CYBERONICS, INC.

as Issuer

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Trustee

INDENTURE

Dated as of September 27, 2005

1

3.0% SENIOR SUBORDINATED CONVERTIBLE NOTES DUE 2012
CROSS-REFERENCE TABLE

              Indenture TIA Section   Section
310(a)(1)
    5.11  
 
       
(a)(2)
    5.11  
 
       
(a)(3)
    n/a  
 
       
(a)(4)
    n/a  
 
       
(a)(5)
    5.11  
 
       
(b)
  5.3;
5.11
 
       
(c)
    n/a  
 
       
311(a)
    5.12  
 
       
(b)
    5.12  
 
       
(c)
    n/a  
 
       
312(a)
    2.10  
 
       
(b)
    14.3  
 
       
(c)
    14.3  
 
       
313(a)
    5.7  
 
       
(b)(1)
    n/a  
 
       
(b)(2)
    5.7  
 
       
(c)
  5.7;
14.2
 
       
(d)
    5.7  
 
       
314(a)(1), (2), (3)
  9.6;
14.6
 
       
(a)(4)
  9.6;
9.7;
14.6
 
       
(b)
    n/a  
 
       
(c)(1)
    14.5  
 
       
(c)(2)
    14.5  
 
       
(c)(3)
    n/a  
 
       
(d)
    n/a  
 
       
(e)
    14.6  
 
       
(f)
    n/a  
 
       
315(a)
    5.1 (a)
 
       
(b)
  5.6;
14.2
 
       
(c)
    5.1 (b)
 
       
(d)
    5.1 (c)
 
       
(e)
    4.14  
 
       
316(a)(last sentence)
    2.13  
 
       
(a)(1)(A)
    4.5  
 
       
(a)(1)(B)
    4.4  
 
       
(a)(2)
    n/a  
 
       
(b)
    4.7  
 
       
(c)
    7.4  
 
       
317(a)(1)
    4.8  
 
       
(a)(2)
    4.9  
 
       
(b)
    2.5  
 
       
318(a)
    14.1  
 
       
(b)
    n/a  
 
       
(c)
    14.1  

“n/a” means not applicable

This Cross-Reference Table shall not, for any purpose, be deemed to be a part of
the Indenture

2

TABLE OF CONTENTS

Page

      ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE  

      SECTION 1.1. Definitions  

      SECTION 1.2. Incorporation by Reference of Trust Indenture Act  

      SECTION 1.3. Rules of Construction  

      ARTICLE 2 THE SECURITIES  

      SECTION 2.1. Title and Terms  

      SECTION 2.2. Form of Securities  

      SECTION 2.3. Legend  

      SECTION 2.4. Execution, Authentication, Delivery and Dating  

      SECTION 2.5. Registrar and Paying Agent  

      SECTION 2.6. Paying Agent to Hold Assets in Trust  

      SECTION 2.7. General Provisions Relating to Transfer and Exchange  

      SECTION 2.8. Book-Entry Provisions for the Global Securities  

      SECTION 2.9. [Reserved]  

      SECTION 2.10. Holder Lists  

      SECTION 2.11. Persons Deemed Owners  

      SECTION 2.12. Mutilated, Destroyed, Lost or Stolen Securities  

      SECTION 2.13. Treasury Securities  

      SECTION 2.14. Temporary Securities  

      SECTION 2.15. Cancellation  

      SECTION 2.16. CUSIP Numbers  

      SECTION 2.17. Defaulted Interest  

      SECTION 2.18. Registration Default  

      ARTICLE 3 SATISFACTION AND DISCHARGE  

      SECTION 3.1. Satisfaction and Discharge of Indenture  

      SECTION 3.2. Deposited Monies To Be Held in Trust  

      SECTION 3.3. Return of Unclaimed Monies  

      ARTICLE 4 DEFAULTS AND REMEDIES  

      SECTION 4.1. Events of Default  

      SECTION 4.2. Acceleration of Maturity; Rescission and Annulment  

      SECTION 4.3. Other Remedies  

      SECTION 4.4. Waiver of Past Defaults  

      SECTION 4.5. Control by Majority  

      SECTION 4.6. Limitation on Suit  

      SECTION 4.7. Unconditional Rights of Holders to Receive Payment and to
Convert  

      SECTION 4.8. Collection of Indebtedness and Suits for Enforcement by the
Trustee  

      SECTION 4.9. Trustee May File Proofs of Claim  

      SECTION 4.10. Restoration of Rights and Remedies  

      SECTION 4.11. Rights and Remedies Cumulative  

      SECTION 4.12. Delay or Omission Not Waiver  

      SECTION 4.13. Application of Money Collected  

      SECTION 4.14. Undertaking for Costs  

      SECTION 4.15. Waiver of Stay or Extension Laws  

      ARTICLE 5 THE TRUSTEE  

      SECTION 5.1. Certain Duties and Responsibilities  

      SECTION 5.2. Certain Rights of Trustee  

      SECTION 5.3. Individual Rights of Trustee  

      SECTION 5.4. Money Held in Trust  

      SECTION 5.5. Trustee’s Disclaimer  

      SECTION 5.6. Notice of Defaults  

      SECTION 5.7. Reports by Trustee to Holders  

      SECTION 5.8. Compensation and Indemnification  

      SECTION 5.9. Replacement of Trustee  

      SECTION 5.10. Successor Trustee by Merger, Etc  

      SECTION 5.11. Corporate Trustee Required; Eligibility  

      SECTION 5.12. Collection of Claims Against the Company  

      ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE  

      SECTION 6.1. Company May Consolidate, Etc. Only on Certain Terms  

      SECTION 6.2. Successor Substituted  

      ARTICLE 7 AMENDMENTS, SUPPLEMENTS AND WAIVERS  

      SECTION 7.1. Without Consent of Holders of Securities  

      SECTION 7.2. With Consent of Holders of Securities  

      SECTION 7.3. Compliance with Trust Indenture Act  

      SECTION 7.4. Revocation of Consents and Effect of Consents or Votes  

      SECTION 7.5. Notation on or Exchange of Securities  

      SECTION 7.6. Trustee to Sign Amendment, Etc  

      ARTICLE 8 MEETING OF HOLDERS OF SECURITIES  

      SECTION 8.1. Purposes for Which Meetings May Be Called  

      SECTION 8.2. Call Notice and Place of Meetings  

      SECTION 8.3. Persons Entitled to Vote at Meetings  

      SECTION 8.4. Quorum; Action  

      SECTION 8.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings  

      SECTION 8.6. Counting Votes and Recording Action of Meetings  

      ARTICLE 9 COVENANTS  

      SECTION 9.1. Payment of Principal, Premium and Interest  

      SECTION 9.2. Maintenance of Offices or Agencies  

      SECTION 9.3. Corporate Existence  

      SECTION 9.4. Maintenance of Properties  

      SECTION 9.5. Payment of Taxes and Other Claims  

      SECTION 9.6. Reports  

      SECTION 9.7. Compliance Certificate  

      SECTION 9.8. [Reserved]  

      SECTION 9.9. Additional Interest Amounts Notice  

      ARTICLE 10 [RESERVED]  

      ARTICLE 11 REPURCHASE OF SECURITIES  

      SECTION 11.1. Repurchase Right Upon Fundamental Change.  

      SECTION 11.2. [Reserved]  

      SECTION 11.3. Notices; Method of Exercising Repurchase Right, Etc  

      ARTICLE 12 CONVERSION OF SECURITIES  

      SECTION 12.1. Conversion Right and Conversion Rate.  

      SECTION 12.2. Exercise of Conversion Right  

      SECTION 12.3. Fractions of Shares  

      SECTION 12.4. Adjustment of Conversion Rate  

      SECTION 12.5. Notice of Adjustments of Conversion Rate  

      SECTION 12.6. Notice Prior to Certain Actions  

      SECTION 12.7. Company to Reserve Common Stock  

      SECTION 12.8. Taxes on Conversions  

      SECTION 12.9. Covenant as to Common Stock  

      SECTION 12.10. Cancellation of Converted Securities  

      SECTION 12.11. Effect of Recapitalization, Reclassification,
Consolidation, Merger or Sale  

      SECTION 12.12. Responsibility of Trustee for Conversion Provisions  

      SECTION 12.13. Make-Whole Premium  

      ARTICLE 13 SUBORDINATION  

      SECTION 13.1. Securities Subordinated to Senior Debt  

      SECTION 13.2. Subrogation  

      SECTION 13.3. Obligation of the Company Is Absolute and Unconditional  

      SECTION 13.4. Maturity of or Default on Senior Debt  

      SECTION 13.5. Payments on Securities Permitted  

      SECTION 13.6. Effectuation of Subordination by Trustee  

      SECTION 13.7. Knowledge of Trustee  

      SECTION 13.8. Trustee’s Relation to Senior Debt  

      SECTION 13.9. Rights of Holders of Senior Debt Not Impaired  

      SECTION 13.10. Modification of Terms of Senior Debt  

      SECTION 13.11. Certain Conversions Not Deemed Payment  

      ARTICLE 14 OTHER PROVISIONS OF GENERAL APPLICATION  

      SECTION 14.1. Trust Indenture Act Controls  

      SECTION 14.2. Notices  

      SECTION 14.3. Communication by Holders with Other Holders  

      SECTION 14.4. Acts of Holders of Securities.  

      SECTION 14.5. Certificate and Opinion as to Conditions Precedent  

      SECTION 14.6. Statements Required in Certificate or Opinion  

      SECTION 14.7. Effect of Headings and Table of Contents  

      SECTION 14.8. Successors and Assigns  

      SECTION 14.9. Separability Clause  

      SECTION 14.10. Benefits of Indenture  

      SECTION 14.11. Governing Law  

      SECTION 14.12. Counterparts  

      SECTION 14.13. Legal Holidays  

      SECTION 14.14. Recourse Against Others  

3

INDENTURE, dated as of September 27, 2005, between CYBERONICS, INC., a
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 100 Cyberonics Boulevard, Houston, Texas 77058
(the “Issuer” or the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Trustee (the “Trustee”), having its principal corporate trust office at 505 Main
Street, Suite 301, Fort Worth, TX 76102 .

RECITALS OF THE COMPANY

The Company has duly authorized the creation of an issue of its 3.0% Senior
Subordinated Convertible Notes due 2012 (herein called the “Securities”) of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.

All things necessary to make the Securities, when the Securities are executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1. Definitions. For all purposes of this Indenture and the Securities,
the following terms are defined as follows:

“Act”, when used with respect to any Holder of a Security, has the meaning
specified in Section 14.4(a) hereof.

“Additional Interest Amount” means the additional interest amount payable by the
Company upon the occurrence of a Registration Default (as defined in the
Registration Rights Agreement), in the manner and in the amounts provided by the
Registration Rights Agreement.

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control”, when used with respect to any specified 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.

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

“Board of Directors” means either the board of directors of the Company or any
committee of that board empowered to act for it with respect to this Indenture.

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

“Business Combination” means any of the following events:

(1) any recapitalization, reclassification or change of our common stock, other
than changes resulting from a subdivision or combination,

(2) a consolidation, merger or combination involving us,

(3) a sale, conveyance or lease to another person of all or substantially all of
our property and assets, or

(4) any statutory share exchange.

“Business Day”, when used with respect to any Place of Payment or Place of
Conversion, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in that Place of Payment or Place of
Conversion, as the case may be, are authorized or obligated by law to close.

“Change of Control” means the occurrence of any of the following after the
original issuance of the Securities:

(1) the acquisition by any person, including any syndicate or group deemed to be
a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock of the Company
entitling such person to exercise 50% or more of the total voting power of all
shares of capital stock of the Company entitled to vote generally in elections
of directors, other than any such acquisition by the Company, any subsidiary of
the Company or any employee benefit plan of the Company;

(2) any consolidation or merger of the Company with or into any other person,
any merger of another person into the Company, or any conveyance, transfer,
sale, lease or other disposition of all or substantially all of the properties
and assets of the Company to another person, other than (a) any such transaction
(x) that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of capital stock of the Company and
(y) pursuant to which holders of capital stock of the Company immediately prior
to such transaction have the entitlement to exercise, directly or indirectly,
50% or more of the total voting power of all shares of capital stock of the
Company entitled to vote generally in the election of directors of the
continuing or surviving person immediately after such transaction or (b) any
merger which is effected primarily to change the jurisdiction of incorporation
of the Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock of the
surviving entity;

(3) during any consecutive two-year period, individuals who at the beginning of
that two-year period constituted the Board of Directors (together with any new
directors whose election to the Board of Directors, or whose nomination for
election by the stockholders of the Company, was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose elections or nominations for election were
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office; or

(4) the Company is liquidated or dissolved or a resolution is passed by the
Company’s stockholders approving a plan of liquidation or dissolution of the
Company other than in a transaction which complies with the provisions described
in Article 6 of this Indenture.

Beneficial ownership shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. The term “person” shall include
any syndicate or group which would be deemed to be a “person” under
Section 13(d)(3) of the Exchange Act.

“Chief Executive Officer” means the chief executive officer of the Company.

“Closing Price” of any security on any date of determination means:

(1) the closing sale price (or, if no closing sale price is reported, the last
reported sale price) of such security (regular way) on the New York Stock
Exchange on such date;

(2) if such security is not listed for trading on the New York Stock Exchange on
any such date, the closing sale price as reported in the composite transactions
for the principal U.S. securities exchange on which such security is so listed;

(3) if such security is not so listed on a U.S. national or regional securities
exchange, the closing sale price as reported by the Nasdaq National Market or
Nasdaq SmallCap Market;

(4) if such security is not so reported, the last quoted bid price for such
security in the over-the-counter market as reported by the National Quotation
Bureau or similar organization; or

(5) if such bid price is not available, the average of the mid-point of the last
bid and ask prices of such security on such date from at least three nationally
recognized independent investment banking firms retained for this purpose by the
Company.

“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. However, subject to the
provisions of Section 12.11 hereof, shares issuable on conversion of Securities
shall include only shares of the class designated as Common Stock, par value
$0.01 per share, of the Company at the date of this Indenture 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, however, that if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable 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.

“Company” means the corporation named as the “Company” in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter “Company” shall mean
such successor corporation.

“Company Notice” has the meaning specified in Section 11.3 hereof.

“Company Order” means a written order signed in the name of the Company by both
(1) the Chief Executive Officer, the President or a Vice President and (2) so
long as not the same as the officer signing pursuant to clause (1), the Chief
Financial Officer, the Treasurer, the Secretary or any Assistant Secretary of
the Company, and delivered to the Trustee.

“Conversion Agent” means any Person authorized by the Company to convert
Securities in accordance with Article 12 hereof.

“Conversion Price” shall equal (i) $1,000 divided by (ii) the Conversion Rate
for $1,000 principal amount of Securities.

“Conversion Rate” has the meaning specified in Section 12.1 hereof.

“Corporate Trust Office” means for purposes of presentation or surrender of
Securities for payment, registration, transfer, exchange or conversion or for
service of notices or demands upon the Company, the office of the Trustee
located in the City of New York (which at the date of this Indenture is located
at Wells Fargo Corporate Trust, c/o The Depository Trust Company, 1st Floor,
TADS Dept., 55 Water Street, New York, NY 10041), and for all other purposes,
the office of the Trustee located in the City of Fort Worth, Texas (which at the
date of this Indenture is located at 505 Main Street, Suite 301, Forth Worth,
Texas 76102).

“Corporation” means corporations, associations, limited liability companies,
companies and business trusts.

“Current Market Price” has the meaning set forth in Section 12.4(g).

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

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

“Defaulted Interest” has the meaning specified in Section 2.17 hereof.

“Depositary” means The Depository Trust Company, its nominees and their
respective successors.

“Designated Senior Debt” means Senior Debt of the Company which, at the date of
determination, has an aggregate amount outstanding of, or under which, at the
date of determination, the holders thereof are committed to lend up to, at least
$10.0 million and is specifically designated in the instrument, agreement or
other document evidencing or governing that Senior Debt as “Designated Senior
Debt” for purposes of this Indenture.

“Dollar,” “U.S. Dollar” or “U.S. $” means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debts.

“DTC Participants” has the meaning specified in Section 2.8 hereof.

“Event of Default” has the meaning specified in Section 4.1 hereof.

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

“Expiration Time” has the meaning specified in Section 12.4(f) hereof.

“fair market value” has the meaning set forth in Section 12.4(g) hereof.

“Fundamental Change” means the occurrence of either a Change of Control or a
Termination of Trading.

“Fundamental Change Effective Date” means the date on which any Fundamental
Change becomes effective.

“Global Security” has the meaning specified in Section 2.2 hereof.

“Guarantee” means any obligation, contingent or otherwise, of any Person,
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or maintain financial statement
conditions or otherwise); or

(2) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part);

provided, however, that the term “guarantee” will not include endorsements for
collection or deposit in the ordinary course of business. The term “guarantee”
used as a verb has a corresponding meaning.

“Holder,” when used with respect to any Security, means the Person in whose name
the Security is registered in the Register.

“Indebtedness,” when used with respect to any Person, and without duplication
means:

(1) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person for borrowed money (including obligations of the
Company in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, Interest Rate Protection Agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or other instruments for the payment of money, or
incurred in connection with the acquisition of any property, services or assets
(whether or not the recourse of the lender is to the whole of the assets of such
Person or to only a portion thereof), other than any account payable or other
accrued current liability or obligation to trade creditors incurred in the
ordinary course of business in connection with the obtaining of materials or
services;

(2) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank guarantees,
bankers’ acceptances, surety bonds, performance bonds or other guaranty of
contractual performance;

(3) all obligations and liabilities (contingent or otherwise) in respect of
(a) leases of such Person required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease obligations on
the balance sheet of such Person and (b) any lease or related documents
(including a purchase agreement) in connection with the lease of real property
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the landlord and the obligations of
such Person under such lease or related document to purchase or to cause a third
party to purchase the leased property;

(4) all obligations of such Person (contingent or otherwise) with respect to an
interest rate or other swap, cap or collar agreement or other similar instrument
or agreement or foreign currency hedge, exchange, purchase or similar instrument
or agreement;

(5) all direct or indirect guaranties or similar agreements by such Person in
respect of, and obligations or liabilities (contingent or otherwise) of such
Person to purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of, indebtedness, obligations or liabilities of another Person
of the kind described in clauses (1) through (4);

(6) any indebtedness or other obligations described in clauses (1) through
(4) secured by any mortgage, pledge, lien or other encumbrance existing on
property which is owned or held by such Person, regardless of whether the
indebtedness or other obligation secured thereby shall have been assumed by such
Person; and

(7) any and all deferrals, renewals, extensions, refinancings, replacements,
restatements and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability of the kind described in clauses
(1) through (6).

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

“Initial Purchaser” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.

