
proceeds from such Asset Sale,
 
(c) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Sale, and
 
(d) the deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the Property
disposed of in such Asset Sale and retained by the Company or any of its
Subsidiaries after such Asset Sale.
 
“Note Obligations” means the Notes, the Guarantees and all other obligations of
any obligor under this Indenture, the Notes, the Guarantees and the Security
Documents.
 
“Notes Purchase Agreement” means the Amended and Restated Notes purchase
agreement dated June 1, 2007 by and among the Company, AFC, the Operating
Subsidiaries and Citadel Equity Fund Ltd.
 
“Notes” is defined in the preamble.
 
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“Noteholder” or “holder” as applied to any Note, or other similar terms (but
excluding the term “Beneficial Holder”), means any Person in whose name at the
time a particular Note is registered on the Registrar’s books.
 
“Notice Date” means the date of mailing of the notice pursuant to Section
3.02(b).
 
“Obligations” means all obligations for principal, premium, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Debt.
 
“Officer” means, with respect to the Company, its Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial Officer or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title “Vice President”) and the Treasurer or any
Assistant Treasurer, or the Secretary or Assistant Secretary.
 
“Officers’ Certificate” means a certificate, in form and substance satisfactory
to the Trustee, signed by two Officers of the Company, at least one of whom
shall be the principal executive officer or principal financial officer of the
Company, and which certificate meets the requirements of Section 15.05 hereof
and is delivered to the Trustee.
 
“Operating Subsidiaries” means (i) Feihe, (ii) BaiQuan Feihe Dairy Co., Limited,
a limited liability company organized and existing under the laws of the PRC and
a wholly-owned Subsidiary of Feihe, (iii) Beijing Feihe Biotechnology Scientific
and Commercial Co., Limited, a limited liability company organized and existing
under the laws of the PRC and 95% of the registered capital of which is owned by
Feihe and 5% of the registered capital of which is held in trust for the
Company, (iv) GanHan Feihe Dairy Company Limited, a limited liability company
organized and existing under the laws of the PRC and a wholly-owned Subsidiary
of the Company, (v) LangFang Feihe Dairy Company Limited, a limited liability
company organized and existing under the laws of the PRC and a wholly-owned
Subsidiary of the Company and (vi) Shanxi Feihesantai Biotechnology Scientific
and Commercial Co., Limited, a limited liability company organized and existing
under the laws of the PRC and a wholly-owned Subsidiary of the Company.
 
“Opinion of Counsel” means a written opinion, in form and substance satisfactory
to the Trustee, from legal counsel who is acceptable to the Trustee and which
meets the requirements of Section 15.05 hereof.
 
“Other Indenture” means the instrument between the Company and the Trustee
governing the terms and conditions of the Other Notes in an aggregate principal
amount not exceeding $20,000,000, as originally executed or, if amended or
supplemented as therein provided, as so amended or supplemented.
 
“Other Notes” means the notes in an aggregate principal amount not exceeding
$20,000,000, issued by the Company which shall rank pari passu with the Notes.
 
“Outstanding”, when used with reference to Notes and subject to the provisions
of Section 12.04, means, as of any particular time, all Notes authenticated and
delivered by the Trustee under this Indenture, except:
 
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(a) Notes theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;
 
(b) Notes, or portions thereof, (i) for the redemption of which monies in the
necessary amount shall have been deposited in trust with the Trustee or with any
paying agent (other than the Company) or (ii) which shall have been otherwise
discharged in accordance with Article 11;
 
(c) Notes in lieu of which, or in substitution for which, other Notes shall have
been authenticated and delivered pursuant to the terms of Section 2.06; and
 
(d) Notes converted into Common Stock pursuant to Article 14 and Notes deemed
not outstanding pursuant to Article 3.
 
“Permitted Holders” means Mr. Leng You-Bin, a resident of Beijing in the PRC,
and his estate, spouse, ancestors and lineal descendants, the legal
representatives of any of the foregoing and the trustees of any bona fide trusts
of which the foregoing are the sole beneficiaries or the grantors, or any Person
of which the foregoing Beneficially Owns, individually or collectively with any
of the foregoing, at least 30% of the total voting power of the Voting Stock of
such Person.
 
“Permitted Investment” means any Investment by the Company or any of its
Subsidiaries in:
 
(a) the Company or any of its Subsidiaries engaged in a Related Business;
 
(b)  any Person that will, upon the making of such Investment, become a
Subsidiary of the Company, provided that the primary business of such Subsidiary
is a Related Business;
 
(c)  any Person if as a result of such Investment such Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
Property to, the Company or a Subsidiary of the Company, provided that such
Person’s primary business is a Related Business;
 
(d)  cash and Cash Equivalents;
 
(e)  receivables owing to the Company or any of its Subsidiaries, if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as the Company or such Subsidiary
deems reasonable under the circumstances;
 
(f)  payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses under GAAP and
that are made in the ordinary course of business;
 
(g)  stock, obligations or other securities received in settlement of debts
created in the ordinary course of business and owing to the Company or one of
its Subsidiaries or in satisfaction of judgments;
 
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(h)  any Person to the extent such Investment represents the non-cash portion of
the consideration received in connection with (A) an Asset Sale consummated in
compliance with Section 4.12 or (B) any disposition of Property not constituting
an Asset Sale;
 
(i)  Hedging Obligations by the Company or any Guarantor that are otherwise
permitted to be incurred under this Indenture, and which were entered into for
financial management of interest rates, foreign currency exchange rates or
commodity prices and are directly related to transactions entered into by such
Person in the ordinary course of its business, and not for speculative purposes;
and
 
(j)  other Investments made for Fair Market Value that do not exceed 10% of the
aggregate amount of Consolidated Net Income accrued during the period (treated
as one accounting period) from the beginning of the Fiscal Quarter after the
Issue Date to the end of the most recent Fiscal Quarter ending prior to the date
of such Investment (or if the aggregate amount of Consolidated Net Income for
such period shall be a deficit, minus 100% of such deficit).
 
“Permitted Liens” means:
 
(a)  Liens in favor of the Company or the Guarantors;
 
(b)  Liens securing, or created for the benefit of securing, the Notes, the
Other Notes and the Guarantees;
 
(c)  Liens securing Debt of an Operating Subsidiary under Credit Facilities,
provided that any such Lien is limited to the Property of such Operating
Subsidiary;
 
(d) leases, licenses, subleases and sublicenses of assets (including, without
limitation, real property and intellectual property rights) which do not
materially interfere with the ordinary conduct of the business of the Company or
any of the Subsidiaries;
 
(e) Liens for taxes, assessments or governmental charges or levies on the
Property of the Company or any of its Subsidiaries if the same shall not at the
time be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
that shall be required in conformity with GAAP shall have been made therefor;
 
(f)  Liens imposed by law, such as carriers’, warehousemen’s and mechanics’
Liens and other similar Liens, on the Property of the Company or any of its
Subsidiaries arising in the ordinary course of business and securing payment of
obligations that are not more than 60 days past due or are being contested in
good faith and by appropriate proceedings;
 
(g)  Liens on the Property of the Company or any of its Subsidiaries Incurred in
the ordinary course of business to secure performance of obligations with
respect to statutory or regulatory requirements, performance or return-of-money
bonds, surety bonds or other obligations of a like nature and Incurred in a
manner consistent with industry practice, in each case which are not Incurred in
connection with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of Property and which do not in the
aggregate impair in any material respect the use of Property in the operation of
the business of the Company and its Subsidiaries taken as a whole;
 
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(h)  Liens on Property at the time the Company or any of its Subsidiaries
acquired such Property, including any acquisition by means of a merger or
consolidation with or into the Company or any of its Subsidiaries; provided,
however, that any such Lien may not extend to any other Property of the Company
or any of its Subsidiaries; provided further, that such Liens shall not have
been Incurred in anticipation of or in connection with the transaction or series
of transactions pursuant to which such Property was acquired by the Company or
any of its Subsidiaries;
 
(i)  Liens on the Property of a Person at the time such Person becomes a
Subsidiary of the Company; provided, however, that any such Lien may not extend
to any other Property of the Company or any other Subsidiary of the Company that
is not a direct Subsidiary of such Person; provided further, that any such Lien
was not Incurred in anticipation of or in connection with the transaction or
series of transactions pursuant to which such Person became a Subsidiary of the
Company;
 
(j)  pledges or deposits by the Company or any of its Subsidiaries under
workers’ compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (other than
for the payment of Debt) or leases to which the Company or any of its
Subsidiaries is party, or deposits to secure public or statutory obligations of
the Company, or deposits for the payment of rent, in each case Incurred in the
ordinary course of business;
 
(k)  utility easements, building restrictions and such other encumbrances or
charges against real Property as are of a nature generally existing with respect
to properties of a similar character;
 
(l)  Liens existing on the Issue Date not otherwise described in clauses (a)
through (h) above;
 
(m)  Liens on the Property of the Company or any of its Subsidiaries to secure
any Refinancing, in whole or in part, of any Debt secured by Liens referred to
in clause (h), (i) or (l) above; provided, however, that any such Lien shall be
limited to all or part of the same Property that secured the original Lien
(together with improvements and accessions to such Property), and the aggregate
principal amount of Debt (and other obligations thereunder) that is secured by
such Lien shall not be increased to an amount greater than the sum of:
 
(1)  the outstanding principal amount, or, if greater, the committed amount, of
the Debt (and other obligations thereunder) secured by Liens described under
clause (h), (i) or (l) above, as the case may be, at the time the original Lien
became a Permitted Lien under this Indenture, and
 
(2)  an amount necessary to pay any fees and expenses, including premiums and
defeasance costs, incurred by the Company or such Subsidiary in connection with
such Refinancing; and
 
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(n)  judgment Liens not giving rise to en Event of Default so long as such Lien
is adequately bonded and any appropriate legal proceedings which may have been
duly initiated for the review of such judgment have not been finally terminated
or the period within which such proceedings may be initiated has not expired.
 
“Permitted Refinancing Debt” means any Debt that Refinances any other Debt,
including any successive Refinancings, so long as:
 
(a)  such Debt is in an aggregate principal amount (or if Incurred with original
issue discount, an aggregate issue price) not in excess of the sum of:
 
(1) the aggregate principal amount (or if Incurred with original issue discount,
the aggregate accreted value) then outstanding of the Debt being Refinanced, and
 
(2) an amount necessary to pay any fees and expenses, including premiums and
defeasance costs, related to such Refinancing,
 
(b)  the Average Life of such Debt is equal to or greater than the Average Life
of the Debt being Refinanced,
 
(c)  the Stated Maturity of such Debt is no earlier than the Stated Maturity of
the Debt being Refinanced,
 
(d)  the new Debt shall not be senior in right of payment to the Debt that is
being Refinanced, and
 
(e)  the new Debt, the proceeds of which are used to Refinance the Notes or any
Debt that is pari passu with or subordinate to the Notes or a Guarantee, shall
only be permitted if (A) in case the Notes are refinanced in part or the Debt to
be Refinanced is pari passu with the Notes or a Guarantee, such new Debt, by its
terms or by terms of any agreement or instrument pursuant to which such new Debt
is outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the remaining Notes or such Guarantee, or (B) in case the Debt to be
Refinanced is subordinated in right of payment to the Notes or a Guarantee, such
new Debt, by its terms or by the terms of any agreement or instrument to which
such new Debt is issued or remains outstanding, is expressly made subordinate in
right of payment to the Notes or such Guarantee at least to the extent that the
Debt to be Refinanced is subordinated to the Notes or the Guarantee;
 
provided, however, that Permitted Refinancing Debt shall not include the Debt of
any Subsidiary that is not a Guarantor, if such Debt is used to Refinance Debt
of the Company or a Subsidiary.
 
“Person” means a corporation, an association, a partnership, a limited liability
company, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
 
“PRC” means the People’s Republic of China, exclusive of Taiwan, Macau and Hong
Kong.
 
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“Predecessor Note” of any particular Note means every previous Note evidencing
all or a portion of the same Debt as that evidenced by such particular Note; and
any Note authenticated and delivered under Section 2.06 in lieu of a lost,
destroyed or stolen Note shall be deemed to evidence the same Debt as the lost,
destroyed or stolen Note.
 
“Preferred Stock” means any Capital Stock of a Person, however designated, which
entitles the holder thereof to a preference with respect to the payment of
dividends, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of any other class of
Capital Stock issued by such Person.
 
“Preferred Stock Dividends” means all dividends with respect to Preferred Stock
of the Company’s Subsidiaries held by Persons other than the Company or any of
its Wholly Owned Subsidiaries. The amount of any such dividend shall be equal to
the quotient obtained by dividing such dividend by the difference between one
and the maximum statutory federal and/or other applicable income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such Preferred Stock.
 
“pro forma” means, with respect to any calculation made or required to be made
pursuant to the terms hereof, a calculation performed in accordance with Article
11 of Regulation S-X promulgated under the Securities Act, as interpreted in
good faith by the Board of Directors after consultation with the independent
certified public accountants of the Company, or otherwise a calculation made in
good faith by the Board of Directors after consultation with the independent
certified public accountants of the Company, as the case may be.
 
“Property” means, with respect to any Person, any interest of such Person in any
kind of property or asset, whether real, personal or mixed, or tangible or
intangible, including intellectual property rights and Capital Stock in, and
other securities of, any other Person. For purposes of any calculation required
pursuant to this Indenture, the value of any Property shall be its Fair Market
Value.
 
“Qualifying IPO” means a public offering of Common Stock of the Company pursuant
to an effective registration statement under the Securities Act that results in
(i) at least 25% of the Company’s issued and outstanding share capital being
publicly held by Persons other than any Affiliate of the Company or the
Permitted Holders, (ii) the product of (x) the number of shares of Common Stock
of the Company (including other securities of the Company that are convertible
into Common Stock of the Company, on an as-converted basis) and (y) the Closing
Sale Price of the Company’s Common Stock on the date of listing in connection
with the Qualifying IPO, shall be at least $500,000,000 (unless such percentage
in (i) above or dollar amount in (ii) above be otherwise agreed by the holders
of a majority in aggregate principal amount of the Combined Notes then
outstanding), (iii) the minimum number of holders of the Company’s Common Stock
as required by the securities exchange on which such Common Stock is listed in
connection with such Qualifying IPO and (iv) listing of the Common Stock on the
New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market or any other market consented to by the holders
of a majority in aggregate principal amount of the Combined Notes then
outstanding.
 
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“Redemption Price” means the amount calculated in accordance with the following
formula, rounded (if necessary) to two decimal places with 0.005 being rounded
upwards:
 
Redemption Price = I x (1 + r)d/360
 
Where:
   
I
=
Issue price (100% of principal amount) of the Notes;
r
=
18.0% expressed as a decimal; and
d
=
number of days from and including the Issue Date to but excluding, the date for
redemption or repurchase, calculated on the basis of a 360-day year consisting
of 12 months of 30 days each, and in the case of an incomplete month, the actual
number of days elapsed.
     

For the avoidance of doubt, if the date fixed for redemption is one of the
following semi-annual dates, the Redemption Price for each US$100,000 principal
amount shall be as set out in the table below in respect of such semi-annual
date:
 
Semi-annual Date
 
Redemption Price (US$)
 
December 1, 2007
 
US$
108,627.80
 
June 1, 2008
   
118,000.00
 
December 1, 2008
   
128,180.81
 
June 1, 2009
   
139,240.00
 
December 1, 2009
   
151,253.36
 
June 1, 2010
   
164,303.20
 
December 1, 2010
   
178,478.96
 
June 1, 2011
   
193,877.78
 
December 1, 2011
   
210,605.17
 
June 1, 2012
   
228,775.78
           

“Refinance” means, in respect of any Debt, to refinance, extend, renew, refund
or Repay (in whole or in part), or to issue other Debt, in exchange or
replacement for (in whole or in part), such Debt. “Refinanced” and “Refinancing”
shall have correlative meanings.
 
“Registration Rights Agreement” means the registration rights agreement dated
the Issue Date by and among the Company, AFC, the Shareholders and Citadel
Equity Fund Ltd.
 
“Related Business” means the business of processing, manufacturing, marketing
and/or distributing of soybean powder, walnut powder, rice cereal, milk powder
or other dairy and related food products in the PRC or any other country,
including any other activities related thereto.
 
“Repay” means, in respect of any Debt, to repay, prepay, repurchase, redeem,
legally defease or otherwise retire such Debt. “Repayment” and “Repaid” shall
have correlative meanings. For purposes of Section 4.12 and the definition of
“Leverage Ratio,” Debt shall be considered to have been Repaid only to the
extent the related loan commitment, if any, shall have been permanently reduced
in connection therewith.
 
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“Repurchase Amount” means, with respect to any Note, the Redemption Price plus
any accrued and unpaid Interest and any other interest payable pursuant to
Section 4.01 on such Note (including post-petition interest in any proceeding
under any Bankruptcy Law) and interest accrued on overdue principal (and, to the
extent lawful, on overdue installments of interest) and premium, if any.
 
“Responsible Officer” shall mean, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee with direct
responsibility for the administration of this Indenture.
 
“Restricted Payment” means:
 
(a)  any dividend or distribution (whether made in cash, securities or other
Property) declared or paid on or with respect to any shares of Capital Stock of
the Company or any of its Subsidiaries (including any payment in connection with
any merger or consolidation with or into the Company or any of its
Subsidiaries), except for any dividend or distribution that is made solely to
the Company or any of its Subsidiaries (and, if such Subsidiary is not a Wholly
Owned Subsidiary, to the other shareholders of such Subsidiary on a pro rata
basis or on a basis that results in the receipt by the Company or any of its
Subsidiaries of dividends or distributions of greater value than it would
receive on a pro rata basis) or any dividend or distribution payable solely in
shares of Capital Stock (other than Disqualified Stock) of the Company;
 
(b)  the purchase, repurchase, redemption, acquisition or retirement for value
of any Capital Stock of the Company or any of its Subsidiaries (other than from
the Company or any of its Subsidiaries) or any securities exchangeable for or
convertible into any such Capital Stock, including the exercise of any option to
exchange any Capital Stock (other than for or into Capital Stock of the Company
that is not Disqualified Stock);
 
(c)  the purchase, repurchase, redemption, acquisition or retirement for value,
prior to the date for any scheduled maturity, sinking fund or amortization or
other installment payment, of any Subordinated Obligation (other than the
purchase, repurchase or other acquisition of any Subordinated Obligation
purchased in anticipation of satisfying a scheduled maturity, sinking fund or
amortization or other installment obligation, in each case due within one year
of the date of acquisition); or
 
(d)  any Investment (other than Permitted Investments) in any Person.
 
“RMB” means the lawful currency of the PRC.
 
“S&P” means Standard & Poor’s Ratings Services, a division of McGraw Hill, Inc.,
or any successor to the rating agency business thereof.
 
“Sale and Leaseback Transaction” means any direct or indirect arrangement
relating to Property now owned or hereafter acquired whereby the Company or any
of its Subsidiaries transfers such Property to another Person and the Company or
any of its Subsidiaries leases it from such Person.
 
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“Securities Act” means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.
 
“Security Documents” means that certain Share Pledge Agreement dated the date
hereof in favor of the Collateral Agent for the benefit of the holders of Note
Obligations, whenever incurred, and also for the benefit of the present and
future holders of all other Note Obligations and any document perfecting such
security interests, and any one or more security agreements, pledge agreements,
collateral assignments, mortgages, deeds of trust or other grants or transfers
for security executed and delivered by the Company or any other obligor creating
a Lien upon property owned or to be acquired by the Company or such other
obligor in favor of the Collateral Agent for the benefit of the holders of Note
Obligations, whenever incurred, and also for the benefit of the present and
future holders of all other Note Obligations and any document perfecting such
security interests pursuant to the terms of Article 10 hereof.
 
“Senior Debt” of the Company means:
 
(a)  all obligations consisting of the principal, premium, if any, and accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such post-filing interest is allowed in such proceeding) in respect of:
 
(1) Debt of the Company for borrowed money, and
 
(2) Debt of the Company evidenced by notes, debentures, bonds or other similar
instruments permitted under this Indenture for the payment of which the Company
is responsible or liable;
 
(b)  all Capital Lease Obligations of the Company and all Attributable Debt in
respect of Sale and Leaseback Transactions entered into by the Company;
 
(c)  all obligations of the Company
 
(1) for the reimbursement of any obligor on any letter of credit, banker’s
acceptance or similar credit transaction,
 
(2) under Hedging Obligations, or
 
(3) issued or assumed as the deferred purchase price of Property and all
conditional sale obligations of the Company and all obligations under any title
retention agreement permitted under this Indenture; and
 
(d)  all obligations of other Persons of the type referred to in clauses (a),
(b) and (c) for the payment of which the Company is responsible or liable as
Guarantor;
 
 provided, however, that Senior Debt shall not include:
 
(A)  Debt of the Company that is by its terms subordinate in right of payment to
the Notes, including any Subordinated Obligations;
 
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(B)  any Debt Incurred in violation of the provisions of this Indenture;
 
(C)  accounts payable or any other obligations of the Company to trade creditors
created or assumed by the Company in the ordinary course of business in
connection with the obtaining of materials or services (including Guarantees
thereof or instruments evidencing such liabilities);
 
(D)  any liability for U.S. federal, state, national, provincial, local or other
taxes owed or owing by the Company;
 
(E)  any obligation of the Company to any of its Subsidiaries; or
 
(F)  any obligations with respect to any Capital Stock of the Company.
 
To the extent that any payment of Senior Debt (whether by or on behalf of the
Company as proceeds of security or enforcement or any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered by,
or paid over to, such trustee, receiver or other similar party, the Senior Debt
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred.
 
“Senior Debt” of any Guarantor has a correlative meaning.
 
“Shareholders” means Mr. Leng You-Bin and Mr. Liu Hua.
 
“Significant Subsidiary” means any Subsidiary that would be a “significant
subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the Commission.
 
“Stated Maturity” means, with respect to any installment of interest or
principal on any series of Debt (including, without limitation, a scheduled
repayment or a scheduled sinking fund payment), the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Debt, and will not include any contingent obligations to repay,
redeem or repurchase any such interest or principal prior to the date originally
scheduled for the payment hereof.
 
“Subordinated Obligation” means any Debt of the Company or any Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Notes or the applicable
Guarantee pursuant to a written agreement to that effect.
 
“Subsidiary,” with respect to any Person, means (i) any corporation of which the
outstanding Capital Stock having a majority of the votes entitled to be cast in
the election of directors under ordinary circumstances shall at the time be
owned, directly or indirectly, through one or more intermediaries, by such
Person or (ii) any other Person of which a majority of the voting interest under
ordinary circumstances is at the time, directly or indirectly, through one or
more intermediaries, owned by such Person.
 
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“Surviving Person” means the surviving Person formed by a merger, consolidation
or amalgamation and, for purposes of Section 5.01, a Person to whom all or
substantially all of the Property of the Company or a Guarantor is sold,
transferred, assigned, leased, conveyed or otherwise disposed.
 
“Tax Original Issue Discount” means the amount of ordinary interest income on a
Note that must be accrued as original issue discount for United States federal
income tax purposes.
 
“Termination of Trading” will be deemed to have occurred if, (i) the Common
Stock (or other common stock, depositary receipts, ordinary shares or other
certificates representing common equity interests into which the Notes are then
convertible) is neither listed for trading on a United States national
securities exchange, listed for trading on a United States national or regional
securities exchange nor approved for trading on any of the Nasdaq’s Capital
Market, Global Market or Global Select Market, (ii) trading in the Common Stock
on any such exchange or market has been suspended for more than ten consecutive
Trading Days, or (iii) a transaction or event (whether by means of an exchange
offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) occurs in connection with which
all or substantially all of the Common Stock is exchanged for, converted into,
or acquired for, consideration which is not all or substantially all common
stock, depositary receipts, ordinary shares or other certificates representing
common equity interests that are (or, upon consummation of or immediately
following such transaction or event, will be) listed on a United States national
securities exchange or approved (or, upon consummation of or immediately
following such transaction or event, will be approved) for quotation on the
Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market or any
similar United States system of automated dissemination of quotations of
securities prices.
 
“Transaction Document” means this Indenture, the Notes, the Guarantees, Notes
Purchase Agreement, the Investor Rights Agreement, the Registration Rights
Agreement, the Security Documents, certain Non-Competition Agreements dated the
Issue Date by and between the Company and each of the Shareholders, or any of
them as the context may so require.
 
“Trading Day” shall mean (x) if the applicable security is quoted on the Nasdaq
Global Market, Global Select Market or Capital Market, a day on which trades may
be made thereon, (y) if the applicable security is listed or admitted for
trading on the American Stock Exchange, New York Stock Exchange or another
national securities exchange, a day on which the American Stock Exchange, New
York Stock Exchange or another national securities exchange is open for
business, or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
 
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the Nasdaq
Capital Market, the American Stock Exchange, the New York Stock Exchange, the
NYSE Archipelago Exchange, the Nasdaq Global Market or the Nasdaq Global Select
Market.
 
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“Trading Reference VWAP” means, as of March 1 or September 1 of each year, the
simple arithmetic average of the VWAPs for the thirty Trading Days preceding
such March 1 or September 1, as the case may be, as proportionally adjusted for
any subdivision, consolidation, reclassification or similar event of the Common
Stock; provided that if the actual Trading Reference VWAP be less than $12.00,
the Trading Reference VWAP shall be deemed to be exactly $12.00.
 
“Trustee” means the Person named as the “Trustee” in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Trustee” shall mean
such successor Trustee.
 
“U.S. Government Securities” means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America are pledged and
which are not callable or redeemable at the issuer’s option.
 
“Voting Stock” of any Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
 
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted for trading as reported by Bloomberg
Financial L.P. through its “Volume at Price” functions (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); or (b) if
the Common Stock is not then listed or quoted on a Trading Market and if prices
for the Common Stock are then reported in the “Pink Sheets” published by Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the average of the highest closing bid price and lowest
closing ask price of any of the market makers for such security as reported, and
in each of the foregoing clauses ignoring any block trade (which for purposes of
this definition means any transfer of more than 100,000 shares).  If the VWAP
cannot be calculated for such security on such date on any of the foregoing
bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Noteholders of at least a majority in
aggregate principal amount of the Combined Notes then outstanding.
 
“Wholly Owned Subsidiary” means, at any time, a Subsidiary all the Voting Stock
of which (except directors’ qualifying shares) is at such time owned, directly
or indirectly, by the Company and its other Wholly Owned Subsidiaries.
 
Section 1.02.   Other Definitions.

Term
 
Defined in
Section
 
“Additional Interest Notice”
   
4.31
 
“Adjustment Event”
   
14.05(n
)
“Affiliate Transaction”
   
4.14
 
“Allocable Excess Proceeds”
   
4.12
 
“Asset Sale Offer”
   
4.12
 
“Authentication Order”
   
2.04
 
“Benefited Party”
   
9.01
 
“Change of Control Offer”
   
4.17(a
)
“Conversion Date”
   
14.02
 
“Conversion Notice”
   
14.02
 
“Conversion Rate”
   
14.04
 
“Current Market Price”
   
14.05(j
)
“Determination Date”
   
14.05(n
)
“Event of Default”
   
6.01
 
“Excess Proceeds”
   
4.12
 
“Exchange Act Filings”
   
4.33(a
)
“Expiration Time”
   
14.05(f
)
“Future Guarantor”
   
9.03
 
“Future Guarantor Pledgor”
   
10.02(b
)
“Guarantor Pledgor”
   
10.02(b
)
“Interest Payment Date”
   
2.03
 
“Non-electing share”
   
14.06
 
“Offer Amount”
   
3.02(b
)
“Offer Period”
   
3.02(c
)
“Offer to Purchase”
   
3.02(a
)
“Paying Agent”
   
4.02
 
“Purchase Date”
   
3.02(c
)
“Purchase Price”
   
3.02(b
)
“Purchased Shares”
   
14.05(f
)
“Record Date”
   
14.05(j
)
“Registrar”
   
4.02
 
“Rule 144A Information”
   
4.33(b
)
“Securities”
   
14.05(d
)
“Security Register”
   
4.02
 
“Termination of Trading Offer”
   
4.26
 
“Trigger Event”
   
14.05(d
)

 
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Section 1.03.   Rules of Construction.
 
