<PAGE>
                                                                   Exhibit 4(a)






                                EDO CORPORATION,

                                    AS ISSUER

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

                                 HSBC BANK USA,

                                   AS TRUSTEE

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

                                  $137,800,000

                  5.25% CONVERTIBLE SUBORDINATED NOTES DUE 2007

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

                                    INDENTURE

                            DATED AS OF APRIL 2, 2002

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
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                                                                                                                     PAGE
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<S>                                                                                                                  <C>
ARTICLE 1

         DEFINITIONS.............................................................................................      1

         SECTION 1.1           Definitions.......................................................................      1
         SECTION 1.2           Other Definitions.................................................................      8
         SECTION 1.3           Incorporation by Reference of Trust Indenture Act.................................      8
         SECTION 1.4           Rules of Construction.............................................................      9

ARTICLE 2

         THE NOTES...............................................................................................      9

         SECTION 2.1           Form and Dating...................................................................      9
         SECTION 2.2           Execution and Authentication......................................................     10
         SECTION 2.3           Registrar, Paying Agent and Conversion Agent......................................     11
         SECTION 2.4           Paying Agent To Hold Money in Trust...............................................     11
         SECTION 2.5           Holder Lists......................................................................     12
         SECTION 2.6           Transfer and Exchange.............................................................     12
         SECTION 2.7           Replacement Notes.................................................................     14
         SECTION 2.8           Outstanding Notes.................................................................     14
         SECTION 2.9           When Notes Owned by the Company or an Affiliate are Disregarded...................     15
         SECTION 2.10          Temporary Notes...................................................................     15
         SECTION 2.11          Cancellation......................................................................     16
         SECTION 2.12          Defaulted Interest................................................................     16
         SECTION 2.13          CUSIP Number......................................................................     16
         SECTION 2.14          Regulation S......................................................................     16

ARTICLE 3

         REDEMPTION..............................................................................................     17

         SECTION 3.1           Optional Redemption...............................................................     17
         SECTION 3.2           Notices to Trustee................................................................     17
         SECTION 3.3           Selection of Notes To Be Redeemed.................................................     17
         SECTION 3.4           Notice of Redemption..............................................................     18
         SECTION 3.5           Effect of Notice of Redemption....................................................     19
         SECTION 3.6           Deposit of Redemption Price.......................................................     19
         SECTION 3.7           Notes Redeemed in Part............................................................     19
</TABLE>


                                       i
<PAGE>


<TABLE>
<S>                                                                                                                   <C>
         SECTION 3.8           Conversion Arrangement on Call for Redemption.....................................     19

ARTICLE 4

         COVENANTS...............................................................................................     20

         SECTION 4.1           Payment of Notes..................................................................     20
         SECTION 4.2           Rule 144A Information; Periodic Reports to the Trustee............................     20
         SECTION 4.3           Compliance Certificate............................................................     21
         SECTION 4.4           Maintenance of Office or Agency...................................................     21
         SECTION 4.5           Continued Existence...............................................................     21
         SECTION 4.6           Repurchase Upon Fundamental Change................................................     22
         SECTION 4.7           Appointments to Fill Vacancies in Trustee's Office................................     24
         SECTION 4.8           Stay, Extension and Usury Laws....................................................     24
         SECTION 4.9           Taxes.............................................................................     25
         SECTION 4.10          Investment Company Act............................................................     25

ARTICLE 5

         SUCCESSORS..............................................................................................     25

         SECTION 5.1           When the Company May Merge, Etc...................................................     25
         SECTION 5.2           Successor Corporation Substituted.................................................     26
         SECTION 5.3           Purchase Option on Fundamental Change.............................................     26

ARTICLE 6

         DEFAULTS AND REMEDIES...................................................................................     26

         SECTION 6.1           Events of Default.................................................................     26
         SECTION 6.2           Acceleration......................................................................     28
         SECTION 6.3           Other Remedies....................................................................     29
         SECTION 6.4           Waiver of Past Defaults...........................................................     29
         SECTION 6.5           Control by Majority...............................................................     29
         SECTION 6.6           Limitation on Suits...............................................................     30
         SECTION 6.7           Rights of Holders To Receive Payment..............................................     30
         SECTION 6.8           Collection Suit by Trustee........................................................     30
         SECTION 6.9           Trustee May File Proofs of Claim..................................................     31
         SECTION 6.10          Priorities........................................................................     31
         SECTION 6.11          Undertaking for Costs.............................................................     32

ARTICLE 7

         THE TRUSTEE.............................................................................................     32

         SECTION 7.1           Duties of the Trustee.............................................................     32
         SECTION 7.2           Rights of the Trustee.............................................................     33
</TABLE>


                                       ii
<PAGE>

<TABLE>
<S>                                                                                                                   <C>
         SECTION 7.3           Individual Rights of the Trustee..................................................     34
         SECTION 7.4           Trustee's Disclaimer..............................................................     35
         SECTION 7.5           Notice of Defaults................................................................     35
         SECTION 7.6           Reports by the Trustee to Holders.................................................     35
         SECTION 7.7           Compensation and Indemnity........................................................     35
         SECTION 7.8           Replacement of the Trustee........................................................     36
         SECTION 7.9           Successor Trustee by Merger, etc..................................................     37
         SECTION 7.10          Eligibility, Disqualification.....................................................     37
         SECTION 7.11          Preferential Collection of Claims Against Company.................................     37

ARTICLE 8

         SATISFACTION AND DISCHARGE OF INDENTURE.................................................................     38

         SECTION 8.1           Discharge of Indenture............................................................     38
         SECTION 8.2           Deposited Monies to be Held in Trust by Trustee...................................     38
         SECTION 8.3           Paying Agent to Repay Monies Held.................................................     38
         SECTION 8.4           Return of Unclaimed Monies........................................................     39
         SECTION 8.5           Reinstatement.....................................................................     39

ARTICLE 9

         AMENDMENTS..............................................................................................     39

         SECTION 9.1           Without the Consent of Holders....................................................     39
         SECTION 9.2           With the Consent of Holders.......................................................     40
         SECTION 9.3           Compliance with the Trust Indenture Act...........................................     41
         SECTION 9.4           Revocation and Effect of Consents.................................................     41
         SECTION 9.5           Notation on or Exchange of Notes..................................................     42
         SECTION 9.6           Trustee Protected.................................................................     42

ARTICLE 10

         GENERAL PROVISIONS......................................................................................     42

         SECTION 10.1          Trust Indenture Act Controls......................................................     42
         SECTION 10.2          Notices...........................................................................     42
         SECTION 10.3          Communication by Holders With Other Holders.......................................     43
         SECTION 10.4          Certificate and Opinion as to Conditions Precedent................................     43
         SECTION 10.5          Statements Required in Certificate or Opinion.....................................     43
         SECTION 10.6          Rules by Trustee and Agents.......................................................     44
         SECTION 10.7          Legal Holidays....................................................................     44
         SECTION 10.8          No Recourse Against Others........................................................     45
         SECTION 10.9          Counterparts......................................................................     45
         SECTION 10.10         Other Provisions..................................................................     45
         SECTION 10.11         Governing Law.....................................................................     46
         SECTION 10.12         No Adverse Interpretation of Other Agreements.....................................     46
</TABLE>


                                      iii
<PAGE>

<TABLE>
<S>                                                                                                                   <C>
         SECTION 10.13         Successors........................................................................     46
         SECTION 10.14         Severability......................................................................     46
         SECTION 10.15         Table of Contents, Headings, etc..................................................     46

ARTICLE 11

         SUBORDINATION...........................................................................................     46

         SECTION 11.1          Agreement to Subordinate..........................................................     46
         SECTION 11.2          Liquidation; Dissolution; Bankruptcy..............................................     46
         SECTION 11.3          Default on Senior Debt and/or Designated Senior Debt..............................     47
         SECTION 11.4          Acceleration of Notes.............................................................     48
         SECTION 11.5          When Distribution Must Be Paid Over...............................................     48
         SECTION 11.6          Notice by Company.................................................................     48
         SECTION 11.7          Subrogation.......................................................................     49
         SECTION 11.8          Relative Rights...................................................................     49
         SECTION 11.9          Subordination May Not Be Impaired by Company......................................     49
         SECTION 11.10         Distribution or Notice to Representative..........................................     49
         SECTION 11.11         Rights of Trustee and Paying Agent................................................     50
         SECTION 11.12         Authorization to Effect Subordination.............................................     50
         SECTION 11.13         Article Applicable to Paying Agents...............................................     50
         SECTION 11.14         Senior Debt Entitled to Rely......................................................     50
         SECTION 11.15         Permitted Payments................................................................     51

ARTICLE 12

         CONVERSION OF NOTES.....................................................................................     51

         SECTION 12.1          Right to Convert..................................................................     51
         SECTION 12.2          Exercise of Conversion Privilege; Issuance of Common Shares on
                               Conversion; No Adjustment for Interest or Dividends...............................     52
         SECTION 12.3          Cash Payments in Lieu of Fractional Shares........................................     53
         SECTION 12.4          Conversion Price..................................................................     54
         SECTION 12.5          Adjustment of Conversion Price....................................................     54
         SECTION 12.6          Effect of Reclassification, Consolidation, Merger or Sale.........................     61
         SECTION 12.7          Taxes on Shares Issued............................................................     62
         SECTION 12.8          Reservation of Shares; Shares to Be Fully Paid; Listing of Common Shares..........     63
         SECTION 12.9          Responsibility of Trustee.........................................................     63
         SECTION 12.10         Notice to Holders Prior to Certain Actions........................................     64
         SECTION 12.11         Restriction on Common Shares Issuable Upon Conversion.............................     65
</TABLE>


                                       iv
<PAGE>

                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
TRUST INDENTURE                                                                                      INDENTURE
   ACT SECTION                                                                                        SECTION
   -----------                                                                                        -------
<S>                                                                                           <C>
310(a)(1)...............................................................................                 7.10
        (a)(2)..........................................................................                 7.11
        (a)(3)..........................................................................                  n/a
        (a)(4)..........................................................................                  n/a
        (a)(5)..........................................................................                  n/a
        (b).............................................................................      7.8, 7.10, 10.2
        (c).............................................................................                  n/a

311(a)..................................................................................                 7.11
        (b).............................................................................                 7.11
        (c).............................................................................                  n/a
312(a)..................................................................................                  2.5
        (b).............................................................................                 10.3
        (c).............................................................................                 10.3

313(a)..................................................................................                  7.6
        (b)(1)..........................................................................                  n/a
        (b)(2)..........................................................................                  7.6
        (c).............................................................................            7.6, 10.2
        (d).............................................................................                  7.6

314(a)..................................................................................            4.2, 10.2
        (b).............................................................................                  n/a
        (c)(1)..........................................................................                 10.4
        (c)(2)..........................................................................                 10.4
        (c)(3)..........................................................................                  n/a
        (d).............................................................................                  n/a
        (e).............................................................................                 10.5
        (f).............................................................................                  n/a

315(a)..................................................................................               7.1(b)
        (b).............................................................................            7.5, 10.2
        (c).............................................................................               7.1(a)
        (d).............................................................................               7.1(c)
        (e).............................................................................                 6.11

316(a)(last sentence)...................................................................                  2.9
        (a)(1)(A).......................................................................                  6.5
        (a)(1)(B).......................................................................                  6.4
        (a)(2)..........................................................................                  n/a
        (b).............................................................................                  6.2
        (c).............................................................................                  9.4

317(a)(1)...............................................................................                  6.8
        (a)(2)..........................................................................                  6.9
        (b).............................................................................                  2.4

318(a)..................................................................................                 10.1
        (b).............................................................................                  n/a
        (c).............................................................................                 10.1
</TABLE>


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

"n/a" means not applicable.

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

<PAGE>

         THIS INDENTURE, dated as of April 2, 2002, is by and among EDO
Corporation, a New York corporation (the "Company"), and HSBC Bank USA, a New
York banking corporation, as trustee (the "Trustee"). The Company has duly
authorized the creation of its 5.25% Convertible Subordinated Notes due 2007
(the "Notes"), and to provide therefor the Company and the Trustee have duly
authorized the execution and delivery of this Indenture. Each party agrees as
follows for the benefit of the other party and for the equal and ratable benefit
of the holders from time to time of the Notes:

                                   ARTICLE 1

                                   DEFINITIONS

SECTION 1.1       Definitions.

         "Affiliate" means, when used with reference to any person, any other
person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of management or policies of the referent person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. The terms "controlling" and "controlled" have meanings
correlative of the foregoing.

         "Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.

         "Agent Member" means any member of, or participant in, the Depositary.

         "Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Global Security to the extent
applicable to such transaction and as in effect from time to time.

         "Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of the Board of Directors.

         "Capital Stock" of any person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.

         "Change of Control" means the occurrence of one or more of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares
representing more than 50% of the combined voting power of the then outstanding
Voting Stock of the Company, (b) the Company consolidates with or merges into
any other corporation, any other corporation consolidates with or merges into
the Company, or the Company effects a share exchange, and, in the case of any
such transaction, the outstanding Common Shares of the Company are reclassified
into, exchanged for or converted into the right to receive any other property or
security, unless the shareholders of the Company immediately before such
transaction own, directly or indirectly immediately following such transaction,
at least a majority of the combined voting power of the then outstanding Voting
Stock of the


                                       1
<PAGE>
 corporation resulting from such transaction in substantially the same
proportion as their ownership of the Voting Stock of the Company immediately
before such transaction, or (c) the Company or the Company and its subsidiaries,
taken as a whole, sells, conveys, transfers or leases its properties and assets
substantially as an entirety to any person (other than to one or more
wholly-owned subsidiaries of the Company); provided, that a Change of Control
under (a), (b) and (c) above shall not be deemed to have occurred if either (x)
at least 95% of the aggregate fair market value (as determined by the Company's
Board of Directors) of the property and securities received by holders of the
Common Shares (excluding cash payments for fractional shares) in the transaction
or transactions constituting the Change of Control consists of shares of voting
common stock of the surviving person (or its parent) that are, or upon issuance
will be, traded on a United States national securities exchange or approved for
trading on an established automated over-the-counter trading market in the
United States, and the Notes become convertible into such consideration, or (y)
the Daily Market Price per Common Share for any five trading days within the
period of 10 consecutive trading days ending immediately after the later of the
Change of Control or the public announcement of the Change of Control (in the
case of a Change of Control under clause (a) above) or the period of 10
consecutive trading days ending immediately before the Change of Control (in the
case of a Change of Control under clause (b) or (c) above) shall equal or exceed
105% of the Conversion Price in effect on the date of such Change of Control or
the public announcement of such Change of Control, as applicable.

         "Commission" means the Securities and Exchange Commission.

         "Common Shares" means any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 12.6, however, shares issuable on conversion of Notes shall include
only shares of the class designated as Common Shares 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 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 party named as such above until a successor
replaces it in accordance with Article 5 and thereafter means the successor.
References to the Company shall not include any subsidiary.

         "Conversion Price" shall have the meaning set forth in Section 12.4
hereof.

         "Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time the trust created by this Indenture
shall principally be administered; as of the date hereof, the Corporate Trust
Office is located at 452 Fifth Avenue, New York, New York 10018.


                                       2
<PAGE>

         "Credit Facility" means the Credit Agreement dated as of August 24,
2000 by and among the Company, AIL Systems, Inc., jointly and severally, the
lenders which, from time to time, are parties thereto, Citibank, N.A., as
Administrative Agent for the Lenders and Mellon Bank, N.A., as Documentation
Agent, as amended, with all the loan documents and instruments thereunder
(including without limitation, any guarantee or pledge agreements and security
documents), in each case as such agreements may be amended, restated,
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including, without limitation, increasing the amount of available borrowings
thereunder, and all obligations with respect thereto, in adding subsidiaries of
the Company as guarantors thereunder and in receiving or releasing collateral
therefor), all or any portion of the Indebtedness under any such agreement or
any successor or replacement agreement and whether by the same or any other
lender or group of lenders.

         "Daily Market Price" means the price of a Common Share on the relevant
date, determined on the basis of the last reported sale price regular way of the
Common Shares as quoted on the New York Stock Exchange, or if the Common Shares
are not then quoted on the New York Stock Exchange, as reported on the principal
national securities exchange upon which the Common Shares are listed.

         "Default" means any event that is, or after notice or passage of time,
or both, would be, an Event of Default.

         "Depositary" means, with respect to any Global Securities, a clearing
agency that is registered as such under the Exchange Act and is designated by
the Company to act as Depositary for such Global Securities (or any successor
securities clearing agency so registered), which shall initially be DTC.

         "Designated Senior Debt" means the Credit Facility, and any obligations
of the Company under any particular Senior Debt in respect of which the
instrument creating or evidencing the same or the assumption or guarantee
thereof, or related agreements or documents to which the Company is a party,
expressly provides that such indebtedness shall be Designated Senior Debt for
purposes of the Indenture. The instrument, agreement or other document
evidencing any Designated Senior Debt may place limitations and conditions on
the right of such Senior Debt to exercise the rights of Designated Senior Debt.
The Company shall not, as long as any Indebtedness remains outstanding under the
Credit Facility, create any other Indebtedness which provides that it is
Designated Senior Debt without the prior written consent of the Designated
Senior Lender.

         "Designated Senior Lender" means Citibank, N.A. as administrative agent
under the Credit Facility and any successor administrative agent under the
Credit Facility.

         "DTC" means The Depository Trust Company, a New York corporation.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "Fundamental Change" means the occurrence of a Change of Control or a
Termination of Trading.


                                       3
<PAGE>

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.

         "Global Security" means a Note that is registered in the Register.

         "Global Securities Legend" means the legend labeled as such and that is
set forth in Exhibit A hereto.

         "Indebtedness" means, with respect to any person, all obligations,
whether or not contingent, of such person (i) (a) for borrowed money (including,
but not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of the Company that is (1) given to secure all or part
of the purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time of
acquisition thereof), (b) evidenced by a note, debenture, bond or other written
instrument, (c) under a lease required to be capitalized on the balance sheet of
the lessee under GAAP or under any lease or related document (including a
purchase agreement) that provides that the Company is contractually obligated to
purchase or cause a third party to purchase and thereby guarantee a minimum
residual value of the lease property to the lessor and the obligations of the
Company under such lease or related document to purchase or to cause a third
party to purchase such leased property, (d) in respect of letters of credit,
bank guarantees or bankers' acceptances (including reimbursement obligations
with respect to any of the foregoing), (e) with respect to Indebtedness secured
by a mortgage, pledge, lien, encumbrance, charge or adverse claim affecting
title or resulting in an encumbrance to which the property or assets of such
person are subject, whether or not the obligation secured thereby shall have
been assumed by or shall otherwise be such person's legal liability, (f) in
respect of the balance of deferred and unpaid purchase price of any property or
assets, (g) under interest rate or currency swap agreements, cap, floor and
collar agreements, spot and forward contracts and similar agreements and
arrangements; (ii) with respect to any obligation of others of the type
described in the preceding clause (i) or under clause (iii) below assumed by or
guaranteed in any manner by such person through an agreement to purchase
(including, without limitation, "take or pay" and similar arrangements),
contingent or otherwise (and the obligations of such person under any such
assumptions, guarantees or other such arrangements); and (iii) any and all
deferrals, renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any of the foregoing.

