China Security & Surveillance Technology, Inc.: Exhibit 4.1 - Prepared by
TNT Filings Inc.





  






 


  
  Exhibit 4.1

  Execution Version



 


CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.


as the Company

 


CHINA SAFETECH HOLDINGS LIMITED



 


as the Guarantor


and


THE BANK OF NEW YORK MELLON,

a New York banking corporation

as the Trustee


__________________________


INDENTURE


Dated September 2, 2009


__________________________


Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible
Notes 




 



 



TABLE OF CONTENTS 

	 	 	 	Page 	 
	 	 	 	  	 
	 	 	 	  	 
	  ARTICLE 1  	 
	 	 	 	  	 
	  DEFINITIONS  	 
	 	 	 	  	 
	Section 1.01. Definitions
    	 	 	1 	 
	Section 1.02. Other Definitions 	 	 	28 	 
	Section 1.03. Rules of
    Construction. 	 	 	29 	 
	 	 	 	  	 
	  ARTICLE 2  	 
	 	 	 	  	 
	ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
    AND EXCHANGE OF NOTES 	 
	 	 	 	  	 
	Section 2.01. Designation
    Amount and Issue of Notes 	 	 	30 	 
	Section 2.02. Form of Notes 	 	 	30 	 
	Section 2.03. Date and
    Denomination of Notes; Payment of Interest 	 	 	32 	 
	Section 2.04. Execution of Notes 	 	 	32 	 
	Section 2.05. Exchange and
    Registration of Transfer of Notes; Restrictions on Transfer 	 	 	33 	 
	Section 2.06. Mutilated, Destroyed, Lost or
    Stolen Notes 	 	 	35 	 
	Section 2.07. Temporary Notes
    	 	 	36 	 
	Section 2.08. Cancellation of Notes 	 	 	36 	 
	Section 2.09. Defaulted
    Interest 	 	 	36 	 
	Section 2.10. CUSIP Numbers 	 	 	37 	 
	 	 	 	  	 
	  ARTICLE 3  	 
	 	 	 	  	 
	  REDEMPTION AND REPURCHASE OF NOTES  	 
	 	 	 	  	 
	Section 3.01. Redemption 	 	 	37 	 
	Section 3.02. Offer to Purchase 	 	 	38 	 
	 	 	 	  	 
	  ARTICLE 4  	 
	  	 	 	 	 	  	 
	  PARTICULAR COVENANTS OF THE COMPANY  	 
	 	 	 	  	 
	Section 4.01. Payment of
    Principal 	 	 	40 	 
	Section 4.02. Maintenance of Office or Agency
    	 	 	41 	 
	Section 4.03. Provisions as
    to Paying Agent 	 	 	41 	 
	Section 4.04. Existence 	 	 	42 	 
	Section 4.05. Maintenance of
    Properties 	 	 	42 	 
	Section 4.06. Payment of Taxes and Other Claims
    	 	 	43 	 
	Section 4.07. Stay, Extension
    and Usury Laws 	 	 	43 	 
	Section 4.08. Payments for Consent 	 	 	43 	 


i 




 

	Section 4.09. Incurrence of
    Additional Debt; Financial Covenants 	 	44 	 
	Section 4.10. Restricted Payments 		44 	
	Section 4.11. Liens 	 	
      46 
	 
	Section 4.12. Asset Sales 		46 	
	Section 4.13. Restrictions on
    Distributions from Subsidiaries 	 	47 	 
	Section 4.14. Affiliate Transactions 		49 	
	Section 4.15. Issuance or
    Sale of Capital Stock of Subsidiaries 	 	50 	 
	Section 4.16. Maintenance of Consolidated
    Tangible Net Worth 		50 	
	Section 4.17. Repurchase at
    the Option of Holders Following a Change of Control 	 	51 	 
	Section 4.18. Future Guarantors 		51 	
	Section 4.19. Business
    Activities 	 	52 	 
	Section 4.20. Sale and Leaseback Transactions
    		52 	
	Section 4.21. Reserved 	 	52 	 
	Section 4.22. Maintenance of Insurance 		52 	
	Section 4.23. Repurchase Upon
    Termination of Trading 	 	52 	 
	Section 4.24. Government Approvals and
    Licenses; Compliance with Law 		52 	
	Section 4.25. [RESERVED] 	 	53 	 
	Section 4.26. Notes to Rank Senior 		53 	
	Section 4.27. Compliance
    Certificate 	 	53 	 
	Section 4.28. Calculation of Original Issue
    Discount 		53 	
			  	
	  ARTICLE 5  	
			  	
	  SUCCESSORS  	
			  	
	Section 5.01. Merger,
    Consolidation and Sale of Assets 	 	54 	 
	Section 5.02. Successor Corporation Substituted
    		56 	
			  	
	  ARTICLE 6  	
			  	
	REMEDIES OF THE TRUSTEE AND
    NOTEHOLDERS ON AN EVENT OF DEFAULT 	
			  	
	Section 6.01. Events of
    Default 	 	56 	 
	Section 6.02. Payments of Notes on Default;
    Suit Therefor 		59 	
	Section 6.03. Application of
    Monies Collected by Trustee 	 	61 	 
	Section 6.04. Proceedings by Noteholder 		61 	
	Section 6.05. Proceedings by
    Trustee 	 	62 	 
	Section 6.06. Remedies Cumulative and
    Continuing 		62 	
	Section 6.07. Direction of
    Proceedings and Waiver of Defaults by Majority of Noteholders 	 	62 	 
	Section 6.08. Notice of Default 		63 	
	Section 6.09. Undertaking to
    Pay Costs 	 	63 	 
			  	
	  ARTICLE 7  	
			  	
	  THE TRUSTEE  	


ii 




 

	Section 7.01. Duties and
    Responsibilities of Trustee 	 	64 	 
	Section 7.02. Rights of Trustee 		65 	
	Section 7.03. No
    Responsibility for Recitals, Etc 	 	68 	 
	Section 7.04. Trustee, Paying Agents,
    Conversion Agents, Depositary or Registrar May Own Notes 		68 	
	Section 7.05. Monies to Be
    Held in Trust 	 	68 	 
	Section 7.06. Compensation and Expenses of
    Trustee 		68 	
	Section 7.07. Eligibility of
    Trustee 	 	69 	 
	Section 7.08. Resignation or Removal of Trustee
    		69 	
	Section 7.09. Acceptance by
    Successor Trustee 	 	71 	 
	Section 7.10. Succession by Merger 		71 	
	Section 7.11. Trustee's
    Application for Instructions from the Company 	 	72 	 
	Section 7.12. Reserved 		72 	
	Section 7.13. Certain
    Provisions 	 	72 	 
			  	
	  ARTICLE 8  	
			  	
	  SUPPLEMENTAL INDENTURES  	
			  	
	Section 8.01. Supplemental
    Indentures Without Consent of Noteholders 	 	72 	 
	Section 8.02. Supplemental Indenture with
    Consent of Noteholders 		74 	
	Section 8.03. Effect of
    Supplemental Indenture 	 	75 	 
	Section 8.04. Notation on Notes 		75 	
	Section 8.05. Evidence of
    Compliance of Supplemental Indenture to Be Furnished to Trustee 	 	76 	 
			  	
	  ARTICLE 9  	
			  	
	  GUARANTEES  	
			  	
	Section 9.01. Guarantee 	 	76 	 
	Section 9.02. Limitation on Guarantor Liability
    		78 	
	Section 9.03. Execution and
    Delivery of Guarantee 	 	78 	 
	Section 9.04. Guarantors May Consolidate, etc.,
    on Certain Terms 		79 	
	Section 9.05. Releases
    Following Merger, Consolidation or Sale of Assets, Etc 	 	79 	 
			  	
	  ARTICLE 10  	
			  	
	  [RESERVED]  	
			  	
			  	
	  ARTICLE 11  	
			  	
	  SATISFACTION AND DISCHARGE OF
    INDENTURE  	
			  	
	Section 11.01. Discharge of
    Indenture 	 	80 	 
	Section 11.02. Deposited Monies to Be Held in
    Trust by Trustee 		81 	
	Section 11.03. Paying Agent
    to Repay Monies Held 	 	81 	 


iii 




 

	Section 11.04. Return of Unclaimed Monies
    	 	81 	 
	Section 11.05. Reinstatement 	 	82 	 
	 	 	  	 
	  ARTICLE 12  	 
	 	 	  	 
	  THE NOTEHOLDERS  	 
	 	 	  	 
	Section 12.01. Action by Noteholders 	 	82 	 
	Section 12.02. Proof of Execution by Noteholders 	 	82 	 
	Section 12.03. Who Are Deemed Absolute
    Owners 	 	82 	 
	Section 12.04. Company-owned Notes Disregarded 	 	83 	 
	Section 12.05. Revocation of Consents;
    Future Holders Bound 	 	83 	 
	 	 	  	 