(a) Unless the context otherwise requires:
 
(i) a term has the meaning assigned to it;
 
(ii) an accounting term not otherwise defined herein has the meaning assigned to
it in accordance with GAAP;
 
(iii) “or” is not exclusive;
 
(iv) words in the singular include the plural, and in the plural include the
singular;
 
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(v) all references in this instrument to “Articles,” “Sections” and other
subdivisions are to the designated Articles, Sections and subdivisions of this
instrument as originally executed;
 
(vi) the words “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
 
(vii) “including” means “including without limitation;”
 
(viii) provisions apply to successive events and transactions;
 
(ix) “$” means the lawful currency of the United States of America; and
 
(x) references to sections of or rules under the Securities Act or the Exchange
Act shall be deemed to include substitute, replacement or successor sections or
rules adopted by the Commission from time to time thereunder.
 
ARTICLE 2

 
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
 
Section 2.01.   Designation Amount and Issue of Notes.
 
The Notes shall be designated as “1.0% Guaranteed Senior Secured Convertible
Notes due 2012”. Notes in the initial aggregate principal amount of $60,000,000
upon the execution of this Indenture, or from time to time thereafter, may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company, signed by its Chairman of the Board, Chief
Executive Officer, President or any Vice President (whether or not designated by
a number or numbers or word or words added before or after the title “Vice
President”), the Treasurer or any Assistant Treasurer or the Secretary or
Assistant Secretary, without any further action by the Company hereunder.
 
Section 2.02.   Form of Notes.
 
(a) The Notes and the Trustee’s certificate of authentication to be borne by
such Notes shall be substantially in the form set forth in Exhibit A. The terms
and provisions contained in the form of Note attached as Exhibit A hereto shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
 
(b) Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends, endorsements or changes as the
officers executing the same may approve (execution thereof to be conclusive
evidence of such approval) and as are not inconsistent with the provisions of
this Indenture, or as may be required by the Custodian, the Common Depositary or
as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage, or to indicate any special limitations or
restrictions to which any particular Notes are subject.
 
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(c) So long as the Notes are eligible for book-entry settlement with the Common
Depositary, or unless otherwise required by law, or otherwise contemplated by
Section 2.05(a), all of the Notes will be represented by one or more Notes in
global form registered in the name of the Common Depositary or the nominee of
the Common Depositary. The transfer and exchange of beneficial interests in any
such Global Note shall be effected through the Common Depositary in accordance
with this Indenture and the applicable procedures of the Common Depositary.
Except as provided in Section 2.05(a), beneficial owners of a Global Note shall
not be entitled to have certificates registered in their names, will not receive
or be entitled to receive physical delivery of certificates in definitive form
and will not be considered holders of such Global Note.
 
(d) Any Global Note shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented thereby may from time to time be
increased or reduced to reflect redemptions, repurchases, conversions,
transfers, exchanges or further issuances permitted hereby. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon instructions
given by the holder of such Notes in accordance with this Indenture. Payment of
principal of, premium, if any, and Interest on any Global Note shall be made to
the holder of such Note.
 
(e) This Section 2.02(e) shall apply only to Global Notes deposited with the
Trustee, as custodian for the Common Depositary. Participants shall have no
rights under this Indenture or any Global Note with respect to any Global Note
held on their behalf by the Common Depositary or by the Trustee as custodian for
the Common Depositary, and the Common Depositary shall be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Common Depositary or impair, as
between the Common Depositary and its Participants, the Applicable Procedures or
the operation of customary practices of the Common Depositary governing the
exercise of the rights of a holder of a beneficial interest in any Global Note.
 
The provisions of the “Terms and Conditions Governing Use of Euroclear” and the
“General Terms and Conditions of Clearstream” and “Customer Handbook” of
Clearstream shall be applicable to transfers of beneficial interests in Global
Notes that are held by Participants through Euroclear or Clearstream.
 
The Company shall exchange Global Notes for Definitive Notes if: (1) at any time
either Euroclear or Clearstream or any alternative clearing agency on behalf of
which the Notes evidenced by the Global Note may be held is closed for business
for a continuous period of 14 days (other than reason of holidays, statutory or
otherwise) or announces an intention permanently to cease business or does in
fact do so, and, in either case, the Company shall not have appointed a
successor Common Depositary within 90 days after the Company receives such
notice or becomes aware of such ineligibility, or (2) upon written request of a
holder or the Trustee if a Default or Event of Default shall have occurred and
be continuing.
 
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Upon the occurrence of any of the events set forth in clauses (1) or (2) of the
immediately preceding paragraph, the Company shall execute, and, upon receipt of
an Authentication Order in accordance with Section 2.04 hereof, the Trustee
shall authenticate and deliver, Definitive Notes, in authorized denominations,
in an aggregate principal amount equal to the principal amount of the Global
Notes in exchange for such Global Notes.
 
Upon the exchange of a Global Note for Definitive Notes, such Global Note shall
be cancelled by the Trustee or an agent of the Company or the Trustee.
Definitive Notes issued in exchange for a Global Note pursuant to this Section
shall be registered in such names and in such authorized denominations as the
Common Depositary, pursuant to instructions from its Participants or its
Applicable Procedures, shall instruct the Trustee or an agent of the Company or
the Trustee in writing. The Trustee or such agent shall deliver such Definitive
Notes to or as directed by the Persons in whose names such Definitive Notes are
so registered or to the Common Depositary.
 
Section 2.03.   Date and Denomination of Notes; Payments of Interest.
 
The Notes shall be issuable in registered form without coupons in denominations
of $100,000 principal amount and integral multiples thereof. Each Note shall be
dated the date of its authentication and shall bear Interest from the date
specified on the face of the form of Note attached as Exhibit A hereto. Interest
on the Notes shall be computed on the basis of a 360-day year comprised of
twelve 30-day months.
 
The Person in whose name any Note (or its Predecessor Note) is registered on the
Security Register at the close of business on any record date with respect to
any interest payment date shall be entitled to receive the Interest payable on
such interest payment date, except that the Interest payable upon redemption or
repurchase will be payable to the Person to whom principal is payable pursuant
to such redemption or repurchase (unless the redemption date or the repurchase
date, as the case may be, falls after a record date and on or prior to the
corresponding interest payment date, in which case accrued and unpaid Interest
to, but excluding, such redemption date or repurchase date shall be payable on
such interest payment date to the holders of such Notes registered as such on
the applicable record date).
 
Notwithstanding the foregoing, if any Note (or portion thereof) is converted
into Common Stock during the period after a record date for the payment of
Interest to, but excluding, the next succeeding interest payment date and such
Note (or portion thereof) has been called or tendered for redemption on a
redemption date which occurs during such period, the Company shall not be
required to pay interest on such interest payment date in respect of any such
Note (or portion thereof). Interest shall be payable at the office of the
Company maintained by the Company for such purposes in the City of New York,
which shall initially be an office or agency of the Trustee. The Company shall
pay Interest (i) on any Notes in certificated form by (x) check mailed to the
address of the Person entitled thereto as it appears in the Security Register
(or upon written notice, by wire transfer in immediately available funds, if
such Person is entitled to Interest on aggregate principal in excess of $1
million) or (y) by transfer to an account maintained by such person in the City
of New York or (ii) on any Global Note by wire transfer of immediately available
funds to the account of the Common Depositary or its nominee. The term “record
date” with respect to any interest payment date shall mean the May 17 or
November 17 preceding the applicable June 1 or December 1 interest payment date
(each, an “Interest Payment Date”), respectively.
 
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Section 2.04.   Execution of Notes.
 
The Notes shall be signed in the name and on behalf of the Company by the manual
or facsimile signature of its Chairman of the Board, Chief Executive Officer,
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title “Vice President”) and
attested by the manual or facsimile signature of its Secretary or any of its
Assistant Secretaries or its Treasurer or any of its Assistant Treasurers (which
may be printed, engraved or otherwise reproduced thereon, by facsimile or
otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto upon a written order of the Company signed by an Officer (an
“Authentication Order”), manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 15.10), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
 
In case any officer of the Company who shall have signed any of the Notes shall
cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
 
Section 2.05.   Exchange and Registration of Transfer of Notes; Restrictions on
Transfer.
 
(a) As provided herein, interests in a Global Note will be exchanged, upon 45
days’ notice by a holder of an interest in such Global Note for Definitive
Notes. Each Global Note shall be deposited with the Common Depositary, which
shall hold such Global Note in safe custody for the account of Euroclear and/or
Clearstream and instruct Euroclear or Clearstream or both of them, as the case
may be, to credit the principal amounts of the Notes represented by such Global
Note to the holder’s distribution account with Euroclear or Clearstream. Each
relevant Global Note shall be exchangeable in whole for an interest, equal to
the principal amount of such Global Note being exchanged, for Definitive Notes
in the same principal amount, upon request of Euroclear or Clearstream to the
Registrar, but only upon delivery by Euroclear or Clearstream, acting on behalf
of the beneficial owners of such interests, to the Registrar at its principal
office in the City of New York, of certificates substantially in the form of
Exhibit C hereto. The delivery to the Registrar of any certificate in the form
referred to above may be relied upon by the Company, the Trustee and the
Registrar as conclusive evidence that related certificates have been delivered
to Euroclear or Clearstream as contemplated by the terms of this Section.
 
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(b) In accordance with the terms of a Global Note and this Indenture, the
Registrar shall deliver at the cost of the Company, upon not less than 45 days’
notice to the Registrar by Euroclear or Clearstream, the relevant Definitive
Notes in exchange for interests in such Global Note. For this purpose, the
Registrar is authorized and it shall (A) authenticate each such Definitive Note
and (B) deliver each such Definitive Note to or to the order of Euroclear or
Clearstream, in exchange for interests in such Global Note. The Registrar shall
promptly notify the Company upon receipt of a request for issue of Definitive
Notes the aggregate principal amount of the relevant Global Note to be exchanged
in connection therewith. The Company undertakes to deliver to, or to the order
of, the Registrar sufficient numbers of duly executed Definitive Notes to enable
the Registrar to comply with its obligations under this Section 2.05(b). Such
exchange shall be made free of charge to the holder and the beneficial owners of
the relevant Global Note and to the holders of the Definitive Notes issued in
exchange as provided above, except that a Person receiving Definitive Notes must
bear the cost of insurance, postage, transportation and the like in the event
that such Person does not receive such Definitive Notes in person at the offices
of a Registrar. Notwithstanding the above, interests in a Global Note shall be
exchangeable in whole (but not in part) at the cost of the Company for
Definitive Notes under the conditions described in Section 2.02(e).
 
(c) Upon any exchange of an interest in a Global Note for Definitive Notes, the
relevant Global Note shall be endorsed by the Trustee or the Registrar to
reflect the reduction of its principal amount by the aggregate principal amount
so exchanged. Until exchanged in full, the holder of any interest in any Global
Note shall in all respects be entitled to the same benefits under this Indenture
as Definitive Notes authenticated and delivered hereunder. Once exchanged in
full, a Global Note shall be canceled and disposed of by the Trustee in
accordance with its customary procedures and a certificate of disposition will
be sent to the Company.
 
(d) The Trustee or the Registrar shall cause all Global Notes and Definitive
Notes delivered to it and held by it hereunder to be maintained in safe custody
in accordance with this Section.
 
(e) The Security Register shall be in written form in the English language and
shall include a record of the certificate number of each Note that has been
issued, and shall show the amount of such Notes, the date of issue, all
subsequent transfers and changes in ownership in respect thereof and the names,
tax identifying numbers (if relevant to a specific holder), addresses of the
holders of the Notes and any payment instructions with respect thereto (if
different from a holder’s registered address).
 
(f) The Registrar shall at all reasonable times during office hours make the
Security Register available to the Trustee, the Paying Agent, the Company and
the holders of such Notes or any person authorized by the Company in writing for
inspection and for taking of copies thereof or extracts therefrom, and at the
expense of the Company, the Registrar shall deliver to such persons all lists of
holders of such Notes, their addresses, amounts of such holdings and other
details as they may request.
 
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(g) The Registrar shall handle all requests for the registration of transfer, or
exchange, repurchase or conversion, of Notes and receive certificates for the
Notes deposited with the transfer agent for transfer, or exchange, repurchase or
conversion, and in doing so, shall ensure that every Note presented or
surrendered for registration of transfer, or exchange, repurchase or conversion,
(if so required by the Company, the Trustee, the Paying Agent or the Registrar)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer (in form satisfactory to the Company and the Registrar) duly executed
by the holder thereof or by such holder’s attorney duly authorized in writing.
 
(h) Neither the Company nor the Trustee nor any Registrar shall be required to
exchange or register a transfer of (a) any Notes or portions thereof surrendered
for conversion pursuant to Article 14 or (b) any Notes or portions thereof
tendered for purchase pursuant to Section 3.02 (and not withdrawn).
 
(i) Until the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange therefor
or substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Exhibit D, if applicable)
shall bear a legend set forth in Exhibit A, unless such Note has been sold
pursuant to a registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of such
transfer) or pursuant to Rule 144 under the Securities Act or any similar
provision then in force, or unless otherwise agreed by the Company in writing,
with written notice thereof to the Trustee.
 
(j) Any stock certificate representing Common Stock issued upon conversion of
such Note shall bear a legend substantially in the form of Exhibit D.
 
(k) The Trustee and the Registrar shall be entitled to treat a telephone, telex
or facsimile communication from a person purporting to be (and who the Trustee
or the Registrar believe in good faith to be) the authorized representative of
the Company, named in a list furnished to the Trustee and the Registrar from
time to time, as sufficient instructions and authority of the Company for the
Trustee and the Registrar to act in accordance with this Section.
 
(l) Title to the Notes shall pass by delivery. However, title to Notes issued in
the form of Global Notes held through Euroclear and Clearstream shall be
transferable only in accordance with the rules and procedures of Euroclear and
Clearstream, as appropriate.
 
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes.
 
In case any Note shall become mutilated or be destroyed, lost or stolen, the
Company in its discretion may execute, and upon its written request the Trustee
or an authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case,
the applicant for a substituted Note shall furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in every case of destruction, loss or theft, the applicant shall also furnish to
the Company, to the Trustee and, if applicable, to such authenticating agent
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.
 
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Following receipt by the Trustee or such authenticating agent, as the case may
be, of satisfactory security or indemnity and evidence, as described in the
preceding paragraph, the Trustee or such authenticating agent may authenticate
any such substituted Note and make available for delivery such Note. Upon the
issuance of any substituted Note, the Company or the Trustee, as the case may
be, may require the payment by the holder of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in relation thereto
and any other expenses connected therewith. In case any Note which has matured
or is about to mature or has been called for redemption or has been tendered for
repurchase upon a Termination of Trading (and not withdrawn) or is to be
converted into Common Stock shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Note, pay or authorize
the payment of or convert or authorize the conversion of the same (without
surrender thereof except in the case of a mutilated Note), as the case may be,
if the applicant for such payment or conversion shall furnish to the Company, to
the Trustee and, if applicable, to such authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or in connection with such substitution,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Company, the Trustee and, if applicable, any paying agent or
conversion agent evidence to their satisfaction of the destruction, loss or
theft of such Note and of the ownership thereof.
 
Every substitute Note issued pursuant to the provisions of this Section by
virtue of the fact that any Note is destroyed, lost or stolen shall constitute
an additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Note shall be found at any time, and shall be entitled
to all the benefits of (but shall be subject to all the limitations set forth
in) this Indenture equally and proportionately with any and all other Notes duly
issued hereunder. If, after the delivery of such replacement Note, a protected
purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment, registration or conversion of such original Note, the
Trustee shall be entitled to recover such replacement Note from the Person to
whom it was delivered or any Person taking therefrom, except a protected
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Company, the Trustee and any authenticating agent in connection therewith.
 
Section 2.07. Temporary Notes.
 
Pending the preparation of Notes in certificated form, the Company may execute
and the Trustee or an authenticating agent appointed by the Trustee shall, upon
the written request of the Company, authenticate and deliver temporary Notes
(printed or lithographed). Temporary Notes shall be issuable in any authorized
denomination, and substantially in the form of the Notes in certificated form,
but with such omissions, insertions and variations as may be appropriate for
temporary Notes, all as may be determined by the Company. Every such temporary
Note shall be executed by the Company and authenticated by the Trustee or such
authenticating agent upon the same conditions and in substantially the same
manner, and with the same effect, as the Notes in certificated form. Without
unreasonable delay, the Company will execute and deliver to the Trustee or such
authenticating agent Notes in certificated form and thereupon any or all
temporary Notes may be surrendered in exchange therefor, at each office or
agency maintained by the Company pursuant to Section 4.02 and the Trustee or
such authenticating agent shall authenticate and make available for delivery in
exchange for such temporary Notes an equal aggregate principal amount of Notes
in certificated form. Such exchange shall be made by the Company at its own
expense and without any charge therefor. Until so exchanged, the temporary Notes
shall in all respects be entitled to the same benefits and subject to the same
limitations under this Indenture as Notes in certificated form authenticated and
delivered hereunder.
 
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Section 2.08.  Cancellation of Notes.
 
All Notes surrendered for the purpose of payment, redemption, repurchase,
conversion, exchange or registration of transfer shall, if surrendered to the
Company or any paying agent or any Registrar or any conversion agent, be
surrendered to the Trustee and promptly canceled by it, or, if surrendered to
the Trustee, shall be promptly canceled by it, and no Notes shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Indenture. The Trustee shall dispose of such canceled Notes in accordance with
its customary procedures. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption, repurchase or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.
 
Section 2.09.   Defaulted Interest.
 
If the Company defaults in a payment of interest on the Notes, it shall pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date; provided that no such special record date
shall be less than 10 days prior to the related Interest Payment Date for such
defaulted interest. At least 15 days before the special record date, the Company
(or, upon the written request of the Company, the Trustee in the name and at the
expense of the Company) shall mail or cause to be mailed to holders a notice
that states the special record date, the related Interest Payment Date and the
amount of such interest to be paid.
 
Section 2.10.   ISIN Numbers.
 
The Company in issuing the Notes may use ISIN numbers (if then generally in
use), and, if so, the Trustee shall use ISIN numbers in notices of redemption or
repurchases as a convenience to Noteholders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption or
a repurchase and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption or repurchase shall not be
affected by any defect in or omission of such numbers. The Company will promptly
notify the Trustee in writing of any change in the ISIN numbers.
 
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Section 2.11.  Further Issuances.
 
The Company may from time to time without notice to or the consent of the
Noteholders, create and issue further debt securities ranking pari passu with
the Notes in all respects, provided that such further debt securities issued
after the date of this Indenture shall not exceed an aggregate principal amount
of $20,000,000. The Company may consolidate such further debt securities with
the Notes then outstanding to form a single series, provided that the aggregate
principal amount of the Notes so consolidated shall not exceed $80,000,000. The
Company may deliver an Officer’s Certificate to the Trustee directing the
Trustee or the Registrar to authenticate and deliver further securities in an
aggregate principal amount specified in such Officer’s Certificate (subject to
the limitations set forth in the preceding two sentences) and the Trustee or the
Registrar shall authenticate and deliver such further securities. The Company
shall promptly notify the Trustee of any such further issue. Such further notes
will be represented by an increase in the aggregate principal amount of the
Global Notes.
 
ARTICLE 3

 
REDEMPTION AND REPURCHASE OF NOTES
 
Section 3.01.   Redemption at Maturity.
 
Unless previously redeemed or converted or purchased and cancelled in accordance
with this Indenture, the Company shall redeem the Notes at the Repurchase Amount
on June 1, 2012.
 
The Notes may not be redeemed at the election of the Company, in whole or in
part at any time prior to June 1, 2012.
 
Section 3.02.   Offer to Purchase.
 
(a) In the event that, pursuant to Section 4.12, Section 4.17 or Section 4.26
hereof, the Company shall be required to commence an Asset Sale Offer, a Change
of Control Offer or a Termination of Trading Offer (each of the foregoing, an
“Offer to Purchase”), respectively, it shall follow the procedures specified
below.
 
(b) The Company shall commence the Offer to Purchase by sending, by first-class
mail, with a copy to the Trustee, to each holder at such holder’s address
appearing in the Security Register, a notice the terms of which shall govern the
Offer to Purchase stating:
 
(i) that the Offer to Purchase is being made pursuant to this Section and
Section 4.12, Section 4.17 or Section 4.26, as the case may be, and, in the case
of a Change of Control Offer or Termination of Trading Offer, that such event
has occurred, the circumstances and relevant facts regarding such event and that
a Change of Control Offer or Termination of Trading Offer is being made pursuant
to Section 4.17 or Section 4.26, respectively;
 
(ii) the principal amount of Notes required to be purchased pursuant to Section
4.12, Section 4.17 or Section 4.26, as the case may be (the “Offer Amount”), the
purchase price set forth in Section 4.12, Section 4.17 or Section 4.26, as
applicable (the “Purchase Price”), the Offer Period and the Purchase Date (each
as defined below);
 
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(iii) except as provided in clause (ix), that all Notes timely tendered and not
withdrawn shall be accepted for payment;
 
(iv) that any Note not tendered or accepted for payment shall continue to accrue
interest;
 
(v) that, unless the Company defaults in making such payment, any Note accepted
for payment pursuant to the Offer to Purchase shall cease to accrue interest
after the Purchase Date;
 
(vi) that holders electing to have a Note purchased pursuant to an Offer to
Purchase may elect to have Notes purchased in integral multiples of $100,000
only;
 
(vii) that holders electing to have a Note purchased pursuant to any Offer to
Purchase shall be required to surrender the Note, with the form entitled
“Purchase Notice” on the reverse of the Note completed, or transfer by
book-entry transfer, to the Company, the Common Depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice before the
close of business on the third Business Day before the Purchase Date;
 
(viii) that holders shall be entitled to withdraw their election if the Company,
the Common Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the holder, the principal
amount of the Note (or portions thereof) the holder delivered for purchase and a
statement that such holder is withdrawing his election to have such Note
purchased;
 
(ix) that, in the case of an Asset Sale Offer, if the aggregate principal amount
of Notes surrendered by holders exceeds the Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only Notes in denominations of
$100,000 or integral multiples thereof shall be purchased);
 
(x) that holders whose Notes were purchased in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered
(or transferred by book-entry transfer); and
 
(xi) any other procedures the holders must follow in order to tender their Notes
(or portions thereof) for payment and the procedures that holders must follow in
order to withdraw an election to tender Notes (or portions thereof) for payment.
 
(c) The Offer to Purchase shall remain open for a period of at least 30 days but
no more than 60 days following its commencement, except to the extent that a
longer period is required by applicable law (the “Offer Period”). No later than
five (5) Business Days (and in any event no later than the 60th day following
any Change of Control or Termination of Trading) after the termination of the
Offer Period (the “Purchase Date”), the Company shall purchase the Offer Amount
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Offer to Purchase. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made. The Company shall
publicly announce the results of the Offer to Purchase on the Purchase Date.
 
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(d) On or prior to the Purchase Date, the Company shall, to the extent lawful:
 
(i) accept for payment (on a pro rata basis to the extent necessary in
connection with an Asset Sale Offer) from each tendering holder, the Offer
Amount of Notes or portions of Notes properly tendered and not withdrawn
pursuant to the Offer to Purchase, or if less than the Offer Amount has been
tendered, all Notes tendered; and
 
(ii) surrender to the Trustee the Notes properly accepted to be cancelled by the
Trustee in accordance Section 2.08 hereof, together with an Officers’
Certificate stating the aggregate principal amount of Notes or portions of Notes
being purchased by the Company and that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this
Section.
 
(e) Upon receipt of the Notes in accordance with Section 3.02(d)(i), the Company
shall promptly, and in any event within (1) Business Day after the Purchase
Date, deliver to each tendering holder the Purchase Price. In the event that any
portion of the Notes surrendered is not purchased by the Company, the Company
shall promptly execute and issue a new Note in a principal amount equal to such
unpurchased portion of the Note surrendered, and, upon receipt of an
Authentication Order in accordance with Section 2.04 hereof, the Trustee shall
authenticate and deliver (or cause to be transferred by book-entry) such new
Note to such holder, in a principal amount equal to any unpurchased portion of
the Note surrendered; provided, however, that each such new Note shall be in a
principal amount of $100,000 or an integral multiple thereof. Any Note not so
accepted shall be promptly mailed or delivered by the Company to the holder
thereof.
 
(f) If the Purchase Date is on or after a record date for the payment of
interest and on or before the related Interest Payment Date, any accrued and
unpaid Interest shall be paid to the Person in whose name a Note is registered
at the close of business on such record date for the payment of interest, and no
further Interest shall be payable to holders who tender Notes pursuant to the
Offer to Purchase.
 
(g) The Company shall comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection
with the Offer to Purchase. To the extent that the provisions of any securities
laws or regulations conflict with Section 4.12, Section 4.17 or Section 4.26, as
applicable, this Section or other provisions of this Indenture, the Company
shall comply with applicable securities laws and regulations and shall not be
deemed to have breached its obligations under Section 4.12, Section 4.17 or
Section 4.26, as applicable, this Section or such other provision by virtue of
such compliance.
 
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ARTICLE 4

 
PARTICULAR COVENANTS OF THE COMPANY
 
Section 4.01.   Payment of Principal and Interest.
 
The Company covenants and agrees that it will duly and punctually pay or cause
to be paid the principal of (including the purchase price upon an Offer to
Purchase or the repurchase price upon repurchase, in each case pursuant to
Article 3) and Interest, on each of the Notes at the places, at the respective
times and in the manner provided herein and in the Notes. The Company shall pay
Additional Amounts upon the occurrence of any events, in the amounts and at the
times specified in the definition of “Additional Amounts” in Section 1.01
hereof.
 
The Company shall pay, from time to time on demand, interest (including
post-petition interest in any proceeding under any Bankruptcy Law) accrued on
overdue principal and premium, if any, at a rate that is 5% per annum in excess
of the rate then in effect from the due date and ending on the date immediately
preceding the related Interest Payment Date; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods), from
time to time on demand at the same rate to the extent lawful.
 
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
 
Section 4.02.   Maintenance of Office or Agency.
 
The Company will maintain an office or agency in the City of New York, where the
Notes may be surrendered for registration of transfer or exchange (“Registrar”)
or for presentation for payment or for conversion, redemption or repurchase
(“Paying Agent”) and where notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Registrar shall keep a
register (the “Security Register”) of the Notes and of their registration of
transfer and exchange. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office.
 
The Company may also from time to time designate co-registrars and one or more
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice of any such designation or rescission
and of any change in the location of any such other office or agency.
 
The Company hereby initially designates the Trustee as paying agent, Registrar,
Custodian and conversion agent and each of the Corporate Trust Office and the
office of agency of the Trustee in City of New York, shall be considered as one
such office or agency of the Company for each of the aforesaid purposes.
 
So long as the Trustee is the Registrar, the Trustee agrees to mail, or cause to
be mailed, the notices set forth in Section 7.08(a) and the third paragraph of
Section 7.09. If co-registrars have been appointed in accordance with this
Section, the Trustee shall mail such notices only to the Company and the holders
of Notes it can identify from its records.
 
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Section 4.03.   Provisions as to Paying Agent.
 