         "Indenture" means this Indenture as amended or supplemented from time
to time.

         "Initial Purchasers" means Salomon Smith Barney Inc., SG Cowen
Securities Corporation, and Robertson Stephens, Inc.

         "Interest Payment Date" means April 15 and October 15 of each year.

         "Issue Date" means the date on which Notes are first issued and
authenticated under this Indenture.


                                       4
<PAGE>

         "Liquidated Damages" has the meaning specified in Paragraph 15 of the
form of Note which is attached as Exhibit A hereto.

         "Material Subsidiary" means any subsidiary of the Company which at the
date of determination is a "significant subsidiary" as defined in Rule 1-02(w)
of Regulation S-X under the Securities Act and the Exchange Act.

         "Maturity Date" means April 15, 2007.

         "Notes" means the 5.25% Convertible Subordinated Notes due 2007 issued,
authenticated and delivered under this Indenture.

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

         "Offering Memorandum" means the offering memorandum dated March 27,
2002, relating to the Notes, including all amendments thereto.

         "Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Financial Officer, the Chief Accounting Officer, any
Executive Vice President, Senior Vice President or Vice President (whether or
not designated by a number or numbers or word or words before or after the title
"Vice President"), the Treasurer, the Secretary and any Assistant Treasurer or
any Assistant Secretary of the Company, as the case may be.

         "Officers' Certificate" means a certificate signed by any two of the
following Officers of the Company: the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, a Vice President,
the Treasurer, the Controller or the Secretary, and delivered to the Trustee.
One of the officers giving an Officers' Certificate given pursuant to Section
4.3 shall be the principal executive, financial or accounting officer of the
Company.

         "Opinion of Counsel" means a written opinion from legal counsel, who
may be an employee of or counsel to the Company or the Trustee except to the
extent otherwise indicated in this Indenture, and shall be reasonably acceptable
to the Trustee.

         A "person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization, limited liability company
or government or any agency or political subdivision thereof.

         "Redemption Date" when used with respect to any of the Notes to be
redeemed, means the date fixed by the Company for such redemption pursuant to
Article 3 of this Indenture and the Notes.

         "Redemption Price" when used with respect to any of the Notes to be
redeemed, means the price fixed for such redemption pursuant to Article 3 of
this Indenture and the Notes.

         "Registration Agreement" means the Registration Rights Agreement
relating to the Notes and Common Shares issuable upon conversion of such Notes
dated as of April 2, 2002, by and


                                       5
<PAGE>

among the Company and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.

         "Regular Record Date" means the April 1 or October 1 immediately
preceding each Interest Payment Date.

         "Representative" means (a) with respect to the Credit Facility, the
Designated Senior Lender, (b) the indenture trustee or other trustee, agent or
representative for any Senior Debt or (c) with respect to any Senior Debt that
does not have any such trustee, agent or other representative, (i) in the case
of such Senior Debt issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Debt, any holder or
owner of such Senior Debt acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Debt and (ii) in the
case of all other such Senior Debt, the holder or owner of such Senior Debt.

         "Restricted Common Share Legend" means the legend labeled as such and
that is set forth in Exhibit B hereto.

         "Restricted Securities Legend" means the legend labeled as such and
that is set forth in Exhibit A hereto.

         "Sale Price" of the Common Shares on any date means the closing sale
price per share (or, if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and average ask prices) on such date as reported in the composite
transactions for the principal United States securities exchange on which the
Common Shares are traded or, if the Common Shares are not listed on a United
States national or regional securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System, appropriately
adjusted to take into account the occurrence after the applicable Conversion
Date of an event that would result in an adjustment of the Conversion Price.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "Senior Debt" means the principal of, premium, if any, and interest on,
rent under, and any other amounts payable on or in respect of any Indebtedness
of the Company (including, without limitation, any Obligations in respect of
such Indebtedness and any interest accruing after the filing of a petition by or
against the Company under any bankruptcy law, whether or not allowed as a claim
after such filing in any proceeding under such bankruptcy law), 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, refinancings or refundings of, or amendments,
modifications or supplements to the foregoing); provided, however, that Senior
Debt does not include (a) Indebtedness evidenced by the Notes, (b) any liability
for federal, state, local or other taxes owed or owing by the Company, (c)
Indebtedness of the Company to any subsidiary of the Company except to the
extent such Indebtedness is of a type described in clause (ii) of the definition
of Indebtedness, (d) trade payables of the Company for goods, services or
materials purchased in the ordinary course of business (other than, to the


                                       6
<PAGE>

extent they may otherwise constitute trade payables, any obligations of the type
described in clause (ii) of the definition of Indebtedness) and (e) any
particular Indebtedness in which the instrument creating or evidencing the same
expressly provides that such Indebtedness shall not be senior in right of
payment to, or is pari passu with, or is subordinated or junior to, the Notes.

         "Shelf Registration Statement" shall have the meaning set forth in the
Registration Agreement.

         A "subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a subsidiary of such person or (b)
the only general partners of which are such person or of one or more
subsidiaries of such person (or any combination thereof).

         "Termination of Trading" will be deemed to have occurred if the Common
Shares (or other common shares into which the Notes are then convertible) are
neither listed for trading on the New York Stock Exchange nor approved for
trading on the Nasdaq National Market.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa- 77bbbb) as in effect on the date of execution of this Indenture, except
as provided in Sections 9.3 and 12.6.

         "Trading Day" shall mean a day during which trading in the Common
Shares generally occurs on the New York Stock Exchange or, if the Common Shares
are not listed on the New York Stock Exchange, on the principal other national
or regional securities exchange on which the Common Shares are then listed or,
if the Common Shares are not listed on a national or regional securities
exchange, on the National Association of Notes Dealers Automated Quotation
System or, if the Common Shares are not quoted on the National Association of
Securities Dealers Automated Quotation System, on the principal other market on
which the Common Shares are then traded.

         "Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.

         "Trust Officer" means an officer in the Corporate Trust Office of the
Trustee and having direct responsibility for the administration of this
Indenture.

         "U.S. Government Obligations" means direct obligation of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged. In order to have money available on a
payment date to pay principal, premium, if any, or interest on the Notes, the
U.S. Government Obligations shall be payable as to principal or interest on or
before such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's option.

         "Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.


                                       7
<PAGE>

SECTION 1.2       Other Definitions.

<TABLE>
<CAPTION>
                                                                                    Defined in Section
                                                                                    ------------------
<S>                                                                                 <C>
                  "Bankruptcy Law"                                                            6.1
                  "business day"                                                             10.7
                  "closing price"                                                            12.5
                  "Conversion Agent"                                                          2.3
                  "Conversion Date                                                           12.2
                  "Current Market Price"                                                     12.5
                  "Custodian"                                                                 6.1
                  "Fundamental Change Date"                                                   4.6
                  "Fundamental Change Offer"                                                  4.6
                  "Fundamental Change Payment"                                                4.6
                  "Fundamental Change Payment Date"                                           4.6
                  "Event of Default"                                                          6.1
                  "Expiration Time"                                                          12.5
                  "fair market value"                                                        12.5
                  "Legal Holiday"                                                            10.7
                  "non-electing share"                                                       12.5
                  "Paying Agent"                                                              2.3
                  "Purchased Shares"                                                         12.5
                  "Record Date"                                                              12.5
                  "Registrar"                                                                 2.3
                  "Register"                                                                  2.3
                  "Securities"                                                               12.5
                  "Trigger Event"                                                            12.5
</TABLE>

SECTION 1.3       Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

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

                  "Commission" means the Commission;

                  "indenture securities" means the Notes;

                  "indenture security holder" means a holder of a Note;

                  "indenture to be qualified" means this Indenture;

                  "indenture trustee" or "institutional trustee" means the
                  Trustee; and

                  "obligor" on the Notes means the Company or any other obligor
                  on the Notes.


                                       8
<PAGE>

         All other terms in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.

SECTION 1.4       Rules of Construction.

         Unless the context otherwise requires:

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

                  (2)      an accounting term not otherwise defined has the
                           meaning assigned to it in accordance with GAAP;

                  (3)      "or" is not exclusive;

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

                  (5)      the male, female and neuter genders include one
                           another.

                                   ARTICLE 2

                                    THE NOTES

SECTION 2.1       Form and Dating.

         (a) Global Securities. The Notes are being offered and sold by the
Company pursuant to a Purchase Agreement relating to the Notes, dated March 27,
2002, among the Company and the Initial Purchasers (the "Purchase Agreement").

         The Notes are being offered and sold (i) in reliance on Regulation S
under the Securities Act ("Regulation S") or (ii) to "qualified institutional
buyers" as defined in Rule 144A ("QIBs") in reliance on Rule 144A under the
Securities Act ("Rule 144A"), each as provided in the Purchase Agreement, and
shall be issued in the form of one or more permanent global securities in
definitive, fully registered form without interest coupons with the Global
Securities Legend and Restricted Securities Legend set forth in Exhibit A hereto
(each, a "Global Security"). Any Global Security shall be deposited on behalf of
the purchasers of the Notes represented thereby with the Trustee, as custodian
for the Depositary, and registered in the name of the Depositary or a nominee of
the Depositary for the accounts of participants in the Depositary (and, in the
case of Notes held in accordance with Regulation S, registered with the
Depositary for the accounts of designated agents holding on behalf of the
Euroclear System ("Euroclear") or Clearstream Banking, societe anonyme
("Clearstream")), duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of a Global Security may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depositary or its nominee as hereinafter provided.

         (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.


                                       9
<PAGE>

         The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and the written order of the Company, authenticate and
deliver initially one or more Global Securities that (i) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary pursuant to
a FAST Balance Certificate Agreement between the Depositary and the Trustee.

         Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary 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 herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.

         The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations and Instructions to Participants" of Clearstream shall be applicable
to interests in any Global Securities that are held by participants through
Euroclear or Clearstream. The Trustee shall have no obligation to notify holders
of any such procedures or to monitor or enforce compliance with the same.

(c) Definitive Securities. Except as provided in Section 2.10, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Notes in definitive form. If applicable,
certificated Notes in definitive form will bear the Restricted Securities Legend
set forth on Exhibit A unless removed in accordance with Section 2.6(c).

SECTION 2.2       Execution and Authentication.

         One Officer shall sign the Notes for the Company by manual or facsimile
signature.

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

         A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

         Upon a written order of the Company signed by an Officer of the
Company, the Trustee shall authenticate Notes for original issue in an aggregate
principal amount of $137,800,000 to the Initial Purchasers. The aggregate
principal amount of Notes outstanding at any time may not exceed that amount
except as provided in Section 2.7.

         The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 or integral multiples thereof.


                                       10
<PAGE>

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

SECTION 2.3       Registrar, Paying Agent and Conversion Agent.

         The Company shall maintain or cause to be maintained in such locations
as it shall determine, which may be the Corporate Trust Office, an office or
agency: (i) where securities may be presented for registration of transfer or
for exchange ("Registrar"); (ii) where Notes may be presented for payment
("Paying Agent"); (iii) an office or agency where Notes may be presented for
conversion (the "Conversion Agent"); and (iv) where notices and demands to or
upon the Company in respect of Notes and this Indenture may be served by the
holders of the Notes. The Registrar shall keep a register ("Register") of the
Notes and of their registration of transfer and exchange. The Company may
appoint one or more co-registrars, one or more additional paying agents and one
or more additional conversion agents. The term "Paying Agent" includes any
additional paying agent, and the term "Conversion Agent" includes any additional
Conversion Agent. The Company may change any Paying Agent, Registrar, Conversion
Agent or co-registrar without prior notice. The Company shall notify the Trustee
of the name and address of any Agent not a party to this Indenture and shall
enter into an appropriate agency agreement with any Registrar, Paying Agent,
Conversion Agent or co-registrar not a party to this Indenture. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company or any of its subsidiaries may act as Paying Agent, Registrar,
Conversion Agent or co-registrar, except that for purposes of Article 8 and
Section 4.6, neither the Company nor any of its subsidiaries shall act as Paying
Agent. If the Company fails to appoint or maintain another entity as Registrar,
or Paying Agent or Conversion Agent, the Trustee shall act as such, and the
Trustee shall initially act as such.

SECTION 2.4       Paying Agent To Hold Money in Trust.

         The Company shall require each Paying Agent (other than the Trustee,
who hereby so agrees), to agree in writing that the Paying Agent will hold in
trust for the benefit of holders of the Notes or the Trustee all money held by
the Paying Agent for the payment of principal, premium, if any, or interest
(including Liquidated Damages) on the Notes, and will notify the Trustee of any
default by the Company in respect of making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a subsidiary of the Company) shall
have no further liability for the money. If the Company or a subsidiary of the
Company acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the holders of the Notes all money held by it as Paying
Agent. In the absence of a written request from the Company to return unclaimed
funds to the Company, the Trustee shall from time to time deliver all unclaimed
funds held by it in any capacity hereunder to or as directed by applicable
escheat authorities, as required by applicable law. Any unclaimed funds held by
the Trustee in any capacity hereunder pursuant to this Section 2.4 shall be held
uninvested and without any liability for interest.


                                       11
<PAGE>

SECTION 2.5       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 of Notes and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven business days before each Interest Payment Date, and as the Trustee may
request in writing within fifteen (15) days after receipt by the Company of any
such request (or such lesser time as the Trustee may reasonably request in order
to enable it to timely provide any notice to be provided by it hereunder), a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of holders of Notes.

SECTION 2.6       Transfer and Exchange.

         (a) When Notes are presented to the Registrar or a co-registrar with a
request to register a transfer or to exchange them for an equal principal amount
of Notes for other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Company shall issue, and the
Trustee shall authenticate, Notes at the Registrar's request, bearing
registration numbers not contemporaneously outstanding. No service charge shall
be made to a holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company and the Registrar may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable upon exchanges pursuant to Sections 2.7, 9.5 or
12.2.

         The Company or the Registrar shall not be required (i) to issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business fifteen (15) days before the day of any selection of Notes
for (x) redemption under Section 3.3 or (y) repurchase under Section 4.6 and
ending at the close of business on the day of selection, (ii) to register the
transfer or exchange of any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part or (iii) to
register the transfer of any Notes surrendered for repurchase pursuant to
Section 4.6.

         All Notes issued upon any registration of transfer or exchange of Notes
in accordance with this Indenture shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this Indenture
as the Notes surrendered upon such registration of transfer or exchange.

         (b) Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Sections
2.1(b) and 2.10; provided, however, that beneficial interests in a Global
Security may be transferred to persons who take delivery thereof in the form of
a beneficial interest in the Global Security in accordance with the transfer
restrictions set forth under the heading "Notice to Investors" in the Offering
Memorandum and, if applicable, in the Restricted Securities Legend.


                                       12
<PAGE>

         Except for transfers or exchanges made in accordance with Section 2.10,
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.

         In the event that a Global Security is exchanged for Notes in
definitive form pursuant to Section 2.10 prior to the effectiveness of a Shelf
Registration Statement with respect to such Notes, such exchange may occur, and
such Notes may be further exchanged or transferred, only upon receipt by the
Registrar of (1) such Global Security or such Notes in definitive form, duly
endorsed as provided herein, as applicable, (2) instructions from the holder
directing the Trustee to authenticate and deliver one or more Notes in
definitive form of the same aggregate principal amount as the Global Security or
the Notes in definitive form (or portion thereof), as applicable, to be
transferred, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Notes in definitive form to be so issued and appropriate delivery instructions,
and (3) such certifications or other information and, in the case of transfers
pursuant to Rule 144 under the Securities Act, legal opinions as the Company may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act (including the certification requirements
intended to ensure that such transfers comply with Rule 144A or Regulation S
under the Securities Act, as the case may be), and upon compliance with such
other procedures as may from time to time be adopted by the Company and the
Registrar.

         (c) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Agreement,
if Notes are issued upon the registration of transfer, exchange or replacement
of Notes bearing a Restricted Securities Legend, or if a request is made to
remove such a Restrictive Securities Legend on Notes, the Notes so issued shall
bear the Restricted Securities Legend, or a Restricted Securities Legend shall
not be removed, as the case may be, unless there is delivered to the Company
such satisfactory evidence, which, in the case of a transfer made pursuant to
Rule 144 under the Securities Act, may include an opinion of counsel given in
accordance with the laws in the State of New York, as may be reasonably required
by the Company, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or
that such Notes are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon provision to the Company of such satisfactory evidence, the
Trustee, at the written direction of the Company, shall authenticate and deliver
Notes that do not bear the legend. The Company shall not otherwise be entitled
to require the delivery of a legal opinion in connection with any registration
of transfer or exchange of Securities.

         (d) Neither the Trustee nor any Agent shall have any responsibility for
any actions taken or not taken by the Depositary.

         (e) The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Notes (including any transfers between or among the Depositary's
participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation as is
expressly


                                       13
<PAGE>

required by, and to do so if and when expressly required by, the terms of this
Indenture and to examine the same to determine substantial compliance as to form
with the express requirements hereof.

SECTION 2.7       Replacement Notes.

         If the holder of a Note claims that its Note has been lost, destroyed
or wrongfully taken, the Company shall issue and the Trustee shall authenticate
a replacement Note if the Trustee's and the Company's requirements are met. If
required by the Trustee or the Company as a condition of receiving a replacement
Note, the holder of a Note must provide a certificate of loss and an indemnity
and/or an indemnity bond sufficient, in the judgment of both the Company and the
Trustee, to fully protect the Company, the Trustee, any Agent and any
authenticating agent from any loss, liability, cost or expense which any of them
may suffer or incur if the Note is replaced. The Company and the Trustee may
charge the relevant holder for their expenses in replacing any Note.

         The Trustee or any authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company and
the Trustee 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 connected therewith. In case any Note, which has matured or is about to
mature, or has been called for redemption pursuant to Article 3, submitted for
repurchase pursuant to Section 4.6 or is about to be converted into Common
Shares pursuant to Article 12, shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Note, pay or authorize
the payment of or convert or authorize the conversion of the same (without
surrender thereof except in the case of a mutilated Note), as the case may be,
if the applicant for such payment or conversion shall furnish to the Company, to
the Trustee and, if applicable, to the authenticating agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in case of destruction, loss or theft, evidence satisfactory to the Company, the
Trustee and, if applicable, any paying agent or conversion agent of the
destruction, loss or theft of such Note and of the ownership thereof.

         Every replacement Note is an additional obligation of the Company and
shall be entitled to all the benefits provided under this Indenture equally and
proportionately with all other Notes duly issued, authenticated and delivered
hereunder.

SECTION 2.8       Outstanding Notes.

         The Notes outstanding at any time are all the Notes properly
authenticated by the Trustee except for those canceled by the Trustee, those
delivered to it for cancellation, and those described in this Section as not
outstanding.

         If a Note is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser (as defined in Article 8 of the
Uniform Commercial Code).


                                       14
<PAGE>

         If Notes are considered paid under Section 4.1 or converted under
Article 12, they cease to be outstanding, and interest (and Liquidated Damages,
if any) on them ceases to accrue.

