EXHIBIT
      4.2

    
 

     

    FIRST
      SUPPLEMENTAL INDENTURE

    


    


    Dated
      as of December 19, 2005

    


    


    Between

    


    


    CERADYNE,
      INC.

    


    


    And

    


    


    UNION
      BANK OF CALIFORNIA, N.A.,

    Trustee

    



    
      
         

      

      
         

        
          

        

      

      
         

        
          


        

      

    


    TABLE
      OF CONTENTS


    
      
        	 	 
	 	
                Page

              
	 	 
	
                Article
                  1. Definitions and Incorporation by Reference

              	
                1

              
	
                Section
                  1.01

              	
                Definitions.

              	
                1

              
	
                Section
                  1.02

              	
                Other
                  Definitions.

              	
                9

              
	 	 	 
	
                Article
                  2. The Series of Securities

              	
                10

              
	
                Section
                  2.01

              	
                Designation,
                  Form and Dating.

              	
                10

              
	
                Section
                  2.02

              	
                Final
                  Maturity Date; Interest.

              	
                11

              
	
                Section
                  2.03

              	
                Limit
                  on Amount of Series.

              	
                11

              
	
                Section
                  2.04

              	
                Registrar,
                  Paying Agent, Conversion Agent and Trustee.

              	
                11

              
	
                Section
                  2.05

              	
                Conversion
                  Agent to Hold Shares in Trust.

              	
                12

              
	
                Section
                  2.06

              	
                Global
                  Securities.

              	
                12

              
	 	 	 
	
                Article
                  3. Redemption and Purchase

              	
                14

              
	
                Section
                  3.01

              	
                To
                  Redeem; Notice to Trustee.

              	
                14

              
	
                Section
                  3.02

              	
                Selection
                  of Securities to be Redeemed.

              	
                14

              
	
                Section
                  3.03

              	
                Notice
                  of Redemption.

              	
                15

              
	
                Section
                  3.04

              	
                Effect
                  of Notice of Redemption.

              	
                16

              
	
                Section
                  3.05

              	
                Deposit
                  of Redemption Price.

              	
                16

              
	
                Section
                  3.06

              	
                Securities
                  Redeemed in Part.

              	
                17

              
	
                Section
                  3.07

              	
                Conversion
                  Arrangement on Call for Redemption.

              	
                17

              
	
                Section
                  3.08

              	
                Repurchase
                  of Securities at Option of the Holder upon a Fundamental
                  Change.

              	
                17

              
	
                Section
                  3.09

              	
                Effect
                  of Fundamental Change Repurchase Notice.

              	
                20

              
	
                Section
                  3.10

              	
                Deposit
                  of Fundamental Change Repurchase Price.

              	
                20

              
	
                Section
                  3.11

              	
                Repayment
                  to the Company.

              	
                21

              
	
                Section
                  3.12

              	
                Purchase
                  of Securities at Option of the Holder on Specified Dates.

              	
                21

              
	
                Section
                  3.13

              	
                Securities
                  Purchased in Part.

              	
                25

              
	
                Section
                  3.14

              	
                Compliance
                  with Securities Laws upon Purchase of Securities.

              	
                25

              
	
                Section
                  3.15

              	
                Purchase
                  of Securities in Open Market.

              	
                25

              
	
                Section
                  3.16

              	
                Exchange
                  in Lieu of Repurchase.

              	
                25

              
	 	 	 
	
                Article
                  4. Conversion

              	
                26

              
	
                Section
                  4.01

              	
                Conversion
                  Privilege and Conversion Rate.

              	
                26

              
	
                Section
                  4.02

              	
                Conversion
                  Procedure.

              	
                30

              
	
                Section
                  4.03

              	
                Fractional
                  Shares.

              	
                32

              
	
                Section
                  4.04

              	
                Taxes
                  on Conversion.

              	
                32

              
	
                Section
                  4.05

              	
                Exchange
                  In Lieu of Conversion.

              	
                32

              
	
                Section
                  4.06

              	
                Company
                  to Provide Common Stock.

              	
                33

              
	
                Section
                  4.07

              	
                Adjustment
                  of Conversion Rate.

              	
                34

              
	
                Section
                  4.08

              	
                No
                  Adjustment.

              	
                39

              
	
                Section
                  4.09

              	
                Notice
                  of Adjustment.

              	
                40

              
	
                Section
                  4.10

              	
                Notice
                  of Certain Transactions.

              	
                40

              
	
                Section
                  4.11

              	
                Effect
                  of Reclassification, Consolidation, Merger or Sale on Conversion
                  Privilege.

              	
                40

              
	
                Section
                  4.12

              	
                Trustee’s
                  Disclaimer.

              	
                42

              
	
                Section
                  4.13

              	
                Voluntary
                  Increase.

              	
                42

              
	
                Section
                  4.14

              	
                Payment
                  of Cash in Lieu of Common Stock.

              	
                42

              


         

         

        
          
             

          

          
            -i-
              

            
              

            

          

          
             

          

        

         

        
          	
                  Article
                    5. Subordination

                	
                  43

                
	
                  Section
                    5.01

                	
                  Securities
                    Subordinated to Senior Debt.

                	
                  43

                
	
                  Section
                    5.02

                	
                  Subrogation.

                	
                  46

                
	
                  Section
                    5.03

                	
                  Obligation
                    of the Company is Absolute and Unconditional.

                	
                  46

                
	
                  Section
                    5.04

                	
                  Maturity
                    of or Default on Senior Debt.

                	
                  46

                
	
                  Section
                    5.05

                	
                  Payments
                    on Securities Permitted.

                	
                  46

                
	
                  Section
                    5.06

                	
                  Effectuation
                    of Subordination by Trustee.

                	
                  47

                
	
                  Section
                    5.07

                	
                  Knowledge
                    of Trustee.

                	
                  47

                
	
                  Section
                    5.08

                	
                  Trustee’s
                    Relation to Senior Debt.

                	
                  47

                
	
                  Section
                    5.09

                	
                  Rights
                    of Holders of Senior Debt Not Impaired.

                	
                  48

                
	
                  Section
                    5.10

                	
                  Modification
                    of Terms of Senior Debt.

                	
                  48

                
	
                  Section
                    5.11

                	
                  Certain
                    Conversions Not Deemed Payment.

                	
                  48

                
	
                  Section
                    5.12

                	
                  No
                    Layering of Debt

                	
                  49

                
	 	 	 
	
                  Article
                    6. Covenants

                	
                  49

                
	
                  Section
                    6.01

                	
                  Payment
                    of Securities.

                	
                  49

                
	
                  Section
                    6.02

                	
                  Tax
                    Treatment of Securities.

                	
                  50

                
	 	 	 
	
                  Article
                    7. Consolidation; Merger; Conveyance; Transfer or Lease

                	
                  50

                
	
                  Section
                    7.01

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

                	
                  51

                
	
                  Section
                    7.02

                	
                  Successor
                    Substituted.

                	
                  51

                
	 	 	 
	
                  Article
                    8. Default and Remedies

                	
                  52

                
	
                  Section
                    8.01

                	
                  Events
                    of Default.

                	
                  52

                
	
                  Section
                    8.02

                	
                  Acceleration.

                	
                  54

                
	
                  Section
                    8.03

                	
                  Rights
                    of Holders to Receive Payment and to Convert.

                	
                  54

                
	 	 	 
	
                  Article
                    9. Amendments; Supplements and Waivers

                	
                  55

                
	
                  Section
                    9.01

                	
                  Without
                    Consent of Holders.

                	
                  55

                
	
                  Section
                    9.02

                	
                  With
                    Consent of Holders.

                	
                  55

                
	 	 	 
	
                  Article
                    10. Miscellaneous

                	
                  57

                
	
                  Section
                    10.01

                	
                  Governing
                    Law.

                	
                  57

                
	
                  Section
                    10.02

                	
                  No
                    Security Interest Created.

                	
                  57

                
	
                  Section
                    10.03

                	
                  Successors.

                	
                  57

                
	
                  Section
                    10.04

                	
                  Counterparts.

                	
                  57

                
	
                  Section
                    10.05

                	
                  Severability.

                	
                  57

                
	
                  Section
                    10.06

                	
                  Table
                    of Contents, Headings, Etc.

                	
                  57

                
	 	 
	Exhibit
                  A -
                  Form of Note	 


        

      

    

    


     

     

    
      
         

      

      
        -ii-

        
          

        

      

      
         

      

    

     

    THIS
      FIRST SUPPLEMENTAL INDENTURE (this “First
      Supplemental Indenture”),
      dated
      as of December 19, 2005, is between Ceradyne, Inc., a corporation duly organized
      under the laws of the State of Delaware (the “Company”),
      and
      Union Bank of California, N.A., a national banking association organized and
      existing under the laws of the United States, as Trustee (the “Trustee”).

     

    RECITALS

    


    WHEREAS,
      the Company and the Trustee have duly executed and delivered an Indenture,
      dated
      as of December 19, 2005 (the “Base
      Indenture”
and
      together with this First Supplemental Indenture, the “Indenture”),
      to
      provide for the issuance by the Company from time to time of Securities to
      be
      issued in one or more series by the Company;

     

    WHEREAS,
      the issuance and sale of up to $121,000,000 aggregate principal amount at
      maturity of the Company’s Convertible Senior Subordinated Notes due 2035 has
      been authorized by resolutions adopted by the Board of Directors and the Pricing
      Committee of the Board of Directors of the Company;

     

    WHEREAS,
      Section 9.1(e) of the Base Indenture expressly permits the Company and the
      Trustee to enter into one or more supplemental indentures for the purposes
      of
      establishing the forms and terms of any Securities to be issued under the
      Indenture without the consent of the Holders of any Securities then
      outstanding;

     

    WHEREAS,
      the Company desires to supplement the provisions of the Base Indenture to
      provide for the issuance of the Securities under the terms of the Base Indenture
      as supplemented hereby; and 

     

    WHEREAS,
      for the purposes hereinabove recited, and pursuant to due corporate action,
      the
      Company has duly determined to execute and deliver to the Trustee this First
      Supplemental Indenture;

     

    NOW,
      THEREFORE, in consideration of the covenants and agreements set forth herein
      and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the Company and the Trustee covenant and agree as
      follows:

     

    Article
      1.

    Definitions
      and Incorporation by Reference

     

    Section
      1.01  Definitions.

     

    All
      terms
      contained in this First Supplemental Indenture shall, except as specifically
      provided for herein or except as the context may otherwise require, have the
      meanings given to such terms in the Base Indenture. In the event of any
      inconsistency between the Base Indenture and the First Supplemental Indenture,
      this First Supplemental Indenture shall govern.

     

    Unless
      the context otherwise requires, the following terms shall have the following
      meanings:

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    “Applicable
      Procedures” means, with respect to any conversion, transfer or exchange of
      beneficial ownership interests in a Global Security, the rules and procedures
      of
      the Depositary, to the extent applicable to such transfer or exchange.


     

    “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.

     

    “Cash”
or
      “cash” means such coin or currency of the United States as at any time of
      payment is legal tender for the payment of public and private debts.


     

    “Certificated
      Security” means a Security that is in substantially the form attached as Exhibit
      A but that does not include the information called for by footnote 1 thereof
      or
      the attached schedule of exchanges.

     

    “Change
      in Control” means the occurrence of any of the following events from and after
      the Issue Date:

     

    (i) any
      “person” or “group” (as such terms are used in Sections 13(d) and 14(d)(2) of
      the Exchange Act or any successor provision to either of the foregoing),
      including any group acting for the purpose of acquiring, holding or disposing
      of
      securities within the meaning of Rule 13d−5(b)(1) under the Exchange Act, other
      than the Company, any of its Subsidiaries or any of its employee benefit plans,
      is or becomes the “beneficial owner” (as defined in Rule 13d−3 under the
      Exchange Act), directly or indirectly, through a purchase, merger or other
      acquisition transaction, of 50% or more of the total voting power of all classes
      of the Company’s Voting Stock;

     

    (ii) the
      Company consolidates with, or merges with or into, another person (as such
      term
      is used in Sections 13(d) and 14(d) of the Exchange Act) or any person
      consolidates or merges with or into the Company, or the Company conveys,
      transfers, leases or otherwise disposes of all or substantially all of its
      assets to any person, other than (x) any transaction pursuant to which holders
      of the Company’s Capital Stock immediately prior to the transaction have the
      entitlement to exercise, directly or indirectly, 50% or more of the total voting
      power of all shares of the Voting Stock of the continuing or surviving entity
      of
      such transaction; or (y) any merger solely for the purpose of changing the
      Company’s jurisdiction of formation and resulting in a reclassification,
      conversion or exchange of outstanding shares of common stock solely into shares
      of common stock of the surviving entity;

     

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

     

    (iv) the
      Company approves a plan of liquidation or dissolution.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    Notwithstanding
      anything to the contrary set forth herein, a Change in Control will be deemed
      not to have occurred if 100% of the consideration (excluding cash payments
      for
      fractional shares and cash payments made in respect of dissenters’ appraisal
      rights) in a transaction or transactions otherwise constituting a Change in
      Control consists of shares of common stock and any associated rights traded
      on a
      U.S. national securities exchange or quoted on the Nasdaq National Market,
      or
      which will be so traded or quoted when issued or exchanged in connection with
      the transaction or transactions, and as a result of the transaction or
      transactions the Securities become convertible into such common stock.


     

    “Closing
      Price” means on any Trading Day, the reported last sale price per share of the
      Company’s Common Stock (or if no last sale price is reported, the average of the
      bid and ask prices per share or, if more than one in either case, the average
      of
      the average bid and the average ask prices per share) on such date reported
      by
      the Nasdaq National Market or, if the Company’s Common Stock (or the applicable
      security) is not quoted on the Nasdaq National Market, as reported by the
      principal national securities exchange on which the Company’s Common Stock (or
      such other security) is listed, or if no such prices are available, the Closing
      Price per share shall be the fair value of a share of Common Stock (or such
      other security) as reasonably determined by the Board of Directors (which
      determination shall be conclusive and shall be evidenced by an Officers’
Certificate delivered to the Trustee).

     

    “Common
      Stock” means the common stock of the Company, par value $0.01 per share, as it
      exists on the date of this First Supplemental Indenture and any shares of any
      class or classes of Capital Stock of the Company resulting from any
      reclassification or reclassifications thereof, or, in the event of a merger,
      consolidation or other similar transaction involving the Company that is
      otherwise permitted hereunder in which the Company is not the surviving
      corporation the common stock, common equity interests, ordinary shares or
      depositary shares or other certificates representing common equity interests
      of
      such surviving corporation or its direct or indirect parent corporation, and
      which have no preference in respect of dividends or of amounts payable in the
      event of any voluntary or involuntary liquidation, dissolution or winding-up
      of
      the Company and which are not subject to redemption by the Company; provided,
      however,
      that if
      at any time there shall be more than one such resulting class, the shares of
      each such class then so issuable on conversion of Securities 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 in the first paragraph of this First Supplemental
      Indenture until a successor replaces it pursuant to the applicable provisions
      of
      the Indenture, and thereafter “Company” shall mean such successor Company.


     

    “Conversion
      Price” per share of Common Stock as of any day means the result obtained by
      dividing (i) $1,000 by (ii) the then applicable Conversion Rate. 

     

    “Conversion
      Rate” means the rate at which shares of Common Stock shall be delivered upon
      conversion, which rate shall be initially 17.1032 shares of Common Stock for
      each $1,000 principal amount of Securities, as adjusted from time to time
      pursuant to the provisions of this Indenture.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    “Conversion
      Reference Period” means:

     

    
      	 	
              (i)

            	
              for
                Securities that are converted after the Company has specified a Redemption
                Date, the 10 consecutive Trading Days beginning on the third Trading
                Day
                following such Redemption Date (in the case of Securities being converted
                which were previously called for redemption (including a partial
                redemption) this clause (i) shall only apply to those Securities
                that are
                subject to redemption); and

            


    

     

    
      	 	
              (ii)

            	
              in
                all other instances, the 10 consecutive Trading Days beginning on
                the
                third Trading Day following the Conversion
                Date.

            


    

     

    “Conversion
      Value” means, for each $1,000 principal amount of Securities, an amount equal to
      the product of (i) the Conversion Rate in effect on the Conversion Date and
      (ii)
      the average of the Closing Prices of the Company’s Common Stock for each of the
      10 consecutive Trading Days of the Conversion Reference Period; provided that
      after the consummation of a Fundamental Change in which the consideration is
      comprised entirely of cash, the amount used in clause (ii) of this definition
      shall be the cash price per share received by holders of the Company’s Common
      Stock in such Fundamental Change.

     

    “Credit
      Facility” means the $160,000,000 Credit Agreement, dated August 18, 2004, among
      the Company, Ceradyne ESK, LLC, ESK Ceramics GMBH & Co, KG and the
      subsidiary guarantors named therein, and the Initial Lenders, the Swing Line
      Bank and Initial Issuing Bank named therein, and Wachovia Bank, National
      Association, Union Bank of California, N.A. and Comerica Bank, and U.S. Bank,
      National Association and the Northern Trust Company, and Wachovia Capital
      Markets, LLC, as amended by Amendment No. 1 to the Credit Agreement, dated
      December 22, 2004.

     

    “Daily
      Share Amount” means, for each Trading Day of the Conversion Reference Period and
      for each $1,000 principal amount of Securities surrendered for conversion,
      a
      number of shares (but in no event less than zero) equal to (i) the amount of
      (a)
      the Closing Price on such Trading Day multiplied by the Conversion Rate in
      effect on the Conversion Date, appropriately adjusted to take into account
      the
      occurrence on such Trading Day of any event which would require an anti-dilution
      adjustment, less (b) $1,000; divided by (ii) the Closing Price on such Trading
      Day multiplied by 10.

     

    “Default”
      means, when used with respect to the Securities, any event that is or, after
      notice or passage of time, or both, would be, an Event of Default. 

     

    “Designated
      Senior Debt” means (i) all Indebtedness under the Company’s Credit Facility and
      (ii) any other Senior Debt which at the date of determination has an aggregate
      principal amount outstanding of, or under which, at the date of determination,
      the holders of the Senior Debt are committed to lend up to, at least $25 million
      and which is specifically designated in the instrument evidencing or governing
      such Senior Debt as “Designated Senior Debt” by the Company for purposes of the
      Indenture. However, the instrument evidencing the Senior Debt may place
      limitations and conditions on the right of that Senior Debt to exercise the
      rights of the Designated Senior Debt.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    “Final
      Maturity Date” means December 15, 2035.

     

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

     

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

     

    “Fundamental
      Change Repurchase Price” of any Security, means 100% of the principal amount of
      the Security to be repurchased plus unpaid interest, if any, and Contingent
      Interest, if any, accrued to, but excluding, the Fundamental Change Repurchase
      Date.

     

    “GAAP”
      means generally accepted accounting principles in the United States of America
      as in effect from time to time, including those set forth in (1) the opinions
      and pronouncements of the Accounting Principles Board of the American Institute
      of Certified Public Accountants, (2) the statements and pronouncements of the
      Financial Accounting Standards Board, and (3) such other statements by such
      other entity as approved by a significant segment of the accounting
      profession.

     

    “Global
      Security” means a Security in global form that is in substantially the form
      attached as Exhibit A and that includes the information called for in footnote
      1
      thereof and the schedule of exchanges and which is deposited with the Depositary
      or its custodian and registered in the name of the Depositary or its nominee.
      

     

    “Holder”
      or “Holder of a Security” means the person in whose name a Security is
      registered on the Registrar’s books.

     

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

     

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

     

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

     

    (iii) all
      obligations and liabilities (contingent or otherwise) in respect of (a) leases
      of such Person required, in conformity with GAAP, to be accounted for as
      capitalized lease obligations on the balance sheet of such Person;

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    “Indenture”
      means, collectively, the Base Indenture and First Supplemental Indenture as
      the
      same may be amended or supplemented from time to time pursuant to the terms
      of
      the First Supplemental Indenture and the Base Indenture, including the
      provisions of the TIA that are automatically deemed to be a part of this
      Indenture by operation of the TIA.

     

    “Interest
      Payment Date” means June 15 and December 15 of each year, commencing June 15,
      2006.

     

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

     

    “Issue
      Date” of any Security means the date on which the Security was originally issued
      or deemed issued as set forth on the face of the Security. 

     

    “Maturity”
      means the date on which the principal of such Security becomes due and payable
      as therein or herein provided, whether at the Final Maturity Date or by
      acceleration, conversion, call for redemption, exercise of a repurchase right
      or
      otherwise.

     

    “Pari
      Passu Debt” means any Indebtedness of the Company that is pari
      passu
      in right
      of payment to the Securities.

     

    “Person”
      or “person” means any individual, corporation, partnership, limited liability
      company, joint venture, association, joint-stock company, trust, unincorporated
      organization, government or any agency or political subdivision thereof or
      any
      syndicate or group that would be deemed to be a “person” under Section 13(d)(3)
      of the Exchange Act or any other entity. 

     

    “Redeemable
      Capital Stock” means any Capital Stock that, either by its terms or by the terms
      of any security into which it is convertible or exchangeable or otherwise,
      is
      (i) or upon the happening of an event or passage of time would be, required
      to
      be redeemed prior to the Maturity of the principal of the Securities, (ii)
      redeemable at the option of the holder thereof at any time prior to the Maturity
      (other than upon a Fundamental Change in circumstances where the holder of
      the
      Securities would have similar rights) or (iii) convertible into or exchangeable
      for debt securities at any time prior to the Maturity at the option of the
      holder thereof.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    “Redemption
      Date” when used with respect to any Security to be redeemed, means the date
      fixed by the Company for such redemption pursuant to Section 3.01.

     

    “Redemption
      Price” means with respect to any Securities redeemed on a Redemption Date, (i)
      if such Redemption Date occurs on or after December 20, 2010 and on or prior
      to
      December 14, 2011, 100.821% of the aggregate principal amount of the Securities
      being redeemed, (ii) if such Redemption Date occurs on or after December 15,
      2011 and on or prior to December 14, 2012, 100.411% of the aggregate principal
      amount of the Securities being redeemed, and (iii) if such Redemption Date
      occurs on or after December 15, 2012, 100.000% of the aggregate principal amount
      of the Securities being redeemed, in each case plus accrued and unpaid interest
      to, but excluding such Redemption Date.

     

    “Regular
      Record Date” means, with respect to each Interest Payment Date, the June 1 or
      December 1, as the case may be, next preceding such Interest Payment
      Date.

     

    “Securities”
      means the up to $121.0 million aggregate principal amount of 2.875% Senior
      Subordinated Convertible Notes due 2035, or any of them (each a “Security”), as
      amended or supplemented from time to time, that are issued under this First
      Supplemental Indenture.

     

    “Securities
      Act” means the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder, as in effect from time to time. 

     

    “Securities
      Custodian” means the Trustee, as custodian with respect to the Securities in
      global form, or any successor thereto.

     

    “Senior
      Debt” means the principal of, premium, if any, interest (including interest, to
      the extent allowable, accruing subsequent to the filing of a petition initiating
      any proceeding under any state, federal or foreign bankruptcy law, whether
      or
      not a claim for post-petition interest is allowable as a claim in any such
      proceeding) and rent payable on or termination payment with respect to or in
      connection with, and all fees, costs, expenses and other amounts accrued or
      due
      on or in connection with, Indebtedness of the Company, whether outstanding
      on
      the date of this Indenture or thereafter created, incurred, assumed, guaranteed
      or in effect guaranteed by the Company (including all deferrals, renewals,
      extensions or refundings of, or amendments, modifications or supplements to,
      the
      foregoing), except for:

     

    (i) Indebtedness
      that by its terms expressly provides that it shall not be senior in right of
      payment to the Securities or expressly provides that such Indebtedness is equal
      with or junior to the Securities; 

     

    (ii) Indebtedness,
      which when incurred and without respect to any election under Section 1111(b)
      of
      Title 11 United States Code, is without recourse to the Company;

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (iii) Indebtedness
      which is represented by Redeemable Capital Stock;

     

    (iv) any
      liability for foreign, federal, state, local or other taxes owed or owing by
      the
      Company to the extent such liability constitutes Indebtedness;

     

    (v) Indebtedness
      between or among the Company or any of the Subsidiaries or any other Affiliate
      of the Company;

     

    (vi) to
      the
      extent it might constitute Indebtedness, amounts owing for goods, materials
      or
      services purchased in the ordinary course of business or consisting of trade
      accounts payable owed or owing by the Company, and amounts owed by the Company
      for compensation to employees or for services rendered to the
      Company;

     

    (vii) that
      portion of any Indebtedness, which at the time of issuance is issued in
      violation of this Indenture; and

     

    (viii) Indebtedness
      evidenced by any guarantee of Subordinated Debt or Pari Passu Debt.