(a) If the Company shall appoint a paying agent other than the Trustee, or if
the Trustee shall appoint such a paying agent, the Company will cause such
paying agent to execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section:
 
(i) that it will hold all sums held by it as such agent for the payment of the
principal of or Interest on the Notes (whether such sums have been paid to it by
the Company or by any other obligor on the Notes) in trust for the benefit of
the holders of the Notes;
 
(ii) that it will give the Trustee notice of any failure by the Company (or by
any other obligor on the Notes) to make any payment of the principal of or
Interest on the Notes when the same shall be due and payable; and
 
(iii) that at any time during the continuance of an Event of Default, upon
request of the Trustee, it will forthwith pay to the Trustee all sums so held in
trust.
 
The Company shall, on the Business Day prior to each due date of the principal
or Interest on the Notes, deposit with the paying agent a sum (in funds which
are immediately available on the due date for such payment) sufficient to pay
such principal or Interest, and (unless such paying agent is the Trustee) the
Company will promptly notify the Trustee in writing of any failure to take such
action; provided that if such deposit is made on the due date, such deposit
shall be received by the paying agent by 10:00 a.m. New York City time, on such
date.
 
(b) If the Company shall act as its own paying agent, it will, on the Business
Day prior to each due date of the principal of or Interest on the Notes, set
aside, segregate and hold in trust for the benefit of the holders of the Notes a
sum sufficient to pay such principal or Interest so becoming due and will
promptly notify the Trustee in writing of any failure to take such action and of
any failure by the Company (or any other obligor under the Notes) to make any
payment of the principal of or Interest on the Notes when the same shall become
due and payable.
 
(c) Anything in this Section to the contrary notwithstanding, the Company may,
at any time, for the purpose of obtaining a satisfaction and discharge of this
Indenture, or for any other reason, pay or cause to be paid to the Trustee all
sums held in trust by the Company or any paying agent hereunder as required by
this Section, such sums to be held by the Trustee upon the trusts herein
contained and upon such payment by the Company or any paying agent to the
Trustee, the Company or such paying agent shall be released from all further
liability with respect to such sums.
 
(d) Anything in this Section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section is subject to Sections 11.03 and
11.04.
 
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The Trustee shall not be responsible for the actions of any other paying agents
(including the Company if acting as its own paying agent) and shall have no
control of any funds held by such other paying agents.
 
Section 4.04.   Existence.
 
Subject to Article 5, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and rights
(charter and statutory); provided that the Company shall not be required to
preserve any such right if the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Noteholders.
 
Section 4.05.   Maintenance of Properties.
 
The Company will cause all properties used or useful in the conduct of its
business or the business of any Significant Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any subsidiary and not disadvantageous in any material respect to
the Noteholders.
 
Section 4.06.   Payment of Taxes and Other Claims.
 
The Company will pay or discharge, or cause to be paid or discharged, before the
same may become delinquent, (i) all taxes, assessments and governmental charges
levied or imposed upon the Company or any Significant Subsidiary or upon the
income, profits or property of the Company or any Significant Subsidiary, (ii)
all claims for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon the property of the Company or any Significant
Subsidiary and (iii) all stamp taxes and other duties, if any, which may be
imposed by the United States or any political subdivision thereof or therein in
connection with the issuance, transfer, exchange, conversion, redemption or
repurchase of any Notes or with respect to this Indenture; provided that, in the
case of clauses (i) and (ii), the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim (A) if the failure to do so will not, in the aggregate, have a material
adverse impact on the Company, or (B) if the amount, applicability or validity
is being contested in good faith by appropriate proceedings.
 
Section 4.07.   Stay, Extension and Usury Laws.
 
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or Interest on the Notes as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
 
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Section 4.08.   Payments for Consent.
 
The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to or for the benefit of any holder for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all holders that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
 
Section 4.09.   Incurrence of Additional Debt; Financial Covenants.
 
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
Incur, directly or indirectly, any Debt unless, after giving effect to the
application of the proceeds thereof, no Default or Event of Default would occur
as a consequence of such Incurrence or be continuing following such Incurrence.
 
(b) The Company shall maintain a Leverage Ratio, as determined as of the last
day of each Fiscal Quarter, for the four Fiscal Quarters ending on such day, not
exceeding (x) 5.75 to 1.00 from the Issue date through December 31, 2007, (y)
4.00 to 1.00 from January 1, 2008 through December 31, 2008 and (z) 3.00 to 1.00
thereafter.
 
(c) Notwithstanding anything to the contrary contained in this Section,
 
(i) the Company shall not, and shall not permit any Guarantor to, Incur any Debt
pursuant to this covenant if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such Debt shall be
subordinated to the Notes or the applicable Guarantee, as the case may be, to at
least the same extent as such Subordinated Debt;
 
(ii) the Company shall not permit any of its Subsidiaries that is not a
Guarantor to Incur any Debt pursuant to this covenant if the proceeds thereof
are used, directly or indirectly, to Refinance any Debt of the Company or any
Guarantor; and
 
(iii) accrual of interest, accretion or amortization of original issue discount
and the payment of interest or dividends in the form of additional Debt, will be
deemed not to be an Incurrence of Debt for purposes of this Section.
 
Section 4.10.   Restricted Payments.
 
The Company shall not make, and shall not permit any of its Subsidiaries to
make, directly or indirectly, any Restricted Payment if at the time of, and
after giving effect to, such proposed Restricted Payment,
 
(a) a Default or Event of Default shall have occurred and be continuing, or
 
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(b) the Company could not Incur at least $1.00 of additional Debt in compliance
with Section 4.09, or
 
(c) the aggregate amount of such Restricted Payment and all other Restricted
Payments declared or made since the Issue Date (the amount of any Restricted
Payment, if made other than in cash, to be based upon Fair Market Value at the
time of such Restricted Payment) would exceed an amount equal to the sum of:
 
(1) 10% of the aggregate amount of Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of the Fiscal
Quarter after the Issue Date to the end of the most recent Fiscal Quarter ending
prior to the date of such Restricted Payment (or if the aggregate amount of
Consolidated Net Income for such period shall be a deficit, minus 100% of such
deficit), plus
 
(2) 100% of the Capital Stock Sale Proceeds, plus
 
(3) the sum of:
 
(A) the aggregate net cash proceeds received by the Company or any Guarantor
from the issuance or sale after the Issue Date of convertible or exchangeable
Debt that has been converted into or exchanged for Capital Stock (other than
Disqualified Stock) of the Company, and
 
(B) the aggregate amount by which Debt (other than Subordinated Obligations) of
the Company or any Guarantor is reduced on the Company’s consolidated balance
sheet on or after the Issue Date upon the conversion or exchange of any Debt
issued or sold on or prior to the Issue Date that is convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the Company,
 
excluding, in the case of clause (A) or (B):
 
(x) any such Debt issued or sold to the Company or a Subsidiary of the Company
or an employee stock ownership plan or trust established by the Company or any
such Subsidiary for the benefit of their employees, and
 
(y) the aggregate amount of any cash or other Property distributed by the
Company or any of its Subsidiaries upon any such conversion or exchange, plus
 
(4) an amount equal to the net reduction in Investments in any Person other than
the Company or any of its Subsidiaries resulting from dividends, repayments of
loans or advances or other transfers of Property, in each case to the Company or
any of its Subsidiaries from such Person.
 
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Notwithstanding the foregoing limitation, the Company may:
 
(a) pay dividends on its Capital Stock within 60 days of the declaration thereof
if, on the declaration date, such dividends could have been paid in compliance
with the Indenture; provided, however, that at the time of such payment of such
dividend, no other Default or Event of Default shall have occurred and be
continuing (or result therefrom); provided further, however, that such dividend
shall be included in the calculation of the amount of Restricted Payments;
 
(b) purchase, repurchase, redeem, legally defease, acquire or retire for value
Capital Stock of the Company or Subordinated Obligations in exchange for, or out
of the proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock issued or
sold to a Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees); provided, however, that
 
(1) such purchase, repurchase, redemption, legal defeasance, acquisition or
retirement shall be excluded in the calculation of the amount of Restricted
Payments and
 
(2) the Capital Stock Sale Proceeds from such exchange or sale shall be excluded
from the calculation pursuant to clause (c)(2) above; and
 
(c) purchase, repurchase, redeem, legally defease, acquire or retire for value
any Subordinated Obligations in exchange for, or out of the proceeds of the
substantially concurrent sale of, Permitted Refinancing Debt; provided, however,
that such purchase, repurchase, redemption, legal defeasance, acquisition or
retirement shall be excluded in the calculation of the amount of Restricted
Payments.
 
Section 4.11.   Liens.
 
The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, Incur or suffer to exist, any Lien (other than Permitted Liens)
upon any of its Property (including Capital Stock of any of its Subsidiaries),
whether owned at the Issue Date or thereafter acquired, or any interest therein
or any income or profits therefrom, unless it has made or will make effective
provision whereby the Notes or the applicable Guarantee will be secured by such
Lien equally and ratably with (or, if such other Debt constitutes Subordinated
Debt, prior to) all other Debt of the Company or any of its Subsidiaries secured
by such Lien for so long as such other Debt is secured by such Lien.
 
Section 4.12.   Asset Sales.
 
The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, consummate any Asset Sale unless:
 
(a) the Company or such Subsidiary receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the Property subject to
such Asset Sale;
 
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(b) at least 75% of the consideration paid to the Company or such Subsidiary in
connection with such Asset Sale is in the form of cash or Cash Equivalents or
the assumption by the purchaser of liabilities of the Company or any of its
Subsidiaries (other than contingent liabilities or liabilities that are by their
terms subordinated to the Notes or the applicable Guarantee) as a result of
which the Company and its Subsidiaries are no longer obligated with respect to
such liabilities; and
 
(c) the Company delivers an Officers’ Certificate to the Trustee certifying that
such Asset Sale complies with the foregoing clauses (a) and (b).
 
The Net Available Cash (or any portion thereof) from Asset Sales may be applied
by the Company or any of its Subsidiaries, to the extent the Company or such
Subsidiary elects (or is required by the terms of any Debt) to reinvest in
Additional Assets (including by means of an Investment in Additional Assets by
any Subsidiary of the Company with Net Available Cash received by the Company or
another Subsidiary of the Company).
 
Any Net Available Cash from an Asset Sale not applied in accordance with the
preceding paragraph within 120 days from the date of the receipt of such Net
Available Cash shall constitute “Excess Proceeds”.
 
When the aggregate amount of Excess Proceeds exceeds $5.0 million (taking into
account income earned on such Excess Proceeds, if any), the Company will be
required to make an offer to repurchase (the “Asset Sale Offer”) the Notes,
which offer shall be in the amount of the Allocable Excess Proceeds (rounded to
the nearest $100,000), on a pro rata basis according to principal amount, at the
Repurchase Amount, in accordance with the procedures (including prorating in the
event of oversubscription) set forth in Section 3.02. To the extent that any
portion of the amount of Net Available Cash remains after compliance with the
preceding sentence and provided that all holders of Notes have been given the
opportunity to tender their Notes for repurchase in accordance with Section
3.02, the Company or such Subsidiary may use such remaining amount first to
Repay the Credit Facilities or any other Senior Debt of the Company or any
Guarantor or Debt of any Subsidiary of the Company that is not a Guarantor
(excluding, in any such case, any Debt owed to the Company or an Affiliate of
the Company), and only thereafter, for any purpose permitted by this Indenture,
and the amount of Excess Proceeds will be reset to zero.
 
The term “Allocable Excess Proceeds” shall mean the product of:
 
(a) the Excess Proceeds and
 
(b) a fraction,
 
(1) the numerator of which is the aggregate principal amount of the Notes
outstanding on the date of the Asset Sale Offer, and
 
(2) the denominator of which is the sum of the aggregate principal amount of the
Notes outstanding on the date of the Asset Sale Offer and the aggregate
principal amount (or accreted value, if applicable) of other Debt of the Company
outstanding on the date of the Asset Sale Offer that is pari passu in right of
payment with the Notes and subject to terms and conditions in respect of Asset
Sales similar in all material respects to this Section and requiring the Company
to make an offer to repurchase such Debt at substantially the same time as the
Asset Sale Offer.
 
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Section 4.13.   Restrictions on Distributions from Subsidiaries.
 
The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist any consensual
restriction on the right of any of its Subsidiaries to:
 
(a) pay dividends, in cash or otherwise, or make any other distributions on or
in respect of its Capital Stock owned by, or pay any Debt or other obligation
owed, to, the Company or any other Subsidiary of the Company,
 
(b) make any loans or advances to the Company or any other Subsidiary of the
Company, or
 
(c) transfer any of its Property to the Company or any other Subsidiary of the
Company.
 
The foregoing limitations will not apply:
 
(1) with respect to clauses (a), (b) and (c), to restrictions:
 
(A) in effect on the Issue Date (including, without limitation, restrictions
pursuant to the Notes and this Indenture),
 
(B) relating to Debt of any Subsidiary of the Company and existing at the time
it became a Subsidiary of the Company if such restriction was not created in
connection with or in anticipation of the transaction or series of transactions
pursuant to which such Subsidiary became a Subsidiary of the Company or was
acquired by the Company, or
 
(C) that result from the Refinancing of Debt Incurred pursuant to an agreement
referred to in clause (1)(A) or (B) above or in clause (2)(A) or (B) below,
provided such restrictions are not less favorable to the holders of Notes than
those under the agreement evidencing the Debt so Refinanced, and
 
(2) with respect to clause (c) only, to restrictions:
 
(A) relating to Debt that is permitted to be Incurred and secured without also
securing the Notes or the applicable Guarantee in compliance with Section 4.09
and Section 4.11 that limit the right of the debtor to dispose of the Property
securing such Debt,
 
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(B) encumbering Property at the time such Property was acquired by the Company
or any of its Subsidiaries, so long as such restrictions relate solely to the
Property so acquired and were not created in connection with or in anticipation
of such acquisition,
 
(C) resulting from customary provisions restricting subletting or assignment of
leases or customary provisions in other agreements that restrict assignment of
such agreements or rights thereunder, or
 
(D) customary restrictions contained in asset sale agreements limiting the
transfer of such Property pending the closing of such sale.
 
Section 4.14.   Affiliate Transactions.
 
The Company shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, conduct any business or enter into or suffer to exist any
transaction or series of transactions (including the purchase, sale, transfer,
assignment, lease, conveyance or exchange of any Property or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
“Affiliate Transaction”), unless:
 
(a) the terms of such Affiliate Transaction are:
 
(1) set forth in writing,
 
(2) in the best interest of the Company or such Subsidiary, as the case may be,
and
 
(3) no less favorable to the Company or such Subsidiary, as the case may be,
than those that could be obtained in a comparable arm’s-length transaction with
a Person that is not an Affiliate of the Company,
 
(b) if such Affiliate Transaction involves aggregate payments or value in excess
of $1.0 million, the Board of Directors (including a majority of the
disinterested members of the Board of Directors) approves such Affiliate
Transaction and, in its good faith judgment, believes that such Affiliate
Transaction complies with clauses (a)(2) and (3) of this paragraph as evidenced
by a Board Resolution promptly delivered to the Trustee, and
 
(c) if such Affiliate Transaction involves aggregate payments or value in excess
of $5.0 million, the Company obtains a written opinion from an Independent
Financial Advisor to the effect that the consideration to be paid or received in
connection with such Affiliate Transaction is fair, from a financial point of
view, to the Company and its Subsidiaries.
 
Notwithstanding the foregoing limitation, the Company or any of its Subsidiaries
may enter into or suffer to exist the following:
 
(a) any transaction or series of transactions between the Company and one or
more of its Subsidiaries or between two or more of its Subsidiaries in the
ordinary course of business, provided that no more than 5% of the total voting
power of the Voting Stock (on a fully diluted basis) of any such Subsidiary is
owned by an Affiliate of the Company (other than any Subsidiary of the Company);
 
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(b) any Restricted Payment permitted to be made pursuant to Section 4.10 or any
Permitted Investment;
 
(c) the payment of compensation (including amounts paid pursuant to employee
benefit plans) for the personal services of officers, directors and employees of
the Company or any of its Subsidiaries, so long as the Board of Directors in
good faith shall have approved the terms thereof and deemed the services
theretofore or thereafter to be performed for such compensation to be fair
consideration therefor; and
 
(d) loans and advances to employees made in the ordinary course of business and
consistent with the past practices of the Company or such Subsidiary, as the
case may be, provided that such loans and advances do not exceed $300,000 in the
aggregate at any one time outstanding; provided, however, that the Company and
its Subsidiaries shall comply in all material respects with all provisions of
the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith that would be applicable to an issuer with debt securities
registered under the Securities Act relating to such loans and advances.
 
Section 4.15.   Issuance or Sale of Capital Stock of Subsidiaries.
 
The Company shall not:
 
(a) sell, pledge, hypothecate or otherwise dispose of any shares of Capital
Stock of any of its Subsidiaries, or
 
(b) permit any Subsidiary of the Company to, directly or indirectly, issue or
sell or otherwise dispose of any shares of its Capital Stock,
 
other than, in the case of either (a) or (b):
 
(1) directors’ qualifying shares,
 
(2) to secure the Notes and the Other Notes,
 
(3) to the Company or a Wholly Owned Subsidiary, or
 
(4) a disposition of 100% of the shares of Capital Stock of such Subsidiary;
provided, however, that, in the case of this clause (3),
 
(A) such disposition is effected in compliance with Section 4.12, and
 
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(B) upon consummation of such disposition and execution and delivery of a
supplemental indenture in form satisfactory to the Trustee, such Subsidiary
shall be released from any Guarantee previously made by such Subsidiary.
 
Section 4.16.   Maintenance of Consolidated Tangible Net Worth.
 
The Company shall not, on the Issue Date (after giving effect to the issuance of
the Notes) or at the end of any Fiscal Quarter thereafter, permit its
Consolidated Tangible Net Worth to be less than the Consolidated Tangible Net
Worth Threshold. The “Consolidated Tangible Net Worth Threshold” shall be equal
to $60 million from the Issue Date until the first annual anniversary thereof,
and at each annual anniversary of the Issue Date shall increase by an amount
equal to $10 million.
 
Section 4.17.   Repurchase at the Option of Holders Following a Change of
Control.
 
(a) Upon the occurrence of a Change of Control, the Company shall, within 7 days
thereafter notify the Trustee and the holders of such Change of Control, and
within 30 days of a Change of Control, make an offer (the “Change of Control
Offer”) pursuant to the procedures set forth in Section 3.02. Each holder shall
have the right to accept such offer and require the Company to repurchase all or
any portion (equal to $100,000 or an integral multiple thereof) of such holder’s
Notes pursuant to the Change of Control Offer at a purchase price, in cash equal
to the Repurchase Amount.
 
(b) The Company shall not be required to make a Change of Control Offer
following a Change of Control if a third party makes the Change of Control Offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in this Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes properly tendered and not withdrawn under such
Change of Control Offer.
 
Section 4.18.   Future Guarantors.
 
(a) Each of the Operating Subsidiaries hereby agrees, and each of the Company
and AFC hereby agrees, jointly and severally, to cause each Operating
Subsidiary, to execute and deliver to the Trustee a Guarantee to the fullest
extent permitted under applicable laws (including the laws of the PRC) and
subject to obtaining all necessary Governmental Approvals.
 
(b) The Company shall cause each Person that becomes a Subsidiary following the
Issue Date to execute and deliver to the Trustee a Guarantee at the time such
Person becomes a Subsidiary, provided that, in the case of a Person that becomes
a Subsidiary incorporated in the PRC, the Company shall cause such Subsidiary to
execute and deliver to the Trustee a Guarantee to the fullest extent permitted
by applicable laws (including the laws of the PRC) and subject to obtaining all
necessary Governmental Approval.
 
Section 4.19.   Business Activities; Charter Documents.
 
(a) The Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, engage in any business other than a
Related Business.
 
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(b) The Company shall not, and the Company shall not permit any of its
Subsidiaries to, amend, alter, waive or repeal any provision of the certificate
of incorporation, memorandum and articles of association or any other
organizational or constitutional documents of the Company or its Subsidiaries in
a way that would be adverse to the interests of the holders of the Notes.
 
Section 4.20.   Sale and Leaseback Transactions.
 
The Company shall not, and shall not permit any of its Subsidiaries to, enter
into any Sale and Leaseback Transaction with respect to any Property unless:
 
(a) the Company or such Subsidiary would be entitled to:
 
(1) Incur Debt in an amount equal to the Attributable Debt with respect to such
Sale and Leaseback Transaction in compliance with Section 4.09 and
 
(2) create a Lien on such Property securing such Attributable Debt without also
securing the Notes or the applicable Guarantee pursuant to Section 4.11 and
 
(b) such Sale and Leaseback Transaction is effected in compliance with Section
4.12.
 
Section 4.21.   Impairment of Security Interest.
 
Other than in accordance with the terms and conditions of the Other Notes and
the Other Indenture, the Company shall not, and shall not permit any of its
Subsidiaries to, take or omit to take any action that might or would have the
result of materially impairing the security interest with respect to the
Collateral for the benefit of the Trustee and the holders of the Notes, and the
Company shall not, and shall not permit any of its Subsidiaries to, grant to any
Person other than the Collateral Agent, for the benefit of the Trustee, the
holders of the Notes and the other beneficiaries described in the Security
Documents, any interest whatsoever in any of the Collateral.
 
Section 4.22.   Amendments to Security Documents.
 
Other than in accordance with the terms and conditions of the Other Notes and
the Other Indenture, the Company shall not, and shall not permit any of its
Subsidiaries to, amend, waive or otherwise modify, or permit or consent to any
amendment, waiver or other modification, the Security Documents in any way that
would be adverse to the holders of the Notes.
 
Section 4.23.   Use of Proceeds.
 
The Company will not use the net proceeds from the sale of the Notes, in any
amount, for any purpose other than for Capital Expenditures, Repayment of Debt
of the Operating Subsidiaries outstanding as of the Issue Date, acquisitions and
general corporate purposes, and pending the application of all of such net
proceeds in such manner, to invest the portion of such net proceeds not yet so
applied in Cash Equivalents; provided that the Company shall deliver, or cause
to be delivered, to the Trustee, an Officers’ Certificate and an Opinion of
Counsel, each stating to the effect that all relevant Governmental Approval has
been obtained by the Governmental Authority, and no violation of laws, rules,
regulations or orders of any Governmental Authority by any of the Company or the
Subsidiaries has occurred or will occur in connection with, or as a result of,
the consummation of any such acquisition or performance of their respective
obligations under the related transaction documents within 30 days after the
consummation of any such acquisition.
 
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Section 4.24.   Maintenance of Insurance.
 
The Company shall, and shall cause its Subsidiaries to, maintain the currently
existing and additional insurance policies to be obtained covering the risks of
the business carried on by the Company.
 
Section 4.25.   Qualifying IPO.
 
The Company shall make such filings, registrations or qualifications and take
all other necessary action and will use its best efforts to obtain such
consents, approvals and authorizations, if any, and satisfy all conditions that
may be required in connection with listing the Company’s common stock in a
Qualifying IPO and shall use its best efforts to complete a Qualifying IPO by no
later than December 1, 2008 and maintain such listing continuously thereafter.
 
Section 4.26.   Repurchase Upon Termination of Trading.
 
Upon the occurrence of a Termination of Trading, the Company shall, within 7
days thereafter notify the Trustee and the holders of such Termination of
Trading, and within 30 days of a Termination of Trading, make an offer (the
“Termination of Trading Offer”) pursuant to the procedures set forth in Section
3.02. Each holder shall have the right to accept such offer and require the
Company to repurchase all or any portion (equal to $100,000 or an integral
multiple of $100,000) of such holder’s Notes pursuant to the Termination of
Trading Offer at a purchase price, in cash equal to the Repurchase Amount.
 
Section 4.27.   Government Approvals and Licenses; Compliance with Law.
 
The Company shall, and shall cause its Subsidiaries to, (a) obtain and maintain
in full force and effect all Governmental Approvals, authorizations, consents,
permits, concessions and licenses as are necessary to engage in a Related
Business, (b) preserve and maintain good and valid title to its properties and
assets (including land-use rights) free and clear of any Liens other than
Permitted Liens and (c) comply with all laws, regulations, orders, judgments and
decrees of any governmental body, except to the extent that failure so to
obtain, maintain, preserve and comply would reasonably be expected to have a
material adverse effect on (1) the business, results of operations or prospects
of the Company and its Subsidiaries taken as a whole or (2) the ability of the
Company or any Guarantor to perform its obligations under the Notes, the
relevant Guarantee of the Notes or this Indenture.
 
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Section 4.28.   Engage Qualified Auditing Firms. 
 
(a) The Company shall, by no later than May 1, 2008, appoint any one of the
following accounting firms as auditor of the Company and its Subsidiaries to
audit the Company’s consolidated annual financial statements for the fiscal year
beginning January 1, 2008 and perform interim reviews of the Company’s
consolidated quarterly financial statements, all in accordance with Regulation
S-X: PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, KPMG, BDO
International, Grant Thornton International, RSM International, Baker Tilly
International, Horwath International, Moores Rowland International, Moss Adams,
J.H. Cohn, Crowe Chizek and Co. LLC, Plante & Moran PLLC or BKD LLP.
 
(b) The Company shall, for any fiscal year beginning on or after January 1,
2008, engage any one of the accounting firms set forth in paragraph (a) above as
the primary auditor of the Company and its Subsidiaries and shall cause such
auditor to audit the Company's consolidated annual financial statements and
perform interim reviews of the Company's consolidated quarterly financial
statements, all in accordance with Regulation S-X.
 
Section 4.29.   Notes to Rank Senior.
 
The Notes are senior secured obligations of the Company and rank pari passu in
right of payment with all existing and future debt of the Company that is not
subordinated to the Notes and rank senior in right of payment to any future
subordinated obligations of the Company. The Guarantees are senior unsecured
obligations of the Guarantors and rank pari passu in right of payment with all
existing and future debt of the Guarantors that is not subordinated to the
Guarantees and rank senior in right of payment to any future subordinated
obligations of the Guarantors.

Section 4.30.   Compliance Certificate.
 
The Company shall deliver to the Trustee, within one hundred twenty (120) days
after the end of each fiscal year of the Company, a certificate signed by either
the principal executive officer, principal financial officer or principal
accounting officer of the Company, stating whether or not to the best knowledge
of the signer thereof the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall be in default, specifying all such defaults
and the nature and the status thereof of which the signer may have knowledge.
 
The Company will deliver to the Trustee, forthwith upon becoming aware of (i)
any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or (ii) any Event of Default, an
Officers’ Certificate specifying with particularity such Default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto.
 
Any notice required to be given under this Section shall be delivered to a
Responsible Officer of the Trustee at its Corporate Trust Office.
 
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Section 4.31.   Additional Interest Notice.
 
In the event that the Company is required to pay Additional Interest to holders
of Notes pursuant to the terms hereof, the Company will provide written notice
(“Additional Interest Notice”) to the Trustee and the holders of the Company’s
obligation to pay Additional Interest no later than fifteen (15) days prior to
the proposed payment date for the Additional Interest, and the Additional
Interest Notice shall set forth the amount of Additional Interest to be paid by
the Company on such payment date.
 
Section 4.32.   Calculation of Original Issue Discount.
 
The Company shall file with the Trustee, solely for purposes of making such
information available to the holders upon request, promptly at the end of each
calendar year (i) a written notice specifying the amount of Tax Original Issue
Discount (including daily rates and accrual periods) accrued on outstanding
Notes as of the end of such year and (ii) such other specific information
relating to such Tax Original Issue Discount as may then be required under the
Code, or the Treasury regulations promulgated thereunder.
 
Section 4.33.   Reports by the Company and Provision of Information.
 