         Subject to Section 2.9 hereof, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.

SECTION 2.9     When Notes Owned by the Company or an Affiliate are Disregarded.

         In determining whether the holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate of the Company shall be considered as though they are
not outstanding except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so disregarded.

SECTION 2.10      Temporary Notes.

         (a) Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes and shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.

         (b) A Global Security deposited with the Depositary or with the Trustee
as custodian for the Depositary pursuant to Section 2.1 shall be transferred to
the beneficial owners thereof in the form of certificated Notes in definitive
form only if such transfer complies with Section 2.6 and (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time such Depositary ceases to be a
"clearing agency" registered under the Exchange Act and a successor Depositary
is not appointed by the Company within 90 days of such notice, or (ii) an Event
of Default has occurred and is continuing.

         (c) Any Global Security or interest therein that is transferable to the
beneficial owners thereof in the form of certificated Notes in definitive form
shall, if held by the Depository, be surrendered by the Depositary to the
Trustee, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Notes of authorized denominations in the form of
certificated Notes in definitive form. Any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 and integral multiples thereof and
registered in such names as the Depositary shall direct. Any Notes in the form
of certificated Notes in definitive form delivered in exchange for an interest
in the Global Security shall, except as otherwise provided by Section 2.6(c),
bear the Restricted Securities Legend set forth in Exhibit A hereto.

         (d) Prior to any transfer pursuant to Section 2.10(b), the registered
holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and


                                       15
<PAGE>

persons that may hold interests through Agent Members, to take any action which
a holder is entitled to take under this Indenture or the Notes.

SECTION 2.11      Cancellation.

         The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange, payment,
replacement, conversion, repurchase or cancellation. The Trustee and no one else
may cancel Notes surrendered for registration of transfer, exchange, payment,
replacement, conversion, repurchase or cancellation. The Trustee shall dispose
of canceled Notes in accordance with its then customary procedures, unless the
Company shall otherwise direct in writing. The Company may not issue new Notes
to replace Notes that it has paid or repurchased or that have been delivered to
the Trustee for cancellation or that any holder has (i) converted pursuant to
Article 12 hereof, (ii) submitted for redemption pursuant to Article 3 hereof or
(iii) submitted for repurchase pursuant to Section 4.6 hereof (unless revoked).

SECTION 2.12      Defaulted Interest.

         If the Company fails to make a payment of interest on the Notes, it
shall pay such defaulted interest plus, to the extent lawful, any interest
payable on the defaulted interest. It may pay such defaulted interest, plus any
such interest payable on it, to the persons who are holders of Notes on a
subsequent special record date. The Company shall fix any such record date and
payment date. At least 15 days before any such record date, the Company shall
mail to holders of the Notes a notice that states the record date, payment date
and amount of such interest to be paid.

SECTION 2.13      CUSIP Number.

         The Company in issuing the Notes may use a "CUSIP" number, and if so,
such CUSIP number shall be included in notices of repurchase as a convenience to
holders of Notes; provided, however, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes; and provided further that
neither the Trustee nor any Registrar shall have any liability as to the
correctness or accuracy of any CUSIP number so printed in the notice. The
Company will promptly notify the Trustee of any change in the CUSIP number.

SECTION 2.14      Regulation S.

         The Company agrees that it will refuse to register any transfer of
Notes or any Common Shares issued upon conversion of Notes that is not made in
accordance with the provisions of Regulation S under the Securities Act,
pursuant to a registration statement which has been declared effective under the
Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act; provided that the provisions of this
paragraph shall not be applicable to any Notes which do not bear a Restricted
Securities Legend or to any Common Shares evidenced by certificates which do not
bear a Restricted Common Share Legend.


                                       16
<PAGE>

                                   ARTICLE 3

                                   REDEMPTION

SECTION 3.1       Optional Redemption.

         The Company may redeem all or any portion of the Notes upon the terms
and at the Redemption Prices set forth in each of the Notes. Any redemption
shall be made pursuant to paragraph 5 of the Notes and this Article 3.

SECTION 3.2       Notices to Trustee.

         If the Company elects to redeem Notes pursuant to the optional
redemption provisions of paragraph 5 of the Notes, it shall furnish to the
Trustee, at least 15 (25 if less than all of the then outstanding Notes are to
be redeemed or if the Company requests the Trustee to give notice of redemption
pursuant to Section 3.4) days but not more than 60 days before a Redemption Date
(unless a shorter period shall be satisfactory to the Trustee), an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount
of Notes (if less than all) to be redeemed, (iv) the Redemption Price and (v)
the CUSIP number of the Notes being redeemed.

SECTION 3.3       Selection of Notes To Be Redeemed.

         If less than all the Notes are to be redeemed, the Trustee shall select
the Notes to be redeemed by a method that complies with the requirements of the
principal national securities exchange, if any, on which the Notes are listed or
quoted or, if the Notes are not so listed, on a pro rata basis by lot or by any
other method that the Trustee considers fair and appropriate. The Trustee shall
make the selection not more than 60 days and not less than 15 days before the
Redemption Date from Notes outstanding and not previously called for redemption.
The Trustee may select for redemption a portion of the principal of any Notes
that has a denomination larger than $1,000. Notes and portions thereof will be
redeemed in the amount of $1,000 or integral multiples of $1,000.

         Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption. The Trustee shall notify
the Company promptly of the Notes or portions of Notes to be called for
redemption.

         If any Note selected for partial redemption is converted in part after
such selection, the converted portion of such Note shall be deemed (so far as
may be) to be the portion to be selected for redemption. The Notes (or portion
thereof) so selected shall be deemed duly selected for redemption for all
purposes hereof, notwithstanding that any such Note is converted in whole or in
part before the mailing of the notice of redemption. Upon any redemption of less
than all the Notes, the Company and the Trustee may treat as outstanding any
Notes surrendered for conversion during the period of 15 days next preceding the
mailing of a notice of redemption and need not treat as outstanding any Note
authenticated and delivered during such period in exchange for the unconverted
portion of any Note converted in part during such period.


                                       17
<PAGE>

SECTION 3.4       Notice of Redemption.

         At least 15 days but not more than 60 days before a Redemption Date,
the Company shall mail by first class mail a notice of redemption to each holder
whose Notes are to be redeemed, at such holder's registered address.

         The notice shall identify the Notes to be redeemed and shall state:

                  (1) the Redemption Date;

                  (2) the Redemption Price;

                  (3) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion will be issued in the name of the holder thereof;

                  (4) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;

                  (5) that interest and Liquidated Damages, if applicable, on
Notes called for redemption and for which funds have been set apart for payment,
ceases to accrue on and after the Redemption Date (unless the Company defaults
in the payment of the Redemption Price or the Paying Agent is prohibited from
making such payment pursuant to the terms of this Indenture);

                  (6) the paragraph of the Notes pursuant to which the Notes
called for redemption are being redeemed;

                  (7) the aggregate principal amount of Notes (if less than all)
that are being redeemed;

                  (8) the CUSIP number of the Notes (provided that the
disclaimer permitted by Section 2.13 may be made);

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

                  (10) that Notes called for redemption may be converted at any
time prior to the close of business on the last Trading Day immediately
preceding the Redemption Date and if not converted prior to the close of
business on such date, the right of conversion will be lost; and

                  (11) that in the case of Notes or portions thereof called for
redemption on a date that is also an Interest Payment Date, the interest payment
and Liquidated Damages, if any, due on such date shall be paid to the person in
whose name the Note is registered at the close of business on the relevant
Regular Record Date.

         The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the holder receives
such notice. In any case, failure to give such


                                       18
<PAGE>

notice by mail or any defect in the notice to the holder of any Note designated
for redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any Note.

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

SECTION 3.5       Effect of Notice of Redemption.

         Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date at the Redemption Price set forth in the
Note.

SECTION 3.6       Deposit of Redemption Price.

         On or before 10:00 a.m., New York City time, on the Redemption Date,
the Company shall deposit with the Trustee or with the Paying Agent money in
immediately available funds sufficient to pay the Redemption Price of and
accrued interest (including Liquidated Damages) on all Notes to be redeemed on
that date. The Trustee or the Paying Agent shall return to the Company any money
not required for that purpose.

         On and after the Redemption Date, unless the Company shall default in
the payment of the Redemption Price, interest and Liquidated Damages, if
applicable, will cease to accrue on the principal amount of the Notes or
portions thereof called for redemption and for which funds have been set apart
for payment, and such Notes, or portions thereof, shall cease after the close of
business on the business day immediately preceding the Redemption Date to be
convertible into Common Shares and, except as provided in this Section 3.6 and
Section 8.4, to be entitled to any benefit or security under this Indenture, and
the holders thereof shall have no right in respect of such Notes, or portions
thereof, except the right to receive the Redemption Price thereof and unpaid
interest and Liquidated Damages, if any, to (but excluding) the Redemption Date.
In the case of Notes or portions thereof redeemed on a Redemption date which is
also an Interest Payment Date, the interest payment and Liquidated Damages, if
any, due on such date shall be paid to the person in whose name the Note is
registered at the close of business on the relevant Regular Record Date.

SECTION 3.7       Notes Redeemed in Part.

         Upon surrender of a Note that is redeemed in part only, the Company
shall issue and the Trustee shall authenticate and deliver to the holder of a
Note a new Note equal in principal amount to the unredeemed portion of the Note
surrendered, at the expense of the Company, except as specified in Section 2.6.

SECTION 3.8       Conversion Arrangement on Call for Redemption.

         In connection with any redemption of Notes, the Company may arrange for
the purchase and conversion of any Notes by an arrangement with one or more
investment bankers or other purchasers to purchase such Notes by paying to the
Trustee in trust for the holders, on or before the date fixed for redemption, an
amount not less than the applicable Redemption Price, together with interest and
Liquidated Damages, if any, accrued to the date fixed for redemption, of such
Notes. Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the


                                       19
<PAGE>

Company to pay the Redemption Price of such Notes, together with interest and
Liquidated Damages, if any, accrued to the date fixed for redemption, shall be
deemed to be satisfied and discharged to the extent such amount is so paid by
the purchasers. If such an agreement is entered into, a copy of which will be
filed with the Trustee prior to the date fixed for redemption, any Notes not
duly surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article 12) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be deemed to have been extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Notes shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and defend
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses incurred by the Trustee
in the defense of any claim or liability arising out of or in connection with
the exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.

                                   ARTICLE 4

                                    COVENANTS

SECTION 4.1       Payment of Notes.

         The Company shall pay the principal of or premium, if any, and interest
(including Liquidated Damages, if any) on, the Notes on the dates and in the
manner provided in the Notes. Principal, interest and the Fundamental Change
Payment shall be considered paid on the date due if the Trustee or Paying Agent
(other than the Company or a subsidiary of the Company) holds as of 10:00 a.m.,
New York City time, on that date immediately available funds designated for and
sufficient to pay all principal, premium, if any, interest (including Liquidated
Damages) or the Fundamental Change Payment then due; provided, however, that
money held by the Agent for the benefit of holders of Senior Debt pursuant to
the provisions of Article 11 hereof or the payment of which to the holders of
the Notes is prohibited by Article 11 shall not be considered to be designated
for the payment of any principal of or interest on the Notes within the meaning
of this Section 4.1. To the extent lawful, the Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
(i) overdue principal, at the rate borne by Notes, compounded semiannually; and
(ii) overdue installments of interest (without regard to any applicable grace
period) at the same rate, compounded semiannually.

SECTION 4.2 Rule 144A Information; Periodic Reports to the Trustee.

         So long as any of the Notes or Common Shares issuable upon conversion
of the Notes are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, the


                                       20
<PAGE>

Company will, during any period in which it is not subject to and in compliance
with Section 13 or Section 15(d) of the Exchange Act, provide to each holder and
beneficial owner of such restricted securities and to each prospective purchaser
(as designated by such holder or beneficial owner) of such restricted
securities, upon the request of such holder or beneficial owner or prospective
purchaser, any information required to be provided by Rule 144A(d)(4) under the
Securities Act.

         The Company shall provide to the Trustee such documents, reports and
information as required by TIA Section 314 (if any) in the form, in the manner
and at the times required by TIA Section 314. Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).

SECTION 4.3       Compliance Certificate.

         The Company shall deliver to the Trustee within 120 days after the end
of its respective fiscal year, an Officers' Certificate stating that neither of
the signers thereof has any knowledge, after due investigation during the
preceding fiscal year made under the supervision of the signing officers, of any
Default or Event of Default (or, if any Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge). As of the date hereof, the fiscal year of the Company ends
on December 31.

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

SECTION 4.4       Maintenance of Office or Agency.

         The Company shall maintain or cause to be maintained the office or
agency required under Section 2.3. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency not maintained by the Trustee. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, presentations, surrenders, notices and demands
with respect to the Notes may be made or served at the Corporate Trust Office of
the Trustee.

         The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designation.

SECTION 4.5       Continued Existence.

         Subject to Article 5, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.


                                       21
<PAGE>

SECTION 4.6       Repurchase Upon Fundamental Change.

         Following a Fundamental Change (the date of each such occurrence being
the "Fundamental Change Date") prior to the Maturity Date, the Company shall
notify the holders of Notes in writing of such occurrence and shall make an
offer (the "Fundamental Change Offer") to repurchase all Notes then outstanding
at a repurchase price in cash (the "Fundamental Change Payment") equal to 100%
of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to, but excluding, the Fundamental Change Payment Date (as
defined below).

         Notice of a Fundamental Change shall be mailed by or at the direction
of the Company to the holders of Notes as shown on the Register and to
beneficial owners as required by law not more than 30 days after the applicable
Fundamental Change Date at the addresses as shown on the Register of holders
maintained by the Registrar, with a copy to the Trustee and the Paying Agent.
During the period specified in such notice, holders of Notes may elect to tender
their Notes in whole or in part in integral multiples of $1,000 in exchange for
cash. Payment shall be made by the Company in respect of Notes properly tendered
pursuant to this Section on or before the day (the "Fundamental Change Payment
Date") which shall be the 60th day after the date of the notice of the
applicable Fundamental Change.

         The notice, which shall govern the terms of the Fundamental Change
Offer, shall include such disclosures as are required by law and shall state:

         (a) that a Fundamental Change Offer is being made pursuant to this
Section 4.6 and that all Notes will be accepted for payment;

         (b) a brief description of the event, transaction or transactions that
constitute the Fundamental Change;

         (c) the Fundamental Change Payment for each Note and the Fundamental
Change Payment Date;

         (d) that any Note not accepted for payment will continue to accrue
interest and Liquidated Damages, if applicable, in accordance with the terms
thereof;

         (e) that, unless the Company defaults on making the Fundamental Change
Payment, any Note accepted for payment pursuant to the Fundamental Change Offer
shall cease to accrue interest and Liquidated Damages, if applicable, on the
Fundamental Change Payment Date and no further interest or Liquidated Damages
shall accrue on or after such date;

         (f) that holders electing to have Notes repurchased pursuant to a
Fundamental Change Offer will be required to deliver, no later than the 60th day
after the date of the Company's notice described in this paragraph, a repurchase
notice electing to require the Company to repurchase all or some portion of the
Notes held by such holder, which notice shall state (i) the name of the holder,
(ii) the principal amount of Notes the holder is delivering for purchase, which
must be $1,000 or integral multiples thereof and (iii) the Note certificate
number (if any);


                                       22
<PAGE>

         (g) that holders of Notes will be entitled to withdraw their election
if the Paying Agent receives, not later than 5:00 p.m., New York City time, on
the Fundamental Change Payment Date, a facsimile transmission or letter setting
forth (i) the name of the holder, (ii) the principal amount of Notes the holder
delivered for purchase, (iii) the Note certificate number (if any) delivered,
(iv) a statement that such holder is withdrawing his election to have such Notes
purchased, (v) the principal amount of Notes being withdrawn, (vi) the Note
certificate number (if any) being withdrawn and (vii) the principal amount of
Notes that remains subject to the Fundamental Change Offer, if any;

         (h) that holders whose Notes are repurchased only in part will be
issued Notes equal in principal amount to the unpurchased portion of the Notes
surrendered provided that the unpurchased portion shall be in an authorized
denomination;

         (i) the instructions that holders must follow in order to tender their
Notes; and

         (j) that in the case of a Fundamental Change Payment Date that is also
an Interest Payment Date, the interest payment and Liquidated Damages, if any,
due on such date shall be paid to the person in whose name the Note is
registered at the close of business on the Regular Record Date immediately
preceding such Interest Payment Date.

         On the Fundamental Change Payment Date, the Company shall accept for
payment all Notes or portions thereof validly tendered and not validly withdrawn
pursuant to the Fundamental Change Offer. Prior to 10:00 a.m., New York City
time, on the business day following the Fundamental Change Payment Date, the
Company shall deposit with the Paying Agent money sufficient to pay the
Fundamental Change Payment with respect to all Notes or portions thereof so
tendered and accepted, and deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate setting forth the
aggregate principal amount of Notes or portions thereof tendered to and accepted
for payment by the Company. Promptly following the later of (i) the Fundamental
Change Payment Date and (ii) the time of book-entry transfer or physical
delivery of Notes by a holder, the Paying Agent shall mail or deliver the
Fundamental Change Payment to such holder of Notes so accepted and the Trustee
shall, as soon as reasonably practicable, authenticate and mail or cause to be
transferred by book-entry to such holder a new Note equal in principal amount to
any unpurchased portion of the Note surrendered, if any; provided that such
holder shall have delivered to the Paying Agent, by book-entry transfer or
physical delivery, the Notes, together with necessary endorsements; provided,
further, that such new Notes will be in a principal amount of $1,000 or integral
multiples thereof. Any Notes not so accepted shall be promptly mailed or
delivered by the Company to the holder thereof.

         In the case of any reclassification, change, consolidation, merger,
share exchange, combination or sale or conveyance to which Section 12.6 applies
in which the Common Shares of the Company are changed or exchanged into the
right to receive stock, securities or other property or assets (including cash)
which includes shares of common stock of the Company or another person that are,
or upon issuance will be, traded on a United States national securities exchange
or approved for trading on an established automated over-the-counter trading
market in the United States and such shares constitute at the time such change
or exchange becomes effective in excess of 95% of the aggregate fair market
value of such stock, securities or other


                                       23
<PAGE>

property and assets (including cash) (as determined by the Company, which
determination shall be conclusive and binding), then the person formed by such
consolidation or resulting from such merger or share exchange or which acquires
such assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture (which shall comply with the TIA as in force at the date
of execution of such supplemental indenture) modifying the provisions of this
Indenture relating to the right of holders of Notes to cause the Company to
repurchase Notes following a Fundamental Change, including the applicable
provisions of this Section 4.6 and the definitions of Fundamental Change, Change
of Control and Termination of Trading, as appropriate, as determined in good
faith by the Company (which determination shall be conclusive and binding), to
make such provision apply to such common stock and the issuer thereof if
different from the Company and Common Shares of the Company (in lieu of the
Company and the Common Shares of the Company).