     

    “Senior
      Subordinated Debt” means the Securities and any other Indebtedness of the
      Company that specifically provides that it is equal in right of payment with
      the
      Securities and is not subordinated by its terms in right of payment to any
      Indebtedness of the Company that is not Senior Debt.

     

    “Stock
      Price” means the price paid per share of the Company’s Common Stock in
      connection with a Fundamental Change as determined pursuant to Section
      4.01(i).

     

    “Subordinated
      Debt” means Indebtedness of the Company that specifically provides that it is
      subordinated in right of payment to the Securities.

     

    “Termination
      of Trading” means the occurrence of the Company’s Common Stock (or other common
      stock for which the Securities are then convertible) not being listed for
      trading on a United States national securities exchange or approved for trading
      on an established automated
      over-the-counter trading market in the United States.

     

    “Trading
      Day” means any day on which the Nasdaq National Market or, if the Company’s
      Common Stock is not quoted on the Nasdaq National Market, the principal national
      securities exchange on which the Company’s Common Stock is listed, is open for
      trading or, if the Company’s Common Stock is listed on the New York Stock
      Exchange, a day on which trades may be made on such market or, if the applicable
      Security is not so listed, admitted for trading or quoted, any Business Day.
      A
      Trading Day only includes those days that have a scheduled closing time of
      4:00
      p.m. (New York City time) or the then standard closing time for regular trading
      on the relevant exchange or trading system.

     

    “Trading
      Price” of the Securities on any date of determination means the average of the
      secondary market bid quotations obtained by the Trustee for $5,000,000 principal
      amount of Securities at approximately 3:30 p.m., New York City time, on such
      determination date from three nationally recognized securities dealers the
      Company selects, which may include the Underwriters; provided that if three
      such
      bids cannot reasonably be obtained by the Trustee, but two such bids are
      obtained, then the average of the two bids shall be used, and if only one such
      bid can reasonably be obtained by the Trustee, that one bid shall be used.
      If
      the Trustee cannot reasonably obtain at least one bid for $5,000,000 principal
      amount of Securities from a nationally recognized securities dealer, or in
      the
      reasonable judgment of the Company, the bid quotations are not indicative of
      the
      secondary market value of the Securities, then the Trading Price per $1,000
      principal amount of Securities will be deemed to equal the product of the
      applicable Conversion Rate of the Securities and the Closing Price of the Common
      Stock on such determination date.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    “Trustee”
      means the party named as such in the first paragraph of this First Supplemental
      Indenture until a successor replaces it in accordance with the provisions of
      the
      Indenture, and thereafter means the successor.

     

    “Trust
      Officer” means, with respect to the Trustee, any officer assigned to the
      Corporate Trust Office, and also, with respect to a particular matter, any
      other
      officer to whom such matter is referred because of such officer’s knowledge of
      and familiarity with the particular subject.

     

    “Underwriters”
      means Citigroup Global Markets Inc., Needham & Company, LLC and Wachovia
      Capital Markets, LLC.

     

    “Voting
      Stock” of a Person means all classes of Capital Stock or other interests
      (including partnership interests) of such Person then outstanding and normally
      entitled (without regard to the occurrence of any contingency within the control
      of such person to satisfy) to vote in the election of directors, managers or
      trustees thereof.

     

    Section
      1.02  Other
      Definitions.

    

      
        
          	
                  Term

                	 	
                  Defined
                    in Section

                
	 	 	 
	
                  “Agent
                    Members”

                	 	
                  2.06(g)

                
	
                  “Bankruptcy
                    Law”

                	 	
                  8.01(a)

                
	
                  “Base
                    Indenture” 

                	 	
                  Recitals

                
	
                  “Cash
                    Percentage”

                	 	
                  .4.14(b)
                    

                
	
                  “Company
                    Put Right Notice”

                	 	
                  3.12(b)

                
	
                  “Contingent
                    Interest” 

                	 	
                  Exh.
                    A

                
	
                  “Contingent
                    Interest Period”

                	 	
                  Exh.
                    A

                
	
                  “Contingent
                    Payment Regulations”

                	 	
                  6.02

                
	
                  “Conversion
                    Agent”

                	 	
                  2.04

                
	
                  “Conversion
                    Date”

                	 	
                  4.02(a)

                
	
                  “Corporate
                    Trust Office” 

                	 	
                  2.04

                
	
                  “Current
                    Market Price”

                	 	
                  4.07(a)(9)

                
	
                  “Depositary”

                	 	
                  2.01

                
	
                  “Determination
                    Date”

                	 	
                  4.07(a)(6)

                
	
                  “Distributed
                    Securities”

                	 	
                  4.07(a)(4)

                
	
                  “Distribution
                    Notice”

                	 	
                  4.01(b)

                
	
                  “Event
                    of Default”

                	 	
                  8.01(a)

                
	
                  “Expiration
                    Date”

                	 	
                  4.07(a)(7)

                


        

         

         

      

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    

      
        	
                Term

              	 	
                Defined
                  in Section

              
	 	 	 
	
                “Expiration
                  Time”

              	 	
                4.07(a)(7)

              
	
                “First
                  Supplemental Indenture”

              	 	
                Preamble

              
	
                “Fundamental
                  Change Company Notice”

              	 	
                3.08(b)

              
	
                “Fundamental
                  Change Repurchase Date”

              	 	
                3.08(a)

              
	
                “Fundamental
                  Change Repurchase Notice”

              	 	
                3.08(c)

              
	
                “Indenture”

              	 	
                Recitals

              
	
                “Initial
                  Period”

              	 	
                5.01(d)(2)

              
	
                “Make
                  Whole Premium”

              	 	
                4.01(i)

              
	
                “Merger
                  Event”

              	 	
                4.11

              
	
                “Merger
                  Notice”

              	 	
                4.01(c)

              
	
                “Non-Payment
                  Default”

              	 	
                5.01(d)(1)

              
	
                “Notice
                  of Default”

              	 	
                8.01(b)

              
	
                “Payment
                  Blockage Notice”

              	 	
                5.01(d)(1)

              
	
                “Payment
                  Blockage Period”

              	 	
                5.01(d)(1)

              
	
                “Purchase
                  Agreement”

              	 	
                2.01

              
	
                “Purchase
                  Party”

              	 	
                3.16

              
	
                “Purchased
                  Shares”

              	 	
                4.07(a)(7)

              
	
                “purchases”

              	 	
                4.07(a)(8)

              
	
                “Put
                  Right Purchase Date”

              	 	
                3.12(a)

              
	
                “Put
                  Right Purchase Notice”

              	 	
                3.12(e)

              
	
                “Put
                  Right Purchase Price”

              	 	
                3.12(a)

              
	
                “record
                  date”

              	 	
                4.07(c)

              
	
                “Receiver”

              	 	
                8.01(a)

              
	
                “Reference
                  Property”

              	 	
                4.11(b)

              
	
                “Rights”

              	 	
                4.07(a)(5)

              
	
                “Rights
                  Plan”

              	 	
                4.07(a)(5)

              
	
                “Spinoff
                  Securities”

              	 	
                4.07(a)(4)

              
	
                “Spinoff
                  Valuation Period”

              	 	
                4.07(a)(4)

              
	
                “tender
                  offer”

              	 	
                4.07(a)(8)

              
	
                “tendered
                  shares”

              	 	
                4.07(a)(8)

              
	
                “Triggering
                  Distribution”

              	 	
                4.07(a)(6)

              
	
                “Trustee”

              	 	
                Preamble

              


      

    

     

    Article
      2.

    The
      Series of Securities

     

    Section
      2.01  Designation,
      Form and Dating. 

     

    There
      is
      hereby authorized a series of senior subordinated unsecured notes designated
      as
“2.875%
      Senior Subordinated Convertible Notes due 2035.”
The
      Securities are being offered and sold pursuant to a Purchase Agreement, dated
      December 13, 2005 (the “Purchase
      Agreement”)
      between the Company and the Underwriters.

     

    The
      Securities and the Trustee’s certificate of authentication to be borne by such
      Securities shall be substantially in the form set forth in Exhibit A. The terms
      and provisions contained in the form of Securities attached as Exhibit A hereto
      shall constitute, and are hereby expressly made, a part of this First
      Supplemental Indenture and, to the extent applicable, the Company and the
      Trustee, by their execution and delivery of this First Supplemental Indenture,
      expressly agree to such terms and provisions and to be bound
      thereby.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    Any
      of
      the Securities may have such letters, numbers or other marks of identification
      and such notations, legends, endorsements or changes as the Officers executing
      the same may approve (execution thereof to be conclusive evidence of such
      approval) and as are not inconsistent with the provisions of this First
      Supplemental Indenture or the Base Indenture, or as may be required by the
      Trustee, the Depositary, or as may be required to comply with any applicable
      law
      or with any rule or regulation made pursuant thereto or with any rule or
      regulation of any securities exchange or automated quotation system on which
      the
      Securities may be listed, or to conform to usage, or to indicate any special
      limitations or restrictions to which any particular Securities are subject.
      

     

    Subject
      to Section 2.06 hereof, so long as the Securities are eligible for
      book-entry settlement with the Depositary, or unless otherwise required by
      law,
      or otherwise contemplated by the Base Indenture, all of the Securities will
      be
      represented by one or more Global Securities. The transfer and exchange of
      beneficial interests in any such Global Security shall be effected through
      the
      Depositary in accordance with this First Supplemental Indenture and the
      Applicable Procedures. 

     

    Each
      Global Security shall represent such of the outstanding Securities as shall
      be
      specified therein and each shall provide that it shall represent the aggregate
      principal amount of outstanding Securities from time to time endorsed thereon
      and that the aggregate principal amount of outstanding Securities represented
      thereby may from time to time be reduced or increased, as appropriate, to
      reflect exchanges, redemptions, purchases or conversions of such Securities.
      

     

    Section
      2.02  Final
      Maturity
      Date; Interest. 

     

    The
      Final
      Maturity Date of the Securities shall be December 15, 2035. 

     

    The
      rate
      or rates at which the Securities shall bear interest, including Contingent
      Interest, if any, the date or dates from which such interest shall accrue,
      the
      Interest Payment Dates on which such interest shall be payable and the Regular
      Record Date for any interest payable on any Interest Payment Date, in each
      case,
      shall be as set forth in the form of Security set forth as Exhibit A
      hereto.

     

    Section
      2.03  Limit
      on Amount of Series. 

     

    The
      aggregate principal amount of Securities which may be authenticated and
      delivered under this First Supplemental Indenture is limited to $110,000,000
      (or
      $121,000,000 if the Underwriters exercise in full their over-allotment option
      as
      set forth in the Purchase Agreement). 

     

    Section
      2.04  Registrar,
      Paying Agent, Conversion Agent and Trustee.

     

    In
      addition to Section 2.4 of the Base Indenture, the Company shall maintain
      an office or agency where Securities may be presented for conversion (the
“Conversion
      Agent”).
      The
      Company hereby initially designates the Trustee as the Conversion Agent and
      designates the Corporate Trust Office of the Trustee, 120 South San Pedro
      Street, 4th
      Floor,
      Los Angeles, California 90012, as the “Corporate
      Trust Office.”

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    Section
      2.05  Conversion
      Agent to Hold Shares in Trust.

     

    The
      Company shall require each Conversion Agent other than the Trustee to agree
      in
      writing that the Conversion Agent will hold in trust for the benefit of Holders
      or the Trustee all shares of Common Stock held by the Conversion Agent for
      the
      delivery of Common Stock when due upon conversion, and will notify the Trustee
      of any default by the Company in making any such delivery. While any such
      default continues, the Trustee may require a Conversion Agent to deliver all
      shares of Common Stock held by it to the Trustee. The Company at any time may
      require a Conversion Agent to pay all money held by it to the Trustee. Upon
      payment over to the Trustee, the Conversion Agent (if other than the Company
      or
      a Subsidiary) shall have no further liability for the money. If the Company
      or a
      Subsidiary acts as Conversion Agent, it shall segregate and hold in a separate
      trust fund for the benefit of the Holders all shares held by it as Conversion
      Agent. Upon any bankruptcy or reorganization proceedings relating to the
      Company, the Trustee shall serve as Conversion Agent for the Securities.


     

    Section
      2.06  Global
      Securities. 

     

    (a) Each
      Global Security authenticated under this First Supplemental Indenture shall
      be
      registered in the name of the Depositary or a nominee thereof and delivered
      to
      such Depositary or a nominee thereof or custodian therefore, and each such
      Global Security shall constitute a single Security for purposes of this First
      Supplemental Indenture.

     

    (b) Notwithstanding
      any other provisions of this First Supplemental Indenture, the Base Indenture
      or
      the Securities, transfers of a Global Security, in whole or in part, shall
      be
      made only in accordance with Sections 2.7 and 2.14 of the Base Indenture and
      this Section 2.06. A Global Security may not be transferred, in whole or in
      part, to any Person other than the Depositary or a nominee or any successor
      thereof, and no such transfer to any such other Person may be registered;
provided
      that
      this clause (b) shall not prohibit any transfer of a Security that is
      issued in exchange for a Global Security but is not itself a Global Security.
      No
      transfer of a Security to any Person shall be effective under this First
      Supplemental Indenture unless and until such Security has been registered in
      the
      name of such Person. 

     

    (c) Notwithstanding
      any other provisions of this First Supplemental Indenture, the Base Indenture
      or
      the Securities, a Global Security shall not be exchanged in whole or in part
      for
      a Security registered in the name of any Person other than the Depositary or
      one
      or more nominees thereof, provided
      that a
      Global Security may be exchanged for Securities registered in the names of
      any
      Person designated by the Depositary in the event that (i) the Depositary
      has notified the Company that it is unwilling or unable to continue as
      depositary for such Global Security or the 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, (ii) the Company by notice to the
      Trustee elects to issue the Securities in definitive registered form in exchange
      for all or any part of the Securities represented by the Global Security or
      (iii) there is or continues to be an Event of Default and the Registrar
      receives notice from the Depositary for the issuance of definitively registered
      Securities in exchange for the Global Security. Any Global Security exchanged
      pursuant to clause (a) above shall be so exchanged in whole and not in
      part. Any Security issued in exchange for a Global Security or any portion
      thereof shall be a Global Security; provided
      that any
      such Security so issued that is registered in the name of a Person other than
      the Depositary or a nominee thereof shall not be a Global Security.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    (d) Securities
      issued in exchange for a Global Security or any portion thereof shall be issued
      in definitive, fully registered form, without interest coupons, shall have
      a
      principal amount equal to that of such Global Security or portion thereof to
      be
      so exchanged, and shall be registered in such names and be in such authorized
      denominations as the Depositary shall designate. Any Global Security to be
      exchanged in whole shall be surrendered by the Depositary to the Trustee or
      the
      Registrar. With regard to any Global Security to be exchanged in part, either
      such Global Security shall be so surrendered for exchange or, if the Trustee
      is
      acting as custodian for the Depositary or its nominee with respect to such
      Global Security, the principal amount thereof shall be reduced, by an amount
      equal to the portion thereof to be so exchanged, by means of an appropriate
      adjustment made on the records of the Trustee. Upon any such surrender or
      adjustment, the Trustee shall authenticate and deliver the Security issuable
      on
      such exchange to or upon the order of the Depositary or an authorized
      representative thereof. 

     

    (e) Subject
      to the provisions of Section 2.06(g) below, the registered Holder may grant
      proxies and otherwise authorize any Person, including Agent Members (as defined
      below) and Persons that may hold interests through Agent Members, to take any
      action which a Holder is entitled to take under this First Supplemental
      Indenture or the Securities. 

     

    (f) In
      the
      event of the occurrence of any of the events specified in Section 2.06(c)
      above, the Company will promptly make available to the Trustee a reasonable
      supply of certificated Securities in definitive, fully registered form, without
      interest coupons. 

     

    (g) Neither
      any members of, or participants in, the Depositary (collectively, the
“Agent
      Members”)
      nor
      any other Persons on whose behalf Agent Members may act shall have any rights
      under this First Supplemental Indenture or the Base Indenture with respect
      to
      any Global Security registered in the name of the Depositary or any nominee
      thereof, or under any such Global Security, and the Depositary or such nominee,
      as the case may be, may be treated by the Company, the Trustee and any agent
      of
      the Company or the Trustee as the absolute owner and Holder of such Global
      Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
      herein shall prevent the Company or 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 such nominee, as the case may
      be,
      or impair, as between the Depositary, its Agent Members and any other person
      on
      whose behalf an Agent Member may act, the operation of customary practices
      of
      such Persons governing the exercise of the rights of a holder of any Security.
      

     

    (h) At
      such
      time as all interests in a Global Security have been redeemed, converted,
      cancelled or exchanged for Securities in certificated form, such Global Security
      shall, upon receipt thereof, be cancelled by the Trustee in accordance with
      standing procedures and instructions existing between the Depositary and the
      Securities Custodian, subject to Section 2.12 of the Base Indenture. At any
      time
      prior to such cancellation, if any interest in a Global Security is redeemed,
      converted, canceled or exchanged for Securities in certificated form, the
      principal amount of such Global Security shall, in accordance with the standing
      procedures and instructions existing between the Depositary and the Securities
      Custodian, be appropriately reduced, and an endorsement shall be made on such
      Global Security, by the Trustee or the Securities Custodian, at the direction
      of
      the Trustee, to reflect such reduction.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    Article
      3.

    Redemption
      and Purchase

     

    Notwithstanding
      Article III of the Base Indenture, the following Article 3 shall apply for
      purposes of this First Supplemental Indenture and the Securities.

     

    Section
      3.01  To
      Redeem; Notice to
      Trustee.

     

    (a)  No
      sinking fund is provided for the Securities. Prior to December 20, 2010, the
      Securities shall not be redeemable. On or after December 20, 2010, the Company
      may, at its option, redeem the Securities for cash at the Redemption Price,
      as a
      whole at any time or from time to time in part, on any Redemption Date (or
      in
      the case of multiple redemptions, Redemption Dates) fixed by the Company. If
      a
      Redemption Date falls after the close of business on a Regular Record Date
      and
      before the related Interest Payment Date, then interest on the Securities
      payable on such Interest Payment Date will be payable to the Holders in whose
      names the Securities are registered at the close of business on such Regular
      Record Date and the Redemption Price shall not include the interest on the
      Securities payable on such Interest Payment Date.

     

    (b)  If
      the
      Company elects to redeem Securities pursuant to this Section 3.01, it shall
      notify the Trustee and by mail to the Holders, on a date at least 30 days and
      no
      more than 60 days prior to the applicable Redemption Date (unless a shorter
      notice shall be satisfactory to the Trustee), of the Redemption Date and the
      principal amount of Securities to be redeemed. The record date relating to
      a
      redemption shall be selected by the Company and given to the Trustee and shall
      not be less than five days after the date of notice to the Trustee.

     

    Section
      3.02  Selection
      of Securities to be
      Redeemed.

     

    (a)  If
      less
      than all of the Securities are to be redeemed, unless the Applicable Procedures
      specify otherwise, the Trustee shall select the Securities to be redeemed within
      five Business Days after it receives the notice described in Section 3.01(b).
      The Trustee shall make the selection from the Securities outstanding and not
      previously called for redemption by lot, or in its discretion, on a pro rata
      basis or by another method that the Trustee considers fair and appropriate
      (so
      long as such method is not prohibited by the rules of any stock exchange or
      market on which the Securities are listed). Securities in denominations of
      $1,000 principal amount may only be redeemed in whole. The Trustee may select
      for redemption portions (equal to $1,000 principal amount or any integral
      multiple thereof) of the principal amount of Securities that have denominations
      larger than $1,000. Provisions of this Indenture that apply to Securities called
      for redemption also apply to portions of Securities called for redemption.
      The
      Trustee shall notify the Company promptly of the Securities or portions of
      Securities to be redeemed.

     

    (b)  If
      any
      Security selected for partial redemption is converted in part before termination
      of the conversion right with respect to the portion of the Security so selected,
      the converted portion of such Security shall be deemed (up to the amount
      selected for the redemption) to be part of the portion selected for redemption.
      Securities which have been converted subsequent to the Trustee commencing
      selection of Securities to be redeemed but prior to redemption of such
      Securities shall be treated by the Trustee as outstanding for the purpose of
      such selection.

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    In
      the
      event of any redemption in part, the Company shall not be required to (i) issue,
      register the transfer of or exchange any Security during a period beginning
      at
      the opening of business 15 days before any selection of Securities for
      redemption and ending at the close of business on the earliest date on which
      the
      relevant notice of redemption is deemed to have been given to all Holders of
      Securities to be redeemed, or (ii) register the transfer or exchange of any
      Security so selected for redemption, in whole or in part, except the unredeemed
      portion of any Security being redeemed in part. 

     

    Section
      3.03  Notice
      of
      Redemption.

     

    (a)  At
      least
      30 days but not more than 60 days before a Redemption Date, the Company shall
      mail or cause to be mailed a notice of redemption to each Holder of Securities
      to be redeemed at such Holder’s address as it appears on the Registrar’s
      books.

     

    (b)  The
      notice shall identify the Securities (including CUSIP numbers) to be redeemed
      and shall state:

     

    (1)  the
      Redemption Date;

     

    (2)  the
      Redemption Price;

     

    (3)  the
      then
      effective Conversion Rate;

     

    (4)  the
      name
      and address of each Paying Agent and Conversion Agent; 

     

    (5)  that
      Securities called for redemption must be presented and surrendered
      to a Paying Agent to collect the Redemption Price; 

     

    (6)  that
      Holders who wish to convert Securities must surrender such Securities for
      conversion no later than the close of business on the Business Day immediately
      preceding the Redemption Date and must satisfy the other requirements set forth
      in paragraph 9 of the Securities and Article 3 of this First Supplemental
      Indenture;

     

    (7)  that,
      unless the Company has failed to make the payment of such Redemption Price
      which
      is due and payable, interest (including Contingent Interest, if any) will cease
      to accrue on and after the Redemption Date; 

     

    (8)  if
      any
      Security is being redeemed in part, the portion of the principal amount of
      such
      Security to be redeemed and that, after the Redemption Date, upon presentation
      and surrender of such Security, a new Security or Securities in aggregate
      principal amount equal to the unredeemed portion thereof will be issued;
      and

     

    (9)  if
      Certificated Securities have been issued and fewer than all the outstanding
      Securities are to be redeemed, the certificate number and the principal amounts
      of the particular Securities to be redeemed.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

     

    (c)  If
      any of
      the Securities to be redeemed is in the form of a Global Security, then the
      Company shall modify such notice to the extent necessary to accord with the
      procedures of the Depositary applicable to redemptions. At the Company’s written
      request, which request shall set forth all relevant information required by
      clauses (1) through (9) of Section
      3.03(b), the Trustee shall give the notice of redemption to each Holder in
      the
      Company’s name and at the Company’s expense; provided,
      however,
      that in
      all cases, the text of such notice of redemption shall be prepared by the
      Company; and provided
      further
      that the
      Company must make such request at least five Business Days prior to the date
      by
      which such notice of redemption must be given to the Holders in accordance
      with
      this Section 3.03.

     

    Section
      3.04  Effect
      of
      Notice of Redemption.

     

    Once
      notice of redemption is mailed, Securities called for redemption become due
      and
      payable on the Redemption Date and at the Redemption Price stated in the notice,
      except for Securities that are converted on a Conversion Date prior to the
      Redemption Date in accordance with the provisions of Article 3. On or after
      the
      Redemption Date and upon presentation and surrender to a Paying Agent,
      Securities called for redemption shall be paid at the Redemption Price.


     

    Section
      3.05  Deposit
      of
      Redemption Price.

     

    (a)  Prior
      to
      10:00 a.m., New York City time, on the Redemption Date, the Company shall
      deposit with a Paying Agent (or, if the Company acts as Paying Agent, shall
      segregate and hold in trust) an amount of money (in immediately available funds
      if deposited on such Redemption Date) sufficient to pay the Redemption Price
      payable upon redemption of all Securities to be redeemed on that date, other
      than Securities or portions thereof called for redemption on that date which
      have been delivered by the Company to the Trustee for cancellation or have
      been
      converted. The Paying Agent shall as promptly as practicable return to the
      Company any money not required for that purpose because of the cancellation
      of
      Securities or the conversion of Securities pursuant to Article 4 or, if such
      money is then held by the Company in trust and is not required for such purpose,
      it shall be discharged from the trust. 

     

    (b)  If
      a
      Paying Agent holds, in accordance with the terms hereof, money sufficient to
      pay
      the Redemption Price of any Security for which a notice of redemption has been
      tendered and not withdrawn in accordance with this First Supplemental Indenture
      then, on the Redemption Date, such Security will cease to be outstanding,
      whether or not the Security is delivered to the Paying Agent, and the rights
      of
      the Holder in respect thereof shall terminate (other than the right to receive
      the Redemption Price as aforesaid).