(a) At any time when the Company is subject to Section 13 or 15(d) of the
Exchange Act, and to the extent such reports, information and documents are not
available on the Commission’s EDGAR System, the Company shall deliver to the
Trustee within 30 days after it files with the Commission copies of the annual
reports and of the information, documents, and other reports (or copies of such
portions of any of the foregoing as the Commission may be rules and regulations
prescribe), if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act (“Exchange Act Filings”);
provided, however, the Company shall not be required to deliver to the Trustee
any materials for which the Company has sought and received confidential
treatment by the Commission. The Company shall promptly provide written notice
to the Trustee if and when it begins to make all of its Exchange Act Filings via
the Commission’s EDGAR System in lieu of paper filings. Delivery of such annual
reports, information and documents and other reports to the Trustee is for
informational purposes only and the Trustee’s receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on an Officer’s Certificate).
 
(b) At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, upon the request of a holder of the Notes, the Company will
promptly furnish or cause to be furnished Rule 144A Information to such holder,
to a prospective purchaser of such Notes designated by such holder, to a
beneficial owner of such Notes (as designated in writing to the Company by such
holder) or to a prospective purchaser designated by such beneficial owner, as
the case may be, in order to permit compliance by such holder or beneficial
owner with Rule 144A in connection with the resale of such Notes by such holder
or beneficial owner; provided, however, that the Company shall not be required
to furnish such information in connection with any request made on or after the
date which is five years from the later of the Issue Date and the date such
Notes (or any predecessor Notes or the Notes surrendered for conversion) was
acquired from the Company or an “affiliate” of the Company within the meaning of
Rule 144; and provided further, that the Company shall not be required to
furnish such information at any time to a prospective purchaser located outside
the United States who is not a “U.S. Person” within the meaning of Regulation S
if such Securities may then be sold to such prospective purchaser in accordance
with Regulation S (or any successor provision thereto). As used herein, “Rule
144A Information” means such information as is specified pursuant to Rule
144A(d)(4) under the U.S. Securities Act (or any successor provision thereto).
 
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Section 4.34.   Other Notes and Other Indenture.
 
The Company shall issue the Other Notes and execute the Other Indenture only on
terms and conditions (other than the transfer restrictions and related
provisions for the Other Notes to be in compliance with the Securities Act) that
are substantially identical to those of the Notes and the Indenture,
respectively, except as approved in writing, prior to the issuance of such Other
Notes or the execution of such Other Indenture, by the holders of at least a
majority in aggregate principal amount of the Notes then outstanding.
 
ARTICLE 5

 
SUCCESSORS
 
Section 5.01.   Merger, Consolidation and Sale of Assets.
 
(a) The Company shall not merge, consolidate or amalgamate with or into any
other Person (other than a merger of a Wholly Owned Subsidiary into the Company)
or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all of its Property in any one transaction or series of
transactions unless:
 
(i) the Company shall be the Surviving Person in such merger, consolidation or
amalgamation, or the Surviving Person (if other than the Company) formed by such
merger, consolidation or amalgamation or to which such sale, transfer,
assignment, lease, conveyance or disposition is made shall be a corporation
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia;
 
(ii) the Surviving Person (if other than the Company) expressly assumes, by
supplemental indenture in form satisfactory to the Trustee, executed and
delivered to the Trustee by such Surviving Person, the due and punctual payment
of the principal of, and premium, if any, and interest on, all the Notes,
according to their tenor, and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be performed by the
Company;
 
(iii) in the case of a sale, transfer, assignment, lease, conveyance or other
disposition of all or substantially all the Property of the Company, such
Property shall have been transferred as an entirety or virtually as an entirety
to one Person;
 
(iv) immediately before and after giving effect to such transaction or series of
transactions on a pro forma basis (and treating, for purposes of this clause
(iv) and clause (v) below, any Debt that becomes, or is anticipated to become,
an obligation of the Surviving Person or any Subsidiary of the Company as a
result of such transaction or series of transactions as having been Incurred by
the Surviving Person or such Subsidiary at the time of such transaction or
series of transactions), no Default or Event of Default shall have occurred and
be continuing;
 
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(v) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Surviving Person shall have a
Consolidated Net Worth in an amount which is not less than the Consolidated Net
Worth of the Company immediately prior to such transaction or series of
transactions;
 
(vi) the Company shall deliver, or cause to be delivered, to the Trustee, an
Officers’ Certificate and an Opinion of Counsel, each stating that such
transaction or series of transactions and the supplemental indenture, if any, in
respect thereto comply with this covenant and that all conditions precedent
herein provided for relating to such transaction or series of transactions have
been satisfied; and
 
(vii) the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the holders will not recognize income, gain or loss for federal
income tax purposes as a result of such transaction and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such transaction had not occurred.
 
The foregoing provisions (other than clause (iv)) shall not apply to any
transaction or series of transactions which constitute an Asset Sale if the
Company has complied with Section 4.12.
 
(b) The Company shall not permit any Guarantor to merge, consolidate or
amalgamate with or into any other Person (other than a merger of a Wholly Owned
Subsidiary into the Company or such Guarantor) or sell, transfer, assign, lease,
convey or otherwise dispose of all or substantially all its Property in any one
transaction or series of transactions unless:
 
(i) the Surviving Person (if other than such Guarantor) expressly assumes, to
the extent permitted by applicable laws, by supplemental indenture in form
satisfactory to the Trustee, executed and delivered to the Trustee by such
Surviving Person, the due and punctual performance and observance of all the
obligations of such Guarantor under its Guarantee;
 
(ii) in the case of a sale, transfer, assignment, lease, conveyance or other
disposition of all or substantially all the Property of such Guarantor, such
Property shall have been transferred as an entirety or virtually as an entirety
to one Person;
 
(iii) immediately before and after giving effect to such transaction or series
of transactions on a pro forma basis (and treating, for purposes of this clause
(iii) and clause (iv) below, any Debt that becomes, or is anticipated to become,
an obligation of the Surviving Person, the Company or any of its Subsidiaries as
a result of such transaction or series of transactions as having been Incurred
by the Surviving Person, the Company or such Subsidiary at the time of such
transaction or series of transactions), no Default or Event of Default shall
have occurred and be continuing;
 
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(iv) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Company shall have a Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction or series of transactions;
 
(v) the Company shall deliver, or cause to be delivered, to the Trustee, an
Officers’ Certificate and an Opinion of Counsel, each stating that such
transaction or series of transactions and the supplemental indenture, if any, in
respect thereto comply with this covenant and that all conditions precedent
herein provided for relating to such transaction or series of transactions have
been satisfied; and
 
(vi) the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the holders will not recognize income, gain or loss for federal
income tax purposes as a result of such transaction and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such transaction had not occurred.
 
The foregoing provisions (other than clause (iii)) shall not apply to any
transaction or series of transactions which constitute an Asset Sale if the
Company has complied with Section 4.12.
 
Section 5.02.   Successor Corporation Substituted.
 
The Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of the Company or a Guarantor, as applicable, under this
Indenture; provided, however, that the predecessor entity shall not be released
from any of the obligations or covenants under this Indenture, including with
respect to the payment of the Notes and obligations under the Guarantee, as the
case may be, in the case of:
 
(a) a sale, transfer, assignment, conveyance or other disposition (unless such
sale, transfer, assignment, conveyance or other disposition is of all or
substantially all of the assets of the Company, taken as a whole or, in the case
of a Guarantor, such sale, transfer, assignment, conveyance or other disposition
is of all or substantially all of the assets of such Guarantor to a Person that
is not (either before or after giving effect to such transaction) a Subsidiary
of the Company, or such portion of the Capital Stock of such Guarantor ceases to
be a Subsidiary of the Company), or
 
(b) a lease.
 
ARTICLE 6

 
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
 
Section 6.01.   Events of Default.
 
In case one or more of the following Events of Default (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body) shall have occurred and be continuing:
 
(a) default in the payment of any installment of Interest upon any of the Notes
as and when the same shall become due and payable and continuance of such
default for a period of fifteen (15) days; or
 
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(b) default in the payment of the principal of, and premium, if any, on, any of
the Notes as and when the same shall become due and payable either at maturity
or in connection with any redemption, repurchase or otherwise, in each case
pursuant to Article 3, by acceleration or otherwise, including payment of
Additional Amounts pursuant to Section 4.01; or
 
(c) default in the Company’s obligation to provide an Offer to Purchase when
required in connection with an Asset Sale, a Change of Control or Termination of
Trading as provided in Section 3.02; or
 
(d) failure to comply with Section 5.01;
 
(e) failure on the part of the Company duly to observe or perform any other of
the covenants or agreements on the part of the Company in the Notes or in this
Indenture (other than a covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with and other than
the failure to comply with Section 4.25 or Section 4.28, for which payment of
Additional Amounts is provided for hereunder and is governed by Section 4.01))
continued for a period of thirty (30) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Combined Notes at the time outstanding
determined in accordance with Section 12.04; or
 
(f) the Company, any of its Significant Subsidiaries (or any group of
Subsidiaries that, when taken together, would constitute a Significant
Subsidiary) pursuant to or within the meaning of any Bankruptcy Law:
 
(i) commences a voluntary case or gives notice of intention to make a proposal
under any Bankruptcy Law;
 
(ii) consents to the entry of an order for relief against it in an involuntary
case or consents to its dissolution or winding up;
 
(iii) consents to the appointment of a receiver, interim receiver, receiver and
manager, liquidator, trustee or custodian of it or for all or substantially all
of its property;
 
(iv) makes a general assignment for the benefit of its creditors; or
 
(v) admits in writing its inability to pay its debts as they become due or
otherwise admits its insolvency; or
 
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(g) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
 
(i) is for relief against the Company, any of its Significant Subsidiaries (or
any group of Subsidiaries that, when taken together, would constitute a
Significant Subsidiary) in an involuntary case; or
 
(ii) appoints a receiver, interim receiver, receiver and manager, liquidator,
trustee or custodian of the Company, any of its Significant Subsidiaries (or any
group of Subsidiaries that, when taken together, would constitute a Significant
Subsidiary) for all or substantially all of the property of the Company, any of
its Significant Subsidiaries (or any group of Subsidiaries that, when taken
together, would constitute a Significant Subsidiary); or
 
(iii) orders the liquidation of the Company, any of its Significant Subsidiaries
(or any group of Subsidiaries that, when taken together, would constitute a
Significant Subsidiary);
 
and such order or decree remains unstayed and in effect for 60 consecutive days;
 
(h) a default under any Debt by the Company or any of its Subsidiaries that
results in acceleration of the maturity of such Debt, or failure to pay any such
Debt when due, in an aggregate amount greater than $2.0 million or its foreign
currency equivalent at the time;
 
(i) any final non-appealable judgment or judgments for, the payment of money in
an aggregate amount in excess of $2.0 million (or its foreign currency
equivalent at the time) that shall be rendered against the Company or any of its
Subsidiaries;
 
(j) any Guarantee ceases to be in full force and effect (other than in
accordance with the terms of such Guarantee) or any Guarantor or a group of
Guarantors that, taken as a whole, would constitute a Significant Subsidiary
denies or disaffirms its obligations under its Guarantee;
 
(k) any default by the Company, any other Pledgor under the Security Documents
or Future Guarantor Pledgor in any of its obligations under the Security
Documents, which adversely affects the enforceability, validity, perfection or
priority of the applicable Lien on the Collateral or which adversely affects the
condition or value of the Collateral, taken as a whole, in any material respect;
the security interest under the Security Documents shall, at any time, cease to
be in full force and effect for any reason other than the satisfaction in full
of all obligations under the Indenture and discharge of the Indenture or any
security interest created thereunder shall be declared invalid or unenforceable
or the Company or any Guarantor shall assert, in any pleading in any court of
competent jurisdiction, that any such security interest is invalid or
unenforceable;
 
(l) the Company or any Future Guarantor Pledgor denies or disaffirms its
obligations under any Security Document or, other than in accordance with this
Indenture and the Security Documents, any Security Document ceases to be or is
not in full force and effect or the Collateral Agent ceases to have a first
priority interest in the Collateral;
 
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(m) the Company or the Operating Subsidiaries amends or modifies their
respective constitutive documents in such a manner that would have a Material
Adverse Effect or engages any business other than a Related Business;
 
(n)  the Indenture, the Notes, any Guarantee or any loan made directly or
indirectly from the Company to the Operating Subsidiaries or any Security
Document, shall be (A) declared by any Governmental Authority to be illegal or
unenforceable or (B) terminated prior to its scheduled termination date;
 
(o) (i) the confiscation, expropriation or nationalization by any Governmental
Authority of any Property of the Company or any of its Subsidiaries; or (ii) if
such revocation or repudiation could reasonably be expected to have a Material
Adverse Effect, the revocation or repudiation by any Governmental Authority of
any previously granted Governmental Approval to the Operating Subsidiaries that
is material to the operation of the Related Business; or (iii) the imposition or
introduction of material and discriminatory taxes, tariffs, royalties, customs
or excise duties imposed on the Operating Subsidiaries, or the material and
discriminatory withdrawal or suspension of material privileges or specifically
granted material rights of a fiscal nature; or
 
(p) failure by the Company or any Affiliate thereof (other than any Person who
is an Affiliate solely because such Person is a holder of Notes) to cure any
non-compliance with any of the agreements in the Investor Rights Agreement or
the Registration Rights Agreement within 30 days after written notice from the
other party (or parties) to such agreements demanding the cure of such
non-compliance if such failure continues for 30 days after written notice is
given to the Company by the Trustee or the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding specifying the default,
demanding that it be remedied and stating that such notice is a “Notice of
Default,”

then, and in each and every such case (other than an Event of Default specified
in Section 6.01(f) or 6.01(g)), unless the principal of all of the Notes shall
have already become due and payable, either the Trustee or the holders of not
less than twenty-five percent (25%) in aggregate principal amount of the
Combined Notes then outstanding hereunder determined in accordance with Section
12.04, by notice in writing to the Company (and to the Trustee if given by
Noteholders), may declare the principal of all the Notes, the Interest accrued
thereon to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, anything in this
Indenture or in the Notes contained to the contrary notwithstanding. If an Event
of Default specified in Section 6.01(f) or 6.01(g) occurs, the principal of all
the Notes and the Interest accrued thereon shall be immediately and
automatically due and payable without necessity of further action.
 
This provision, however, is subject to the conditions that if, at any time after
the principal of the Notes shall have been so declared due and payable, and
before any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, (i) the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
Interest upon all Notes and the principal of any and all Notes which shall have
become due otherwise than by acceleration (with interest on overdue installments
of Interest (to the extent that payment of such interest is enforceable under
applicable law) and on such principal at the rate borne by the Notes, to the
date of such payment or deposit) and amounts due to the Trustee pursuant to
Section 7.06, (ii) if any and all defaults under this Indenture, other than the
nonpayment of principal of and accrued Interest on Notes which shall have become
due by acceleration, shall have been cured or waived pursuant to Section 6.07,
then and in every such case the holders of a majority in aggregate principal
amount of the Combined Notes then outstanding, by written notice to the Company
and to the Trustee, may waive all Defaults or Events of Default and rescind and
annul such declaration and its consequences; but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent Default or Event of
Default, or shall impair any right consequent thereon. The Company shall notify
in writing a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.
 
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In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
 
Section 6.02.   Payments of Notes on Default; Suit Therefor.
 
The Company covenants that (a) in case default shall be made in the payment of
any installment of Interest upon any of the Notes as and when the same shall
become due and payable, and such default shall have continued for a period of
thirty (30) days, or (b) in case default shall be made in the payment of the
principal of any of the Notes as and when the same shall have become due and
payable, whether at maturity of the Notes or in connection with any redemption
or repurchase, by or under this Indenture by declaration or otherwise, then,
upon demand of the Trustee, the Company will pay to the Trustee, for the benefit
of the holders of the Notes, the whole amount that then shall have become due
and payable on all such Notes for principal or Interest, as the case may be,
with interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue installments of
Interest at the rate borne by the Notes, plus 1% and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to the Trustee, its agents, attorneys and
counsel, and all other amounts due the Trustee under Section 7.06. Until such
demand by the Trustee, the Company may pay the principal of and Interest on the
Notes to the registered holders, whether or not the Notes are overdue.
 
In case the Company shall fail forthwith to pay such amounts upon such demand,
the Trustee, in its own name and as trustee of an express trust, shall be
entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
 
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In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Notes under any
Bankruptcy Law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or such other obligor, the
property of the Company or such other obligor, or in the case of any other
judicial proceedings relative to the Company or such other obligor upon the
Notes, or to the creditors or property of the Company or such other obligor, the
Trustee, irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and Interest owing and unpaid in respect of the Notes, and,
in case of any judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee and of the Noteholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Notes, its or their
creditors, or its or their property, and to collect and receive any monies or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of any amounts due the Trustee under Section 7.06, and
to take any other action with respect to such claims, including participating as
a member of any official committee of creditors, as it reasonably deems
necessary or advisable, and, unless prohibited by law or applicable regulations,
and any receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, custodian or similar official is hereby authorized by each of the
Noteholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due it for compensation, expenses,
advances and disbursements, including counsel fees and expenses incurred by it
up to the date of such distribution. To the extent that such payment of
compensation, expenses, advances and disbursements out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
monies, securities and other property which the holders of the Notes may be
entitled to receive in such proceedings, whether in liquidation or under any
plan of reorganization or arrangement or otherwise.
 
All rights of action and of asserting claims under this Indenture, or under any
of the Notes, may be enforced by the Trustee without the possession of any of
the Notes, or the production thereof at any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the holders of the Notes.
 
In any proceedings brought by the Trustee (and in any proceedings involving the
interpretation of any provision of this Indenture to which the Trustee shall be
a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.
 
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Section 6.03.   Application of Monies Collected by Trustee.
 
Any monies or property collected by the Trustee pursuant to this Article shall
be applied in the order following, at the date or dates fixed by the Trustee for
the distribution of such monies or property, upon presentation of the several
Notes and either (i) stamping thereon the payment, if only partially paid, or
(ii) upon surrender thereof, if fully paid.
 
FIRST: To the payment of all amounts due the Trustee under Section 7.06 in
connection with the Trustee’s performance of its duties under this Indenture,
the Security Documents or the Notes, including the collection or distribution of
such amounts held or realized or in connection with expenses incurred in
enforcing its remedies under the Security Documents and preserving the
Collateral and all amounts for which the Trustee is entitled to indemnification
under the Security Documents;
 
SECOND: In case the principal of the outstanding Notes shall not have become due
and be unpaid, to the payment of Interest on the Notes in default in the order
of the maturity of the installments of such Interest, with interest (to the
extent that such interest has been collected by the Trustee) upon the overdue
installments of Interest at the rate specified in the Notes, such payments to be
made ratably to the Persons entitled thereto;
 
THIRD: In case the principal of the outstanding Notes shall have become due, by
declaration or otherwise, and be unpaid to the payment of the whole amount then
owing and unpaid upon the Notes for principal and Interest, with Interest on the
overdue principal and (to the extent that such Interest has been collected by
the Trustee) upon overdue installments of Interest at the rate specified in the
Notes, and in case such monies shall be insufficient to pay in full the whole
amounts so due and unpaid upon the Notes, then to the payment of such principal
and Interest without preference or priority of principal over Interest, or of
Interest over principal, or of any installment of Interest over any other
installment of Interest, or of any Note over any other Note, ratably to the
aggregate of such principal and accrued and unpaid Interest; and
 
FOURTH: To the payment of the remainder, if any, to the Company or the
Guarantors or to whomever may be lawfully entitled thereto.
 
Section 6.04.   Proceedings by Noteholder.
 
No holder of any Note shall have any right by virtue of or by reference to any
provision of this Indenture to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Indenture, or for the
appointment of a receiver, trustee, liquidator, custodian or other similar
official, or for any other remedy hereunder, unless (a) such holder previously
shall have given to the Trustee written notice of an Event of Default and of the
continuance thereof, as hereinbefore provided, (b) the holders of not less than
twenty-five percent (25%) in aggregate principal amount of the Combined Notes
then outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such security or indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for sixty (60) days after its receipt of such notice, request and offer
of indemnity shall have neglected or refused to institute any such action, suit
or proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 6.07; it being understood and
intended, and being expressly covenanted by the taker and holder of every Note
with every other taker and holder and the Trustee, that no one or more holders
of Notes shall have any right in any manner whatever by virtue of or by
reference to any provision of this Indenture to affect, disturb or prejudice the
rights of any other holder of Notes, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section each and every Noteholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
 
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Notwithstanding any other provision of this Indenture and any provision of any
Note, the right of any holder of any Note to receive payment of the principal of
(including the purchase price upon an Offer to Purchase or the repurchase price,
in each case pursuant to Article 3) and accrued Interest on such Note, on or
after the respective due dates expressed in such Note or in the event of an
Offer to Purchase or a repurchase, as the case may be, or to institute suit for
the enforcement of any such payment on or after such respective dates against
the Company shall not be impaired or affected without the consent of such
holder.
 
Anything in this Indenture or the Notes to the contrary notwithstanding, the
holder of any Note, without the consent of either the Trustee or the holder of
any other Note, in its own behalf and for its own benefit, may enforce, and may
institute and maintain any proceeding suitable to enforce, its rights of
conversion as provided herein.
 
Section 6.05.   Proceedings by Trustee.
 
In case of an Event of Default, the Trustee may, in its discretion, proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as are necessary to protect and enforce any of
such rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
 
Section 6.06.   Remedies Cumulative and Continuing.
 
Except as provided in Section 2.06, all powers and remedies given by this
Article to the Trustee or to the Noteholders shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to the Trustee or the holders of the Notes, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any holder of any of the Notes to exercise any
right or power accruing upon any Default or Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or any acquiescence therein, and,
subject to the provisions of Section 6.04, every power and remedy given by this
Article or by law to the Trustee or to the Noteholders may be exercised from
time to time, and as often as shall be deemed expedient, by the Trustee or by
the Noteholders.
 
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Section 6.07.   Direction of Proceedings and Waiver of Defaults by Majority of
Holders of the Combined Notes.
 
The holders of a majority in aggregate principal amount of the Combined Notes at
the time outstanding determined in accordance with Section 12.04 shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee; provided that (a) such direction shall not be in conflict with any
rule of law or with this Indenture, (b) the Trustee may take any other action
which is not inconsistent with such direction, (c) the Trustee may decline to
take any action that would benefit some Noteholder to the detriment of other
Noteholders and (d) the Trustee may decline to take any action that would
involve the Trustee in personal liability. Subject to Section 6.01, the holders
of a majority in aggregate principal amount of the Combined Notes at the time
outstanding determined in accordance with Section 12.04 may, on behalf of the
holders of all of the Notes, waive any past Default or Event of Default
hereunder and its consequences except (i) a default in the payment of Interest
on, or the principal of, the Notes, (ii) a failure by the Company to convert any
Notes into Common Stock, (iii) a default in the payment of the purchase price
pursuant to Section 3.02, or (iv) a default in respect of a covenant or
provisions hereof which under Article 8 cannot be modified or amended without
the consent of the holders of each or all of the Notes then outstanding or
affected thereby. Upon any such waiver, the Company, the Trustee and the holders
of the Notes shall be restored to their former positions and rights hereunder;
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon. Whenever any Default or Event of
Default hereunder shall have been waived as permitted by this Section, said
Default or Event of Default shall for all purposes of the Notes and this
Indenture be deemed to have been cured and to be not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
 
Section 6.08.   Notice of Default.
 
If the Trustee receives notice of any Default or Event of Default from the
Company, the Trustee shall mail to all Noteholders, as the names and addresses
of such holders appear upon the Security Register, Notice of the Default or
Event of Default within 90 days after it occurs, unless the Default or Event of
Default shall have been cured or waived before the giving of such notice;
provided that except in the case of default in the payment of the principal of
or Interest on any of the Notes, the Trustee shall be protected in withholding
such notice if and so long as a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Noteholders.
 
Section 6.09.   Undertaking to Pay Costs.
 
All parties to this Indenture agree, and each holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may, in its
discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
provided that the provisions of this Section (to the extent permitted by law)
shall not apply to any suit instituted by the Trustee, to any suit instituted by
any Noteholder, or group of Noteholders, holding in the aggregate more than ten
percent in principal amount of the Notes at the time outstanding determined in
accordance with Section 12.04, or to any suit instituted by any Noteholder for
the enforcement of the payment of the principal of or Interest on any Note on or
after the due date expressed in such Note or to any suit for the enforcement of
the right to convert any Note in accordance with the provisions of Article 14.
 
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ARTICLE 7

 
THE TRUSTEE
 
Section 7.01.   Duties and Responsibilities of Trustee.
 
The Trustee, prior to the occurrence of an Event of Default and after the curing
of all Events of Default which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture. In
case an Event of Default has occurred (which has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.
 
No provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:
 
(a) prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default which may have occurred:
 
(i) the duties and obligations of the Trustee shall be determined solely by the
express provisions of this Indenture, and the Trustee shall not be liable except
for the performance of such duties and obligations as are specifically set forth
in this Indenture and no implied covenants, duties or obligations shall be read
into this Indenture against the Trustee; and
 
(ii) in the absence of bad faith and willful misconduct on the part of the
Trustee, the Trustee may conclusively rely as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the Trustee under
this Indenture, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture but
need not confirm or investigate the accuracy of mathematical calculations or
other facts stated therein;
 
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(b) the Trustee shall not be liable for any error of judgment made in good faith
by a Responsible Officer or Officers of the Trustee, unless the Trustee was
negligent in ascertaining the pertinent facts;
 
(c) the Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with the written direction of the
holders of not less than a majority in principal amount of the Combined Notes at
the time outstanding determined as provided in Section 12.04 relating to the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee under
this Indenture;
 
(d) whether or not therein provided, every provision of this Indenture relating
to the conduct or affecting the liability of, or affording protection to, the
Trustee shall be subject to the provisions of this Section;
 
(e) the Trustee shall not be liable in respect of any payment (as to the
correctness of amount, entitlement to receive or any other matters relating to
payment) or notice effected by the Company or any paying agent or any records
maintained by any co-registrar with respect to the Notes;
 
(f) if any party fails to deliver a notice relating to an event the fact of
which, pursuant to this Indenture, requires notice to be sent to the Trustee,
the Trustee may conclusively rely on its failure to receive such notice as
reason to act as if no such event occurred; and
 
(g) the Trustee shall not be deemed to have knowledge of any Default or Event of
Default hereunder unless a Responsible Officer of the Trustee at the Corporate
Trust Office shall have been notified in writing of such Default or Event of
Default by the Company or the holders of at least 25% in aggregate principal
amount of the Combined Notes.
 
None of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
 
Section 7.02.   Rights of Trustee.
 
(a) The Trustee may conclusively rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document (whether in its original or facsimile form) believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties.
 
(b) Any request, direction, order or demand of the Company mentioned herein
shall be sufficiently evidenced by an Officers’ Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company; the
Trustee shall be entitled to accept such certificate as sufficient and
conclusive evidence of the fulfillment of the applicable conditions precedent,
in which event it shall be conclusive and binding on the Noteholders.
 
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(c) The Trustee may consult with counsel of its own selection and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel; the Trustee shall be entitled
to accept such opinion as sufficient and conclusive evidence of the fulfillment
of the applicable conditions precedent, in which event it shall be conclusive
and binding on the Noteholders.
 
(d) The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request, order or direction of any
of the Noteholders pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee security or indemnity satisfactory
to it against the costs, expenses and liabilities which may be incurred therein
or thereby.
 
(e) The Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document, but the Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney at the expense of the Company, and shall incur no
liability of any kind by reason of such inquiry or investigation.
 
(f) The Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed by it with due care hereunder.
 
(g) The Trustee shall not be liable for any action taken, suffered or omitted to
be taken by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.
 
(h) The rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder.
 
(i) The Trustee may request that the Company deliver an Officers’ Certificate
setting forth the names of individuals and/or titles of officers authorized at
such time to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any person authorized to sign an Officers’
Certificate, including any person specified as so authorized in any such
certificate previously delivered and not superseded.
 
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(j) Any permissive right or authority granted to the Trustee shall not be
construed as a mandatory duty.
 