“Interest Payment Date” means each March 27 and September 27.

“Interest Rate” means 3.0% per annum.

“Interest Rate Protection Agreement” means, with respect to any Person, any
interest rate swap agreement, interest rate cap or collar agreement or other
financial agreement or arrangement designed to protect such Person against
fluctuations in interest rates, as in effect from time to time.

“Make-Whole Premium” has the meaning specified in Section 12.13 hereof.

“Maturity” means the date on which the principal of such Security becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
acceleration, conversion, exercise of a Repurchase Right or otherwise.

“Measurement Period” has the meaning specified in Section 12.4(d) hereof.

“Nasdaq National Market” means the National Association of Securities Dealers
Automated Quotation National Market or any successor national securities
exchange or automated over-the-counter trading market in the United States.

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

“Officers’ Certificate” means a certificate signed by both (1) the Chief
Executive Officer, the President or a Vice President and (2) so long as not the
same as the officer signing pursuant to clause (1), the Chief Financial Officer,
the Treasurer or the Secretary of the Company, and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel to
the Company (and may include directors or employees of the Company) and which
opinion is acceptable to the Trustee, which acceptance shall not be unreasonably
withheld.

“Outstanding,” when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except Securities:

(1) previously canceled by the Trustee or delivered to the Trustee for
cancellation;

(2) for the payment of which money in the necessary amount has been previously
deposited with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities, and

(3) which have been paid, in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the Company.

“Paying Agent” has the meaning specified in Section 2.5 hereof.

“Payment Blockage Notice” has the meaning specified in Section 13.1(d) hereof.

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

“Physical Securities” has the meaning specified in Section 2.2 hereof.

“Place of Conversion” means any city in which any Conversion Agent is located.

“Place of Payment” means any city in which any Paying Agent is located.

“Predecessor Security” of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.12 hereof in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Security.

“Purchase Agreement” means the Purchase Agreement with respect to the
Securities, dated September 21, 2005, between the Company and the Initial
Purchaser.

“Quoted Price” of the Common Stock means the last reported sale price of the
Common Stock on the Nasdaq National Market or, if the Common Stock is listed on
a national securities exchange, then on such exchange, or if the Common Stock is
not quoted on Nasdaq National Market or listed on an exchange, the average of
the last bid and asked price on the National Association of Securities Dealers
Automated Quotation System.

“Record Date” means either a Regular Record Date or a Special Record Date, as
the case may be, provided that, for purposes of Section 12.4 hereof, Record Date
has the meaning specified in Section 12.4(g) hereof.

“Reference Period” has the meaning set forth in Section 12.4(d) hereof.

“Register” has the meaning specified in Section 2.5 hereof.

“Registrar” has the meaning specified in Section 2.5 hereof.

“Registration Rights Agreement” means the Registration Rights Agreement dated as
of September 27, 2005 entered into by the Company and the Initial Purchaser.

“Regular Record Date” for the interest on the Securities payable means the
March 12 (whether or not a Business Day) next preceding a March 27 Interest
Payment Date and the September 12 (whether or not a Business Day) next preceding
a March 27 Interest Payment Date.

“Repurchase Date” has the meaning specified in Section 11.1 hereof.

“Repurchase Price” has the meaning specified in Section 11.1 hereof.

“Repurchase Right” has the meaning specified in Section 11.1 hereof.

“Responsible Officer” when used with respect to the Trustee, means any officer
of the Trustee, including any vice president, assistant vice president,
secretary, assistant secretary, the treasurer, any assistant treasurer, the
managing director or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of such officer’s knowledge of
and familiarity with the particular subject.

“Rights” means any common stock or preferred stock purchase right, as the case
may be, that all or substantially all shares of Common Stock are entitled to
receive under a Rights Plan.

“Rights Plan” means the Company’s Second Amended and Restated Preferred Shares
Rights Agreement, dated as of August 21, 2000 between Cyberonics and BankBoston,
N.A. (formerly known as The First National Bank of Boston), including the Form
of First Amended Certificate of Designation of Rights, Preference snad
Privileges of Series A Participating Preferred Stock, Form of Rights Certificate
and Stockholder Rights plan attached thereto as Exhibits A, B and C,
respectively, as amended, and any preferred shares rights plan or any similar
plan adopted by the Company after the date hereof.

“SEC” means the Securities and Exchange Commission.

“Securities” has the meaning ascribed to it in the first paragraph under the
caption “Recitals of the Company.”

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Debt” means the principal of, premium, if any, interest (including all
interest accruing subsequent to the commencement of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowable as a
claim in any such proceeding) and rent payable on or termination payment with
respect to or in connection with, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, Indebtedness of the Company,
whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), except for (a) any particular
Indebtedness in respect of which the instrument creating or evidencing the same
or the assumption or guarantee thereof expressly provides that such Indebtedness
shall not be senior in right of payment to the Securities or expressly provides
that such Indebtedness is pari passu or junior to the Securities and (b) any
Indebtedness between or among the Company and/or any of its subsidiaries, or any
of the Company’s Affiliates. The term “Senior Debt” shall include, without
limitation, all Designated Senior Debt.

“Significant Subsidiary” means any Subsidiary which is a “significant
subsidiary” within the meaning of Rule 405 under the Securities Act.

“Special Record Date” for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 2.17 hereof.

“Spin-off” has the meaning specified in Section 12.4(d) hereof.

“Stated Maturity” means the date specified in any Security as the fixed date for
the payment of principal on such Security or on which an installment of interest
on such Security is due and payable.

“Stock Price” means (i) in connection with a Fundamental Change in which the
Holders receive only cash, the amount of cash paid per share of Common Stock in
connection with the Fundamental Change, and (ii) in all other cases means the
average of the Closing Price of the Common Stock for the shorter of (A) 20
Trading Days ending on the Trading Day immediately preceding the Fundamental
Change Effective Date for such Fundamental Change, or (B) all of the Trading
Days from the Trading Day after the Company gives notice of the anticipated
Fundamental Change Effective Date up to but not including the Fundamental Change
Effective date.

“Subsidiary” means a corporation more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
the purposes of this definition only, “voting stock” means stock which
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.

“Termination of Trading” means the occurrence of the Common Stock or any other
common stock into which the Securities are then convertible being neither listed
for trading on a United States national securities exchange nor approved for
listing on Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices or traded in
over-the-counter securities markets, and no American Depositary Shares or
similar instruments for such common stock are so listed or approved for listing
in the United States.

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

“Trading Day” means a day during which trading in securities generally occurs on
The New York Stock Exchange or, if the Common Stock is not then listed on The
New York Stock Exchange, on the principal other national or regional securities
exchange on which the Common Stock is then listed or, if the Common Stock is not
then listed on a national or regional securities exchange, on the Nasdaq
National Market or, if the Common Stock is not then quoted on the Nasdaq
National Market, on the principal other market on which the Common Stock is
traded.

“Transfer Agent” means any Person, which may be the Company, authorized by the
Company to exchange or register the transfer of Securities.

“Trigger Event” has the meaning specified in Section 12.4(d) hereof.

“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 Obligations” means: (1) direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America and which, in either case, are
non-callable at the option of the issuer thereof.

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

SECTION 1.2. Incorporation by Reference of Trust Indenture Act. Whenever this
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the following meanings:

(i) “indenture securities” means the Securities;

     
(ii)
(iii)
(iv)
  “indenture security holder” means a Holder;
“indenture to be qualified” means this Indenture;
“indenture trustee” or “institutional trustee” means the Trustee; and

(v) “obligor” on the Securities means the Company and any other obligor on the
indenture securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule have the meanings
assigned to them by such definitions.

SECTION 1.3. Rules of Construction. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular;

(2) all accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with accounting principles generally accepted in the
United States prevailing at the time of any relevant computation hereunder; and

(3) 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.

ARTICLE 2

THE SECURITIES

SECTION 2.1. Title and Terms. The Securities shall be known and designated as
the “3.0% Senior Subordinated Convertible Notes due 2012” of the Company. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to $125,000,000 (or $143,750,000 if
the option set forth in Section 2(b) of the Purchase Agreement is exercised in
full), except for securities authenticated and delivered upon registration of,
transfer of, or in exchange for, or in lieu of other Securities pursuant to
Section 2.7, 2.8, 2.12, 7.5, 11.1 or 12.2 hereof. The Securities shall be
issuable in denominations of $1,000 or integral multiples thereof.

The Securities shall mature on September 27, 2012.

Interest shall accrue from September 27 at the Interest Rate until the principal
thereof is paid or made available for payment. Interest shall be payable
semiannually in arrears on March 27 and September 27 of each year, commencing
March 27, 2006.

Interest on the Securities shall be computed on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full semiannual period
for which interest is calculated, on the basis of a 30-day month, and for such
periods of less than a month, the actual number of days elapsed over a 30-day
month.

A Holder of any Security at the close of business on a Regular Record Date shall
be entitled to receive interest on such Security on the corresponding Interest
Payment Date. If the Company is required by law to withhold any taxes with
respect to a deemed distribution to a Holder resulting from a Conversion Rate
adjustment, such taxes may be withheld from interest payments made to such
Holder on or after the date of such Conversion Price adjustment.

A Holder of any Security which is converted after the close of business on a
Regular Record Date and prior to the corresponding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date) shall
be entitled to receive interest on the principal amount of such Security on such
Interest Payment Date, notwithstanding the conversion of such Security prior to
such Interest Payment Date. However, any such Holder which surrenders any such
Security for conversion during the period between the close of business on such
Regular Record Date and ending with the opening of business on the corresponding
Interest Payment Date shall be required to pay the Company an amount equal to
the interest on the principal amount of such Security so converted (but
excluding any overdue interest on the principal amount of such Security so
converted that exists at the time such Holder surrenders such Security for
conversion), which is payable by the Company to such Holder on such Interest
Payment Date, at the time such Holder surrenders such Security for conversion.
Notwithstanding the foregoing, any such Holder which surrenders for conversion
any Security with respect to which the Company has specified a Repurchase Date
that is after such Regular Record Date and on or prior to the next succeeding
Interest Payment Date shall be entitled to receive (and retain) such interest
and need not pay the Company an amount equal to the interest on the principal
amount of such Security so converted at the time such Holder surrenders such
Security for conversion.

Principal of, and premium, if any, and interest on, Global Securities shall be
payable to the Depositary in immediately available funds.

Principal and premium, if any, on Physical Securities shall be payable at the
office or agency of the Company maintained for such purpose, initially the
Corporate Trust Office of the Trustee. Interest on Physical Securities will be
payable by (i) U.S. Dollar check drawn on a bank located in the city where the
Corporate Trust Office of the Trustee is located mailed to the address of the
Person entitled thereto as such address shall appear in the Register, or
(ii) upon application to the Registrar not later than the relevant Record Date
by a Holder of an aggregate principal amount in excess of $5,000,000, wire
transfer in immediately available funds.

The Securities shall have the repurchase rights exercisable at the option of
Holders as provided in Article 11 hereof.

The Securities shall be convertible as provided in Article 12 hereof.

The Securities shall be subordinated in right of payment to Senior Debt of the
Company as provided in Article 13 hereof.

SECTION 2.2. Form of Securities. The Securities and the Trustee’s certificate of
authentication to be borne by such Securities shall be substantially in the form
annexed hereto as Exhibit A, which is incorporated in and made a part of this
Indenture. The terms and provisions contained in the form of Security shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.

Any of the Securities may have such letters, numbers or other marks of
identification and such notations, legends and endorsements 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 to comply with any 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 Securities may be
listed or designated for issuance, or to conform to usage.

The Securities shall be issued initially only in the form of one or more
permanent Global Securities (each, a “Global Security”) in registered form
without interest coupons. The Global Securities shall be:

(1) duly executed by the Company and authenticated by the Trustee as hereinafter
provided;

(2) registered in the name of the Depositary (or its nominee) for credit to the
respective accounts of the Holders at the Depositary; and

(3) deposited with the Trustee, as custodian for the Depositary.

The Global Securities shall be substantially in the form of Security set forth
in Exhibit A annexed hereto (including the text and schedule called for by
footnotes 1 and 2 thereto). The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depositary (or its nominee),
in accordance with the instructions given by the Holder thereof, as hereinafter
provided.

Securities issued in exchange for interests in the Global Securities pursuant to
Section 2.8(d) hereof shall be issued in the form of permanent definitive
Securities (the “Physical Securities”) in registered form without interest
coupons. The Physical Securities shall be substantially in the form set forth in
Exhibit A annexed hereto.

The Securities shall be typed, printed, lithographed or engraved or produced by
any combination of these methods or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may be
listed, all as determined by the Officers executing such Securities, as
evidenced by their execution of such Securities.

SECTION 2.3. Legend. Each Global Security shall bear the following legend on the
face thereof:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (“DTC”) TO CYBERONICS, INC. (OR ITS SUCCESSOR) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, CONVERSION OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE NOTES AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
‘‘SECURITIES ACT’’), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE, THE SHARES
OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

BY ITS ACQUISITION HEREOF, THE HOLDER (1) AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS
NOTE) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
, TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.

SECTION 2.4. Execution, Authentication, Delivery and Dating. Two Officers shall
execute the Securities on behalf of the Company by manual or facsimile
signature. If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall be valid
nevertheless.

At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and deliver such Securities as in this Indenture
provided and not otherwise.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture, or be valid
or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.

The Trustee may appoint an authenticating agent or agents reasonably acceptable
to the Company with respect to the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent.

SECTION 2.5. Registrar and Paying Agent. The Company shall maintain an office or
agency where Securities may be presented for registration of transfer or for
exchange (the “Registrar”) and an office or agency where Securities may be
presented for payment (the “Paying Agent”). The Registrar shall keep a register
of the Securities (the “Register”) and of their transfer and exchange. The
Company may appoint one or more co-Registrars and one or more additional Paying
Agents for the Securities. The term “Paying Agent” includes any additional
paying agent and the term “Registrar” includes any additional registrar. The
Company may change any Paying Agent or Registrar without prior notice to any
Holder.

The Company will cause each Paying Agent (other than the Trustee) to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of this Section, that such Paying Agent
will:

(1) hold all sums held by it for the payment of the principal of and premium, if
any, or interest on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as provided in this Indenture;

(2) give the Trustee notice of any Default by the Company in the making of any
payment of principal and premium, if any, or interest; and

(3) at any time during the continuance of any such Default, upon the written
request of the Trustee, forthwith pay to the Trustee all sums so held in trust
by such Paying Agent.

The Company shall give prompt written notice to the Trustee of the name and
address of any Agent who is not a party to this Indenture. If the Company fails
to appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company or any Affiliate of the Company may act as Paying
Agent or Registrar; provided, however, that none of the Company, its
Subsidiaries or the Affiliates of the foregoing shall act:

(i) as Paying Agent in connection with offers to purchase and discharges, as
otherwise specified in this Indenture, and

(ii) as Paying Agent or Registrar if a Default or Event of Default has occurred
and is continuing.

The Company hereby initially appoints the Trustee as Registrar and Paying Agent
for the Securities.

SECTION 2.6. Paying Agent to Hold Assets in Trust. Not later than 10:00 a.m.
(New York City time) on each due date of the principal, premium, if any, and
interest on any Securities, the Company shall deposit with one or more Paying
Agents money in immediately available funds sufficient to pay such principal,
premium, if any, and interest so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company) shall have no
further liability for the money so paid over to the Trustee.

If the Company shall act as a Paying Agent, it shall, prior to or on each due
date of the principal of and premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Holders a sum
sufficient with monies held by all other Paying Agents, to pay the principal and
premium, if any, or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as provided in this Indenture, and shall
promptly notify the Trustee of its action or failure to act.

SECTION 2.7. General Provisions Relating to Transfer and Exchange. The
Securities are issuable only in registered form. A Holder may transfer a
Security only by written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of this Indenture. No
such transfer shall be effected until, and such transferee shall succeed to the
rights of a Holder only upon, final acceptance and registration of the transfer
by the Registrar in the Register. Furthermore, any Holder of a Global Security
shall, by acceptance of such Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Holder of such Global Security (or its agent) and that
ownership of a beneficial interest in the Security shall be required to be
reflected in a book-entry.

When Securities are presented to the Registrar with a request to register the
transfer or to exchange them for an equal aggregate principal amount of
Securities of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met (including that such Securities are duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder
thereof or by an attorney who is authorized in writing to act on behalf of the
Holder). Subject to Section 2.4 hereof, to permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange of the Securities, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon exchanges
pursuant to Section 2.14, 7.5 or 10.7 hereof).

(1) Neither the Company nor the Registrar shall be required to exchange or
register a transfer of any Securities surrendered for conversion or, if a
portion of any Security is surrendered for conversion, such portion thereof
surrendered for conversion.

SECTION 2.8. Book-Entry Provisions for the Global Securities.

(a) The Global Securities initially shall

(i) be registered in the name of the Depositary (or a nominee thereof);

(ii) be delivered to the Trustee as custodian for such Depositary; and

(iii) bear the legend as set forth in Section 2.3 hereof.

Members of, or participants in, the Depositary (“DTC Participants”) shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary, or the Trustee as its custodian, or under such Global
Security, and the Depositary may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
contained herein shall prevent the Company, the Trustee or any agent of the
Company or Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and the DTC Participants, the operation of customary practices
governing the exercise of the rights of a Holder of any Security.

(b) The registered Holder of a Global Security may grant proxies and otherwise
authorize any Person, including DTC Participants and Persons that may hold
interests through DTC Participants, to take any action which a Holder is
entitled to take under this Indenture or the Securities.

(c) A Global Security may not be transferred, in whole or in part, to any Person
other than the Depositary (or a nominee thereof), and no such transfer to any
such other Person may be registered. Beneficial interests in a Global Security
may be transferred in accordance with the rules and procedures of the Depositary
and the provisions of Section 2.9 hereof.

(d) If at any time:

(i) the Depositary notifies the Company in writing that it is no longer willing
or able to continue to act as Depositary for the Global Securities, or the
Depositary ceases to be a “clearing agency” registered under the Exchange Act,
and a successor depositary for the Global Securities is not appointed by the
Company within 90 days of such notice or cessation;

(ii) the Company, at its option, notifies the Trustee in writing that it elects
to cause the issuance of the Securities in definitive form under this Indenture
in exchange for all or any part of the Securities represented by a Global
Security or Global Securities; or

(iii) an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depositary for the issuance of Physical Securities
in exchange for such Global Security or Global Securities,

the Depositary shall surrender such Global Security or Global Securities to the
Trustee for cancellation and the Company shall execute, and the Trustee, upon
receipt of an Officers’ Certificate and Company Order for the authentication and
delivery of Securities, shall authenticate and deliver in exchange for such
Global Security or Global Securities, Physical Securities of like tenor as that
of the Global Securities in an aggregate principal amount equal to the aggregate
principal amount of such Global Security or Global Securities. Such Physical
Securities shall be registered in such names as the Depositary shall identify in
writing as the beneficial owners of the Securities represented by such Global
Security or Global Securities (or any nominees thereof).