	  ARTICLE 13  	 
	 	 	  	 
	  MEETINGS OF NOTEHOLDERS  	 
	 	 	  	 
	Section 13.01. Purpose of Meetings 	 	84 	 
	Section 13.02. Call of Meetings by Company or Noteholders
    	 	84 	 
	Section 13.03. Qualifications for Voting
    	 	84 	 
	Section 13.04. Regulations 	 	85 	 
	Section 13.05. Voting 	 	85 	 
	Section 13.06. No Delay of Rights by Meeting 	 	86 	 
	 	 	  	 
	  ARTICLE 14  	 
	 	 	  	 
	  CONVERSION OF NOTES  	 
	 	 	  	 
	Section 14.01. Right to Convert 	 	86 	 
	Section 14.02. Exercise of Conversion Right; Issuance of
    Common Stock on Conversion; No Adjustment for Interest or Dividends 	 	86 	 
	Section 14.03. Cash Payments in Lieu of
    Fractional Shares 	 	88 	 
	Section 14.04. Conversion Rate 	 	88 	 
	Section 14.05. Adjustment of Conversion
    Rate 	 	88 	 
	Section 14.06. Effect of Reclassification, Consolidation,
    Merger or Sale 	 	97 	 
	Section 14.07. [RESERVED] 	 	98 	 
	Section 14.08. Taxes on Shares Issued 	 	98 	 
	Section 14.09. Reservation of Shares;
    Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing
    of Common Stock 	 	99 	 
	Section 14.10. Responsibility of Trustee 	 	99 	 
	Section 14.11. Notice to Holders Prior to
    Certain Actions 	 	100 	 
	Section 14.12. Shareholder Rights Plans 	 	101 	 
	 	 	  	 
	  ARTICLE 15  	 
	 	 	  	 
	  MISCELLANEOUS PROVISIONS  	 
	 	 	  	 
	Section 15.01. Provisions Binding on
    Company's Successors 	 	101 	 


iv 




 

	Section 15.02. Official Acts by Successor
    Corporation 	 	101 	 
	Section 15.03. Addresses for Notices, Etc 	 	101 	 
	Section 15.04. Governing Law 	 	102 	 
	Section 15.05. Evidence of Compliance with Conditions
    Precedent; Certificates to Trustee 	 	102 	 
	Section 15.06. Legal Holidays 	 	103 	 
	Section 15.07. Company Responsible for Making Calculations
    	 	103 	 
	Section 15.08. Benefits of Indenture 	 	103 	 
	Section 15.09. Table of Contents, Headings, Etc. 	 	103 	 
	Section 15.10. Authenticating Agent 	 	104 	 
	Section 15.11. Indenture and Notes Solely Corporate
    Obligations 	 	104 	 
	Section 15.12. Execution in Counterparts
    	 	105 	 
	Section 15.13. Severability 	 	105 	 
	Section 15.14. Consent to Jurisdiction;
    Consent to Service of Process 	 	105 	 
	Section 15.15. Currency Indemnity. 	 	106 	 
	Section 15.16. U.S.A. Patriot Act. 	 	106 	 


 

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


v 



INDENTURE


INDENTURE dated September 2, 2009, between CHINA SECURITY & SURVEILLANCE
TECHNOLOGY, INC, a Delaware corporation (hereinafter called the “Company”),
the Guarantor listed on the signature pages hereto, and THE BANK OF NEW YORK
MELLON, a New York banking corporation, as trustee hereunder (hereinafter called
the “Trustee”).


WITNESSETH:


WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its Tranche A Zero Coupon Guaranteed Senior Unsecured
Convertible Notes (hereinafter called the “Notes”), in an
aggregate principal amount not to exceed $50,000,000 and, to provide the terms
and conditions upon which the Notes are to be authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this
Indenture; and


WHEREAS, for its lawful corporate purposes, each Guarantor has
duly authorized the issue of its Guarantee of the Notes and, to provide the
terms and conditions upon which the Guarantee is to be issued and delivered,
each Guarantor has duly authorized the execution and delivery of this Indenture;
and


WHEREAS, the Notes, the certificate of authentication to be borne
by the Notes, a form of notation of Guarantee, a form of Assignment, a form of
Purchase Notice and a form of Conversion Notice to be borne by the Notes are to
be substantially in the forms hereinafter provided for; and


WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute this Indenture a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized,


NOW, THEREFORE, THIS INDENTURE WITNESSETH:


That in order to declare the terms and conditions upon which the
Notes are, and are to be, authenticated, issued and delivered, and in
consideration of the premises and of the purchase and acceptance of the Notes by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Notes (except as otherwise provided below), as follows:


ARTICLE 1



DEFINITIONS


Section 1.01.   Definitions.
 


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




“Additional Assets” means:


(a) any Property (other than cash, Cash Equivalent and
securities) to be owned by the Company or any of its Subsidiaries and used in a
Related Business; or 


(b) Capital Stock of a Person that becomes a Subsidiary of the
Company as a result of the acquisition of such Capital Stock by the Company or
another Subsidiary of the Company from any Person other than the Company or an
Affiliate of the Company; provided, however, that, in the case of clause
(b), such Subsidiary is primarily engaged in a Related Business.


“Affiliate” of any specified Person means:


(a) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person, or 


(b) any other Person who is a director or officer of:


(1) such specified Person, 


(2) any Subsidiary of such specified Person, or


(3) any Person described in clause (a) above.  


For the purposes of this definition, “control,” when used with
respect to any Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.  For purposes of
Section 4.12 and Section 4.14 and the definition of “Additional Assets” only,
“Affiliate” shall also mean any Beneficial Owner of shares representing 5% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase such Voting Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any such
Beneficial Owner pursuant to the first sentence hereof. Notwithstanding the
foregoing, in no event shall Citadel Equity Fund Ltd. or any of its Affiliates
be considered an Affiliate of the Company.


 “Amended Investor Rights Agreement” means the
second amended and restated investor rights agreement dated the Issue Date by
and among the Company, the Guarantor, the Operating Subsidiary, and Citadel
Equity Fund Ltd.


“Applicable Procedures” means, with respect to any
transfer, repurchase or exchange of or for beneficial interests in any Global
Note, the rules and procedures of DTC that apply to such transfer, repurchase or
exchange.


2




“Asset Sale” means any sale, lease, transfer,
issuance or other disposition (or series of related sales, leases, transfers,
issuances or dispositions) by the Company or any of its Subsidiaries, including
any disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a “disposition”), of 



(a) any shares of Capital Stock of a Subsidiary of the Company
(other than directors' qualifying shares), or


(b) any other Property of the Company or any of its Subsidiaries
outside of the ordinary course of business of the Company or such Subsidiary,



other than, in the case of clause (a) or (b) above, 


(1) any disposition by a Subsidiary of the Company to the Company
or by the Company or one of its Subsidiaries to a Wholly Owned Subsidiary,



(2) any disposition that constitutes a Permitted Investment or
Restricted Payment permitted by Section 4.10,


(3) any disposition effected in compliance with the first
paragraph of Section 5.01, 


(4) any disposition of inventory of the Company or any of its
Subsidiaries in the ordinary course of business, or inventory or other property
that in the reasonable judgment of the Company have become uneconomic, obsolete
or worn out,


(5) the sale or discount of accounts receivable in connection
with the compromise or collection thereof in the ordinary course of business,
and


(6) any disposition in a single transaction or a series of
related transactions of assets for aggregate consideration of less than $5.0
million. 


“Attributable Debt” in respect of a Sale and
Leaseback Transaction means, at any date of determination, 


(a) if such Sale and Leaseback Transaction is a Capital Lease
Obligation, the amount of Debt represented thereby according to the definition
of “Capital Lease Obligations,” and 


(b) in all other instances, the present value (discounted at the
weighted average interest rate borne by the Notes, compounded annually in the
most recently completed twelve months) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended).


“Average Life” means, as of any date of
determination, with respect to any Debt or Preferred Stock, the quotient
obtained by dividing:


(a) the sum of the product of the numbers of years (rounded to
the nearest one-twelfth of one year) from the date of determination to the dates
of each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment by 


3




(b) the sum of all such payments.


“Bankruptcy Law” means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors, or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.


“Beneficial Owner” has the meaning assigned to such
term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular “person” (as such term is
used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to
have beneficial ownership of all securities that such “person” has the right to
acquire by conversion or exercise of other securities, whether such right is
currently exercisable or is exercisable only upon the occurrence of a subsequent
condition or passage of time.  The terms “Beneficially Owns” and “Beneficially
Owned” have a corresponding meaning.


“Board of Directors” means (1) in respect of a
corporation, the board of directors of the corporation, or (except if used in
the definition of “Change of Control”) any duly authorized committee thereof;
and (2) in respect of any other Person, the board or committee of that Person
serving an equivalent function.


“Board Resolution” of a Person means a copy of a
resolution (in form and substance satisfactory to the Trustee) certified by the
secretary or an assistant secretary (or individual performing comparable duties)
of the applicable Person to have been duly adopted by the Board of Directors of
such Person and to be in full force and effect on the date of such
certification, and delivered to the Trustee.