(k) The Trustee shall not be required to give any bond or surety in respect of
the performance of its powers and duties hereunder.
 
(l) The Trustee shall have no duty to inquire as to the performance of the
Company’s covenants herein.
 
(m) Neither the Trustee nor any clearing system through which the Notes are
traded shall have any obligation or duty to monitor, determine or inquire as to
compliance, and shall not be responsible or liable for compliance, with
restrictions on transfer, exchange, redemption, purchase or repurchase, as
applicable, of minimum denominations imposed hereunder or under applicable law
or regulation with respect of any transfer, exchange, redemption, purchase or
repurchase, as applicable, of interest in any Note.
 
(n) In the event the Trustee receives inconsistent or conflicting requests and
indemnity from two or more groups of Noteholders, each representing less than a
majority in aggregate principal amount of the Combined Notes then outstanding,
pursuant to the provisions of this Indenture, the Trustee, in its sole
discretion, may determine what action, if any, will be taken.
 
(o) The Trustee is entitled to enter into business transactions with the
Company, its Affiliates or any entity related thereto without accounting for any
profit.
 
(p) In connection with the exercise of its functions (including but not limited
to those in relation to any proposed modification, authorization, waiver or
substitution), the Trustee will have regard to the interests of the Noteholders
as a class, and will not have regard to the consequences of such exercise for
individual Noteholders. The Trustee will not be entitled to require, nor will
any Noteholder be entitled to claim, from the Company or any Guarantor, any
indemnification or payment in respect of any tax consequences of any such
exercise upon individual Noteholders.
 
(q) The Trustee may refrain from taking any action in any jurisdiction if the
taking of such action in that jurisdiction would, in its opinion based upon
legal advice in the relevant jurisdiction, be contrary to any law of that
jurisdiction or, to the extent applicable, of the State of New York.
Furthermore, the Trustee may also refrain from taking such action if it would
otherwise render it liable to any person in that jurisdiction or the State of
New York or if, in its opinion based upon such legal advice, it would not have
the power to do the relevant thing in that jurisdiction by virtue of any
applicable law in that jurisdiction or in the State of New York or if it is
determined by any court or other competent authority in that jurisdiction or in
the State of New York that it does not have such power.
 
Notwithstanding any provision herein to the contrary, the Trustee shall not be
obligated to take any action with respect to an Event of Default pursuant to
Sections 6.01(k), 6.01(m) and 6.01(o), unless it has been first notified to do
so in writing by the Holders of at least 25% in aggregate principal amount of
the outstanding Combined Notes.
 
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Section 7.03.   No Responsibility for Recitals, Etc.
 
The recitals contained herein and in the Notes (except in the Trustee’s
certificate of authentication) shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for the correctness of the same. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes. The Trustee shall not be accountable for the use or
application by the Company of any Notes or the proceeds of any Notes
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture.
 
Section 7.04.   Trustee, Paying Agents, Conversion Agents, Collateral Agents,
Common Depositary or Registrar May Own Notes.
 
The Trustee, any paying agent, any conversion agent, Collateral Agent, Common
Depositary or Registrar, in its individual or any other capacity, may become the
owner or pledgee of Notes with the same rights it would have if it were not
Trustee, paying agent, conversion agent, Collateral Agent, Common Depositary or
Registrar.
 
Section 7.05.   Monies to Be Held in Trust.
 
Subject to the provisions of Section 11.04, all monies received by the Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as may be agreed in writing from time to time by
the Company and the Trustee.
 
Section 7.06.   Compensation and Expenses of Trustee.
 
The Company and each Guarantor, jointly and severally, covenants and agrees to
pay to the Trustee from time to time, and the Trustee shall be entitled to, such
compensation for all services rendered by it hereunder in any capacity (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) as mutually agreed to from time to time in writing
between the Company and the Trustee, and the Company and each Guarantor, jointly
and severally, will pay or reimburse the Trustee upon its request for all
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture and the Security
Documents (including the compensation and the expenses and disbursements of its
counsel and of all Persons not regularly in its employ), except any such
expense, disbursement or advance as shall be determined to have been caused by
its own gross negligence or willful misconduct. The Company and each Guarantor,
jointly and severally, also covenants to indemnify the Trustee and any
predecessor Trustee (or any officer, director or employee of the Trustee) in any
capacity under this Indenture and the Security Documents (which, for the
avoidance of doubt, includes its duties as Collateral Agent, paying agent,
conversion agent, Common Depositary or Registrar) and its agents and any
authenticating agent for, and to hold them harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes based on
the income of the Trustee) incurred without gross negligence, bad faith or
willful misconduct on the part of the Trustee or such officers, directors,
employees and agents or authenticating agent, as the case may be, and arising
out of or in connection with the acceptance or administration of this trust or
in any other capacity hereunder, including the costs and expenses of defending
themselves against any claim (whether asserted by the Company, any holder or any
other Person) of liability in the premises. The obligations of the Company under
this Section to compensate or indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall be secured by a lien
prior to that of the Notes upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Notes. The obligation of the Company under this Section shall survive
the satisfaction and discharge of this Indenture pursuant to Article 11 hereof,
the termination of this Indenture and the Security Documents, the resignation or
removal of the Trustee or payment in full of the Notes through the expiration of
the applicable statute of limitations.
 
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To secure the Company’s payment obligations in this Section, the Trustee shall
have a Lien prior to the Notes on all money or property held or collected by the
Trustee, except that held in trust to pay principal, premium, if any, and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture pursuant to Article 11 hereof, the termination of
this Indenture and the Security Documents, the resignation or removal of the
Trustee or payment in full of the Notes through the expiration of the applicable
statute of limitations.
 
When the Trustee and its agents and any authenticating agent incur expenses or
render services after an Event of Default specified in Section 6.01(f) or (g)
with respect to the Company occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
bankruptcy, insolvency or similar laws.
 
Section 7.07.   Eligibility of Trustee.
 
There shall at all times be a Trustee hereunder which shall be a Person that has
a combined capital and surplus of at least $50,000,000 (or, if such Person is a
member of a bank holding company system, its bank holding company shall have a
combined capital and surplus of at least $50,000,000). If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of any supervising or examining authority, then for the purposes of this Section
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
 
Section 7.08.   Resignation or Removal of Trustee.
 
(a) The Trustee may at any time resign by giving written notice of such
resignation to the Company and to the holders of Notes. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment sixty (60) days after the mailing of
such notice of resignation to the Noteholders, the resigning Trustee may, upon
ten (10) Business Days’ notice to the Company and the Combined Noteholders,
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor trustee, or, any Noteholder who has been a bona
fide holder of a Note or Notes for at least six (6) months may, subject to the
provisions of Section 6.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
 
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(b) In case at any time any of the following shall occur:
 
(i) the Trustee shall cease to be eligible in accordance with the provisions of
Section 7.09 and shall fail to resign after written request therefor by the
Company or by any such Noteholder; or
 
(ii) the Trustee shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
 
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 6.09, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee; provided that
if no successor Trustee shall have been appointed and have accepted appointment
sixty (60) days after either the Company or such Noteholder has removed the
Trustee, or the Trustee resigns, the Trustee so removed may petition, at the
expense of the Company, any court of competent jurisdiction for an appointment
of a successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
 
(c) The holders of a majority in aggregate principal amount of the Combined
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee which shall be deemed appointed as successor trustee unless,
within ten (10) days after notice to the Company of such nomination, the Company
objects thereto, in which case the Trustee so removed or any Noteholder, or, if
such Trustee so removed or any Noteholder fails to act, the Company, upon the
terms and conditions and otherwise as in Section 7.08(a) provided, may petition
any court of competent jurisdiction for an appointment of a successor trustee.
 
(d) Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
7.09.
 
(e) Notwithstanding the replacement of the Trustee pursuant to this Section, the
Company’s obligations under Section 7.06 shall continue for the benefit of the
retiring Trustee.
 
Section 7.09.   Acceptance by Successor Trustee.
 
Any successor trustee appointed as provided in Section 7.08 shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as trustee herein; but, nevertheless, on
the written request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amount then due it pursuant to the
provisions of Section 7.06, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act. Upon request of any such successor trustee, the Company shall execute any
and all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers. Any trustee
ceasing to act shall, nevertheless, retain a lien upon all property and funds
held or collected by such trustee as such, except for funds held in trust for
the benefit of holders of particular Notes, to secure any amounts then due it
pursuant to the provisions of Section 7.06.
 
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No successor trustee shall accept appointment as provided in this Section
unless, at the time of such acceptance, such successor trustee shall be eligible
under the provisions of Section 7.07.
 
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Company (or the former trustee, at the written direction of the
Company) shall mail or cause to be mailed notice of the succession of such
trustee hereunder to the holders of Notes at their addresses as they shall
appear on the Security Register. If the Company fails to mail such notice within
ten (10) days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
 
Section 7.10.   Succession by Merger.
 
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee (including any trust created by this Indenture), shall be the successor
to the Trustee hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that in the case
of any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, such corporation shall be eligible under the provisions
of Section 7.09. The Trustee shall provide the Company with a written notice
within thirty (30) days after the closing of such merger, conversion or
consolidation.
 
In any case where at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or any authenticating agent appointed by such successor
trustee may authenticate such Notes in the name of the successor trustee; and in
all such cases such certificates shall have the full force that is provided in
the Notes or in this Indenture; provided that the right to adopt the certificate
of authentication of any predecessor Trustee or to authenticate Notes in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.
 
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Section 7.11.   Trustee’s Application for Instructions from the Company.
 
Any application by the Trustee for written instructions from the Company (other
than with regard to any action proposed to be taken or omitted to be taken by
the Trustee that affects the rights of the holders of the Notes under this
Indenture) may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three (3) Business Days after the date any Officer of the Company actually
receives such application, unless any such Officer shall have consented in
writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
 
Section 7.12.   Reports by Trustee.
 
(a) Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the holders a brief report dated as of such reporting date with
respect to any of the following events which may have occurred within the
previous 12 months (but if no such event has occurred such date, no report need
be transmitted).
 
(i) the character and amount of any disbursements made by it, as the Trustee
under this Indenture, which remain unpaid on the date of such report, and for
the reimbursement of which it claims or may claim a lien or charge, prior to
that of Notes, on property or funds held or collected by it as the Trustee under
this Indenture, if such disbursements so remaining unpaid aggregate more than
one-half of 1 per centum of the principal amount of the Notes outstanding on
such date;
 
(ii) any release, or release and substitution, of property subject to the Lien
under the Security Documents (and the consideration therefor, if any) which it
has not previously reported; and 
 
(iii) any action taken by it in the performance of its duties under this
Indenture which it has not previously reported and which in its opinion
materially affects the Notes, except action in respect of a default, notice of
which has been or is to be withheld by it in accordance with this Indenture.
 
(b) A copy of each report at the time of its mailing to the holders shall be
mailed to the Company. The Company shall promptly notify the Trustee when the
Notes are listed on any stock exchange and any delisting thereof.
 
Section 7.13.   Certain Provisions.
 
Each Noteholder by accepting a Note authorizes and directs on his or her behalf
the Trustee to enter into and to take such actions and to make such
acknowledgements as are set forth in this Indenture or other documents entered
into in connection therewith.
 
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The Trustee shall not be responsible for the legality, validity, effectiveness,
suitability, adequacy or enforceability of any of the Security Documents or any
obligation or rights created or purported to be created thereby or pursuant
thereto or any security or the priority thereof constituted or purported to be
constituted thereby or pursuant thereto, nor shall it be responsible or liable
to any person because of any invalidity of any provision of such documents or
the unenforceability thereof, whether arising from statute, law or decision of
any court. The Trustee shall be under no obligation to monitor or supervise the
functions of the Collateral Agent under the Security Documents and shall be
entitled to assume that the Collateral Agent is properly performing its
functions and obligations thereunder and the Trustee shall not be responsible
for any diminution in the value of or loss occasioned to the assets subject
thereto by reason of the act or omission by the Collateral Agent in relation to
its functions thereunder. The Trustee shall have no responsibility whatsoever to
the Company, any Guarantor or any Noteholder as regards any deficiency which
might arise because the Trustee is subject to any tax in respect of the Security
Documents, the security created thereby or any part thereof or any income
therefrom or any proceeds thereof.
 
ARTICLE 8

 
SUPPLEMENTAL INDENTURES
 
Section 8.01.   Supplemental Indentures Without Consent of Noteholders.
 
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may, from time to time, and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
 
(a) make provision with respect to the conversion rights of the holders of Notes
pursuant to the requirements of Section 14.05 and the purchase obligations of
the Company pursuant to the requirements of Section 3.02.;
 
(b) to convey, transfer, assign, mortgage or pledge to the Trustee as security
for the Notes, any property or assets;
 
(c) to evidence the succession of another Person to the Company, or successive
successions, and the assumption by the successor Person of the covenants,
agreements and obligations of the Company pursuant to Article 11;
 
(d) to add to the covenants of the Company such further covenants, restrictions
or conditions as the Board of Directors and the Trustee shall consider to be for
the benefit of the holders of Notes, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants,
restrictions or conditions a Default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture as
herein set forth; provided that, in respect of any such additional covenant,
restriction or condition, such supplemental indenture may provide for a
particular period of grace after Default (which period may be shorter or longer
than that allowed in the case of other Defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the Trustee
upon such Default;
 
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(e) to provide for the issuance under this Indenture of Notes in coupon form
(including Notes registrable as to principal only) and to provide for
exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
 
(f) to cure any ambiguity or to correct or supplement any provision contained
herein or in any supplemental indenture that may be defective or inconsistent
with any other provision contained herein or in any supplemental indenture, or
to make such other provisions in regard to matters or questions arising under
this Indenture that shall not materially adversely affect the interests of the
holders of the Notes;
 
(g) to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee with respect to the Notes;
 
(h) add additional Guarantees or additional obligors with respect to the Notes
or release Guarantors from guarantees as permitted by the terms of this
Indenture;
 
(i) further secure the Notes, or release all or any portion of the Collateral
pursuant to the terms of the Security Documents; or
 
(j) to increase, from time to time, the per annum interest rate on the Notes for
any period.
 
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture (in form
satisfactory to the Trustee), the Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations that may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder;
provided that the Trustee shall not be obligated to, but may in its discretion,
enter into any supplemental indenture that affects the Trustee’s own rights,
duties or immunities under this Indenture or otherwise.
 
Any supplemental indenture authorized by the provisions of this Section may be
executed by the Company and the Trustee without the consent of the holders of
any of the Notes at the time outstanding, notwithstanding any of the provisions
of Section 8.02.
 
Section 8.02.   Supplemental Indenture with Consent of Noteholders.
 
With the consent (evidenced as provided in Article 12) of the holders of a
majority in aggregate principal amount of the Combined Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental indenture
shall:
 
(a) extend the fixed maturity of any Note;
 
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(b) reduce the rate or extend the time of payment of Interest thereon;
 
(c) reduce the principal amount thereof or reduce any amount payable on
redemption or repurchase thereof;
 
(d) change the obligation of the Company to repurchase any Note upon the
happening of a Termination of Trading in a manner adverse to the holders of
Notes;
 
(e) impair the right of any Noteholder to institute suit for the payment
thereof;
 
(f) make the principal thereof or Interest thereon payable in any coin or
currency other than that provided in the Notes;
 
(g) impair the right to convert the Notes into Common Stock or reduce the number
of shares of Common Stock or any other property receivable by a Noteholder upon
conversion subject to the terms set forth herein, including Section 14.05, in
each case, without the consent of the holder of each Note so affected;
 
(h) modify any of the provisions of this Section or Section 6.07, except to
increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the holder of each
Note so affected;
 
(i) change any obligation of the Company to maintain an office or agency in the
places and for the purposes set forth in Section 4.02;
 
(j) reduce the quorum or voting requirements set forth in Article 13;
 
(k) subordinate the Notes or any Guarantee to any other obligation of the
Company or the applicable Guarantor;
 
(l) release the security interest granted in favor of the holders of the Notes
in the Collateral other than pursuant to the terms of the Security Documents;
 
(m) release any other security interest that may have been granted in favor of
the holders of the Notes other than pursuant to the terms of such security
interest;
 
(n) reduce the amount payable as Additional Amounts;
 
(o) reduce any premium payable upon a Change of Control or, at any time after a
Change of Control has occurred, change the time at which the Change of Control
Offer relating thereto must be made or at which the Notes must be repurchased
pursuant to such Change of Control Offer;
 
(p) at any time after the Company is obligated to make an Asset Sale Offer with
the Excess Proceeds from Asset Sales, change the time at which such Asset Sale
Offer must be made or at which the Notes must be repurchased pursuant thereto;
 
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(q) make any change in any Guarantee that would adversely affect the holders; or
 
(r) reduce the aforesaid percentage of Combined Notes, the holders of which are
required to consent to any such supplemental indenture,
 
in each case, without the consent of the holders of all Notes then outstanding.
 
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture (in form
satisfactory to the Trustee), and upon the filing with the Trustee of evidence
of the consent of the Combined Noteholders as aforesaid, the Trustee shall join
with the Company in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee’s own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
 
It shall not be necessary for the consent of the Combined Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
 
Section 8.03.   Effect of Supplemental Indenture.
 
Upon the execution of any supplemental indenture pursuant to the provisions of
this Article, this Indenture shall be and shall be deemed to be modified and
amended in accordance therewith and the respective rights, limitation of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of the Combined Notes shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications
and amendments and all the terms and conditions of any such supplemental
indenture shall be and shall be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
 
Section 8.04.   Notation on Notes.
 
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company or the Trustee shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may, at the Company’s expense, be prepared and executed
by the Company, authenticated by the Trustee (or an authenticating agent duly
appointed by the Trustee pursuant to Section 15.10) and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
 
Section 8.05.   Evidence of Compliance of Supplemental Indenture to Be Furnished
to Trustee.
 
Prior to entering into any supplemental indenture, the Trustee shall be provided
with, in addition to the documents required by Section 15.05, an Officers’
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article and is otherwise authorized or permitted by this Indenture.
 
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ARTICLE 9

 
GUARANTEES
 
Section 9.01.   Guarantee.
 
Subject to this Article 9, each Guarantor hereby unconditionally guarantees to
each holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns: (a) the due and punctual payment of the
principal of, premium, if any, and interest on the Notes, subject to any
applicable grace period, whether at Stated Maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on the overdue principal
of and premium, if any, and, to the extent permitted by law, interest, and the
due and punctual performance of all other obligations of the Company to the
holders or the Trustee under this Indenture or any other agreement with or for
the benefit of the holders or the Trustee, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration pursuant to
Section 6.01, redemption or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
 
Each Guarantor hereby agrees that its obligations with regard to its Guarantee
shall be joint and several, unconditional, irrespective of the validity or
enforceability of the Notes or the obligations of the Company under this
Indenture, the absence of any action to enforce the same, the recovery of any
judgment against the Company or any other obligor with respect to this
Indenture, the Notes or the Obligations of the Company under this Indenture or
the Notes, any action to enforce the same or any other circumstances (other than
complete performance) which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor further, to the extent
permitted by law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited to:
(a) any right to require any of the Trustee, the holders or the Company (each a
“Benefited Party”), as a condition of payment or performance by such Guarantor,
to (1) proceed against the Company, any other guarantor (including any other
Guarantor) of the Obligations under the Guarantees or any other Person, (2)
proceed against or exhaust any security held from the Company, any such other
guarantor or any other Person, (3) proceed against or have resort to any balance
of any deposit account or credit on the books of any Benefited Party in favor of
the Company or any other Person, or (4) pursue any other remedy in the power of
any Benefited Party whatsoever; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of the Company
including any defense based on or arising out of the lack of validity or the
unenforceability of the Obligations under the Guarantees or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
the Company from any cause other than payment in full of the Obligations under
the Guarantees; (c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (d) any defense based
upon any Benefited Party’s errors or omissions in the administration of the
Obligations under the Guarantees, except behavior which amounts to bad faith;
(e)(1) any principles or provisions of law, statutory or otherwise, which are or
might be in conflict with the terms of the Guarantees and any legal or equitable
discharge of such Guarantor’s obligations hereunder, (2) the benefit of any
statute of limitations affecting such Guarantor’s liability hereunder or the
enforcement hereof, (3) any rights to set-offs, recoupments and counterclaims
and (4) promptness, diligence and any requirement that any Benefited Party
protect, secure, perfect or insure any security interest or lien or any property
subject thereto; (f) notices, demands, presentations, protests, notices of
protest, notices of dishonor and notices of any action or inaction, including
acceptance of the Guarantees, notices of Default under the Notes or any
agreement or instrument related thereto, notices of any renewal, extension or
modification of the Obligations under the Guarantees or any agreement related
thereto, and notices of any extension of credit to the Company and any right to
consent to any thereof; (g) to the extent permitted under applicable law, the
benefits of any “One Action” rule and (h) any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of the Guarantees.
Except to the extent expressly provided herein, including Section 9.05, each
Guarantor hereby covenants that its Guarantee shall not be discharged except by
complete performance of the obligations contained in its Guarantee and this
Indenture.
 
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If any holder or the Trustee is required by any court or otherwise to return to
the Company, the Guarantors or any custodian, trustee, liquidator or other
similar official acting in relation to either the Company or the Guarantors, any
amount paid by either to the Trustee or such holder, the Guarantee of such
Guarantor, to the extent theretofore discharged, shall be reinstated in full
force and effect.
 
Each Guarantor agrees that it shall not be entitled to any right of subrogation
in relation to the holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor further
agrees that, as between the Guarantors, on the one hand, and the holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 6.01 hereof for the purposes of
this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby and
(y) in the event of any declaration of acceleration of such obligations as
provided in Section 6.01 hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the holders under the Guarantee.
 
Section 9.02.   Limitation on Guarantor Liability.
 
(a) Each Guarantor, and by its acceptance of Notes, each holder, hereby confirms
that it is the intention of all such parties that the Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
guarantee. To effectuate the foregoing intention, the Trustee, the holders and
the Guarantors hereby irrevocably agree that each Guarantor’s liability shall be
that amount from time to time equal to the aggregate liability of such Guarantor
under the guarantee, but shall be limited to the lesser of (a) the aggregate
amount of the Company’s obligations under the Notes and this Indenture or (b)
the amount, if any, which would not have (1) rendered the Guarantor “insolvent”
(as such term is defined in Bankruptcy Law and in the Debtor and Creditor Law of
the State of New York) or (2) left it with unreasonably small capital at the
time its guarantee with respect to the Notes was entered into, after giving
effect to the incurrence of existing Debt immediately before such time;
provided, however, it shall be a presumption in any lawsuit or proceeding in
which a Guarantor is a party that the amount guaranteed pursuant to the
guarantee with respect to the Notes is the amount described in clause (a) above
unless any creditor, or representative of creditors of the Guarantor, or debtor
in possession or trustee in bankruptcy of the Guarantor, otherwise proves in a
lawsuit that the aggregate liability of the Guarantor is limited to the amount
described in clause (b).
 
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(b) In making any determination as to the solvency or sufficiency of capital of
a Guarantor in accordance with the proviso of Section 9.02(a), the right of each
Guarantor to contribution from other Guarantors and any other rights such
Guarantor may have, contractual or otherwise, shall be taken into account.
 
Section 9.03.   Execution and Delivery of Guarantee.
 
To evidence its Guarantee set forth in Section 9.01, each Guarantor hereby
agrees that a notation of such Guarantee in substantially the form included
in Exhibit B attached hereto shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.
 
Each Guarantor hereby agrees that its Guarantee set forth in Section 9.01 shall
remain in full force and effect notwithstanding any failure to endorse on each
Note a notation of such Guarantee.
 
If an Officer whose signature is on this Indenture or on the Guarantee no longer
holds that office at the time the Trustee authenticates the Note on which a
Guarantee is endorsed, the Guarantee shall be valid nevertheless.
 
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantors.
 
The Company hereby agrees that it shall cause each Person that becomes obligated
to provide a Guarantee pursuant to Section 4.18 (each, a “Future Guarantor”) to
execute a supplemental indenture in form and substance satisfactory to the
Trustee, pursuant to which such Person provides the guarantee set forth in this
Article 9 and otherwise assumes the obligations and accepts the rights of a
Guarantor under this Indenture, in each case with the same effect and to the
same extent as if such Person had been named herein as a Guarantor. The Company
also hereby agrees to cause each such new Guarantor to evidence its guarantee by
endorsing a notation of such guarantee on each Note as provided in this Section.
 
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Section 9.04.   Guarantors May Consolidate, etc., on Certain Terms.
 
Except as otherwise provided in Section 9.05, no Guarantor may consolidate with
or merge with or into (whether or not such Guarantor is the Surviving Person)
another Person whether or not affiliated with such Guarantor unless:
 
(a) subject to Section 9.05, the Person formed by or surviving any such
consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance satisfactory to the Trustee, under
this Indenture, the Guarantee on the terms set forth herein or therein; and
 
(b) the Guarantor complies with the requirements of Article 5 hereof.
 
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form and substance to the Trustee,
of the Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor Person thereupon may cause to be signed any or all of the
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Guarantees so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Guarantees had been issued at the date of the execution hereof.
 
Except as set forth in Articles 4 and 5, and notwithstanding clauses (a) and (b)
above, nothing contained in this Indenture or in any of the Notes shall prevent
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
 
Section 9.05.   Releases Following Merger, Consolidation or Sale of Assets, Etc.
 
In the event of a sale or other disposition of all or substantially all of the
assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the Capital Stock of any Guarantor, in each case
to a Person that is not (either before or after giving effect to such
transactions) a Subsidiary of the Company, then such Guarantor (in the event of
a sale or other disposition, by way of merger, consolidation or otherwise, of
all of the Capital Stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) shall be released and relieved of any
obligations under its Guarantee; provided that the net proceeds of such sale or
other disposition shall be applied in accordance with the applicable provisions
of this Indenture, including without limitation Section 4.12. Upon delivery by
the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel
to the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without limitation
Section 4.12, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its obligations under its
Guarantee.
 
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Any Guarantor not released from its obligations under its Guarantee shall remain
liable for the full amount of principal of and interest on the Notes and for the
other obligations of any Guarantor under this Indenture as provided in this
Article 9.
 
ARTICLE 10

 
COLLATERAL AND SECURITY
 
Section 10.01.   Security Documents.
 
(a) The due and punctual payment of the principal of and interest on the Notes
when and as the same shall be due and payable, whether on an Interest Payment
Date, at maturity, by acceleration, repurchase, redemption or otherwise, and
interest on the overdue principal of and interest on the Notes and performance
of all other obligations of the Company to the holders or the Trustee under this
Indenture and the Notes, according to the terms hereunder or thereunder, are
secured as provided in the Security Documents which the Company and Mr. Leng
You-Bin has entered into simultaneously with the execution of this Indenture and
which is attached as Exhibit E hereto. Each holder, by its acceptance thereof,
consents and agrees to the terms of the Security Documents (including, without
limitation, the provisions providing for foreclosure and release of Collateral)
as the same may be in effect or may be amended from time to time in accordance
with its terms and authorizes and directs the Trustee to enter into the Security
Documents and to perform its obligations and exercise its rights thereunder as a
Secured Party in accordance therewith. The Company will do or cause to be done
all such acts and things as may be required by applicable law or may be
necessary or proper, or as may be required by the provisions of the Security
Documents, to assure and confirm to the Trustee the security interest in the
Collateral contemplated hereby, by the Security Documents or any part thereof,
as from time to time constituted, so as to render the same available for the
security and benefit of this Indenture and of the Notes secured hereby,
according to the intent and purposes herein expressed. The Company will take,
and will cause its Subsidiaries to take, any and all actions reasonably required
to cause the Security Documents to create and maintain, as security for the
Obligations of the Company hereunder, a valid and enforceable perfected first
priority Lien in and on all the Collateral, in favor of the Trustee, as Secured
Party, for the benefit of the holders, superior to and prior to the rights of
all third Persons and subject to no other Liens than Permitted Liens.
 