Notwithstanding the foregoing, in connection with any transfer of beneficial
interests in a Global Security to beneficial owners pursuant to Section 2.8(d)
hereof, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of such Global Security in an amount equal to
the principal amount of the beneficial interest in such Global Security to be
transferred.

SECTION 2.9. [Reserved].

SECTION 2.10. Holder Lists. The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with Section 312(a) of the TIA.
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
prior to or on each Interest Payment Date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders relating to such
Interest Payment Date or request, as the case may be.

SECTION 2.11. Persons Deemed Owners. The Company, the Trustee and any agent of
the Company or the Trustee may treat the registered Holder of a Global Security
as the absolute owner of such Global Security for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Security be overdue, and notwithstanding any notice of
ownership or writing thereon, or any notice of previous loss or theft or other
interest therein. The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
premium, if any, and interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and notwithstanding any
notice of ownership or writing thereon, or any notice of previous loss or theft
or other interest therein.

SECTION 2.12. Mutilated, Destroyed, Lost or Stolen Securities. If any mutilated
Security is surrendered to the Trustee, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of
like tenor and principal amount and bearing a number not contemporaneously
outstanding.

If there is delivered to the Company and the Trustee

(1) evidence to their satisfaction of the destruction, loss or theft of any
Security, and

(2) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless,

then, in the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the Company shall execute and, upon
request, the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, the Company in its discretion, but subject to
any conversion rights, may, instead of issuing a new Security, pay such
Security, upon satisfaction of the condition set forth in the preceding
paragraph.

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

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

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

SECTION 2.13. Treasury Securities. In determining whether the Holders of the
requisite principal amount of Outstanding Securities are present at a meeting of
Holders for quorum purposes or have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any Affiliate of the Company shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only such Securities of which the Trustee has received written notice and are so
owned shall be so disregarded.

SECTION 2.14. Temporary Securities. Pending the preparation of Securities in
definitive form, the Company may execute and the Trustee shall, upon written
request of the Company, authenticate and deliver temporary Securities (printed
or lithographed). Temporary Securities shall be issuable in any authorized
denomination, and substantially in the form of the Securities in definitive form
but with such omissions, insertions and variations as may be appropriate for
temporary Securities, all as may be determined by the Company. Every such
temporary Security shall be executed by the Company and authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
the same effect, as the Securities in definitive form. Without unreasonable
delay, the Company will execute and deliver to the Trustee Securities in
definitive form (other than in the case of Securities in global form) and
thereupon any or all temporary Securities (other than any such Securities in
global form) may be surrendered in exchange therefor, at each office or agency
maintained by the Company pursuant to Section 9.2 and the Trustee shall
authenticate and deliver in exchange for such temporary Securities an equal
aggregate principal amount of Securities in definitive form. Such exchange shall
be made by the Company at its own expense and without any charge therefor. Until
so exchanged, the temporary Securities shall in all respects be entitled to the
same benefits and subject to the same limitations under this Indenture as
Securities in definitive form authenticated and delivered hereunder.

SECTION 2.15. Cancellation. All securities surrendered for payment, redemption,
repurchase, conversion, registration of transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee.
All Securities so delivered shall be canceled promptly by the Trustee, and no
Securities shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Indenture. Upon written instructions of the Company,
the Trustee shall dispose of the Securities in accordance with its usual and
customary policies and procedures and, thereafter, shall deliver a certificate
of such cancellation to the Company. If the Company shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Securities unless the same are delivered
to the Trustee for cancellation.

SECTION 2.16. CUSIP Numbers. The Company in issuing the Securities may use
“CUSIP” numbers (if then generally in use), and the Trustee shall use CUSIP
numbers in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice shall state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any such notice and that reliance may be placed only on the
other identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
shall promptly notify the Trustee of any change in the CUSIP numbers.

SECTION 2.17. Defaulted Interest. If the Company fails to make a payment of
interest on any Security when due and payable (“Defaulted Interest”), it shall
pay such Defaulted Interest plus (to the extent lawful) any interest payable on
the Defaulted Interest, in any lawful manner. It may elect to pay such Defaulted
Interest, plus any such interest payable on it, to the Persons who are Holders
of such Securities on which the interest is due on a subsequent Special Record
Date. The Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security. The Company shall fix any
such Special Record Date and payment date for such payment. At least 15 days
before any such Special Record Date, the Company shall mail to Holders affected
thereby a notice that states the Special Record Date, the Interest Payment Date,
and amount of such interest to be paid.

SECTION 2.18. Registration Default. The Additional Interest Amount shall be
payable upon the Securities in the case of a Registration Default (as defined in
the Registration Rights Agreement). If a Registration Default occurs, the
Company shall deliver to the Trustee an Officers’ Certificate stating (1) the
Additional Interest Amount payable, (2) when such Additional Interest Amount
began accruing and (3) when such Additional Interest Amount is payable. Unless
and until a Responsible Officer of the Trustee receives such an Officers’
Certificate, the Trustee shall assume that no Additional Interest Amount is
payable.

ARTICLE 3

SATISFACTION AND DISCHARGE

SECTION 3.1. Satisfaction and Discharge of Indenture. When:

(1) The Company shall deliver to the Trustee for cancellation all Securities
previously authenticated (other than any Securities which have been destroyed,
lost or stolen and in lieu of or in substitution for which other Securities
shall have been authenticated and delivered) and not previously canceled, or

(2) (A) All the securities not previously 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 one year,

  (B)   The Company shall deposit with the Trustee, in trust, cash in U.S.
dollars and/or U.S. Government Obligations which through the payment of interest
and principal in respect thereof, in accordance with their terms, will provide
(and without reinvestment and assuming no tax liability will be imposed on the
Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay principal of, premium, if any, or interest on
all of the Securities (other than any Securities which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Securities shall have been authenticated and delivered) not previously
canceled or delivered to the Trustee for cancellation, on the dates such
payments of principal, premium, if any, or interest are due to such date of
maturity, and

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

and if, in the case of either clause (1) or (2), the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, 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
Securities, (ii) rights hereunder of Holders to receive payments of principal of
and premium, if any, and interest on the Securities and the other rights, duties
and obligations of Holders, 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 demand of the Company
accompanied by an Officers’ Certificate and an Opinion of Counsel and at the
cost and expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture; provided, however, that the
Company shall reimburse the Trustee for all amounts due the Trustee under
Section 5.8 hereof and for any costs or expenses thereafter reasonably and
properly incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Securities.

SECTION 3.2. Deposited Monies To Be Held in Trust. Subject to Section 3.3
hereof, all monies deposited with the Trustee pursuant to Section 3.1 hereof
shall be held in trust and applied by it to the payment, notwithstanding the
provisions of Article 13 hereof, either directly or through any Paying Agent
(including the Company if acting as its own Paying Agent), to the Holders of the
particular Securities for the payment 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. All monies deposited with the Trustee pursuant to
Section 3.1 hereof (and held by it or any Paying Agent) for the payment of
Securities subsequently converted shall be returned to the Company upon request
of the Company.

SECTION 3.3. Return of Unclaimed Monies. The Trustee and the Paying Agent shall
pay to the Company any money held by them for the payment of principal or
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due. After payment to the Company,
Holders entitled to the money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person,
and all liability of the Trustee and the Paying Agent with respect to such money
shall cease.

ARTICLE 4

DEFAULTS AND REMEDIES

SECTION 4.1. Events of Default. An “Event of Default” with respect to the
Securities occurs when any of the following occurs (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of
Article 13 hereof or be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):

(a) the Company defaults in the payment of the principal of or premium, if any,
on any of the Securities when it becomes due and payable, at Maturity or
exercise of a Repurchase Right or otherwise, whether or not such payment is
prohibited by Article 13 hereof; or

(b) the Company defaults in the payment of interest (including without
limitation, Additional Interest Amounts, if any) on any of the Securities when
it becomes due and payable and such default continues for a period of 30 days,
whether or not such payment is prohibited by Article 13 hereof; or

(c) the Company fails to deliver shares of Common Stock, together with cash
instead of fractional shares, when those shares of Common Stock or cash instead
of fractional shares is required to be delivered following conversion of a
Security in accordance with Article 12, and that failure continues for 10 days;
or

(d) the Company fails to perform or observe any other term, covenant or
agreement contained in the Securities or this Indenture and the failure
continues for a period of 60 days after written notice of such failure,
requiring the Company to remedy the same, shall have been given to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 25%
in aggregate principal amount of the Outstanding Securities; or

(e) (i) the Company fails to make any payment by the end of the applicable grace
period, if any, after the maturity of any Indebtedness for borrowed money in an
amount in excess of $25,000,000 or (ii) there is an acceleration of any
Indebtedness for borrowed money in an amount in excess of $25,000,000 because of
a default with respect to such Indebtedness without such Indebtedness having
been discharged or such acceleration having been cured, waived, rescinded or
annulled, in the case of either (i) or (ii) above, for a period of 30 days after
written notice to the Company by the Trustee or to the Company and the Trustee
by Holders of at least 25% in aggregate principal amount of the Outstanding
Securities; or

(f) the Company fails to provide the Company Notice in accordance with the terms
of Section 11.3(a) hereof; or

(g) the entry by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable U.S. federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable U.S. federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or

(h) the commencement by the Company of a voluntary case or proceeding under any
applicable U.S. federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the entry of a decree or order for
relief in respect of the Company in an involuntary case or proceeding under any
applicable U.S. federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under any applicable U.S.
federal or state law, or the consent by the Company to the filing of such
petition or to the appointment of or the taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company; or of any substantial part of its property, or the making by the
Company of an assignment for the benefit of creditors, or the admission by the
Company in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company expressly in furtherance
of any such action.

SECTION 4.2. Acceleration of Maturity; Rescission and Annulment. If an Event of
Default with respect to Outstanding Securities (other than an Event of Default
specified in Section 4.1(g) or 4.1(h) hereof) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities, by written notice to the Company and the Trustee, may
declare due and payable 100% of the principal amount of all Outstanding
Securities plus any accrued and unpaid interest to the date of payment. Upon a
declaration of acceleration, such principal and accrued and unpaid interest to
the date of payment shall be immediately due and payable.

If an Event of Default specified in Section 4.1(g) or 4.1(h) hereof occurs, all
unpaid principal of and accrued and unpaid interest on the Outstanding
Securities shall become and be immediately due and payable, without any
declaration or other act on the part of the Trustee or any Holder.

The Holders of a majority in aggregate principal amount of the Outstanding
Securities by written notice to the Trustee may rescind and annul an
acceleration and its consequences if:

(1) all existing Events of Default, other than the nonpayment of principal of or
interest on the Securities which has become due solely because of the
acceleration, have been remedied, cured or waived, and

(2) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction;

provided, however, that in the event such declaration of acceleration has been
made based on the existence of an Event of Default under Section 4.1(e) hereof
and such Event of Default has been remedied, cured or waived in accordance with
Section 4.1(e) hereof, then, without any further action by the Holders, such
declaration of acceleration shall be rescinded automatically and the
consequences of such declaration shall be annulled. No such rescission or
annulment shall affect any subsequent Default or impair any right consequent
thereon.

SECTION 4.3. Other Remedies. If an Event of Default with respect to Outstanding
Securities occurs and is continuing, the Trustee may pursue any available remedy
by proceeding at law or in equity to collect the payment of principal of or
interest on the Securities or to enforce the performance of any provision of the
Securities.

The Trustee may maintain a proceeding in which it may prosecute and enforce all
rights of action and claims under this Indenture or the Securities, even if it
does not possess any of the Securities or does not produce any of them in the
proceeding.

SECTION 4.4. Waiver of Past Defaults. The Holders, either (a) through the
written consent of not less than a majority in aggregate principal amount of the
Outstanding Securities or (b) by the adoption of a resolution, at a meeting of
Holders of the Outstanding Securities at which a quorum is present, by the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities represented at such meeting, may, on behalf of the Holders of all of
the Securities, waive an existing Default or Event of Default, except a Default
or Event of Default:

(1) in the payment of the principal of or premium, if any, or interest on any
Security (provided, however, that subject to Section 4.7 hereof, the Holders of
a majority in aggregate principal amount of the Outstanding Securities may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration);

(2) in respect of the right to convert any Security in accordance with
Article 12; or

(3) in respect of a covenant or provision hereof which, under Section 7.2
hereof, cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.

Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; provided, however, that no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.

SECTION 4.5. Control by Majority. The Holders, either (a) through the written
consent of not less than a majority in aggregate principal amount of the
Outstanding Securities, or (b) by the adoption of a resolution, at a meeting of
Holders of the Outstanding Securities at which a quorum is present, by the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities represented at such meeting, 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. However, the
Trustee may refuse to follow any direction that:

(1) conflicts with any law or with this Indenture,

(2) the Trustee determines may be unduly prejudicial to the rights of the
Holders not joining therein, or

(3) may expose the Trustee to personal liability.

The Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

SECTION 4.6. Limitation on Suit. No Holder of any Security shall have any right
to pursue any remedy with respect to this Indenture or the Securities (including
instituting any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee) unless:

(1) such Holder has previously given written notice to the Trustee of an Event
of Default that is continuing;

(2) the Holders of at least 25% in aggregate principal amount of the Outstanding
Securities shall have made written request to the Trustee to pursue the remedy;

(3) such Holder or Holders have offered to the Trustee indemnity satisfactory to
it against any costs, expenses and liabilities incurred in complying with such
request;

(4) the Trustee has failed to comply with the request for 60 days after its
receipt of such notice, request and offer of indemnity; and

(5) during such 60-day period, no direction inconsistent with such written
request has been given to the Trustee by the Holders of a majority in aggregate
principal amount of the Outstanding Securities (or such amount as shall have
acted at a meeting pursuant to the provisions of this Indenture);

provided, however, that no one or more of such Holders may use this Indenture to
prejudice the rights of another Holder or to obtain preference or priority over
another Holder.

SECTION 4.7. Unconditional Rights of Holders to Receive Payment and to Convert.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and interest on such Security
on the Stated Maturity expressed in such Security (or in the case of the
exercise of a Repurchase Right on the Repurchase Date) and to convert such
Security in accordance with Article 12, and to bring suit for the enforcement of
any such payment on or after such respective dates and right to convert, and
such rights shall not be impaired or affected without the consent of such
Holder.

SECTION 4.8. Collection of Indebtedness and Suits for Enforcement by the
Trustee. The Company covenants that if:

(1) a Default or Event of Default occurs in the payment of any interest on any
Security when such interest becomes due and payable and such Default or Event of
Default continues for a period of 30 days, or

(2) a Default or Event of Default occurs in the payment of the principal of or
premium, if any, on any Security at the Maturity thereof, the Company shall,
upon demand of the Trustee, pay to it, for the benefit of the Holders of such
Securities, the whole amount then due and payable (as expressed therein or as a
result of any acceleration effected pursuant to Section 4.2 hereof) on such
Securities for principal and premium, if any, and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal and premium, if any, and on any overdue interest, in each case
at the Interest Rate, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

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

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

SECTION 4.9. Trustee May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Company or
the property of the Company or its creditors, the Trustee (irrespective of
whether the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise, (1) to file and prove a claim for the whole amount of principal
and premium, if any, and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders of Securities allowed in such judicial
proceeding, and (2) to collect and receive any moneys or other property payable
or deliverable on any such claim and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceedings is hereby authorized by each Holder of
Securities to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders of
Securities, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 5.8.

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

SECTION 4.10. Restoration of Rights and Remedies. If the Trustee or any Holder
of a Security has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders of Securities shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

SECTION 4.11. Rights and Remedies Cumulative. Except as otherwise provided with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities in the last paragraph of Section 2.12, no right or remedy conferred
in this Indenture upon or reserved to the Trustee or to the Holders of
Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

SECTION 4.12. Delay or Omission Not Waiver. No delay or omission of the Trustee
or of any Holder of any Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or any acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the Holders of
Securities may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities, as the case may be.

SECTION 4.13. Application of Money Collected. Subject to Article 13, any money
and property collected by the Trustee pursuant to this Article shall be applied
in the following order, at the date or dates fixed by the Trustee and, in case
of the distribution of such money and property on account of principal or
premium, if any, or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee for amounts due for
outstanding fees and expenses, including but not limited to fees and expenses of
Trustee’s counsel and other experts employed by the Trustee to assist it in
performing its duties. The Trustee’s fees and expenses are intended to
constitute an “Administrative Expense” under the Bankruptcy Law;

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

THIRD: Any remaining amounts shall be repaid to the Company.

SECTION 4.14. Undertaking for Costs. All parties to this Indenture agree, and
each Holder of any Security by such Holder’s acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of the Outstanding Securities, or to
any suit instituted by any Holder of any Security for the enforcement of the
payment of the principal of or premium, if any, or interest on any Security on
or after the Stated Maturity expressed in such Security (or, in the case of
exercise of a repurchase right, on or after the Repurchase Date) or for the
enforcement of the right to convert any Security in accordance with Article 12.

SECTION 4.15. Waiver of Stay or Extension Laws. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim to take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not 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.

ARTICLE 5

THE TRUSTEE

SECTION 5.1. Certain Duties and Responsibilities.

(a) Except during the continuance of an Event of Default,

(1) The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture or the TIA, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

(2) In the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; provided, however, that in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine the
certificates or opinions to determine whether or not, on their face, they
conform to the requirements of this Indenture (but need not investigate or
confirm the accuracy of any facts stated therein).

(b) In case an Event of Default actually known to a Responsible Officer of the
Trustee has occurred and is continuing, 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.

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

(1) This paragraph (c) shall not be construed to limit the effect of paragraph
(a) of this Section 5.1;

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

(3) The Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with a direction received by it of
the Holders of a majority in principal amount of the Outstanding Securities (or
such lesser amount as shall have acted at a meeting pursuant to the provisions
of this Indenture) 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 herein expressly so 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 5.1.

(e) No provision of this Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur any liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers. The Trustee
may refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability, cost or expense
(including, without limitation, reasonable fees of counsel and costs incurred in
defending itself against any and all charges, claims, complaints, allegations,
assertions or demands of any nature whatsoever, except liability which is
adjudicated to be a result of the Trustee’s negligence or willful misconduct in
connection with any such action).

(f) The Trustee shall not be obligated to pay interest on any money or other
assets received by it unless otherwise agreed in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

(g) 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, note,
coupon, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, 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 sole cost of the Company, and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.