“Business Day” means any day other than a Legal
Holiday.


“Capital Expenditures” means expenditures (whether
paid in cash or other consideration or accrued as a liability and including that
portion of Capital Lease Obligations which is capitalized on the consolidated
balance sheet of the Company and its Subsidiaries) by the Company and its
Subsidiaries that, in conformity with GAAP, are included in “additions to
property, plant and equipment” or as capitalized internally developed software
or comparable items reflected in the consolidated balance sheet of the Company
and its Subsidiaries.


“Capital Lease Obligations” means any obligation
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP; and the amount of Debt represented by such
obligation shall be the capitalized amount of such obligations determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.  For purposes of Section 4.11 a Capital Lease Obligation shall be
deemed secured by a Lien on the Property being leased.


“Capital Stock” means, with respect to any Person,
any shares or other equivalents (however designated) of any class of corporate
stock or partnership interests or any other participations, rights, warrants,
options or other interests in the nature of an equity interest in such Person,
including Preferred Stock, but excluding any debt security convertible or
exchangeable into such equity interest.


4




“Capital Stock Sale Proceeds” means the aggregate
cash proceeds received by the Company from the issuance or sale (other than to a
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any such Subsidiary for the benefit of their
employees) by the Company of its Capital Stock (other than Disqualified Stock)
after the Issue Date, net of attorneys' fees, accountants' fees, underwriters'
or placement agents' fees, discounts or commissions and brokerage, consultant
and other fees actually incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.


“Cash Equivalents” means any of the following:  


(a) Investments in U.S. Government Securities maturing within 365
days of the date of acquisition thereof; 


(b) Investments in time deposit accounts, certificates of deposit
and money market deposits maturing within 90 days of the date of acquisition
thereof issued by a bank or trust company organized under the laws of the United
States of America or any state thereof having capital, surplus and undivided
profits aggregating in excess of $500 million and whose long-term debt is rated
“A-3” or “A-” or higher according to Moody's or S&P (or such similar equivalent
rating by at least one “nationally recognized statistical rating organization”
(as defined in Rule 436 under the Securities Act)); 


(c) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (a) entered into
with:


(1) a bank meeting the qualifications described in clause (b)
above, or 


(2) any primary government securities dealer reporting to the
Market Reports Division of the Federal Reserve Bank of New York; 


(d) Investments in commercial paper, maturing not more than 90
days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America with a rating at the time as of which any Investment
therein is made of “P-1” (or higher) according to Moody's or “A-1” (or higher)
according to S&P (or such similar equivalent rating by at least one “nationally
recognized statistical rating organization” (as defined in Rule 436 under the
Securities Act));


(e) direct obligations (or certificates representing an ownership
interest in such obligations) of any state of the United States of America
(including any agency or instrumentality thereof) for the payment of which the
full faith and credit of such state are pledged and which are not callable or
redeemable at the issuer's option, provided that:


(1) the long-term debt of such state is rated “A-3” or “A-” or
higher according to Moody's or S&P (or such similar equivalent rating by at
least one “nationally recognized statistical rating organization” (as defined in
Rule 436 under the Securities Act)), and


5




(2) such obligations mature within 180 days of the date of
acquisition thereof; and


(f) time deposit accounts, certificates of deposit and money
market deposits with (i) Bank of China, Industrial and Commercial Bank of China,
China Construction Bank and China Merchants Bank or (ii) any other bank or trust
company organized under the laws of the PRC whose long-term debt is rated as
high or higher than any of those banks.


 “Change of Control” means the occurrence of any of
the following events: 


 (a) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the Property of
the Company and its Subsidiaries, considered as a whole (other than a
disposition of such Property as an entirety or virtually as an entirety to a
Wholly Owned Subsidiary or one or more Permitted Holders), shall have occurred,
or the Company merges, consolidates or amalgamates with or into any other Person
(other than one or more Permitted Holders) or any other Person (other than one
or more Permitted Holders) merges, consolidates or amalgamates with or into the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is reclassified into or exchanged for cash,
securities or other Property, other than any such transaction where: 


(1) the outstanding Voting Stock of the Company is reclassified
into or exchanged for other Voting Stock of the Company or for Voting Stock of
the Surviving Person, and 


(2) the holders of the Voting Stock of the Company immediately
prior to such transaction own, directly or indirectly, not less than a majority
of the Voting Stock of the Company or the Surviving Person immediately after
such transaction and in substantially the same proportion as before the
transaction; or


(b) 


Continuing Directors cease for any reason to constitute a
majority of the Board of Directors then in office; or 


(c) 


the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.


“Clearstream” means Clearstream Banking, S.A. (or
any successor securities clearing agency).

 


 “Closing Sale Price” of the shares of Common Stock
on any date means (i) if Common Stock is primarily traded on a securities
exchange, the last sale price on such securities exchange on the applicable day,
or if no sale occurred on such day, the mean between the closing “bid” and
“asked” prices on such day, (ii) if the principal market for Common Stock is in
the over-the-counter market, the closing sale price on the applicable day as
published by The NASDAQ Stock Market, Inc. or similar organization, or if such
price is not so published on such day, the mean between the closing “bid” and
“asked” prices, if available, on such day, which prices may be obtained from any
reputable pricing service, broker or dealer, and (iii) if neither clause (i) nor
clause (ii) is applicable, the Fair Market Value as determined in good faith by
the Board of Directors of the Company or an Independent Financial Advisor, as
applicable. The Closing Sale Price shall be determined based on regular market
hours without reference to extended after hours trading or pre-market trading.


6




“Code” means the U.S. Internal Revenue Code of
1986, as amended.


“Commission” means the U.S. Securities and Exchange
Commission.


“Commodity Price Protection Agreement” means, in
respect of a Person, any forward contract, commodity swap agreement, commodity
option agreement or other similar agreement or arrangement designed to protect
such Person against fluctuations in commodity prices.


“Common Stock” means any stock of any class of the
Company which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which is not subject to redemption by the Company.  Subject
to the provisions of Section 14.06, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture (namely, the Common Stock,
par value $0.0001) or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that, if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable on conversion shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.


“Company” means the corporation named as the
“Company” in the first paragraph of this Indenture, and, subject to the
provisions of Article 5 and Section 14.06, shall include its
successors and assigns.


“Consolidated Interest Expense” means, for any
period, the total interest expense of the Company and its consolidated
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent Incurred by the Company or its Subsidiaries, without
duplication,


(a) interest expense attributable to leases constituting part of
a Sale and Leaseback Transaction and to Capital Lease Obligations, 


(b) amortization of debt discount and debt issuance cost,
including commitment fees, 


(c) capitalized interest, 


(d) non-cash interest expense, 


(e) commissions, discounts and other fees and charges owed with
respect to letters of credit and banker's acceptance financing, 


(f) net costs associated with Hedging Obligations (including
amortization of fees), 


(g) Disqualified Stock Dividends (other than dividends payable in
Capital Stock other than Disqualified Stock), 


7




(h) Preferred Stock Dividends (other than dividends payable in
Capital Stock other than Disqualified Stock) of Subsidiaries, 


(i) interest accruing on any Debt of any other Person to the
extent such Debt is guaranteed by the Company or any of its Subsidiaries, and



(j) the cash contributions to any employee stock ownership plan
or similar trust, if any and to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the Company) in
connection with Debt Incurred by such plan or trust.


“Consolidated Net Income” means, for any period,
the net income (loss) of the Company and its consolidated Subsidiaries; 
provided, however, that there shall not be included in such Consolidated Net
Income:


(a) any net income (loss) of any Person (other than the Company)
if such Person is not a Subsidiary of the Company, except that:


(1) subject to the exclusions contained in clauses (c), (d) and
(e) below, equity of the Company and its consolidated Subsidiaries in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash distributed by such Person during
such period to the Company or any of its Subsidiaries as a dividend or other
distribution (subject, in the case of a dividend or other distribution to such
Subsidiary, to the limitations contained in clause (b) below), and 


(2) the equity of the Company and its consolidated Subsidiaries
in a net loss of any such Person for such period shall be included in
determining such Consolidated Net Income, 


(b) any net income (loss) of any Subsidiary of the Company if
such Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions, directly or indirectly, to
the Company, except that:


(1) subject to the exclusions contained in clauses (c), (d) and
(e) below, the equity of the Company and its consolidated Subsidiaries in the
net income of any such Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash distributed by such
Subsidiary during such period to the Company or another of its Subsidiaries as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to another Subsidiary of the Company, to the limitation contained
in this clause), and


(2) the equity of the Company and its consolidated Subsidiaries
in a net loss of any such Subsidiary for such period shall be included in
determining such Consolidated Net Income, 


(c) any gain (but not loss) realized upon the sale or other
disposition of any Property of the Company or any of its consolidated
Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is
not sold or otherwise disposed of in the ordinary course of business,


8




(d) any extraordinary gain or loss, and


(e) the cumulative effect of a change in accounting principles.  