     

    (c)  No
      Securities may be redeemed by the Company at the option of Holders if there
      has
      occurred and is continuing an Event of Default with respect to the Securities,
      other than a Default in the payment of the Redemption Price. The Paying Agent
      will promptly return to the respective Holders thereof any Securities held
      by it
      during the continuance of an Event of Default (other than a failure to pay
      the
      applicable Redemption Price).

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

    Section
      3.06  Securities
      Redeemed in
      Part.

     

    Upon
      presentation and surrender of a Security that is redeemed in part, the Company
      shall execute and the Trustee shall authenticate and deliver to the Holder
      a new
      Security equal in principal amount to the unredeemed portion of the Security
      surrendered.

     

    Section
      3.07  Conversion
      Arrangement on
      Call for Redemption. 

     

    In
      connection with any redemption of Securities, the Company may arrange for the
      purchase and conversion into Common Stock of any Securities called for
      redemption by an agreement with one or more investment banks or other purchasers
      to purchase such Securities by paying to a Paying Agent (other than the Company
      or any of its Affiliates) in trust for the Holders, on or before 10:00 a.m.,
      New
      York City time, on the Redemption Date, an amount that, together with any
      amounts deposited with such Paying Agent by the Company for the redemption
      of
      such Securities, is not less than the Redemption Price. Notwithstanding anything
      to the contrary contained in this Article 3, the obligation of the Company
      to
      pay the Redemption Price of such Securities shall be deemed to be satisfied
      and
      discharged to the extent such amount is so paid by such purchasers; provided,
      however,
      that
      nothing in this Section 3.07 shall relieve the Company of its obligation to
      pay
      the Redemption Price on Securities called for redemption. If such an agreement
      with one or more investment banks or other purchasers is entered into, any
      Securities called for redemption and not surrendered for conversion by the
      Holders thereof prior to the relevant Redemption Date may, at the option of
      the
      Company upon written notice to the Trustee, 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 4) surrendered
      by
      such purchasers for conversion, all as of 10:00 a.m., New York City time, on
      the
      Redemption Date, subject to payment of the above amount as aforesaid. The Paying
      Agent shall hold and pay to the Holders whose Securities are selected for
      redemption any such amount paid to it for purchase in the same manner as it
      would money deposited with it by the Company for the redemption of Securities.
      Without the Paying Agent’s prior written consent, no arrangement between the
      Company and such purchasers for the purchase and conversion of any Securities
      shall increase or otherwise affect any of the powers, duties, responsibilities
      or obligations of the Paying Agent as set forth in the Indenture, and the
      Company agrees to indemnify the Paying Agent from, 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 Securities between the
      Company and such purchasers, including the costs and expenses incurred by the
      Paying Agent 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 the Indenture. 

     

    Section
      3.08  Repurchase
      of Securities at Option of
      the
      Holder upon a Fundamental Change.

     

    (a)  If
      a
      Fundamental Change occurs prior to the Final Maturity Date, each Holder of
      a
      Security shall have the right, at the option of the Holder, to require the
      Company to repurchase for cash all or any portion of the Securities of such
      Holder equal to $1,000 principal amount (or an integral multiple thereof) at
      the
      Fundamental Change Repurchase Price, on the date specified by the Company that
      is no earlier than 15 days and no later than 30 days after the date of the
      Fundamental Change Company Notice pursuant to subsection 3.08(b) (the
“Fundamental
      Change Repurchase Date”).

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

     

    (b)  On
      or
      before the 20th day after a Fundamental Change has occurred, the Company shall
      mail a written notice of the Fundamental Change and of the resulting repurchase
      right to the Trustee, Paying Agent and to each Holder (and to beneficial owners
      as required by applicable law) (the “Fundamental
      Change Company Notice”).
      The
      Fundamental Change Company Notice shall include the form of a Fundamental Change
      Repurchase Notice to be completed by the Holder and shall state:

     

    (1)  the
      events causing such Fundamental Change;

     

    (2)  the
      date
      (or expected date) of such Fundamental Change; 

     

    (3)  the
      last
      date by which the Fundamental Repurchase Notice must be delivered to elect
      the
      repurchase option pursuant to this Section 3.08;

     

    (4)  the
      Fundamental Change Repurchase Date;

     

    (5)  the
      Fundamental Change Repurchase Price;

     

    (6)  the
      Holder’s right to require the Company to purchase the Securities;

     

    (7)  the
      name
      and address of each Paying Agent and Conversion Agent; 

     

    (8)  the
      then
      effective Conversion Rate and any adjustments to the Conversion Rate resulting
      from such Fundamental Change;

     

    (9)  the
      procedures that the Holder must follow to exercise rights under Article 4 and
      that Securities as to which a Fundamental Change Repurchase Notice has been
      given may be converted into Common Stock pursuant to Article 4 of this First
      Supplemental Indenture only to the extent that the Fundamental Change Repurchase
      Notice has been withdrawn in accordance with the terms of this First
      Supplemental Indenture;

     

    (10)  the
      procedures that the Holder must follow to exercise rights under this Section
      3.08;

     

    (11)  the
      procedures for withdrawing a Fundamental Change Repurchase Notice;

     

    (12)  that,
      unless the Company fails to pay such Fundamental Change Repurchase Price,
      Securities covered by any Fundamental Change Repurchase Notice will cease to
      be
      outstanding and interest will cease to accrue on and after the Fundamental
      Change Repurchase Date; and

     

    (13)  the
      CUSIP
      number of the Securities.

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

     

    At
      the
      Company’s request, the Trustee shall give such Fundamental Change Company Notice
      in the Company’s name and at the Company’s expense; provided, that, in all
      cases, the text of such Fundamental Change Company Notice shall be prepared
      by
      the Company. In connection with the delivery of the Fundamental Change Company
      Notice to the Holders, the Company shall publish a notice containing
      substantially the same information that is required in the Fundamental Change
      Company Notice in a newspaper of general circulation in the City of New York
      or
      publish information on a website of the Company or through such other public
      medium the Company may use at that time. If any of the Securities is in the
      form
      of a Global Security, then the Company shall modify such notice to the extent
      necessary to accord with the Applicable Procedures relating to the purchase
      of
      Global Securities.

     

    (c)  A
      Holder
      may exercise its rights specified in Section 3.08(a) upon delivery of a written
      notice (which shall be in substantially the form attached as Exhibit A under
      the
      heading “Fundamental Change Repurchase Notice” and which may be delivered by
      letter, overnight courier, hand delivery, facsimile transmission or in any
      other
      written form and, in the case of Global Securities, may be delivered
      electronically or by other means in accordance with the Depositary’s Applicable
      Procedures) of the exercise of such rights (a “Fundamental
      Change Repurchase Notice”)
      to the
      Paying Agent at any time prior to the close of business on the fifth Business
      Day immediately preceding the Fundamental Change Repurchase Date, subject to
      extension to comply with applicable law. 

     

    (1)  The
      Fundamental Change Repurchase Notice shall state: (A) the certificate number
      (if
      such Security is held other than in global form) of the Security which the
      Holder will deliver to be repurchased (or, if the Security is held in global
      form, any other items required to comply with the Applicable Procedures), (B)
      the portion of the principal amount of the Security which the Holder will
      deliver to be repurchased and (C) that such Security shall be repurchased as
      of
      the Fundamental Change Repurchase Date pursuant to the terms and conditions
      specified in the Securities and in this First Supplemental
      Indenture.

     

    (2)  The
      delivery of a Security for which a Fundamental Change Repurchase Notice has
      been
      timely delivered to any Paying Agent and not validly withdrawn prior to, on
      or
      after the Fundamental Change Repurchase Date (together with all necessary
      endorsements) at the office of such Paying Agent shall be a condition to the
      receipt by the Holder of the Fundamental Change Repurchase Price
      therefor.

     

    (3)  The
      Company shall only be obliged to purchase, pursuant to this Section 3.08, a
      portion of a Security if the principal amount of such portion is $1,000 or
      an
      integral multiple of $1,000 (provisions of this First Supplemental Indenture
      that apply to the purchase of all of a Security also apply to the purchase
      of
      such portion of such Security).

     

    (4)  Notwithstanding
      anything herein to the contrary, any Holder delivering to a Paying Agent the
      Fundamental Change Repurchase Notice contemplated by this Section 3.08(c) shall
      have the right to withdraw such Fundamental Change Repurchase Notice in whole
      or
      in a portion thereof that is a principal amount of $1,000 or in an integral
      multiple thereof at any time prior to the close of business on the fifth
      Business Day prior to the Fundamental Change Repurchase Date by delivery of
      a
      written notice of withdrawal to the Paying Agent in accordance with Section
      3.09(b).

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

     

    (5)  A
      Paying
      Agent shall promptly notify the Company of the receipt by it of any Fundamental
      Change Repurchase Notice or written withdrawal thereof.

     

    (6)  Anything
      herein to the contrary notwithstanding, in the case of Global Securities, any
      Fundamental Change Repurchase Notice may be delivered or withdrawn and such
      Securities may be surrendered or delivered for purchase in accordance with
      the
      Applicable Procedures as in effect from time to time.

     

    (d)  The
      Company shall deposit cash at the time and in the manner as provided in Section
      3.10, sufficient to pay the aggregate Fundamental Change Repurchase Price of
      all
      Securities to be purchased pursuant to this Section 3.08.

     

    Section
      3.09  Effect
      of
      Fundamental Change Repurchase Notice. 

     

    (a)  Upon
      receipt by any Paying Agent of a properly completed Fundamental Change
      Repurchase Notice from a Holder, the Holder of the Security in respect of which
      such Fundamental Change Repurchase Notice was given shall (unless such
      Fundamental Change Repurchase Notice is withdrawn as specified in Section
      3.09(b)) thereafter be entitled to receive the Fundamental Change Repurchase
      Price with respect to such Security, subject to the occurrence of the
      Fundamental Change Effective Date. Such Fundamental Change Repurchase Price
      shall be paid to such Holder promptly, but no later than two Business Days,
      following the later of (1) the Fundamental Change Repurchase Date (provided
      that
      the conditions in Section 3.08 have been satisfied) and (2) the time of delivery
      of such Security to a Paying Agent by the Holder thereof in the manner required
      by Section 3.08(c). Securities in respect of which a Fundamental Change
      Repurchase Notice has been given by the Holder thereof may not be converted
      into
      shares of Common Stock pursuant to Article 4 on or after the date of the
      delivery of such Fundamental Change of Repurchase Notice unless such Fundamental
      Change Repurchase Notice has first been validly withdrawn in accordance with
      Section 3.09(b) with respect to the Securities to be converted. 

     

    (b)  A
      Fundamental Change Repurchase Notice may be withdrawn by means of a written
      notice (which may be delivered by mail, overnight courier, hand delivery,
      facsimile transmission or in any other written form and, in the case of Global
      Securities, may be delivered electronically or by other means in accordance
      with
      the Applicable Procedures) of withdrawal delivered by the Holder to a Paying
      Agent at any time prior to the close of business on the fifth Business Day
      immediately prior to the Fundamental Change Repurchase Date, specifying (1)
      the
      principal amount of the Security or portion thereof (which must be a principal
      amount of $1,000 or an integral multiple of $1,000 in excess thereof) with
      respect to which such notice of withdrawal is being submitted, (2) if
      certificated Securities have been issued, the certificate number of the Security
      being withdrawn in whole or in part (or if the Securities are not certificated,
      such written notice must comply with the procedures of the Depositary) and
      (3)
      the portion of the principal amount of the Security that will remain subject
      to
      the Fundamental Change Repurchase Notice, which portion must be a principal
      amount of $1,000 or an integral multiple thereof. 

     

    Section
      3.10  Deposit
      of
      Fundamental Change Repurchase Price. 

     

    (a)  On
      or
      before 10:00 a.m. New York City time on the Business Day following the
      applicable Fundamental Change Repurchase Date, the Company shall deposit with
      the Trustee or with a Paying Agent (or if the Company or an Affiliate of the
      Company is acting as the Paying Agent, shall segregate and hold in trust as
      provided in Section 2.5 of the Base Indenture) an amount of money (in
      immediately available funds if deposited on or after such Fundamental Change
      Repurchase Date), sufficient to pay the aggregate Fundamental Change Repurchase
      Price of all the Securities or portions thereof that are to be purchased as
      of
      Fundamental Change Repurchase Date.

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

     

    (b)  If
      a
      Paying Agent or the Trustee holds on the Fundamental Change Repurchase Date,
      in
      accordance with the terms hereof, money sufficient to pay the Fundamental Change
      Repurchase Price of any Security for which a Fundamental Change Repurchase
      Notice has been tendered and not withdrawn in accordance with this First
      Supplemental Indenture then, immediately following
      the applicable Fundamental Change Repurchase Date, whether or not the Security
      is delivered to the Paying Agent, such Security will cease to be outstanding,
      interest (including Contingent Interest, if any), shall cease to accrue, and
      the
      rights of the Holder in respect of the Security shall terminate (other than
      the
      right to receive the Fundamental Change Repurchase Price upon delivery of the
      Security as aforesaid). 

     

    (c)  The
      Paying Agent will promptly return to the respective Holders thereof any
      Securities with respect to which a Fundamental Change Repurchase Notice has
      been
      withdrawn in compliance with this First Supplemental Indenture.

     

    (d)  If
      a
      Fundamental Change Repurchase Date falls after a Regular Record Date and on
      or
      before the related Interest Payment Date, then interest on the Securities
      payable on such Interest Payment Date will be payable to the Holders in whose
      names the Securities are registered at the close of business on such Regular
      Record Date.

     

    Section
      3.11  Repayment
      to
      the
      Company.

     

    To
      the
      extent that the aggregate amount of cash deposited by the Company pursuant
      to
      Section 3.10 exceeds the aggregate Fundamental Change Repurchase Price of the
      Securities or portions thereof that the Company is obligated to purchase, then
      promptly after the Fundamental Change Repurchase Date the Trustee or a Paying
      Agent, as the case may be, shall return any such excess cash to the
      Company.

     

    Section
      3.12  Purchase
      of
      Securities at Option of the Holder on Specified Dates.

     

    (a)  Securities
      shall be purchased in cash in whole or in part (which must be equal to $1,000
      principal amount or any integral multiple thereof) by the Company, at the option
      of Holders, in accordance with the provisions of this Section 3.12 and paragraph
      8 of the Securities promptly on December 15, 2012, December 15, 2015, December
      15, 2020, December 15, 2025 and December 15, 2030 (each, a “Put
      Right Purchase Date”),
      or
      the time of the surrender of the Securities, if later, for cash at a purchase
      price equal to 100% of the principal amount of the surrendered Securities
      together with accrued but unpaid interest, if any, and Contingent Interest,
      if
      any, up to but excluding the applicable Put Right Purchase Date (the
“Put
      Right Purchase Price”).
      If
      the Put Right Purchase Date falls after a Regular Record Date and on or before
      the related Interest Payment Date, interest, including Contingent Interest,
      if
      any, on the Securities payable on such Interest Payment Date will be payable
      to
      the Holders in whose name the Securities are registered at the close of business
      on such Regular Record Date.

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

     

    (b)  Unless
      the Company has issued a notice to redeem the Securities pursuant to Section
      3.03 hereof, the Company shall give written notice of the applicable Put Right
      Purchase Date by notice sent by first-class mail to the Trustee and to each
      Holder (at its address shown in the register of the Registrar) not less than
      20
      Business Days prior to each Put Right Purchase Date (the “Company
      Put Right Notice”).
      Each
      Company Put Right Notice shall include a form of Put Right Purchase Notice
      to be
      completed by a Holder and shall state: 

     

    (1)  the
      Put
      Right Purchase Price, for the applicable Put Right Purchase Date and the
      Conversion Rate then in effect;

     

    (2)  the
      name
      and address of the Paying Agent and the Conversion Agent; 

     

    (3)  that
      Securities as to which a Put Right Purchase Notice has been given may be
      converted, if they are otherwise convertible, only in accordance with Article
      4
      and paragraph 9 of the Securities and only to the extent that the Put Right
      Purchase Notice has been withdrawn in accordance with the terms of this
      Indenture;

     

    (4)  that
      Securities must be surrendered to the Paying Agent as a condition to collecting
      payment of the Put Right Purchase Price; 

     

    (5)  that
      the
      Put Right Purchase Price for any Security as to which a Put Right Purchase
      Notice has been given and not withdrawn will be paid promptly following the
      later of the Put Right Purchase Date and the time of surrender of such Security
      as described in subclause (4) above; 

     

    (6)  the
      procedures the Holder must follow to exercise rights under this Section 3.12
      and
      a brief description of those rights; 

     

    (7)  the
      procedures for withdrawing a Put Right Purchase Notice (including a summary
      of
      the terms of Section 3.12(g));

     

    (8)  that,
      unless the Company fails to pay such Put Right Purchase Price on Securities
      for
      which a Put Right Purchase Notice has been submitted, such Securities shall
      no
      longer be outstanding and interest (including Contingent Interest, if any)
      on
      such Securities will cease to accrue on and after the Put Right Purchase Date;
      and

     

    (9)  the
      CUSIP
      number of the Securities.

     

    (c)  If
      any of
      the Securities are to be redeemed in the form of a Global Security, the Company
      shall modify such notice to the extent necessary to accord with the Applicable
      Procedures relating to repurchases.

     

    (d)  At
      the
      Company’s request, the Trustee shall give such Company Put Right Notice on
      behalf of the Company and at the Company’s expense; provided,
      however,
      that, in
      all cases, the text of such Company Put Right Notice shall be prepared by the
      Company; provided
      further
      that the
      Company shall make such request and deliver the text of such Company Put Right
      Notice at least five Business Days prior to the date by which such Company
      Put
      Right Notice must be given in accordance with this Section 3.12.

     

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

     

    (e)  To
      exercise its rights pursuant to this Section 3.12, the Holder shall deliver
      to
      the Paying Agent a properly completed put right purchase notice (each, a
“Put
      Right Purchase Notice”)
      at any
      time from the opening of business on the date that is 20 Business Days prior
      to
      the applicable Put Right Purchase Date until the close of business on the
      Business Day immediately preceding the Put Right Purchase Date
      stating:

     

    (1)  if
      certificated Securities have been issued, the certificate number of the Security
      that the Holder will deliver for repurchase (or if the Securities are not
      certificated, the Put Right Purchase Notice must comply with the Applicable
      Procedures relating to purchases);

     

    (2)  the
      portion of the principal amount of the Security which the Holder will deliver
      to
      be purchased, which portion must be a principal amount of $1,000 or an integral
      multiple thereof; and

     

    (3)  that
      such
      Security shall be purchased as of the applicable Put Right Purchase Date
      pursuant to the terms and conditions in this Section 3.12 and paragraph 8 of
      the
      Securities.

     

    (f)  The
      Company shall pay the Put Right Purchase Price for all Securities with respect
      to which a Put Right Purchase Notice is given and not validly withdrawn, upon
      the later of the Business Day following the applicable Put Right Purchase Date
      and delivery of such Securities to the Paying Agent (together with all necessary
      endorsements) at the offices of the Paying Agent (if the Securities are not
      certificated, such delivery must comply with the Applicable Procedures relating
      to purchases). Delivery of such Security shall be a condition to receipt by
      the
      Holder of the Put Right Purchase Price therefor. The Put Right Purchase Price
      shall be paid pursuant to this Section 3.12 only if the Security delivered
      to
      the Paying Agent conforms in all respects to the description thereof in the
      related Put Right Purchase Notice, as determined by the Company.

     

    (g)  Notwithstanding
      anything herein to the contrary, any Holder delivering to the Paying Agent
      the
      Put Right Purchase Notice contemplated by this Section 3.12 shall have the
      right
      to withdraw such Put Right Purchase Notice in whole or in part at any time
      prior
      to the close of business on the Business Day immediately preceding the
      applicable Put Right Purchase Date by delivery of a written notice of withdrawal
      to the Paying Agent specifying: 

     

    (1)  the
      aggregate principal amount of the Security (which must be equal to $1,000 or
      any
      integral multiple thereof) with respect to which such notice of withdrawal
      is
      being submitted,

     

    (2)  the
      certificate number, if any, of the Security in respect of which such notice
      of
      withdrawal is being submitted (or, if the Securities are not certificated,
      the
      withdrawal notice must comply with the Applicable Procedures relating to
      withdrawals), and 

     

    (3)  the
      aggregate principal amount, if any, of such Security which remains subject
      to
      the original Put Right Purchase Notice and which has been or will be delivered
      for purchase by
      the
      Company.

     

    
      
         

      

      
        -23-

        
          

        

      

      
         

      

    

     

    (h)  The
      Paying Agent shall promptly notify the Company of the receipt by it of any
      Put
      Right Purchase Notice or written notice of withdrawal thereof. 

     

    (i)  On
      or
      before 10:00 a.m. New York City time on the Business Day following the
      applicable Put Right Purchase Date, the Company shall deposit with the Trustee
      or with the Paying Agent (or if the Company or an Affiliate of the Company
      is
      acting as the Paying Agent, shall segregate and hold in trust as provided in
      Section 2.5 of the Base Indenture) an amount of money (in immediately available
      funds if deposited on or after such Put Right Purchase Date) sufficient to
      pay
      the aggregate Put Right Purchase Price of all the Securities or portions thereof
      which are to be purchased as of the Put Right Purchase Date. 

     

    (1)  If
      a
      Paying Agent holds on the Business Day after the Put Right Purchase Date, in
      accordance with the terms hereof, money sufficient to pay the Put Right Purchase
      Price of any Security for which a Put Right Notice has been tendered and not
      withdrawn, then, immediately after the Put Right Purchase Date, whether or
      not
      the Security is delivered to the Paying Agent, such Security will cease to
      be
      outstanding, interest (including Contingent Interest, if any) shall cease to
      accrue and the rights of the Holder in respect of the Security shall terminate
      (other than the right to receive the Put Right Purchase Price as aforesaid).
      

     

    (2)  The
      Put
      Right Purchase Price shall be paid to such Holder with respect to Securities
      for
      which a Put Right Purchase Notice has been tendered and not validly withdrawn,
      subject to receipt of funds by the Paying Agent, promptly after the later of
      (A)
      the applicable Put Right Purchase Date with respect to such Security (provided
      that the conditions in Section 3.12(f) have been satisfied) or (B) the time
      of
      delivery of such Security to the Paying Agent by the Holder thereof in the
      manner required by Section 3.12(f). Securities in respect of which a Put Right
      Purchase Notice has been given by the Holder thereof, if convertible pursuant
      to
      Article 4, may not be converted on or after the date of the delivery of such
      Put
      Right Purchase Notice, unless such Put Right Purchase Notice has first been
      validly withdrawn as specified in Section 3.12(g). 

     

    (3)  To
      the
      extent that the aggregate amount of cash deposited by the Company pursuant
      to
      this Section 3.12(i) exceeds the aggregate Put Right Purchase Price of the
      Securities or portions thereof that the Company is obligated to purchase, then
      promptly after the Put Right Purchase Date the Trustee or a Paying Agent, as
      the
      case may be, shall return any such excess cash to the Company, or if such money
      is then held by the Company in trust, it shall be discharged from the
      trust.

     

    (j)  The
      Company shall only be obligated to purchase, pursuant to this Section 3.12,
      a
      portion of a Security if the principal amount of such portion is $1,000 or
      an
      integral multiple of $1,000. Provisions of this Indenture that apply to the
      purchase of all of a Security also apply to the purchase of such portion of
      such
      Security.

     

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

     

    Section
      3.13  Securities
      Purchased in
      Part.

     

    Any
      Security that is to be purchased only in part shall be surrendered at the office
      of a Paying Agent, and promptly after the Fundamental Change Repurchase Date
      or
      the Put Right Purchase Date, as the case may be, the Company shall execute
      and
      the Trustee shall authenticate and deliver to the Holder of such Security,
      without service charge, a new Security or Securities, of such authorized
      denomination or denominations as may be requested by such Holder (which must
      be
      equal to $1,000 principal amount or any integral thereof), in aggregate
      principal amount equal to, and in exchange for, the portion of the principal
      amount of the Security so surrendered that is not purchased. 

     

    Section
      3.14  Compliance
      with
      Securities Laws upon Purchase of Securities. 

     

    In
      connection with any offer to purchase of Securities under Section 3.08 or
      Section 3.12, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or
      any successor to either such Rule), and any other tender offer rules, if
      applicable, under the Exchange Act, (b) file the related Schedule TO (or any
      successor or similar schedule, form or report) if required under the Exchange
      Act, and (c) otherwise comply with all federal and state securities laws in
      connection with such offer to purchase or purchase of Securities, all so as
      to
      permit the rights of the Holders and obligations of the Company under Sections
      3.08 through 3.12 to be exercised in the time and in the manner specified
      therein. To the extent that compliance with any such laws, rules and regulations
      would result in a conflict with any of the terms hereof, this Indenture is
      hereby modified to the extent required for the Company to comply with such
      laws,
      rules and regulations.