(b) If at any time after the Issue Date there is a change in PRC law or
interpretation in PRC law that permits the encumbrance of the Operating
Subsidiaries’ assets or Property by a Lien without the approval of any
governmental body of the PRC, then the Company shall cause the Operating
Subsidiaries to, concurrently:
 
(i) execute and deliver to the Trustee a Security Document upon substantially
the same terms granting a Lien upon such property to the Trustee for the benefit
of the holders of Notes, which Lien shall be first priority if such assets or
Property is not then encumbered by any other Lien (other than Liens required by
law) or a second priority Lien if such assets or Property is at that time so
encumbered;
 
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(ii) cause the Lien to be granted in such Security Document to be duly perfected
in any manner permitted by law; and
 
(iii) deliver to the Trustee an Opinion of Counsel confirming as to such
Security Document the matters set forth as to the Security Documents and Liens
thereunder in the Opinions of Counsel delivered to holders on the Issue Date
and, if the property subject to such Security Document is an interest in real
estate, such local counsel opinions, insurance policies, surveys and other
supporting documents as may be required by applicable law.
 
(c) Notwithstanding (i) anything to the contrary contained in this Indenture,
the Security Documents, the Notes or any other instrument governing, evidencing
or relating to any Debt, (ii) the time, order or method of attachment of any
Liens, (iii) the time or order of filing or recording of financing statements or
other documents filed or recorded to perfect any Lien upon any Collateral, (iv)
the time of taking possession or control over any Collateral or (v) the rules
for determining priority under the Uniform Commercial Code as in effect in the
State of Utah or the District of Columbia or any other law of any relevant
jurisdiction governing relative priorities of secured creditors:
 
(A) the Liens will rank at least equally and ratably with all valid, enforceable
and perfected Liens, whenever granted upon any present or future Collateral, but
only to the extent such Liens are permitted under this Indenture to exist and to
rank equally and ratably with the Notes and the Guarantees; and
 
(B) all proceeds of the Collateral applied under the Security Documents shall be
allocated and distributed as set forth in Section 6.03.
 
Section 10.02.   Future Guarantor Pledgors.
 
(a) To the fullest extent permitted under applicable laws (including the laws of
the PRC), the Company and AFC shall pledge and to cause each Future Guarantor to
pledge the Capital Stock of any current or future Subsidiary (other than the
Capital Stock of AFC already pledged under the Security Documents) in each case
owned by the Company, AFC or such Future Guarantor, on a first priority basis
(subject to Permitted Liens) in order to secure the obligations of the Company
under the Notes and this Indenture and of such Future Guarantor under its
Guarantee, and use its best efforts to obtain any necessary Governmental
Approvals and take all other actions necessary thereto.
 
(b) Each Guarantor that pledges Capital Stock of a Subsidiary after the Issue
Date is referred to as a “Future Guarantor Pledgor” and, upon giving such
pledge, will be a “Guarantor Pledgor.”
 
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(c) Upon each pledge by AFC or a Future Guarantor of the Capital Stock of any
current or future Subsidiary in accordance with Section 10.02(a), the Company
will deliver to the Trustee an Officers’ Certificate stating that entry into the
applicable pledge agreement has been duly and validly authorized and an Opinion
of Counsel to the effect that (i) in the opinion of such counsel, such action
has been taken with respect to the recording, registering and filing of or with
respect to this Indenture and the applicable pledge agreement and all other
instruments of further assurance as are necessary to make effective the first
priority lien (subject to Permitted Liens) created by such pledge agreement in
the Capital Stock referenced in Section 10.02(a), and referencing the details of
such action; or (ii) in the opinion of such counsel, no such action is necessary
to make such first priority lien (subject to Permitted Liens) effective;
provided that any such Opinion of Counsel may rely on an Officers’ Certificate
or certificates of public officials with respect to matters of fact.
 
(d) All Opinions of Counsel delivered pursuant to Section 10.02(c) may contain
assumptions, qualifications, exceptions and limitations as are appropriate and
customary for similar opinions relating to the nature of the Capital Stock
pledged.
 
(e) Upon each pledge by AFC or any Future Guarantor of the Capital Stock of any
current or future Subsidiary in accordance with Section 10.02(a), the Company
will give notice, file, register or record any supplemental indentures,
financing statements, continuation statements, pledge agreements or other
instruments or cause each such Future Guarantor Pledgor to give notice, file,
register or record any supplemental indentures, financing statements,
continuation statements, pledge agreements or other instruments and take any
other actions necessary in order to perfect and protect the first priority lien
(subject to Permitted Liens) thereby created.
 
Section 10.03.   Recording and Opinions.
 
(a) The Company will furnish to the Trustee within three months after each
anniversary of the Issue Date, an Opinion of Counsel, dated as of such date,
stating either that (i) in the opinion of such counsel, action has been taken
with respect to the recording, registering, filing, re-recording, re-registering
and re-filing of all supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is necessary to maintain
the Lien of the Security Documents and reciting with respect to the security
interest in the Collateral the details of such action or referring to prior
Opinions of Counsel in which such details are given, and stating that, in the
opinion of such counsel, based on relevant laws as in effect on the date of such
Opinion of Counsel, all financing statements and continuation statements have
been executed and filed that are necessary as of such date and during the
succeeding 12 months fully to preserve and protect, to the extent such
protection and preservation are possible by filing, the rights of the holders
and the Trustee hereunder and under the Security Documents with respect to the
security interest in the Collateral; or (ii) in the opinion of such counsel, no
such action is necessary to maintain such Lien and assignment.
 
(b) So long as no Default or Event of Default has occurred and is continuing,
and subject to certain terms and conditions, the Company and the Guarantors will
be entitled to receive all cash dividends, interest and other payments made upon
or with respect to the Collateral pledged by them.
 
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(c) So long as there has occurred no Event of Default, then the Company and the
Guarantors shall have the right to exercise any voting and other consensual
rights pertaining to the Collateral pledged by them.
 
(d) Upon the occurrence and during the continuance of a Default or Event of
Default, all rights of the Company and the Guarantors to receive all cash
dividends, interest and other payments made upon or with respect to the
Collateral will cease and such cash dividends, interest and other payments will
be paid to the Collateral Agent;
 
(e) Upon the occurrence and during the continuance of an Event of Default:
 
(i) all rights of the Company and the Guarantors to exercise such voting or
other consensual rights will cease, and all such rights will become vested in
the Collateral Agent, which, to the extent permitted by law, will have the sole
right to exercise such voting and other consensual rights; and
 
(ii) the Collateral Agent may sell the Collateral or any part of the Collateral
in accordance with the terms of the Security Documents. The Collateral Agent, in
accordance with the provisions of this Indenture, will distribute all funds
distributed under the Security Documents and received by the Collateral Agent to
the Trustee for the benefit of the holders of the Notes.
 
Section 10.04.   Release of Collateral.
 
(a) Subject to subsections (b), (c) and (d) of this Section 10.04, Collateral
may be released from the Lien and security interest created by the Security
Documents at any time or from time to time in accordance with the provisions of
the Security Documents or as provided hereby. In addition, upon the request of
the Company pursuant to an Officers’ Certificate, upon which the Trustee may
conclusively rely, certifying that all conditions precedent hereunder have been
met and stating whether or not such release is in connection with an Asset Sale,
at the sole cost and expense of the Company, the Trustee will release Collateral
that is sold, conveyed or disposed of in compliance with the provisions of this
Indenture; provided, that if such sale, conveyance or disposition constitutes an
Asset Sale, the Company will apply the Net Available Cash in accordance with
Section 4.12 hereof. Upon receipt of such Officers’ Certificate the Trustee
shall execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any Collateral
permitted to be released pursuant to this Indenture or the Security Documents.
 
(b) No Collateral may be released from the Lien and security interest created by
the Security Documents pursuant to the provisions of the Security Documents
unless the certificate required by this Section has been delivered to the
Trustee.
 
(c) At any time when a Default or Event of Default has occurred and is
continuing and the maturity of the Notes has been accelerated (whether by
declaration or otherwise), no release of Collateral pursuant to the provisions
of the Security Documents will be effective as against the holders.
 
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(d) The release of any Collateral from the terms of this Indenture and the
Security Documents will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms of the Security Documents and
hereof.
 
Section 10.05.   Authorization of Actions to Be Taken by the Trustee Under the
Security Documents.
 
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may, in
its sole discretion and without the consent of the holders, take, on behalf of
the holders, all actions it deems necessary or appropriate in order to:
 
(a) enforce any of the terms of the Security Documents; and
 
(b) collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder.
 
The Trustee will have power to institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Security Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the holders or of the Trustee).
 
Section 10.06.   Authorization of Receipt of Funds by the Trustee Under the
Security Documents.
 
The Trustee is authorized to receive any funds for the benefit of the holders
distributed under the Security Documents, and to make further distributions of
such funds to the holders according to the provisions of this Indenture.
 
Section 10.07.   Termination of Security Interest.
 
Upon the payment in full of all Obligations of the Company under this Indenture
and the Notes, the Trustee will, at the request of the Company, release the
Liens pursuant to this Indenture and the Security Documents.
 
ARTICLE 11
 
SATISFACTION AND DISCHARGE OF INDENTURE
 
Section 11.01.   Discharge of Indenture.
 
When (a) the Company shall deliver to the Trustee for cancellation all Notes
theretofore authenticated (other than any Notes that have been mutilated,
destroyed, lost or stolen and in lieu of or in substitution for which other
Notes shall have been authenticated and delivered) and not theretofore canceled,
or (b) all the Notes not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within three years or are to be called for redemption within
three years under arrangements satisfactory to the Trustee for the giving of
notice of redemption, and the Company shall deposit with the Trustee, in trust,
funds sufficient to pay at maturity or upon redemption of all of the Notes
(other than any Notes that shall have been mutilated, destroyed, lost or stolen
and in lieu of or in substitution for which other Notes shall have been
authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal and Interest due or to become due
to such date of maturity or redemption date, as the case may be, accompanied by
a verification report, as to the sufficiency of the deposited amount, from an
independent certified accountant or other financial professional satisfactory to
the Trustee, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, and in the case of either clause (a) or
(b), no Default or Event of Default with respect to this Indenture or the Notes
shall have occurred and be continuing on the date of such deposit or shall occur
as a result of such deposit and such deposit shall not result in a breach or
violation of, or constitute a default under, any other instrument or agreement
to which the Company is a party or by which it is bound, then this Indenture
shall cease to be of further effect (except as to (i) remaining rights of
registration of transfer, substitution and exchange and conversion of Notes,
(ii) rights hereunder of Noteholders to receive payments of principal of and
Interest on the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder), and the Trustee, on written demand of the Company
accompanied by an Officers’ Certificate and an Opinion of Counsel as required by
Section 15.05 and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture; the
Company, however, hereby agrees to reimburse the Trustee for any costs or
expenses thereafter incurred by the Trustee and to compensate the Trustee for
any services thereafter rendered by the Trustee in connection with this
Indenture or the Notes. The Trustee shall hold in trust money deposited with it
pursuant to this Article. It shall apply the deposited money through the Paying
Agent and in accordance with this Indenture to the payment of principal of and
Interest on the Notes.
 
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Section 11.02.   Deposited Monies to Be Held in Trust by Trustee.
 
Subject to Section 11.04, all monies deposited with the Trustee pursuant to
Section 11.01 shall be held in trust for the sole benefit of the Noteholders,
and such monies shall be applied by the Trustee to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Notes for the payment or redemption of
which such monies have been deposited with the Trustee of all sums due and to
become due thereon for principal, premium, if any, and Interest.
 
Section 11.03.   Paying Agent to Repay Monies Held.
 
Upon the satisfaction and discharge of this Indenture, all monies then held by
any paying agent of the Notes (other than the Trustee) shall, upon written
request of the Company, be repaid to it or paid to the Trustee, and thereupon
such paying agent shall be released from all further liability with respect to
such monies.
 
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Section 11.04.   Return of Unclaimed Monies.
 
Subject to the requirements of applicable law, any monies deposited with or paid
to the Trustee for payment of the principal or Interest on Notes and not applied
but remaining unclaimed by the holders of Notes for two years (or such shorter
period of time under applicable escheat law) after the date upon which the
principal of or Interest on such Notes, as the case may be, shall have become
due and payable, shall be repaid to the Company by the Trustee on demand and all
liability of the Trustee shall thereupon cease with respect to such monies; and
the holder of any of the Notes shall thereafter look only to the Company for any
payment that such holder may be entitled to collect unless an applicable
abandoned property law designates another Person.
 
Section 11.05.   Reinstatement.
 
If the Trustee or the paying agent is unable to apply any money in accordance
with Section 11.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company’s obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
11.01 until such time as the Trustee or the paying agent is permitted to apply
all such money in accordance with Section 11.02; provided that, if the Company
makes any payment of Interest on or principal of any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the holders of such Notes to receive such payment from the money held by the
Trustee or paying agent.
 
ARTICLE 12

 
THE NOTEHOLDERS
 
Section 12.01.   Action by Noteholders.
 
Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Combined Notes may take any
action (including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that, at the time
of taking any such action, the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by Noteholders in person or by agent or proxy appointed
in writing, or (b) by the record of the holders of Notes voting in favor thereof
at any meeting of Combined Noteholders duly called and held in accordance with
the provisions of Article 13, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Combined Noteholders.
Whenever the Company or the Trustee solicits the taking of any action by the
Combined Noteholders, the Company or the Trustee may fix in advance of such
solicitation a date as the record date for determining holders entitled to take
such action. The record date shall be not more than fifteen (15) days prior to
the date of commencement of solicitation of such action.
 
Section 12.02.   Proof of Execution by Noteholders.
 
Subject to the provisions of Sections 7.01, 7.02 and 13.04, proof of the
execution of any instrument by a Noteholder or its agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The holding of Notes shall be proved by the registry of such Notes
or by a certificate of the Registrar.
 
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The record of any Combined Noteholders’ meeting shall be proved in the manner
provided in Section 13.05.
 
Section 12.03.   Who Are Deemed Absolute Owners.
 
The Company, the Trustee, any paying agent, any conversion agent, any Collateral
Agent, Common Depositary and any Registrar may deem the Person in whose name
such Note shall be registered upon the Security Register to be, and may treat it
as, the absolute owner of such Note (whether or not such Note shall be overdue
and notwithstanding any notation of ownership or other writing thereon made by
any Person other than the Company or any Registrar) for the purpose of receiving
payment of or on account of the principal of and Interest on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor
the Trustee nor any paying agent, Collateral Agent, Common Depositary,
conversion agent nor any Registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon
such holder’s order, shall be valid and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for monies payable upon
any such Note.
 
Section 12.04.   Company-owned Notes Disregarded.
 
In determining whether the holders of the requisite aggregate principal amount
of the Combined Notes have concurred in any direction, consent, waiver or other
action under this Indenture, Notes and Other Notes which are owned by the
Company or any other obligor on the Notes or any Affiliate of the Company or any
other obligor on the Notes and Other Notes shall be disregarded and deemed not
to be outstanding for the purpose of any such determination; provided that, for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, consent, waiver or other action, only Notes and Other Notes
which a Responsible Officer knows are so owned shall be so disregarded. Notes
and Other Notes so owned which have been pledged in good faith may be regarded
as outstanding for the purposes of this Section if the pledgee shall establish
to the satisfaction of the Trustee the pledgee’s right to vote such Notes and
that the pledgee is not the Company, any other obligor on the Notes or any
Affiliate of the Company or any such other obligor. In the case of a dispute as
to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee. Upon request of the Trustee, the
Company shall furnish to the Trustee promptly an Officers’ Certificate listing
and identifying all Notes and Other Notes, if any, known by the Company to be
owned or held by or for the account of any of the above-described Persons, and,
subject to Section 7.01, the Trustee shall be entitled to accept such Officers’
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes and Other Notes not listed therein are outstanding for the
purpose of any such determination.
 
Section 12.05.   Revocation of Consents; Future Holders Bound.
 
At any time prior to (but not after) the evidencing to the Trustee, as provided
in Section 12.01, of the taking of any action by the holders of the percentage
in aggregate principal amount of the Combined Notes specified in this Indenture
in connection with such action, any holder of a Note or an Other Note which is
shown by the evidence to be included in the Combined Notes the holders of which
have consented to such action may, by filing written notice with the Trustee at
its Corporate Trust Office and upon proof of holding as provided in Section
12.02, revoke such action so far as concerns such Note or Other Note. Except as
aforesaid, any such action taken by the holder of any Note or Other Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note or Other Note and of any Notes or Other Notes issued in
exchange or substitution therefor, irrespective of whether any notation in
regard thereto is made upon such Note or Other Note or any Note or Other Notes
issued in exchange or substitution therefor.
 
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ARTICLE 13

 
MEETINGS OF NOTEHOLDERS
 
Section 13.01.   Purpose of Meetings.
 
A meeting of Combined Noteholders may be called at any time and from time to
time pursuant to the provisions of this Article for any of the following
purposes:
 
(a) to give any notice to the Company or to the Trustee or to give any
directions to the Trustee permitted under this Indenture, or to consent to the
waiving of any Default or Event of Default hereunder and its consequences, or to
take any other action authorized to be taken by Combined Noteholders pursuant to
any of the provisions of Article 6;
 
(b) to remove the Trustee and nominate a successor trustee pursuant to the
provisions of Article 7;
 
(c) to consent to the execution of an indenture or indentures supplemental
hereto pursuant to the provisions of Section 8.02; or
 
(d) to take any other action authorized to be taken by or on behalf of the
holders of any specified aggregate principal amount of the Combined Notes under
any other provision of this Indenture or under applicable law.
 
Section 13.02.   Call of Meetings by Company or Noteholders.
 
In case at any time the Company, pursuant to a resolution of its Board of
Directors, or the holders of at least twenty-five percent (25%) in aggregate
principal amount of the Combined Notes then outstanding, shall have requested
the Trustee to call a meeting of Combined Noteholders, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
twenty (20) days after receipt of such request, then the Company or such
Combined Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 13.01 by mailing
notice a notice of meeting. Notice of every meeting of the Combined Noteholders,
setting forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
pursuant to Section 12.01, shall be mailed to holders of Combined Notes at their
addresses as they shall appear on the Security Register. Such notice shall also
be mailed to the Company. Such notices shall be mailed not less than twenty (20)
nor more than ninety (90) days prior to the date fixed for the meeting.
 
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Any meeting of Combined Noteholders shall be valid without notice if the holders
of all Combined Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the holders of all Combined
Notes outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
 
Section 13.03.   Qualifications for Voting.
 
To be entitled to vote at any meeting of Combined Noteholders, a person shall
(a) be a holder of one or more Notes or Other Notes on the record date
pertaining to such meeting or (b) be a person appointed by an instrument in
writing as proxy by a holder of one or more Notes or Other Notes on the record
date pertaining to such meeting. The only persons who shall be entitled to be
present or to speak at any meeting of Combined Noteholders shall be the persons
entitled to vote at such meeting and their counsel and any representatives of
the Trustee and its counsel and any representatives of the Company and its
counsel.
 
Section 13.04.   Regulations.
 
Notwithstanding any other provisions of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any meeting of Combined
Noteholders, in regard to proof of the holding of Notes and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall think fit.
 
The Company or the Combined Noteholders calling the meeting, as the case may be,
shall, by an instrument in writing, appoint a temporary chairman of the meeting.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the holders of a majority in principal amount of the Combined Notes
represented at the meeting and entitled to vote at the meeting.
 
Subject to the provisions of Section 12.04, at any meeting each Noteholder or
proxyholder shall be entitled to one vote for each $100,000 principal amount of
Notes or Other Notes held or represented by him; provided that no vote shall be
cast or counted at any meeting in respect of any Note or Other Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes or Other Notes held by him or instruments in writing as
aforesaid duly designating him as the proxy to vote on behalf of other
Noteholders or Other Noteholders. Any meeting of Combined Noteholders duly
called pursuant to the provisions of Section 13.02 may be adjourned from time to
time by the holders of a majority of the aggregate principal amount of the
Combined Notes represented at the meeting, whether or not constituting a
majority of the aggregate principal amount of the Combined Notes outstanding,
the latter of which shall constitute a quorum, and the meeting may be held as so
adjourned without further notice.
 
Section 13.05.   Voting.
 
The vote upon any resolution submitted to any meeting of the Combined
Noteholders shall be by written ballot on which shall be subscribed the
signatures of the holders of Notes or Other Notes or of their representatives by
proxy and the outstanding principal amount of the Notes or Other Notes held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record in duplicate of the proceedings of each meeting of the Combined
Noteholders shall be prepared by the secretary of the meeting, and there shall
be attached to said record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 13.02. The record
shall show the principal amount of the Combined Notes voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
 
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Any record so signed and verified shall be conclusive evidence of the matters
therein stated.
 
Section 13.06.   No Delay of Rights by Meeting.
 
Nothing contained in this Article shall be deemed or construed to authorize or
permit, by reason of any call of a meeting of the Combined Noteholders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the or Other Notes Noteholders under any of the
provisions of this Indenture or of the Notes or the Other Indenture or of the
Other Notes.
 
ARTICLE 14

 
CONVERSION OF NOTES
 
Section 14.01.   Right to Convert.
 
(a) Subject to and upon compliance with the provisions of this Indenture, the
holder of any Note shall have the right, at such holder’s option at any time
prior to the close of business on the date of maturity of the Notes, to convert
the principal amount of the Note, or any portion of such principal amount which
is a multiple of $100,000, into fully paid and non-assessable shares of Common
Stock (as such shares shall then be constituted) at the Conversion Rate in
effect at such time, by surrender of the Note so to be converted in whole or in
part, together with any required funds, under the circumstances described in
this Section and in the manner provided in Section 14.02.
 
(b) A Note in respect of which a holder is electing to exercise its option to
require the Company to purchase such holder’s Notes upon an Asset Sale Offer,
Change of Control Offer or Termination of Trading Offer pursuant to Section
3.02 may be converted only if such holder withdraws its election in accordance
with Section 3.02. A holder of Notes is not entitled to any rights of a holder
of Common Stock until such holder has converted his Notes to Common Stock, and
only to the extent such Notes are deemed to have been converted to Common Stock
under this Article.
 
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Section 14.02.   Exercise of Conversion Right; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends.
 
In order to exercise the conversion right with respect to any Note in
certificated form, the Company must receive at the office or agency of the
Company maintained for that purpose or, at the option of such holder, the
Corporate Trust Office, such Note with the original or facsimile of the form
entitled “Conversion Notice” on the reverse thereof, duly completed and manually
signed, together with such Notes duly endorsed for transfer, accompanied by the
funds, if any, required by this Section. Such notice shall also state the name
or names (with address or addresses) in which the certificate or certificates
for shares of Common Stock which shall be issuable on such conversion shall be
issued, and shall be accompanied by transfer or similar taxes, if required
pursuant to Section 14.07.
 
In order to exercise the conversion right with respect to any interest in a
Global Note, the beneficial holder must complete, or cause to be completed, the
appropriate instruction form for conversion pursuant to the Common Depositary’s
book-entry conversion program, deliver, or cause to be delivered, by book-entry
delivery an interest in such Global Note, furnish appropriate endorsements and
transfer documents if required by the Company or the Trustee or conversion
agent, and pay the funds, if any, required by this Section and any transfer
taxes if required pursuant to Section 14.07.
 
As promptly as practicable after satisfaction of the requirements for conversion
set forth above, subject to compliance with any restrictions on transfer if
shares issuable on conversion are to be issued in a name other than that of the
Noteholder (as if such transfer were a transfer of the Note or Notes (or portion
thereof) so converted), the Company shall issue and shall deliver to such
Noteholder at the office or agency maintained by the Company for such purpose
pursuant to Section 4.02 a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof as determined by the Company in accordance with the provisions of this
Article and a check or cash in respect of any fractional interest in respect of
a share of Common Stock arising upon such conversion, calculated by the Company
as provided in Section 14.03. In case any Note of a denomination greater than
$100,000 shall be surrendered for partial conversion, and subject to Section
2.03, the Company shall execute and the Trustee shall authenticate and deliver
to the holder of the Note so surrendered, without charge to such holder, a new
Note or Notes in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered Note.
 
Each conversion shall be deemed to have been effected as to any such Note (or
portion thereof) on the date (the “Conversion Date”) on which the requirements
set forth above in this Section have been satisfied as to such Note (or portion
thereof), and the Person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder of record of the shares represented thereby;
provided that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the Person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Rate in effect on the date upon which such
Note shall be surrendered.
 
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Any Note or portion thereof surrendered for conversion during the period from
the close of business on the record date for any Interest Payment Date to the
close of business on the Business Day preceding such Interest Payment Date shall
be accompanied by payment, in immediately available funds or other funds
acceptable to the Company, of an amount equal to the Interest otherwise payable
on such Interest Payment Date on the principal amount being converted; provided
that no such payment need be made (1) if the Company has specified a Purchase
Date that is after a record date and on or prior to the next Interest Payment
Date or (2) to the extent of any overdue Interest, if any overdue Interest
exists at the time of conversion with respect to such Note. Except as provided
above in this Section, no payment or other adjustment shall be made for Interest
accrued on any Note converted or for dividends on any shares issued upon the
conversion of such Note as provided in this Article.
 
Upon the conversion of an interest in a Global Note, the Trustee (or other
conversion agent appointed by the Company), or the Custodian at the direction of
the Trustee (or other conversion agent appointed by the Company), shall make a
notation on such Global Note as to the reduction in the principal amount
represented thereby. The Company shall notify the Trustee in writing of any
conversions of Notes effected through any conversion agent other than the
Trustee.
 
Upon the conversion of a Note, that portion of the accrued but unpaid Interest,
including accrued Additional Interest, if any, to the Conversion Date, with
respect to the converted Note shall not be canceled, extinguished or forfeited,
but rather shall be deemed to be paid in full to the holder thereof through
delivery of the Common Stock (together with the cash payment, if any in lieu of
fractional shares) in exchange for the Note being converted pursuant to the
provisions hereof, and the Fair Market Value of such shares of Common Stock
(together with any such cash payment in lieu of fractional shares) shall be
treated as issued, to the extent thereof, first in exchange for and in
satisfaction of the Company’s obligation to pay the principal amount of the
converted Note, the accrued but unpaid Interest, including accrued Additional
Interest, if any, through the Conversion Date and the balance, if any, of such
Fair Market Value of such Common Stock (and any such cash payment) shall be
treated as issued in exchange for and in satisfaction of the right to convert
the Note being converted pursuant to the provisions hereof.
 
Section 14.03.   Cash Payments in Lieu of Fractional Shares.
 
No fractional shares of Common Stock or scrip certificates representing
fractional shares shall be issued upon conversion of Notes. If more than one
Note shall be surrendered for conversion at one time by the same holder, the
number of full shares that shall be issuable upon conversion shall be computed
on the basis of the aggregate principal amount of the Notes (or specified
portions thereof to the extent permitted hereby) so surrendered. If any
fractional share of stock would be issuable upon the conversion of any Note or
Notes, the Company shall make an adjustment and payment therefor in cash at the
Closing Sale Price on the last Trading Day immediately preceding the Conversion
Date thereof to the holder of Notes.
 
Section 14.04.   Conversion Rate.
 
Each $100,000 principal amount of the Notes shall be initially convertible into
4,166 shares of Common Stock at the initial Conversion Price of $24.00 per
share, as specified in the form of Note (herein called the “Conversion Rate”)
attached as Exhibit A hereto, subject to adjustment as provided in this Article.
 
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Section 14.05.   Adjustment of Conversion Rate.
 