“Consolidated Net Worth” means the total of the
amounts shown on the consolidated balance sheet of the Company and its
Subsidiaries as of the end of the most recent Fiscal Quarter of the Company
ending prior to the taking of any action for the purpose of which the
determination is being made, as:


(a) the par or stated value of all outstanding Capital Stock of
the Company, plus 


(b) paid-in capital or capital surplus relating to such Capital
Stock, plus 


(c) any retained earnings or earned surplus, less:


(1) any accumulated deficit, and 


(2) any amounts attributable to Disqualified Stock or any equity
security convertible into or exchangeable for Debt, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of
Capital Stock of the Company or any of its Subsidiaries, each item to be
determined in conformity with GAAP.


“Consolidated Tangible Net Worth” means, as of any
date of determination, the Consolidated Net Worth less the Intangible Assets.


“Continuing Directors” means, as of any date of
determination, any member of the Board of Directors who (a) was a member of the
Board of Directors on the date of this Indenture or (b) was nominated for
election to the Board of Directors by, or whose election was ratified with the
approval of, a majority of the Continuing Directors who were members of the
Board of Directors at the time of such nomination or election.


“Conversion Price” as of any day will equal
$100,000 divided by the Conversion Rate as of such date.


“Corporate Trust Office” shall be the address of
the Trustee specified in Section 15.03 hereof, or such other address as
to which the Trustee may give notice to the Company.


“Credit Facilities” means, with respect to the
Subsidiaries (including any Person who becomes a Subsidiary after the Issue
Date), one or more debt or commercial paper facilities with banks or other
institutional lenders in the PRC providing for revolving credit loans, term
loans, receivables or inventory financing (including through the sale of
receivables or inventory to such lenders or to special purpose, bankruptcy
remote entities formed to borrow from such lenders against such receivables or
inventory) or trade letters of credit, in each case together with any
Refinancings thereof by any lender or syndicate of lenders. 


 “Currency Exchange Protection Agreement” means, in
respect of a Person, any foreign exchange contract, currency swap agreement,
currency option or other similar agreement or arrangement designed to protect
such Person against fluctuations in currency exchange rates. 


9




“Custodian” means, with respect to the Notes
issuable or issued in global form, the Person specified in Section 2.02(e)
as Custodian with respect to the Notes, and any and all successors thereto
appointed as custodian hereunder and having become such pursuant to the
applicable provisions of this Indenture.


“Debt” means, with respect to any Person on any
date of determination (without duplication):


(a) the principal of and premium (if any) in respect of:


(1) debt of such Person for money borrowed, and


(2) debt evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;



(b) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale and Leaseback Transactions entered into by
such Person; 


(c) all obligations of such Person representing the deferred
purchase price of Property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);



(d) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (a) through (c) above) entered
into in the ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the third Business Day following receipt by
such Person of a demand for reimbursement following payment on the letter of
credit); 


(e) the amount of all obligations of such Person with respect to
the Repayment of any Disqualified Stock or, with respect to any Subsidiary of
such Person, any Preferred Stock (but excluding, in each case, any accrued
dividends); 


(f) all obligations of the type referred to in clauses (a)
through (e) above of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, guarantor or otherwise, including by means of any
guarantee; 


(g) all obligations of the type referred to in clauses (a)
through (f) above of other Persons secured by any Lien on any Property of such
Person (whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the Fair Market Value of such
Property and the amount of the obligation so secured; and 


(h) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.  


10




The amount of Debt of any Person at any date shall be the
outstanding balance, or the accreted value of such Debt in the case of Debt
issued with original issue discount, at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date.  The amount of Debt represented by a Hedging Obligation shall be
equal to the notional amount of such Hedging Obligation. 


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


“Definitive Note” means a certificated Note
registered in the name of the holder thereof and issued in accordance with 
Section 2.05 or 2.07 hereof, in substantially the form of Exhibit
A hereto except that such Note shall not bear the Global Note Legend and
shall not have the “Schedule of Exchanges of Interests in the Global Note”
attached thereto.


“Depositary” means with respect to the Notes
issuable or issued in whole or in part in the form of one or more Global Notes,
the Person designated as Depositary by the Company pursuant to the Indenture and
its successors.  


“Disqualified Stock” means any Capital Stock of the
Company or any of its Subsidiaries that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable, in either
case at the option of the holder thereof) or otherwise:


(a) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise, 


(b) is or may become redeemable or repurchaseable at the option
of the holder thereof (except that any Capital Stock that would constitute
Disqualified Stock solely because the holders of such Capital Stock have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.10 hereof),
in whole or in part, or 


(c) is convertible or exchangeable at the option of the holder
thereof for Debt or Disqualified Stock,


on or prior to, in the case of clause (a), (b) or (c), the first
anniversary of the Final Redemption Date.


“Disqualified Stock Dividends” means all dividends
with respect to Disqualified Stock of the Company held by Persons other than a
Wholly Owned Subsidiary.  The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income tax rate (expressed as a decimal number between 1 and
0) then applicable to the Company.


 “DTC” means The Depositary Trust Company.


11




“EBITDA” means, for any period, an amount equal to,
for the Company and its consolidated Subsidiaries:


(a) the sum of Consolidated Net Income for such period, plus the
following to the extent reducing Consolidated Net Income for such period:  


(1) the provision for taxes based on income or profits or
utilized in computing net loss,


(2) Consolidated Interest Expense,


(3) depreciation, 


(4) amortization of intangibles, and 


(5) any other non-cash items (other than any such non-cash item
to the extent that it represents an accrual of, or reserve for, cash
expenditures in any future period or amortization of a prepaid cash expense paid
in a period prior to the period that is subject to calculation), minus 



(b) all non-cash items increasing Consolidated Net Income for
such period.  


Notwithstanding the foregoing clause (a), the provision for taxes
and the depreciation, amortization and non-cash items of a Subsidiary of the
Company shall be added to Consolidated Net Income to compute EBITDA only to the
extent (and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to such
Subsidiary or its shareholders. 


“Euroclear” means Euroclear Bank S.A./N.V., as
operator of the Euroclear system (or any successor securities clearing agency).


 


 “Exchange Act” means the U.S. Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
as in effect from time to time.


“Ex-Dividend Time” means, with respect to any
distribution on shares of Common Stock, the first date on which the shares of
Common Stock trade regularly on the principal securities market on which the
shares of Common Stock are then traded without the right to receive such
distribution.


“Fair Market Value” means, with respect to any
Property at the time of determination, the price that could be negotiated in an
arm's-length free market transaction, for cash, between a willing seller and a
willing buyer, neither of whom is under undue pressure or compulsion to complete
the transaction.  Fair Market Value shall be determined, except as otherwise
provided,


12




(a) if such Property has a Fair Market Value equal to or less
than $1.0 million, by any Officer of the Company,


(b) if such Property has a Fair Market Value in excess of $1.0
million but less than or equal to $5.0 million, by a majority of the Board of
Directors and evidenced by a Board Resolution delivered to the Trustee, or



(c) if such Property has a Fair Market Value in excess of $5.0
million, by an Independent Financial Advisor and evidenced by a written opinion
from such Independent Financial Advisor dated within 30 days of the relevant
transaction delivered to the Trustee. 


“Final Redemption Date” means September 2, 2012.


“Fiscal Quarter” means each of the three month
periods ending on March 31, June 30, September 30 and December 31.


“Foreign Subsidiary” means any Subsidiary of the
Company which is not organized under the laws of the United States of America or
any State thereof or the District of Columbia.


“GAAP” means United States generally accepted
accounting principles as in effect on the Issue Date, including those set forth
in:


(a) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, 


(b) the statements and pronouncements of the Financial Accounting
Standards Board, 


(c) such other statements by such other entity as approved by a
significant segment of the accounting profession, and 


(d) the rules and regulations of the Commission governing the
inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission. 


All ratios and computations based on GAAP contained in this
Indenture will be computed in conformity with GAAP.


“Global Note Legend” means the legend set forth on
all Global Notes issued under this Indenture.


“Global Notes” means the global Notes in the form
of Exhibit A hereto issued in accordance with Article 2 hereof.


“Governmental Approval” means any authorization of
or by, consent of, approval of, license from, ruling of, permit from, tariff by,
rate of, certification by, exemption from, filing with (except any filing
relating to the perfection of security interests), variance from, claim of,
order from, judgment from, decree of, publication to or by, notice to,
declaration of or with or registration by or with any Governmental Authority,
whether tacit or express.


13




“Governmental Authority” means any federal, state,
national, provincial, municipal, local, territorial or other government
department, ministry (including local counterparts thereof), commission, board,
agency, regulatory authority, instrumentality, judicial or administrative body,
domestic or foreign.


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


(a) 


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


(b) 


entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof (in whole or in part); 


provided, however, that the term
“guarantee” shall not include:


(1) endorsements for collection or deposit in the ordinary course
of business, or 


(2) a contractual commitment by one Person to invest in another
Person for so long as such Investment is reasonably expected to constitute a
Permitted Investment under clause (a), (b) or (c) of the definition of
“Permitted Investment.”  