         There shall be no purchase of any Notes pursuant to this Section 4.6 if
there has occurred (prior to, on or after, as the case may be, the giving, by
the holders of such Notes, of the required Fundamental Change repurchase notice)
and is continuing, an Event of Default (other than a default in the payment of
the Fundamental Change Payment with respect to such Notes). The Paying Agent
will promptly return to the respective holders any Notes (x) with respect to
which a Fundamental Change repurchase notice has been withdrawn in compliance
with this Indenture or (y) held by it during the continuance of an Event of
Default (other than a default in the payment of the Fundamental Change Payment
with respect to such Notes) in which case upon such return the Fundamental
Change repurchase notice with respect thereto shall be deemed to have been
withdrawn.

         The Fundamental Change Offer shall be made by the Company in compliance
with all applicable provisions of the Exchange Act, and all applicable tender
offer rules promulgated thereunder, to the extent such laws and regulations are
then applicable and shall include all instructions and materials that the
Company shall reasonably deem necessary to enable such holders of Notes to
tender their Notes.

SECTION 4.7       Appointments to Fill Vacancies in Trustee's Office.

         The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.8, a
Trustee, so that there shall at all times be a Trustee hereunder.

SECTION 4.8       Stay, Extension and Usury Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter enforced, that may affect the Company's
obligation to pay the Notes; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law insofar
as such law applies to the Notes, and covenants that it shall not, by resort to
any such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such power as
though no such law has been enacted.


                                       24
<PAGE>

SECTION 4.9       Taxes.

         The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and government levies; provided,
however, that the Company shall not be required to pay or cause to be paid any
such tax, assessment or levy (A) if the failure to do so will not, in the
aggregate, have a material adverse impact on the Company and its subsidiaries
taken as a whole, or (B) if the amount, applicability or validity is being
contested in good faith by appropriate proceedings.

SECTION 4.10      Investment Company Act.

         As long as any Notes are outstanding, the Company will conduct its
business and operations so as not to become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and will take all steps required in order for it to continue not
to be an "investment company" and not to be required to be registered under the
Investment Company Act, including, if necessary, redeployment of the assets of
the Company.

                                   ARTICLE 5

                                   SUCCESSORS

SECTION 5.1       When the Company May Merge, Etc.

         The Company may not, in a single transaction or series of related
transactions, consolidate or merge with or into, or effect a share exchange with
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets as an entirety or substantially as an entirety to, any
person or entity unless:

         (a) either

                  (i) the Company shall be the surviving or continuing
corporation; or

                  (ii) the entity or person formed by or surviving any such
consolidation or share exchange or into which the Company is merged (if other
than the Company) or the entity or person which acquires by sale, assignment,
transfer, lease, conveyance or other disposition the properties and assets of
the Company as an entirety or substantially as an entirety

                  (1) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and

                  (2) shall expressly assume, by supplemental indenture in form
reasonably satisfactory to the Trustee, executed and delivered to the Trustee,
the due and punctual payment of the principal of or premium, if any, interest
and Liquidated Damages, if any, on, all of the Notes and the performance of
every covenant of the Notes and this Indenture and the Registration Agreement on
the part of the Company to be performed or observed, including, without
limitation, modifications to rights of holders to cause the repurchase of Notes
upon a


                                       25
<PAGE>

Fundamental Change in accordance with the penultimate paragraph of Section 4.6
and conversion rights in accordance with Section 12.6 to the extent required by
such Sections;

         (b) immediately after giving effect to such transaction no Default and
no Event of Default shall have occurred and be continuing; and

         (c) the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, share exchange, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this provision of this Indenture and that
all conditions precedent in this Indenture relating to such transaction have
been satisfied.

         For purposes of this Section 5.1, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more subsidiaries of the
Company, the capital stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

SECTION 5.2       Successor Corporation Substituted.

         Upon any such consolidation, merger, share exchange, sale, assignment,
conveyance, lease, transfer or other disposition in accordance with Section 5.1,
the successor person formed by such consolidation, or share exchange or into
which the Company is merged or to which such assignment, conveyance, lease,
transfer or other disposition is made will 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 had been named as the Company therein, and
thereafter (except in the case of a sale, assignment, transfer, lease,
conveyance or other disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture and the Notes.

SECTION 5.3       Purchase Option on Fundamental Change.

         This Article 5 does not affect the obligations of the Company
(including without limitation any successor to the Company) under Section 4.6.

                                   ARTICLE 6

                              DEFAULTS AND REMEDIES

SECTION 6.1       Events of Default.

         An "Event of Default" with respect to any Notes occurs if:

         (a) the Company defaults in the payment of principal of or premium, if
any, on, the Notes when due at maturity, upon repurchase, upon acceleration or
otherwise otherwise, including, without limitation, failure of the Company to
make any optional redemption payment when required pursuant to Article 3; or


                                       26
<PAGE>

         (b) the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article 11 of this
Indenture) of any installment of interest or Liquidated Damages on the Notes
when due (including any interest or Liquidated Damages payable in connection
with a repurchase pursuant to Section 4.6 or in connection with any optional
redemption payment pursuant to Article 3) and such default continues for 30 days
or more; or

         (c) the Company defaults (other than a default set forth in clauses (a)
and (b) above and clauses (d) and (e) below) in the performance of, or breaches,
any other covenant or warranty of the Company set forth in this Indenture or the
Notes and fails to remedy such default or breach within a period of 60 days
after the receipt of written notice from the Trustee; or

         (d) the Company defaults in the payment of the Fundamental Change
Payment in respect of the Notes on the date therefor, whether or not such
payment is prohibited by the subordination provisions set forth in Article 11 of
this Indenture; or

         (e) the Company fails to provide timely notice of any Fundamental
Change in accordance with Section 4.6; or

         (f) (A) one or more defaults in the payment of principal of or premium,
if any, on any Indebtedness aggregating $10.0 million or more, when the same
becomes due and payable at the final scheduled maturity thereof, and such
default or defaults shall have continued after any applicable grace period and
shall not have been cured or waived within a 30-day period after the date of
receipt of written notice by the Company from the Trustee or by the Company and
the Trustee from any holder of Notes (a "Notice of Default") or (B) any
Indebtedness aggregating $10.0 million or more shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or repurchased
(other than by regularly scheduled required prepayment) prior to the final
scheduled maturity thereof and such acceleration is not waived, rescinded or
annulled within a 30-day period after a Notice of Default; or

         (g) failure by the Company or any Material Subsidiary to pay a final,
non-appealable judgment or final, non-appealable judgments (other than any
judgment as to which a reputable insurance company has accepted full liability)
for the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any Material Subsidiary, which judgment or
judgments remain unstayed, unbonded or undischarged for a period (during which
execution shall not be effectively stayed) of 120 days, provided that the
aggregate amount of all such judgments exceeds $10,000,000; or

         (h) the Company, pursuant to or within the meaning of any Bankruptcy
Law (as defined below):

                  (i) commences a voluntary case,

                  (ii) consents to the entry of an order for relief against it
in an involuntary case,

                  (iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,


                                       27

<PAGE>


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

                   (v) makes the admission in writing that it generally is
unable to pay its debts as the same become due; or

         (i) a court of competent jurisdiction enters a judgment, order or
decree under any Bankruptcy Law that:

             (i)   is for relief against the Company in an involuntary
                   case,

             (ii)  appoints a Custodian of the Company, or

             (iii) orders the liquidation of the Company,

and in any case, the order or decree remains unstayed and in effect for 90 days.

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

         In the case of any Event of Default, pursuant to the provisions of this
Section 6.1, occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium which the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to paragraph 5 of the Notes, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law, upon the acceleration of the Notes notwithstanding anything
contained in this Indenture or in the Notes to the contrary.

         If an Event of Default occurs prior to any date on which the Company is
prohibited from redeeming the Notes, pursuant to paragraph 5 of the Notes, by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to such date, then the premium specified in this Indenture shall
also become immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.

SECTION 6.2 Acceleration.

         If an Event of Default (other than an Event of Default with respect to
the Company specified in clauses (h) and (i) of Section 6.1) occurs and is
continuing, then and in every such case the Trustee, by written notice to the
Company, or the holders of at least 25% in aggregate principal amount of the
then outstanding Notes, by written notice to the Company and the Trustee, may
declare the unpaid principal of, and accrued and unpaid interest and Liquidated
Damages, if any, on, all the Notes to be due and payable; provided, that such
amount shall not be declared due and payable unless the Trustee shall have given
at least three (3) days prior notice thereof to the Designated Senior Lender.
Upon such declaration, such principal amount, and accrued and unpaid interest
and Liquidated Damages, if any, shall become immediately due and



                                       28
<PAGE>
payable, notwithstanding anything contained in this Indenture or the Notes to
the contrary, but subject to the provisions of Article 11 hereof. If any Event
of Default with respect to the Company specified in clauses (h) or (i) of
Section 6.1 occurs, all unpaid principal of and accrued and unpaid interest and
Liquidated Damages, if any, on the Notes then outstanding shall become
automatically due and payable, subject to the provisions of Article 11 hereof
without any declaration or other act on the part of the Trustee or any holder of
Notes.

         The holders of a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may rescind an acceleration of the
Notes and its consequences if all existing Events of Default (other than
nonpayment of principal of or premium, if any, interest and Liquidated Damages,
if any, on, the Notes which has become due solely by virtue of such
acceleration) have been cured or waived, the amounts payable to the Trustee
under Section 7.7 shall have been paid and if the rescission would not conflict
with any judgment or decree of any court of competent jurisdiction. No such
rescission shall affect any subsequent Default or Event of Default or impair any
right consequent thereto.

SECTION 6.3 Other Remedies.

         If an Event of Default 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 premium, if any, interest or Liquidated Damages, if applicable,
on, the Notes or to enforce the performance of any provision of the Notes or
this Indenture. The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any holder of a Note in exercising any right
or remedy occurring upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.

SECTION 6.4 Waiver of Past Defaults.

         Subject to Section 6.2, the holders of a majority in aggregate
principal amount of the Notes then outstanding may, on behalf of the holders of
all the Notes, waive an existing Default or Event of Default and its
consequences, except a Default or Event of Default in the payment of the
principal of, or premium, if any, interest or Liquidated Damages, if any, on the
Notes (other than the non-payment of principal of and interest and Liquidated
Damages, if any, on the Notes which has become due solely by virtue of an
acceleration which has been duly rescinded as provided above), or in respect of
a covenant or provision of this Indenture which cannot be modified or amended
without the consent of all holders of Notes or with respect to a failure to
purchase any Notes tendered pursuant to Section 4.6 hereof. When a Default or
Event of Default is waived, it is cured and stops continuing. No waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.

SECTION 6.5 Control by Majority.

         The holders of a majority in aggregate principal amount of the then
outstanding Notes may 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 it. However, the Trustee may refuse to


                                       29
<PAGE>
follow any direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of other holders of Notes or
that may involve the Trustee in personal liability; provided that the Trustee
shall have no duty or obligation (subject to Section 7.1) to ascertain whether
or not such actions of forbearances are unduly prejudicial to such holders;
provided, further, that the Trustee may take any other action the Trustee deems
proper that is not inconsistent with such directions. Notwithstanding any
provision to the contrary in this Indenture, the Trustee shall not be obligated
to take any action with respect to the provisions of the next to last paragraph
of Section 6.1 unless directed to do so pursuant to this Section 6.5.
Notwithstanding anything to the contrary contained in this Indenture, holders of
Notes may enforce their rights under this Indenture or the Notes only as
provided herein.

SECTION 6.6 Limitation on Suits.

             A holder of a Note may not pursue any remedy with respect to this
Indenture or the Notes unless:

                          (1) the holder gives to the Trustee notice of a
continuing Event of Default;

                          (2) the holders of at least 25% in principal amount of
the then outstanding Notes make a request to the Trustee to pursue the remedy;

                          (3) such holder or holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;

                          (4) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and

                          (5) during such 60-day period the holders of a
majority in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.

         A holder of a Note may not use this Indenture to prejudice the rights
of another holder or to obtain a preference or priority over another holder.

SECTION 6.7 Rights of Holders To Receive Payment.

         Subject to the provisions of Article 11 hereof, notwithstanding any
other provision of this Indenture, the right of any holder of a Note to receive
payment of principal of or premium, if any, interest and Liquidated Damages, if
any, on, the Note, on or after the respective due dates expressed in the Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates, or to bring suit for the enforcement of the right to convert
the Note shall not be impaired or affected without the consent of the holder of
a Note.

SECTION 6.8 Collection Suit by Trustee.

         If an Event of Default specified in Section 6.1(a), (b) or (d) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal and interest and Liquidated Damages, if any,


                                       30
<PAGE>
remaining unpaid on the Notes and interest on overdue principal and interest and
Liquidated Damages, if any, and such further amount as shall be sufficient to
cover the costs and, to the extent lawful, expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and all other amounts due the Trustee under Section 7.7.

SECTION 6.9 Trustee May File Proofs of Claim.

         The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the holders of Notes allowed in any judicial proceedings relative to the
Company, its creditors or its property. The Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise:

         (a) to file and prove a claim for the whole amount of the principal of,
and interest and Liquidated Damages, if any, on, the Notes 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
all other amounts due the Trustee under Section 7.7.) and of the holders of the
Notes allowed in such judicial proceedings; and

         (b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any Custodian in
any such judicial proceeding is hereby authorized by each holder of Notes 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 holder of Notes, to pay
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7.

         Nothing 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 Note any
plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any holder thereof, or to authorize the Trustee to vote
in respect of the claim of any holder in any such proceeding.

SECTION 6.10          Priorities.

         If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:

         (a) First: to the Trustee for amounts due under Section 7.7, including
payment of all compensation, expenses and liabilities incurred, and all advances
made, by the Trustee, and the costs and expenses of collection;

         (b) Second: to holders of Senior Debt to the extent required by Article
11;

         (c) Third: to holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, interest and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, interest and
Liquidated Damages, if any, respectively; and

                                       31
<PAGE>

         (d)      Fourth:  to the Company.

         Except as otherwise provided in Section 2.12, the Trustee may fix a
record date and payment date for any payment to holders of Notes.

SECTION 6.11          Undertaking for Costs.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit, other than the Trustee, of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a holder pursuant to Section 6.7 or a suit by holders of more than 10% in
principal amount of the then outstanding Notes.


                                    ARTICLE 7

                                   THE TRUSTEE

         The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed. 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 Article 7.

SECTION 7.1           Duties of the Trustee.

         (a) If an Event of Default known to a Trust 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 his or her own affairs.

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

             (1) The duties of the Trustee shall be determined solely by the
express provisions of this Indenture, and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, 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 any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture (but shall not be required to
confirm or investigate the accuracy of mathematical calculations or other facts
stated therein).

                                       32
<PAGE>

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

             (1) This paragraph does not limit the effect of paragraph (b) or
paragraph (e) of this Section;

             (2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer or any other officer of the Trustee to whom
such matter is referred, because of such person's knowledge of and familiarity
with the particular subject, unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts; and

             (3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.5.

         (d) Whether or not therein expressly so provided, every provision of
this Indenture that is in any way related to the Trustee is subject to
paragraphs (a), (b), (c) and (e) of this Section 7.1.

         (e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or the exercise of any of its rights and powers
hereunder, including, without limitation, the provisions of Section 6.5 hereof,
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk of liability is not reasonably assured
to it.

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

SECTION 7.2 Rights of the Trustee.

         (a) The Trustee may rely on and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, security or other document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter contained therein.

         (b) Any request, direction, order or demand of the Company shall be
sufficiently evidenced by an Officers' Certificate (unless other evidence in
respect thereof is herein specifically prescribed). In addition, before the
Trustee acts or refrains from acting, it may require an Officers' Certificate,
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 such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.

         (c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through attorneys and
agents and other persons not


                                       33
<PAGE>
regularly in its employ and shall not be responsible for the misconduct or
negligence of any attorney or agent appointed with due care.

         (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith without negligence or willful misconduct which it believes to
be authorized or within its discretion, rights or powers.

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

         (f) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.

         (g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the holders of Notes pursuant to the provisions of this
Indenture, unless such holders have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred therein or thereby.

         (h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, security or other document
unless requested in writing to do so by the holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, provided that if
the Trustee determines in its discretion to make any such investigation, then it
shall be entitled, upon reasonable prior notice and during normal business
hours, to examine the books and records and the premises of the Company,
personally or by agent or attorney, and the reasonable expenses of every such
examination shall be paid by the Company or, if paid by the Trustee or any
predecessor Trustee, shall be reimbursed by the Company upon demand.

         (i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct.

         (j) The Trustee shall not be responsible for the computation of any
adjustment to the Conversion Price or for any determination as to whether an
adjustment is required and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received the notice from the Company
contemplated by Section 12.5(j).

SECTION 7.3 Individual Rights of the Trustee.

         Subject to Sections 7.10 and 7.11, the Trustee in its individual or any
other capacity may become the owner or pledgee of Notes with the same rights it
would have if it were not the Trustee and may otherwise deal with the Company or
an Affiliate of the Company and receive, collect, hold and retain collections
from the Company with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.

                                       34
<PAGE>

SECTION 7.4 Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes. It shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture. It shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

SECTION 7.5 Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to a Trust Officer of the Trustee, the Trustee shall mail to each holder
of a Note a notice of the Default or Event of Default within 60 days after such
Default or Event of Default occurs. A Default or an Event of Default shall not
be considered known to a Trust Officer of the Trustee unless it is a Default or
Event of Default in the payment of principal or interest when due under Section
6.1(a), (b) or (d) or a Trust Officer of the Trustee shall have received written
notice thereof, in accordance with this Indenture, from the Company or from the
holders of a majority in principal amount of the outstanding Notes. Except in
the case of a Default or Event of Default in payment of principal or interest or
Liquidated Damages, if any, on any Note, the Trustee may withhold the notice if
and so long as a trust committee of its officers in good faith determines that
withholding the notice is in the interest of the holders of the Notes.

SECTION 7.6 Reports by the Trustee to Holders.

         Within 60 days after May 15, beginning May 15, 2002, the Trustee shall
mail to holders of Notes a brief report dated as of such reporting date that
complies with TIA Section 313(a) (but if no event described in TIA Section
313(a) has occurred within twelve months preceding the reporting date, no report
need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA Section
313(c).

         A copy of each report at the time of its mailing to holders of Notes
shall be filed, at the expense of the Company, by the Trustee with the
Commission and each stock exchange or securities market, if any, on which the
Notes are listed. The Company shall timely notify the Trustee when the Notes are
listed or quoted on any stock exchange or securities market.

SECTION 7.7 Compensation and Indemnity.

         The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for its acceptance of this
Indenture and its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by or on behalf of it in
addition to the compensation for its services. Such expenses may include the
reasonable compensation, disbursements and expenses of the Trustee's agents,
counsel and other persons not regularly in its employ.