(h) The Trustee shall not be deemed to have notice or actual knowledge of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
a Default or Event of Default is received by the Trustee pursuant to
Section 14.2 hereof, and such notice is received from the Company or the Holders
of not less than 25% in aggregate principal amount of the Securities then
outstanding and such notice references the Securities and this Indenture and, in
the absence of such notice so delivered the Trustee may conclusively assume no
default exists.

(i) The rights, privileges, protections, immunities and benefits given to the
Trustee hereunder, 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 Paying Agent, authenticating agent, Conversion
Agent or Registrar acting hereunder.

SECTION 5.2. Certain Rights of Trustee. Subject to the provisions of Section 5.1
hereof and subject to Sections 315(a) through (d) of the TIA:

(1) The Trustee may rely on any document believed by it to be genuine and to
have been signed or presented by the proper person, and the Trustee shall be
under no duty to make any investigation as to any statement contained in any
such instance, but may accept the same as conclusive evidence of the truth and
accuracy of such statement or the correctness of such opinions.

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

(3) The Trustee may act through attorneys and agents and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care.

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

(5) The Trustee may consult with counsel of its selection and the advice of such
counsel as to matters of law shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.

(6) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.

(7) The permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty unless so specified herein.

SECTION 5.3. Individual Rights of Trustee. The Trustee in its individual or any
other capacity may become the owner or pledgee of Securities and may otherwise
deal with the Company or any Affiliate of the Company with the same rights it
would have if it were not Trustee. However, in the event that the Trustee
acquires any conflicting interest (as such term is defined in Section 310(b) of
the TIA), it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee (to the extent permitted under Section 310(b)
of the TIA) or resign. Any agent may do the same with like rights and duties.
The Trustee is also subject to Sections 5.11 and 5.12 hereof.

SECTION 5.4. Money Held in Trust. 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 otherwise expressly agreed with the Company.

SECTION 5.5. Trustee’s Disclaimer. The recitals contained herein and in the
Securities (except for those in the certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity, sufficiency or priority of this Indenture or of the Securities.
The Trustee shall not be accountable for the use or application by the Company
of Securities or the proceeds thereof.

SECTION 5.6. Notice of Defaults. Within 90 days after the occurrence of any
Default or Event of Default hereunder of which the Trustee has received written
notice, the Trustee shall give notice to Holders pursuant to Section 14.2
hereof, unless such Default or Event of Default shall have been cured or waived;
provided, however, that, except in the case of a Default or Event of Default in
the payment of the principal of or premium, if any, or interest, or in the
payment of any repurchase obligation, on any Security, the Trustee shall be
protected in withholding such notice if and so long as Responsible Officers of
the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders.

SECTION 5.7. Reports by Trustee to Holders. The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required by Section 313 of the TIA at the times and in the manner
provided by the TIA.

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

SECTION 5.8. Compensation and Indemnification. The Company covenants and agrees
to pay to the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) and the Company
covenants and agrees to pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by it or on its
behalf in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ), except to the extent
that any such expense, disbursement or advance is due to its negligence or bad
faith. When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 4.1 hereof, the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law. The Company also covenants to indemnify the Trustee and its
officers, directors, employees and agents for, and to hold such Persons harmless
against, any loss, liability or expense incurred by them, arising out of or in
connection with the acceptance or administration of this Indenture or the trusts
hereunder or the performance of their duties hereunder, including the costs and
expenses of defending themselves against or investigating any claim of liability
in the premises, except to the extent that any such loss, liability or expense
was due to the negligence or willful misconduct of such Persons. The obligations
of the Company under this Section 5.8 to compensate and indemnify the Trustee
and its officers, directors, employees and agents and to pay or reimburse such
Persons for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture or the earlier resignation or removal of the Trustee. Such additional
indebtedness shall be a senior claim to that of the Securities upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the Holders of particular Securities, and the Securities are
hereby subordinated to such senior claim. “Trustee” for purposes of this
Section 5.8 shall include any predecessor Trustee, but the negligence or willful
misconduct of any Trustee shall not affect the indemnification of any other
Trustee.

SECTION 5.9. Replacement of Trustee. A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee’s acceptance of appointment as provided in this Section 5.9.

The Trustee may resign and be discharged from the trust hereby created by so
notifying the Company in writing. The Holders of at least a majority in
aggregate principal amount of Outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company in writing. The Company must remove the
Trustee if:

(i) the Trustee fails to comply with Section 5.11 hereof or Section 310 of the
TIA;

(ii) the Trustee becomes incapable of acting;

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

(iv) a Custodian or public officer takes charge of the Trustee or its property.

If the Trustee resigns or is removed or if a vacancy exists in the office of the
Trustee for any reason, the Company shall promptly appoint a successor Trustee.
The Trustee shall be entitled to payment of its fees and reimbursement of its
expenses while acting as Trustee. Within one year after the successor Trustee
takes office, the Holders of at least a majority in aggregate principal amount
of Outstanding Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

Any Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee if the Trustee fails to
comply with Section 5.11 hereof.

If an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation or removal, the resigning or removed Trustee, as the case may be,
may petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. The
Company shall mail a notice of the successor Trustee’s succession to the
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee. Notwithstanding replacement of the Trustee
pursuant to this Section 5.9, the Company’s obligations under Section 5.8 hereof
shall continue for the benefit of the retiring Trustee with respect to expenses,
losses and liabilities incurred by it prior to such replacement.

SECTION 5.10. Successor Trustee by Merger, Etc. Subject to Section 5.11 hereof,
if the Trustee consolidates with, merges or converts into, or transfers or sells
all or substantially all of its corporate trust business to, another corporation
or national banking association, the successor entity without any further act
shall be the successor Trustee as to the Securities.

SECTION 5.11. Corporate Trustee Required; Eligibility. The Trustee shall at all
times satisfy the requirements of Sections 310(a)(1), (2) and (5) of the TIA.
The Trustee shall at all times have (or, in the case of a corporation included
in a bank holding company system, the related bank holding company shall at all
times have) a combined capital and surplus of at least $100 million as set forth
in its (or its related bank holding company’s) most recent published annual
report of condition. The Trustee is subject to Section 310(b) of the TIA.

SECTION 5.12. Collection of Claims Against the Company. The Trustee is subject
to Section 311(a) of the TIA, excluding any creditor relationship listed in
Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the TIA to the extent indicated therein.

ARTICLE 6

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 6.1. Company May Consolidate, Etc. Only on Certain Terms. The Company
shall not consolidate with or merge into any other Person or convey, transfer or
lease its properties and assets substantially as an entirety to any Person, and
the Company shall not permit any Person to consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless:

(1) in the event that the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or trust
organized and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and, if the entity surviving such
transaction or transferee entity is not the Company, then such surviving or
transferee entity shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of and premium, if any and interest on
all the Securities and the performance of every covenant of this Indenture on
the party of the Company to be performed or observed and shall have provided for
conversion rights in accordance with Section 12.11 hereof;

(2) at the time of consummation of such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing;

(3) if as a result of such transaction the Securities become convertible into
common stock or other securities issued by any Person other than the Company,
such Person fully and unconditionally guarantees all obligations of the Company
or the surviving or transferee entity under the Securities and this Indenture;
and

(4) the Company shall have delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such transaction
have been complied with.

SECTION 6.2. Successor Substituted. Upon any consolidation or merger by the
Company with or into any other Person or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety to any
Person, in accordance with Section 6.1 hereof, the successor Person formed by
such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease to another Person, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.

ARTICLE 7

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 7.1. Without Consent of Holders of Securities. Without the consent of
any Holders of Securities, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may amend this Indenture and
the Securities to:

(a) add to the covenants of the Company or provide Guarantees for the benefit of
the Holders of Securities;

(b) surrender any right or power herein conferred upon the Company;

(c) make provision with respect to the conversion rights of Holders of
Securities pursuant to Section 12.11 hereof;

(d) provide for the assumption of the Company’s obligations to the Holders of
Securities in the case of a merger, consolidation, conveyance, transfer or lease
pursuant to Article 6 hereof;

(e) increase the Conversion Rate; provided, however, that such increase in the
Conversion Rate shall not adversely affect the interest of the Holders of
Securities (after taking into account tax and other consequences of such
increase) in any material respect;

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

(g) cure any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein or which is otherwise defective, or
make any other provisions with respect to matters or questions arising under
this Indenture which the Company and the Trustee may deem necessary or desirable
and which shall not be inconsistent with the provisions of this Indenture;
provided, however, that such action pursuant to this clause (g) does not, in the
good faith opinion of the Board of Directors and the Trustee, adversely affect
the interests of the Holders of Securities in any material respect; or

(h) make any changes or modifications to this Indenture necessary in connection
with the registration of the Securities under the Securities Act as contemplated
by the Registration Rights Agreement; provided that this action does not
adversely affect the interests of the Holders in any material respect; or

(i) add or modify any other provisions with respect to matters or questions
arising under this Indenture which the Company and the Trustee may deem
necessary or desirable and which shall not be inconsistent with the provisions
of this Indenture, provided, however, that such action pursuant to this clause
(i) does not adversely affect the interests of the Holders of Securities in any
material respect.

SECTION 7.2. With Consent of Holders of Securities. Except as provided below in
this Section 7.2, this Indenture or the Securities may be amended or
supplemented, and noncompliance by the Company in any particular instance with
any provision of this Indenture or the Securities may be waived, in each case
(i) with the consent of the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities or (ii) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of a majority in aggregate principal amount of
the Outstanding Securities represented at such meeting.

Without the written consent or the affirmative vote of each Holder of Securities
affected, an amendment or waiver under this Section 7.2 may not:

(a) change the Stated Maturity of the principal of, or any installment of
interest on, any Security or any payment of Additional Interest Amounts;

(b) reduce the principal amount of or premium, or interest on or any payment of
Additional Interest Amounts on, if any, on any Security;

(c) reduce the Interest Rate or interest on any Security;

(d) change the currency of payment of principal of, premium, if any, or interest
on any Security;

(e) impair the right of any Holder to institute suit for the enforcement of any
payment on or with respect to, or the conversion of, any Security;

(f) modify the obligation of the Company to maintain an office or agency in The
City of New York pursuant to Section 9.2 hereof;

(g) except as permitted by Section 12.11 hereof, adversely affect the right to
convert any Security as provided in Article 12 hereof;

(h) adversely affect the Repurchase Right;

(i) modify the subordination provisions of the Securities in a manner adverse to
the Holders of Securities;

(j) modify any of the provisions of this Section, Section 4.4 or Section 14.11,
except to increase any percentage contained herein or therein or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby; or

(k) reduce the requirements of Section 8.4 hereof for quorum or voting, or
reduce the percentage in aggregate principal amount of the Outstanding
Securities the consent of whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required for any waiver provided
for in this Indenture.

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

SECTION 7.3. Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall be set forth in a supplemental indenture that
complies with the TIA as then in effect.

SECTION 7.4. Revocation of Consents and Effect of Consents or Votes. Until an
amendment, supplement or waiver becomes effective, a written consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the consenting
Holder’s Security, even if notation of the consent is not made on any Security;
provided, however, that unless a record date shall have been established, any
such Holder or subsequent Holder may revoke the consent as to its Security or
portion of a Security if the Trustee receives written notice of revocation
before the date the amendment, supplement or waiver becomes effective.

An amendment, supplement or waiver becomes effective on receipt by the Trustee
of written consents from or affirmative votes by, as the case may be, the
Holders of the requisite percentage of aggregate principal amount of the
Outstanding Securities, and thereafter shall bind every Holder of Securities;
provided, however, if the amendment, supplement or waiver makes a change
described in any of clauses (a) through (k) of Section 7.2 hereof, the
amendment, supplement or waiver shall bind only each Holder of a Security which
has consented to it or voted for it, as the case may be, and every subsequent
Holder of a Security or portion of a Security that evidences the same
indebtedness as the Security of the consenting or affirmatively voting, as the
case may be, Holder.

SECTION 7.5. Notation on or Exchange of Securities. If an amendment, supplement
or waiver changes the terms of a Security:

(a) the Trustee may require the Holder of a Security to deliver such Security to
the Trustee, the Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder and the Trustee may place an
appropriate notation on any Security thereafter authenticated; or

(b) if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms.

Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.

SECTION 7.6. Trustee to Sign Amendment, Etc. The Trustee shall sign any
amendment authorized pursuant to this Article 7 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If the amendment does adversely affect the rights, duties, liabilities or
immunities of the Trustee, the Trustee may but need not sign it. In signing or
refusing to sign such amendment, the Trustee shall be entitled to receive and
shall be fully protected in relying upon an Officers’ Certificate and an Opinion
of Counsel as conclusive evidence that such amendment is authorized or permitted
by this Indenture.

ARTICLE 8

MEETING OF HOLDERS OF SECURITIES

SECTION 8.1. Purposes for Which Meetings May Be Called. A meeting of Holders of
Securities may be called at any time and from time to time pursuant to this
Article to make, give or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be made,
given or taken by Holders of Securities.

Notwithstanding anything contained in this Article 8, the Trustee may, during
the pendency of a Default or an Event of Default, call a meeting of Holders of
Securities in accordance with its standard practices.

SECTION 8.2. Call Notice and Place of Meetings.

(a) The Trustee may at any time call a meeting of Holders of Securities for any
purpose specified in Section 8.1 hereof, to be held at such time and at such
place in The City of New York. Notice of every meeting of Holders of Securities,
setting forth the time and the place of such meeting, in general terms the
action proposed to be taken at such meeting and the percentage of the principal
amount of the Outstanding Securities which shall constitute a quorum at such
meeting, shall be given, in the manner provided in Section 14.2 hereof, not less
than 21 nor more than 180 days prior to the date fixed for the meeting.

(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Securities shall
have requested the Trustee to call a meeting of the Holders of Securities for
any purpose specified in Section 8.1 hereof, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first publication of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the Holders
of Securities in the amount specified, as the case may be, may determine the
time and the place in The City of New York for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in paragraph
(a) of this Section.

SECTION 8.3. Persons Entitled to Vote at Meetings. To be entitled to vote at any
meeting of Holders of Securities, a Person shall be (a) a Holder of one or more
Outstanding Securities or (b) a Person appointed by an instrument in writing as
proxy for a Holder or Holders of one or more Outstanding Securities by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders shall be the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.

SECTION 8.4. Quorum; Action. The Persons entitled to vote a majority in
principal amount of the Outstanding Securities shall constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders of Securities,
be dissolved. In any other case, the meeting may be adjourned for a period of
not less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 8.2(a) hereof, except
that such notice need be given only once and not less than five days prior to
the date on which the meeting is scheduled to be reconvened.

At a meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid, any resolution and all matters (except as limited by the
second paragraph of Section 7.2 hereof) shall be effectively passed and decided
if passed or decided by the Persons entitled to vote not less than a majority in
principal amount of Outstanding Securities represented and voting at such
meeting.

Any resolution passed or decisions taken at any meeting of Holders of Securities
duly held in accordance with this Section shall be binding on all the Holders of
Securities, whether or not present or represented at the meeting.

SECTION 8.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.

(a) Notwithstanding any other provisions of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any meeting of Holders
of Securities in regard to proof of the holding of Securities 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 deem appropriate.

(b) The Trustee shall, by an instrument in writing, appoint a temporary chairman
(which may be the Trustee) of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section 8.2(b)
hereof, in which case the Company or the Holders of Securities calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities represented at the meeting.

(c) At any meeting, each Holder of a Security or proxy shall be entitled to one
vote for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Security 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, except as a Holder of a Security or proxy.

(d) Any meeting of Holders of Securities duly called pursuant to Section 8.2
hereof at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.

SECTION 8.6. Counting Votes and Recording Action of Meetings. The vote upon any
resolution submitted to any meeting of Holders of Securities shall be by written
ballots on which shall be subscribed the signatures of the Holders of Securities
or of their representatives by proxy and the principal amounts and serial
numbers of the Outstanding Securities 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, at least in duplicate, of
the proceedings of each meeting of Holders of Securities 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 given
as provided in Section 8.2 hereof and, if applicable, Section 8.4 hereof. Each
copy shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one such copy shall be delivered to the Company
and another to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein stated.

ARTICLE 9

COVENANTS

SECTION 9.1. Payment of Principal, Premium and Interest. The Company will duly
and punctually pay the principal of and premium, if any, and interest on the
Securities in accordance with the terms of the Securities and this Indenture.
The Company will deposit or cause to be deposited with the Trustee as directed
by the Trustee, no later than the day of the Stated Maturity of any Security or
installment of interest, all payments so due. Except as otherwise noted, all
references to the payment of interest include the payment of Additional Interest
Amounts.

SECTION 9.2. Maintenance of Offices or Agencies. The Company hereby appoints the
Trustee’s Corporate Trust Office as its office in The City of New York where
Securities may be:

(i) presented or surrendered for payment;

(ii) surrendered for registration of transfer or exchange;

(iii) surrendered for conversion;

and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served.

The Company may at any time and from time to time vary or terminate the
appointment of any such office or appoint any additional offices for any or all
of such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of and premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 9.3 hereof, the Company will maintain in The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange, where Securities may be surrendered for conversion and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee, and notice to the Holders in accordance with Section 14.2 hereof, of
the appointment or termination of any such agents and of the location and any
change in the location of any such office or agency.

If at any time the Company shall fail to maintain any such required office or
agency in The City of New York, or shall fail to furnish the Trustee with the
address thereof, presentations and surrenders may be made at, and notices and
demands may be served on, the Corporate Trust Office of the Trustee.

SECTION 9.3. Corporate Existence. Subject to Article 6 hereof, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be required to
preserve any such right or franchise if the Company determines 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 Holders.

SECTION 9.4. Maintenance of Properties. The Company will maintain and keep its
properties and every part thereof in such repair, working order and condition,
and make or cause to be made all such needful and proper repairs, renewals and
replacements thereof, as in the judgment of the Company are necessary in the
interests of the Company; provided, however, that nothing contained in this
Section shall prevent the Company from selling, abandoning or otherwise
disposing of any of its properties or discontinuing a part of its business from
time to time if, in the judgment of the Company, such sale, abandonment,
disposition or discontinuance is advisable and does not materially adversely
affect the interests or business of the Company.

SECTION 9.5. Payment of Taxes and Other Claims. The Company will, and will cause
any Significant Subsidiary to, promptly pay and discharge or cause to be paid
and discharged all material taxes, assessments and governmental charges or
levies lawfully imposed upon it or upon its income or profits or upon any of its
property, real or personal, or upon any part thereof, as well as all material
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon its property; provided, however, that neither the Company
nor any Significant Subsidiary shall be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in good
faith by appropriate proceedings and if the Company or such Significant
Subsidiary, as the case may be, shall have set aside on its books reserves
deemed by it adequate with respect thereto.