The term “guarantee” used as a verb has a corresponding meaning.
 The term “guarantor” shall mean any Person guaranteeing any obligation.


“Guarantee” means the Guarantee of the Notes by
each of the Guarantors pursuant to Article 9 and in the form of the
Guarantee attached as Exhibit B and any additional Guarantee of the Notes
to be executed by any Subsidiary of the Company pursuant to Section 4.18.


“Guarantor” means Safetech and any other Subsidiary
of the Company that becomes a Guarantor pursuant to Section 4.18 or who
otherwise executes and delivers a supplemental indenture (in form satisfactory
to the Trustee) to the Trustee providing for a Guarantee; provided that
any Person constituting a Guarantor as described above shall cease to constitute
a Guarantor when its respective Guarantee is released in accordance with the
terms of this Indenture.


“Hedging Obligation” of any Person means any
obligation of such Person pursuant to any Interest Rate Agreement, Currency
Exchange Protection Agreement, Commodity Price Protection Agreement or any other
similar agreement or arrangement


“Incur” means, with respect to any Debt or other
obligation of any Person, to create, issue, incur (by merger, conversion,
exchange or otherwise), extend, assume, guarantee or become liable in respect of
such Debt or other obligation or the recording, as required pursuant to GAAP or
otherwise, of any such Debt or obligation on the balance sheet of such Person
(and “Incurrence” and “Incurred” shall have meanings correlative to the
foregoing); provided, however, that a change in GAAP that results in an
obligation of such Person that exists at such time, and is not theretofore
classified as Debt, becoming Debt shall not be deemed an Incurrence of such
Debt; and provided further, however, that any Debt or other
obligations of a Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary.


14




“Indenture” means this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented.


“Independent Financial Advisor” means an investment
banking firm of international standing or any third party appraiser of
international standing, provided that such firm or appraiser is not an
Affiliate of the Company. 


“Intangible Assets” shall mean as of the
date of any determination thereof the total amount of all assets of the Company
and its Subsidiaries classified as goodwill, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over book value of related
assets and such other assets as are properly classified as “intangible assets”
in accordance with GAAP.


“Interest” means, when used with reference to the
Notes, any interest payable under the terms of the Notes. 


“Interest Rate Agreement” means, for any Person,
any interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement or other similar agreement designed to protect against
fluctuations in interest rates.


“Investment” by any Person means any direct or
indirect loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person), advance or other extension of credit or capital contribution (by means
of transfers of cash or other Property to others or payments for Property or
services for the account or use of others, or otherwise) to, or Incurrence of a
guarantee of any obligation of, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Debt issued by, any
other Person.  


In determining the amount of any Investment made by transfer of
any Property other than cash, such Property shall be valued at its Fair Market
Value at the time of such Investment.


“Issue Date” means September 2, 2009.


 “Legal Holiday” means a Saturday, a Sunday or a
day on which banking institutions in the City of New York, the PRC, London,
England, the city in which the Corporate Trust Office of the Trustee is located
or any other place of payment on the Notes are authorized by law, regulation or
executive order to remain closed.  


15




“Leverage Ratio” means the ratio of:


(a) the outstanding Debt of the Company and its Subsidiaries on a
consolidated basis, to 


(b) EBITDA for the most recently completed four Fiscal Quarters;
provided, that, 


(1) if:


(A) 


since the beginning of such period the Company or any of its
Subsidiaries has Incurred any Debt that remains outstanding or Repaid any Debt,
or 


(B)


the transaction giving rise to the need to calculate the Leverage
Ratio is an Incurrence or Repayment of Debt, 


Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Incurrence or Repayment
as if such Debt was Incurred or Repaid on the first day of such period, 
provided that, in the event of any such Repayment of Debt, EBITDA for such
period shall be calculated as if the Company or such Subsidiary had not earned
any interest income actually earned during such period in respect of the funds
used to Repay such Debt, and provided further that the amount of Debt
Incurred under revolving credit facilities shall be deemed to be the average
daily balance of such Debt during such period (or any shorter period in which
such facilities are in effect) and


(2) if 


(A) since the beginning of such period, the Company or any of its
Subsidiaries shall have made any Asset Sale or an Investment (by merger or
otherwise) in any Subsidiary of the Company (or any Person that becomes such a
Subsidiary) or an acquisition of Property, 


(B) the transaction giving rise to the need to calculate the
Leverage Ratio is such an Asset Sale, Investment or acquisition, or 


(C) since the beginning of such period any Person (that
subsequently became a Subsidiary of the Company or was merged with or into the
Company or any of its Subsidiaries since the beginning of such period) shall
have made such an Asset Sale, Investment or acquisition, 


EBITDA for such period shall be calculated after giving pro
forma effect to such Asset Sale, Investment or acquisition as if such Asset
Sale, Investment or acquisition occurred on the first day of such period.


If any Debt bears a floating rate of interest and is being given
pro forma effect, the interest expense on such Debt shall be calculated
as if the base interest rate in effect for such floating rate of interest on the
date of determination had been the applicable base interest rate for the entire
period (taking into account any Interest Rate Agreement applicable to such Debt
if such Interest Rate Agreement has a remaining term in excess of 12 months).
 In the event the Capital Stock of any Subsidiary of the Company is sold during
the period, the Company shall be deemed, for purposes of clause (1) above, to
have Repaid during such period the Debt of such Subsidiary to the extent the
Company and its continuing Subsidiaries are no longer liable for such Debt after
such sale.


16




“Lien” means, with respect to any Property of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such Property (including any
Capital Lease Obligation, conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing or any
Sale and Leaseback Transaction). 


“Material Adverse Effect” means a material adverse
effect on (a) the property, business, operations, financial condition,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of any such Person to perform its payment obligations or
any of its material obligations under any of the Transaction Documents to which
such Person is a party, (c) the validity or enforceability of any of the
Transaction Documents, (d) the material rights and remedies of the Trustee,
under any of the Transaction Documents or (e) the timely payment of any
principal of any of the Notes.


“Moody's” means Moody's Investors Service, Inc. or
any successor to the rating agency business thereof.


“Net Available Cash” from any Asset Sale means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Debt or other
obligations relating to the Property that is the subject of such Asset Sale or
received in any other non-cash form), in each case net of: 


(a) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all U.S. federal, state, national,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, 


(b) all payments made on or in respect of any Debt that is
secured by any Property subject to such Asset Sale, in accordance with the terms
of any Lien upon such Property, or which must by its terms, or in order to
obtain a necessary consent to such Asset Sale, or by applicable law, be repaid
out of the proceeds from such Asset Sale, 


(c) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Sale, and 


(d) the deduction of appropriate amounts provided by the seller
as a reserve, in accordance with GAAP, against any liabilities associated with
the Property disposed of in such Asset Sale and retained by the Company or any
of its Subsidiaries after such Asset Sale.


“Note Obligations” means the Notes, the Guarantees
and all other obligations of any obligor under this Indenture, the Notes and the
Guarantees. 


17




“Notes Purchase Agreement” means the Notes purchase
agreement dated August 18, 2009 by and among the Company, the Guarantor, the
Operating Subsidiary and Citadel Equity Fund Ltd.


“Notes” is defined in the preamble.


“Noteholder” or “holder” as applied
to any Note, or other similar terms (but excluding the term “Beneficial
Holder”), means any Person in whose name at the time a particular Note is
registered on the Registrar's books.


“Notice Date” means the date of mailing of the
notice pursuant to Section 3.02(b).


“Obligations” means all obligations for principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any Debt.


“Officer” means, with respect to the Company, its
Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer
or any Vice President (whether or not designated by a number or numbers or word
or words added before or after the title “Vice President”) and the Treasurer or
any Assistant Treasurer, or the Secretary or Assistant Secretary.


“Officers' Certificate” means a certificate, in
form and substance satisfactory to the Trustee, signed by two Officers of the
Company, at least one of whom shall be the principal executive officer or
principal financial officer of the Company, and which certificate meets the
requirements of Section 15.05 hereof and is delivered to the Trustee.


“Operating Subsidiary” means China Security &
Surveillance Technology (PRC), Inc., a limited liability company organized and
existing under the laws of the PRC and a wholly-owned Subsidiary of the Company.


“Opinion of Counsel” means a written opinion, in
form and substance satisfactory to the Trustee, from legal counsel who is
acceptable to the Trustee and which meets the requirements of Section 15.05
hereof. 


“Outstanding”, when used with reference to Notes
and subject to the provisions of Section 12.04, means, as of any
particular time, all Notes authenticated and delivered by the Trustee under this
Indenture, except:


(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;


(b) Notes, or portions thereof, (i) for the redemption of which
monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which shall
have been otherwise discharged in accordance with Article 11;


(c) Notes in lieu of which, or in substitution for which, other
Notes shall have been authenticated and delivered pursuant to the terms of 
Section 2.06; and


18




(d) Notes converted into Common Stock pursuant to Article 14
and Notes deemed not outstanding pursuant to Article 3.