                                       35
<PAGE>

         The Company shall indemnify, defend and hold the Trustee and its
directors, officers, employees and agents (collectively with the Trustee the
"Indemnitees") harmless from and against every loss, liability or expense,
including without limitation damages, fines, suits, actions, demands, penalties,
costs, out-of-pocket or incidental expenses, legal fees and expenses, and the
costs and expenses of defending any claim (collectively, "Losses"), that may be
imposed on, incurred by, or asserted against, any Indemnitee for or in respect
of the Trustee's (i) execution and delivery of this Indenture, (ii) compliance
or attempted compliance with or reliance upon any instruction or other direction
upon which the Trustee is authorized to rely pursuant to the terms of this
Indenture and (iii) performance under this Indenture except as set forth in the
next paragraph. Any Indemnitee shall notify the Company promptly of any claim
for which it may seek indemnity under this Section.

         The Company need not reimburse any expense or indemnify against any
Loss incurred by the Trustee or any Indemnitee through its own negligence or
willful misconduct.

         The Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee to secure the Company's payment
obligations in this Section 7.7, except that held in trust to pay principal and
interest and Liquidated Damages, if any, on Notes. Such liens and the Company's
obligations under this Section 7.7 shall survive the termination, satisfaction
and discharge of this Indenture and the resignation or removal of the Trustee
for any reason.

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

SECTION 7.8           Replacement of the 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 7.8.

         The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing and may appoint a successor
Trustee. The Company may remove the Trustee if:

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

                  (2) 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;

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

                  (4) the Trustee becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the

                                       36
<PAGE>
successor Trustee takes office, the holders of a majority in principal amount of
the then outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

         If the Trustee after written request by any holder of a Note who has
been a holder for at least six months fails to comply with Section 7.10, such
holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. 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 successor Trustee shall mail a notice of its
succession to holders of Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the retiring Trustee hereunder have been paid and subject to the lien
provided for in Section 7.7. Notwithstanding the replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee with respect to expenses and
liabilities incurred by it prior to such replacement.

         Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.

SECTION 7.9 Successor Trustee by Merger, etc.

         If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another person, the resulting, surviving or
transferee person without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.

SECTION 7.10 Eligibility, Disqualification.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee shall always have a combined
capital and surplus as stated in Section 10.10. The Trustee is subject to TIA
Section 310(b) regarding the disqualification of a trustee upon acquiring a
conflicting interest.

SECTION 7.11 Preferential Collection of Claims Against Company.

         The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship set forth in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.

                                       37
<PAGE>

                                    ARTICLE 8

                     SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 8.1 Discharge of Indenture.

         When (a) the Company delivers to the Trustee for cancellation all Notes
theretofore authenticated (other than any other Notes which have been destroyed,
lost or stolen and in lieu of or in substitution for which other Notes have been
authenticated and delivered) and not theretofore canceled, or (b) all the Notes
not theretofore canceled or delivered to the Trustee for cancellation have
become due and payable, or by their terms will become due and payable within one
year or are to be called for redemption within one year under arrangements
reasonably satisfactory to the Trustee for the giving of notice of redemption,
and the Company deposits with the Trustee, in trust, amounts sufficient to pay
at maturity all of the Notes (other than any Notes which have been mutilated,
destroyed, lost or stolen and in lieu of or in substitution for which other
Notes have been authenticated and delivered) not theretofore canceled or
delivered to the Trustee for cancellation, including principal and premium, if
any, interest and Liquidated Damages, if any, due or to become due to such date
of maturity or Redemption Date, as the case may be, and if in either case the
Company also pays, or causes 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) rights of registration of transfer, substitution, replacement and exchange
and conversion of Notes, (ii) rights hereunder of holders of Notes to receive
payments of principal of, and premium, if any, interest, Liquidated Damages, if
any, on, the Notes, (iii) the obligations under Sections 2.3 and 8.5 hereof and
(iv) 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 as required by Section 10.4, and at the Company's cost and
expense, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture; the Company, however, hereby agrees to reimburse
the Trustee 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 Notes.

SECTION 8.2 Deposited Monies to be Held in Trust by Trustee.

         Subject to Section 8.4, all monies deposited with the Trustee pursuant
to Section 8.1 shall be held in trust and applied by it to the payment,
notwithstanding the provisions of Article II hereof, either directly or through
the Paying Agent, to the holders of the particular Notes for the payment of
which such monies have been deposited with the Trustee, of all sums due and to
become due thereon for principal and premium, if any, interest, and Liquidated
Damages, if any.

SECTION 8.3 Paying Agent to Repay Monies Held.

         Upon the satisfaction and discharge of this Indenture, all monies then
held by any Paying Agent (other than the Trustee) shall, upon the Company's
demand, be repaid to it or paid to the Trustee, and thereupon such Paying Agent
shall be released from all further liability with respect to such monies.

                                       38
<PAGE>

SECTION 8.4 Return of Unclaimed Monies.

         Subject to the requirements of applicable law, any monies deposited
with or paid to the Trustee for payment of the principal of or premium, if any,
or interest (including Liquidated Damages) on, Notes and not applied but
remaining unclaimed by the holders thereof for two years after the date upon
which the principal of or premium, if any, or interest (including Liquidated
Damages) on, such Notes, as the case may be, have become due and payable, shall
be repaid to the Company by the Trustee on demand; provided, however, that the
Company, or the Trustee at the request and expense of the Company, shall have
first caused notice of such payment to the Company to be mailed to each holder
of a Note entitled thereto no less than 30 days prior to such payment and all
liability of the Trustee shall thereupon cease with respect to such monies; and
the holder of any of the Notes shall thereafter look only to the Company for any
payment which such holder may be entitled to collect unless an applicable
abandoned property law designates another person. In the absence of a written
request from the Company to return unclaimed funds to the Company, the Trustee
shall from time to time deliver all unclaimed funds held by it in any capacity
hereunder to or as directed by applicable escheat authorities, as required by
applicable law. Any unclaimed funds held by the Trustee in any capacity
hereunder pursuant to this Section 8.4 shall be held uninvested and without any
liability for interest.

SECTION 8.5 Reinstatement.

         If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 8.2 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.1 until such time as the Trustee or the Paying Agent is permitted to apply all
such money in accordance with Section 8.2; provided, however, that if the
Company makes any payment of interest (including Liquidated Damages) on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders thereof to receive such
payment from the money held by the Trustee or Paying Agent.

                                    ARTICLE 9

                                   AMENDMENTS

SECTION 9.1 Without the Consent of Holders.

         The Company and the Trustee may amend this Indenture or the Notes
without notice to or the consent of any holder of a Note for the purposes of:

         (a) curing any ambiguity or correcting or supplementing any defective
or inconsistent provision contained in this Indenture or making any other
changes in the provisions of this Indenture which the Company and the Trustee
may deem necessary or desirable provided such amendment does not materially and
adversely affect the legal rights under the Indenture of the holders of Notes.

         (b) providing for uncertificated Notes in addition to or in place of
certificated Notes;

                                       39
<PAGE>

         (c) evidencing the succession of another person to the Company and
providing for the assumption by such successor of the covenants and obligations
of the Company hereunder and in the Notes as permitted by Section 5.1;

         (d) providing for conversion rights and/or repurchase rights of holders
of Notes in the event of consolidation, merger, share exchange or sale of all or
substantially all of the assets of the Company as required to comply with
Sections 5.1 and/or 12.6;

         (e) reducing the Conversion Price;

         (f) evidencing and providing for the acceptance of appointment under
this Indenture of a successor Trustee;

         (g) making any changes that would provide the holders of the Notes with
any additional rights or benefits or that does not adversely affect the legal
rights under this Indenture of any such holder; or

         (h) complying with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the TIA.

SECTION 9.2 With the Consent of Holders.

         Subject to Section 6.7, the Company and the Trustee may amend this
Indenture or the Notes with the written consent of the holders of at least a
majority in aggregate principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes).

         Subject to Sections 6.4 and 6.7, the holders of a majority in principal
amount of the Notes then outstanding may also waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.

         However, without the consent of each holder of a Note affected, an
amendment or waiver under this Section 9.2 may not:

         (a) reduce the principal amount of Notes whose holders must consent to
an amendment, supplement or waiver;

         (b) reduce the principal of or change the fixed maturity of any Note
or, except as permitted pursuant to Section 9.1(a), (d), (g) or (h), alter the
redemption provisions with respect thereto;

         (c) reduce the rate of, or change the time for payment of, interest,
including defaulted interest, or Liquidated Damages on any Note;

         (d) waive a Default or Event of Default in the payment of principal of
or premium, if any, interest or Liquidated Damages, if any, on, the Notes
(except a rescission of acceleration of the Notes by the holders of at least a
majority in aggregate principal amount of the Notes then outstanding and a
waiver of the payment default that resulted from such acceleration);

                                       40
<PAGE>

         (e) make the principal of or premium, interest or Liquidated Damages
on, any Note payable in money other than as provided for herein and in the
Notes;

         (f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or Events of Default or the rights of holders of Notes
to receive payments of principal of or premium, interest or Liquidated Damages
on, the Notes;

         (g) waive a redemption payment with respect to any Notes;

         (h) except as permitted herein (including Section 9.1(a)), increase the
Conversion Price or modify the provisions contained herein relating to
conversion of the Notes in a manner adverse to the holders thereof; or

         (i) make any change to the abilities of holders of Notes to enforce
their rights hereunder or the provisions of clauses (a) through (h) of this
Section 9.2.

         To secure a consent of the holders of Notes under this Section 9.2, it
shall not be necessary for such holders to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.

         After an amendment or waiver under this Section 9.2 becomes effective,
the Company shall mail to holders of Notes a notice briefly describing the
amendment or waiver.

SECTION 9.3 Compliance with the Trust Indenture Act.

         Every amendment to this Indenture or the Notes shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.

SECTION 9.4 Revocation and Effect of Consents.

         Until an amendment or waiver becomes effective, a consent to it by a
holder of a Note is a continuing consent by the holder and every subsequent
holder of a Note or portion of a Note that evidences the same debt as the
consenting holder's Note, even if notation of the consent is not made on any
Note. However, any such holder or subsequent holder may revoke the consent as to
his or her Note or portion of a Note if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate certifying that the holders of the requisite principal amount of
Notes have consented to the amendment or waiver.

         The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the holders of Notes entitled to consent to any
amendment or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
holders of Notes at such record date (or their duly designated proxies), and
only those persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such persons continue to
be holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from holders of the
principal amount of Notes required hereunder for such amendment or waiver to be
effective shall have also been given and not revoked within such 90-day period.

                                       41
<PAGE>

         After an amendment or waiver becomes effective it shall bind every
holder of a Note, unless it is of the type described in clauses (a) - (i) of
Section 9.2. In such case, the amendment or waiver shall bind each holder of a
Note who has consented to it and every subsequent holder of a Note or portion of
a Note that evidences the same debt as the consenting holder's Note.

SECTION 9.5 Notation on or Exchange of Notes.

         Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 9 may, and shall if required by
the Trustee, bear a notation in the form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Notes so modified as to conform, in the opinion of the Company
and the Trustee, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange for
outstanding Notes without charge to the holders of the Notes, except as
specified in Section 2.6.

SECTION 9.6 Trustee Protected.

         The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if such amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If such amendment or supplemental indenture does
adversely affect the rights, duties, liabilities or immunities of the Trustee,
the Trustee may, but need not, sign it. In signing such amendment or
supplemental indenture, the Trustee shall be entitled to receive, in addition to
the documents required by Section 10.4 hereof, and shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that such amendment or supplemental indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, and that it
will be valid and binding upon the Company in accordance with its terms.

                                   ARTICLE 10

                               GENERAL PROVISIONS

SECTION 10.1 Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), such duties imposed by such section of
the TIA shall control. If any provision of this Indenture expressly modifies or
excludes any provision of the TIA that may be so modified or excluded, the
Indenture provision so modifying or excluding such provision of the TIA shall be
deemed to apply.

SECTION 10.2 Notices.

         Any notice or communication by the Company or the Trustee to the other
parties is duly given if in writing and delivered in person or mailed by
first-class mail, with postage prepaid (registered or certified, return receipt
requested), or sent by facsimile or overnight air couriers guaranteeing next day
delivery, to the other party's address as stated in Section 10.10. The Company
or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

                                       42
<PAGE>

         All notices and communications (other than those sent to holders of
Notes) shall be deemed to have been duly given at the time delivered by hand if
personally delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; when transmission is confirmed, if transmitted by
facsimile; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. Notwithstanding
the foregoing, all notices to the Trustee shall be effective only upon receipt
by a Trust Officer.

         Any notice or communication to a holder of a Note shall be mailed by
first-class mail, with postage prepaid, to his or her address shown on the
Register kept by the Registrar. Failure to mail a notice or communication to a
holder or any defect in the notice or communication shall not affect its
sufficiency with respect to other holders.

         If a notice or communication to a holder of a Note is sent in the
manner provided above within the time prescribed, it is duly given, whether or
not the addressee receives it.

         If the Company sends a notice or communication to holders of Notes, it
shall send a copy to the Trustee and each Agent at the same time.

         All notices or communications shall be in writing.

SECTION 10.3 Communication by Holders With Other Holders.

         Holders may communicate pursuant to TIA Section 312(b) with other
holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and the Paying Agent shall have the
protection of TIA Section 312(c).

SECTION 10.4 Certificate and Opinion as to Conditions Precedent.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

                  (1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5) stating that, in the opinion of such person, all conditions
precedent provided for in this Indenture (including any covenants, compliance
with which constitutes a condition precedent) relating to the proposed action
have been complied with; and

                  (2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5) stating that, in the opinion of such counsel, such action is
authorized or permitted by this Indenture and that all such conditions precedent
(including any covenants, compliance with which constitutes a condition
precedent) have been complied with.

SECTION 10.5 Statements Required in Certificate or Opinion.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall include:

                                       43
<PAGE>

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

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


                  (3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

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

         Any Officers' Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless such Officer knows that the opinion
with respect to the matters upon which his or her certificate may be based as
aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon certificates, statements or opinions of, or
representations by an officer or officers of the Company, or other persons or
firms deemed appropriate by such counsel, unless such counsel knows that the
certificates, statements or opinions or representations with respect to the
matters upon which his or her opinion may be based as aforesaid are erroneous.

         Any Officers' Certificate, statement or Opinion of Counsel may be
based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representation by an accountant (who may be an employee of the
Company), or firm of accountants, unless such Officer or counsel, as the case
may be, knows that the certificate or opinion or representation with respect to
the accounting matters upon which his or her certificate, statement or opinion
may be based as aforesaid is erroneous.

SECTION 10.6 Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by, or a meeting of,
holders of Notes. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

SECTION 10.7 Legal Holidays.

         A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or the city in which the Corporate Trust
Office of the Trustee is located are not required to be open, and a "business
day" is any day that is not a Legal Holiday. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If any date specified in this Indenture, including, without
limitation, a redemption date under Paragraph 5 of the Notes, is a Legal
Holiday, then such date shall be the next succeeding business day.

                                       44
<PAGE>

SECTION 10.8 No Recourse Against Others.

         No director, officer, employee, shareholder or Affiliate, as such, of
the Company from time to time shall have any liability for any obligations of
the Company under the Notes or this Indenture or for any claim based on, in
respect of, or by reason of such obligations or their creation. Each holder by
accepting a Note waives and releases all such liability. This waiver and release
are part of the consideration for the Notes. Each of such directors, officers,
employees, shareholders and Affiliates is a third party beneficiary of this
Section 10.8.

SECTION 10.9 Counterparts.

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

SECTION 10.10 Other Provisions.

         The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.

         The Trustee shall always have, or shall be a subsidiary of a bank or
bank holding company which has, a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.

         The Company's address is:

         EDO Corporation.
         60 East 42nd Street, Suite 5010
         New York, New York  10165
         Attention:  William J. Frost
         Facsimile:  (212) 716-2050
         Telephone: (212) 716-2000

         The Trustee's address is:

         HSBC Bank USA
         452 Fifth Avenue

         New York, New York  10018
         Attention:  Issuer Services
         Facsimile:  (212) 525-1300
         Telephone:  (212) 525-1398



                                       45
<PAGE>

SECTION 10.11 Governing Law.

         The laws of the State of New York (including without limitation Section
5-1401 of the New York General Obligations Law or any successor to such statute)
shall govern this Indenture and the Notes without giving effect to applicable
principles of conflicts of law thereof.

SECTION 10.12 No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its subsidiaries. Any such other
indenture, loan or debt agreement may not be used to interpret this Indenture.

SECTION 10.13 Successors.

         All agreements of the Company in this Indenture and the Notes shall
bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.

SECTION 10.14 Severability.

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

SECTION 10.15 Table of Contents, Headings, etc.

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

                                   ARTICLE 11

                                  SUBORDINATION

SECTION 11.1 Agreement to Subordinate.

         The Company agrees, and each holder of Notes by accepting a Note
agrees, that the indebtedness evidenced by the Note is subordinated in right of
payment, to the extent and in the manner provided in this Article 11, to the
prior payment in full in cash or payment satisfactory to holders of Senior Debt
of all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.

SECTION 11.2 Liquidation; Dissolution; Bankruptcy.

         Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:

                                       46
<PAGE>

                  (1) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt (including
interest and Liquidated Damages, if any, after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) in cash or other
payment satisfactory to the holders of the Senior Debt before holders of Notes
shall be entitled to receive any payment with respect to the Notes; and

                  (2) until all Senior Debt is paid in full in cash or other
payment satisfactory to the holders of the Senior Debt, any distribution to
which holders of Notes would be entitled but for this Article 11 shall be made
to holders of Senior Debt, as their interests may appear.

SECTION 11.3          Default on Senior Debt and/or Designated Senior Debt.

         Anything in this Indenture to the contrary notwithstanding, no payment
on account of principal of or premium, if any, interest or Liquidated Damages,
if any, on, or other amounts due on the Notes (including without limitation the
making of a deposit pursuant to Section 3.6 or 4.6), and no redemption,
repurchase, or other acquisition of the Notes, shall be made by or on behalf of
the Company unless:

         (a) full payment of all amounts then due for principal of and interest
on, and of all other amounts then due on, all Senior Debt has been made pursuant
to the terms of the instruments governing such Senior Debt; and

         (b) at the time for, and immediately after giving effect to, such
payment, redemption, repurchase or other acquisition, there shall not exist
under any Senior Debt, or any agreement pursuant to which any Senior Debt is
issued, any default which shall not have been cured or waived and which default
shall have resulted in the full amount of such Senior Debt being declared due
and payable.

         In addition, if the Trustee shall receive written notice from the
holders of Designated Senior Debt or their Representative (a "Payment Blockage
Notice") that there has occurred and is continuing under such Designated Senior
Debt, or any agreement pursuant to which such Designated Senior Debt is issued,
any default, which default shall not have been cured or waived, giving the
holders of such Designated Senior Debt the right to declare such Designated
Senior Debt immediately due and payable, then, anything in this Indenture to the
contrary notwithstanding, no payment on account of the principal of or premium,
if any, interest or Liquidated Damages, if any, on or any other amounts due on
the Notes (including without limitation the making of a deposit pursuant to
Section 3.6 or 4.6), and no redemption, repurchase or other acquisition of the
Notes, shall be made by or on behalf of the Company during the period (the
"Payment Blockage Period") commencing on the date of receipt of the Payment
Blockage Notice and ending (unless earlier terminated by notice given to the
Trustee by the holders or the Representative of the holders of such Designated
Senior Debt) on the earlier of (i) the date on which such default shall have
been cured or waived and (ii) 180 days from the receipt of the Payment Blockage
Notice. Notwithstanding the provisions described in the immediately preceding
sentence (but subject to the provisions contained in Section 11.1 and the first
sentence of this Section 11.3), unless the holders of such Designated Senior
Debt or the Representative of such holders shall have accelerated the maturity
of such Designated Senior Debt, the Company may resume payments on the Notes
after the end of such Payment Blockage Period. Not more


                                       47
<PAGE>
than one Payment Blockage Notice may be given in any consecutive 365-day period,
irrespective of the number of defaults with respect to Senior Debt during such
period.