     

    Section
      3.15  Purchase
      of
      Securities in Open Market.

     

    The
      Company shall surrender any Security repurchased by the Company pursuant to
      this
      Article 3 to the Trustee for cancellation. Any Securities surrendered to the
      Trustee for cancellation may not be reissued or resold by the Company and will
      be canceled promptly in accordance with Section 2.12 of the Base Indenture.
      The
      Company may purchase Securities in the open market, by tender at any price
      or
      pursuant to private agreements.

     

    Section
      3.16  Exchange
      in Lieu of Repurchase.

     

    The
      Company shall have the option, exercisable at any time or from time to time,
      by
      an instrument in writing signed by the Company and provided to the Paying Agent,
      to designate a, or change the existing designation of, the financial institution
      (a “Purchase
      Party”)
      to
      which Securities surrendered by a Holder for repurchase in accordance with
      this
      Article 3, as applicable, will be initially offered by the Paying Agent on
      behalf of a Holder for exchange in lieu of repurchase. In order to accept any
      Securities surrendered for repurchase, the Purchase Party must agree to deliver,
      in exchange for such Securities, the Put Right Purchase Price or the Fundamental
      Change Purchase Price, as the case may be, for such Securities in the amount
      that would be payable if the Securities were repurchased by the Company in
      accordance with this Article 3. If the Purchase Party accepts any Securities
      for
      repurchase, it will deliver to the Paying Agent, and the Paying Agent will
      deliver to Holders that surrendered such Securities for repurchase, the Put
      Right Purchase Price or the Fundamental Change Repurchase Price, as applicable,
      payable with respect to such Securities. In the event that the Purchase Party
      agrees to accept any Securities for repurchase but fails to deliver the Put
      Right Purchase Price or the Fundamental Change Repurchase Price to the Paying
      Agent by the Put Right Purchase Date or Fundamental Change Repurchase Date,
      as
      applicable, the Securities will be repurchased by the Company in accordance
      with
      this Article 3, and the Company will, as promptly as practical thereafter,
      but
      not later than one Business Day following the Put Right Purchase Date or the
      Fundamental Change Repurchase Date, as the case may be, cause the Put Right
      Purchase Price or the Fundamental Change Repurchase Price, as the case may
      be,
      for the Securities to be paid. Any Securities purchased by the Purchase Party
      shall remain outstanding. The designation by the Company of a Purchase Party
      does not require such Purchase Party to accept any Securities. If the Purchase
      Party declines to accept any Securities surrendered for repurchase, the Company
      will repurchase the Securities on the terms provided in this Indenture. The
      Company will not pay any consideration to, or otherwise enter into any
      arrangement with, the Purchase Party for or with respect to such
      designation.

     

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

     

    Article
      4.

    Conversion

     

    Section
      4.01  Conversion
      Privilege and
      Conversion Rate.

     

    (a)  Subject
      to the obligation and the right of the Company to pay some or all of the
      conversion consideration in cash in accordance with Section 4.14, and upon
      compliance with the provisions of this Article 4, at the option of the Holder
      thereof, any Security or portion thereof that is an integral multiple of $1,000
      principal amount may be converted into fully paid and nonassessable shares
      (calculated as to each conversion to the nearest 1/100th of a share) of Common
      Stock prior to the close of business on the Business Day immediately preceding
      the Final Maturity Date or such earlier date set forth in this Article 4, unless
      previously redeemed by the Company or purchased by the Company at the Holders’
option, at the Conversion Rate in effect at such time, determined as hereinafter
      provided, and subject to the adjustments described below, only under the
      following circumstances: 

     

    (1)  during
      any calendar quarter commencing after December 31, 2005, and only during such
      calendar quarter, if, as of the last day of the immediately preceding calendar
      quarter, the Closing Price per share of the Common Stock for at least 20 Trading
      Days in the period of the 30 consecutive Trading Days ending on the last Trading
      Day of such preceding calendar quarter was more than 120% of the Conversion
      Price per share of Common Stock on the last day of such preceding calendar
      quarter; 

     

    (2)  until
      the
      close of business on the Business Day immediately preceding the Redemption
      Date
      if the Company elects to redeem the relevant Security pursuant to Article
      3;

     

    (3)  if
      the
      Company distributes to all holders of Common Stock any rights or warrants
      entitling them to purchase, for a period expiring within 60 days of the date
      of
      issuance, Common Stock, or securities convertible into Common Stock, at less
      than, or having a Conversion Price per share less than, the average of the
      Closing Prices per share of the Common Stock for the 10 consecutive Trading
      Days
      prior to the day of issuance;

     

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

     

    (4)  if
      the
      Company distributes to all holders of Common Stock, assets, debt securities
      or
      rights to purchase the Company’s securities, which distribution has a per share
      value as determined by the Board of Directors exceeding 7.5% of the Closing
      Price of the Common Stock on the Trading Day preceding the declaration date
      for
      such distribution;

     

    (5)  if
      the
      Company is a party to a consolidation, merger or binding share exchange pursuant
      to which the Company’s Common Stock would be converted into cash, securities or
      other property (unless the transaction also constitutes a Fundamental
      Change);

     

    (6)  if
      a
      Fundamental Change occurs;

     

    (7)  at
      any
      time during the period beginning 10 Trading Days prior to the Final Maturity
      Date and ending at the close of business on the Business Day immediately
      preceding the Final Maturity Date; or

     

    (8)  during
      the five Business Day period after any five consecutive Trading Day period
      in
      which the Trading Price (as defined below) per $1,000 principal amount of
      Securities, as determined following a request by a Holder in accordance with
      the
      procedures described below in Section 4.01(d)(ii), for each day of that period
      was less than 98% of the product of the Closing Price of the Company’s Common
      Stock and the Conversion Rate per $1,000 principal amount of
      securities.

     

    For
      purposes of this Section 4.01(a)(8) only, the “Trading
      Price”
of
      the
      Securities on any date of determination means the average of the secondary
      market bid quotations obtained by the Trustee for $5,000,000 principal amount
      of
      Securities at approximately 3:30 p.m., New York City time, on such determination
      date from three nationally recognized securities dealers the Company selects,
      which may include the Underwriters; provided that if three such bids cannot
      reasonably be obtained by the Trustee, but two such bids are obtained, then
      the
      average of the two bids shall be used, and if only one such bid can reasonably
      be obtained by the Trustee, that one bid shall be used. If the Trustee cannot
      reasonably obtain at least one bid for $5,000,000 principal amount of Securities
      from a nationally recognized securities dealer, or in the reasonable judgment
      of
      the Company, the bid quotations are not indicative of the secondary market
      value
      of the Securities, then the Trading Price per $1,000 principal amount of
      Securities will be deemed to be less than 98% of the product of the Closing
      Price of the Company’s Common Stock and the Conversion Rate per $1,000 principal
      amount of Securities.

     

    (b)  In
      the
      case of a distribution contemplated by clauses (3) and (4) of Section 4.01(a),
      the Company shall notify Holders at least 20 days prior to the ex-dividend
      date
      for such distribution (the “Distribution
      Notice”).
      Once
      the Company has given the Distribution Notice, Holders may surrender their
      Securities for conversion at any time until the earlier of the close of business
      on the last Business Day preceding the ex-dividend date (the first date on
      which
      the Common Stock trades, regular way, on the relevant market from which the
      Closing Price was obtained without the right to receive such right, warrant,
      dividend or distribution) or the Company’s announcement that such distribution
      will not take place. In the event of a distribution contemplated by clauses
      (3)
      and (4) of Section 4.01(a), Holders may not convert the Securities if the
      Holders will otherwise participate in such distribution. The Company will
      provide written notice to the Conversion Agent as soon as reasonably practicable
      of any anticipated or actual event or transaction that will cause or causes
      the
      Securities to become convertible pursuant to clauses (3) or (4) of Section
      4.01(a).

     

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

     

    (c)  In
      the
      case of a transaction contemplated by clause (5) of Section 4.01(a) (regardless
      of whether the transaction constitutes a Fundamental Change), the Company will
      notify Holders at least 15 days prior to the anticipated effective date of
      such
      transaction that the Company knows or reasonably should know will occur (the
      “Merger
      Notice”).
      Holders may surrender Securities for conversion at any time from and after
      the
      date which is 15 days prior to the anticipated effective date of such
      transaction until, but excluding, the date which is 15 days after the actual
      effective date of such transaction.

     

    (d)  (i)
      For
      each calendar quarter of the Company, beginning with the calendar quarter ending
      December 31, 2005, the Conversion Agent, on behalf of the Company, will
      determine, on the first Business Day following the last Trading Day of such
      calendar quarter, whether the Securities are convertible pursuant to clause
      (1)
      of Section 4.01(a), and, if so, will notify the Trustee (to the extent the
      Trustee is not also serving as the Conversion Agent) and the Company in
      writing.

     

    (ii) The
      Trustee shall have no obligation to determine the Trading Price of the
      Securities and whether the Securities are convertible pursuant to clause (8)
      of
      Section 4.01(a) unless the Company has requested such determination; and the
      Company shall have no obligation to make such request unless a Holder of the
      Securities provides the Company with reasonable evidence that the Trading Price
      per $1,000 principal amount of Securities would be less than 98% of the product
      of the Closing Price of the Company’s Common Stock and the Conversion Rate per
      $1,000 principal amount of Securities. At such time, the Company shall instruct
      the Trustee to determine the Trading Price of the Securities beginning on the
      next Trading Day and on each successive Trading Day until the Trading Price
      per
      $1,000 principal amount of the Securities is greater than 98% of the product
      of
      the Closing Price of the Company’s Common Stock and the Conversion Rate per
      $1,000 principal amount of the Securities.

     

    (e)  The
      conversion rights pursuant to this Article 4 shall commence on the Issue Date
      of
      the Securities and expire at the close of business on the Business Day
      immediately preceding the Final Maturity Date, but shall be exercisable only
      during the time periods specified with respect to each circumstance pursuant
      to
      which the Securities become convertible, subject, in the case of conversion
      of
      any Global Security, to any Applicable Procedures. If a Security is called
      for
      redemption or submitted or presented for purchase pursuant to Article 3, such
      conversion right shall commence on the date of the notice of redemption and
      terminate at the close of business on the second Business Day immediately
      preceding the Redemption Date, Put Right Purchase Date or Fundamental Change
      Repurchase Date for such Security (unless the Company shall fail to make the
      Redemption Price, Put Right Purchase Price or Fundamental Change Repurchase
      Price payment when due in accordance with Article 3, in which case the
      conversion right shall terminate at the close of business on the date such
      failure is cured and such Security is redeemed or purchased, as the case may
      be). If a Security is convertible as a result of a Fundamental Change, such
      conversion right shall commence and terminate as set forth in Section 4.01(c).
      Securities in respect of which a Fundamental Change Repurchase Notice or a
      Put
      Right Purchase Notice, as the case may be, has been delivered may not be
      surrendered for conversion pursuant to this Article 4 prior to a valid
      withdrawal of such Fundamental Change Notice or Put Right Purchase Notice,
      as
      the case may be, in accordance with the provisions of Article 3.

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

     

    (f)  Provisions
      of this Indenture that apply to conversion of all of a Security also apply
      to
      conversion of a portion of a Security. 

     

    (g)  A
      Holder
      of Securities is not entitled to any rights of a holder of Common Stock until
      such Holder has converted its Securities into Common Stock, and only to the
      extent such Securities are deemed to have been converted into Common Stock
      pursuant to this Article 4.

     

    (h)  The
      Conversion Rate shall be adjusted in certain instances as provided in Section
      4.01(i) and Section 4.07.

     

    (i)  If
      on or
      prior to December 15, 2012, there shall have occurred a transaction described
      in
      clauses (i), (ii) or (iv) of the definition of a Change in Control, the Company
      shall pay a “Make
      Whole Premium”
to
      the
      Holders of the Securities who convert their Securities during the period
      beginning 15 days before the anticipated Fundamental Change Effective Date
      until, but excluding, the date that is 15 days after the Fundamental Change
      Effective Date on the Fundamental Change Repurchase Date by increasing the
      Conversion Rate for such Securities. The number of additional shares of Common
      Stock per $1,000 principal amount of Securities constituting the Make Whole
      Premium shall be determined by reference to the table below, based on the
      Fundamental Change Effective Date of such Fundamental Change and the Stock
      Price; provided that if the Stock Price or Fundamental Change Effective Date
      are
      not set forth on the table: (i) if the actual Stock Price on the Fundamental
      Change Effective Date is between two Stock Prices on the table or the actual
      Fundamental Change Effective Date is between two Fundamental Change Effective
      Dates on the table, the Make Whole Premium will be determined by a straight-line
      interpolation between the Make Whole Premiums set forth for the two Stock Prices
      and the two Fundamental Change Effective Dates on the table based on a 365-day
      year, as applicable, (ii) if the Stock Price on the Fundamental Change Effective
      Date exceeds $150 per share, subject to adjustment as set forth herein, no
      Make
      Whole Premium will be paid, and (iii) if the Stock Price on the Fundamental
      Change Effective Date is less than $43.31 per share, subject to adjustment
      as
      set forth herein, no Make Whole Premium will be paid. If Holders of the
      Company’s Common Stock receive only cash in the transaction, the Stock Price
      shall be the cash amount paid per share of the Company’s Common Stock in
      connection with the Fundamental Change. Otherwise, the Stock Price shall be
      equal to the average Closing Price of the Company’s Common Stock over the five
      Trading Day period ending on the Trading Day immediately preceding, and
      excluding, the applicable Fundamental Change Effective Date.

     

    
      
         

      

      
        -29-

        
          

        

      

      
         

      

    

     

    Make
      Whole Premium Upon a Fundamental Change (Number of Additional
      Shares)

    


    
      	
              Stock
                Price on

            	 	
              Effective
                Date

            	 
	
              Effective
                Date

            	 	
              12/19/05

            	 	
              12/15/06

            	 	
              12/15/07

            	 	
              12/15/08

            	 	
              12/15/09

            	 	
              12/15/10

            	 	
              12/15/11

            	 	
              12/15/12

            	 
	
              $43.31

            	 	 	
              5.9862

            	 	 	
              5.9862

            	 	 	
              5.9862

            	 	 	
              5.9862

            	 	 	
              5.9862

            	 	 	
              6.1758

            	 	 	
              6.0810

            	 	 	
              5.9862

            	 
	
              $50.00

            	 	 	
              4.5783

            	 	 	
              4.3664

            	 	 	
              4.0716

            	 	 	
              3.6801

            	 	 	
              3.1092

            	 	 	
              3.0611

            	 	 	
              2.9789

            	 	 	
              2.8968

            	 
	
              $55.00

            	 	 	
              3.8211

            	 	 	
              3.5897

            	 	 	
              3.2722

            	 	 	
              2.8499

            	 	 	
              2.2244

            	 	 	
              1.2280

            	 	 	
              1.1533

            	 	 	
              1.0786

            	 
	
              $60.00

            	 	 	
              3.2349

            	 	 	
              2.9961

            	 	 	
              2.6718

            	 	 	
              2.2427

            	 	 	
              1.6099

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $65.00

            	 	 	
              2.7732

            	 	 	
              2.5345

            	 	 	
              2.2138

            	 	 	
              1.7934

            	 	 	
              1.1835

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $70.00

            	 	 	
              2.4039

            	 	 	
              2.1703

            	 	 	
              1.8595

            	 	 	
              1.4570

            	 	 	
              0.8874

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $75.00

            	 	 	
              2.1042

            	 	 	
              1.8788

            	 	 	
              1.5817

            	 	 	
              1.2023

            	 	 	
              0.6810

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $80.00

            	 	 	
              1.8581

            	 	 	
              1.6427

            	 	 	
              1.3612

            	 	 	
              1.0071

            	 	 	
              0.5361

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $90.00

            	 	 	
              1.4820

            	 	 	
              1.2886

            	 	 	
              1.0402

            	 	 	
              0.7372

            	 	 	
              0.3599

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $100.00

            	 	 	
              1.2122

            	 	 	
              1.0407

            	 	 	
              0.8241

            	 	 	
              0.5674

            	 	 	
              0.2663

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $125.00

            	 	 	
              0.7953

            	 	 	
              0.6705

            	 	 	
              0.5178

            	 	 	
              0.3471

            	 	 	
              0.1654

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 
	
              $150.00

            	 	 	
              0.5640

            	 	 	
              0.4727

            	 	 	
              0.3630

            	 	 	
              0.2447

            	 	 	
              0.1221

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 	 	
              0.0000

            	 


    

    


    The
      Stock
      Prices set forth in the first column of the table above will be adjusted as
      of
      any date on which the Conversion Rate of the Securities is adjusted other than
      an adjustment pursuant to the Make Whole Premium described above. The adjusted
      Stock Prices will equal the Stock Prices applicable immediately prior to such
      adjustment multiplied by a fraction, the numerator of which is the Conversion
      Rate immediately prior to the adjustment giving rise to the Stock Price
      adjustment and the denominator of which is the Conversion Rate as so adjusted.
      The number of additional shares set forth in the table above will be adjusted
      in
      the same manner as the Conversion Rate as set forth in Section 4.07 hereof,
      other than as a result of an adjustment to the Conversion Rate by adding the
      Make Whole Premium as described above. 

     

    Notwithstanding
      the foregoing paragraph, in no event will the total number of shares of Common
      Stock issuable upon conversion of a Security exceed 23.0894 per $1,000 principal
      amount, subject to proportional adjustment in the same manner as the Conversion
      Rate as set forth in clauses (1) through (4) of Section 4.07(a)
      hereof.

     

    (j)  By
      delivering the amount of cash and/or the number of shares of Common Stock
      issuable on conversion to the Trustee, the Company will be deemed to have
      satisfied its obligation to pay the principal amount of the Securities so
      converted and its obligation to pay accrued and unpaid interest, (including
      Contingent Interest, if any), attributable to the period from the most recent
      Interest Payment Date through the Conversion Date (which amount will be deemed
      paid in full rather than cancelled, extinguished or forfeited).

     

    (k)  Notwithstanding
      anything else contained herein, the Securities shall not become subject to
      conversion by reason of a merger, consolidation, or other transaction effected
      with one of the Company’s direct or indirect Subsidiaries for the purpose of
      changing the Company’s state of incorporation to any other state within the
      United States or the District of Columbia.

     

    Section
      4.02  Conversion
      Procedure.

     

    (a)  To
      convert a Security, a Holder must (1) complete and manually sign the conversion
      notice on the back of the Security and deliver such notice to the Conversion
      Agent, (2) surrender the Security to the Conversion Agent, (3) furnish
      appropriate endorsements and transfer documents if required by the Registrar
      or
      the Conversion Agent, (4) pay an amount equal to the interest (including
      Contingent Interest, if any) as required by Section 4.02(c) and (5) pay all
      transfer or similar taxes, if required pursuant to Section 4.04. The date on
      which the Holder satisfies all of those requirements is the “Conversion
      Date.”
Upon
      the conversion of a Security, the Company will pay the cash and deliver the
      shares of Common Stock, as applicable, without service charge, as promptly
      as
      practicable after the later of the Conversion Date and the date that all
      calculations necessary to make such payment and delivery have been made, but
      in
      no event later than five Business Days after the later of those dates. Anything
      herein to the contrary notwithstanding, in the case of Global Securities,
      conversion notices may be delivered and such Securities may be surrendered
      for
      conversion in accordance with clauses (3), (4) and (5) of this Section 4.02(a)
      and the Applicable Procedures as in effect from time to time.

     

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

     

    (b)  The
      person in whose name the shares of Common Stock are issuable upon conversion
      shall be deemed to be a holder of record of such Common Stock on the later
      of
      (i) the Conversion Date, (ii) the expiration of the period in which the Company
      may elect to deliver cash in lieu of shares of Common Stock, or (iii) if the
      Company elects to deliver cash in lieu of some, but not all, of such shares
      of
      Common Stock, the date on which the amount of cash issuable per Security has
      been determined; provided,
      however,
      that no
      surrender of a Security on any Conversion Date when the stock transfer books
      of
      the Company shall be closed shall be effective to constitute the person or
      persons entitled to receive the shares of Common Stock upon conversion as the
      record holder or holders of such shares of Common Stock on such date, but such
      surrender shall be effective to constitute the person or persons entitled to
      receive such shares of Common Stock as the record holder or holders thereof
      for
      all purposes at the close of business on the next succeeding day on which such
      stock transfer books are open; provided
      further
      that
      such conversion shall be at the Conversion Rate in effect on the Conversion
      Date
      as if the stock transfer books of the Company had not been closed. Upon
      conversion of a Security, such person shall no longer be a Holder of such
      Security. Except as set forth in this First Supplemental Indenture, no payment
      or adjustment will be made for dividends or distributions declared or made
      on
      shares of Common Stock issued upon conversion of a Security prior to the
      issuance of such shares.

     

    (c)  Holders
      of Securities surrendered for conversion (in whole or in part) during the period
      from the close of business on any Regular Record Date to the opening of business
      on the next succeeding Interest Payment Date (excluding Securities or portions
      thereof called for redemption) will receive the semi-annual interest (including
      Contingent Interest, if any) payable on such Securities on the corresponding
      Interest Payment Date notwithstanding the conversion. Upon surrender of any
      such
      Securities for conversion, unless such Securities are being converted solely
      pursuant to Section 4.01(a)(2), such Securities shall also be accompanied by
      payment in funds to the Conversion Agent acceptable to the Company of an amount
      equal to the interest (including Contingent Interest, if any) payable on such
      corresponding Interest Payment Date. Except as otherwise provided in this
      Section 4.02(c), no payment or adjustment will be made for accrued interest
      (including Contingent Interest, if any) on a converted Security.

     

    (d)  Subject
      to Section 4.02(c), nothing in this Section shall affect the right of a Holder
      in whose name any Security is registered at the close of business on a Regular
      Record Date to receive the interest (including Contingent Interest, if any)
      payable on such Security on the related Interest Payment Date in accordance
      with
      the terms of this First Supplemental Indenture and the Securities. If a Holder
      converts more than one Security at the same time, the amount of cash to be
      paid
      and the number of shares of Common Stock issuable upon the conversion, if any,
      (and the amount of any cash in lieu of fractional shares pursuant to Section
      4.03) shall be based on the aggregate principal amount of all Securities so
      converted.

     

    
      
         

      

      
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    (e)  In
      the
      case of any Security which is converted in part only, upon such conversion
      the
      Company shall execute and the Trustee shall authenticate and deliver to the
      Holder thereof, without service charge, a new Security or Securities of
      authorized denominations in an aggregate principal amount equal to the, and
      in
      exchange for, unconverted portion of the principal amount of such Security.
      A
      Security may be converted in part, but only if the principal amount of such
      part
      is an integral multiple of $1,000 and the principal amount of such Security
      to
      remain outstanding after such conversion is equal to $1,000 or any integral
      multiple of $1,000 in excess thereof.

     

    (f)  Upon
      the
      Company’s determination that a Holder is or will be entitled to convert their
      Securities into shares of Common Stock pursuant to this Article 4, the Company
      will promptly after making such determination, deliver written notice to the
      Trustee and issue a press release and use its reasonable efforts to post such
      information on the Company’s website or otherwise publicly disclose such
      information.

     

    Section
      4.03  Fractional
      Shares.

     

    The
      Company will not issue fractional shares of Common Stock upon conversion of
      Securities. If more than one Security shall be surrendered for conversion at
      one
      time by the same Holder, the number of full shares that shall be issuable upon
      conversion shall be computed on the basis of the aggregate principal amount
      of
      the Securities (or specified portions thereof to the extent permitted hereby)
      so
      surrendered. In lieu of any fractional shares, the Company will pay an amount
      in
      cash equal to the average of the Closings Prices for the Company’s Common Stock
      for each of the 10 consecutive Trading Days of the Conversion Reference Period.
      

     

    Section
      4.04  Taxes
      on
      Conversion.

     

    If
      a
      Holder converts a Security, the Holder shall pay any transfer, stamp or similar
      taxes or duties related to the issue or delivery of shares of Common Stock
      upon
      such conversion. The Holder shall also pay any such tax with respect to cash
      received in lieu of fractional shares. In addition, the Holder shall pay any
      such tax which is due because the Holder requests the shares to be issued in
      a
      name other than the Holder’s name. The Conversion Agent may refuse to deliver
      the certificate representing the Common Stock being issued in a name other
      than
      the Holder’s name until the Conversion Agent receives a sum sufficient to pay
      any tax which will be due because the shares are to be issued in a name other
      than the Holder’s name. Nothing herein shall preclude any tax withholding
      required by law or regulation.