“Permitted Holders” means Mr. Tu Guo Shen, a
resident of Hangzhou in the PRC, and his estate, spouse, ancestors and lineal
descendants, the legal representatives of any of the foregoing and the trustees
of any bona fide trusts of which the foregoing are the sole beneficiaries or the
grantors, or any Person of which the foregoing “beneficially owns” (as defined
in Rule 13d-3 under the Exchange Act), individually or collectively with any of
the foregoing, at least 50% of the total voting power of the Voting Stock of
such Person.


“Permitted Investment” means any Investment by the
Company or any of its Subsidiaries in: 


(a)


the Company or any of its Subsidiaries engaged in a Related
Business;


(b) 


any Person that will, upon the making of such Investment, become
a Subsidiary of the Company, provided that the primary business of such
Subsidiary is a Related Business; 


(c) 


any Person if as a result of such Investment such Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its Property to, the Company or a Subsidiary of the Company,
provided that such Person's primary business is a Related Business;


(d) 


cash and Cash Equivalents; 


(e) 


receivables owing to the Company or any of its Subsidiaries, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the Company
or such Subsidiary deems reasonable under the circumstances; 


(f) 


payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses under
GAAP and that are made in the ordinary course of business;


(g) 


stock, obligations or other securities received in settlement of
debts created in the ordinary course of business and owing to the Company or one
of its Subsidiaries or in satisfaction of judgments;  


(h) 


any Person to the extent such Investment represents the non-cash
portion of the consideration received in connection with (A) an Asset Sale
consummated in compliance with Section 4.12 or (B) any disposition of
Property not constituting an Asset Sale;


(i) 


Hedging Obligations by the Company or any Guarantor that are
otherwise permitted to be incurred under this Indenture, and which were entered
into for financial management of interest rates, foreign currency exchange rates
or commodity prices and are directly related to transactions entered into by
such Person in the ordinary course of its business, and not for speculative
purposes; and


19




(j) 


other Investments made for Fair Market Value that do not exceed
10% of the aggregate amount of Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the Fiscal Quarter
after the Issue Date to the end of the most recent Fiscal Quarter ending prior
to the date of such Investment (or if the aggregate amount of Consolidated Net
Income for such period shall be a deficit, minus 100% of such deficit).


“Permitted Liens” means:


(a) 


Liens in favor of the Company or the Guarantors;


(b) 


Liens securing, or created for the benefit of securing, the Notes
and the Guarantees;


(c) 


Liens securing Debt of a PRC Subsidiary under Credit Facilities,
provided that any such Lien is limited to the Property of such PRC
Subsidiary;


(d)


leases, licenses, subleases and sublicenses of assets (including,
without limitation, real property and intellectual property rights) which do not
materially interfere with the ordinary conduct of the business of the Company or
any of the Subsidiaries;


(e)


Liens for taxes, assessments or governmental charges or levies on
the Property of the Company or any of its Subsidiaries if the same shall not at
the time be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate
provision that shall be required in conformity with GAAP shall have been made
therefor; 


(f) 


Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens, on the Property of the Company or any
of its Subsidiaries arising in the ordinary course of business and securing
payment of obligations that are not more than 60 days past due or are being
contested in good faith and by appropriate proceedings;


(g) 


Liens on the Property of the Company or any of its Subsidiaries
Incurred in the ordinary course of business to secure performance of obligations
with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like nature and
Incurred in a manner consistent with industry practice, in each case which are
not Incurred in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of Property
from vendors and others and which do not in the aggregate impair in any material
respect the use of Property in the operation of the business of the Company and
its Subsidiaries taken as a whole;


(h) 


Liens on Property at the time the Company or any of its
Subsidiaries acquired such Property, including any acquisition by means of a
merger or consolidation with or into the Company or any of its Subsidiaries; 
provided, however, that any such Lien may not extend to any other Property
of the Company or any of its Subsidiaries; provided further, that such
Liens shall not have been Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Property was
acquired by the Company or any of its Subsidiaries; 


20




(i) 


Liens on the Property of a Person at the time such Person becomes
a Subsidiary of the Company; provided, however, that any such Lien may
not extend to any other Property of the Company or any other Subsidiary of the
Company that is not a direct Subsidiary of such Person; provided further, 
that any such Lien was not Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Person became a
Subsidiary of the Company; 


(j) 


pledges or deposits by the Company or any of its Subsidiaries
under workers' compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Debt) or leases to which the Company or any of
its Subsidiaries is party, or deposits to secure public or statutory obligations
of the Company, or deposits for the payment of rent, in each case Incurred in
the ordinary course of business; 


(k) 


utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character;


(l) 


Liens existing on the Issue Date not otherwise described in
clauses (a) through (k) above;


(m) 


Liens on the Property of the Company or any of its Subsidiaries
to secure any Refinancing, in whole or in part, of any Debt secured by Liens
referred to in clause (g), (h) or (i) above; provided, however, that any
such Lien shall be limited to all or part of the same Property that secured the
original Lien (together with improvements and accessions to such Property), and
the aggregate principal amount of Debt (and other obligations thereunder) that
is secured by such Lien shall not be increased to an amount greater than the sum
of:


(1) 


the outstanding principal amount, or, if greater, the committed
amount, of the Debt (and other obligations thereunder) secured by Liens
described under clause (g), (h) or (i) above, as the case may be, at the time
the original Lien became a Permitted Lien under this Indenture, and 


(2) 


an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, incurred by the Company or such Subsidiary in
connection with such Refinancing; and


(n) 


judgment Liens not giving rise to en Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment have not been finally
terminated or the period within which such proceedings may be initiated has not
expired.


 “Permitted Refinancing Debt” means any Debt that
Refinances any other Debt, including any successive Refinancings, so long as:


(a) 


such Debt is in an aggregate principal amount (or if Incurred
with original issue discount, an aggregate issue price) not in excess of the sum
of: 


21




(1) the aggregate principal amount (or if Incurred with original
issue discount, the aggregate accreted value) then outstanding of the Debt being
Refinanced, and


(2) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, related to such Refinancing, 


(b) 


the Average Life of such Debt is equal to or greater than the
Average Life of the Debt being Refinanced,


(c) 


the Stated Maturity of such Debt is no earlier than the Stated
Maturity of the Debt being Refinanced, 


(d) 


the new Debt shall not be senior in right of payment to the Debt
that is being Refinanced, and


(e) 


the new Debt, the proceeds of which are used to Refinance the
Notes or any Debt that is pari passu with or subordinate to the Notes or
a Guarantee, shall only be permitted if (A) in case the Notes are refinanced in
part or the Debt to be Refinanced is pari passu with the Notes or a
Guarantee, such new Debt, by its terms or by terms of any agreement or
instrument pursuant to which such new Debt is outstanding, is expressly made 
pari passu with, or subordinate in right of payment to, the remaining Notes
or such Guarantee, or (B) in case the Debt to be Refinanced is subordinated in
right of payment to the Notes or a Guarantee, such new Debt, by its terms or by
the terms of any agreement or instrument to which such new Debt is issued or
remains outstanding, is expressly made subordinate in right of payment to the
Notes or such Guarantee at least to the extent that the Debt to be Refinanced is
subordinated to the Notes or the Guarantee;


provided, however, that Permitted
Refinancing Debt shall not include the Debt of any Subsidiary that is not a
Guarantor, if such Debt is used to Refinance Debt of the Company or a
Subsidiary.


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


“PRC” means the People's Republic of China,
exclusive of Taiwan, Macau and Hong Kong.


“Predecessor Note” of any particular Note
means every previous Note evidencing all or a portion of the same Debt as that
evidenced by such particular Note; and any Note authenticated and delivered
under Section 2.06 in lieu of a lost, destroyed or stolen Note shall be
deemed to evidence the same Debt as the lost, destroyed or stolen Note.


“Preferred Stock” means any Capital Stock of a
Person, however designated, which entitles the holder thereof to a preference
with respect to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of any other class of Capital Stock issued by such Person.


22




“Preferred Stock Dividends” means all dividends
with respect to Preferred Stock of the Company's Subsidiaries held by Persons
other than the Company or any of its Wholly Owned Subsidiaries.  The amount of
any such dividend shall be equal to the quotient of such dividend divided by the
difference between one and the maximum statutory federal income rate (expressed
as a decimal number between 1 and 0) then applicable to the issuer of such
Preferred Stock.


“pro forma” means, with respect to any calculation
made or required to be made pursuant to the terms hereof, a calculation
performed in accordance with Article 11 of Regulation S-X promulgated under the
Securities Act, as interpreted in good faith by the Board of Directors after
consultation with the independent certified public accountants of the Company,
or otherwise a calculation made in good faith by the Board of Directors after
consultation with the independent certified public accountants of the Company,
as the case may be.


“Property” means, with respect to any Person, any
interest of such Person in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, including intellectual property rights and
Capital Stock in, and other securities of, any other Person.  For purposes of
any calculation required pursuant to this Indenture, the value of any Property
shall be its Fair Market Value.