SECTION 11.4 Acceleration of Notes.

         In the event of the acceleration of the Notes because of an Event of
Default, the Company may not make any payment or distribution to the Trustee or
any holder of Notes in respect of Obligations with respect to Notes and may not
acquire or purchase from the Trustee or any holder of Notes any Notes until all
Senior Debt has been paid in full in cash or other payment satisfactory to the
holders of Senior Debt or such acceleration is rescinded in accordance with the
terms of this Indenture.

         If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt or trustee(s) of such
Senior Debt of the acceleration.

SECTION 11.5 When Distribution Must Be Paid Over.

         In the event that the Trustee, any holder of Notes or any other person
receives any payment or distributions of assets of the Company of any kind with
respect to the Notes in contravention of any terms contained in this Indenture,
whether in cash, property or securities, including, without limitation by way of
set-off or otherwise, then such payment shall be held by the recipient in trust
for the benefit of holders of Senior Debt, and shall be immediately paid over
and delivered to the holders of Senior Debt or the representative(s), to the
extent necessary to make payment in full in cash or other payment satisfactory
to such holders of all Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution or provision therefor, to or for the holders
of Senior Debt; provided that the foregoing shall apply to the Trustee only if a
Trust Officer of the Trustee has actual knowledge (as determined in accordance
with Section 11.11) that such payment or distribution is prohibited by this
Indenture.

         With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 11, 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 shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of holders of Notes or the
Company or any other person money or assets to which any holders of Senior Debt
shall be entitled by virtue of this Article 11, except if such payment is made
as a result of the willful misconduct or gross negligence of the Trustee.

SECTION 11.6 Notice by Company.

         The Company shall promptly notify the Trustee of any facts known to the
Company that would cause a payment of any Obligations with respect to the Notes
or the purchase of any Notes by the Company to violate this Article, but failure
to give such notice shall not affect the subordination of the Notes to the
Senior Debt as provided in this Article.

                                       48
<PAGE>

SECTION 11.7 Subrogation.

         After all Senior Debt is paid in full and until the Notes are paid in
full, holders of Notes shall be subrogated (equally and ratably with all other
indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article to holders of
Senior Debt that otherwise would have been made to holders of Notes is not, as
between the Company and holders of Notes, a payment by the Company on the Notes.

SECTION 11.8 Relative Rights.

         This Article defines the relative rights of holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:

                  (1) impair, as between the Company and holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of or premium, if any, and interest (including Liquidated Damages) on the Notes
in accordance with their terms;

                  (2) affect the relative rights of holders of Notes and
creditors (other than with respect to Senior Debt) of the Company, other than
their rights in relation to holders of Senior Debt; or

                  (3) prevent the Trustee or any holder of Notes from exercising
its available remedies upon a Default or Event of Default, subject to the notice
requirements of Section 6.2 and to the rights of holders and owners of Senior
Debt to receive distributions and payments otherwise payable to holders of
Notes.

         If the Company fails because of this Article to pay principal of or
interest (including Liquidated Damages) on a Note on the due date, the failure
is still a Default or Event of Default.

SECTION 11.9 Subordination May Not Be Impaired by Company.

         No right of any holder of Senior Debt to enforce the subordination of
the indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any holder of Notes or by the failure of the Company or
any such holder to comply with this Indenture.

SECTION 11.10 Distribution or Notice to Representative.

         Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative(s).

         Upon any payment or distribution of assets of the Company referred to
in this Article 11, the Trustee and the holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other person making any distribution to the Trustee or to the holders
of Notes for the purpose of ascertaining the persons entitled to participate
in such

                                       49
<PAGE>
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 11.

SECTION 11.11 Rights of Trustee and Paying Agent.

         The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes. Notwithstanding the provisions of this Article
11 or any other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts that would prohibit the making of
any payment or distribution by the Trustee (other than pursuant to Section
11.4), and the Trustee may continue to make payments on the Notes, unless a
Trust Officer shall have received at least two business days prior to the date
of such payment or distribution written notice of facts that would cause such
payment or distribution with respect to the Notes to violate this Article. Only
the Company or a Representative may give the notice.

         Nothing in this Article 11 shall impair the claims of, or payments to,
the Trustee under or pursuant to Section 7.7 hereof.

         The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

SECTION 11.12 Authorization to Effect Subordination.

         Each holder of a Note by the holder's acceptance thereof authorizes and
directs the Trustee on the holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 11, and appoints the Trustee to act as the holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.9 hereof at least 30 days before the expiration of the time to file such
claim, the holders of any Senior Debt or their representatives are hereby
authorized to file an appropriate claim for and on behalf of the holders of the
Notes.

SECTION 11.13 Article Applicable to Paying Agents.

         In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that the second and third paragraphs of Section 11.11 shall not apply
to the Company or any subsidiary of the Company if it or such subsidiary acts as
Paying Agent.

SECTION 11.14 Senior Debt Entitled to Rely.

         The holders of Senior Debt shall have the right to rely upon this
Article 11, and no amendment or modification of the provisions contained herein
shall diminish or adversely affect


                                       50
<PAGE>
the rights of such holders unless such holders and the Designated Senior Lender
shall have agreed in writing thereto.


SECTION 11.15 Permitted Payments.

         Notwithstanding anything to the contrary in this Article 11, the
holders of Notes may receive and retain at any time on or prior to the Maturity
Date (i) securities that are subordinated to at least the same extent as the
Notes to (a) Senior Debt and (b) any securities issued in exchange for Senior
Debt and (ii) payments and other distributions made from any trust created
pursuant to Section 8.1 hereof; provided, however, no amounts shall be deposited
with the Trustee in trust pursuant to Section 8.1 hereof if all Designated
Senior Indebtedness has not been paid in full in cash or if the Designated
Senior Lender has not given prior written approval of such deposit.

SECTION 11.16 No Waiver of Subordinated Provisions.

         No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company, or by any
non-compliance 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.

         Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Notes, without
incurring responsibility to the Holders of the Notes and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Notes to the holders of Senior Debt, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other person.

                                   ARTICLE 12

                               CONVERSION OF NOTES

SECTION 12.1 Right to Convert.

         Subject to and upon compliance with the provisions of this Indenture,
each holder of Notes shall have the right, at his or her option, at any time on
or before the close of business on the last Trading Day prior to the Maturity
Date (except that (a) with respect to any Note or portion thereof which is
called for redemption prior to such date, such right will terminate, except as
provided in the fourth paragraph of Section 12.2, at the close of business on
the last Trading Day preceding the date fixed for redemption (unless the Company
defaults in payment of the Redemption Price in which case the conversion right
will terminate at the close of business


                                       51
<PAGE>
on the date such default is cured) and (b) with respect to any Note or portion
thereof subject to a duly completed election for repurchase, such right shall
terminate on the close of business on the Fundamental Change Payment Date
(unless the Company defaults in the payment due upon repurchase or such holder
elects to withdraw the submission of such election to repurchase in accordance
with section 4.6) to convert the principal amount of any Note held by such
holder, or any portion of such principal amount which is $1,000 or integral
multiples thereof, into that number of fully paid and non-assessable Common
Shares (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof to be converted by the
Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided in Section 12.2. Notes in
respect of which a holder has delivered a Fundamental Change repurchase notice
exercising the option of such holder to require the Company to repurchase such
Notes may be converted only if the Fundamental Change repurchase notice is
withdrawn in accordance with the terms of this Indenture. A holder of Notes is
not entitled to any rights of a holder of Common Shares until such holder of
Notes has converted his or her Notes to Common Shares, and only to the extent
such Notes are deemed to have been converted to Common Shares under this Article
12.

SECTION 12.2 Exercise of Conversion Privilege; Issuance of Common Shares on
Conversion; No Adjustment for Interest or Dividends.

         To exercise, in whole or in part, the conversion privilege with respect
to any Note, the holder of such Note shall surrender such Note, duly endorsed,
at an office or agency maintained by the Company pursuant to Section 4.4,
accompanied by the funds, if any, required by the final paragraph of this
Section 12.2 and a duly signed and completed written notice of conversion in the
form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder of Notes elects to convert such
Note or such portion thereof specified in said notice. Such notice shall also
state the name or names (with address or addresses) in which the certificate or
certificates for Common Shares which are issuable on such conversion shall be
issued, and shall be accompanied by transfer taxes, if required pursuant to
Section 12.7. Each such Note surrendered for conversion shall, unless the shares
issuable on conversion are to be issued in the same name as the registration of
such Note, be duly endorsed by, or be accompanied by instruments of transfer in
form satisfactory to the Company duly executed by, the holder of Notes or his or
her duly authorized attorney. The holder of such Notes will not be required to
pay any tax or duty which may be payable in respect of the issue or delivery of
Common Shares on conversion, but will be required to pay any tax or duty which
may be payable in respect of any transfer involved in the issue or delivery of
Common Shares in a name other than the same name as the registration of such
Note. The date on which the holder of Notes satisfies each of the requirements
provided in this paragraph shall be referred to as the "Conversion Date."

         No later than the second business day after the Conversion Date, the
Company shall issue and shall deliver to such holder at the office or agency
maintained by the Company for such purpose pursuant to Section 4.4, (1) a
certificate or certificates for the number of full Common Shares issuable upon
the conversion of such Note and (2) a check or cash in an amount calculated
pursuant to Section 12.3 in respect of any fractional interest in respect of a
Common Share arising upon such conversion no later than the tenth business day
after the Conversion Date.

                                       52
<PAGE>

         Certificates representing Common Shares will not be issued or delivered
unless all taxes and duties, if any, payable by the holder have been paid. In
case any Note of a denomination of integral multiples greater than $1,000 is
surrendered for partial conversion, the Company shall execute, and the Trustee
shall authenticate and deliver to the holder of the Note so surrendered, without
charge to him or her, a new Note or Notes in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Note.

         Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the applicable Conversion Date, and the person in
whose name any certificate or certificates for Common Shares are issuable upon
such conversion shall be deemed to have become on the applicable Conversion Date
the holder of record of the shares represented thereby; provided, however, that
any such surrender on any date when the Company's stock transfer books are
closed shall constitute the person in whose name the certificates are to be
issued as the record holder thereof for all purposes on the next succeeding day
on which such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date upon which such Note is surrendered.

         Any Note or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
through the close of business on the last Trading Day immediately preceding such
Interest Payment Date shall (unless such Note or portion thereof being converted
has been called for redemption pursuant to a notice of redemption mailed by the
Company to the holders in accordance with the provisions of Section 3.4) be
accompanied by payment, in funds acceptable to the Company, of an amount equal
to the interest and Liquidated Damages, if any, otherwise payable on such
interest payment date on the principal amount being converted; provided,
however, that no such payment need be made if there exists at the time of
conversion a default in the payment of interest or Liquidated Damages, if
applicable, on the Notes. An amount equal to such payment shall be paid by the
Company on such interest payment date to the holder of such Note at the close of
business on such record date; provided, however, that if the Company defaults in
the payment of interest or Liquidated Damages, if applicable, on such Interest
Payment Date, such amount shall be paid to the person who made such required
payment. Except as provided above in this Section 12.2, no adjustment shall be
made for interest and Liquidated Damages, if any, accrued on any Note converted
or for dividends on any shares issued upon the conversion of such Note as
provided in this Article 12.

SECTION 12.3 Cash Payments in Lieu of Fractional Shares.

         No fractional Common Shares or scrip representing fractional shares
shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered for conversion. If any fractional
share of stock otherwise would be issuable upon the conversion of any Note or
Notes, the Company shall make an adjustment therefor in cash based upon the
Current Market Price of the Common Shares on the last Trading Day prior to the
Conversion Date.

                                       53
<PAGE>

SECTION 12.4 Conversion Price.

         The conversion price shall be as specified in Paragraph 14 of the form
of Note attached as Exhibit A hereto, subject to adjustment as provided in this
Article 12.

SECTION 12.5 Adjustment of Conversion Price.

         The Conversion Price shall be adjusted from time to time by the Company
as follows:

         (a) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Shares in Common Shares,
the Conversion Price in effect at the opening of business on the date following
the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of Common Shares
outstanding at the close of business on the Record Date (as defined in Section
12.5(g)) fixed for such determination and the denominator shall be the sum of
such number of shares and the total number of shares constituting such dividend
or other distribution, such reduction to 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 12.5(a) is declared but not
so paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.

         (b) If the outstanding Common Shares shall be subdivided into a greater
number of Common Shares, the Conversion Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, if the outstanding
Common Shares shall be combined into a smaller number of Common Shares, the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, 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) If the Company shall issue rights or warrants to all or
substantially all holders of its outstanding Common Shares entitling them to
subscribe for or purchase Common Shares at a price per share less than the
Current Market Price (as defined in Section 12.5(g)) on the Record Date fixed
for the determination of shareholders entitled to receive such rights or
warrants, the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect at the
opening of business on the date after such Record Date by a fraction of which
the numerator shall be the number of Common Shares 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 would purchase at such
Current Market Price, and of which the denominator shall be the number of Common
Shares outstanding on the close of business on the Record Date plus the total
number of additional Common Shares so offered for subscription or purchase. Such
adjustment shall become effective immediately after the opening of business on
the day following the Record Date fixed for determination of shareholders
entitled to receive such rights or warrants. To the extent that Common Shares
are not delivered pursuant to such rights or warrants, upon the expiration or
termination of such


                                       54
<PAGE>
rights or warrants the Conversion Price shall be readjusted to be the Conversion
Price which would then be in effect had the adjustments made upon the issuance
of such rights or warrants been made on the basis of delivery of only the number
of Common Shares actually delivered. If such rights or warrants are not so
issued, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such date fixed for the determination of
shareholders entitled to receive such rights or warrants had not been fixed. In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase Common Shares at less than such Current Market Price, and in
determining the aggregate offering price of such Common Shares, there shall be
taken into account any consideration received for such rights or warrants, with
the value of such consideration, if other than cash, to be determined by the
Board of Directors.

         (d) If the Company shall, by dividend or otherwise, distribute to all
holders of its Common Shares shares of any class of capital stock of the Company
(other than any dividends or distributions to which Section 12.5(a) applies) or
evidences of its indebtedness, cash or other assets (including securities, but
excluding (i) any rights or warrants of a type referred to in Section 12.5(c)
and (ii) dividends and distributions paid exclusively in cash) (the foregoing
hereinafter in this Section 12.5(d) called the "Securities"), then, in each such
case, the Conversion Price shall be reduced so that the same shall be equal to
the price determined by multiplying the Conversion Price in effect immediately
prior to the close of business on the Record Date (as defined in Section
12.5(g)) with respect to such distribution by a fraction of which the numerator
shall be the Current Market Price (determined as provided in Section 12.5(g)) on
such date less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors) on such date of the portion of the Securities so distributed
applicable to one Common Share and the denominator shall be such Current Market
Price, such reduction to become effective immediately prior to the opening of
business on the day following the Record Date; provided, however, that in the
event the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one Common Share 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 of Notes shall
have the right to receive upon conversion of a Note (or any portion thereof) the
amount of Securities such holder would have received had such holder converted
such Note (or portion thereof) immediately prior to such Record Date. If such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price 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 12.5(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 used in computing the
Current Market Price pursuant to Section 12.5(g) to the extent possible.

         Notwithstanding any other provision of this Section 12.5(d) to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including, without limitation, any rights distributed pursuant to
any shareholder rights plan) shall be deemed not to have been distributed for
purposes of this Section 12.5(d) if the Company makes proper provision so that
each holder of Notes who converts a Note (or any portion thereof) after the date
fixed for determination of shareholders entitled to


                                       55
<PAGE>
receive such distribution shall be entitled to receive upon such conversion, in
addition to the Common Shares issuable upon such conversion, the amount and kind
of such distributions that such holder would have been entitled to receive if
such holder had, immediately prior to such determination date, converted such
Note into Common Shares.

         Rights or warrants distributed by the Company to all holders of Common
Shares entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such Common Shares;
(ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Shares, shall be deemed not to have been distributed for
purposes of this Section 12.5(d) (and no adjustment to the Conversion Price
under this Section 12.5(d) shall be required) until the occurrence of the
earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment to the Conversion Price
under this Section 12.5(d) shall be made. If any such rights or warrants,
including any such existing rights or warrants distributed prior to the date of
this Indenture, are subject to subsequent events, upon the occurrence of each of
which such rights or warrants shall become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the occurrence of
each such event shall be deemed to be such date of issuance and record date with
respect to new rights or warrants (and a termination or expiration of the
existing rights or warrants 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 with respect thereto, that was counted for
purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 12.5 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Shares with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Shares as
of the date of such redemption or repurchase, and (2) in the case of such rights
or warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.

         For purposes of this Section 12.5(d) and Sections 12.5(a) and (c), any
dividend or distribution to which this Section 12.5(d) is applicable that also
includes Common Shares, or rights or warrants to subscribe for or purchase
Common Shares to which Section 12.5(c) applies (or both), shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
assets, shares of capital stock, rights or warrants other than such Common
Shares or rights or warrants to which Section 12.5(c) applies (and any
Conversion Price reduction required by this Section 12.5(d) with respect to such
dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such Common Shares or such rights or warrants (and
any further Conversion Price reduction required by Sections 12.5(a) and (c) with
respect to such dividend or distribution shall then be made, except that (A) the
Record Date of such dividend or distribution shall be substituted as "the date
fixed for the determination of shareholders entitled to receive such dividend or
other distribution", "Record Date fixed for such determination" and "Record
Date" within the meaning of Section 12.5(a) and as "the date fixed


                                       56
<PAGE>
for the determination of shareholders entitled to receive such rights or
warrants", "the Record Date fixed for the determination of the shareholders
entitled to receive such rights or warrants" and "such Record Date" within the
meaning of Section 12.5(c) and (B) any Common Shares included in such dividend
or distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of Section 12.5(a)).