The Conversion Rate shall be adjusted from time to time by the Company as
follows:
 
(a) In case the Company shall hereafter pay a dividend or make a distribution to
all holders of the outstanding Common Stock in shares of Common Stock, the
Conversion Rate shall be increased so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect at the opening of
business on the date following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution by a
fraction,
 
(i) the numerator of which shall be the sum of the number of shares of Common
Stock outstanding at the close of business on the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution plus the total number of shares of Common Stock constituting such
dividend or other distribution; and
 
(ii) the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination,
 
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purpose of this
paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company will
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company. If any dividend or distribution of the type
described in this Section 14.05(a) is declared but not so paid or made, the
Conversion Rate shall again be adjusted to the Conversion Rate that would then
be in effect if such dividend or distribution had not been declared.
 
(b) In case the Company shall issue rights or warrants to all holders of its
outstanding shares of Common Stock entitling them (for a period expiring within
forty-five (45) days after the date fixed for determination of shareholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Common Stock at a price per share less than the Current Market Price
immediately preceding the date such distribution is first publicly announced by
the Company, the Conversion Rate shall be increased so that the same shall equal
the rate determined by multiplying the Conversion Rate in effect immediately
prior to the date fixed for determination of shareholders entitled to receive
such rights or warrants by a fraction,
 
(i) the numerator of which shall be the number of shares of Common Stock
outstanding on the date fixed for determination of shareholders entitled to
receive such rights or warrants plus the total number of additional shares of
Common Stock offered for subscription or purchase, and
 
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(ii) the denominator of which shall be the sum of the number of shares of Common
Stock outstanding at the close of business on the date fixed for determination
of shareholders entitled to receive such rights or warrants plus the number of
shares that the aggregate offering price of the total number of shares so
offered would purchase at a price equal to the Current Market Price immediately
preceding the date such distribution is first publicly announced by the Company,
 
such adjustment shall be successively made whenever any such rights or warrants
are issued, and shall become effective immediately after the opening of business
on the day following the date fixed for determination of shareholders entitled
to receive such rights or warrants. To the extent that shares of Common Stock
are not delivered after the expiration of such rights or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate that would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. If such rights or warrants are not so issued, the Conversion
Rate shall again be adjusted to be the Conversion Rate that would then be in
effect if such date fixed for the determination of shareholders entitled to
receive such rights or warrants had not been fixed. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase shares of
Common Stock at a price less than the Current Market Price immediately preceding
the date such distribution is first publicly announced by the Company, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Company for such
rights or warrants and any amount payable on exercise or conversion thereof, the
value of such consideration, if other than cash, to be determined by the Board
of Directors.
 
(c) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Rate in effect at the opening of business
on the day following the day upon which such combination becomes effective shall
be proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
 
(d) In case the Company shall, by dividend or otherwise, distribute to all
holders of Common Stock shares of any class of capital stock of the Company or
evidences of its indebtedness or assets (including securities, but excluding any
rights or warrants referred to in Section 14.05(b), and excluding any dividend
or distribution (x) paid exclusively in cash or (y) referred to in Section
14.05(a) (any of the foregoing hereinafter in this Section 14.05(d) called the
“Securities”)), then, in each such case (unless the Company elects to reserve
such Securities for distribution to the Noteholders upon the conversion of the
Notes so that any such holder converting Notes will receive upon such
conversion, in addition to the shares of Common Stock to which such holder is
entitled, the amount and kind of such Securities which such holder would have
received if such holder had converted its Notes into Common Stock immediately
prior to the Record Date for such distribution of the Securities) the Conversion
Rate shall be increased so that the same shall be equal to the rate determined
by multiplying the Conversion Rate in effect on the Record Date with respect to
such distribution by a fraction,
 
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(i) the numerator of which shall be the Current Market Price on such Record
Date; and
 
(ii) the denominator of which shall be the Current Market Price on such Record
Date less the Fair Market Value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the Board of
Directors) on the Record Date of the portion of the Securities so distributed
applicable to one share of Common Stock,
 
such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided that, if the then Fair Market
Value (as so determined) of the portion of the Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Noteholder shall have the right to receive
upon conversion the amount of Securities such holder would have received had
such holder converted each Note on the Record Date. If such dividend or
distribution is not so paid or made, the Conversion Rate shall again be adjusted
to be the Conversion Rate that would then be in effect if such dividend or
distribution had not been declared. If the Board of Directors determines the
Fair Market Value of any distribution for purposes of this Section 14.05(d) by
reference to the actual or when issued trading market for any securities, it
must in doing so consider the prices in such market over the same period used in
computing the Current Market Price on the applicable Record Date.
Notwithstanding the foregoing, if the Securities distributed by the Company to
all holders of its Common Stock consist of capital stock of, or similar equity
interests in, a Subsidiary or other business unit, the Conversion Rate shall be
increased so that the same shall be equal to the rate determined by multiplying
the Conversion Rate in effect on the Record Date with respect to such
distribution by a fraction,
 
(i) the numerator of which shall be the sum of (A) the average of the Closing
Sale Prices of the Common Stock for the ten (10) Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Time plus (B) the Fair
Market Value of the securities distributed in respect of each share of Common
Stock for which this Section 14.05(d) applies, which shall equal the number of
Securities distributed in respect of each share of Common Stock multiplied by
the average of the closing sale prices of those Securities distributed (where
such closing sale prices are available) for the ten (10) Trading Days commencing
on and including the fifth Trading Day after the Ex-Dividend Time; and
 
(ii) the denominator of which shall be the average of the Closing Sale Prices of
the Common Stock for the ten (10) Trading Days commencing on and including the
fifth Trading Day after the Ex-Dividend Time,
 
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such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided that the Company may in lieu of
the foregoing adjustment make adequate provision so that each Noteholder shall
have the right to receive upon conversion the amount of Securities such holder
would have received had such holder converted each Note on the Record Date with
respect to such distribution.
 
Rights or warrants distributed by the Company to all holders of Common Stock
entitling the holders thereof to subscribe for or purchase shares of the
Company’s capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
(“Trigger Event”): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section (and no adjustment to the Conversion Rate under this
Section will be required) until the occurrence of the earliest Trigger Event,
whereupon such rights and warrants shall be deemed to have been distributed and
an appropriate adjustment (if any is required) to the Conversion Rate shall be
made under this Section 14.05(d). If any such right or warrant, including any
such existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights or
warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Rate under this Section was made, (1) in the case of any such rights
or warrants that shall all have been redeemed or repurchased without exercise by
any holders thereof, the Conversion Rate shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder or holders of Common
Stock with respect to such rights or warrants (assuming such holder had retained
such rights or warrants), made to all holders of Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such rights or warrants
that shall have expired or been terminated without exercise by any holders
thereof, the Conversion Rate shall be readjusted as if such rights and warrants
had not been issued.
 
No adjustment of the Conversion Rate shall be made pursuant to this Section
14.05(d) in respect of rights or warrants distributed or deemed distributed on
any Trigger Event to the extent that such rights or warrants are actually
distributed, or reserved by the Company for distribution to holders of Notes
upon conversion by such holders of Notes to Common Stock.
 
For purposes of this Section 14.05(d) and Sections 14.05(a) and 14.05(b), any
dividend or distribution to which this Section 14.05(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Rate adjustment required by this Section 14.05(d) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Rate adjustment required by Sections
14.05(a) and 14.05(b) with respect to such dividend or distribution shall then
be made), except (A) the Record Date of such dividend or distribution shall be
substituted as “the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution”, “the date fixed for the
determination of shareholders entitled to receive such rights or warrants” and
“the date fixed for such determination” within the meaning of Sections 14.05(a)
and 14.05(b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed “outstanding at the close of business on the
date fixed for such determination” within the meaning of Section 14.05(a).
 
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(e) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary), then, in such case, the Conversion Rate shall
be increased so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on such
Record Date by a fraction,
 
(i) the numerator of which shall be the Current Market Price on such Record
Date; and
 
(ii) the denominator of which shall be the Current Market Price on such Record
Date less the amount of cash so distributed applicable to one share of Common
Stock,
 
such adjustment to be effective immediately prior to the opening of business on
the day following the Record Date; provided that if the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Noteholder shall have
the right to receive upon conversion the amount of cash such holder would have
received had such holder converted each Note on the Record Date. If such
dividend or distribution is not so paid or made, the Conversion Rate shall again
be adjusted to be the Conversion Rate that would then be in effect if such
dividend or distribution had not been declared.
 
(f) In case a tender or exchange offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender or exchange
offer (as amended upon the expiration thereof) shall require the payment to
shareholders of consideration per share of Common Stock having a Fair Market
Value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) that as of
the last time (the “Expiration Time”) tenders or exchanges may be made pursuant
to such tender or exchange offer (as it may be amended) exceeds the Closing Sale
Price of a share of Common Stock on the Trading Day next succeeding the
Expiration Time, the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the Expiration Time by a fraction,
 
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(i) the numerator of which shall be the sum of (x) the Fair Market Value
(determined as aforesaid) of the aggregate consideration payable to shareholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to as the “Purchased Shares”) and (y) the product of the number
of shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Closing Sale Price of a share of Common Stock on the
Trading Day next succeeding the Expiration Time, and
 
(ii) the denominator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Expiration Time
multiplied by the Closing Sale Price of a share of Common Stock on the Trading
Day next succeeding the Expiration Time,
 
such adjustment to become effective immediately prior to the opening of business
on the day following the Expiration Time. If the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again be adjusted to
be the Conversion Rate that would then be in effect if such tender or exchange
offer had not been made.
 
(g) On March 1 and September 1 of each year, beginning with March 1, 2008, the
Conversion Rate shall be adjusted to equal the quotient obtained by dividing (i)
$100,000 by (ii) the Trading Reference VWAP; provided that no such adjustment
shall be made if the number of shares issuable upon conversion of the Notes at
such adjusted Conversion Rate would be lower than the number of shares issuable
at then existing Conversion Rate (after giving effect to prior adjustments
permitted pursuant to this clause).
 
(h) If at any time after the Issue Date the Company shall issue or sell its
Common Stock at a price per share less than the Current Market Price then in
effect (and in the case of subclauses (ii) or (iii) below, issue or sell Common
Stock or any other securities exercisable into shares of Common Stock, whose
stock compensation expense per share, as determined in accordance with US GAAP,
is less than the Current Market Price then in effect), the Conversion Rate shall
be increased such that the Conversion Price is equal to the lowest price or
stock compensation expense per share at which the Company has issued or sold its
Common Stock after the Issue Date such adjustment to take effect as of the date
of the issuance or sale of such Common Stock; provided, however, that no
adjustment shall be made to the Conversion Price for (i) the issuance of Common
Stock pursuant to the conversion or exercise of convertible or exercisable
securities issued or outstanding on or prior to the Issue Date or the Notes,
(ii) the issuance of Common Stock or any other securities exercisable into
shares of Common Stock pursuant to exercise of stock options granted or reserved
under the Company's employee stock options existing on the Issue Date or adopted
thereafter, or (iii) the issuance, after the Issue Date, of Common Stock or any
other securities exercisable into shares of Common Stock issued or granted to
third-party consultants or employees of the Company and its subsidiaries under
the Company's employee stock options or pursuant to written contractual
arrangements relating to the compensation for the services rendered to the
Company or its subsidiaries by such consultants or employees, to the extent that
all such shares or securities issued under subclauses (ii) or (iii) in this
paragraph, in the aggregate, on a cumulative basis and without double counting,
do not exceed five percent (5%) of the Common Stock of the Company issued and
outstanding immediately prior to such issuance.
 
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(i) If and at each time, upon completion of the annual audit of the Company’s
financial statements a Financial and Operational Trigger shall have occurred in
the immediately preceding fiscal year, then within five (5) Business Days
following issuance of the audit report for such fiscal year, the Conversion Rate
per Note shall be adjusted (such adjustment to take effect as of the date of its
determination) to equal:
 
Conversion Rate then in effect + [(A x B) / C],

where

 
A =
the total number of shares of Common Stock issued and outstanding on a
fully-diluted basis at the date of determination of such adjustment;

B =
2.0% expressed as a decimal; and

 
C =
the aggregate principal amount of the Combined Notes issued on their respective
issue dates divided by the principal amount of a Note.

For the avoidance of doubt, the adjustments contemplated by this Section
14.05(i) (x) shall be made upon the occurrence of each Financial and Operational
Trigger, irrespective of the number of adjustments made prior thereto pursuant
to this Section 14.05(i), and (y) shall not be subject to any ceiling or floor,
including the Conversion Rate and the Conversion Price, respectively.
 
(j) For purposes of this Section 14.05, the following terms shall have the
meaning indicated:
 
(i) “Current Market Price” shall mean the average of the daily Closing Sale
Prices per share of Common Stock for the ten (10) consecutive Trading Days
ending on the earlier of the Trading Day immediately preceding the relevant date
and the day before the “ex” date with respect to the closing of the issuance,
distribution, subdivision or combination requiring such computation. For purpose
of this paragraph, the term “ex” date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common Stock trades,
regular way, on the relevant exchange or in the relevant market from which the
Closing Sale Price was obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any subdivision or combination
of shares of Common Stock, means the first date on which the Common Stock
trades, regular way, on such exchange or in such market after the time at which
such subdivision or combination becomes effective.
 
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If another issuance, distribution, subdivision or combination to which Section
14.05 applies occurs during the period applicable for calculating “Current
Market Price” pursuant to the definition in the preceding paragraph, “Current
Market Price” shall be calculated for such period in a manner determined by the
Board of Directors to reflect the impact of such issuance, distribution,
subdivision or combination on the Closing Sale Price of the Common Stock during
such period.
 
(ii) “Record Date” shall mean, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock have the right
to receive any cash, securities or other property or in which the Common Stock
(or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
 
(k) The Company may make such increases in the Conversion Rate, in addition to
those required by Section 14.05(a) through (i) as the Board of Directors
considers to be advisable to avoid or diminish any income tax to holders of
Common Stock or rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes.
 
To the extent permitted by applicable law and Nasdaq Marketplace rules, the
Company from time to time may increase the Conversion Rate by any amount for any
period of time if the period is at least twenty (20) Business Days, the increase
is irrevocable during the period and the Board of Directors shall have made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. Whenever the Conversion Rate is
increased pursuant to the preceding sentence, the Company shall mail to holders
of record of the Notes a notice of the increase at least fifteen (15) days prior
to the date the increased Conversion Rate takes effect, and such notice shall
state the increased Conversion Rate and the period during which it will be in
effect.
 
(l) No adjustment in the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
such rate; provided that any adjustments that by reason of this Section 14.05(l)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article shall be made by
the Company and shall be made to the nearest cent or to the nearest one-ten
thousandth (1/10,000) of a share, as the case may be. No adjustment need be made
for rights to purchase Common Stock pursuant to a Company plan for reinvestment
of dividends or interest or for any issuance of Common Stock or convertible or
exchangeable securities or rights to purchase Common Stock or convertible or
exchangeable securities. To the extent the Notes become convertible into cash,
assets, property or securities (other than capital stock of the Company), no
adjustment need be made thereafter as to the cash, assets, property or such
securities. Interest will not accrue on any cash into which the Notes are
convertible.
 
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(m) Whenever the Conversion Rate is adjusted as herein provided, the Company
shall promptly file with the Trustee and any conversion agent other than the
Trustee an Officers’ Certificate setting forth the Conversion Rate after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. Unless and until a Responsible Officer of the Trustee shall have
received such Officers’ Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Rate and may assume that the last
Conversion Rate of which it has knowledge is still in effect. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and
the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Conversion Rate to the holder of each Note at his last
address appearing on the Security Register provided for in Section 4.02 of this
Indenture, within twenty (20) days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of any such adjustment.
 
(n) In any case in which this Section provides that an adjustment shall become
effective immediately after (1) a record date or Record Date for an event, (2)
the date fixed for the determination of shareholders entitled to receive a
dividend or distribution pursuant to Section 14.05(a), (3) a date fixed for the
determination of shareholders entitled to receive rights or warrants pursuant to
Section 14.05(b), or (4) the Expiration Time for any tender or exchange offer
pursuant to Section 14.05(f), (each a “Determination Date”), the Company may
elect to defer until the occurrence of the applicable Adjustment Event (as
hereinafter defined) (x) issuing to the holder of any Note converted after such
Determination Date and before the occurrence of such Adjustment Event, the
additional shares of Common Stock or other securities issuable upon such
conversion by reason of the adjustment required by such Adjustment Event over
and above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (y) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 14.03. For purposes of this Section 14.05(n), the
term “Adjustment Event” shall mean:
 
(i) in any case referred to in clause (1) hereof, the occurrence of such event,
 
(ii) in any case referred to in clause (2) hereof, the date any such dividend or
distribution is paid or made,
 
(iii) in any case referred to in clause (3) hereof, the date of expiration of
such rights or warrants, and
 
(iv) in any case referred to in clause (4) hereof, the date a sale or exchange
of Common Stock pursuant to such tender or exchange offer is consummated and
becomes irrevocable.
 
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(o) For purposes of this Section, the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company
but shall include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the treasury
of the Company.
 
Section 14.06.   Effect of Reclassification, Consolidation, Merger or Sale.
 
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than (x) a subdivision or
combination to which Section 14.05(c) applies) as a result of which holders of
Common Stock shall be entitled to receive stock, other securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, (ii) any consolidation, merger or combination of the Company with
another Person as a result of which holders of Common Stock shall be entitled to
receive stock, other securities or other property or assets (including cash)
with respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the
Company to any other Person as a result of which holders of Common Stock shall
be entitled to receive stock, other securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing Person, as the case may be, shall execute
with the Trustee a supplemental indenture (in form satisfactory to the Trustee)
providing that each Note shall be convertible into the kind and amount of shares
of stock, other securities or other property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock are available to convert
all such Notes) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming such holder of
Common Stock did not exercise such holder’s rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised (“Non-electing share”),
then for the purposes of this Section the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each Non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article.
 
The Company shall cause notice of the execution of such supplemental indenture
to be mailed to each holder of Notes, at its address appearing on the Security
Register provided for in Section 4.02 of this Indenture, within twenty (20) days
after execution thereof. Failure to deliver such notice shall not affect the
legality or validity of such supplemental indenture.
 
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
 
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If this Section applies to any event or occurrence, Section 14.05 shall not
apply.
 
Section 14.07.   Taxes on Shares Issued.
 
The issue of stock certificates on conversions of Notes shall be made without
charge to the converting Noteholder for any documentary, stamp or similar issue
or transfer tax in respect of the issue thereof. The Company shall not, however,
be required to pay any such tax which may be payable in respect of any transfer
involved in the issue and delivery of stock in any name other than that of the
holder of any Note converted, and the Company shall not be required to issue or
deliver any such stock certificate unless and until the Person or Persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
 
Section 14.08.   Reservation of Shares; Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock.
 
The Company shall provide, free from preemptive rights, out of its authorized
but unissued shares or shares held in treasury, sufficient shares of Common
Stock to provide for the conversion of the Notes from time to time as such Notes
are presented for conversion.
 
Before taking any action which would cause an adjustment increasing the
Conversion Rate to an amount that would cause the Conversion Price to be reduced
below the then par value, if any, of the shares of Common Stock issuable upon
conversion of the Notes, the Company will take all corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue shares of such Common Stock at such adjusted
Conversion Rate.
 
The Company covenants that all shares of Common Stock which may be issued upon
conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free from all taxes, liens and charges with respect to the issue
thereof.
 
The Company covenants that, if any shares of Common Stock to be provided for the
purpose of conversion of Notes hereunder require registration with or approval
of any governmental authority under any federal or state law before such shares
may be validly issued upon conversion, the Company will in good faith and as
expeditiously as possible, to the extent then permitted by the rules and
interpretations of the Commission (or any successor thereto), endeavor to secure
such registration or approval, as the case may be.
 
The Company further covenants that, if at any time the Common Stock shall be
listed on the Nasdaq Global Market, Nasdaq Global Select Market or Nasdaq
Capital Market or any other national securities exchange or automated quotation
system, the Company will, if permitted by the rules of such exchange or
automated quotation system, list and keep listed, so long as the Common Stock
shall be so listed on such exchange or automated quotation system, all Common
Stock issuable upon conversion of the Notes; provided that if the rules of such
exchange or automated quotation system permit the Company to defer the listing
of such Common Stock until the first conversion of the Notes into Common Stock
in accordance with the provisions of this Indenture, the Company covenants to
list such Common Stock issuable upon conversion of the Notes in accordance with
the requirements of such exchange or automated quotation system at such time.
 
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Section 14.09.   Responsibility of Trustee.
 
The Trustee and any other conversion agent shall not at any time be under any
duty or responsibility to any Noteholder to determine the Conversion Rate or
whether any facts exist which may require any adjustment of the Conversion Rate,
or with respect to the nature or extent or calculation of any such adjustment
when made, or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. The Trustee
and any other conversion agent shall not be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Note; and the Trustee and any other conversion agent make
no representations with respect thereto. Neither the Trustee nor any conversion
agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 14.06 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 14.06 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 7.01, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers’ Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
 
Section 14.10.   Notice to Holders Prior to Certain Actions.
 
In case:
 
(a) the Company shall declare a dividend (or any other distribution) on its
Common Stock that would require an adjustment in the Conversion Rate pursuant to
Section 14.05; or
 
(b) the Company shall authorize the granting to the holders of all or
substantially all of its Common Stock of rights or warrants to subscribe for or
purchase any share of any class or any other rights or warrants; or
 
(c) of any reclassification or reorganization of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
 
(d) of the voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
 
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the Company shall cause to be filed with the Trustee and to be mailed to each
Noteholder at such holder’s address appearing on the Security Register provided
for in Section 4.02 of this Indenture, as promptly as possible but in any event
at least ten (10) days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
 
Section 14.11.   Shareholder Rights Plans.
 
Each share of Common Stock issued upon conversion of Notes pursuant to this
Article shall be entitled to receive the appropriate number of rights, if any,
and the certificates representing the Common Stock issued upon such conversion
shall bear such legends, if any, in each case as may be provided by the terms of
any shareholder rights plan adopted by the Company, as the same may be amended
from time to time. If at the time of conversion, however, the rights have
separated from the shares of Common Stock in accordance with the provisions of
the applicable shareholder rights agreement so that the holders of the Notes
would not be entitled to receive any rights in respect of Common Stock issuable
upon conversion of the Notes, the conversion rate will be adjusted in accordance
with Section 14.05(d) treating all rights previously issued as Securities for
purposes of such adjustment, subject to readjustment in the event of the
expiration, termination or redemption of the rights.
 
ARTICLE 15

 
MISCELLANEOUS PROVISIONS
 
Section 15.01.   Provisions Binding on Company’s Successors.
 
All the covenants, stipulations, promises and agreements by the Company
contained in this Indenture shall bind its successors and assigns whether so
expressed or not.
 
Section 15.02.   Official Acts by Successor Corporation.
 
Any act or proceeding by any provision of this Indenture authorized or required
to be done or performed by any board, committee or officer of the Company shall
and may be done and performed with like force and effect by the like board,
committee or officer of any Person that shall at the time be the lawful sole
successor of the Company.
 
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Section 15.03.   Addresses for Notices, Etc.
 
Any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders of Notes on the
Company shall be deemed to have been sufficiently given or made, for all
purposes, if given or served by being deposited postage prepaid by registered or
certified mail in a post office letter box or sent by telecopier transmission
addressed as follows:

If to the Company:
 
American Dairy, Inc.
Star City International Building
No. 10 Jiuxianqiao Road, C-16th Floor
Chaoyang District, Beijing
People’s Republic of China 100016
Fax: (86) 10 8456 7768
Attention: Mr. Leng You-Bin
 
With a copy to:
 
Hodgson Russ LLP
1540 Broadway, 24th Floor
New York, New York 10036
U.S.A.
Attention: Jeffrey A. Rinde, Esq.
Facsimile No: +1 212 751 0928
 
If to the Trustee:
 
The Bank of New York
101 Barclay Street
Floor 4E
New York, NY 10286
U.S.A.
Attention: Global Finance Americas
Facsimile No: +1 212 815 5802/5803
 
The Trustee, by notice to the Company, may designate additional or different
addresses for subsequent notices or communications.
 
Any notice or communication mailed to a Noteholder shall be mailed to such
holder by first-class mail, postage prepaid, at his address as it appears on the
Security Register and shall be sufficiently given to such holder if so mailed
within the time prescribed.
 
Failure to mail a notice or communication to a Noteholder or any defect in it
shall not affect its sufficiency with respect to other Noteholders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
 
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Section 15.04.   Governing Law.
 
THIS INDENTURE, THE GUARANTEE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
 
Section 15.05.   Evidence of Compliance with Conditions Precedent; Certificates
to Trustee.
 
Upon any application or demand by the Company to the Trustee to take any action
under any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
 
Each certificate or opinion provided for in this Indenture and delivered to the
Trustee with respect to compliance with a condition or covenant provided for in
this Indenture shall include: (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
 
Section 15.06.   Legal Holidays.
 
In any case in which the date of maturity of Interest on or principal of the
Notes or the redemption date of any Note will not be a Business Day, then
payment of such Interest on or principal of the Notes need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date of maturity or the redemption date, and no
Interest shall accrue for the period from and after such date.
 
Section 15.07.   Company Responsible for Making Calculations.
 
The Company will be responsible for making all calculations required under the
Notes. The Company will make these calculations in good faith and absent
manifest error, these calculations will be final and binding on the Noteholders.
Promptly after the calculation thereof, the Company will provide to each of the
Trustee and any other conversion agent and Officers’ Certificate setting forth a
schedule of its calculations, and each of the Trustee and any other conversion
agent is entitled to conclusively rely upon the accuracy of such calculations
without independent verification. The Trustee will forward the Company’s
calculations to any holder upon the written request of such holder.
 
Section 15.08.   Benefits of Indenture.
 
Nothing in this Indenture or in the Notes, express or implied, shall give to any
Person, other than the parties hereto, any paying agent, any authenticating
agent, any conversion agent, any Collateral Agent, Common Depositary, any
Registrar and their successors hereunder and the holders of Notes any benefit or
any legal or equitable right, remedy or claim under this Indenture.
 
114

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Section 15.09.   Table of Contents, Headings, Etc.
 
The table of contents and the titles and headings of the Articles and Sections
of this Indenture have been inserted for convenience of reference only, are not
to be considered a part hereof, and shall in no way modify or restrict any of
the terms or provisions hereof.
 
Section 15.10.   Authenticating Agent.
 
The Trustee may appoint an authenticating agent that shall be authorized to act
on its behalf, and subject to its direction, in the authentication and delivery
of Notes in connection with the original issuance thereof and transfers and
exchanges of Notes hereunder, including under Sections 2.04, 2.05, 2.06, 2.07,
3.02, and 14.02, as fully to all intents and purposes as though the
authenticating agent had been expressly authorized by this Indenture and those
Sections to authenticate and deliver Notes. For all purposes of this Indenture,
the authentication and delivery of Notes by the authenticating agent shall be
deemed to be authentication and delivery of such Notes “by the Trustee” and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee’s certificate of authentication. Such authenticating
agent shall at all times be a Person eligible to serve as trustee hereunder
pursuant to Section 7.07.
 
Any corporation into which any authenticating agent may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, consolidation or conversion to which any authenticating agent shall be a
party, or any corporation succeeding to the corporate trust business of any
authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.
 
Any authenticating agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall either promptly appoint a successor authenticating agent or itself assume
the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Security Register.
 
The Company agrees to pay to the authenticating agent from time to time such
compensation for its services as shall be agreed upon in writing between the
Company and the authenticating agent.
 
115

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The provisions of Sections 7.02, 7.03, 7.04 and 12.03 and this Section shall be
applicable to any authenticating agent.
 
Section 15.11.   Indenture and Notes Solely Corporate Obligations.
 
No recourse for the payment of the principal of, premium, if any, or Interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, shareholder, employee, agent, officer, director or subsidiary, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.
 