SECTION 9.6. Reports. The Company shall deliver to the Trustee within 15 days
after it files them with the SEC copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act; provided, however, that 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 SEC. The Company also shall comply with
the other provisions of Section 314(a) of the TIA.

SECTION 9.7. Compliance Certificate. The Company shall deliver to the Trustee,
within 90 days after the end of each fiscal year of the Company, an Officers’
Certificate stating that in the course of the performance by the signers of
their duties as Officers of the Company, they would normally have knowledge of
any failure by the Company to comply with all conditions, or Default by the
Company with respect to any covenants, under this Indenture, and further stating
whether or not they have knowledge of any such failure or Default and, if so,
specifying each such failure or Default and the nature thereof. Within five
Business Days of an Officer of the Company coming to have actual knowledge of a
Default, regardless of the date, the Company shall deliver an Officers’
Certificate to the Trustee specifying such Default and the nature and status
thereof.

SECTION 9.8. [Reserved]

SECTION 9.9. Additional Interest Amounts Notice. In the event that the Company
is required to pay Additional Interest Amounts to Holders pursuant to the
Registration Rights Agreement, the Company will provide written notice
(“Additional Interest Amount Notice”) to the Trustee of its obligation to pay
Additional Interest Amounts no later than fifteen (15) days prior to the
proposed payment date for the Additional Interest Amounts, and the Additional
Interest Amounts Notice shall set forth the amount of Additional Interest
Amounts to be paid by the Company on such payment date. The Trustee shall not at
any time be under any duty or responsibility to any Holder to determine the
Additional Interest Amounts, or with respect to the nature, extent or
calculation of the amount of Additional Interest Amounts when made, or with
respect to the method employed in such calculation of the Additional Interest
Amounts.

ARTICLE 10

[RESERVED]

ARTICLE 11

REPURCHASE OF SECURITIES

SECTION 11.1. Repurchase Right Upon Fundamental Change.

(a) In the event that a Fundamental Change shall occur, each Holder shall have
the right (the “Repurchase Right”), at the Holder’s option, but subject to the
provisions of Section 11.3 hereof, to require the Company to repurchase, and
upon the exercise of such right the Company shall repurchase, all of such
Holder’s Securities or any portion of the principal amount thereof that is equal
to $1,000 or any integral multiple thereof (provided, however, that no single
Security may be repurchased in part unless the portion of the principal amount
of such Security to be Outstanding after such repurchase is equal to $1,000 or
integral multiples thereof), on the date (the “Repurchase Date”) that is 45 days
after the date of the Company Notice at a purchase price equal to 100% of the
principal amount of the Securities to be repurchased (the “Repurchase Price”),
plus interest accrued and unpaid to, but excluding, the Repurchase Date;
provided, however, that installments of interest on Securities whose Stated
Maturity is prior to or on the Repurchase Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such on
the relevant Record Date according to their terms and the provisions of
Section 2.1 hereof.

(b) The Company may elect to pay the Repurchase Price by delivering that number
of shares of Common Stock equal to (i) the Repurchase Price divided by (ii) 95%
of the average of the daily volume-weighted average price of the Common Stock
for the twenty (20) consecutive Trading Days immediately preceding and including
the third Business Day prior to the Repurchase Date (if the third Business Day
prior to the Repurchase Date is a Trading Day, or if not, then on the last
Trading Day prior to the third Business Day), appropriately adjusted to take
into account the occurrence, during the period commencing on the first Trading
Day during the twenty Trading-Day period and ending on the Repurchase Date of
any event that would result in an adjustment to the conversion rate set forth in
Section 12.1(c).

(c) Whenever in this Indenture (including Sections 2.2, 4.1(a) and 4.7 hereof)
or Exhibit A annexed hereto there is a reference, in any context, to the
principal of any Security as of any time, such reference shall be deemed to
include reference to the Repurchase Price, payable in respect to such Security
to the extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this
Indenture shall not be construed as excluding the Repurchase Price in those
provisions of this Indenture when such express mention is not made; provided,
however, that for the purposes of Article 13 hereof, such reference shall be
deemed to include reference to the Repurchase Price only to the extent the
Repurchase Price is payable in cash.

     
SECTION 11.2.
  [Reserved]
 
   
SECTION 11.3.
  Notices; Method of Exercising Repurchase Right, Etc
 
   

(a) Prior to or on the 30th day after the occurrence of a Fundamental Change,
the Company, or, at the written request and expense of the Company prior to or
on the 30th day after such occurrence, the Trustee shall give to all Holders of
Securities notice, in the manner provided in Section 14.2 hereof, of the
occurrence of the Fundamental Change and of the Repurchase Right set forth
herein arising as a result thereof (the “Company Notice”). The Company shall
also deliver a copy of such notice of a Repurchase Right to the Trustee. Each
notice of a Repurchase Right shall state:

(1) the Repurchase Date;

(2) the date by which the Repurchase Right must be exercised;

(3) the Repurchase Price and accrued and unpaid interest, if any, and whether
the Repurchase Price shall be paid by the Company in cash or by delivery of
shares of Common Stock;

(4) a description of the procedure which a Holder must follow to exercise a
Repurchase Right, and the place or places where such Securities, are to be
surrendered for payment of the Repurchase Price and accrued and unpaid interest,
if any;

(5) that on the Repurchase Date the Repurchase Price and accrued and unpaid
interest, if any, will become due and payable upon each such Security designated
by the Holder to be repurchased, and that interest thereon shall cease to accrue
on and after said date;

(6) the Conversion Rate then in effect, the date on which the right to convert
the principal amount of the Securities to be repurchased will terminate and the
place where such Securities may be surrendered for conversion;

(7) the place or places where such Securities, together with the Option to Elect
Repayment Upon a Change of Control certificate included in Exhibit A annexed
hereto are to be delivered for payment of the Repurchase Price and accrued and
unpaid interest, if any; and

(8) whether a Make-Whole Premium shall be payable by the Company upon
conversion.

No failure of the Company to give the foregoing notices or defect therein shall
limit any Holder’s right to exercise a Repurchase Right or affect the validity
of the proceedings for the repurchase of Securities.

If any of the foregoing provisions or other provisions of this Article 11 are
inconsistent with applicable law, such law shall govern.

(b) To exercise a Repurchase Right, a Holder shall deliver to the Trustee prior
to or on the 30th day after the date of the Company Notice:

(1) written notice of the Holder’s exercise of such right, which notice shall
set forth the name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Security is to be repurchased in part, the serial
number thereof, the portion of the principal amount thereof to be repurchased)
and a statement that an election to exercise the Repurchase Right is being made
thereby, and, in the event that the Repurchase Price shall be paid in shares of
Common Stock, the name or names (with addresses) in which the certificate or
certificates for shares of Common Stock shall be issued, and

(2) the Securities with respect to which the Repurchase Right is being
exercised.

Such written notice shall be irrevocable, except that the right of the Holder to
convert the Securities with respect to which the Repurchase Right is being
exercised shall continue until the close of business on the Business Day
immediately preceding the Repurchase Date.

(c) In the event a Repurchase Right shall be exercised in accordance with the
terms hereof, the Company shall pay or cause to be paid to the Trustee the
Repurchase Price in cash for payment to the Holder on the Repurchase Date or, if
shares of Common Stock are to be paid, shares of Common Stock, as provided
above, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable in cash with respect
to the Securities as to which the Repurchase Right has been exercised; provided,
however, that installments of interest that mature prior to or on the Repurchase
Date shall be payable in cash to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.

(d) If any Security (or portion thereof) surrendered for repurchase shall not be
so paid on the Repurchase Date, the principal amount of such Security (or
portion thereof, as the case may be) shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at the Interest
Rate, and each Security shall remain convertible into Common Stock until the
principal of such Security (or portion thereof, as the case may be) shall have
been paid or duly provided for.

(e) Any Security which is to be repurchased only in part shall be surrendered to
the Trustee (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Security or Securities, containing identical terms and conditions,
each in an authorized denomination in aggregate principal amount equal to and in
exchange for the unrepurchased portion of the principal of the Security so
surrendered.

(f) Any issuance of shares of Common Stock in respect of the Repurchase Price
shall be deemed to have been effected immediately prior to the close of business
on the Repurchase Date and the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such repurchase shall be deemed to have become on the Repurchase Date the holder
or holders of record of the shares represented thereby; provided, however, that
any surrender for repurchase on a date when the stock transfer books of the
Company shall be closed shall constitute the Person or Persons in whose name or
names the certificate or certificates for such shares are to be issued as the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open. No payment
or adjustment shall be made for dividends or distributions on any Common Stock
issued upon repurchase of any Security declared prior to the Repurchase Date.

(g) No fractions of shares of Common Stock shall be issued upon repurchase of
any Security or Securities. If more than one Security shall be repurchased from
the same Holder and the Repurchase Price shall be payable in shares of Common
Stock, the number of full shares which shall be issued upon such repurchase
shall be computed on the basis of the aggregate principal amount of the
Securities (or specified portions thereof) to be so repurchased. Instead of any
fractional share of Common Stock which would otherwise be issued on the
repurchase of any Security or Securities (or specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction (calculated to
the nearest one-100th of a share) in an amount equal to the same fraction of the
Quoted Price of the Common Stock as of the Trading Day preceding the Repurchase
Date.

(h) Any issuance and delivery of certificates for shares of Common Stock on
repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the Securities
represented thereby; provided, however, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery shall be made
unless the Persons requesting such issuance or delivery has paid to the Company
the amount of any such tax or duty or has established, to the satisfaction of
the Company, that such tax or duty has been paid.

(i) All Securities delivered for repurchase shall be delivered to the Trustee to
be canceled at the direction of the Trustee, which shall dispose of the same as
provided in Section 2.15 hereof.

ARTICLE 12

CONVERSION OF SECURITIES

SECTION 12.1. Conversion Right and Conversion Rate.

(a) Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Security or any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000 may be
converted at the principal amount thereof, or of such portion thereof, into the
number of duly authorized, fully paid and nonassessable shares of Common Stock
at the Conversion Rate, determined as hereinafter provided, in effect at the
time of conversion. Such conversion right shall expire at the close of business
on September 27, 2012.

(b) In the case of a Fundamental Change for which the Holder exercises its
Repurchase Right with respect to a Security or portion thereof, such conversion
right in respect of the Security or portion thereof shall expire at the close of
business on the Business Day preceding the Repurchase Date.

(c) The rate at which shares of Common Stock shall be delivered upon conversion
(the “Conversion Rate”) shall be initially equal to 24.0964 shares of Common
Stock per $1,000 principal amount of Securities. The Conversion Rate shall be
adjusted in certain instances as provided in paragraphs (a), (b), (c), (d), (e),
(f), (h) and (l) of Section 12.4 hereof.

(d) If a Holder converts its Securities in connection with a Fundamental Change,
such Holder will be entitled to receive an amount, payable in Common Stock equal
to the Make-Whole Premium pursuant to Section 12.13, in addition to the shares
of Common Stock deliverable upon conversion of the Securities.

SECTION 12.2. Exercise of Conversion Right. To exercise the conversion right,
the Holder of any Security to be converted shall surrender such Security duly
endorsed or assigned to the Company or in blank, at the office of any Conversion
Agent, accompanied by a duly signed conversion notice substantially in the form
attached to the Security to the Company stating that the Holder elects to
convert such Security or, if less than the entire principal amount thereof is to
be converted, the portion thereof to be converted.

Any Holder which surrenders any Security for conversion during the period
between the close of business on any Regular Record Date and ending with the
opening of business on the corresponding Interest Payment Date (except in the
case of any Security whose Maturity is prior to such Interest Payment Date)
shall be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest to be received on
such Interest Payment Date on the principal amount of the Security being
surrendered for conversion (but excluding any overdue interest on the principal
amount of such Security so converted that exists at the time such Holder
surrenders such Security for conversion). Notwithstanding the foregoing, any
such Holder which surrenders for conversion any Security with respect to which
the Company has specified a Repurchase Date that is after such Regular Record
Date and on or prior to the next succeeding Interest Payment Date need not pay
the Company an amount equal to the interest in the principal amount of such
Security so converted at the time such Holder surrenders such Security for
conversion.

Securities shall be deemed to have been converted immediately prior to the close
of business on the day of surrender of such Securities for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease (and all obligations of the
Company with respect thereto shall be deemed satisfied, including with respect
to the principal amount and any accrued and unpaid interest, including ay
Additional Interest), and the Person or Persons entitled to receive the Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall cause to be issued and
delivered to such Conversion Agent a certificate or certificates for the number
of full shares of Common Stock issuable upon conversion, together with payment
in lieu of any fraction of a share as provided in Section 12.3 hereof.

In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Securities.

The Company hereby initially appoints the Trustee as the Conversion Agent.

SECTION 12.3. Fractions of Shares. No fractional shares of Common Stock shall be
issued upon conversion of any Security or Securities. If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issued upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issued upon conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction (calculated to the nearest one-100th of a
share) in an amount equal to the same fraction of the Quoted Price of the Common
Stock as of the Trading Day preceding the date of conversion.

SECTION 12.4. Adjustment of Conversion Rate. The Conversion Rate shall be
subject to adjustments, calculated by the Company, from time to time 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 in effect at the opening of business on the date following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be increased by multiplying such Conversion
Rate by a fraction:

(i) the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date (as defined in
Section 12.4(g)) fixed for such determination and the total number of shares
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 Record Date (as defined in
Section 12.4(g)) fixed for such determination.

Such increase shall become effective immediately after the opening of business
on the day following the Record Date. If any dividend or distribution of the
type described in this Section 12.4(a) is declared but not so paid or made, the
Conversion Rate shall again be adjusted to the Conversion Rate which would then
be in effect if such dividend or distribution had not been declared.

(b) In case the 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.

(c) In case the Company shall issue rights or warrants exercisable for no more
than 45 days (other than any rights or warrants referred to in Section 12.4(d))
to all or substantially all holders of its outstanding shares of Common Stock
entitling them to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Current Market Price (as defined in
Section 12.4(g)) on the Record Date fixed for the determination of stockholders
entitled to receive such rights or warrants, 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 after such
Record Date by a fraction:

(i) the numerator of which shall be the number of shares of Common Stock
outstanding on the close of business on the Record Date plus the total number of
additional shares of Common Stock so offered for subscription or purchase (or
into which the convertible securities so offered are convertible), and

(ii) the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date plus the number of
shares which the aggregate offering price of the total number of shares so
offered for subscription or purchase (or the aggregate conversion price of the
convertible securities so offered) would purchase at such Current Market Price.

Such adjustment shall become effective immediately after the opening of business
on the day following the Record Date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock (or securities convertible into Common Stock) are not delivered pursuant
to such rights or warrants, upon the expiration or termination of such rights or
warrants the Conversion Rate shall be readjusted to the Conversion Rate which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of the delivery of only the number of
shares of Common Stock (or securities convertible into Common Stock) actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such date fixed for the determination of stockholders
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 less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received for such rights or
warrants, the value of such consideration if other than cash, to be determined
by the Board of Directors.

(d) In case the Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which
Section 12.4(a) applies) or evidences of its indebtedness, cash or other assets,
including securities, but excluding (1) any rights or warrants referred to in
Section 12.4(c), (2) any stock, securities or other property or assets
(including cash) distributed in connection with a reclassification, change,
merger, consolidation, statutory share exchange, combination, sale or conveyance
to which Section 12.11 hereof applies and (3) dividends and distributions paid
exclusively in cash (the securities described in foregoing clauses (1), (2) and
(3) hereinafter in this Section 12.4(d) called the “securities”), then, in each
such case, subject to the second succeeding paragraph of this Section 12.4(d),
the Conversion Rate shall be increased so that the same shall be equal to the
rate determined by multiplying the Conversion Rate in effect immediately prior
to the close of business on the Record Date (as defined in Section 12.4(g)) with
respect to such distribution by a fraction:

(i) the numerator of which shall be the Current Market Price (determined as
provided in Section 12.4(g)) on such date, and

(ii) the denominator of which shall be such Current Market Price on such date
less the fair market value (as determined by the Board of Directors (except as
described below), whose determination shall be conclusive and set forth in a
Board Resolution) on such date of the portion of the shares of capital stock,
evidences of indebtedness, cash or other assets, including securities, so
distributed applicable to one share of Common Stock (determined on the basis of
the number of shares of the Common Stock outstanding on the Record Date).

Such increase shall become effective immediately prior to the opening of
business on the day following the Record Date, or in the case of a Spin-off,
immediately prior to the opening of business on the day following the last
Trading Day of the Measurement Period. However, in the event that 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 Holder shall have the right to receive upon
conversion of a Security (or any portion thereof) the amount of shares of
capital stock, evidences of indebtedness, cash or other assets, including
securities, such Holder would have received had such Holder converted such
Security (or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Rate shall again be adjusted to be the Conversion Rate which 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 12.4(d) by reference to the actual or when issued
trading market for any securities comprising all or part of such distribution,
it must in doing so consider the prices in such market over the same period (the
“Reference Period”) used in computing the Current Market Price pursuant to
Section 12.4(g) to the extent possible, unless the Board of Directors in a Board
Resolution determines in good faith that determining the fair market value
during the Reference Period would not be in the best interest of the Holder.

In the event the Company distributes shares of capital stock of a Subsidiary or
other business unit of the Company, the Conversion Rate will be adjusted, if at
all, so that the same shall be equal to the rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on the
Record Date (as defined in Section 12.4(g)) with respect to such distribution by
a fraction:

(iii) the numerator of which shall be the Current Market Price (determined as
described below) on such date plus the fair market value on such date of the
portion of the shares of capital stock of such Subsidiary or other business unit
of the Company so distributed applicable to one share of Common Stock
(determined on the basis of the number of shares of the Common Stock outstanding
on the Record Date), and

(iv) the denominator of which shall be such Current Market Price on such date
(determined as described below).

In respect of a dividend or other distribution of shares of capital stock of a
class or series, or similar equity interest, of or relating to a Subsidiary or
other business unit of the Company which has a Subsidiary Closing Price (a
“Spin-off”), the fair market value of the securities to be distributed shall
equal the average of the daily Subsidiary Closing Price of such securities for
the ten (10) consecutive Trading Days commencing on and including the fifth
Trading Day of such securities after the effectiveness of the Spin-off (the
“Measurement Period”) and the Current Market Price shall be calculated over the
same Measurement Period; provided, however, that in the event that an
underwritten initial public offering of the securities in the Spin-off occurs
simultaneously with the Spin-off, fair market value of the securities
distributed in the Spin-off shall be the initial public offering price of such
securities and the market price per share of the Common Stock shall mean the
Closing Price for the Common Stock on the same Trading Day.