         (e) If the Company shall, by dividend or otherwise, distribute cash to
all holders of its Common Shares (excluding any cash that is distributed upon a
merger, share exchange or consolidation to which Section 12.6 applies or as part
of a distribution referred to in Section 12.5(d)) in an aggregate amount that,
combined together with (1) the aggregate amount of any other such all-cash
distributions to all holders of its Common Shares within the 12 months preceding
the date of payment of such distribution, and in respect of which no adjustment
pursuant to this Section 12.5(e) has been made, and (2) the aggregate of any
cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Shares
concluded within the 12 months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant to Section 12.5(f)
has been made, exceeds 15% of the product of the Current Market Price
(determined as provided in Section 12.5(g)) on the Record Date with respect to
such distribution times the number of Common Shares outstanding on such date,
then, and in each such case, immediately after the close of business on such
date, the Conversion Price shall be reduced so that it shall equal the price
determined by multiplying the Conversion Price 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 less an
amount equal to the quotient of (x) the excess of such combined amount over such
15% and (y) the number of Common Shares outstanding on the Record Date and (ii)
the denominator of which shall be equal to the Current Market Price on such
Record Date; provided, however, that if the portion of the cash so distributed
applicable to one Common Share is equal to or greater than the Current Market
Price of the Common Share on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of Notes shall
have the right to receive upon conversion of a Note (or any portion thereof) the
amount of cash such holder would have received had such holder converted such
Note (or portion thereof) immediately prior to such Record Date. If such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. Any cash distribution to
all holders of Common Shares as to which the Company makes the election
permitted by Section 12.5(m) and as to which the Company has complied with the
requirements of such Section shall be treated as not having been made for all
purposes of this Section 12.5(e).

         (f) If a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Shares expires and such tender offer (as
amended upon the expiration thereof) requires the payment to shareholders (based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of Purchased Shares (as defined below)) of an aggregate consideration having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in


                                       57
<PAGE>
a resolution of the Board of Directors) that, combined together with (1) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offers, by the Company or
any of its subsidiaries for all or any portion of the Common Shares, expiring
within the 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to this Section 12.5(f) has been made
and (2) the aggregate amount of any such all-cash distributions to all holders
of the Common Shares within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to Section 12.5(e) has been
made, exceeds 15% of the product of the Current Market Price (determined as
provided in Section 12.5(g)) as of the last time (the "Expiration Time") tenders
could have been made pursuant to such tender offer (as it may be amended) times
the number of Common Shares outstanding (including any tendered shares) on the
Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Conversion
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to close of
business on the date of the Expiration Time by a fraction of which the numerator
shall be the number of Common Shares outstanding (including any tendered shares)
on the Expiration Time multiplied by the Current Market Price of the Common
Shares on the Trading Day next succeeding the Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders based on the
acceptance (up to any maximum specified in the terms of the tender offer) of all
shares validly tendered 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 Common Shares outstanding (less
any Purchased Shares) on the Expiration Time and the Current Market Price of the
Common Shares on the Trading Day next succeeding the Expiration Time, such
reduction (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. If the Company is obligated
to purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender offer had not
been made. If the application of this Section 12.5(f) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be made for
such tender offer under this Section 12.5(f).

         (g) For purposes of this Section 12.5, the following terms shall have
the meaning indicated:

                  (1) "closing price" with respect to any securities on any day
means the closing price on such day or, if no such sale takes place on such day,
the average of the reported high and low prices on such day, in each case on the
Nasdaq National Market or New York Stock Exchange, as applicable, or, if such
security is not listed or admitted to trading on such national market or
exchange, on the principal national securities exchange or quotation system on
which such security is quoted or listed or admitted to trading, or, if not
quoted or listed or admitted to trading on any national securities exchange or
quotation system, the average of the high and low prices of such security on the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available, in such manner as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in


                                       58
<PAGE>
good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors.

                  (2) "Current Market Price" means the average of the daily
closing prices per Common Share for the 10 consecutive Trading Days immediately
prior to the date in question; provided, however, that (1) if 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 Price
pursuant to Sections 12.5(a), (b), (c), (d), (e) or (f) occurs during such 10
consecutive Trading Days, the closing price for each Trading Day prior to the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (2) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 12.5(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 multiplying such closing price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if 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 (1) or (2) 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 Sections 12.5(d) or (f), whose
determination shall be conclusive and described in a resolution of the Board of
Directors) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one Common Share as of the close of business on
the day before such "ex" date. For purposes of any computation under Section
12.5(f), the Current Market Price on any date shall be deemed to be the average
of the daily closing prices per Common Share 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 Price pursuant to Section 12.5(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 multiplying such Closing Price by the reciprocal of the fraction
by which the Conversion Price is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term "ex" date, (1) when used
with respect to any issuance or distribution, means the first date on which the
Common Shares trade 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, (2) when used with respect to any subdivision or
combination of Common Shares, means the first date on which the Common Shares
trade regular way on such exchange or in such market after the time at which
such subdivision or combination becomes effective, and (3) when used with
respect to any tender or exchange offer means the first date on which the Common
Shares trade 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 Price are called for pursuant to this Section
12.5, such adjustments shall be made to the Current Market Price as may be
necessary or appropriate to effectuate the intent of this Section 12.5 and to
avoid unjust or inequitable results as determined in good faith by the Board of
Directors.

                                       59
<PAGE>

                  (3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.

                  (4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Shares
have the right to receive any cash, securities or other property or in which the
Common Shares (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).

         (h) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 12.5(a), (b), (c), (d), (e) and (f), as
the Board of Directors considers to be advisable to avoid or diminish any income
tax to holders of Common Shares or rights to purchase Common Shares resulting
from any dividend or distribution of stock (or rights to acquire stock) or from
any event treated as such for income tax purposes.

         The Company from time to time may, to the extent permitted by law,
reduce the Conversion Price by any amount for any period of at least 20 days, if
the Board of Directors has made a determination that such reduction would be in
the Company's best interests, which determination shall be conclusive and
described in a resolution of the Board of Directors. The reduction in Conversion
Price shall be irrevocable during this period. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to the
holders of Notes at his or her last address appearing on the Register a notice
of the reduction at least 15 days prior to the date the reduced Conversion Price
takes effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.

         (i) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect; provided, however, that any adjustments which
by reason of this Section 12.5(i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. 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 hundredth 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 Shares.

         (j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any Conversion Agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to each holder of Notes at his or her last address appearing on the Register of
holders maintained for that purpose within 20 days of the effective date of such
adjustment. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.

                                       60
<PAGE>

         (k) In any case in which this Section 12.5 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 issuing to the holder of any Note
converted after such Record Date and before the occurrence of such event the
additional Common Shares issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Shares issuable upon
such conversion before giving effect to such adjustment.

         (l) For purposes of this Section 12.5, the number of Common Shares 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 Common Shares. The Company shall not pay any
dividend or make any distribution on Common Shares held in the treasury of the
Company.

         (m) In lieu of making any adjustment to the Conversion Price pursuant
to Section 12.5(e), the Company may elect to reserve an amount of cash for
distribution to the holders of Notes upon the conversion of the Notes so that
any such holder converting Notes will receive upon such conversion, in addition
to the Common Shares and other items to which such holder is entitled, the full
amount of cash which such holder would have received if such holder had,
immediately prior to the Record Date for such distribution of cash, converted
its Notes into Common Shares, together with any interest accrued with respect to
such amount, in accordance with this Section 12.5(m). The Company may make such
election by providing an Officers' Certificate to the Trustee to such effect on
or prior to the payment date for any such distribution and depositing with the
Trustee on or prior to such date an amount of cash equal to the aggregate amount
that the holders of Notes would have received if such holders had, immediately
prior to the Record Date for such distribution, converted all of the Notes into
Common Shares. Any such funds so deposited by the Company with the Trustee shall
be invested by the Trustee pursuant to arrangements reasonably satisfactory to
the Trustee in U.S. Government Obligations with a maturity not more than three
(3) months from the date of issuance. Upon conversion of Notes by a holder
thereof, such holder shall be entitled to receive, in addition to the Common
Shares issuable upon conversion, an amount of cash equal to the amount such
holder would have received if such holder had, immediately prior to the Record
Date for such distribution, converted its Note into Common Shares, along with
such holder's pro-rata share of any accrued interest earned as a consequence of
the investment of such funds. Promptly after making an election pursuant to this
Section 12.5(m), the Company shall give or shall cause to be given notice to all
holders of Notes of such election, which notice shall state the amount of cash
per $1,000 principal amount of Notes such holders shall be entitled to receive
(excluding interest) upon conversion of the Notes as a consequence of the
Company having made such election.

SECTION 12.6 Effect of Reclassification, Consolidation, Merger or Sale.

         If any of the following events occur: (i) any reclassification or
change of the outstanding Common Shares (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 consolidation, merger, share
exchange or combination of the Company with another corporation as a result of
which holders of Common Shares shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Shares, or (iii) any sale or conveyance of the properties and assets
of the Company as an entirety or substantially as


                                       61
<PAGE>
an entirety to any other corporation as a result of which holders of Common
Shares shall be entitled to receive stock, securities or other property or
assets (including cash) with respect to or in exchange for such Common Shares,
then 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 the
Notes shall be convertible into the kind and amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, share exchange, combination,
sale or conveyance by a holder of a number of Common Shares issuable upon
conversion of the Notes (assuming, for such purposes, a sufficient number of
authorized Common Shares available to convert all such Notes) immediately prior
to such reclassification, change, consolidation, merger, share exchange,
combination, sale or conveyance assuming such holder of Common Shares did not
exercise his or her rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance is not the same for each Common Share in
respect of which such rights of election have not been exercised ("non-electing
share"), then, for the purposes of this Section 12.6, the kind and amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance for each non-electing share shall be deemed
to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 12. If, in the case of any such reclassification,
change, consolidation, merger, share exchange, combination, sale or conveyance,
the stock or other securities and assets receivable thereupon by a holder of
Common Shares 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 reclassification, change, consolidation, merger, 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 Notes as the Board of Directors
shall reasonably consider necessary by reason of the foregoing.

         The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes at his or her address appearing
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 12.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, share exchanges,
combinations, sales and conveyances.

         If this Section 12.6 applies to any event or occurrence, Section 12.5
shall not apply.

SECTION 12.7 Taxes on Shares Issued.

         The issue of stock certificates on conversions of Notes shall be made
without charge to the converting holder for any tax in respect of the issue
thereof. The Company shall not,


                                       62
<PAGE>
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any Note converted, and the Company shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.

SECTION 12.8 Reservation of Shares; Shares to Be Fully Paid; Listing of Common
Shares.

         The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares to
provide for the conversion of the Notes from time to time as such Notes are
presented for conversion.

         Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Shares issuable
upon conversion of the Notes, the Company shall take all corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue such Common Shares at such adjusted Conversion Price.

         The Company covenants that all Common Shares issued upon conversion of
Notes will be fully paid and non-assessable by the Company and free from all
taxes, liens and charges with respect to the issue thereof.

         The Company further covenants that as long as the Common Shares are
listed on the New York Stock Exchange, or its successor, the Company shall cause
all Common Shares issuable upon conversion of the Notes to be eligible for such
listing in accordance with, and at the times required under, the requirements of
such market, and if at any time the Common Shares become quoted on the Nasdaq
National Market or listed on any other national securities exchange, the Company
shall cause all Common Shares issuable upon conversion of the Notes to be so
quoted or listed and kept so quoted or listed.

SECTION 12.9 Responsibility of Trustee.

         The Trustee shall not at any time be under any duty of responsibility
to any holders of Notes to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee shall not be accountable with respect to the
validity or value (or the kind or amount) of any Common Shares, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Note; and the Trustee makes no representations with respect
thereto. Subject to the provisions of Section 7.1, the Trustee shall not be
responsible for any failure of the Company to issue, transfer or deliver any
Common Shares or stock certificates or other securities or property or cash upon
the surrender of any Note for the purpose of conversion or to comply with any of
the duties, responsibilities or covenants of the Company contained in this
Article 12. Without limiting the generality of the foregoing, the Trustee shall
not have any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 12.6
relating either to


                                       63
<PAGE>
the kind or amount of shares of stock or securities or property (including cash)
receivable by holders of Notes upon the conversion of their Notes after any
event referred to in such Section 12.6 or to any adjustment to be made with
respect thereto, but, subject to the provisions of Section 7.1, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officers' Certificate and Opinion of Counsel
(which the Company shall be obligated to file with the Trustee prior to the
execution of any such supplemental indenture) with respect thereto.

SECTION 12.10 Notice to Holders Prior to Certain Actions.

         If

         (a) the Company declares a dividend (or any other distribution) on its
Common Shares (other than in cash out of retained earnings or other than a
dividend that results in an adjustment in the Conversion Price pursuant to
Section 12.5 as to which the Company has made an election in accordance with
Section 12.5(m)); or

         (b) the Company authorizes the granting to all or substantially all of
the holders of its Common Shares of rights or warrants to subscribe for or
purchase any share of any class of Common Shares or any other rights or warrants
(other than rights or warrants referred to in the second paragraph of Section
12.5(d)); or

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

         (d) there is any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;

then the Company shall cause to be filed with the Trustee and to be mailed to
each holder of Notes at his or her address appearing on the Register maintained
for that purpose as promptly as possible but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution or
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Shares of record to be entitled to such dividend, distribution
or rights are to be determined, or (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding-up is expected to become effective or occur, and the date as of which
it is expected that holders of Common Shares of record shall be entitled to
exchange their Common Shares for securities or other property deliverable upon
such reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding-up.

                                       64
<PAGE>

SECTION 12.11 Restriction on Common Shares Issuable Upon Conversion.

         (a) Common Shares to be issued upon conversion of Notes prior to the
effectiveness of a Shelf Registration Statement shall be physically delivered in
certificated form to the holders converting such Securities, and the certificate
representing such Common Shares shall bear the Restricted Common Share Legend
unless removed in accordance with Section 12.11(c).

         (b) If (i) Common Shares to be issued upon conversion of a Note prior
to the effectiveness of a Shelf Registration Statement are to be registered in a
name other than that of the holder of such Note or (ii) Common Shares
represented by a certificate bearing the Restricted Common Share Legend are
transferred subsequently by such holder, then, unless the Shelf Registration
Statement has become effective and such shares are being transferred pursuant to
the Shelf Registration Statement, the holder must deliver to the transfer agent
for the Common Shares a certificate in substantially the form of Exhibit C as to
compliance with the restrictions on transfer applicable to such Common Shares,
and neither the transfer agent nor the registrar for the Common Shares shall be
required to register any transfer of such Common Shares not so accompanied by a
properly completed certificate.

         (c) Except in connection with a Shelf Registration Statement, if
certificates representing Common Shares are issued upon the registration of
transfer, exchange or replacement of any other certificate representing Common
Shares bearing the Restricted Common Share Legend, or if a request is made to
remove such Restricted Common Share Legend from certificates representing Common
Shares, the certificates so issued shall bear the Restricted Common Share
Legend, or the Restricted Common Share Legend shall not be removed, as the case
may be, unless there is delivered to the Company such satisfactory evidence,
which, in the case of a transfer made pursuant to Rule 144 under the Securities
Act, may include an opinion of counsel as may be reasonably required by the
Company, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of Rule 144A, Rule 144 or Regulation S under the Securities Act or that such
Common Shares are securities that are not "restricted" within the meaning of
Rule 144 under the Securities Act. Upon provision to the Company of such
reasonably satisfactory evidence, the Company shall cause the transfer agent for
the Common Shares to countersign and deliver certificates representing Common
Shares that do not bear the legend.


                                       65
<PAGE>


         IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Indenture.

                                      EDO CORPORATION

                                      By:/s/ James M. Smith
                                        --------------------------------------
                                      Name:  James M. Smith
                                      Title: President and CEO

                                      HSBC BANK USA, as Trustee



                                      By: /s/ Deirdra N. Ross
                                        --------------------------------------
                                      Name:  Deirdra N. Ross
                                      Title: Assistant Vice President





                                       66

<PAGE>
No. _______                                                           $_________
                                                               CUSIP 281347 AC 8

                                 EDO CORPORATION

                  5.25% CONVERTIBLE SUBORDINATED NOTE DUE 2007

      EDO Corporation promises to pay to

      or registered assigns,

      the principal sum of                                 on April 15, 2007

      Interest Payment Dates: April 15 and October 15, commencing October 15,
      2002

      Regular Record Dates: April 1 and October 1.

                                          EDO CORPORATION

                                          By:
                                             ---------------------------------
                                          Title:


                          Certificate of Authentication

     This is one of the Notes described in the within-mentioned Indenture.

                                          HSBC Bank USA,
                                          as Trustee

                                          By:
                                             ---------------------------------
                                          Authorized Officer
                                          Dated:


<PAGE>


                               (Back of Security)


                                      A-2
<PAGE>




                                 EDO CORPORATION

                  5.25% CONVERTIBLE SUBORDINATED NOTE DUE 2007

         1.       Interest. EDO Corporation, a New York corporation (the
                  "Company"), promises to pay interest on the principal amount
                  of this Note at the rate per annum shown above. The Company
                  will pay interest semi-annually in arrears on April 15 and
                  October 15 of each year, beginning October 15, 2002. Interest
                  on the Notes will accrue from the most recent interest payment
                  date to which interest has been paid or, if no interest has
                  been paid, from April 2, 2002. Interest (including any
                  Liquidated Damages) will be computed on the basis of a 360-day
                  year composed of twelve 30-day months.

         2.       Method of Payment. The Company will pay interest (and
                  Liquidated Damages, if any) on the Notes (except defaulted
                  interest) to the person in whose name each Note is registered
                  at the close of business on the April 1 or October 1
                  immediately preceding the relevant interest payment date (each
                  a "Regular Record Date") (other than with respect to a Note or
                  portion thereof called for redemption on a Redemption Date ,
                  or repurchased in connection with a Fundamental Change on a
                  repurchase date, during the period from the close of business
                  on a Regular Record Date to (but excluding) the next
                  succeeding interest payment date, in which case accrued
                  interest (and Liquidated Damages, if any) shall be payable
                  (unless such Note or portion thereof is converted) to the
                  holder of the Note or portion thereof redeemed or repurchased
                  in accordance with the applicable redemption or repurchase
                  provisions of the Indenture). The holder must surrender Notes
                  to a Paying Agent to collect principal payments. The Company
                  will pay the principal of, and premium, if any, and interest
                  (including Liquidated Damages, if any) on, the Notes at the
                  office or agency of the Company maintained for such purpose,
                  in money of the United States that at the time of payment is
                  legal tender for payment of public and private debts. Until
                  otherwise designated by the Company, the Company's office or
                  agency maintained for such purpose will be the principal
                  Corporate Trust Office of the Trustee (as defined below).
                  However, the Company may pay principal, premium, if any, and
                  interest (including Liquidated Damages, if any) by check
                  payable in such money, and may mail such check to the holders
                  of the Notes at their respective addresses as set forth in the
                  Register of holders of Notes.

         3.       Paying Agent and Registrar. HSBC Bank USA (together with any
                  successor Trustee under the Indenture referred to below, the
                  "Trustee"), will act as Paying Agent and Registrar. The
                  Company may change the Paying Agent, Registrar or co-registrar
                  without prior notice. Subject to certain limitations in the
                  Indenture, the Company or any of its subsidiaries may act in
                  any such capacity.