     

    Section
      4.05  Exchange
      In Lieu of Conversion. 

     

    The
      Company shall have the option, exercisable at any time or from time to time,
      to
      designate or change the designation, by an instrument in writing signed by
      the
      Company and provided to the Conversion Agent, of the financial institution
      to
      which Securities surrendered by a Holder for conversion will be initially
      offered by the Conversion Agent on behalf of a Holder for exchange (an
“Exchange
      Party”);
      provided that such option may be exercised only pursuant to an agreement among
      the Company, the Conversion Agent and the Exchange Party (the “Exchange
      Agreement”).
      The
      Company will not pay any consideration to, or otherwise enter into any
      arrangement with, the Exchange Party for or with respect to such designation.
      The Exchange Agreement shall provide that at the opening of business on each
      Business Day, the Conversion Agent shall inform the Exchange Party as to the
      aggregate Principal Amount of Securities surrendered for exchange on the prior
      Business Day. The Exchange Party may accept for exchange all or any of such
      Securities if it agrees, no later than the time specified in the agreement
      between the Company and the Conversion Agent, to deliver in exchange therefor
      the cash and shares of Common Stock, as applicable, and other property that
      would be delivered on conversion of such Securities in accordance with the
      terms
      of this First Supplemental Indenture. If the Exchange Party accepts any
      Securities for conversion, it will deliver to the Conversion Agent, and the
      Conversion Agent will deliver to the converting Holders, the appropriate cash
      amount and, if applicable, the appropriate number of shares of Common Stock.
      If
      the Exchange Party declines to accept any Securities in whole or in part, those
      Securities or parts of Securities will be converted into cash and, if
      applicable, shares of Common Stock as of the close of business on the Business
      Day following the Business Day on which the Securities are surrendered for
      conversion. Settlement for any such exchange shall take place no later than
      the
      second Business Day following such acceptance. In the event that the Exchange
      Party fails to deliver the cash and shares of Common Stock, as applicable,
      by
      such second Business Day, the Exchange Party shall be in default of its
      obligations and, instead of being exchanged, the Securities will be converted
      in
      accordance with their terms. A Holder whose Securities are exchanged in whole
      or
      in part shall be given a written confirmation from the Conversion Agent
      informing such Holder as to the aggregate principal amount of the Securities
      so
      exchanged. Any Securities which have been exchanged by the Exchange Party shall
      remain outstanding. The designation by the Company of an Exchange Party does
      not
      require such Exchange Party to accept any Securities for conversion. The
      agreement between the Company and the Conversion Agent setting forth the
      procedures to be followed in an exchange may be changed at any time so long
      as
      such change does not have a material adverse effect on a Holder which surrenders
      its Securities for conversion.

     

    
      
         

      

      
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    Section
      4.06  Company
      to
      Provide Common Stock.

     

    (a)  The
      Company shall, prior to issuance of any Securities hereunder, and from time
      to
      time as may be necessary, reserve, out of its authorized but unissued Common
      Stock, a sufficient number of shares of Common Stock to permit the conversion
      of
      all outstanding Securities into shares of Common Stock. 

     

    (b)  All
      shares of Common Stock delivered upon conversion of the Securities shall be
      newly issued shares, shall be duly authorized, validly issued, fully paid and
      nonassessable and shall be free from preemptive or similar rights and free
      of
      any lien or adverse claim as the result of any action by the Company.


     

    (c)  The
      Company will endeavor promptly to comply with all federal and state securities
      laws regulating the offer and delivery of shares of Common Stock upon conversion
      of Securities.

     

    
      
         

      

      
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    Section
      4.07  Adjustment
      of
      Conversion Rate.

     

    (a)  The
      Conversion Rate shall be adjusted from time to time by the Company as
      follows:

     

    (1)  If
      the
      Company shall pay a dividend or make a distribution to all holders of
      outstanding Common Stock in shares of Common Stock, the Conversion Rate in
      effect immediately prior to the record date for the determination of
      shareholders entitled to receive such dividend or other distribution shall
      be
      increased so that the same shall equal the rate determined by multiplying the
      Conversion Rate in effect immediately prior to such record date by a fraction
      of
      which the numerator of shall be the sum of the number of shares of Common Stock
      outstanding at the close of business on such record date plus the total number
      of shares of Common Stock constituting such dividend or other distribution
      and
      of which the denominator shall be the number of shares of Common Stock
      outstanding at the close of business on such record date. Such adjustment shall
      be made successively whenever any such dividend or distribution is made and
      shall become effective immediately after such record date. For the purpose
      of
      this clause (1), the number of shares of Common Stock at any time outstanding
      shall not include shares held in the treasury of the Company. The Company will
      not pay any dividend or make any distribution on Common Stock held in the
      treasury of the Company. If any dividend or distribution of the type described
      in this clause is declared but not so paid or made, the Conversion Rate shall
      again be adjusted to the Conversion Rate that would then be in effect if such
      dividend or distribution had not been declared.

     

    (2)  If
      the
      Company shall subdivide its outstanding Common Stock into a greater number
      of
      shares, or combine its outstanding Common Stock into a smaller number of shares,
      the Conversion Rate in effect immediately prior to the day upon which such
      subdivision or combination becomes effective shall be, in the case of a
      subdivision of Common Stock, proportionately increased and, in the case of
      a
      combination of Common Stock, proportionately reduced. Such adjustment shall
      be
      made successively whenever any such subdivision or combination of the Common
      Stock occurs and shall become effective immediately after the date upon which
      such subdivision or combination becomes effective.

     

    (3)  If
      the
      Company shall issue any rights or warrants to all holders of its outstanding
      Common Stock entitling them (for a period expiring within 60 days after such
      issuance) to subscribe for or purchase shares of Common Stock (or securities
      convertible into Common Stock) at a price per share (or having a Conversion
      Price per share) less than the Current Market Price per share of Common Stock
      (as determined in accordance with clause (9) of this Section 4.07(a)) on the
      record date for the determination of shareholders entitled to receive such
      rights or warrants, the Conversion Rate in effect immediately prior thereto
      shall be adjusted so that the same shall equal the rate determined by
      multiplying the Conversion Rate in effect immediately prior to such record
      date
      by a fraction of which the numerator shall be the number of shares of Common
      Stock outstanding at the close of business on such record date plus the number
      of additional shares of Common Stock offered (or into which the convertible
      securities so offered are convertible) and of which the denominator shall be
      the
      number of shares of Common Stock outstanding at the close of business on such
      record date plus the number of shares which the aggregate offering price of
      the
      total number of shares of Common Stock so offered for subscription or purchase
      (or the aggregate conversion price of the convertible securities so offered
      for
      subscription or purchase, which shall be determined by multiplying the number
      of
      shares of Common Stock issuable upon conversion of such convertible securities
      by the conversion price per share of Common Stock pursuant to the terms of
      such
      convertible securities) would purchase at the Current Market Price per share
      of
      Common Stock on such record date. Such adjustment shall be made successively
      whenever any such rights or warrants are issued, and shall become effective
      immediately after such record date. To the extent that shares of Common Stock
      (or securities convertible into Common Stock) are not delivered after the
      expiration of such rights or warrants, the Conversion Rate shall be readjusted
      to the Conversion Rate that would then be in effect had the adjustments made
      upon the issuance of such rights or warrants been made on the basis of delivery
      of only the number of shares of Common Stock actually delivered. If such rights
      or warrants are not so issued, the Conversion Rate shall again be adjusted
      to be
      the Conversion Rate that would then be in effect if the record date 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
      shareholders to subscribe for or purchase shares of Common Stock at a price
      less
      than the Current Market Price per share of Common Stock and in determining
      the
      aggregate offering price of the total number of shares of Common Stock so
      offered, there shall be taken into account any consideration received by the
      Company for such rights or warrants and any amount payable on exercise or
      conversion thereof, the value of such consideration, if other than cash, to
      be
      determined by the Board of Directors.

     

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

     

    (4)  If
      the
      Company shall make a dividend or other distribution to all holders of its Common
      Stock of Capital Stock, other than Common Stock, or evidences of indebtedness
      or
      other assets (including securities) of the Company (excluding (x) any issuance
      of rights or warrants for which an adjustment was made pursuant to Section
      4.07(a)(3), (y) dividends and distributions in connection with a
      reclassification, change, consolidation, merger, combination, liquidation,
      dissolution, winding up, sale or conveyance resulting in a change in the
      conversion consideration pursuant to Section 4.11, and (z) any dividend or
      distribution paid exclusively in cash for which an adjustment was made pursuant
      to Section 4.07(a)(6)) (the “Distributed
      Securities”),
      then
      in each such case (unless the Company distributes such Distributed Securities
      for distribution to the Holders of Securities on such dividend or distribution
      date (as if each Holder had converted such Security into Common Stock
      immediately prior to the record date with respect to such distribution)) the
      Conversion Rate in effect immediately prior to the record date fixed for the
      determination of shareholders entitled to receive such dividend or distribution
      shall be adjusted so that the same shall equal the rate determined by
      multiplying the Conversion Rate in effect immediately prior to such record
      date
      by a fraction of which the numerator shall be the Current Market Price per
      share
      of the Common Stock on such record date and of which the denominator shall
      be
      Current Market Price per share on such record date less the fair market value
      (as determined by reference to the Current Market Price of the Distributed
      Securities) on such record date of the portion of the Distributed Securities
      so
      distributed applicable to one share of Common Stock (determined on the basis
      of
      the number of shares of Common Stock outstanding at the close of business on
      such record date). Such adjustment shall be made successively whenever any
      such
      distribution is made and shall become effective immediately after the record
      date for the determination of shareholders entitled to receive such
      distribution. In the event that such dividend or distribution is not so paid
      or
      made, the Conversion Rate shall again be adjusted to be the Conversion Rate
      that
      would then be in effect if such dividend or distribution had not been
      declared.

     

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

     

    If
      the
      then fair market value (as so determined) of the portion of the Distributed
      Securities so distributed applicable to one share of Common Stock is equal
      to or
      greater than the Current Market Price per share of the Common Stock on such
      record date, in lieu of the foregoing adjustment, adequate provision shall
      be
      made so that each holder of a Security shall have the right to receive upon
      conversion the amount of Distributed Securities so distributed that such Holder
      would have received had such Holder converted each Security on such record
      date.
      If the Board of Directors determines the fair market value of any distribution
      for purposes of this Section 4.07(a)(4) by reference to the actual or when
      issued trading market for any securities, it must in doing so consider the
      prices in such market over the same period used in computing the Current Market
      Price of the Common Stock.

     

    Notwithstanding
      the foregoing, if the securities distributed by the Company to all holders
      of
      its Common Stock consist of Capital Stock of, or similar equity interests in,
      a
      Subsidiary or other business unit of the Company (the “Spinoff
      Securities”),
      the
      Conversion Rate shall be adjusted, unless the Company makes an equivalent
      distribution to the Holders of the Securities, so that the same shall be equal
      to the rate determined by multiplying the Conversion Rate in effect on the
      record date fixed for the determination of shareholders entitled to receive
      such
      distribution by a fraction, the numerator of which shall be the sum of (A)
      the
      average Closing Price of one share of Common Stock over the 10 consecutive
      Trading Day period (the “Spinoff
      Valuation Period”)
      commencing on and including the fifth Trading Day after the date on which
      ex-dividend trading commences for such distribution on the Nasdaq National
      Market or such other U.S. national or regional exchange or market on which
      the
      Common Stock is then listed or quoted and (B) the product of (i) the average
      Closing Price over the Spinoff Valuation Period of the Spinoff Securities
      multiplied by (ii) the number of Spinoff Securities distributed in respect
      of
      one share of Common Stock and the denominator of which shall be the average
      Closing Price of one share of Common Stock over the Spinoff Valuation Period,
      such adjustment to become effective immediately prior to the opening of business
      on the fifteenth Trading Day after the date on which ex-dividend trading
      commences; provided,
      however,
      that the
      Company may in lieu of the foregoing adjustment elect to make adequate provision
      so that each Holder of Securities shall have the right to receive upon
      conversion thereof the amount of such Spinoff Securities that such Holder of
      Securities would have received if such Securities had been converted on the
      record date with respect to such distribution.

     

    (5)  With
      respect to any rights or warrants (the “Rights”)
      that
      may be issued or distributed pursuant to any rights plan that the Company
      implements after the date of this Indenture (each a “Rights
      Plan”),
      in
      lieu of any adjustment required by any other provision of this Section 4.07
      upon
      conversion of the Securities into Common Stock, to the extent that such Rights
      Plan is in effect upon such conversion, the Holders of Securities will receive,
      with respect to the shares of Common Stock issued upon conversion, the Rights
      described therein (whether or not the Rights have separated from the Common
      Stock at the time of conversion), subject to the limitations set forth in and
      in
      accordance with any such Rights Plan; provided that if, at the time of
      conversion, however, the Rights have separated from the shares of Common Stock
      in accordance with the provisions of the Rights Plan so that Holders would
      not
      be entitled to receive any rights in respect of the shares of Common Stock
      issuable upon conversion of the Securities as a result of the timing of the
      Conversion Date, the Conversion Rate will be adjusted as if the Company
      distributed to all holders of Common Stock Distributed Securities as provided
      in
      the first paragraph of clause (4) of this Section 4.07(a), subject to
      appropriate readjustment in the event of the expiration, termination, repurchase
      or redemption of the Rights. Any distribution of rights or warrants pursuant
      to
      a Rights Plan complying with the requirements set forth in the immediately
      preceding sentence of this paragraph shall not constitute a distribution of
      rights or warrants pursuant to this Section 4.07(a). Other than as specified
      in
      this clause (5) of this Section 4.07(a), there will not be any adjustment to
      the
      Conversion Rate as the result of the issuance of any Rights, the distribution
      of
      separate certificates representing such Rights, the exercise or redemption
      of
      such Rights in accordance with any Rights Plan or the termination or
      invalidation of any Rights.

     

    
      
         

      

      
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    (6)  If
      the
      Company shall, by dividend or otherwise, at any time distribute (a “Triggering
      Distribution”)
      to all
      holders of its Common Stock a payment consisting exclusively of cash (excluding
      any dividend or distribution in connection with the liquidation, dissolution
      or
      winding up of the Company, whether voluntary or involuntary) the Conversion
      Rate
      shall be increased so that the same shall equal the rate determined by
      multiplying such Conversion Rate in effect immediately prior to the close of
      business on the record date for such Triggering Distribution (a “Determination
      Date”)
      by a
      fraction of which the numerator shall be such Current Market Price per share
      of
      the Common Stock on the Determination Date and the denominator of which shall
      be
      the Current Market Price per share of the Common Stock on the Determination
      Date
      less the amount of such cash dividend or distribution applicable to one share
      of
      Common Stock (determined on the basis of the number of shares of Common Stock
      outstanding at the close of business on the Determination Date), such increase
      to become effective immediately prior to the opening of business on the day
      following the date on which the Triggering Distribution is paid. If the amount
      of cash dividend or distribution applicable to one share of Common Stock is
      equal to or greater than the Current Market Price per share of the Common Stock
      on the Determination Date, in lieu of the foregoing adjustment, adequate
      provision shall be made so that each Holder of a Security shall have the right
      to receive upon conversion the amount of cash so distributed that such Holder
      would have received had such Holder converted each Security on such
      Determination Date. In the event that such dividend or distribution is not
      so
      paid or made, the Conversion Rate shall again be adjusted to be the Conversion
      Rate that would then be in effect if such divided or distribution had not been
      declared.

     

    (7)  If
      any
      tender offer made by the Company or any of its Subsidiaries for all or any
      portion of Common Stock shall expire, then, if the tender offer shall require
      the payment to shareholders of consideration per share of Common Stock having
      a
      fair market value (determined as provided below) that exceeds the Closing Price
      per share of Common Stock on the Trading Day next succeeding the last date
      (the
“Expiration
      Date”)
      tenders could have been made pursuant to such tender offer (as it may be
      amended) (the last time at which such tenders could have been made on the
      Expiration Date is hereinafter sometimes called the “Expiration
      Time”),
      the
      Conversion Rate shall be increased so that the same shall equal the rate
      determined by multiplying the Conversion Rate in effect immediately prior to
      the
      close of business on the Expiration Date by a fraction of which the numerator
      shall be the sum of (A) the fair market value of the aggregate consideration
      (the fair market value as determined by the Board of Directors, whose
      determination shall be conclusive evidence of such fair market value and which
      shall be evidenced by an Officers’ Certificate delivered to the Trustee) 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
      (B) the product of the number of shares of Common Stock outstanding (less any
      Purchased Shares and excluding any shares held in the treasury of the Company)
      at the Expiration Time and the Closing Price per share of Common Stock on the
      Trading Day next succeeding the Expiration Date and the denominator of which
      shall be the product of the number of shares of Common Stock outstanding
      (including Purchased Shares but excluding any shares held in the treasury of
      the
      Company) at the Expiration Time multiplied by the Closing Price per share of
      the
      Common Stock on the Trading Day next succeeding the Expiration Date, such
      increase to become effective immediately prior to the opening of business on
      the
      day following the Expiration Date. In the event that the Company is obligated
      to
      purchase shares pursuant to any such tender offer, but the Company is
      permanently prevented by applicable law from effecting any or all such purchases
      or any or all such purchases are rescinded, the Conversion Rate shall again
      be
      adjusted to be the Conversion Rate which would have been in effect based upon
      the number of shares actually purchased, if any. If the application of this
      clause (7) of Section 4.07(a) to any tender offer would result in a decrease
      in
      the Conversion Rate, no adjustment shall be made for such tender offer under
      this clause (7).

     

    
      
         

      

      
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    (8)  For
      purposes of this Section 4.07, the term “tender
      offer”
shall
      mean and include both tender offers and exchange offers, all references to
      “purchases”
of
      shares in tender offers (and all similar references) shall mean and include
      both
      the purchase of shares in tender offers and the acquisition of shares pursuant
      to exchange offers, and all references to “tendered
      shares”
(and
      all similar references) shall mean and include shares tendered in both tender
      offers and exchange offers. 

     

    (9)  For
      the
      purpose of any computation under this Section 4.07(a), the current market price
      (the “Current
      Market Price”)
      per
      share of Common Stock or any Distributed Security on any date shall be deemed
      to
      be the average of the Closing Prices for the 10 consecutive Trading Days ending
      on the earlier of (A) the Determination Date or the Expiration Date, as the
      case
      may be, with respect to distributions or tender offers under this Section
      4.07(a) or (B) the “ex-date” with respect to distributions, issuances or other
      events requiring such computation under this Section 4.07.

     

    (b)  In
      any
      case in which this Section 4.07 shall require that an adjustment be made
      following a record date, a Determination Date or Expiration Date, as the case
      may be, established for the purposes specified in this Section 4.07, the Company
      may elect to defer (but only until five Business Days following the filing
      by
      the Company with the Trustee of the certificate described in Section 4.09)
      issuing to the Holder of any Security converted after such record date,
      Determination Date or Expiration Date the shares of Common Stock and other
      Capital Stock of the Company issuable upon such conversion over and above the
      shares of Common Stock and other Capital Stock of the Company (or other cash,
      property or securities, as applicable) issuable upon such conversion only on
      the
      basis of the Conversion Rate prior to adjustment; and, in lieu of any cash,
      property or securities the issuance of which is so deferred, the Company shall
      issue or cause its transfer agents to issue due bills or other appropriate
      evidence prepared by the Company of the right to receive such cash, property
      or
      securities. If any distribution in respect of which an adjustment to the
      Conversion Rate is required to be made as of the record date, Determination
      Date
      or Expiration Date therefore is not thereafter made or paid by the Company
      for
      any reason, the Conversion Rate shall be readjusted to the Conversion Rate
      which
      would then be in effect if such record date had not been fixed or such record
      date, Determination Date or Expiration Date had not occurred.

     

    
      
         

      

      
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    (c)  For
      purposes of this Section 4.07, “record
      date”
shall
      mean, with respect to any dividend, distribution or other transaction or event
      in which the holders of Common Stock have the right to receive any cash,
      securities or other property or in which the Common Stock (or other applicable
      security) is exchanged or converted into any combination of cash, securities
      or
      other property, the date fixed for determination of shareholders entitled to
      receive such cash, security or other property (whether or not such date is
      fixed
      by the Board of Directors or by statute, contract or otherwise).

     

    (d)  If
      one or
      more event occurs requiring an adjustment be made to the Conversion Rate for
      a
      particular period, adjustments to the Conversion Rate shall be determined by
      the
      Company’s Board of Directors to reflect the combined impact of such Conversion
      Rate adjustment events, as set out in this Section 4.07, during such
      period.

     

    (e)  Notwithstanding
      the provisions set forth in Section 4.07(a), in no event shall the total number
      of shares of Common Stock issuable upon conversion of a Security exceed 23.0894
      per $1,000 principal amount of Securities, subject to proportional adjustment
      in
      the same manner as the Conversion Rate as set forth in clauses (1) through
      (4)
      of Section 4.07(a).

     

    Section
      4.08  No
      Adjustment.

     

    (a)  No
      adjustment in the Conversion Rate shall be required if Holders may participate
      in the transactions set forth in Section 4.07 above (to the same extent as
      if
      the Securities had been converted into Common Stock immediately prior to such
      transactions) without converting the Securities held by such
      Holders.

     

    (b)  No
      adjustment in the Conversion Rate shall be required unless such adjustment
      would
      require an increase or decrease of at least 1% in the Conversion Rate as last
      adjusted; provided,
      however,
      that any
      adjustments which would be required to be made but for this Section 4.08(b)
      shall be carried forward and taken into account in any subsequent adjustment.
      All calculations under this Article 4 shall be made to the nearest cent or
      to
      the nearest one-ten thousandth of a share, as the case may be, with one half
      cent and 0.00005 of a share, respectively, being rounded upward.

     

    (c)  No
      adjustment in the Conversion Rate shall be required for issuances of Common
      Stock pursuant to a Company plan for reinvestment of dividends or interest
      or
      for a change in the par value or a change to no par value of the Common
      Stock.

     

    (d)  To
      the
      extent that the Securities become convertible into the right to receive cash,
      no
      adjustment need be made thereafter as to the cash.

     

    
      
         

      

      
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    (e)  No
      adjustment in the Conversion Rate shall be required with respect to accrued
      and
      unpaid interest on the Securities.

     

    Section
      4.09  Notice
      of
      Adjustment.

     

    Whenever
      the Conversion Rate or conversion privilege is required to be adjusted pursuant
      to this Indenture, the Company shall promptly mail to Holders a notice of the
      adjustment and file with the Trustee an Officers’ Certificate briefly stating
      the facts requiring the adjustment, the adjusted Conversion Rate and the manner
      of computing it. Failure to mail such notice or any defect therein shall not
      affect the validity of any such adjustment. Unless and until the Trustee shall
      receive an Officers’ Certificate setting forth an adjustment of the Conversion
      Rate, the Trustee may assume without inquiry that the Conversion Rate has not
      been adjusted and that the last Conversion Rate of which it has knowledge
      remains in effect.

     

    Section
      4.10  Notice
      of
      Certain Transactions.

     

    In
      the
      event that there is a dissolution or liquidation of the Company, the Company
      shall mail to Holders and file with the Trustee a notice stating the proposed
      effective date. The Company shall mail such notice at least 20 days before
      such
      proposed effective date. Failure to mail such notice or any defect therein
      shall
      not affect the validity of any transaction referred to in this Section
      4.10.

     

    Section
      4.11  Effect
      of
      Reclassification, Consolidation, Merger or Sale on Conversion
      Privilege.

     

    Upon
      (i)
      any recapitalization, reclassification or change of the outstanding shares
      of
      Common Stock issuable upon conversion of the Securities (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 split, subdivision or combination), (ii) any consolidation,
      merger or combination of the Company with another Person as a result of which
      holders of shares of Common Stock shall be entitled to receive stock, securities
      or other property or assets (including cash) with respect to or in exchange
      for
      such shares of Common Stock (other than a merger in which the Company is the
      continuing corporation and which does not result in any reclassification of,
      or
      change (other than a change in name, or 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) in, the Common Stock), or (iii) any sale, lease, transfer or
      conveyance of all or substantially all of the properties and consolidated assets
      of the Company and its Subsidiaries substantially as an entirety to any other
      Person, or any statutory share exchange, as a result of which holders of Common
      Stock shall be entitled to receive stock, securities or other property or assets
      (including cash or any combination thereof) with respect to or in exchange
      for
      such Common Stock (any such event a “Merger
      Event”),
      then:

     

    (a) 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) permitted under
      Section 9.1(g) of the Base Indenture providing for the conversion and
      settlement of the Securities as set forth in this First Supplemental Indenture.
      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 4, as the case may be. If, in the case of any Merger Event, the
      Reference Property (defined below) 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,
      combination, sale or conveyance, then such supplemental indenture shall also
      be
      executed by such other corporation and shall contain such additional provisions
      to protect the interests of the holders of the Securities as the Board of
      Directors shall reasonably consider necessary by reason of the foregoing,
      including to the extent required by the Board of Directors and practicable
      the
      provisions providing for the repurchase rights set forth in Article 3
      herein.