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”):

(v) are deemed to be transferred with such shares of Common Stock,

(vi) are not exercisable, and

(vii) are also issued in respect of future issuances of Common Stock

shall be deemed not to have been distributed for purposes of this
Section 12.4(d) (and no adjustment to the Conversion Rate under this
Section 12.4(d) will be required) until the occurrence of the earliest Trigger
Event. If such right or warrant is subject to subsequent events, upon the
occurrence of which such right or warrant shall become exercisable to purchase
different securities, evidences of indebtedness or other assets or entitle the
holder to purchase a different number or amount of the foregoing or to purchase
any of the foregoing at a different purchase price, then the occurrence of each
such event shall be deemed to be the date of issuance and record date with
respect to a new right or warrant (and a termination or expiration of the
existing right or warrant without exercise by the holder 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 resulted in an adjustment to the Conversion
Rate under this Section 12.4(d):

(1) in the case of any such rights or warrants which shall all have been
repurchased without exercise by any holders thereof, the Conversion Rate shall
be readjusted upon such final 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 repurchase price received by a holder of Common Stock with
respect to such rights or warrant (assuming such holder had retained such rights
or warrants), made to all holders of Common Stock as of the date of such
repurchase, and

(2) in the case of such rights or warrants all of which shall have expired or
been terminated without exercise, the Conversion Rate shall be readjusted as if
such rights and warrants had never been issued.

For purposes of this Section 12.4(d) and Sections 12.4(a), 12.4(b) and 12.4(c),
any dividend or distribution to which this Section 12.4(d) is applicable that
also includes shares of Common Stock, a subdivision or combination of Common
Stock to which Section 12.4(b) applies, or rights or warrants to subscribe for
or purchase shares of Common Stock to which Section 12.4(c) applies (or any
combination thereof), shall be deemed instead to be:

(3) a dividend or distribution of the evidences of indebtedness, assets, shares
of capital stock, rights or warrants other than such shares of Common Stock,
such subdivision or combination or such rights or warrants to which
Sections 12.4(a), 12.4(b) and 12.4(c) apply, respectively (and any Conversion
Rate increase required by this Section 12.4(d) with respect to such dividend or
distribution shall then be made), immediately followed by

(4) a dividend or distribution of such shares of Common Stock, such subdivision
or combination or such rights or warrants (and any further Conversion Rate
increase required by Sections 12.4(a), 12.4(b) and 12.4(c) 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
(x) “the date fixed for the determination of stockholders entitled to receive
such dividend or other distribution”, “Record Date fixed for such determination”
and “Record Date” within the meaning of Section 12.4(a), (y) “the day upon which
such subdivision becomes effective” and “the day upon which such combination
becomes effective” within the meaning of Section 12.4(b), and (z) “the Record
Date fixed for the determination of stockholders entitled to receive such rights
or warrants,” such “Record Date,” “the Record Date fixed for the determination
of stockholders entitled to receive such rights or warrants” and “such date
fixed for the determination of stockholders entitled to receive such rights or
warrants” within the meaning of Section 12.4(c), 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 Record Date
fixed for such determination” within the meaning of Section 12.4(a) and any
reduction or increase in the number of shares of Common Stock resulting from
such subdivision or combination shall be disregarded in connection with such
dividend or distribution.

(e) In case the Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock cash (excluding any cash that is
distributed upon a reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance to which Section 12.11 hereof
applies or as part of a distribution referred to in Section 12.4(d) hereof),
then and in each such case, immediately after the close of business on such
date, 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 equal to the Current Market Price on the
Record Date, and

(ii) the denominator of which shall be equal to the Current Market Price on such
date less an amount equal to the quotient of (x) the sum of the aggregate amount
of cash so distributed and (y) the number of shares of Common Stock outstanding
on the Record Date.

In the event that such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate which 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 of its
subsidiaries for all or any portion of the Common Stock shall expire, then, and
in each such case, immediately prior to the opening of business on the day after
the date of the last time (the “Expiration Time”) tenders could have been made
pursuant to such tender or exchange offer, the Conversion Rate shall be adjusted
so that the same shall equal the rate determined by multiplying the Conversion
Rate in effect immediately prior to close of business on the date of the
Expiration Time by a fraction:

(i) the numerator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
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) on the
Expiration Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time, and

(ii) the denominator shall be (x) the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Expiration Time.

Such increase (if any) shall become effective immediately prior to the opening
of business on the day following the Expiration Time. In the event that the
Company is obligated to purchase shares pursuant to any such tender 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 which would then be in effect if such
tender or exchange offer had not been made. If the application of this
Section 12.4(f) to any tender or exchange offer would result in a decrease in
the Conversion Rate, no adjustment shall be made for such tender or exchange
offer under this Section 12.4(f).

(g) For purposes of this Section 12.4, the following terms shall have the
meanings indicated:

(1) “Current Market Price” shall mean the average of the daily Closing Prices
per share of Common Stock for the ten (10) consecutive Trading Days immediately
prior to the date in question; provided, however, that if:

(ii) the “ex” date (as hereinafter defined) for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the Conversion Rate pursuant to Section 12.4(a), (b), (c), (d), (e) or
(f) occurs during such ten consecutive Trading Days, the Closing Price for each
Trading Day prior to the “ex” date for such other event shall be adjusted by
dividing such Closing Price by the same fraction by which the Conversion Rate is
so required to be adjusted as a result of such other event;

(iii) the “ex” date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Rate
pursuant to Section 12.4(a), (b), (c), (d), (e) or (f) occurs on or after the
“ex” date for the issuance or distribution requiring such computation and prior
to the day in question, the Closing Price for each Trading Day on and after the
“ex” date for such other event shall be adjusted by dividing such Closing Price
by the reciprocal of the fraction by which the Conversion Rate is so required to
be adjusted as a result of such other event; and

(iv) the “ex” date for the issuance or distribution requiring such computation
is prior to the day in question, after taking into account any adjustment
required pursuant to clause (i) or (ii) of this proviso, the Closing Price for
each Trading Day on or after such “ex” date shall be adjusted by adding thereto
the amount of any cash and the fair market value (as determined by the Board of
Directors in a manner consistent with any determination of such value for
purposes of Section 12.4(d) or (f), whose determination shall be conclusive and
set forth in a Board Resolution) of the evidences of indebtedness, shares of
capital stock or assets being distributed applicable to one share of Common
Stock as of the close of business on the day before such “ex” date.

For purposes of any computation under Section 12.4(f), the Current Market Price
of the Common Stock on any date shall be deemed to be the average of the daily
Closing Prices per share of Common Stock for such day and the next two
succeeding Trading Days; provided, however, that if the “ex” date for any event
(other than the tender offer requiring such computation) that requires an
adjustment to the Conversion Rate pursuant to Section 12.4(a), (b), (c), (d),
(e) or (f) occurs on or after the Expiration Time for the tender or exchange
offer requiring such computation and prior to the day in question, the Closing
Price for each Trading Day on and after the “ex” date for such other event shall
be adjusted by dividing such Closing Price by the reciprocal of the fraction by
which the Conversion Rate is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term “ex” date, when used:

  (A)   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 Price was obtained without the right to
receive such issuance or distribution;

  (B)   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, and

  (C)   with respect to any tender or exchange offer, means the first date on
which the Common Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer.

Notwithstanding the foregoing, whenever successive adjustments to the Conversion
Rate are called for pursuant to this Section 12.4, such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 12.4 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.

(2) “fair market value” shall mean the amount which a willing buyer would pay a
willing seller in an arm’s length transaction.

(3) “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 stockholders 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).

(h) The Company may make such increases in the Conversion Rate, in addition to
those required by Section 12.4(a), (b), (c), (d), (e) or (f), 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, 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 20 days and the increase is irrevocable during the period and the
Board of Directors determines in good faith that such increase would be in the
best interests of the Company, which determination shall be conclusive and set
forth in a Board Resolution; provided, however, that in no event may the Company
increase the Conversion Rate such that it causes the Conversion Price to be less
than the par value of a share of Common Stock. Whenever the Conversion Rate is
increased pursuant to the preceding sentence, the Company shall mail to the
Trustee and each Holder at the address of such Holder as it appears in the
Register a notice of the increase at least 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.

(i) All calculations under this Article 12 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 a
change in the par value or no par value of the Common Stock.

(j) In any case in which this Section 12.4 provides that an adjustment shall
become effective immediately after a Record Date for an event, the Company may
defer until the occurrence of such event (i) issuing to the Holder of any
Security converted after such Record Date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder any amount in cash in lieu of any fraction pursuant
to Section 12.3 hereof.

(k) For purposes of this Section 12.4, 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.

(l) To the extent the Company has a Rights Plan in effect upon conversion of the
Securities pursuant to this Article 12: (i) if such Rights have not separated
from the Common Stock prior to the conversion of the Securities, each share of
Common Stock issued upon conversion of the Securities pursuant to this
Article 12 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 Rights Plan; or (ii) if such Rights have separated from the
Common Stock prior to the conversion of the Securities, the Conversion Rate will
be adjusted as though the Rights were being distributed to all holders of Common
Stock on the date of such separation. If such an adjustment is made and the
Rights are later redeemed, invalidated or terminated, then a corresponding
reversing adjustment will be made to the Conversion Rate on an equitable basis.

SECTION 12.5. Notice of Adjustments of Conversion Rate. Whenever the Conversion
Rate is adjusted as herein provided (other than in the case of an adjustment
pursuant to the second paragraph of Section 12.4(h) for which the notice
required by such paragraph has been provided), the Company shall promptly file
with the Trustee and any Conversion Agent other than the Trustee an Officers’
Certificate setting forth the adjusted Conversion Rate and showing in reasonable
detail the facts upon which such adjustment is based. Promptly after delivery of
such Officers’ Certificate, the Company shall prepare a notice stating that the
Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate
and the date on which each adjustment becomes effective, and shall mail such
notice to each Holder at the address of such Holder as it appears in the
Register within 20 days of the effective date of such adjustment. If any
adjustment to the Conversion Rate would be less than 1% of the then effective
Conversion Rate, such adjustment shall be carried forward and adjustment with
respect thereto shall be made at the time of and together with any subsequent
adjustments which, together with the original adjustment, shall aggregate at
least 1% of the then effective Conversion Rate; provided, however, that any
carryforward amount will be paid to the Holder upon conversion regardless of the
1% threshold. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.

SECTION 12.6. Notice Prior to Certain Actions. In case at any time after the
date hereof:

(1) the Company shall declare a dividend (or any other distribution) on its
Common Stock payable otherwise than in cash out of its capital surplus or its
consolidated retained earnings;

(2) the Company shall authorize the granting to the holders of its Common Stock
of rights or warrants to subscribe for or purchase any shares of capital stock
of any class (or of securities convertible into shares of capital stock of any
class) or of any other rights;

(3) there shall occur any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock, a
change in par value, a change from par value to no par value or a change from no
par value to par value), or any merger, consolidation, statutory share exchange
or combination to which the Company is a party and for which approval of any
shareholders of the Company is required, or the sale, transfer or conveyance of
all or substantially all of the assets of the Company; or

(4) there shall occur the voluntary or involuntary dissolution, liquidation or
winding up of the Company;

the Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of securities pursuant to Section 9.2 hereof, and shall
cause to be provided to the Trustee and all Holders in accordance with
Section 14.2 hereof, at least 20 days (or 10 days in any case specified in
clause (1) or (2) above) prior to the applicable record or effective date
hereinafter specified, a notice stating:

  (A)   the date on which a record is to be taken for the purpose of such
dividend, distribution, 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, rights or warrants are to be determined, or

  (B)   the date on which such reclassification, merger, consolidation,
statutory share exchange, combination, sale, transfer, conveyance, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, merger, consolidation, statutory share
exchange, sale, transfer, dissolution, liquidation or winding up.

Neither the failure to give such notice nor any defect therein shall affect the
legality or validity of the proceedings or actions described in clauses
(1) through (4) of this Section 12.6.

SECTION 12.7. Company to Reserve Common Stock. The Company shall at all times
use its best efforts to reserve and keep available, free from preemptive rights,
out of its authorized but unissued Common Stock, for the purpose of effecting
the conversion of Securities, the full number of shares of fully paid and
nonassessable Common Stock then issuable upon the conversion of all Outstanding
Securities, including pursuant to any Make-Whole Premium.

SECTION 12.8. Taxes on Conversions. Except as provided in the next sentence, the
Company will pay any and all taxes (other than taxes on income) and duties that
may be payable in respect of the issue or delivery of shares of Common Stock on
conversion of Securities pursuant hereto. A Holder delivering a Security for
conversion shall be liable for and will be required to pay any tax or duty which
may be payable in respect of any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that of the Holder of the Security
or Securities to be converted, and no such issue or delivery shall be made
unless the Person requesting such issue has paid to the Company the amount of
any such tax or duty, or has established to the satisfaction of the Company that
such tax or duty has been paid.

SECTION 12.9. Covenant as to Common Stock. The Company covenants that all shares
of Common Stock which may be issued upon conversion of Securities will upon
issue be fully paid and nonassessable and, except as provided in Section 12.8,
the Company will pay all taxes, liens and charges with respect to the issue
thereof.

SECTION 12.10. Cancellation of Converted Securities. All Securities delivered
for conversion shall be delivered to the Trustee to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in
Section 2.15.

SECTION 12.11. Effect of Recapitalization, Reclassification, Consolidation,
Merger or Sale. If any of following events occur, namely:

(i) any recapitalization, reclassification or change of the outstanding shares
of Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination),

(ii) any merger, consolidation, statutory share exchange or combination of the
Company with another corporation as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock or

(iii) any sale, conveyance or lease of the properties and assets of the Company
as, or substantially as, an entirety to any other corporation as a result of
which holders of Common Stock shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock,

the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply with
the TIA as in force at the date of execution of such supplemental indenture if
such supplemental indenture is then required to so comply) providing that each
Security shall be convertible into the kind and amount of shares of stock and
other securities or property or assets (including cash) which such Holder would
have been entitled to receive upon such recapitalization, reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance had such Securities been converted into Common Stock immediately
prior to such recapitalization, reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such
recapitalization, reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance. In the event holders of Common
Stock have the opportunity to elect the form of consideration to be received in
such recapitalization, reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance, Holders shall have a
reasonable opportunity to determine the form of consideration into which all of
the Securities, treated as a single class, shall be convertible from and after
the effective date of such recapitalization, reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance. Such
determination shall be based on the weighted average of elections made by
Holders who participate in such determination, shall be subject to any
limitations to which all of the holders of Common Stock are subject, including,
but not limited to, pro-rata reductions applicable to any portion of the
consideration payable in such recapitalization, reclassification, change,
merger, consolidation, statutory share exchange, combination, sale or conveyance
and shall be conducted in such a manner as to be completed by the date which is
the earliest of (a) the deadline for elections to be made by holders of our
Common Stock, and (b) two trading days prior to the anticipated effective date.
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 12. If, in the case of any such recapitalization, reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such recapitalization, reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or conveyance, then
such supplemental indenture shall also be executed by such other corporation and
shall contain such additional provisions to protect the interests of the Holders
of the Securities as the Board of Directors shall reasonably consider necessary
by reason of the foregoing, including to the extent practicable the provisions
providing for the repurchase rights set forth in Article 11 hereof.

The Company shall cause notice of the execution of such supplemental indenture
to be mailed to each Holder, at the address of such Holder as it appears on the
Register, within 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
recapitalizations, reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.

If this Section 12.11 applies to any event or occurrence, Section 12.4 hereof
shall not apply.

SECTION 12.12. Responsibility of Trustee for Conversion Provisions. The Trustee,
subject to the provisions of Section 5.1 hereof, and any Conversion Agent shall
not at any time be under any duty or responsibility to any Holder of Securities
to determine whether any facts exist which may require any adjustment of the
Conversion Rate, or with respect to the nature or intent of any such adjustments
when made, or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. Neither the
Trustee, subject to the provisions of Section 5.1 hereof, nor any Conversion
Agent shall be accountable with respect to the validity or value (of the kind or
amount) of any Common Stock, or of any other securities or property, which may
at any time be issued or delivered upon the conversion of any Security; and it
or they do not make any representation with respect thereto. Neither the
Trustee, subject to the provisions of Section 5.1 hereof, nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of stock or share
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion; and the Trustee, subject to the provisions of
Section 5.1 hereof, and any Conversion Agent shall not be responsible or liable
for any failure of the Company to comply with any of the covenants of the
Company contained in this Article.

SECTION 12.13. Make-Whole Premium

(a) If a Fundamental Change Effective Date occurs on or prior to September 27,
2012, other than in connection with a Fundamental Change described in clause
(3) of the definition of “Change of Control,” Holders who convert Securities in
accordance with the provisions of Section 11.3(a) in connection with a
Fundamental Change shall, subject to Section 12.13, be entitled to receive a
“Make-Whole Premium” consisting of an increase in the Conversion Rate. The
Make-Whole Premium shall be calculated by the Company and paid for in shares of
Common Stock or in any other consideration into which the Securities are then
convertible. The number of additional shares of Common Stock by which the
Conversion Rate shall increase shall be determined by reference to the table
below and shall equal the number of shares of Common Stock for the applicable
Fundamental Change Effective Date and Stock Price of such Fundamental Change. If
the applicable Fundamental Change Effective Date and/or Stock Price is not set
forth in the table: (i) if the applicable Fundamental Change Effective Date
and/or Stock Price is between two Fundamental Change Effective Dates or Stock
Prices, as the case may be, set forth in the table, the Make-Whole Premium shall
be determined by a straight-line interpolation between the Make-Whole Premiums
set forth for the two Fundamental Change Effective Dates and/or Stock Prices, as
the case may be, set forth in the table based on a 365-day year, (ii) if the
Stock Price on the Fundamental Change Effective Date exceeds $150.00 a share,
subject to adjustment as set forth herein, no Make-Whole Premium shall be paid,
and (iii) if the Stock Price on the Fundamental Change Effective Date is less
than $33.20 a share, subject to adjustment as set forth herein, no Make-Whole
Premium shall be paid.