                                      A-3
<PAGE>


         4.       Indenture. The Company issued the Notes under an Indenture
                  dated as of April 2, 2002 (the "Indenture") by and among the
                  Company and the Trustee. The terms of the Notes include those
                  stated in the Indenture and those made part of the Indenture
                  by reference to the Trust Indenture Act of 1939 (15 U.S. Code
                  Sections 77aaa-77bbbb) (the "TIA") as in effect on the date
                  of the Indenture. The Notes are subject to, and qualified by,
                  all such terms, certain of which are summarized hereon, and
                  holders are referred to the Indenture and the TIA for a
                  statement of such terms. The Notes are general unsecured
                  subordinated obligations of the Company limited to (except as
                  otherwise provided in the Indenture) $125,000,000 in aggregate
                  principal amount, unless an election has been made as set
                  forth in Article 2 of the Indenture to increase such aggregate
                  principal amount to an amount not to exceed $12,800,000.
                  Capitalized terms not defined below have the same meaning as
                  is given them in the Indenture.

         5.       Optional Redemption. On or after April 20, 2005, the Company
                  shall have the option to redeem the Notes, in whole or from
                  time to time in part, at the following redemption prices
                  (expressed as percentages of principal amount), if redeemed
                  during the twelve month period beginning April 15 of each year
                  indicated (April 20, 2005, in the case of the first such year)
                  plus accrued and unpaid interest (and Liquidated Damages, if
                  any) to, but excluding, the date fixed for redemption:

<TABLE>
<CAPTION>
                                                            Redemption
                Year                                          Price
                ----                                          -----
<S>                                                         <C>
                2005.......................................   102.10%

                2006.......................................   101.05%
</TABLE>

                  and 100% at April 15, 2007.

                  Notice of redemption will be mailed by first class mail at
least 15 days but not more than 60 days before the date fixed for redemption to
each holder of Notes to be redeemed at his or her registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. If less than all Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed by a method that complies with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or quoted, or, if the Notes are not so listed, on a pro rata
basis by lot or by any other method that the Trustee considers fair and
appropriate. On and after the redemption date, interest (and Liquidated Damages,
if any) ceases to accrue on Notes or portions thereof called for redemption
(unless the Company defaults in the payment of the redemption price). If this
Note is redeemed on a date which is also an Interest Payment Date, the interest
payment (and Liquidated Damages, if any) due on such date will be paid to the
person in whose name this Note is registered at the close of business on the
relevant record date.


                                      A-4
<PAGE>


         6.       Fundamental Change. Upon the occurrence of a Fundamental
                  Change, the Company shall make a Fundamental Change Offer to
                  repurchase all outstanding Notes at a price equal to 100% of
                  the aggregate principal amount of the Notes, plus accrued and
                  unpaid interest (and Liquidated Damages, if any) to, but
                  excluding, the date of repurchase, such offer to be made as
                  provided in the Indenture. To accept the Fundamental Change
                  Offer, the holder hereof must comply with the terms thereof,
                  including surrendering this Note, with the "Option of Holder
                  to Elect Repurchase" portion hereof completed, to the Company,
                  a depositary, if appointed by the Company, or a Paying Agent,
                  at the address specified in the notice of the Fundamental
                  Change Offer mailed to holders as provided in the Indenture,
                  prior to termination of the Fundamental Change Offer.

         7.       Subordination. The Company's payment of the principal of, or
                  premium, if any, and interest (including Liquidated Damages,
                  if any) on, the Notes is subordinated to the prior payment in
                  full of the Company's Senior Debt as set forth in the
                  Indenture. Each holder of Notes by his or her acceptance
                  hereof covenants and agrees that all payments of the principal
                  of, or premium, if any, and interest (including Liquidated
                  Damages, if any) on the Notes by the Company shall be
                  subordinated in accordance with the provisions of Article 11
                  of the Indenture, and each holder of Notes accepts and agrees
                  to be bound by such provisions.

         8.       Denominations, Transfer and Exchange. The Notes are in
                  registered form without coupons in denominations of $1,000 and
                  integral multiples of $1,000. The transfer of Notes may be
                  registered and Notes may be exchanged as provided in the
                  Indenture. As a condition of transfer, the Registrar and the
                  Trustee may require a holder, among other things, to furnish
                  appropriate endorsements and transfer documents, and the
                  Company and the Registrar may require a holder to pay any
                  taxes and fees required by law or permitted by the Indenture.
                  The Company or the Registrar need not exchange or register the
                  transfer of any Note or portion of a Note submitted for
                  redemption or repurchase. Also the Company or the Registrar
                  need not exchange or register the transfer of any Note for a
                  period of 15 days before a selection of Notes to be redeemed
                  or repurchased.

         9.       Persons Deemed Owners. The registered holder of a Note may be
                  treated as its owner for all purposes.

         10.      Amendments and Waivers. Subject to certain exceptions, the
                  Indenture or the Notes may be amended or supplemented with the
                  consent of the holders of at least a majority in principal
                  amount of the then outstanding Notes, and any existing default
                  may be waived with the consent of the holders of a majority in
                  principal amount of the then outstanding Notes.

         Without the consent of any holder, the Indenture or the Notes may be
amended to: (a) cure any ambiguity or correct or supplement any defective or
inconsistent provision contained in the Indenture, or make any other changes in
the provisions of the Indenture which the Company


                                      A-5
<PAGE>


and the Trustee may deem necessary or desirable provided such amendment does not
materially and adversely affect the legal rights under the Indenture of the
holders of Notes; (b) provide for uncertificated Notes in addition to or in
place of certificated Notes; (c) evidence the succession of another person to
the Company and providing for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Notes as permitted by
Section 5.1 of the Indenture; (d) provide for conversion rights and/or
repurchase rights of holders of Notes in the event of consolidation, merger,
share exchange or sale of all or substantially all of the assets of the Company
as required to comply with Sections 5.1 and/or 12.6 of the Indenture; (e) reduce
the Conversion Price; (f) evidence and provide for the acceptance of the
appointment under the Indenture of a successor Trustee; (g) make any change that
would provide any additional rights or benefits to the holders of Notes or that
does not adversely affect the legal rights under the Indenture of any such
holder; or (h) comply with the requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the TIA.

         Without the consent of each holder affected, an amendment or waiver may
not: (a) reduce the principal amount of Notes whose holders must consent to an
amendment, supplement or waiver; (b) reduce the principal of or premium on or
change the fixed maturity of any Note or, except as permitted pursuant to clause
(a), (d), (g) or (h) of the immediately preceding paragraph, alter the
provisions with respect to the redemption of the Notes; (c) reduce the rate of
or change the time for payment of interest, including defaulted interest, or
Liquidated Damages, if any, on any Notes; (d) waive a Default or Event of
Default in the payment of principal of, or premium, if any, interest or
Liquidated Damages, if any, on, the Notes (except a rescission of acceleration
of the Notes by the holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration); (e) make the principal of, or premium, if any, interest or
Liquidated Damages, if any, on, any Note payable in money other than as provided
for in the Indenture and in the Notes; (f) make any change in the provisions of
the Indenture relating to waivers of past Defaults or the rights of holders of
Notes to receive payments of principal of, or premium, if any, interest or
Liquidated Damages, if any, on the Notes; (g) waive a redemption payment with
respect to any Note; (h) except as permitted by the Indenture (including Section
9.1(a)), increase the Conversion Price or modify the provisions of the Indenture
relating to conversion of the Notes in a manner adverse to the holders thereof
or (i) make any change to the ability of holder of Notes to enforce their rights
under the Indenture or the provisions of clauses (a) through (h) of Section 9.2
of the Indenture.

         11.      Defaults and Remedies. An Event of Default is: (a) default in
                  payment of the principal of, or premium, if any, on, the
                  Notes, when due at maturity, upon repurchase, upon
                  acceleration or otherwise; (b) default for 30 days or more in
                  payment of any installment of interest or Liquidated Damages
                  on the Notes, whether or not such payment is prohibited by the
                  subordination provisions of the Indenture; (c) default by the
                  Company for 60 days or more after notice in the observance or
                  performance of any other covenants in the Indenture; (d)
                  default in the payment of the Fundamental Change Payment in
                  respect of the Notes on the date therefor, whether or not such
                  payment is prohibited by the subordination provisions of the
                  Indenture; (e) failure to provide timely notice of a
                  Fundamental


                                      A-6
<PAGE>


                  Change; (f) (i) one or more defaults in the payment of
                  principal of or premium, if any, on any Indebtedness
                  aggregating $10.0 million or more, when the same becomes due
                  and payable at the final scheduled maturity thereof, and such
                  default or defaults shall have continued after any applicable
                  grace period and shall not have been cured or waived within a
                  30-day period after a Notice of Default or (ii) any
                  Indebtedness aggregating $10.0 million or more shall have been
                  accelerated or otherwise declared due and payable, or required
                  to be prepaid or repurchased (other than by regularly
                  scheduled required prepayment) prior to the final scheduled
                  maturity thereof and such acceleration is not waived,
                  rescinded or annulled within a 30-day period after a Notice of
                  Default; (g) failure by the Company or any Material Subsidiary
                  to pay a final, non-appealable judgment or final,
                  non-appealable judgments (other than any judgment as to which
                  a reputable insurance company has accepted full liability) for
                  the payment of money are entered by a court or courts of
                  competent jurisdiction against the Company or any Material
                  Subsidiary and remain unstayed, unbonded or undischarged for a
                  period (during which execution shall not be effectively
                  stayed) of 120 days, provided that the aggregate amount of all
                  such judgments exceeds $10,000,000; or (h) certain events
                  involving bankruptcy, insolvency or reorganization of the
                  Company. If an Event of Default occurs and is continuing, the
                  Trustee or the holders of at least 25% in principal amount of
                  the then outstanding Notes may declare the unpaid principal
                  of, premium, if any, and accrued and unpaid interest and
                  Liquidated Damages, if any, on, all Notes then outstanding to
                  be due and payable immediately, except that in the case of an
                  Event of Default arising from certain events of bankruptcy,
                  insolvency, or reorganization with respect to the Company, all
                  outstanding Notes become due and payable without further
                  action or notice. Holders of Notes may not enforce the
                  Indenture or the Notes except as provided in the Indenture.
                  The Trustee may require an indemnity satisfactory to it before
                  it enforces the Indenture or the Notes. Subject to certain
                  limitations, holders of a majority in principal amount of the
                  then outstanding Notes may direct the Trustee in its exercise
                  of any trust or power. The Trustee may withhold from holders
                  notice of any continuing default (except a default in payment
                  of principal, premium, if any, interest or Liquidated Damages,
                  if applicable) if it determines that withholding notice is in
                  their interests. The Company must furnish annual compliance
                  certificates to the Trustee.

         12.      Trustee Dealings with the Company. The Trustee or any of its
                  Affiliates, in their individual or any other capacities, may
                  make or continue loans to, accept deposits from and perform
                  services for the Company or its Affiliates and may otherwise
                  deal with the Company or its Affiliates as if it were not
                  Trustee.

         13.      No Recourse Against Others. No director, officer, employee,
                  shareholder or Affiliate, as such, of the Company shall have
                  any liability for any obligations of the Company under the
                  Notes or the Indenture or for any claim based on, in respect
                  of or by reason of such obligations or their creation. Each
                  holder by


                                      A-7
<PAGE>


                  accepting a Note waives and releases all such liability. The
                  waiver and release are part of the consideration for the
                  Notes.

         14.      Authentication. This Note shall not be valid until
                  authenticated by the manual signature of the Trustee or an
                  authenticating agent.

         15.      Abbreviations. Customary abbreviations may be used in the name
                  of a holder or an assignee, such as: TEN CO = 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.      Conversion. Subject to and upon compliance with the provisions
                  of the Indenture, the registered holder of this Note has the
                  right at any time on or before the close of business on the
                  last Trading Day prior to the Maturity Date (or in case this
                  Note or any portion hereof (a) called for redemption prior to
                  such date, before the close of business on the last Trading
                  Day preceding the date fixed for redemption (unless the
                  Company defaults in payment of the redemption price in which
                  case the conversion right will terminate at the close of
                  business on the date such default is cured) or (b) is subject
                  to a duly completed election for repurchase, on or before the
                  close of business on the Fundamental Change Payment Date
                  (unless the Company defaults in payment due upon repurchase or
                  such holder elects to withdraw the submission of such election
                  to repurchase) to convert the principal amount hereof, or any
                  portion of such principal amount which is $1,000 or integral
                  multiples thereof, into that number of fully paid and
                  non-assessable common shares of the Company ("Common Shares")
                  obtained by dividing the principal amount of the Note or
                  portion thereof to be converted by the conversion price of
                  $31.26 per share, as adjusted from time to time as provided in
                  the Indenture (the "Conversion Price"), upon surrender of this
                  Note to the Company at the office or agency maintained for
                  such purpose (and at such other offices or agencies designated
                  for such purpose by the Company), accompanied by written
                  notice of conversion duly executed (and if the Common Shares
                  to be issued on conversion are to be issued in any name other
                  than that of the registered holder of this Note by instruments
                  of transfer, in form satisfactory to the Company, duly
                  executed by the registered holder or its duly authorized
                  attorney) and, in case such surrender shall be made during the
                  period from the close of business on the Regular Record Date
                  immediately preceding any Interest Payment Date through the
                  close of business on the last Trading Day immediately
                  preceding such Interest Payment Date, also accompanied by
                  payment, in funds acceptable to the Company, of an amount
                  equal to the interest and Liquidated Damages, if any,
                  otherwise payable on such Interest Payment Date on the
                  principal amount of this Note then being converted. Subject to
                  the aforesaid requirement for a payment in the event of
                  conversion after the close of business on a Regular Record
                  Date immediately preceding an Interest Payment Date, no
                  adjustment shall be made on conversion for interest or
                  Liquidated Damages accrued hereon or for dividends on


                                      A-8
<PAGE>


                  Common Shares delivered on conversion. The right to convert
                  this Note is subject to the provisions of the Indenture
                  relating to conversion rights in the case of certain
                  consolidations, mergers, share exchanges or sales or transfers
                  of substantially all the Company's assets.

         The Company shall not issue fractional shares or scrip representing
fractions of Common Shares upon any such conversion, but shall pay cash in lieu
of such fractional shares in the manner described in the Indenture.

         17.      Registration Agreement. The holder of this Note is entitled to
                  the benefits of a Registration Agreement, dated as of April 2,
                  2002, by and among the Company and the Initial Purchasers (the
                  "Registration Agreement"). Pursuant to the Registration
                  Agreement, the Company has agreed for the benefit of the
                  holders of the Notes and the Common Shares issued and issuable
                  upon conversion of the Notes, that (i) it will, at its cost,
                  within 60 days after the Issue Date, file a shelf registration
                  statement (the "Shelf Registration Statement") with the
                  Securities and Exchange Commission (the "Commission") with
                  respect to resales of the Notes and the Common Shares issuable
                  upon conversion thereof, (ii) the Company will use its
                  reasonable best efforts to cause such Shelf Registration
                  Statement to be declared effective by the Commission under the
                  Securities Act within 150 days after the Issue Date and (iii)
                  the Company will use its reasonable best efforts to keep such
                  Shelf Registration Statement continuously effective under the
                  Securities Act until the earliest of (a) the second
                  anniversary of the Issue Date or, if later, the second
                  anniversary of the last date on which any Notes are issued
                  upon exercise of the Initial Purchasers' over-allotment
                  option, (b) the date on which the Notes or the Common Shares
                  issuable upon conversion thereof may be sold by persons who
                  are not "affiliates" (as defined in Rule 144) of the Company
                  pursuant to paragraph (k) of Rule 144 (or any successor
                  provision) promulgated by the Commission under the Securities
                  Act, (c) the date as of which all of the Notes or the Common
                  Shares issuable upon conversion thereof have been transferred
                  pursuant to Rule 144 under the Securities Act (or any similar
                  provision then in force) and (d) the date as of which all the
                  Notes or the Common Shares issuable upon conversion thereof
                  have been sold pursuant to such Shelf Registration Statement.

         If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 60 days, or has not been declared effective by the
Commission within 150 days, after the Issue Date or (ii) is filed and declared
effective but shall thereafter cease to be effective (without being succeeded
immediately by a replacement shelf registration statement filed and declared
effective) or cease to be usable (including, without limitation, as a result of
a Suspension Period as defined below) for the offer and sale of Transfer
Restricted Securities (as defined below) for a period of time (including any
Suspension Period) which shall exceed 90 days in the aggregate in any 12-month
period during the period beginning on the Issue Date and ending on the second
anniversary of the Issue Date or, if later, the second anniversary of the last
date on which any


                                      A-9
<PAGE>


Notes are issued upon exercise of the Initial Purchasers' over-allotment option
(each such event referred to in clauses (i) and (ii) being referred to herein as
a "Registration Default"), the Company will pay liquidated damages ("Liquidated
Damages") to each holder of Transfer Restricted Securities which has complied
with its obligations under the Registration Agreement. The amount of Liquidated
Damages payable during any period in which a Registration Default shall have
occurred and be continuing is that amount which is equal to one-quarter of one
percent (25 basis points) per annum per $1,000 principal amount of Notes or
$2.50 per annum per 31.98976 shares of Common Shares (subject to adjustment from
time to time in the event of a stock split, stock recombination, stock dividend
and the like) constituting Transfer Restricted Securities for the first 90 days
during which a Registration Default has occurred and is continuing and one-half
of one percent (50 basis points) per annum per $1,000 principal amount of Notes
or $5.00 per annum per 31.98976 shares of Common Shares (subject to adjustment
as set forth above) constituting Transfer Restricted Securities for any
additional days during which such Registration Default has occurred and is
continuing. The Company will pay all accrued Liquidated Damages by wire transfer
of immediately available funds or by federal funds check on each Damages Payment
Date (as defined in the Registration Agreement), and Liquidated Damages will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Following the cure of a Registration Default, Liquidated Damages will cease to
accrue with respect to such Registration Default.

         "Transfer Restricted Securities" means each Note and each Common Share
issuable on conversion thereof until the date on which such Note or share, as
the case may be, (i) has been transferred pursuant to the Shelf Registration
Statement or another registration statement covering such Note or share which
has been filed with the Commission pursuant to the Securities Act, in either
case after such registration statement has become and while such registration
statement is effective under the Securities Act, (ii) has been transferred
pursuant to Rule 144 under the Securities Act (or any similar provision then in
force), or (iii) may be sold or transferred pursuant to Rule 144(k) under the
Securities Act (or any similar provision then in force).

         Pursuant to the Registration Agreement, the Company may suspend the use
of the prospectus which is a part of the Shelf Registration Statement for a
period not to exceed 45 days in any three-month period or for three periods not
to exceed an aggregate of 90 days in any twelve-month period under certain
circumstances (each, a "Suspension Period"); provided that the existence of a
Suspension Period will not prevent the occurrence of a Registration Default or
otherwise limit the obligation of the Company to pay Liquidated Damages.

         The above description of certain provisions of the Registration
Agreement is qualified by reference to, and is subject in its entirety to, the
more complete description thereof contained in the Registration Agreement.

         The Company will furnish to any holder upon written request and without
charge a copy of the Indenture and the Registration Agreement. Requests may be
made to: EDO Corporation, 60 East 42nd Street, Suite 5010, New York, New York
10165, Attention: William J. Frost.


                                      A-10