     

    
      
         

      

      
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    In
      the
      event the Company shall execute a supplemental indenture pursuant to this
      Section 4.11, the Company shall promptly file with the Trustee an Officers’
Certificate briefly stating the reasons therefor, the kind or amount of shares
      of stock or other securities or property (including cash) that will constitute
      the Reference Property after any such Merger Event and any adjustment to be
      made
      with respect thereto and shall promptly mail notice thereof to all
      Holders.

     

    (b) Notwithstanding
      the provisions of Section 4.02, and subject to the provisions of Section
      4.01, at the effective time of such Merger Event, (i) the right to convert
      each $1,000 principal amount of Securities will be changed to a right to convert
      such Security into the kind and amount of shares of stock, securities or other
      property or assets (including cash or any combination thereof) that a holder
      of
      a number of shares of Common Stock equal to the conversion rate immediately
      prior to such transaction would have owned or been entitled to receive (the
      “Reference
      Property”)
      and
      (ii) the related conversion obligation shall be settled at the times and
      otherwise as set forth under clause (c) below. In the event holders of shares
      of
      Common Stock have the opportunity to elect the form of consideration to be
      received in such Merger Event, the type and amount of consideration that Holders
      would have been entitled to receive shall be deemed to be the weighted average
      of the types and amounts of consideration received by holders of shares of
      Common Stock that affirmatively make an election. The Company shall not become
      a
      party to any such transaction unless its terms are consistent with the
      preceding. None of the foregoing provisions shall affect the right of a holder
      of Securities to convert its Securities into cash and shares of Common Stock,
      as
      set forth in Section 4.01 and Section 4.02 prior to the effective date
      of such Merger Event.

     

    (c) If
      the
      Securities shall be convertible into Reference Property as set forth above,
      the
      related conversion obligation, with respect to each $1,000 principal amount
      of
      Securities tendered for conversion after the effective time of any such Merger
      Event, shall be settled in units of Reference Property;
      provided that for purposes of determining the conversion consideration, amounts
      shall
      be
      based on the per unit average value of the Reference Property during the
      applicable period, such per unit value shall be (A) for
      any shares of common stock that are included in the Reference Property, using
      the procedures set forth in the definition of “Current Market Price”;
(B) for
      any other property (other than cash) included in the Reference Property, as
      determined in good faith by the Board of Directors or by a New York Stock
      Exchange member firm selected by the Board of Directors and (C) for any
      cash, the face amount of such cash.

     

    (d) The
      Company shall cause notice of the execution of such supplemental indenture
      to be
      mailed to each Holder, at its last address appearing on the Security register
      on
      the Registrar’s books provided for in this Indenture, within twenty (20) days
      after execution thereof. Failure to deliver such notice shall not affect the
      legality or validity of such supplemental indenture.

     

    
      
         

      

      
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    (e) The
      above
      provisions of this Section shall similarly apply to successive Merger
      Events.

     

    Section
      4.12  Trustee’s
      Disclaimer.

     

    (a)  The
      Trustee shall have no duty to determine when an adjustment under this Article
      4
      should be made, how it should be made or what such adjustment should be, but
      may
      accept as conclusive evidence of that fact or the correctness of any such
      adjustment, and shall be protected in relying upon, an Officers’ Certificate and
      Opinion of Counsel, including the Officers’ Certificate with respect thereto
      which the Company is obligated to file with the Trustee pursuant to Section
      4.09. The Trustee makes no representation as to the validity or value of any
      securities or assets issued upon conversion of Securities, and the Trustee
      shall
      not be responsible for the Company’s failure to comply with any provisions of
      this Article 4.

     

    (b)  The
      Trustee shall not be under any responsibility to determine the correctness
      of
      any provisions contained in any supplemental indenture executed pursuant to
      Section 4.11, but may accept as conclusive evidence of the correctness thereof,
      and shall be fully protected in relying upon, the Officers’ Certificate and
      Opinion of Counsel, with respect thereto which the Company is obligated to
      file
      with the Trustee pursuant to Section 4.11. 

     

    Section
      4.13  Voluntary
      Increase.

     

    The
      Company from time to time may increase the Conversion Rate, to the extent
      permitted by law, by any amount for any period of time if the period is at
      least
      20 days, the increase is irrevocable during the period and the Board of
      Directors determines that such increase would be in the best interests of the
      Company or to avoid or diminish income tax to holders of shares of Common Stock
      in connection with a dividend or distribution of stock, or rights to acquire
      stock, or similar event, and the Company provides 15 days’ prior written notice
      of any increase in the Conversion Rate to the Trustee and the
      Holders.

     

    Notwithstanding
      the foregoing paragraph, in no event will the total number of shares of Common
      Stock issuable upon conversion of a Security exceed 23.0894 per $1,000 principal
      amount, subject to proportional adjustment in the same manner as the Conversion
      Rate as set forth in clauses (1) through (4) of Section 4.07(a)
      hereof.

     

    Section
      4.14  Payment
      of Cash in Lieu of Common Stock.

     

    (a)  In
      lieu
      of delivery of some or all of the shares of Common Stock otherwise issuable
      upon
      notice of conversion of any Securities, Holders surrendering Securities for
      conversion shall receive for each $1,000 principal amount of Securities
      surrendered: (A) cash in an amount equal to the lesser of (1) $1,000 and (2)
      the
      Conversion Value; and (B) if the Conversion Value is greater than $1,000, a
      number of shares of the Company’s Common Stock (the “Remaining
      Shares”)
      equal
      to the sum of the Daily Share Amounts for each of the 10 consecutive Trading
      Days in the Conversion Reference Period, subject to the Company’s right to
      deliver cash in lieu of all or a portion of such Remaining Shares as set forth
      in Section 4.14(b). The Company will deliver such cash and any shares of Common
      Stock, together with any cash payable for fractional shares, to such Holder
      in
      accordance with Section 4.02(a).

     

    
      
         

      

      
        -42-

        
          

        

      

      
         

      

    

     

    (b)  The
      Company may elect to pay cash to the Holders of Securities surrendered for
      conversion in lieu of all or a portion of the Common Stock otherwise issuable
      pursuant to Section 4.14(a). In such event, on any day prior to the first
      Trading Day of the applicable Conversion Reference Period, the Company may
      specify a percentage of the Daily Share Amount that will be settled in cash
      (the
“Cash
      Percentage”).
      If
      the Company elects to specify a Cash Percentage, the amount of cash that the
      Company will deliver in respect of each Trading Day in the applicable Conversion
      Reference Period will equal the product of: (1) the Cash Percentage, (2) the
      Daily Share Amount for such Trading Day and (3) the Closing Price of the
      Company’s Common Stock on such Trading Day (provided that after the consummation
      of a Fundamental Change in which the consideration is comprised entirely of
      cash, the amount used in this clause (3) will be the cash price per share
      received by holders of the Company’s Common Stock in such Fundamental Change).
      The number of shares that the Company shall deliver in respect of each Trading
      Day in the applicable Conversion Reference Period will be a percentage of the
      Daily Share Amount equal to 100% minus the Cash Percentage. If the Company
      does
      not specify a Cash Percentage by the start of the applicable Conversion
      Reference Period, the Company shall settle 100% of the Daily Share Amount for
      each Trading Day in the applicable Conversion Reference Period with shares
      of
      the Company’s Common Stock; provided,
      however,
      that the
      Company shall pay cash in lieu of fractional shares otherwise issuable upon
      conversion of the Securities.

     

    (c)  For
      the
      purposes of Sections 4.14(a) and (b), in the event that any of Conversion Value,
      Daily Share Amounts, or Closing Price is not calculable for all portions of
      the
      Conversion Reference Period, the Company’s Board of Directors shall in good
      faith determine the values necessary to calculate the Conversion Value, Daily
      Share Amounts, and Closing Price, as applicable. 

     

    Article
      5.

    Subordination

     

    Section
      5.01  Securities
      Subordinated to Senior Debt. 

     

    The
      Company covenants and agrees, and each Holder of Securities, by such Holder’s
      acceptance thereof, likewise covenants and agrees, that the Indebtedness
      represented by the Securities and the payment of the principal of and premium,
      if any, and interest on each and all of the Securities is hereby expressly
      subordinated and junior, to the extent and in the manner set forth and as set
      forth in this Section 5.01, in right of payment to the prior payment in full
      of
      all Senior Debt; provided,
      however,
      that the
      Securities, the Indebtedness represented thereby and the payment of the
      principal of and premium, if any, and interest (including Contingent Interest,
      if any) on the Securities in all respects shall rank equally with, or prior
      to,
      all existing and future Indebtedness of the Company that is expressly
      subordinated to any Senior Debt.

     

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

     

    
      
         

      

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

     

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

     

    (d) (1)
      During the continuance of any event of default with respect to any Designated
      Senior Debt, as such event of default is defined under any such Designated
      Senior Debt or in any agreement pursuant to which any Designated Senior Debt
      has
      been issued (other than a default in payment of the principal of or premium,
      if
      any, or interest on, rent or other payment obligation in respect of any
      Designated Senior Debt), permitting the holder or holders of such Designated
      Senior Debt to accelerate the maturity thereof (or in the case of any lease,
      permitting the landlord either to terminate the lease or to require the Company
      to make an irrevocable offer to terminate the lease following an event of
      default thereunder) (any such event of default, a “Non-payment
      Default”),
      no
      payment shall be made by the Company, directly or indirectly, with respect
      to
      principal of, premium, if any, or interest on the Securities for the period
      specified in clause (2) below (a “Payment
      Blockage Period”)
      following notice in writing (a “Payment
      Blockage Notice”)
      to the
      Company and the Trustee, from any holder or holders of such Designated Senior
      Debt or their representative or representatives or the trustee or trustees
      under
      any indenture or under which any instrument evidencing any such Designated
      Senior Debt may have been issued, that such Non-Payment Default has occurred
      and
      is continuing, unless such event of default has been cured or waived or such
      Designated Senior Debt has been paid in full in cash or other payment
      satisfactory to the holders of such Designated Senior Debt; provided,
      however,
      if the
      maturity of such Designated Senior Debt is accelerated (or in the case of any
      lease, as a result of such event of default, the landlord under the lease has
      given the Company notice of its intention to terminate the lease or to require
      the Company to make an irrevocable offer to terminate the lease following an
      event of default thereunder), no payment may be made on the Securities until
      such Designated Senior Debt has been paid in full in cash or other payment
      satisfactory to the holders of such Designated Senior Debt or such acceleration
      (or termination, in the case of a lease) has been cured or waived.

     

    
      
         

      

      
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    (2) The
      Payment Blockage Period shall commence upon receipt of the Payment Blockage
      Notice by the Company and the Trustee and shall end on the earliest of (A)
      the
      179th
      day
      after such commencement, (B) the date on which such Non-payment Default (and
      all
      other Non-payment Defaults to which notice is given after such Payment Blockage
      Period is initiated) is cured, waived or ceases to exist or on which such
      Designated Senior Debt is discharged or paid in full in cash or other payment
      satisfactory to the holders of the Designated Senior Debt, or (C) the date
      on
      which such Payment Blockage Period (and all Non-payment Defaults as to which
      notice is given after such Payment Blockage Period is initiated) shall have
      been
      terminated by written notice to the Company or the Trustee from the holder
      or
      holders of such Designated Senior Debt initiating such Payment Blockage Period,
      after which, in the case of clauses (A), (B) and (C), the Company shall promptly
      resume making any and all required payments in respect of the Securities,
      including any missed payments. In no event will a Payment Blockage Period extend
      beyond 179 days from the date of the receipt by the Company and the Trustee
      of
      the Payment Blockage Notice initiating such Payment Blockage Period (such
      179-day period referred to as the “Initial
      Period”).
      Any
      number of Payment Blockage Notices may be given during the Initial Period;
      provided, that during any period of 365 consecutive days only one Payment
      Blockage Period, during which payment of principal of, premium, if any, or
      interest on, the Securities may not be made, may commence and the duration
      of
      such period may not exceed 179 days. No Non-payment Default with respect to
      any
      Designated Senior Debt that existed or was continuing on the date of the
      commencement of any Payment Blockage Period will be, or can be, made the basis
      for the commencement of a second Payment Blockage Period, whether or not within
      a period of 365 consecutive days, unless such default has been cured or waived
      for a period of not less than 90 consecutive days. The Company shall deliver
      notice to the Trustee promptly after the date on which any Non-payment Default
      is cured or waived or ceases to exist or on which the Designated Senior Debt
      related thereto is discharged or paid in full, and the Trustee is authorized
      to
      act in reliance on such notice.

     

    (e) In
      the
      event that, notwithstanding the foregoing provisions of Sections 5.01(a),
      5.01(b), 5.01(c) and 5.01(d), any payment on account of principal, premium,
      if
      any, or interest (including Contingent Interest, if any) on the Securities
      shall
      be made by or on behalf of the Company and received by the Trustee, by any
      Holder or by any Paying Agent (or, if the Company is acting as its own Paying
      Agent, money for any such payment shall be segregated and held in
      trust):

     

    (1) after
      the
      occurrence of an event specified in Section 5.01(a) or 5.01(b), then, unless
      all
      Senior Debt is paid in full in cash, or provision shall be made
      therefor,

     

    (2) after
      the
      happening of an event of default of the type specified in Section 5.01(c) above,
      then, unless the amount of such Senior Debt then due shall have been paid in
      full, or provision made therefor or such event of default shall have been cured
      or waived, or

     

    (3) after
      the
      happening of a Non-payment Default of the type specified in Section 5.01(d)
      above and delivery of a Payment Blockage Notice, then, unless such Payment
      Blockage Period shall have expired, 

     

    such
      payment (subject, in each case, to the provisions of Section 5.07 hereof) shall
      be held in trust for the benefit of, and shall be immediately paid over to,
      the
      holders of Designated Senior Debt (unless an event described in Section 5.01(a),
      (b) or (c) has occurred, in which case the payment shall be held in trust for
      the benefit of, and shall be immediately paid over to all holders of Senior
      Debt) or their representative or representatives or the trustee or trustees
      under any indenture under which any instruments evidencing any of the Designated
      Senior Debt or Senior Debt, as the case may be, may have been issued, as their
      interests may appear.

     

    
      
         

      

      
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    Section
      5.02  Subrogation. 

     

    Subject
      to the payment in full of all Senior Debt to which the Indebtedness evidenced
      by
      the Securities is in the circumstances subordinated as provided in Section
      5.01
      hereof, the Holders of the Securities shall be subrogated to the rights of
      the
      holders of such Senior Debt to receive payments or distributions of cash,
      property or securities of the Company applicable to such Senior Debt until
      all
      amounts owing on the Securities shall be paid in full, and, as between the
      Company, its creditors other than holders of such Senior Debt, and the Holders
      of the Securities, no such payment or distribution made to the holders of Senior
      Debt by virtue of this Article which otherwise would have been made to the
      holders of the Securities shall be deemed to be a payment by the Company on
      account of such Senior Debt; provided,
      however,
      that the
      provisions of this Article are and are intended solely for the purpose of
      defining the relative rights of the Holders of the Securities, on the one hand,
      and the holders of Senior Debt, on the other hand.

     

    Section
      5.03  Obligation
      of the Company is
      Absolute and Unconditional. 

     

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

     

    Section
      5.04  Maturity
      of or Default on Senior Debt. 

     

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

     

    Section
      5.05  Payments
      on Securities Permitted. 

     

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

     

    
      
         

      

      
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    Section
      5.06  Effectuation
      of Subordination by Trustee. 

     

    Each
      Holder of Securities, by such Holder’s acceptance thereof, authorizes and
      directs the Trustee on such Holder’s behalf to take such action as may be
      necessary or appropriate to effectuate the subordination provided in this
      Article and appoints the Trustee such Holder’s attorney-in-fact for any and all
      such purposes. Upon any payment or distribution of assets of the Company
      referred to in this Article, the Trustee and the Holders of the Securities
      shall
      be entitled to rely upon any order or decree made by any court of competent
      jurisdiction in which any such dissolution, winding up, liquidation or
      reorganization proceeding affecting the affairs of the Company is pending or
      upon a certificate of the trustee in bankruptcy, receiver, assignee for the
      benefit of creditors, liquidating trustee or agent or other Person making any
      payment or distribution, delivered to the Trustee or to the Holders of the
      Securities, for the purpose of ascertaining the Persons entitled to participate
      in such payment or distribution, and as to other facts pertinent to the right
      of
      such Persons under this Article, and if such evidence is not furnished, the
      Trustee may defer any payment to such Persons pending judicial determination
      as
      to the right of such Persons to receive such payment.

     

    Section
      5.07  Knowledge
      of Trustee. 

     

    Notwithstanding
      the provision of this Article or any other provisions of this Indenture, the
      Trustee shall not be charged with knowledge of the existence of any Senior
      Debt,
      of any default in payment of principal of, premium, if any, or interest on,
      rent
      or other payment obligation in respect of any Senior Debt, or of any facts
      which
      would prohibit the making of any payment of moneys to or by the Trustee, or
      the
      taking of any other action by the Trustee, unless a Responsible Officer of
      the
      Trustee having responsibility for the administration of the trust established
      by
      the Indenture shall have received written notice thereof from the Company,
      any
      Holder of Securities, any Paying Agent or Conversion Agent of the Company or
      the
      holder or representative of any class of Senior Debt, and, prior to the receipt
      of any such written notice, the Trustee shall be entitled in all respects to
      assume that no such default or facts exist; provided,
      however,
      that
      unless on the third Business Day prior to the date upon which by the terms
      hereof any such moneys may become payable for any purpose the Trustee shall
      have
      received the notice provided for in this Section 5.07, then, anything herein
      contained to the contrary notwithstanding, the Trustee shall have full power
      and
      authority to receive such moneys and apply the same to the purpose for which
      they were received, and shall not be affected by any notice to the contrary
      which may be received by it on or after such date. 

     

    Section
      5.08  Trustee’s
      Relation to Senior Debt.

     

    The
      Trustee shall be entitled to all the rights set forth in this Article with
      respect to any Senior Debt at the time held by it, to the same extent as any
      other holder of Senior Debt and nothing in the Indenture shall deprive the
      Trustee of any of its rights as such holder. Nothing contained in this Article
      shall apply to claims of or payments to the Trustee under or pursuant to Section
      7.7 of the Base Indenture. With respect to the holders of Senior Debt, the
      Trustee undertakes to perform or to observe only such of its covenants and
      obligations as are specifically set forth in this Article, and no implied
      covenants or obligations with respect to the holders of Senior Debt shall be
      read into the Indenture against the Trustee. The Trustee shall not be deemed
      to
      owe any fiduciary duty to the holders of Senior Debt and the Trustee shall
      not
      be liable to any holder of Senior Debt if it shall pay over or deliver to
      Holders, the Company or any other Person moneys or assets to which any holder
      of
      Senior Debt shall be entitled by virtue of this Article or
      otherwise.

     

    
      
         

      

      
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    Section
      5.09  Rights
      of Holders of Senior Debt Not Impaired. 

     

    No
      right
      of any present or future holder of any Senior Debt to enforce the subordination
      herein shall at any time or in any way be prejudiced or impaired by any act
      or
      failure to act on the part of the Company or by any noncompliance by the Company
      with the terms, provisions and covenants of the Indenture, regardless of any
      knowledge thereof any such holder may have or be otherwise charged
      with.

     

    Section
      5.10  Modification
      of Terms of Senior Debt. 

     

    Any
      renewal or extension of the time of payment of any Senior Debt or the exercise
      by the holders of Senior Debt of any of their rights under any instrument
      creating or evidencing Senior Debt, including without limitation the waiver
      of
      default thereunder, may be made or done all without notice to or assent from
      the
      Holders of the Securities or the Trustee. No compromise, alteration, amendment,
      modification, extension, renewal or other change of, or waiver, consent or
      other
      action in respect of, any liability or obligation under or in respect of, or
      of
      any of the terms, covenants or conditions of any indenture or other instrument
      under which any Senior Debt is outstanding or of such Senior Debt, whether
      or
      not such release is in accordance with the provisions or any applicable
      document, shall in any way alter or affect any of the provisions of this Article
      or of the Securities relating to the subordination thereof.

     

    Section
      5.11  Certain
      Conversions Not Deemed Payment. 

     

    For
      the
      purposes of this Article 5 only:

     

    (1) the
      issuance and delivery of junior securities upon conversion of Securities in
      accordance with Article 4 hereof shall not be deemed to constitute a payment
      or
      distribution on account of the principal of, premium, if any, or interest on
      Securities or on account of the purchase or other acquisition of Securities,
      and

     

    (2) the
      payment, issuance or delivery of cash (except in satisfaction of fractional
      shares pursuant to Section 4.03 hereof), property or securities (other than
      junior securities) upon conversion of a Security shall be deemed to constitute
      payment on account of the principal of, premium, if any, or interest such
      Security. For the purposes of this Section 5.11, the term “junior
      securities”
      means:

     

    (a) shares
      of
      any Company Common Stock, or

     

    (b) other
      securities of the Company that are subordinated in right of payment to all
      Senior Debt that may be outstanding at the time of issuance or delivery of
      such
      securities to substantially the same extent as, or to a greater extent than,
      the
      Securities are so subordinated as provided in this Article. Nothing contained
      in
      this Article 5 or elsewhere in the Indenture or in the Securities is intended
      to
      or shall impair, as among the Company, its creditors (other than holders of
      Senior Debt) and the Holders of Securities, the right, which is absolute and
      unconditional, of the Holder of any Security to convert such Security in
      accordance with Article 4 hereof.

     

    
      
         

      

      
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    Section
      5.12  No
      Layering of Debt

     

    .
      The
      Company will not incur, create, issue, assume, guarantee or otherwise become
      liable for any Indebtedness that is contractually subordinate or junior in
      right
      of payment to any Senior Debt of the Company and senior in right of payment
      to
      the Securities. 

     

    Article
      6.

    Covenants

     

    In
      addition to the covenants set forth in Article IV of the Base Indenture, the
      following covenants shall apply with respect to the Securities authorized and
      designated under this First Supplemental Indenture.

     

    Section
      6.01  Payment
      of Securities.

     

    (a) The
      Company shall promptly make all payments in respect of the Securities on the
      dates and in the manner provided in the Securities and this Indenture. A payment
      of principal or interest shall be considered paid on the date it is due if
      the
      Paying Agent (other than the Company) holds by 10:00 a.m., New York City time,
      on that date money, deposited by or on behalf of the Company sufficient to
      make
      the payment. Subject to Section 4.02 and Section 3.11, accrued and unpaid
      interest (including Contingent Interest, if any) on any Security that is
      payable, and is punctually paid or duly provided for, on any Interest Payment
      Date shall be paid to the Person in whose name that Security is registered
      at
      the close of business on the Regular Record Date for such interest at the office
      or agency of the Company maintained for such purpose. Principal, Redemption
      Price, Put Right Purchase Price, Fundamental Change Repurchase Price, and
      interest and Contingent Interest, if any, in each case if payable, shall be
      considered paid on the applicable date due if on such date (or, in the case
      of
      Put Right Purchase Price or Fundamental Change Repurchase Price, on the Business
      Day following the applicable Put Right Purchase Date or Fundamental Change
      Repurchase Date, as the case may be) the Trustee or the Paying Agent holds,
      in
      accordance with this Indenture, money sufficient to pay all such amounts then
      due. The Company shall, to the fullest extent permitted by law, pay interest
      in
      immediately available funds on overdue principal amount and interest at the
      annual rate borne by the Securities compounded semiannually, which interest
      shall accrue from the date such overdue amount was originally due to the date
      payment of such amount, including interest thereon, has been made or duly
      provided for. All such interest shall be payable on demand.

     

    (b) Payment
      of the principal of and interest, if any, on the Securities shall be made at
      the
      office or agency of the Company maintained for that purpose, which shall
      initially be at the Corporate Trust Office of the Trustee, in such coin or
      currency of the United States of America as at the time of payment is legal
      tender for payment of public and private debts; provided, however, that at
      the
      option of the Company payment of interest may be made by check mailed to the
      address of the Person entitled thereto as such address appears in the Register;
      provided further that a Holder with an aggregate principal amount in excess
      of
      $5,000,000 will be paid by wire transfer in immediately available funds at
      the
      election of such Holder if such Holder has provided wire transfer instructions
      to the Trustee at least 10 Business Days prior to the payment date. Any wire
      transfer instructions received by the Trustee will remain in effect until
      revoked by the Holder.