                                                                      Effective
Date     Sept. 27,   Sept. 27,   Sept. 27,   Sept. 27,   Sept. 27,   Sept. 27,  
Sept. 27,   Sept. 27, Stock Price   2005   2006   2007   2008   2009   2010  
2011   2012
$33.20
    6.0241       6.0241       6.0241       6.0241       6.0241       6.0241    
  6.0241       0.0000  
$35.00
    5.3663       5.4317       5.4827       5.5196       5.4980       5.4071    
  5.1023       0.0000  
$40.00
    3.9403       3.9370       3.9119       3.8519       3.7179       3.4840    
  2.9673       0.0000  
$45.00
    3.4086       3.0427       2.8278       2.7173       2.5313       2.2396    
  1.6759       0.0000  
$50.00
    3.0699       2.7385       2.3796       1.9842       1.7200       1.4240    
  0.9057       0.0000  
$55.00
    2.7942       2.4892       2.1626       1.8050       1.4095       0.9814    
  0.5113       0.0000  
$60.00
    2.5562       2.2871       1.9819       1.6536       1.2955       0.8993    
  0.4688       0.0000  
$65.00
    2.3575       2.1098       1.8326       1.5253       1.1938       0.8324    
  0.4328       0.0000  
$70.00
    2.1898       1.9526       1.7009       1.4194       1.1097       0.7709    
  0.4019       0.0000  
$75.00
    2.0466       1.8235       1.5812       1.3275       1.0366       0.7206    
  0.3750       0.0000  
$80.00
    1.9151       1.7120       1.4840       1.2347       0.9740       0.6749    
  0.3512       0.0000  
$85.00
    1.7994       1.6136       1.3987       1.1634       0.9073       0.6349    
  0.3296       0.0000  
$90.00
    1.7013       1.5173       1.3225       1.1005       0.8578       0.5993    
  0.3105       0.0000  
$95.00
    1.6157       1.4383       1.2506       1.0441       0.8144       0.5677    
  0.2940       0.0000  
$100.00
    1.5370       1.3693       1.1858       0.9932       0.7761       0.5392    
  0.2790       0.0000  
$105.00
    1.4666       1.3063       1.1304       0.9409       0.7388       0.5137    
  0.2658       0.0000  
$110.00
    1.3991       1.2479       1.0824       0.9000       0.7056       0.4913    
  0.2531       0.0000  
$115.00
    1.3405       1.1948       1.0369       0.8617       0.6763       0.4688    
  0.2426       0.0000  
$120.00
    1.2859       1.1434       0.9931       0.8261       0.6470       0.4500    
  0.2335       0.0000  
$125.00
    1.2293       1.1009       0.9545       0.7958       0.6220       0.4329    
  0.2242       0.0000  
$130.00
    1.1812       1.0596       0.9168       0.7662       0.5989       0.4155    
  0.2145       0.0000  
$135.00
    1.1320       1.0207       0.8843       0.7381       0.5765       0.4018    
  0.2082       0.0000  
$140.00
    1.0941       0.9797       0.8525       0.7103       0.5571       0.3868    
  0.2009       0.0000  
$145.00
    1.0579       0.9411       0.8256       0.6871       0.5360       0.3746    
  0.1945       0.0000  
$150.00
    1.0229       0.9095       0.7924       0.6646       0.5202       0.3624    
  0.1881       0.0000  

The Stock Prices set forth in the table above shall be adjusted as of any date
on which the Conversion Rate of the Securities is adjusted by multiplying each
such Stock Price in effect immediately prior to such adjustment by a fraction,
the numerator of which shall be the Conversion Rate in effect immediately prior
to the adjustment giving rise to the Stock Price adjustment and the denominator
of which shall be the Conversion Rate as so adjusted. The number of additional
shares set forth in the table above shall be adjusted in the same manner as the
Conversion Rate as set forth in Section 12.4 hereof.

Delivery of the payment of the Make-Whole Premium shall be upon the later of
(x) the settlement date of the conversion of Securities by the Holder and
(y) promptly following the Fundamental Change Effective Date.

(b) A conversion of Securities by a Holder will be deemed for the purposes of
this Section 12.13 to be “in connection with” a Fundamental Change if the
conversion notice delivered by the Holder pursuant to Section 12.2 hereof is
received by a Conversion Agent (i) on or subsequent to the date that is 20
Business Days prior to the date announced by the Company as the anticipated
Fundamental Change Effective Date but (ii) prior to the close of business on the
Business Day immediately preceding the related Repurchase Date. To the extent
possible, the Company shall notify the Holders of an anticipated Fundamental
Change Effective Date at least 30 calendar days prior to such Fundamental Change
Effective Date.

(c) Notwithstanding any of the provisions of this Section 12.13, in no event
shall the Conversion Rate exceed 30.1205 shares per $1,000 principal amount of
Securities (subject to adjustment as provided herein).

ARTICLE 13

SUBORDINATION

SECTION 13.1. Securities Subordinated to Senior Debt. The Company covenants and
agrees, and each Holder of Securities, by such Holder’s acceptance thereof,
likewise covenants and agrees, that the Indebtedness represented by the
Securities and the payment of the principal of and premium, if any, and interest
(including Additional Interest Amounts, if any) on each and all of the
Securities is hereby expressly subordinated and junior, to the extent and in the
manner set forth and as set forth in this Section 13.1, in right of payment to
the prior payment in full of all Senior Debt; provided, however, that the
Securities, the Indebtedness represented thereby and the payment of the
principal of and premium, if any, and interest (including Additional Interest
Amounts, if any) on the Securities in all respects shall rank equally with, or
prior to, all existing and future Indebtedness of the Company that is expressly
subordinated to any Senior Debt.

(a) In the event of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company, whether
in bankruptcy, insolvency, reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise, the holders of all Senior Debt
shall first be entitled to receive payment of the full amount due thereon in
respect of all such Senior Debt and all other amounts due or provision shall be
made for such amount in cash, or other payments satisfactory to the holders of
Senior Debt, before the Holders of any of the Securities are entitled to receive
any payment or distribution of any character, whether in cash, securities or
other property, on account of the principal of or premium, if any, or interest
(including Additional Interest Amounts, if any) on the Securities.

(b) In the event of any acceleration of Maturity of the Securities because of an
Event of Default, unless the full amount due in respect of all Senior Debt is
paid in cash or other form of payment satisfactory to the holders of Senior
Debt, no payment shall be made by the Company with respect to the principal of,
premium, if any, or interest on the Securities or to acquire any of the
Securities (including any conversion or cash repurchase pursuant to the exercise
of the Repurchase Right or otherwise), and the Company shall give prompt written
notice of such acceleration to such holders of Senior Debt.

(c) In the event of and during the continuance of any default in payment of the
principal of or premium, if any, or interest on, rent or other payment
obligation in respect of, any Senior Debt, unless all such payments due in
respect of such Senior Debt have been paid in full in cash or other payments
satisfactory to the holders of Senior Debt, no payment shall be made by the
Company with respect to the principal of, premium, if any, or interest
(including Additional Interest Amounts, if any) on the Securities or to acquire
any of the Securities (including any conversion or cash repurchase pursuant to
the exercise of the Repurchase Right). The Company shall give prompt written
notice to the Trustee of any default under any Senior Debt or under any
agreement pursuant to which Senior Debt may have been issued.

(d) During the continuance of any event of default with respect to any
Designated Senior Debt, as such event of default is defined under any such
Designated Senior Debt or in any agreement pursuant to which any Designated
Senior Debt has been issued (other than a default in payment of the principal of
or premium, if any, or interest on, rent or other payment obligation in respect
of any Designated Senior Debt), permitting the holder or holders of such
Designated Senior Debt to accelerate the maturity thereof (or in the case of any
lease, permitting the landlord either to terminate the lease or to require the
Company to make an irrevocable offer to terminate the lease following an event
of default thereunder), no payment shall be made by the Company, directly or
indirectly, with respect to principal of, premium, if any, or interest
(including Additional Interest Amounts, if any) on the Securities for 179 days
following notice in writing (a “Payment Blockage Notice”) to the Company, from
any holder or holders of such Designated Senior Debt or their representative or
representatives or the trustee or trustees under any indenture or under which
any instrument evidencing any such Designated Senior Debt may have been issued,
that such an event of default has occurred and is continuing, unless such event
of default has been cured or waived or such Designated Senior Debt has been paid
in full in cash or other payment satisfactory to the holders of such Designated
Senior Debt; provided, however, if the maturity of such Designated Senior Debt
is accelerated (or in the case of any lease, as a result of such event of
default, the landlord under the lease has given the Company notice of its
intention to terminate the lease or to require the Company to make an
irrevocable offer to terminate the lease following an event of default
thereunder), no payment may be made on the Securities until such Designated
Senior Debt has been paid in full in cash or other payment satisfactory to the
holders of such Designated Senior Debt or such acceleration (or termination, in
the case of a lease) has been cured or waived.

For purposes of this Section 13.1(d), such Payment Blockage Notice shall be
deemed to include notice of all other events of default under such indenture or
instrument which are continuing at the time of the event of default specified in
such Payment Blockage Notice. The provisions of this Section 13.1(d) shall apply
only to one such Payment Blockage Notice given in any period of 365 days with
respect to any issue of Designated Senior Debt, and no such continuing event of
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice shall be, or shall be made, the basis for a subsequent Payment
Blockage Notice.

(e) In the event that, notwithstanding the foregoing provisions of
Sections 13.1(a), 13.1(b), 13.1(c) and 13.1(d), any payment on account of
principal, premium, if any, or interest (including Additional Interest Amounts,
if any) on the Securities shall be made by or on behalf of the Company and
received by the Trustee, by any Holder or by any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust):

(i) after the occurrence of an event specified in Section 13.1(a) or 13.1(b),
then, unless all Senior Debt is paid in full in cash, or provision shall be made
therefor,

(ii) after the happening of an event of default of the type specified in
Section 13.1(c) above, then, unless the amount of such Senior Debt then due
shall have been paid in full, or provision made therefor or such event of
default shall have been cured or waived, or

(iii) after the happening of an event of default of the type specified in
Section 13.1(d) above and delivery of a Payment Blockage Notice, then, unless
such event of default shall have been cured or waived or the 179-day period
specified in Section 13.1(d) shall have expired,

such payment (subject, in each case, to the provisions of Section 13.7 hereof)
shall be held in trust for the benefit of, and shall be immediately paid over
to, the holders of Designated Senior Debt (unless an event described in
Section 13.1(a), (b) or (c) has occurred, in which case the payment shall be
held in trust for the benefit of, and shall be immediately paid over to all
holders of Senior Debt) or their representative or representatives or the
trustee or trustees under any indenture under which any instruments evidencing
any of the Designated Senior Debt or Senior Debt, as the case may be, may have
been issued, as their interests may appear.

SECTION 13.2. Subrogation. Subject to the payment in full of all Senior Debt to
which the Indebtedness evidenced by the Securities is in the circumstances
subordinated as provided in Section 13.1 hereof, the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Debt to receive
payments or distributions of cash, property or securities of the Company
applicable to such Senior Debt until all amounts owing on the Securities shall
be paid in full, and, as between the Company, its creditors other than holders
of such Senior Debt, and the Holders of the Securities, no such payment or
distribution made to the holders of Senior Debt by virtue of this Article which
otherwise would have been made to the holders of the Securities shall be deemed
to be a payment by the Company on account of such Senior Debt; provided,
however, that the provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on the
one hand, and the holders of Senior Debt, on the other hand.

SECTION 13.3. Obligation of the Company Is Absolute and Unconditional. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall impair, as between the Company, its creditors other than
the holders of Senior Debt, and the Holders of the Securities, the obligation of
the Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of and premium, if any, and interest (including
Additional Interest Amounts, if any) on the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of Senior Debt, nor shall
anything contained herein or therein prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
of the holders of Senior Debt in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.

SECTION 13.4. Maturity of or Default on Senior Debt. Upon the maturity of any
Senior Debt by lapse of time, acceleration or otherwise, all principal of or
premium, if any, or interest on, rent or other payment obligations in respect of
all such matured Senior Debt shall first be paid in full, or such payment shall
have been duly provided for, before any payment on account of principal, or
premium, if any, or interest (including Additional Interest Amounts, if any) is
made upon the Securities.

SECTION 13.5. Payments on Securities Permitted. Except as expressly provided in
this Article, nothing contained in this Article shall affect the obligation of
the Company to make, or prevent the Company from making, payments of the
principal of, or premium, if any, or interest (including Additional Interest
Amounts, if any) on the Securities in accordance with the provisions hereof and
thereof, or shall prevent the Trustee or any Paying Agent from applying any
moneys deposited with it hereunder to the payment of the principal of, or
premium, if any, or interest (including Additional Interest Amounts, if any) on
the Securities.

SECTION 13.6. Effectuation of Subordination by Trustee. Each Holder of
Securities, by such Holder’s acceptance thereof, authorizes and directs the
Trustee on such Holder’s behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee such Holder’s attorney-in-fact for any and all such
purposes.

Upon any payment or distribution of assets of the Company referred to in this
Article, the Trustee and the Holders of the Securities shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other Person making any payment or distribution,
delivered to the Trustee or to the Holders of the Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, and as to other facts pertinent to the right of such Persons under
this Article, and if such evidence is not furnished, the Trustee may defer any
payment to such Persons pending judicial determination as to the right of such
Persons to receive such payment.

SECTION 13.7. Knowledge of Trustee. Notwithstanding the provision of this
Article or any other provisions of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any Senior Debt, of any default in
payment of principal of, premium, if any, or interest on, rent or other payment
obligation in respect of any Senior Debt, or of any facts which would prohibit
the making of any payment of moneys to or by the Trustee, or the taking of any
other action by the Trustee, unless a Responsible Officer of the Trustee having
responsibility for the administration of the trust established by this Indenture
shall have received written notice thereof from the Company, any Holder of
Securities, any Paying or Conversion Agent of the Company or the holder or
representative of any class of Senior Debt, and, prior to the receipt of any
such written notice, the Trustee shall be entitled in all respects to assume
that no such default or facts exist; provided, however, that unless on the third
Business Day prior to the date upon which by the terms hereof any such moneys
may become payable for any purpose the Trustee shall have received the notice
provided for in this Section 13.7, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such moneys and apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date.

SECTION 13.8. Trustee’s Relation to Senior Debt. The Trustee shall be entitled
to all the rights set forth in this Article with respect to any Senior Debt at
the time held by it, to the same extent as any other holder of Senior Debt and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.

Nothing contained in this Article shall apply to claims of or payments to the
Trustee under or pursuant to Section 5.8 hereof.

With respect to the holders of Senior Debt, the Trustee undertakes to perform or
to observe only such of its covenants and obligations as are specifically set
forth in this Article, and no implied covenants or obligations with respect to
the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and the Trustee shall not be liable to any holder of
Senior Debt if it shall pay over or deliver to Holders, the Company or any other
Person moneys or assets to which any holder of Senior Debt shall be entitled by
virtue of this Article or otherwise.

SECTION 13.9. Rights of Holders of Senior Debt Not Impaired. No right of any
present or future holder of any Senior Debt to enforce the subordination herein
shall at any time or in any way be prejudiced or impaired by any act or failure
to act on the part of the Company or by any noncompliance by the Company with
the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.

SECTION 13.10. Modification of Terms of Senior Debt. Any renewal or extension of
the time of payment of any Senior Debt or the exercise by the holders of Senior
Debt of any of their rights under any instrument creating or evidencing Senior
Debt, including without limitation the waiver of default thereunder, may be made
or done all without notice to or assent from the Holders of the Securities or
the Trustee.

No compromise, alteration, amendment, modification, extension, renewal or other
change of, or waiver, consent or other action in respect of, any liability or
obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior Debt is
outstanding or of such Senior Debt, whether or not such release is in accordance
with the provisions or any applicable document, shall in any way alter or affect
any of the provisions of this Article or of the Securities relating to the
subordination thereof.

SECTION 13.11. Certain Conversions Not Deemed Payment. For the purposes of this
Article 13 only:

(1) the issuance and delivery of junior securities upon conversion of Securities
in accordance with Article 12 hereof shall not be deemed to constitute a payment
or distribution on account of the principal of, premium, if any, or interest
(including Additional Interest Amounts, if any) on Securities or on account of
the purchase or other acquisition of Securities, and

(2) the payment, issuance or delivery of cash (except in satisfaction of
fractional shares pursuant to Section 12.3 hereof), property or securities
(other than junior securities) upon conversion of a Security shall be deemed to
constitute payment on account of the principal of, premium, if any, or interest
(including Additional Interest Amounts, if any) such Security.

For the purposes of this Section 13.11, the term “junior securities” means:

(b) shares of any common stock of the Company or

(c) other securities of the Company that are subordinated in right of payment to
all Senior Debt that may be outstanding at the time of issuance or delivery of
such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article.

Nothing contained in this Article 13 or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
(other than holders of Senior Debt) and the Holders of Securities, the right,
which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article 12 hereof.

ARTICLE 14

OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 14.1. Trust Indenture Act Controls. This Indenture is subject to the
provisions of the TIA which are required to be part of this Indenture, and
shall, to the extent applicable, be governed by such provisions.

SECTION 14.2. Notices. Any notice or communication to the Company or the Trustee
is duly given if in writing and delivered in person or mailed by first-class
mail to the address set forth below:

(a) if to the Company:

Cyberonics, Inc.

100 Cyberonics Boulevard

Houston, Texas 77058

Attention: David S. Wise, General Counsel

with a copy (which shall not constitute notice) to:

Vinson & Elkins LLP

First City Tower

1001 Fannin Street, Suite 2300

Houston, Texas 77002-6760

Attention: David Oelman, Esq.

(b) if to the Trustee:

Wells Fargo Bank, N.A.
505 Main Street, Suite 301
Fort Worth, TX 76102

Attention: [Corporate Trust Services /Cyberonics]

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

Any notice or communication to a Holder shall be mailed by first-class mail to
his address shown on the Register kept by the Registrar. Failure to mail a
notice or communication to a Holder or any defect in such notice or
communication shall not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed or sent in the manner provided above
within the time prescribed, it is duly given as of the date it is mailed,
whether or not the addressee receives it, except that notice to the Trustee
shall only be effective upon receipt thereof by the Trustee.

If the Company mails a notice or communication to Holders, it shall mail a copy
to the Trustee at the same time.

SECTION 14.3. Communication by Holders with Other Holders. Holders may
communicate pursuant to Section 312(b) of the TIA with other Holders with
respect to their rights under the Securities or this Indenture. The Company, the
Trustee, the Registrar and anyone else shall have the protection of Section
312(c) of the TIA.

SECTION 14.4. Acts of Holders of Securities.

(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by Holders of
Securities may be embodied in and evidenced by:

(1) one or more instruments of substantially similar tenor signed by such
Holders in person or by agent or proxy duly appointed in writing;

(2) the record of Holders of Securities voting in favor thereof, either in
person or by proxies duly appointed in writing, at any meeting of Holders of
Securities duly called and held in accordance with the provisions of Article 8;
or

(3) a combination of such instruments and any such record.

Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the “Act” of the Holders
of Securities signing such instrument or instruments and so voting at such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 5.1 hereof)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 8.6 hereof.

(b) The fact and date of the execution by any Person of any such instrument or
writing may be provided in any manner which the Trustee reasonably deems
sufficient.

(c) The principal amount and serial numbers of Securities held by any Person,
and the date of such Person holding the same, shall be proved by the Register.

(d) Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act of the Holders of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.

SECTION 14.5. Certificate and Opinion as to Conditions Precedent. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.

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

Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.