Section 15.12.   Execution in Counterparts.
 
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
 
Section 15.13.   Severability.
 
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, then (to the extent permitted by law) the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
 
[Signature page(s) to follow.]
 
116

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

       
AMERICAN DAIRY, INC.
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: CEO

 

       
AMERICAN FLYING CRANE CORPORATION
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: Chairman

--------------------------------------------------------------------------------

 
 

       
FOR THE PURPOSE OF SECTION 4.18(A) ONLY
 
LANGFANG FEIHE DAIRY COMPANY LIMITED
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: Chairman

 

       
GANHAN FEIHE DAIRY COMPANY LIMITED
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: Chairman

 

       
SHANXI FEIHESANTAI BIOTECHNOLOGY
SCIENTIFIC AND COMMERCIAL CO., LIMITED
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: Chairman

 

       
HEILONGJIANG FEIHE DAIRY CO., LIMITED
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: Chairman

 

       
BAIQUAN FEIHEI DAIRY CO., LIMITED
 
   
   
  By:   /s/ Liang Aiyun  

--------------------------------------------------------------------------------

Name: Liang Aiyun   Title: Chairman

 

--------------------------------------------------------------------------------

 
 

       
BEIJING FEIHE BIOTECHNOLOGY SCIENTIFIC
AND COMMERCIAL CO., LIMITED
 
   
   
  By:   /s/ Leng You-Bin  

--------------------------------------------------------------------------------

Name: Leng You-Bin   Title: Chairman

--------------------------------------------------------------------------------

 
 

       
THE BANK OF NEW YORK,
as Trustee
 
   
   
  By:      

--------------------------------------------------------------------------------

Name:   Title:

 

--------------------------------------------------------------------------------

 
 
EXHIBIT A
 
[FORM OF FACE OF NOTE]
 
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
EUROCLEAR BANK S.A./N.V. (“EUROCLEAR”), OR CLEARSTREAM BANKING, SOCIÉTÉ ANONYME
(“CLEARSTREAM”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF ITS
AUTHORIZED NOMINEE OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM (AND ANY PAYMENT IS MADE TO ITS
AUTHORIZED NOMINEE, OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, ITS AUTHORIZED NOMINEE, HAS AN INTEREST HEREIN.]1 

THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY
HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”) OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER:

(1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT;

(2) AGREES THAT IT WILL NOT WITHIN THE PERIOD SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (CURRENTLY TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY
OTHER THAN WITH RESPECT TO AFFILIATES) (A) RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
SECURITY EXCEPT (I) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (II) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (III)
TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (IV) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, OR (V) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER OR (B)
ENGAGE IN HEDGING TRANSACTIONS WITH RESPECT TO THIS SECURITY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH SECURITY UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT; AND

--------------------------------------------------------------------------------

1 This legend should be included only if the Note is a Global Note.
 
A-1

--------------------------------------------------------------------------------

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(A)(V) ABOVE) A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.]2 
 

--------------------------------------------------------------------------------

2 This legend should be included only if the Note is a Definitive Note.
 
A-2

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AMERICAN DAIRY, INC.

1.0% GUARANTEED SENIOR SECURED CONVERTIBLE NOTES DUE 2012

ISIN: [__________]
Common Code: [___________]
 
No. 1 $__________

AMERICAN DAIRY, INC., a corporation duly organized and validly existing under
the laws of the State of Utah (herein called the “Company”, which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received hereby promises to pay to The Bank of New York
Depositary (Nominees) Limited, or registered assigns, as common depositary for
Clearstream Banking, société anonyme and/or Euroclear Bank S.A./N.V., at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, (i) the Repurchase Amount as set forth on Schedule I
hereto on June 1, 2012, (ii) interest, semi-annually on June 1 and December 1 of
each year, commencing December 1, 2007 on the outstanding principal sum of the
Note at said office or agency, in like coin or currency, at the rate per annum
of 1.0%, from and including June 1, 2007 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for to, but
excluding the following Interest Payment Date and (iii) Additional Interest of
(x) 5.0% per annum if no Qualifying IPO has occurred on or before December 1,
2008, such interest accruing from and including such date (or, if Interest has
been paid since such date, from and including the most recent interest payment
date thereafter) to but excluding each date of payment thereof and (y) any
additional interest payable pursuant to Section 2(d) of the Registration Rights
Agreement, (iv) Additional Amounts upon the occurrence of any events, in the
amounts and at the times specified in the definition of “Additional Amounts” in
Section 1.01 of the Indenture, and (v) interest on overdue principal and (to the
extent that payment of such interest is enforceable under applicable law)
interest at the rate borne by the Notes, including Additional Interest, if any,
at the rate of 5% per annum.
 
Except as otherwise provided in the Indenture, the interest payable on the Note
pursuant to the Indenture on any June 1 or December 1 will be paid to the Person
entitled thereto as it appears in the Security Register at the close of business
on the record date, which shall be the May 17 or November 17 (whether or not a
Business Day) next preceding such June 1 or December 1, as provided in the
Indenture; provided that any such interest not punctually paid or duly provided
for shall be payable as provided in the Indenture. The Company shall pay
interest (i) on any Notes in certificated form by check mailed to the address of
the Person entitled thereto as it appears in the Security Register (provided
that the holder of Notes with an aggregate principal amount in excess of
$1,000,000 shall, at the written election of such holder, be paid by wire
transfer of immediately available funds) or (ii) on any Global Note by wire
transfer of immediately available funds to the account of the Common Depositary
or its nominee.
 
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions giving the holder of
this Note the right to convert this Note into Common Stock of the Company on the
terms and subject to the limitations referred to on the reverse hereof and as
more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
 
A-3

--------------------------------------------------------------------------------

 
This Note shall be governed by and construed in accordance with the laws of the
State of New York.
 
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
 
A-4

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
 
AMERICAN DAIRY, INC.
 
 
    By:      

--------------------------------------------------------------------------------

Name:       Title:    

 
TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes described in the within-named Indenture.
 
THE BANK OF NEW YORK,
as Trustee
 
AMERICAN DAIRY, INC.
 
 
    By:      

--------------------------------------------------------------------------------

Authorized Signatory    

 
Dated:
 
A-5

--------------------------------------------------------------------------------

 
[FORM OF REVERSE OF NOTE]

AMERICAN DAIRY, INC.

1.0% GUARANTEED SENIOR SECURED CONVERTIBLE NOTE DUE 2012

This Note is one of a duly authorized issue of Notes of the Company, designated
as its 1.0% Guaranteed Senior Secured Convertible Notes due 2012 (herein called
the “Notes”), in an aggregate principal amount of $60,000,000 or such other
amount as shown on the Security Register as being represented by this Note,
issued and to be issued under and pursuant to an Indenture dated June 1, 2007
(herein called the “Indenture”), among the Company, American Flying Crane
Corporation, as the Guarantor, and The Bank of New York, a New York banking
corporation, as trustee (herein called the “Trustee”), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Notes.
 
The Company may from time to time without notice to or the consent of the
Noteholders, create and issue further debt securities ranking pari passu with
the Notes in all respects, provided that such further debt securities issued
after June 1, 2007 shall not exceed an aggregate principal amount of
$20,000,000. The Company may consolidate such further debt securities with the
Notes then outstanding to form a single series, provided that the aggregate
principal amount of the Notes so consolidated shall not exceed $80,000,000. Such
further notes will be represented by an increase in the aggregate principal
amount of this Note.
 
In case an Event of Default shall have occurred and be continuing, the principal
of and accrued and unpaid Interest on all Notes may be declared by either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Combined Notes then outstanding, and upon said declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
 
The Indenture contains provisions permitting the Company and the Trustee, with
the consent of the holders of a majority in aggregate principal amount of the
Combined Notes at the time outstanding, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in any
manner the rights of the holders of the Notes; provided that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, (ii)
reduce the rate or extend the time of payment of Interest thereon, (iii) reduce
the principal amount thereof or reduce any amount payable upon redemption or
repurchase thereof, (iv) change the obligation of the Company to repurchase any
Note upon the happening of a Termination of Trading in a manner adverse to the
holders of Notes, (v) impair the right of any Noteholder to institute suit for
the payment thereof, (vi) make the principal thereof or interest thereon payable
in any coin or currency other than that provided in the Notes, (vii) impair the
right to convert the Notes into Common Stock or reduce the number of shares of
Common Stock or any other property receivable by a Noteholder upon conversion
subject to the terms set forth in the Indenture, including Section 14.05
thereof, in each case, without the consent of the holder of each Note so
affected, (viii) modify any of the provisions of Section 8.02 or Section 6.07
thereof, except to increase any such percentage or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each Note so affected, (ix) change any obligation of the Company
to maintain an office or agency in the places and for the purposes set forth in
Section 4.02 thereof, (x) reduce the quorum or voting requirements set forth in
Article 13, (xi) subordinate the Notes or any Guarantee to any other obligation
of the Company or the applicable Guarantor, (xii) release the security interest
granted in favor of the holders on the Notes in the Collateral other than
pursuant to the terms of the Security Documents, (xiii) release any security
interest that may have been granted in favor of the holders of the Notes other
than pursuant to the terms of such security interest, (xvi) reduce the amount
payable as Additional Amounts, (xv) reduce any premium payable upon a Change of
Control or, at any time after a Change of Control has occurred, change the time
at which the Change of Control Offer relating thereto must be made or at which
the Notes must be repurchased pursuant to such Change of Control Offer, (xvi) at
any time after the Company is obligated to make an Asset Sale Offer with the
Excess Proceeds from Asset Sales, change the time at which such Asset Sale Offer
must be made or at which the Notes must be repurchased pursuant thereto, (xvii)
make any change in any Guarantee that would adversely affect the holders or
(xviii) reduce the aforesaid percentage of Notes, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Notes then outstanding. Subject to the provisions of the
Indenture, the holders of a majority in aggregate principal amount of the
Combined Notes at the time outstanding may on behalf of the holders of all of
the Notes waive any past Default or Event of Default under the Indenture and its
consequences except (A) a default in the payment of Interest on, or the
principal of, any of the Notes, (B) a failure by the Company to convert any
Notes into Common Stock of the Company, (C) a default in the payment of the
purchase price pursuant to Section 3.02 of the Indenture or (D) a default in
respect of a covenant or provisions of the Indenture which under Article 10 of
the Indenture cannot be modified or amended without the consent of the holders
of each or all Combined Notes then outstanding or affected thereby. Any such
consent or waiver by the holder of this Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Note and any Notes which may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is made
upon this Note or such other Notes.
 
A-6

--------------------------------------------------------------------------------

 
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and Interest on this Note at the
place, at the respective times, at the rate and in the coin or currency herein
prescribed.
 
Interest on the Notes shall be computed on the basis of a 360-day year of twelve
30-day months.
 
The Notes are issuable in fully registered form, without coupons, in
denominations of $100,000 principal amount and any multiple of $100,000. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in connection with
any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of any other authorized denominations.
 
A-7

--------------------------------------------------------------------------------

 
The Notes are not subject to redemption through the operation of any sinking
fund.
 
In the event that the Company shall be required to commence an Asset Sale Offer,
a Change of Control Offer or a Termination of Trading Offer, the Company shall
mail to all holders of record of the Notes a notice which states the terms of
such Offer to Purchase, and, in the case of a Change of Control Offer or
Termination of Trading Offer, the circumstances and relevant facts regarding
such event. Each holder shall have the right to accept such offer and require
the Company to repurchase all or any portion of such holder’s Notes in cash
equal to the Repurchase Amount.
 
Holders electing to have a Note purchased pursuant to a Offer to Purchase shall
deliver to the Company such Note with the form entitled “Purchase Notice” on the
reverse thereof duly completed, together with the Note, duly endorsed for
transfer, at any time prior to the close of business on the Business Day
immediately preceding the Purchase Date, and shall deliver the Notes to the
Trustee (or other paying agent appointed by the Company) as set forth in the
Indenture.
 
If the Purchase Date falls after a record date and on or prior the corresponding
Interest Payment Date, then accrued and unpaid Interest to, but excluding, the
Purchase Date shall be paid on such Interest Payment Date to the holders of
record of such Notes on the applicable record date instead of to the holders
surrendering such Notes for repurchase on such date. The Notes will be subject
to repurchase in multiples of $100,000 principal amount.
 
Holders have the right to withdraw any Purchase Notice by delivering to the
Trustee (or other paying agent appointed by the Company) a written notice of
withdrawal up to the close of business on the Business Day immediately preceding
the Purchase Date all as provided in the Indenture.
 
If money or cash, sufficient to pay the repurchase price of all Notes or
portions thereof to be purchased as of the Purchase Date is deposited with the
Trustee (or other paying agent appointed by the Company), on the Purchase Date,
interest will cease to accrue on such Notes (or portions thereof) immediately
after such Purchase Date, and the holder thereof shall have no other rights as
such other than the right to receive the repurchase price upon surrender of such
Note.
 
Subject to the occurrence of certain events and in compliance with the
provisions of the Indenture, prior to the final maturity date of the Notes, the
holder hereof has the right, at its option, to convert each $100,000 principal
amount of the Notes into 4,166 shares of the Company’s Common Stock (a
conversion price of approximately $24.00 per share), as such shares shall be
constituted at the date of conversion and subject to adjustment from time to
time as provided in the Indenture, upon surrender of this Note with the form
entitled “Conversion Notice” on the reverse thereof duly completed, to the
Company at the office or agency of the Company maintained for that purpose in
accordance with the terms of the Indenture, or at the option of such holder, the
Corporate Trust Office, and, unless the shares issuable on conversion are to be
issued in the same name as this Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or by his duly authorized attorney. The Company will notify the
holder thereof in writing of any event triggering the right to convert the Notes
as specified above in accordance with the Indenture.
 
A-8

--------------------------------------------------------------------------------

 
No adjustment in respect of interest on any Note converted or dividends on any
shares issued upon conversion of such Note will be made upon any conversion
except as set forth in the next sentence. If this Note (or portion hereof) is
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the close of business on the Business
Day preceding the following Interest Payment Date, this Note (or portion hereof
being converted) must be accompanied by payment, in immediately available funds
or other funds acceptable to the Company, of an amount equal to the interest
otherwise payable on such Interest Payment Date on the principal amount being
converted; provided that no such payment shall be required (1) if the Company
has specified a Purchase Date that is during such period or (2) to the extent of
any overdue Interest, if any overdue interest exists at the time of conversion
with respect to such Note.
 
No fractional shares will be issued upon any conversion, but an adjustment and
payment in cash will be made, as provided in the Indenture, in respect of any
fraction of a share which would otherwise be issuable upon the surrender of any
Note or Notes for conversion.
 
A Note in respect of which a holder is exercising its right to require
repurchase upon a Asset Sale Offer, Change of Control Offer or Termination of
Trading Offer on a Purchase Date may be converted only if such holder withdraws
its election to exercise either such right in accordance with the terms of the
Indenture.
 
Upon due presentment for registration of transfer of this Note at the office or
agency of the Company maintained for that purpose in accordance with the terms
of the Indenture, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued to the transferee in exchange thereof,
subject to the limitations provided in the Indenture, without charge except for
any tax, assessment or other governmental charge imposed in connection
therewith.
 
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Registrar) for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Registrar shall be affected by any notice to the contrary. All payments made to
or upon the order of such registered holder shall, to the extent of the sum or
sums paid, satisfy and discharge liability for monies payable on this Note.
 
No recourse for the payment of the principal of or Interest on this Note, or for
any claim based hereon or otherwise in respect hereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in the Indenture or
any supplemental indenture or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
shareholder, employee, agent, officer or director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
 
A-9

--------------------------------------------------------------------------------

 
For purposes of sections 1272, 1273 and 1275 of the Internal Revenue Code of
1986, as amended, this Note is being issued with Tax Original Issue Discount and
the issue date of this Note is June 1, 2007.
 
This Note shall be governed by and construed in accordance with the laws of New
York.
 
Terms used in this Note and defined in the Indenture are used herein as therein
defined.
 
A-10

--------------------------------------------------------------------------------

 
ABBREVIATIONS
 
The following abbreviations, when used in the inscription of the face of this
Note, 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 tenant by the entireties
JT TEN
-
as joint tenants with right of survivorship under Uniform Gifts to Minors Act
and not as tenants in common
UNIF GIFT MIN ACT
-
Custodian (Cust) (Minor)

 

         

--------------------------------------------------------------------------------

(State)

 
Additional abbreviations may also be used though not in the above list.
 
A-11

--------------------------------------------------------------------------------

 
SCHEDULE I
 
AMERICAN DAIRY, INC.

1.0% Guaranteed Senior Secured Convertible Notes due 2012
 
No. 1

The initial Principal Amount of this Note is SIXTY MILLION DOLLARS
($60,000,000). The Company will pay the Repurchase Amount as defined below.

“Repurchase Amount” means, with respect to any Note, the Redemption Price plus
any accrued and unpaid Interest on such Note (including post-petition interest
in any proceeding under any Bankruptcy Law) and interest accrued on overdue
principal (and, to the extent lawful, on overdue installments of interest) and
premium, if any, at a rate that is 5% per annum in excess of the rate of
Interest then in effect.
 
“Redemption Price” means the amount calculated in accordance with the following
formula, rounded (if necessary) to two decimal places with 0.005 being rounded
upwards:
 
Redemption Price = I x (1 + r)d/360
Where:
   
I
=
Issue price (100% of Principal Amount) of the Notes;
r
=
18.0% expressed as a decimal; and
d
=
number of days from and including the Issue Date to but excluding, the date for
redemption, calculated on the basis of a 360-day year consisting of 12 months of
30 days each, and in the case of an incomplete month, the actual number of days
elapsed.

 
For the avoidance of doubt, if the date fixed for redemption is one of the
following semi-annual dates, the Redemption Price for each US$100,000 principal
amount shall be as set out in the table below in respect of such semi-annual
date:
 
Semi-annual Date
 
Redemption Price (US$)
 
December 1, 2007
 
US$
108,627.80
 
June 1, 2008
   
118,000.00
 
December 1, 2008
   
128,180.81
 
June 1, 2009
   
139,240.00
 
December 1, 2009
   
151,253.36
 
June 1, 2010
   
164,303.20
 
December 1, 2010
   
178,478.96
 
June 1, 2011
   
193,877.78
 
December 1, 2011
   
210,605.17
 
June 1, 2012
   
228,775.78
 

A-12

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For purposes thereof, the Principal Amount has been adjusted in accordance with
the terms of the Indenture as set forth below:

Date
 
Principal Amount
 
Notation Explaining Principal
 
Amount Recorded  
 
Authorized Signature of Trustee or Custodian

A-13

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CONVERSION NOTICE
 
TO: AMERICAN DAIRY, INC.

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The undersigned registered owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion thereof (which is $100,000 or a
multiple thereof) below designated, into shares of Common Stock of American
Dairy, Inc. in accordance with the terms of the Indenture referred to in this
Note, and directs that the shares issuable and deliverable upon such conversion,
together with any check in payment for fractional shares and any Notes
representing any unconverted principal amount hereof, be issued and delivered to
the registered holder hereof unless a different name has been indicated below.
Capitalized terms used herein but not defined shall have the meanings ascribed
to such terms in the Indenture. If shares or any portion of this Note not
converted are to be issued in the name of a person other than the undersigned,
the undersigned will provide the appropriate information below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid by
the undersigned on account of interest, including additional interest, if any,
accompanies this Note.
 
Dated:
 

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Signature(s)
Signature(s) must be guaranteed by an “eligible guarantor institution” meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or such
other “signature guarantee program” as may be determined by the Registrar in
addition to, or in substitution for, STAMP.
 
 

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Fill in the registration of shares of Common Stock if to be issued, and Notes if
to be delivered, other than to and in the name of the registered holder:

 

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(Name)

 

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(Street Address)
 
 

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(City, State and Zip Code)
 
A-14

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Please print name and address
 
Principal amount to be converted
(if less than all):
 
$ ____________________    

Social Security or Other Taxpayer
Identification Number: 
 

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A-15

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PURCHASE NOTICE
 
TO: AMERICAN DAIRY, INC.

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The undersigned registered owner of this Note hereby irrevocably acknowledges
receipt of a notice from American Dairy, Inc. (the “Company”) regarding the
right of holders to elect to require the Company to repurchase the Notes upon
the occurrence of either an Asset Sale Offer, a Change of Control Offer or a
Termination of Trading Offer and requests and instructs the Company to repay the
entire principal amount of this Note, or the portion thereof (which is $100,000
or an integral multiple thereof) below designated, in accordance with the terms
of the Indenture at the price of the Repurchase Amount, to the registered holder
hereof.

Capitalized terms used herein but not defined shall have the meanings ascribed
to such terms in the Indenture. The Notes shall be purchased by the Company as
of the Purchase Date pursuant to the terms and conditions specified in the
Indenture.

$  principal amount of the Notes to which this Purchase Notice relates (if less
than entire principal amount) pursuant to 4.12, 4.17 or 4.26 of the Indenture,
check the box below:
 
o  Section 4.12    Purchase Date: _______________
 
o  Section 4.17
 
o  Section 4.26
 
Dated:
 
Signature(s):
 
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Note in every particular without alteration
or enlargement or any change whatever.
 
A-16

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Note Certificate Number (if applicable):
 
Principal amount to be repurchased (if less than all):

Social Security or Other Taxpayer Identification Number:

Assignment Form
 
To assign this Note, fill in the form below:
 
(I) or (we) assign and transfer this Note to
 
 

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(Insert assignee’s social security or other tax I.D. no.)
 

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(Print or type assignee’s name, address and zip code)
 
and irrevocably appoint
_______________________________________________________________ as agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
 

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Date: ______________
     
Your Signature: __________________________________
  (Sign exactly as your name appears on the face of this Note)

 
Signature Guarantee:

A-17

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EXHIBIT B
 
FORM OF NOTATION OF GUARANTEE
 
For value received, each Guarantor (which term includes any successor Person
under the Indenture), jointly and severally, unconditionally guarantees, to the
extent set forth in the Indenture and subject to the provisions in the
Indenture, dated June 1, 2007 (the “Indenture”), among American Dairy, Inc., as
issuer (the “Company”), the Guarantor listed on the signature pages thereto and
The Bank of New York, a New York banking corporation, as trustee (the
“Trustee”), (a) the due and punctual payment of the principal of, premium, if
any, and interest on the Notes, whether at maturity, by acceleration,
redemption, repurchase or otherwise, the due and punctual payment of interest on
overdue principal and premium, if any, and, to the extent permitted by law,
interest and the due and punctual performance of all other obligations of the
Company to the holders or the Trustee all in accordance with the terms of the
Indenture and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. The
obligations of the Guarantor to the holders of Notes and to the Trustee pursuant
to the Guarantee and the Indenture are expressly set forth in Article 9 of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Guarantee. This Guarantee is subject to release as and to the extent set
forth in Section 9.05 of the Indenture. Each holder of a Note, by accepting the
same agrees to and shall be bound by such provisions. Capitalized terms used
herein and not defined are used herein as so defined in the Indenture.
 

       
[GUARANTOR NAME]
 
   
   
  By:    

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Name:  
Title:

 
B-1

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EXHIBIT C
 
FORM OF CERTIFICATE OF TRANSFER
 
American Dairy, Inc.
Star City International Building
No. 10 Jiuxianqiao Road, C-16th Floor
Chaoyang District, Beijing
People’s Republic of China 100016
Attention: Mr. Leng You-Bin

The Bank of New York
101 Barclay Street
Floor 4E
New York, NY 10286
U.S.A.
Attention: Global Finance Americas

 
Re:
1.0% GUARANTEED SENIOR SECURED CONVERTIBLE NOTES DUE 2012

 
Reference is hereby made to the Indenture, dated June 1, 2007 (the “Indenture”),
among AMERICAN DAIRY, INC., as issuer (the “Company”), the Guarantor thereto and
THE BANK OF NEW YORK, a New York banking corporation, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
 
___________________, (the “Transferor”) owns and proposes to transfer the
Note[s] or interest in such Note[s] in the principal amount of $___________ (the
“Transfer”), to ___________________________ (the “Transferee”). In connection
with the Transfer, the Transferor hereby certifies that:
 
[CHECK ALL THAT APPLY]
 
1. Check if Transferee will take delivery of a beneficial interest in the Global
Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected
pursuant to and in accordance with Rule 144A under the United States Securities
Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor
hereby further certifies that the beneficial interest or Definitive Note is
being transferred to a Person that the Transferor reasonably believed and
believes is purchasing the beneficial interest or Definitive Note for its own
account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a
“qualified institutional buyer” within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the legend printed on the
Global Note and/or the Definitive Note and in the Securities Act.
 
C-1

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2. Check if Transferee will take delivery of a beneficial interest in the Global
Note or a Definitive Note pursuant to Regulation S. The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a Person in the United States and (A) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (B)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(a) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Distribution Compliance
Period (as defined in Regulation S under the Securities Act), (A) the transfer
is not being made to a U.S. Person or for the account or benefit of a U.S.
Person, (B) the Transferee is not a U.S. person and is not acquiring the Notes
for the account or benefit of any U.S. person or is a U.S. person who purchased
securities in a transaction that did not require registration under the
Securities Act, (C) the Transferee understands that it may and agrees to resell
the Notes only in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act, or pursuant to an available exemption
from registration; and understands that it may not and agrees not to engage in
hedging transactions with regard to the Notes or the common stock issuable upon
conversion unless in compliance with the Securities Act; (D) the Transferee
acknowledges that the certificates evidencing the Notes will contain a legend to
the effect that transfer is prohibited except in accordance with the provisions
of Regulation S, pursuant to registration under the Securities Act, or pursuant
to an available exemption from registration; and that hedging transactions
involving those securities may not be conducted unless in compliance with the
Securities Act; (E) the Transferee acknowledges that the Company is required to
refuse to register any transfer of the securities not made in accordance with
the provisions of Regulation S, pursuant to registration under the Securities
Act, or pursuant to an available exemption from registration; provided, however,
that if the Notes are in bearer form or foreign law prevents the Company from
refusing to register securities transfers, other reasonable procedures (such as
a legend described above) are implemented to prevent any transfer of the
securities not made in accordance with the provisions of Regulation S. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the legend printed on the
Global Note and/or the Definitive Note and in the Securities Act.
 
3. Check and complete if Transferee will take delivery of a beneficial interest
in the Global Note or a Definitive Note pursuant to any provision of the
Securities Act other than Rule 144A or Regulation S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Global Notes and Definitive Notes and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any state
of the United States, and accordingly the Transferor hereby further certifies
that:
 
(i)  such Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act; or
 
C-2

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(ii)  such Transfer is being effected to the Company or a subsidiary thereof; or
 
(iii)  such Transfer is being effected pursuant to an effective registration
statement under the Securities Act.
 
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

       

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[Insert Name of Transferor]
   

 

  By:       

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Name:
Title:
 
  Dated:

 
C-3

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EXHIBIT D
 
FORM OF RESTRICTIVE LEGEND FOR
COMMON STOCK ISSUED UPON CONVERSION

THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT
BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION
HEREOF, THE HOLDER:

(1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT;

(2) AGREES THAT IT WILL NOT WITHIN THE PERIOD SET FORTH IN RULE 144 UNDER THE
SECURITIES ACT (CURRENTLY TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY
OTHER THAN WITH RESPECT TO AFFILIATES) (A) RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY EXCEPT (I) TO THE ISSUER OR ANY SUBSIDIARY THEREOF,
(II) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (III) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT, IF
AVAILABLE, OR (V) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER OR (B) ENGAGE IN HEDGING TRANSACTIONS WITH RESPECT TO THIS
SECURITY UNLESS IN COMPLIANCE WITH THE SECURITIES ACT; AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(A)(V) ABOVE) A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
 
D-1

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EXHIBIT E
 
FORM OF SECURITY DOCUMENTS
 
E-1

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