“Refinance” means, in respect of any Debt, to
refinance, extend, renew, refund or Repay (in whole or in part), or to issue
other Debt, in exchange or replacement for (in whole or in part), such Debt.
 “Refinanced” and “Refinancing” shall have correlative meanings.


“Related Business” means the manufacturing,
distributing, installing, servicing and maintaining security, surveillance, fire
and alarm products and systems, and other products or systems in the similar
nature.


“Repay” means, in respect of any Debt, to repay,
prepay, repurchase, redeem, legally defease or otherwise retire such Debt.
“Repayment” and “Repaid” shall have correlative meanings.  For purposes of 
Section 4.12 and the definition of “Leverage Ratio,” Debt shall be
considered to have been Repaid only to the extent the related loan commitment,
if any, shall have been permanently reduced in connection therewith. 


“Repurchase Amount” means, with respect to any
Note, the aggregate Installment Redemption Amounts then remaining unpaid.


 “Responsible Officer” shall mean, when used with
respect to the Trustee, any officer within the corporate trust department of the
Trustee with direct responsibility for the administration of this Indenture.



“Restricted Payment” means:


(a) 


any dividend or distribution (whether made in cash, securities or
other Property) declared or paid on or with respect to any shares of Capital
Stock of the Company or any of its Subsidiaries (including any payment in
connection with any merger or consolidation with or into the Company or any of
its Subsidiaries), except for any dividend or distribution that is made solely
to the Company or any of its Subsidiaries (and, if such Subsidiary is not a
Wholly Owned Subsidiary, to the other shareholders of such Subsidiary on a 
pro rata basis or on a basis that results in the receipt by the Company or
any of its Subsidiaries of dividends or distributions of greater value than it
would receive on a pro rata basis) or any dividend or distribution
payable solely in shares of Capital Stock (other than Disqualified Stock) of the
Company; 


23




(b) 


the purchase, repurchase, redemption, acquisition or retirement
for value of any Capital Stock of the Company or any of its Subsidiaries (other
than from the Company or any of its Subsidiaries) or any securities exchangeable
for or convertible into any such Capital Stock, including the exercise of any
option to exchange any Capital Stock (other than for or into Capital Stock of
the Company that is not Disqualified Stock); 


(c) 


the purchase, repurchase, redemption, acquisition or retirement
for value, prior to the date for any scheduled maturity, sinking fund or
amortization or other installment payment, of any Subordinated Obligation (other
than the purchase, repurchase or other acquisition of any Subordinated
Obligation purchased in anticipation of satisfying a scheduled maturity, sinking
fund or amortization or other installment obligation, in each case due within
one year of the date of acquisition); or


(d) 


any Investment (other than Permitted Investments) in any Person.


“RMB” means the lawful currency of the PRC.


“S&P” means Standard & Poor's Ratings Services, a
division of McGraw Hill, Inc., or any successor to the rating agency business
thereof.


“Safetech” means China Safetech Holdings
Limited, a wholly-owned subsidiary of the Company, incorporated under the laws
of British Virgin Islands.


“Sale and Leaseback Transaction” means any direct
or indirect arrangement relating to Property now owned or hereafter acquired
whereby the Company or any of its Subsidiaries transfers such Property to
another Person and the Company or any of its Subsidiaries leases it from such
Person. 


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


“Senior Debt” of the Company means:


(a) 


all obligations consisting of the principal, premium, if any, and
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company
whether or not such post-filing interest is allowed in such proceeding) in
respect of:


(1) Debt of the Company for borrowed money, and


(2) Debt of the Company evidenced by notes, debentures, bonds or
other similar instruments permitted under this Indenture for the payment of
which the Company is responsible or liable; 


24




(b) 


all Capital Lease Obligations of the Company and all Attributable
Debt in respect of Sale and Leaseback Transactions entered into by the Company;



(c) 


all obligations of the Company 


(1) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, 


(2) under Hedging Obligations, or 


(3) issued or assumed as the deferred purchase price of Property
and all conditional sale obligations of the Company and all obligations under
any title retention agreement permitted under this Indenture; and


(d) 


all obligations of other Persons of the type referred to in
clauses (a), (b) and (c) for the payment of which the Company is responsible or
liable as guarantor;


 provided, however, that Senior Debt shall not include:


(A) 


Debt of the Company that is by its terms subordinate in right of
payment to the Notes, including any Subordinated Obligations;



(B) 


any Debt Incurred in violation of the provisions of this
Indenture; 


(C) 


accounts payable or any other obligations of the Company to trade
creditors created or assumed by the Company in the ordinary course of business
in connection with the obtaining of materials or services (including guarantees
thereof or instruments evidencing such liabilities); 


(D) 


any liability for U.S. federal, state, national, provincial,
local or other taxes owed or owing by the Company; 


(E) 


any obligation of the Company to any of its Subsidiaries; or


(F) 


any obligations with respect to any Capital Stock of the Company.
 


To the extent that any payment of Senior Debt (whether by or on
behalf of the Company as proceeds of security or enforcement or any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to a trustee, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law, then if such payment is
recovered by, or paid over to, such trustee, receiver or other similar party,
the Senior Debt or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not occurred.



“Senior Debt” of any Guarantor has a correlative meaning.


 “Significant Subsidiary” means any Subsidiary that
would be a “significant subsidiary” of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the Commission.


25




“Stated Maturity” means, with respect to any
installment of interest or principal on any series of Debt (including, without
limitation, a scheduled repayment or a scheduled sinking fund payment), the date
on which the payment of interest or principal was scheduled to be paid in the
original documentation governing such Debt, and will not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment hereof.


 “Subordinated Obligation” means any Debt of the
Company or any Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Notes or the
applicable Guarantee pursuant to a written agreement to that effect. 


“Subsidiary,” with respect to any Person,
means (i) any corporation of which the outstanding Capital Stock having a
majority of the votes entitled to be cast in the election of directors under
ordinary circumstances shall at the time be owned, directly or indirectly,
through one or more intermediaries, by such Person or (ii) any other Person of
which a majority of the voting interest under ordinary circumstances is at the
time, directly or indirectly, through one or more intermediaries, owned by such
Person.


“Surviving Person” means the surviving Person
formed by a merger, consolidation or amalgamation and, for purposes of 
Section 5.01, a Person to whom all or substantially all of the Property of
the Company or a Guarantor is sold, transferred, assigned, leased, conveyed or
otherwise disposed. 


“Tax Original Issue Discount” means the amount of
ordinary interest income on a Note that must be accrued as original issue
discount for United States federal income tax purposes.


“Termination of Trading” will be deemed to have
occurred if, (i) the Common Stock (or other common stock, depositary receipts,
ordinary shares or other certificates representing common equity interests into
which the Notes are then convertible) is neither listed for trading on a United
States national securities exchange, listed for trading on a United States
national or regional securities exchange nor approved for trading on any of the
NASDAQ's Capital Market, Global Market, Global Select Market or the OTC Bulletin
Board, (ii) trading in the Common Stock on any such exchange or market has been
suspended for thirty or more consecutive Trading Days, or (iii) a transaction or
event (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) occurs in connection with which all or substantially all of the
Common Stock is exchanged for, converted into, or acquired for, consideration
which is not all or substantially all common stock, depositary receipts,
ordinary shares or other certificates representing common equity interests that
are (or, upon consummation of or immediately following such transaction or
event, will be) listed on a United States national securities exchange or
approved (or, upon consummation of or immediately following such transaction or
event, will be approved) for quotation on the NASDAQ Capital Market, NASDAQ
Global Market, NASDAQ Global Select Market, the OTC Bulletin Board or any
similar United States system of automated dissemination of quotations of
securities prices.


“Tranche B Indenture” means the Indenture dated as
of even date between the Company and the Trustee, governing the terms and
conditions of the Tranche B Notes.  


26




“Tranche B Notes” means the Tranche B Zero Coupon
Guaranteed Senior Unsecured Notes issued by the Company as of even date in an
aggregate principal amount not exceeding $84,000,000. 


“Transaction Documents” means this Indenture, the
Notes, the Guarantees, Notes Purchase Agreement, the Amended Investor Rights
Agreement, certain Non-Competition Covenant and Agreement dated February 16,
2007 by and between Citadel Equity Fund Ltd. and Mr. Tu Guo Shen, or any of them
as the context may so require.


“Trading Day” shall mean (x) if the applicable
security is quoted on the NASDAQ National Market, a day on which trades may be
made thereon, (y) if the applicable security is listed or admitted for trading
on the American Stock Exchange, New York Stock Exchange or another United States
national securities exchange, a day on which such securities exchange is open
for business, or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.


“Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NASDAQ Capital Market, the American Stock Exchange, the New
York Stock Exchange, the NASDAQ Global Market, the NASDAQ Global Select Market
or the OTC Bulletin Board.


“Trading Reference VWAP” means, as of March 2, 2011,
the simple arithmetic average of the VWAPs as shown on Bloomberg for the
forty-five Trading Days preceding such date, as proportionally adjusted for any
subdivision, consolidation, reclassification or similar event of the Shares; 
provided that if the actual Trading Reference VWAP be less than $6.00, the
Trading Reference VWAP shall be deemed to be exactly $6.00.