     

    
      
         

      

      
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    Section
      6.02  Tax
      Treatment of Securities.

     

    The
      Company and the Holders, by acceptance of a beneficial ownership interest in
      the
      Securities, agree that (i) the Securities are contingent payment debt
      instruments as described in Section 1.1275-4 of the Treasury Regulations
      promulgated by the Department of Treasury pursuant to the Internal Revenue
      Code
      of 1986, amended (the “Contingent
      Payment Regulations”),
      (ii)
      each Holder shall be bound by the Company’s application of the Contingent
      Payment Regulations to the Securities, including the Company’s determination
      that the rate at which interest will be deemed to accrue on the Securities
      for
      U.S. federal income tax purposes, will be 8.0% compounded semiannually, which
      is
      the rate comparable to the rate at which the Company would borrow on a
      noncontingent, nonconvertible borrowing with no contingent payments, but with
      terms and conditions otherwise comparable to the Securities (the “comparable
      yield”),
      (iii)
      each Holder shall use the projected payment schedule with respect to the
      Securities provided by the Company to the Holder, as provided in the Contingent
      Payment Regulations, to determine its interest accruals and adjustments as
      provided in the Contingent Payment Regulations (iv) for purposes of the
      Contingent Payment Regulations, to treat the fair market value of any Common
      Stock received upon any conversion of the Securities as a contingent payment,
      and (v) the Company and each Holder will not take any position on a tax return
      inconsistent with clauses (i), (ii) or (iii) of this Section 6.02, unless
      required by applicable law.

     

    The
      comparable yield and the schedule of projected payments are not determined
      for
      any purpose other than for the determination of interest accruals and adjustment
      thereof in respect of the Securities for U.S. federal income tax purposes.
      The
      comparable yield and the schedule of projected payments do not constitute a
      projection or representation regarding the future stock price or the amount
      payable on the Securities. A Holder may obtain the issue date, comparable yield
      and projected payment schedule by telephoning the Company’s Chief Financial
      Officer at (714) 549-0421 or submitting a written request to: Ceradyne, Inc.,
      3169 Red Hill Avenue, Costa Mesa, California 92626, Attn: Chief Financial
      Officer.

     

    On
      conversion of the Securities, that portion of accrued interest including accrued
      Contingent Interest with respect to the converted Securities shall not be
      canceled, extinguished or forfeited, but rather shall be deemed to be paid
      in
      full to the Holder thereof through delivery of the Common Stock (together with
      the cash payment, if any, in lieu of fractional shares) in exchange for the
      Securities being converted pursuant to the provisions hereof, and the fair
      market value of such shares of Common Stock (together with any such cash payment
      in lieu of fractional shares) shall be treated as issued, to the extent thereof,
      first in exchange for interest accrued and unpaid through the conversion date
      and accrued and unpaid contingent interest, and the balance, if any, of such
      fair market value of such Common Stock (and any such cash payment) shall be
      treated as issued in exchange for the principal amount of the Securities being
      converted pursuant to the provisions hereof.

     

    Article
      7.

    Consolidation;
      Merger; Conveyance; Transfer or Lease

     

    Article
      V
      of the Base Indenture is hereby amended solely as it applies to the Securities,
      to read as follows:

     

    
      
         

      

      
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    Section
      7.01  Company
      May Consolidate, Etc., Only on
      Certain Terms. 

     

    (a)  The
      Company may not, without the consent of the Holders, consolidate with, merge
      into or convey, transfer or lease all or substantially all of the property
      and
      assets of the Company and its Subsidiaries, taken as a whole, to another Person
      unless:

     

    (1)  either
      (A) the Company shall be the resulting or surviving corporation or (B) the
      Person (if other than the Company) formed by such consolidation or into which
      the Company is merged, or the Person which acquires by transfer or lease all
      or
      substantially all of the properties and assets of the Company, shall (i) be
      a
      corporation incorporated and existing under the laws of the United States of
      America or any State thereof or the District of Columbia and (ii) expressly
      assume, by an indenture supplemental hereto, executed and delivered to the
      Trustee, in form satisfactory to the Trustee, the obligations of the Company
      under the Securities, this First Supplemental Indenture and the Base Indenture
      and the performance or observance of every covenant and provision of this First
      Supplemental Indenture and the Base Indenture and the Securities required on
      the
      part of the Company to be performed or observed and the conversion rights shall
      be provided for in accordance with Article 4, by supplemental indenture
      satisfactory in form to the Trustee, executed and delivered to the Trustee,
      by
      the Person (if other than the Company) formed by such consolidation or into
      which the Company shall have been merged or by the Person which shall have
      acquired the Company’s assets;

     

    (2)  after
      giving effect to such transaction, no Event of Default, and no event which,
      after notice or lapse of time or both, would become an Event of Default, shall
      have occurred and be continuing; and 

     

    (3)  if
      the
      Company will not be the resulting or surviving corporation, the Company shall
      have, at or prior to the effective date of such consolidation, merger or
      transfer, delivered to the Trustee an Officers’ Certificate and an Opinion of
      Counsel, each stating that such consolidation, merger or transfer complies
      with
      this Article and, if a supplemental indenture is required in connection with
      such transaction, such supplemental indenture complies with this Article, and
      that all conditions precedent herein provided for relating to such transaction
      have been complied with.

     

    (b)  For
      purposes of the foregoing, the transfer (by lease, assignment, sale or
      otherwise) of the properties and assets of one or more Subsidiaries of the
      Company (other than to the Company or another Subsidiary of the Company), which,
      if such assets were owned by the Company, would constitute all or substantially
      all of the properties and assets of the Company and its Subsidiaries, taken
      as a
      whole, shall be deemed to be the transfer of all or substantially all of the
      properties and assets of the Company.

     

    Section
      7.02  Successor
      Substituted.

     

    Upon
      any
      consolidation of the Company with, or merger of the Company into, any other
      Person or any conveyance, transfer or lease of all or substantially all of
      the
      properties and assets of the Company and its Subsidiaries, taken as a whole,
      in
      accordance with Section 7.01, the successor Person formed by such consolidation
      or into which the Company is merged or to which such conveyance, transfer or
      lease is made shall succeed to, and be substituted for, and may exercise every
      right and power of, the Company under this Indenture with the same effect as
      if
      such successor Person had been named as the Company herein, and thereafter,
      except in the case of a lease, and except for obligations the predecessor Person
      may have under a supplemental indenture, the predecessor Person shall be
      relieved of all obligations and covenants under the Indenture and the
      Securities.

     

    
      
         

      

      
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    Article
      8.

    Default
      and Remedies

     

    Section
      8.01  Events
      of
      Default.

     

    Notwithstanding
      Section 6.1 of the Base Indenture, the following Section 8.01 shall apply for
      purposes of this First Supplemental Indenture and the Securities.

     

    (a)  An
      “Event
      of Default”
shall
      occur if:

     

    (1)  the
      Company shall fail to pay when due the Principal or any Redemption Price, Put
      Right Purchase Price or Fundamental Change Repurchase Price of any Security,
      including any Make-Whole Premium, when the same becomes due and payable whether
      at the Final Maturity Date, upon redemption, repurchase, acceleration or
      otherwise; or

     

    (2)  the
      Company shall fail to pay an installment of cash interest or Contingent
      Interest, if any, on any of the Securities, which failure continues for 30
      days
      after the date when due; or

     

    (3)  the
      Company shall fail to deliver when due all cash and shares of Common Stock
      deliverable upon conversion of the Securities, which failure continues for
      15
      days; or

     

    (4)  the
      Company shall fail to perform or observe any other term, covenant or agreement
      contained in the Securities or the Indenture upon the Company’s receipt of a
      Notice of Default, and fails to cure such default (or obtain a waiver thereof)
      within 30 days after receipt of the Notice of Default; or

     

    (5)  default
      in the payment of principal when due or resulting in acceleration of other
      Indebtedness of the Company or any significant Subsidiaries for borrowed money
      where the aggregate principal amount with respect to which the default or
      acceleration has occurred exceeds $10,000,000 and such acceleration has not
      been
      rescinded or annulled or such Indebtedness repaid within a period of 30 days
      after receipt of a Notice of Default, provided that if any such default is
      cured, waived, rescinded or annulled, then the Event of Default by reason
      thereof would be deemed not to have occurred; or 

     

    (6)  the
      Company fails to provide a Fundamental Change Company Notice in accordance
      with
      Section 3.08; or

     

    
      
         

      

      
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    (7)  the
      Company pursuant to or within the meaning of any Bankruptcy Law:

     

    


    (A)  commences
      as a debtor a voluntary case or proceeding; 

     

    (B)  consents
      to the entry of an order for relief against it in an involuntary case or
      proceeding or the commencement of any case against it;

     

    (C)  consents
      to the appointment of a Receiver of it or for all or substantially all of its
      property; 

     

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

     

    (E)  files
      a
      petition in bankruptcy or answer or consent seeking reorganization or relief;
      

     

    (F)  consents
      to the filing of such a petition or the appointment of
      or
      taking possession by a Receiver; 

     

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

     

    (A)  grants
      relief against the Company in an involuntary case or proceeding or adjudicates
      the Company insolvent or bankrupt; 

     

    (B)  appoints
      a Receiver of the Company or for all or substantially all of the property of
      the
      Company; or 

     

    (C)  orders
      the winding up or liquidation of the Company; 

     

    and
      in
      each case the order or decree remains unstayed and in effect for 60 consecutive
      days.

     

    The
      term
“Bankruptcy
      Law”
means
      Title 11 of the United States Code (or any successor thereto) or any similar
      federal or state law for the relief of debtors. The term “Receiver”
means
      any receiver, trustee, assignee, liquidator, sequestrator or similar official
      under any Bankruptcy Law.

     

    (b)  Notwithstanding
      Section 8.01(a), no Event of Default under clauses (4) or (5) of Section 8.01(a)
      shall occur until the Trustee notifies the Company in writing, or the Holders
      of
      at least 25% in aggregate principal amount of the Securities then outstanding
      notify the Company and the Trustee in writing, of the Default (a “Notice
      of Default”),
      and
      the Company does not cure the Default within the time specified in clause (4)
      or
      (5) of Section 8.01(a), as applicable, after receipt of such notice. A notice
      given pursuant to this Section 8.01 shall be given by registered or certified
      mail, must specify the Default, demand that it be remedied and state that the
      notice is a Notice of Default. When any Default under this Section 8.01 is
      cured, it ceases. 

     

    (c)  The
      Company will deliver to the Trustee, within 5 Business Days after becoming
      aware
      of the occurrence of a Default or Event of Default, written notice
      thereof.

     

    
      
         

      

      
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    The
      Trustee shall not be charged with knowledge of any Event of Default unless
      written notice thereof shall have been given to a Trust Officer with
      responsibility for this Indenture at the Corporate Trust Office of the Trustee
      by the Company, a Paying Agent, any Holder or any agent of any Holder or unless
      a Trust Officer with responsibility for this Indenture acquires actual knowledge
      of such Event of Default in the course of performing other duties pursuant
      to
      this Indenture.

     

    Section
      8.02  Acceleration.

     

    Notwithstanding
      Section 6.2 of the Base Indenture, this Section 8.02 shall apply for purposes
      of
      this First Supplemental Indenture and the Securities.

     

    If
      an
      Event of Default (other than an Event of Default specified in clause (7) or
      (8)
      of Section 8.01(a)) occurs and is continuing with respect to the Company, the
      Trustee may, by notice to the Company, or the Holders of at least 25% in
      aggregate principal amount of the Securities then outstanding may, by notice
      to
      the Company and the Trustee, declare the principal amount and accrued and unpaid
      interest, if any, and accrued and unpaid Contingent Interest, if any, through
      the date of declaration on all the Securities to be immediately due and payable.
      Upon such a declaration, such principal amount and such accrued and unpaid
      interest, if any, and such accrued and unpaid Contingent Interest, if any,
      shall
      be due and payable immediately. If an Event of Default specified in Sections
      8.01(a)(7) or (8) occurs in respect of the Company and is continuing, the
      principal amount and accrued but unpaid interest, if any, and accrued and unpaid
      Contingent Interest, if any, on all the Securities shall become and be
      immediately due and payable without any declaration or other act on the part
      of
      the Trustee or any Holders of Securities. The Holders of a majority in aggregate
      principal amount of the Securities then outstanding by notice to the Trustee
      may
      rescind an acceleration and its consequences if (a) all existing Events of
      Default, other than the nonpayment of the principal of the Securities which
      have
      become due solely by such declaration of acceleration, have been cured or
      waived; (b) to the extent the payment of such interest is lawful, interest
      (calculated at the rate per annum borne by the Securities) on overdue
      installments of interest and overdue principal, which has become due otherwise
      than by such declaration of acceleration, has been paid; (c) the rescission
      would not conflict with any judgment or decree of a court of competent
      jurisdiction; and (d) all payments due to the Trustee and any predecessor
      Trustee under Section 7.7 of the Base Indenture have been made. No such
      rescission shall affect any subsequent Default or impair any right consequent
      thereto.

     

    Section
      8.03  Rights
      of
      Holders to Receive Payment and to Convert. 

     

    In
      addition to the other rights and remedies set forth in this Article 8 and in
      Article VI of the Base Indenture, the following shall apply with respect to
      the
      Securities authorized and designated under this First Supplemental
      Indenture:

     

    Notwithstanding
      any other provision of this First Supplemental Indenture, the right of any
      Holder of a Security to receive payment of the principal amount, Redemption
      Price, Put Right Purchase Price, Fundamental Change Repurchase Price, or
      Make-Whole Premium, interest, if any, and Contingent Interest, if any, in
      respect of the Securities held by such Holder, on or after the respective due
      dates expressed in the Securities and this First Supplemental Indenture,
      (whether upon redemption, repurchase, or otherwise), and to convert such
      Security in accordance with Article 4, and to bring suit for the enforcement
      of
      any such payment on or after such respective due dates or for the right to
      convert in accordance with Article 4, is absolute and unconditional and shall
      not be impaired or affected without the consent of the Holder.

     

    
      
         

      

      
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    Article
      9.

    Amendments;
      Supplements and Waivers

     

    Section
      9.01  Without
      Consent of
      Holders.

     

    (a)  In
      addition to the provisions of Section 9.1 of the Base Indenture, the Company
      and
      the Trustee may also amend or supplement this First Supplemental Indenture,
      the
      Base Indenture or the Securities without notice to or consent of any Holder
      of a
      Security for the purpose of:

     

    (1)  evidencing
      a successor to the Company and the assumption by that successor of the Company’s
      obligations under this First Supplemental Indenture, the Base Indenture and
      the
      Securities;

     

    (2)  adding
      to
      the Company’s covenants for the benefit of the Holders or surrendering any right
      or power conferred upon the Company; 

     

    (3)  curing
      any omission in this First Supplemental Indenture, the Base Indenture or the
      Securities;

     

    (4)  securing
      the Company’s obligations in respect of the Securities; and 

     

    (5)  modifying
      any other provisions of this First Supplemental Indenture or the Base Indenture
      in any manner that will not adversely affect the interests of the Holders in
      any
      material respect.

     

    (b)  The
      Company may, without consent of any Holder of a Security or the Trustee, amend
      this First Supplemental Indenture for the purpose of surrendering the Company’s
      right to issue shares of Common Stock upon conversion of the Securities.


     

    Section
      9.02  With
      Consent of
      Holders.

     

    Notwithstanding
      Section 9.2 of the Base Indenture, this Section 9.02 shall apply for purposes
      of
      this First Supplemental Indenture and the Securities.

     

    
      
         

      

      
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    (a)  The
      Company and the Trustee may amend or supplement this First Supplemental
      Indenture, the Base Indenture or the Securities with the written consent of
      the
      Holders of at least a majority in aggregate principal amount of the Securities
      then outstanding or by the adoption of a resolution at a meeting of Holders
      by
      at least a majority in aggregate principal amount of the Securities represented
      at the meeting. However, subject to Section 9.5 of the Base Indenture, without
      the written consent of each Holder affected, an amendment, supplement or waiver
      may not:

     

    (1)  alter
      the
      manner of calculation or rate of accrual of interest on any Security or change
      the time of payment of any installment of interest on, or any Contingent
      Interest with respect to, any Security; 

     

    (2)  make
      any
      of the Securities payable in money or securities other than that stated in
      the
      Securities;

     

    (3)  change
      the stated Maturity of any Security;

     

    (4)  reduce
      the principal amount, Redemption Price, Put Right Purchase Price, or Fundamental
      Change Repurchase Price (including any Make Whole Premium) (as applicable)
      with
      respect to any of the Securities, or interest (including Contingent Interest,
      if
      any) or the amount payable upon redemption or purchase pursuant to Article
      3,
      with respect to any Security;

     

    (5)  make
      any
      change that adversely affects the rights of a Holder to convert any of the
      Securities in any material respect;

     

    (6)  make
      any
      change that adversely affects the rights of Holders to require the Company
      to
      purchase Securities at the option of Holders in any material
      respect;

     

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

     

    (8)  reduce
      the percentage in aggregate principal amount of Securities outstanding necessary
      to modify or amend this Indenture.

     

    (b)  Without
      limiting the provisions of Section 9.02(a) hereof, the Holders of a majority
      in
      principal amount of the Securities then outstanding may, on behalf of all the
      Holders of all Securities, (i) waive compliance by the Company with the
      restrictive provisions of this Indenture, and (ii) waive any past Default of
      Event of Default under this Indenture and its consequences, except an uncured
      failure to pay when due the principal amount, accrued and unpaid interest,
      accrued and unpaid Liquidated Damages, Redemption Price, Put Right Purchase
      Price or Fundamental Change Repurchase Price, if any and as applicable, or
      in
      respect of any provision which under this Indenture cannot be modified or
      amended without the consent of the Holder of each outstanding Security affected.
      

     

    (c)  After
      an
      amendment, supplement or waiver under this Section 9.02 becomes effective,
      the
      Company shall promptly mail to the Holders affected thereby a notice briefly
      describing the amendment, supplement or waiver. Any failure of the Company
      to
      mail such notice, or any defect therein, shall not, however,
      in any way impair or affect the validity of any such amendment, supplement
      or
      waiver.

     

    
      
         

      

      
        -56-

        
          

        

      

      
         

      

    

     

    Article
      10.

    Miscellaneous

     

    Section
      10.01  Governing
      Law.

     

    This
      First Supplemental Indenture and the Securities shall be governed by, and
      construed in accordance with, the laws of the State of New York.

     

    Section
      10.02  No
      Security Interest Created.

     

    Nothing
      in this First Supplemental Indenture or in the Securities, express or implied,
      shall be construed to constitute a security interest under the Uniform
      Commercial Code or similar legislation, now in effect or hereafter enacted
      and
      made effective, in any jurisdiction.

     

    Section
      10.03  Successors.

     

    All
      agreements of the Company in this First Supplemental Indenture and the
      Securities shall bind its successor. All agreements of the Trustee in this
      First
      Supplemental Indenture shall bind its successor.

     

    Section
      10.04  Counterparts.

     

    This
      First Supplemental 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
      10.05  Severability.

     

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

     

    Section
      10.06  Table
      of
      Contents, Headings, Etc.

     

    The
      table
      of contents, cross-reference sheet and headings of the Articles and Sections
      of
      this First Supplemental 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.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
         

      

      
        -57-

        
          

        

      

      
         

      

    

     

    


    IN
      WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
      date
      and year first above written.

     

     

    CERADYNE,
      INC.

    


     

    
      

    

    Name:
      

    Title:
      

    


    


    UNION
      BANK OF CALIFORNIA, N.A.

    


     

      
        

      

    

    Name:
      

    Title:
      

     

    
      
         

      

      
        -58-

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    [FORM
      OF FACE OF SECURITY]

     

    UNLESS
      THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
      TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
      OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE
      DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
      SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
      DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
      OR
      OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
      CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY
      WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED
      IN
      THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE
      FOR
      SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
      ITS
      NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS
      AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE
      FORM,
      THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
      A
      NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
      OR
      ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
      TO A
      SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.1

     

     

     

      
        

      

    

    
      	1	
              This
                paragraph should be included only if the Security is a Global
                Security.

            


    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Ceradyne,
      Inc.

     

    2.875%
      Senior Subordinated Convertible Notes due 2035 

     

    No.
      A1
      CUSIP: 156710 AA 3

     

    
      

    

     

    Ceradyne,
      Inc., a Delaware corporation, promises to pay to Cede & Co. or registered
      assigns the principal amount of One Hundred Ten Million Dollars
      ($110,000,000.00) on December 15, 2035.

     

    
      	 	
              Interest
                Payment Dates:

            	
              June
                15 and December 15, commencing June 15,
                2006

            


    

     

     

    
      	 	
              Record
                Dates:

            	
              June
                1 and December 1

            


    

     

    This
      Security shall bear interest as specified on the other side of this Security.
      This Security is convertible as specified on the other side of this
      Security.

     

    Additional
      provisions of this Security are set forth on the other side of this
      Security.

     

    Dated:
      December 19, 2005

     

     

    SIGNATURE
      PAGE FOLLOWS

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    IN
      WITNESS WHEREOF, the Company has caused this instrument to be duly executed
      as
      of December 19, 2005.

     

    Ceradyne,
      Inc.

    


    By:

     

     

      
        

      

    

    Joel
      P.
      Moskowitz,

    Chief
      Executive Officer and President

     

     

    By:

     

     

      
        

      

    

    Jerrold
      J. Pellizzon,

    Chief
      Financial Officer

     

     

    Trustee’s
      Certificate of Authentication:

     

    This
      is
      one of the Securities referred to in the within-mentioned
      Indenture.

     

    UNION
      BANK OF CALIFORNIA, N.A., as Trustee

     

    By:

      
        

      

    

    Authorized
      Signatory:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    [FORM
      OF REVERSE SIDE OF SECURITY]

     

    Ceradyne,
      Inc.

     

    2.875%
      Senior Subordinated Convertible Notes due 2035 

     

    
      	1.	
              INTEREST

            


    

     

    The
      Company promises to pay interest on the principal amount of this Note at the
      rate of 2.875% per annum. The Company shall pay interest semiannually in arrears
      on June 15 and December 15 of each year (each, an “Interest
      Payment Date”),
      commencing on June 15, 2006. Interest on the Notes shall accrue from the most
      recent date to which interest has been paid or, if no interest has been paid,
      from December 19, 2005; provided,
      however,
      that if
      there is not an existing default in the payment of interest and if this Note
      is
      authenticated between a record date referred to on the face hereof and the
      next
      succeeding interest payment date, such interest payment date. Interest will
      be
      computed on the basis of a 360-day year composed of twelve 30-day
      months.

     

    In
      addition, the Company shall pay contingent interest (“Contingent
      Interest”)
      to the
      Holders during any six-month period (a “Contingent
      Interest Period”)
      from
      June 15 to December 14 and from December 15 to June 14, commencing with the
      six-month period beginning December 20, 2010 and ending on July 14, 2011,
      if the average Trading Price of a Note for the five Trading Day period ending
      on
      the third Trading Day immediately preceding the first day of the relevant
      Contingent Interest Period equals $1,200 (120% of the principal amount of a
      Note) or more.

     

    Upon
      a
      determination by the Company that Holders will be entitled to receive Contingent
      Interest which will become payable during a Contingent Interest Period, on
      or
      prior to the first day of such Contingent Interest Period, the Company shall
      provide notice in the form of an Officer’s Certificate to the Trustee setting
      forth the amount of such Contingent Interest per $1,000 principal amount of
      Notes and shall issue a press release through a public medium as is customary
      for such a press release.

     

    The
      amount of Contingent Interest payable per $1,000 principal amount of Security
      for any relevant Contingent Interest Period shall equal 0.25% per annum of
      the
      average Trading Price of such Security for the five Trading Day period ending
      on
      the third Trading Day immediately preceding the first day of the relevant
      Contingent Interest Period. Contingent Interest, if any, will accrue and be
      payable to Holders in the same manner as regular interest, and a Holder’s
      obligation to pay the Company Contingent Interest in connection with the
      conversion of a Security will also be the same as regular interest. Regular
      interest will continue to accrue at the rate of 2.875% per year on the principal
      amount of the Securities whether or not Contingent Interest is
      paid.