Upon any application or request by the Company to the Trustee to take any action
under any provision 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, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

SECTION 14.6. Statements Required in Certificate or Opinion. Each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Indenture shall include:

(1) a statement that each individual signing such certificate or opinion on
behalf of the Company has read such covenant or condition and the definitions
herein relating thereto;

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

(3) a statement that, in the opinion of each such individual, 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, in the opinion of each such individual, such
condition or covenant has been complied with.

SECTION 14.7. Effect of Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.

SECTION 14.8. Successors and Assigns. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.

SECTION 14.9. Separability Clause. In case any provision in this Indenture or
the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

SECTION 14.10. Benefits of Indenture. Nothing contained in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior Debt and
the Holders of Securities, any benefit or legal or equitable right, remedy or
claim under this Indenture.

SECTION 14.11. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

SECTION 14.12. Counterparts. This instrument may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
but all such counterparts shall together constitute but one and the same
instrument.

SECTION 14.13. Legal Holidays. In any case where any Interest Payment Date or
Stated Maturity of any Security or the last day on which a Holder of a Security
has a right to convert such Security shall not be a Business Day at any Place of
Payment or Place of Conversion, then (notwithstanding any other provision of
this Indenture or of the Securities) payment of interest or principal or
premium, if any, or conversion of the Securities, need not be made at such Place
of Payment or Place of Conversion on such day, but may be made on the next
succeeding Business Day at such Place of Payment or Place of Conversion with the
same force and effect as if made on the Interest Payment Date or at the Stated
Maturity or on such last day for conversion; provided, however, that in the case
that payment is made on such succeeding Business Day, no interest shall accrue
on the amount so payable for the period from and after such Interest Payment
Date or Stated Maturity, as the case may be.

SECTION 14.14. Recourse Against Others. No recourse for the payment of the
principal of or premium, if any, or interest on any Security, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of 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 the acceptance thereof and as
part of the consideration for the issue thereof, expressly waived and released.

4

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]SIGNATURES

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

                                     
CYBERONICS,
  INC., as Issuer  
 
 
 
 
 

                             
By: /s/ David S. Wise
 
 
 
 
 
 
 

Name: David S. Wise
 
 
 
 
 
 
 

Title: Vice President,
Secretary
  General Counsel &

 

 

 

 

 

 

 
                           
WELLS FARGO BANK
  , N.A., as Trustee  
 
 
 
 
 

 
                           
By: /s/ Melissa S. Scot
  t  
 
 
 
 
 

Name: Melissa S. Scott
 
 
 
 
 
 
 

Title: Vice President
 
 
 
 
 
 
 

5

EXHIBIT A

FORM OF SECURITY

[FORM OF FACE OF SECURITY]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (“DTC”) TO CYBERONICS, INC. (OR ITS SUCCESSOR) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, CONVERSION OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE NOTES AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
‘‘SECURITIES ACT’’), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE, THE SHARES
OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

BY ITS ACQUISITION HEREOF, THE HOLDER (1) AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH NOTE PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS
NOTE) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
, TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S
AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.[1]

     

1 This legend should be included only if the Security is issued in global form.

6

CYBERONICS, INC.
3.0% Senior Subordinated Convertible Note due 2012

CUSIP NO. 23251PAA0

$

No.

1. CYBERONICS, INC., a Delaware corporation (the “Company”, which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to, or its registered assigns, the
principal sum of U.S. Dollars [ ] ($[ ]) on September 27, 2012.

Interest Payment Dates: March 27 and September 27, commencing March 27, 2006.

Regular Record Dates: March 12 and September 12.

Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

[Signature Page to Follow]

7

IN WITNESS WHEREOF, the Company has caused this Security to be duly executed
manually or by facsimile by its duly authorized officers.

      Dated: September 27, 2005   CYBERONICS, INC.
By:
 

 
   
 
  Name:
 
   
 
  Title:
 
   
By:
 

 
   
 
  Name:
 
   
 
  Title:

Trustee’s Certificate of Authentication

This is one of the 3.0% Senior Subordinated Convertible Notes due 2012 described
in the within-named Indenture.

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 
 
By:
 
Name:
 
Title:

Dated: September 27, 2005

8

[REVERSE OF SECURITY]

CYBERONICS, INC.

3.0% Senior Subordinated Convertible Note due 2012

Capitalized terms used herein but not defined shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.

1. Principal and Interest. Cyberonics, Inc., a Delaware corporation (the
“Company”), promises to pay interest on the principal amount of this Security at
the Interest Rate from the date of issuance until repayment at Maturity or
repurchase. The Company shall pay interest on this Security semiannually in
arrears on March 27 and September 27 of each year (each an “Interest Payment
Date”), commencing March 27, 2006.

Interest on this Security shall be computed on the basis of a 360-day year of
twelve 30-day months and for any period shorter than a full semiannual period
for which interest is calculated, on the basis of a 30-day month and, for such
periods of less than a month, the actual number of days elapsed over a 30-day
month.

A Holder of any Security at the close of business on a Regular Record Date shall
be entitled to receive interest on such Security on the corresponding Interest
Payment Date. A Holder of any Security which is converted after the close of
business on a Regular Record Date and prior to the corresponding Interest
Payment Date (other than any Security whose Maturity is prior to such Interest
Payment Date) shall be entitled to receive interest on the principal amount of
such Security, notwithstanding the conversion of such Security prior to such
Interest Payment Date. However, any such Holder which surrenders any such
Security for conversion during the period between the close of business on such
Regular Record Date and ending with the opening of business on the corresponding
Interest Payment Date shall be required to pay the Company an amount equal to
the interest on the principal amount of such Security so converted (but
excluding any overdue interest on the principal amount of such Security so
converted that exists at the time such Holder surrenders such Security for
conversion), which is payable by the Company to such Holder on such Interest
Payment Date, at the time such Holder surrenders such Security for conversion.
Notwithstanding the foregoing, any such Holder which surrenders for conversion
any Security with respect to which the Company has specified a Repurchase Date
that is after such Regular Record Date and on or prior to the next succeeding
Interest Payment Date, in either case, shall be entitled to receive (and retain)
such interest and need not pay the Company an amount equal to the interest on
the principal amount of such Security so converted at the time such Holder
surrenders such Security for conversion.

2. Method of Payment. Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.

Principal of, and premium, if any, and interest on, Global Securities shall be
payable to the Depositary in immediately available funds.

Principal of and premium, if any, on Physical Securities shall be payable at the
office or agency of the Company maintained for such purpose, initially the
Corporate Trust Office of the Trustee. Interest on Physical Securities shall be
payable by (i) U.S. Dollar check drawn on a bank located in the city where the
Corporate Trust Office of the Trustee is located mailed to the address of the
Person entitled thereto as such address shall appear in the Register, or
(ii) upon application to the Registrar not later than the relevant Record Date
by a Holder of an aggregate principal amount of Securities in excess of
$5,000,000, wire transfer in immediately available funds.

3. Paying Agent and Registrar. Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change the Paying Agent or Registrar without notice
to any Holder.

4. Indenture. The Company issued this Security under an Indenture, dated as of
September 27, 2005 (the “Indenture”), between the Company and Wells Fargo Bank,
National Association, as trustee (the “Trustee”). The terms of this Security
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (“TIA”). This Security
is subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of all such terms. To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Security and
the terms of the Indenture, the terms of the Indenture shall control.

5. Repurchase Rights.

(a) Repurchase Right Upon a Fundamental Change. If a Fundamental Change occurs,
the Holder of Securities, at the Holder’s option, shall have the right, in
accordance with the provisions of the Indenture, to require the Company to
repurchase the Securities (or any portion of the principal amount hereof that is
at least $1,000 or an integral multiple thereof; provided, however, that the
portion of the principal amount of this Security to be Outstanding after such
repurchase is at least equal to $1,000) at a purchase price equal to 100% of the
principal amount of the Securities to be repurchased (the “Repurchase Price”),
plus interest accrued and unpaid to, but excluding, the Repurchase Date.

A Company Notice shall be given by the Company to the Holders as provided in the
Indenture. To exercise a Repurchase Right, a Holder must deliver to the Trustee
a written notice as provided in the Indenture.

(b) Payment of Repurchase Price. Subject to the fulfillment by the Company of
the conditions set forth in the Indenture, the Company may elect to pay the
Repurchase Price by delivering the number of shares of Common Stock equal to
(i) the Repurchase Price divided by (ii) 95% of the average of the daily
volume-weighted average price of the Common Stock for the twenty consecutive
Trading Days immediately preceding and including the third Business Day prior to
the Repurchase Date (if the third Business Day prior to the applicable
Repurchase Date is a Trading Day, or if not, then on the last Trading Day prior
to the third Business Day), appropriately adjusted to take into account the
occurrence, during the period commencing on the first Trading Day during the
twenty Trading-Day period and ending on the Repurchase Date of any event that
would result in an adjustment to the conversion rate set forth in the Indenture.
No fractional shares of Common Stock will be issued upon repurchase of any
Securities. Instead of any fractional share of Common Stock which would
otherwise be issued upon conversion of such Securities, the Company shall pay a
cash adjustment as provided in the Indenture.

6. Conversion Rights(c) . (a) Subject to and upon compliance with the provisions
of the Indenture, the Holder of Securities shall be entitled, at such Holder’s
option, at any time before the close of business on September 27, 2012, to
convert the Holder’s Securities (or any portion of the principal amount hereof
which is $1,000 or an integral multiple thereof), at the principal amount
thereof or of such portion thereof, into duly authorized, fully paid and
nonassessable shares of Common Stock of the Company at the Conversion Rate in
effect at the time of conversion.

(d) In the case of a Fundamental Change for which the Holder exercises its
Repurchase Right with respect to a Security (or a portion thereof), such
conversion right in respect of the Security (or portion thereof) shall expire at
the close of business on the Business Day preceding the Repurchase Date.

Subject to certain conditions provided for in the Indenture, in certain
circumstances, a Holder may receive an amount in cash or Common Stock, at the
option of the Company, equal to the Make-Whole Premium, in addition to the
shares of Common Stock issuable on conversion of such Security.

(e) The Conversion Rate shall be initially equal to 24.0964 shares of Common
Stock per $1,000 principal amount of Securities. The Conversion Rate shall be
adjusted under certain circumstances as provided in the Indenture.

(f) No fractional shares of Common Stock shall be issued upon conversion of any
Securities. Instead of any fractional share of Common Stock which would
otherwise be issued upon conversion of such Securities, the Company shall pay a
cash adjustment as provided in the Indenture.

(g) If a Fundamental Change Effective Date occurs prior to September 27, 2012,
other than in connection with a Fundamental Change described in clause (3) of
the definition of “Change of Control,” and a Holder converts Securities in
connection with such Fundamental Change, that Holder shall receive the
Make-Whole Premium payable pursuant to Section 12.13 of the Indenture consisting
of an increase in the Conversion Rate.

7. Subordination. The Indebtedness evidenced by this Security is, to the extent
and in the manner provided in the Indenture, subordinated and subject in right
of payment to the prior payment in full of all amounts then due on all Senior
Debt of the Company; provided, however, that the Securities, the Indebtedness
represented thereby and the payment of the principal of and premium, if any, and
interest on the Securities in all respects shall rank equally with, or prior to,
all existing and future Indebtedness of the Company that is expressly
subordinated to any Senior Debt, and this Security is issued subject to such
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Trustee on such Holder’s behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee such Holder’s attorney-in-fact for any and
all such purposes.

8. Denominations; Transfer; Exchange. The Securities are issuable in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000 in excess thereof. A Holder may register the transfer or exchange of
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture.

In the event of a redemption in part, the Company shall not be required (a) to
register the transfer of, or exchange, Securities for a period of 15 days
immediately preceding the date notice is given identifying the serial numbers of
the Securities called for such redemption, or (b) to register the transfer of,
or exchange, any such Securities, or portion thereof, called for redemption.

In the event of redemption, conversion or repurchase of the Securities in part
only, a new Security or Securities for the unredeemed, unconverted or
unrepurchased portion thereof shall be issued in the name of the Holder hereof.

9. Persons Deemed Owners. The registered Holder of this Security shall be
treated as its owner for all purposes.

10. Unclaimed Money. The Trustee and the Paying Agent shall pay to the Company
any money held by them for the payment of principal, premium, if any, or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Holders entitled to
the money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and the Paying Agent with respect to such money shall cease.

11. Discharge Prior to Redemption or Maturity. Subject to certain conditions
contained in the Indenture, the Company may discharge its obligations under the
Securities and the Indenture if (1) (a) all of the Outstanding Securities shall
become due and payable at their scheduled Maturity within one year or (b) all of
the Outstanding Securities are scheduled for redemption within one year, and
(2) the Company shall have deposited with the Trustee money and/or U.S.
Government Obligations sufficient to pay the principal of, and premium, if any,
and interest on, all of the Outstanding Securities on the date of Maturity or
redemption, as the case may be.

12. Amendment; Supplement; Waiver. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders of the
Securities under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in aggregate principal amount of the
Outstanding Securities (or such lesser amount as shall have acted at a meeting
pursuant to the provisions of the Indenture). The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security or such other Security.

No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and interest on
this Security at the times, places and rate, and in the coin or currency, herein
prescribed or to convert this Security (or pay cash in lieu of conversion) as
provided in the Indenture.

13. Defaults and Remedies. The Indenture provides that an Event of Default with
respect to the Securities occurs when any of the following occurs:

(h) the Company defaults in the payment of the principal of or premium, if any,
on any of the Securities when it becomes due and payable, at Maturity, upon
exercise of a Repurchase Right or otherwise, whether or not such payment is
prohibited by the subordination provisions of Article 13 of the Indenture; or

(i) the Company defaults in the payment of interest on any of the Securities
when it becomes due and payable and such default continues for a period of
30 days, whether or not such payment is prohibited by the subordination
provisions of Article 13 of the Indenture; or

(j) the Company fails to deliver shares of Common Stock, together with cash
instead of fractional shares, when those shares of Common Stock or cash instead
of fractional shares is required to be delivered following conversion of a
Security in accordance with the provisions of Article 12 of the Indenture; or

(k) the Company fails to perform or observe any other term, covenant or
agreement contained in the Securities or the Indenture and such default
continues for a period of 60 days after written notice of such failure is given
as specified in the Indenture; or

(l) (i) the Company fails to make any payment by the end of the applicable grace
period, if any, after the maturity of any Indebtedness for borrowed money in an
amount in excess of $25,000,000, or (ii) there is an acceleration of any
Indebtedness for borrowed money in an amount in excess of $25,000,000 because of
a default with respect to such Indebtedness without such Indebtedness having
been discharged or such acceleration having been cured, waived, rescinded or
annulled, in the case of either clause (i) or (ii) above, for a period of
30 days after written notice is given to the Company as specified in the
Indenture; or

(m) the failure to provide the Company Notice in accordance with the terms of
Section 11.3(a) of the Indenture; or

(n) there are certain events of bankruptcy, insolvency or reorganization of the
Company.

If an Event of Default shall occur and be continuing, the principal of all the
Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.

14. Authentication. This Security shall not be valid until the Trustee (or
authenticating agent) executes the certificate of authentication on the other
side of this Security.

15. Abbreviations. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).

16. Additional Rights of Holders of Transfer Restricted Securities. In addition
to the rights provided to Holders under the Indenture, Holders of Transfer
Restricted Securities shall have all the rights set forth in the Registration
Rights Agreement.

17. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on this Security and the Trustee may use CUSIP numbers in notices
of redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on this Security or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

18. Governing Law. The Indenture and this Security shall be governed by, and
construed in accordance with, the law of the State of New York.

19. Successor Corporation. In the event a successor corporation assumes all the
obligations of the Company under this Security, pursuant to the terms hereof and
of the Indenture, the Company shall be released from all such obligations.

9

ASSIGNMENT FORM

To assign this Security, fill in the form below and have your signature
guaranteed: (I) or (we) assign and transfer this Security to:

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint to transfer this Security on the books of the Company.
The agent may substitute another to act for him.

     
Dated:
 

 
   
 
  Your Name:
 
   
 
  (Print your name exactly as it
appears on the face of this
Security)
 
   
 
  Your Signature:
 
   
Signature
Guarantee*:
  (Sign exactly as your name
appears on the face of this
Security)
 
   
By:
 

• Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

10

CONVERSION NOTICE

      TO: CYBERONICS, INC.

100 Cyberonics Boulevard

Houston, Texas 77058

Attention: [ ]

The undersigned registered owner of this Security hereby irrevocably exercises
the option to convert this Security, or the portion hereof (which is $1,000
principal amount or an integral multiple thereof) below designated, into shares
of Common Stock in accordance with the terms of the Indenture referred to in
this Security, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Security not converted is to
be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required to
be paid to the undersigned on account of interest accompanies this Security.

         
Dated:
  Your Name:  

 
       
 
      (Print your
name exactly
as it appears
on the face of
this Security)
 
       
 
       
 
       
 
  Your
Signature:  

 
       
 
      (Sign exactly
as your name
appears on the
face of this
Security)
 
       
 
       
 
       
 
  Signature
Guarantee*:  

 
       
 
  Social Security   or other
Taxpayer
 
       
 
       
 
       
 
  Identification
Number:  

Principal amount to be converted (if less than all): $

*Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

Fill in for registration of shares (if to be issued) and Securities (if to be
delivered) other than to and in the name of the registered holder:

(Name)

(Street Address)

(City, State and Zip Code)

11

NOTICE OF EXERCISE OF REPURCHASE RIGHT

      TO: CYBERONICS, INC.

100 Cyberonics Boulevard

Houston, Texas 77058

Attention: [ ]

The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Cyberonics, Inc. (the “Company”) as to the
occurrence of a Fundamental Change with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Security, or
the portion thereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Security, together with interest accrued and unpaid to, but
excluding, such date, to the registered holder hereof, in cash.

         
Dated:
  Your Name:  

 
       
 
      (Print
your
name
exactly
as it
appears
on the
face of
this
Security)
 
       
 
       
 
       
 
  Your
Signature:  

 
       
 
      (Sign
exactly
as your
name
appears
on the
face of
this
Security)
 
       
 
       
 
       
 
  Signature
Guarantee*:  

 
       
 
  Social Security   or other
Taxpayer
 
       
 
       
 
       
 
  Identification
Number:  

Principal amount to be repaid (if less than all): $

*Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

12

SCHEDULE OF EXCHANGES FOR PHYSICAL SECURITIES2

The following exchanges of a part of this Global Security for Physical
Securities have been made:

                 
Date of Exchange
  Amount of decrease
in Principal Amount
of this Global
Security   Amount of increase
in Principal Amount
of this Global
Security   Principal Amount of
this Global
Security following
such decrease (or
increase)   Signature of
authorized officer
of Trustee

2 This schedule should be included only if the Security is issued in global
form.

13