     

    If
      this
      Security is redeemed pursuant to Section 6 of this Security or the Holder
      elects to require the Company to repurchase this Security pursuant to
      Section 8 of this Security, on a date that is after the Regular Record Date
      and prior to the corresponding Interest Payment Date, interest (including
      Contingent Interest, if any, accrued and unpaid hereon to, but not including,
      the applicable Redemption Date, Put Right Purchase Date or Fundamental Change
      Repurchase Date), will be paid to the same Holder to whom the Company pays
      the
      principal of such Note regardless of whether such Holder was the registered
      Holder on the Regular Record Date immediately preceding the applicable
      Redemption Date, Put Right Purchase Date or Fundamental Change Repurchase
      Date.

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    Interest
      (including Contingent Interest, if any) on Securities converted after the close
      of business on a Regular Record Date but prior to the opening of business on
      the
      corresponding Interest Payment Date will be paid to the Holder of the Securities
      on each Regular Record Date but, upon conversion, the Holder must pay the
      Company the interest (including Contingent Interest, if any) which has accrued
      and will be paid on such Interest Payment Date. No such payment need be made
      with respect to Securities which will be converted after a Regular Record Date
      and prior to the corresponding Interest Payment Date after being called for
      redemption by the Company.

     

    
      	2.	
              METHOD
                OF PAYMENT

            


    

     

    The
      Company shall pay interest on this Security (except defaulted interest) to
      the
      person who is the Holder of this Security at the close of business on June
      1 or
      December 1, as the case may be, (each, a “Regular
      Record Date”)
      immediately preceding the related Interest Payment Date. The Holder must
      surrender this Security to a Paying Agent to collect payment of principal.
      The
      Company will pay principal and interest (including Contingent Interest, if
      any)
      in money of the United States that at the time of payment is legal tender for
      payment of public and private debts. The Company may pay principal and interest
      (including Contingent Interest, if any) in respect of any Certificated Security
      by check or wire payable in such money; provided,
      however,
      that a
      Holder with an aggregate principal amount in excess of $5,000,000 will be paid
      by wire transfer in immediately available funds at the election of such Holder
      if such Holder has provided wire transfer instructions to the Trustee at least
      10 Business Days prior to the Payment Date. The Company may mail an interest
      check to the Holder’s registered address. Notwithstanding the foregoing, so long
      as this Security is registered in the name of a Depositary or its nominee,
      all
      payments hereon shall be made by wire transfer of immediately available funds
      to
      the account of the Depositary or its nominee.

     

    Any
      wire
      transfer instructions received by the Trustee will remain in effect until
      revoked by the Holder.

     

    
      	3.	
              PAYING
                AGENT, REGISTRAR AND CONVERSION
                AGENT

            


    

     

    Initially,
      Union Bank of California, N.A. (the “Trustee,”
which
      term shall include any successor trustee under the Indenture hereinafter
      referred to) will act as Paying Agent, Registrar and Conversion Agent. The
      Company may change any Paying Agent, Registrar or Conversion Agent without
      notice to the Holder. The Company or any of its Subsidiaries may, subject to
      certain limitations set forth in the Indenture, act as Paying Agent or
      Registrar.

     

    
      	4.	
              INDENTURE,
                LIMITATIONS

            


    

     

    This
      Security is one of a duly authorized issue of Securities of the Company
      designated as its 2.875% Senior Subordinated Convertible Notes Due 2035 (the
      “Securities”),
      issued under an Indenture dated as of December 19, 2005 (the “Base
      Indenture”),
      as
      supplemented by the First Supplemental Indenture dated December 19, 2005
      (the “First
      Supplemental Indenture”
and
      together with the Base Indenture, the “Indenture”),
      between the Company and the Trustee. The terms of this Security include those
      stated in the Indenture and those required by or made part of the Indenture
      by
      reference to the Trust Indenture Act of 1939, as amended, as in effect on the
      date of the Indenture. This Security is subject to all such terms, and the
      Holder of this Security is referred to the Indenture and said Act for a
      statement of them.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    The
      Securities are senior subordinated unsecured obligations of the Company limited
      to $121,000,000 in aggregate principal amount at maturity. The Indenture does
      not limit the incurrence of other debt of the Company or its existing or future
      Subsidiaries, secured or unsecured.

     

    
      	5.	
              REDEMPTION
                AT THE OPTION OF THE COMPANY

            


    

     

    Prior
      to
      December 20, 2010, the Securities shall not be redeemable. On or after December
      20, 2010, the Company may, at its option, redeem the Securities for cash, as
      a
      whole at any time or from time to time in part, at the Redemption Price
      (expressed as a percentage of the principal amount) set forth below if redeemed
      during the periods described below, plus accrued and unpaid cash interest,
      if
      any, and Contingent Interest, if any, up to but not including the applicable
      Redemption Date (the “Redemption
      Price”);
      provided that if the Redemption Date falls after the close of business on a
      Regular Record Date and before the related Interest Payment Date, then interest
      on the Securities payable on such Interest Payment Date will instead be payable
      to the Holders in whose names the Securities are registered at the close of
      business on such Regular Record Date. Securities or portions of Securities
      called for redemption shall be convertible by the Holder until the close of
      business on the Business Day prior to the relevant Redemption Date.

     

    
      	
              Period

            	 	
              Redemption
                Price

            	 
	
              Beginning
                on December 20, 2010 and ending December 14, 2011

            	 	 	
              100.821

            	
              %

            
	
              Beginning
                on December 15, 2011 and ending December 14, 2012

            	 	 	
              100.411

            	
              %

            
	
              Beginning
                on December 15, 2012 and thereafter

            	 	 	
              100.000

            	
              %

            


    

     

    
      	6.	
              NOTICE
                OF REDEMPTION

            


    

     

    Notice
      of
      redemption, as set forth in Section 3.03 of the First Supplemental Indenture,
      will be mailed by first-class mail at least 30 days but not more than 60 days
      before a Redemption Date to each Holder of Securities to be redeemed at its
      registered address. Securities in denominations larger than $1,000 may be
      redeemed in part, but only in whole multiples of $1,000. On and after the
      Redemption Date, subject to the deposit with the Paying Agent of funds
      sufficient to pay the Redemption Price, such Securities or portions of them
      called for redemption will cease to be outstanding, whether or not the Security
      is delivered to the Paying Agent, and the rights of the Holder in respect
      thereof shall cease (other than the right to receive the Redemption
      Price).

     

    
      	
              7.

            	
              PURCHASE
                OF SECURITIES AT OPTION OF HOLDER UPON A FUNDAMENTAL CHANGE
                

            


    

     

    At
      the
      option of the Holder and subject to the terms and conditions of the Indenture,
      the Company shall become obligated to purchase for cash, subject to certain
      exceptions described in the Indenture all or any part specified by the Holder
      (so long as the principal amount of such part is $1,000 or an integral multiple
      of $1,000) of the Securities held by such Holder on a date specified by the
      Company that is no earlier than 15 days and no later than 30 days after the
      date
      of the Fundamental Change Company Notice, at a purchase price equal to 100%
      of
      the principal amount thereof together with unpaid interest, if any, and
      Contingent Interest, if any, accrued to, but excluding, the Fundamental Change
      Repurchase Date. The Holder shall have the right to withdraw any Fundamental
      Change Repurchase Notice (in whole or in a portion thereof that is $1,000 or
      an
      integral multiple of $1,000) at any time prior to the close of business on
      the
      fifth Business Day prior to the Fundamental Change Repurchase Date by delivering
      a written notice of withdrawal to the Paying Agent in accordance with the terms
      of the Indenture.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	8.	
              PURCHASE
                OF SECURITIES AT OPTION OF HOLDER ON SPECIFIED DATES
                

            


    

     

    At
      the
      option of the Holder and subject to the terms and conditions of the Indenture,
      the Company shall become obligated to purchase for cash all or any part
      specified by the Holder (so long as the principal amount of such part is $1,000
      or an integral multiple of $1,000) of the Securities held by such Holder on
      the
      applicable Put Right Purchase Date at the applicable Put Right Purchase Price.
      The Holder shall have the right to withdraw any Put Right Purchase Notice (in
      whole or in a portion thereof that is $1,000 or an integral multiple of $1,000)
      at any time prior to the close of business on the Business Day prior to the
      Put
      Right Purchase Date by delivering a written notice of withdrawal to the Paying
      Agent in accordance with the terms of the Indenture.

     

    
      	9.	
              CONVERSION

            


    

     

    Subject
      to and upon compliance with the provisions of the Indenture and upon the
      occurrence of the events specified in Section 4.01 of the First
      Supplemental Indenture, a Holder may surrender for conversion any Security
      that
      is $1,000 principal amount or integral multiples thereof. In lieu of receiving
      shares of the Company’s Common Stock, a Holder will receive, for each $1,000
      principal amount of Securities surrendered for conversion:

     

    	·      	
            cash
              in an amount equal to the lesser of (1) $1,000 and (2) the Conversion
              Value, as defined in the Indenture; and

          


     

    	·      	
            if
              the Conversion Value is greater than $1,000, a number of shares of
              the
              Company’s Common Stock (the “Remaining
              Shares”)
              equal to the sum of the Daily Share Amounts, as defined in the Indenture,
              for each of the 10 consecutive Trading Days in the Conversion Reference
              Period, subject to the Company’s right to deliver cash in lieu of all or a
              portion of such Remaining Shares as described in the
              Indenture.

          


     

    No
      fractional share of Common Stock shall be issued upon conversion of a Security.
      Instead, the Company shall pay a cash adjustment as provided in the
      Indenture.

     

    
      	10.	
              SUBORDINATION

            


    

     

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

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    
      	11.	
              DENOMINATIONS,
                TRANSFER, EXCHANGE

            


    

     

    The
      Securities are in registered form, without coupons, in denominations of $1,000
      principal amount and integral multiples of $1,000 principal amount. A Holder
      may
      register the transfer of or exchange Securities in accordance with the
      Indenture. The Registrar may require a Holder, among other things, to furnish
      appropriate endorsements and transfer documents and to pay any taxes or other
      governmental charges that may be imposed in relation thereto by law or permitted
      by the Indenture.

     

    
      	12.	
              PERSONS
                DEEMED OWNERS

            


    

     

    The
      Holder of a Security may be treated as the owner of it for all
      purposes.

     

    
      	13.	
              UNCLAIMED
                MONEY

            


    

     

    If
      money
      for the payment of principal or interest (including Contingent Interest, if
      any)
      remains unclaimed for two years, the Trustee and any Paying Agent will pay
      the
      money back to the Company at its written request, subject to applicable
      unclaimed property law and the provisions of the Indenture. After that, Holders
      entitled to money must look to the Company for payment as general creditors
      unless an applicable abandoned property law designates another
      person.

     

    
      	14.	
              AMENDMENT,
                SUPPLEMENT AND WAIVER

            


    

     

    Subject
      to certain exceptions, the Indenture or the Securities may be amended or
      supplemented with the consent of the Holders of at least a majority in aggregate
      principal amount of the Securities then outstanding, and an existing Default
      or
      Event of Default and its consequence or compliance with any provision of the
      Indenture or the Securities may be waived in a particular instance with the
      consent of the Holders of a majority in aggregate principal amount of the
      Securities then outstanding. Without the consent of or notice to any Holder,
      the
      Company and the Trustee may amend or supplement the Indenture or the Securities
      to, among other things, cure any ambiguity, omission, defect or inconsistency
      or
      make any other change that does not adversely affect the rights of the Holders
      in any material respect. The Company may also amend the Indenture, without
      consent of the Holders or the Trustee, for the purpose of surrendering the
      Company’s right to issue shares of Common Stock upon conversion of the
      Securities.

     

    
      	15.	
              SUCCESSOR
                ENTITY

            


    

     

    When
      a
      successor corporation assumes all the obligations of its predecessor under
      the
      Securities and the Indenture in accordance with the terms and conditions of
      the
      Indenture, the predecessor corporation (except in certain circumstances
      specified in the Indenture) shall be released from those
      obligations.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    
      	16.	
              DEFAULTS
                AND REMEDIES

            


    

     

    Under
      the
      Indenture, an Event of Default shall occur if:

     

    
      	 	
              (1)

            	
              the
                Company shall fail to pay when due the Principal or any Redemption
                Price,
                Put Right Purchase Price or Fundamental Change Repurchase Price of
                any
                Security, including any Make-Whole Premium, when the same becomes
                due and
                payable whether at the Final Maturity Date, upon redemption, repurchase,
                acceleration or otherwise; or

            


    

     

    
      	 	
              (2)

            	
              the
                Company shall fail to pay an installment of cash interest or Contingent
                Interest, if any, on any of the Securities, which failure continues
                for 30
                days after the date when due; or

            


    

     

    
      	 	
              (3)

            	
              the
                Company shall fail to deliver when due all cash and shares of Common
                Stock
                deliverable upon conversion of the Securities, which failure continues
                for
                15 days; or

            


    

     

    
      	 	
              (4)

            	
              the
                Company shall fail to perform or observe any other term, covenant
                or
                agreement contained in the Securities or the Indenture upon the Company’s
                receipt of a Notice of Default, and fails to cure such default (or
                obtain
                a waiver thereof) within 30 days after receipt of the Notice of Default;
                or

            


    

     

    
      	 	
              (5)

            	
              default
                in the payment of principal when due or resulting in acceleration
                of other
                Indebtedness of the Company or any significant Subsidiaries for borrowed
                money where the aggregate principal amount with respect to which
                the
                default or acceleration has occurred exceeds $10,000,000 and such
                acceleration has not been rescinded or annulled or such Indebtedness
                repaid within a period of 30 days after receipt of a Notice of Default,
                provided that if any such default is cured, waived, rescinded or
                annulled,
                then the Event of Default by reason thereof would be deemed not to
                have
                occurred; or 

            


    

     

    
      	 	
              (6)

            	
              the
                Company fails to provide a Fundamental Change Company Notice in accordance
                with Section 3.08 of the First Supplemental Indenture;
                or

            


    

     

    
      	 	
              (7)

            	
              the
                Company pursuant to or within the meaning of any Bankruptcy
                Law:

            


    

     

    
      	 	
              (A)

            	
              commences
                as a debtor a voluntary case or proceeding;
                or

            


    

     

    
      	 	
              (B)

            	
              consents
                to the entry of an order for relief against it in an involuntary
                case or
                proceeding or the commencement of any case against it;
                or

            


    

     

    
      	 	
              (C)

            	
              consents
                to the appointment of a Receiver of it or for all or substantially
                all of
                its property; or

            


    

     

    
      	 	
              (D)

            	
              makes
                a general assignment for the benefit of its creditors;
                

            


    

     

    
      	 	
              (E)

            	
              files
                a petition in bankruptcy or answer or consent seeking reorganization
                or
                relief; or

            


    

     

    
      	 	
              (F)

            	
              consents
                to the filing of such a petition or the appointment of or taking
                possession by a Receiver; or

            


    

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    
      	 	
              (8)

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

            


    

     

    
      	 	
              (A)

            	
              grants
                relief against the Company in an involuntary case or proceeding or
                adjudicates the Company insolvent or
                bankrupt;

            


    

     

    
      	 	
              (B)

            	
              appoints
                a Receiver of the Company or for all or substantially all of the
                property
                of the Company; or

            


    

     

    
      	 	
              (C)

            	
              orders
                the winding up or liquidation of the Company; and in each case the
                order
                or decree remains unstayed and in effect for 60 consecutive
                days.

            


    

     

    The
      term
“Bankruptcy
      Law”
means
      Title 11 of the United States Code (or any successor thereto) or any similar
      federal or state law for the relief of debtors. The term “Receiver”
means
      any receiver, trustee, assignee, liquidator, sequestrator or similar official
      under any Bankruptcy Law.

     

    Notwithstanding
      the above, no Event of Default under clauses (4) or (5) above shall occur until
      the Trustee notifies the Company in writing, or the Holders of at least 25%
      in
      aggregate principal amount of the Securities then outstanding notify the Company
      and the Trustee in writing, of the Default (a “Notice
      of Default”),
      and
      the Company does not cure the Default within the time specified in clause (4)
      or
      (5), as applicable, after receipt of such notice.

     

    If
      an
      Event of Default (other than an Event of Default specified in clause (7) or
      (8)
      above) occurs and is continuing with respect to the Company, the Trustee may,
      by
      notice to the Company, or the Holders of at least 25% in aggregate principal
      amount of the Securities then outstanding may, by notice to the Company and
      the
      Trustee, declare the principal amount and accrued and unpaid interest, if any,
      and accrued and unpaid Contingent Interest, if any, through the date of
      declaration on all the Securities to be immediately due and payable. Upon such
      a
      declaration, such principal amount and such accrued and unpaid interest, if
      any,
      and such accrued and unpaid Contingent Interest, if any, shall be due and
      payable immediately. If an Event of Default specified in clauses (7) or (8)
      occurs in respect of the Company and is continuing, the principal amount and
      accrued but unpaid interest, if any, and accrued and unpaid Contingent Interest,
      if any, on all the Securities shall become and be immediately due and payable
      without any declaration or other act on the part of the Trustee or any Holders
      of Securities. The Holders of a majority in aggregate principal amount of the
      Securities then outstanding by notice to the Trustee may rescind an acceleration
      and its consequences if (a) all existing Events of Default, other than the
      nonpayment of the principal of the Securities which have become due solely
      by
      such declaration of acceleration, have been cured or waived; (b) to the extent
      the payment of such interest is lawful, interest (calculated at the rate per
      annum borne by the Securities) on overdue installments of interest and overdue
      principal, which has become due otherwise than by such declaration of
      acceleration, has been paid; (c) the rescission would not conflict with any
      judgment or decree of a court of competent jurisdiction; and (d) all payments
      due to the Trustee and any predecessor Trustee under the Indenture have been
      made. No such rescission shall affect any subsequent Default or impair any
      right
      consequent thereto. Holders may not enforce the Indenture or the Securities
      except as provided in the Indenture. The Trustee may require indemnity
      satisfactory to it before it enforces the Indenture or the Securities. Subject
      to certain limitations, Holders of a majority in aggregate principal amount
      of
      the Securities then outstanding 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 or interest) if and so long
      as
      it determines that withholding notice is in their interests. The Company is
      required to file periodic certificates with the Trustee as to the Company’s
      compliance with the Indenture and knowledge or status of any
      Default.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    
      	17.	
              TRUSTEE
                DEALINGS WITH THE COMPANY

            


    

     

    Union
      Bank of California, N.A., the initial Trustee under the Indenture, in its
      individual or any other capacity, may make loans to, accept deposits from and
      perform services for the Company or an Affiliate of the Company, and may
      otherwise deal with the Company or an Affiliate of the Company, as if it were
      not the Trustee.

     

    
      	18.	
              NO
                RECOURSE AGAINST OTHERS

            


    

     

    A
      director, officer, employee or shareholder, as such, of the Company shall not
      have any liability for any obligations of the Company under the Securities
      or
      the Indenture nor for any claim based on, in respect of or by reason of such
      obligations or their creation. The Holder of this Security by accepting this
      Security waives and releases all such liability. The waiver and release are
      part
      of the consideration for the issuance of this Security.

     

    
      	19.	
              AUTHENTICATION

            


    

     

    This
      Security shall not be valid until the Trustee or an authenticating agent
      manually signs the certificate of authentication on the other side of this
      Security.

     

    
      	20.	
              ABBREVIATIONS
                AND DEFINITIONS

            


    

     

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

     

    All
      terms
      defined in the Indenture and used in this Security but not specifically defined
      herein are defined in the Indenture and are used herein as so
      defined.

     

    
      	21.	
              INDENTURE
                TO CONTROL; GOVERNING LAW

            


    

     

    In
      the
      case of any conflict between the provisions of this Security and the Indenture,
      the provisions of the Indenture shall control. This Security and the Indenture
      shall be governed by, and construed in accordance with, the laws of the State
      of
      New York.

     

    The
      Company will furnish to any Holder, upon written request and without charge,
      a
      copy of the Indenture. Requests may be made to: Ceradyne, Inc. 3169 Red Hill
      Avenue, Costa Mesa, California 92626, Attention: Chief Financial Officer,
      Facsimile No.: (714) 556-0361, Telephone No.: (714) 549-0421.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

     

    To
      assign
      this Security, fill in the form below:

     

    I
      or we
      assign and transfer this Security to

     

     

    
      
        

      

    

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

     

     

      
        

      

    

     

      
        

      

    

     

      
        

      

    

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

     

     

    
      
        

      

    

    Agent
      to
      transfer this Security on the books of the Company. The agent may substitute
      another to act for him or her.

     

    
      
        
          	
                  Date:

                	   
                  	
                  Your
                    Signature:

                	  

	 	 	 	(Sign exactly as your name
                  appears
	 	 	 	on
                  the other side of this Security)
	 	 	 	 


        

        *Signature
          guaranteed by:

      

    

     

    By:_____________________________

     

     

     

    
      

    

    
      	*	
              The
                signature must be guaranteed by an institution which is a member
                of one of
                the following recognized signature guaranty programs: (i) the Securities
                Transfer Agent Medallion Program (STAMP); (ii) the New York Stock
                Exchange
                Medallion Program (MSP); (iii) the Stock Exchange Medallion Program
                (SEMP); or (iv) such other guaranty program acceptable to the
                Trustee.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    CONVERSION
      NOTICE

     

    To
      convert this Security, check the box:

     

     ̈ 

     

    To
      convert only part of this Security, state the principal amount to be converted
      (must be $1,000 or a integral multiple of $1,000): $____________.

     

    If
      you
      want the cash paid to another person or the stock certificate made out in
      another person’s name, fill in the form below:

     

     

    
      
        

      

    

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

     

     

      
        

      

    

     

      
        

      

    

     

      
        

      

    

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

     

     

    
      
        
          	
                  Date:

                	   
                  	
                  Your
                    Signature:

                	  

	 	 	 	(Sign exactly as your name
                  appears
	 	 	 	on
                  the other side of this Security)
	 	 	 	 


        

        *Signature
          guaranteed by:

      

    

     

    By:_________________________

     

     

    
      

    

    
      	*	
              The
                signature must be guaranteed by an institution which is a member
                of one of
                the following recognized signature guaranty programs: (i) the Securities
                Transfer Agent Medallion Program (STAMP); (ii) the New York Stock
                Exchange
                Medallion Program (MSP); (iii) the Stock Exchange Medallion Program
                (SEMP); or (iv) such other guaranty program acceptable to the
                Trustee.

            


    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    FUNDAMENTAL
      CHANGE REPURCHASE NOTICE

     

    
      	To:	
              Ceradyne,
                Inc.

            


    

     

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

     

    
      
        
          	
                  Date:

                	   
                  	
                  Your
                    Signature:

                	  

	 	 	 	 


        

      

    

    Signature(s)
      must be guaranteed by a qualified guarantor institution with membership in
      an
      approved signature guarantee program pursuant to Rule 17Ad-15 under the
      Securities Exchange Act of 1934.

     

     

      
        

      

    

    Signature
      Guaranty

     

    Principal
      amount to be redeemed (in an integral multiple of $1,000, if less than
      all):

     

     

      
        

      

    

    NOTICE:
      The signature to the foregoing Election must correspond to the Name as written
      upon the face of this Security in every particular, without any alteration
      or
      change whatsoever.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    OPTION
      TO ELECT PURCHASE

    ON
      SPECIFIED DATES

     

    To: Ceradyne,
      Inc.

     

    The
      undersigned hereby requests and instructs Ceradyne, Inc. to purchase the entire
      principal amount of this Security, or the portion thereof (which is $1,000
      or an
      integral multiple thereof) below designated, on ________________ in accordance
      with the terms of the Indenture referred to in this Security at the Put Right
      Purchase Price for the next occurring Put Right Purchase Date to the registered
      Holder hereof.

    
       

      
        
          	
                  Date:

                	   
                  	
                  Your
                    Signature:

                	  

	 	 	 	 


        

      

    

    Signature(s)
      must be guaranteed by a qualified guarantor institution with membership in
      an
      approved signature guarantee program pursuant to Rule 17Ad-15 under the
      Securities Exchange Act of 1934.

     

     

    
      
        

      

    

    Signature
      Guaranty

     

    Principal
      amount to be redeemed (in an integral multiple of $1,000, if less than
      all):

     

     

      
        

      

    

    NOTICE:
      The signature to the foregoing Election must correspond to the Name as written
      upon the face of this Security in every particular, without any alteration
      or
      change whatsoever.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
      OF EXCHANGES OF SECURITIES

     

    The
      following exchanges, purchase, redemptions, purchases or conversions of a part
      of this Global Security have been made:

     

    
      	
              Date
                of Exchange

            	 	
              Amount
                of Decrease in Principal Amount of this Security

            	 	
              Amount
                of Increase in Principal Amount of this Security

            	 	
              Principal
                Amount of this Global Security following Each Increase or
                Decrease

            	 	
              Signature
                of Authorized

              Officer
                of Trustee