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


“U.S. Government Securities” means direct
obligations (or certificates representing an ownership interest in such
obligations) of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of
the United States of America are pledged and which are not callable or
redeemable at the issuer's option.


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


“VWAP” means, for any date, the price per share
determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading Market, the daily volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted for
trading as reported by Bloomberg Financial L.P. through its “Volume at Price”
functions (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02
p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the OTC Bulletin Board; or (c) if the Common
Stock is not then quoted for trading on the OTC Bulletin Board and if prices for
the Common Stock are then reported in the “Pink Sheets” published by Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the average of the highest closing bid price and lowest
closing ask price of any of the market makers for such security as reported, and
in each of the foregoing clauses ignoring any block trade (which for purposes of
this definition means any transfer of more than 100,000 shares). If the VWAP
cannot be calculated for such security on such date on any of the foregoing
bases, the VWAP of such security on such date shall be the fair market value as
mutually determined by the Company and the Noteholders of at least a majority in
aggregate principal amount of the Notes then outstanding.


27




“Wholly Owned Subsidiary” means, at any time, a
Subsidiary all the Voting Stock of which (except directors' qualifying shares)
is at such time owned, directly or indirectly, by the Company and its other
Wholly Owned Subsidiaries.


Section 1.02.   Other Definitions.

	
     
	Defined in
	
    Term
	Section
	
    "Adjustment Event"
	14.05(m)
	
    "Affiliate Transaction"
	4.14
	
    "Agent Members"
	2.02(c)
	
    "Allocable Excess Proceeds"
	4.12
	
    "Asset Sale Offer"
	4.12
	
    "Authentication Order"
	2.04
	
    "Benefited Party"
	9.01
	
    "Change of Control Offer"
	4.17
	
    "Conversion Date"
	14.02
	
    "Conversion Notice"
	14.02
	
    "Conversion Rate"
	14.04
	
    "Current Market Price"
	14.05
	
    "Determination Date"
	14.05(m)
	
    "Event of Default"
	6.01
	
    "Excess Proceeds"
	4.12
	
    "Expiration Time"
	14.05(f)
	
    "Future Guarantor"
	9.03
	
    "Installment Redemption Amount"
	3.01(a)
	
    "Installment Redemption Date"
	3.01(a)
	
    "Non-electing share"
	14.06
	
    "Offer Amount"
	3.02(b)
	
    "Offer Period"
	3.02(c)
	
    "Offer to Purchase"
	3.02(a)
	
    "Paying Agent"
	4.02
	
    "Purchase Date"
	3.02(c)
	
    "Purchase Price"
	3.02(b)
	
    "Purchased Shares"
	14.05(f)


	
    "Record Date"
	14.05(i)
	
    "Redemption Date"
	3.01
	
    "Redemption Amount"
	3.01
	
    "Registrar"
	4.02
	
    "Securities"
	14.05(d)
	
    "Security Register"
	4.02
	
    "Termination of Trading Offer"
	4.23
	
    "Trading Day"
	14.05(i)
	
    "Tranche A Voluntary Redemption"
	3.01(b)
	
    "Tranche B Voluntary Redemption"
	3.01(b)
	
    "Trigger Event"
	14.05(d)
	
    "Voluntary Redemption"
	3.01(b)
	
    "Voluntary Redemption Notice"
	3.01(b)



 


28




 


Section 1.03.   Rules of Construction.


(a)


Unless the context otherwise requires:


(i)


a term has the meaning assigned to it;


(ii)


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


(iii)


“or” is not exclusive;


(iv)


words in the singular include the plural, and in the plural
include the singular;


(v)


all references in this instrument to “Articles,” “Sections” and
other subdivisions are to the designated Articles, Sections and subdivisions of
this instrument as originally executed;


(vi)


the words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.


(vii)


“including” means “including without limitation;”


(viii)


provisions apply to successive events and transactions; 



(ix)


“$” means the lawful currency of the United States of America;
and


(x)


references to sections of or rules under the Securities Act or
the Exchange Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the Commission from time to time thereunder.


29




ARTICLE 2



ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES


Section 2.01.   Designation Amount and
Issue of Notes.  


The Notes shall be designated as “Tranche A Zero Coupon
Guaranteed Senior Unsecured Convertible Notes”.  Notes not to exceed the
aggregate principal amount of $50,000,000 (except pursuant to Sections 2.05
and 2.06 hereof) upon the execution of this Indenture, or from time to
time thereafter, may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Notes to or upon the written order of the Company, signed by its Chairman of the
Board, Chief Executive Officer, President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title “Vice President”), the Treasurer or any Assistant Treasurer or the
Secretary or Assistant Secretary, without any further action by the Company
hereunder.  


Section 2.02.   Form of Notes.
 


(a)


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


(b)


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


(c)


So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, or otherwise contemplated
by Section 2.05(a), all of the Notes will be represented by one or more
Notes in global form registered in the name of the Depositary or the nominee of
the Depositary.  The transfer and exchange of beneficial interests in any such
Global Note shall be effected through the Depositary in accordance with this
Indenture and the applicable procedures of the Depositary.  Except as provided
in Section 2.05(a), beneficial owners of a Global Note shall not be
entitled to have certificates registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and
will not be considered holders of such Global Note.  The Company has initially
appointed DTC as the Depositary. Each Global Note initially shall be registered
in the name of a nominee for the Depositary and be delivered to the Trustee, as
custodian for the Depositary or its nominee. Interests in the Global Note may be
held by any member of, or participants in, the Depositary, including Euroclear
and Clearstream (collectively, the “Agent Members”). Agent Members
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depositary, or the Trustee as its custodian, the Paying
Agent or any agent of any of them as the absolute owner of such Global Note for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee, the Paying Agent or any agent of any of them,
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Global Note.  The Holder of a Global Note may grant
proxies and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Notes.


30




(d)


Any Global Note shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect redemptions, repurchases,
conversions, transfers or exchanges permitted hereby.  Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon instructions
given by the holder of such Notes in accordance with this Indenture.  Payment of
principal of, premium, if any, and Interest on any Global Note shall be made to
the holder of such Note.


(e)


This Section 2.02(e) shall apply only to Global Notes
deposited with the Trustee, as custodian for the Depositary.  Participants shall
have no rights under this Indenture or any Global Note with respect to any
Global Note held on their behalf by the Depositary or by the Trustee as
custodian for the Depositary, and the Depositary shall be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of such Global Note for all purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Participants, the Applicable Procedures or the operation
of customary practices of the Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Note.


The Company shall exchange Global Notes for Definitive Notes if:
(1) at any time DTC or any alternative clearing agency on behalf of which the
Notes evidenced by the Global Note may be held is closed for business for a
continuous period of 14 days (other than reason of holidays, statutory or
otherwise) or announces an intention permanently to cease business or does in
fact do so, and, in either case, the Company shall not have appointed a
successor Depositary within 90 days after the Company receives such notice or
becomes aware of such ineligibility, or (2) upon written request of a holder or
the Trustee if a Default or Event of Default shall have occurred and be
continuing.  


Upon the occurrence of any of the events set forth in clauses (1)
or (2) of the immediately preceding paragraph, the Company shall execute, and,
upon receipt of an Authentication Order in accordance with Section 2.04
hereof, the Trustee shall authenticate and deliver, Definitive Notes, in
authorized denominations, in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.


31




Upon the exchange of a Global Note for Definitive Notes, such
Global Note shall be cancelled by the Trustee or an agent of the Company or the
Trustee.  Definitive Notes issued in exchange for a Global Note pursuant to this
Section shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its Participants or its
Applicable Procedures, shall instruct the Trustee or an agent of the Company or
the Trustee in writing.  The Trustee or such agent shall deliver such Definitive
Notes to or as directed by the Persons in whose names such Definitive Notes are
so registered or to the Depositary.


Section 2.03.   Date and Denomination of
Notes;   


The Notes shall be issuable in registered form without coupons in
denominations of $100,000 principal amount and integral multiples of $1,000 in
excess thereof. Each Note shall be dated the date of its authentication.  The
Notes shall not bear any interest except for Default Interest, if any.


Default Interest, if any, shall be payable at the office of the
Company maintained by the Company for such purposes in the City of New York,
which shall initially be an office or agency of the Trustee.  The Company shall
pay Default Interest (i) on any Notes in certificated form by (x) check mailed
to the address of the Person entitled thereto as it appears in the Security
Register (or upon written notice, by wire transfer in immediately available
funds, if such Person is entitled to Default Interest on aggregate principal in
excess of $1 million) or (y) by transfer to an account maintained by such person
in the City of New York or (ii) on any Global Note by wire transfer of
immediately available funds to the account of the Depositary or its nominee.


Section 2.04.   Execution of Notes.
 


The Notes shall be signed in the name and on behalf of the
Company by the manual or facsimile signature of its Chairman of the Board, Chief
Executive Officer, President or any Vice President (whether or not designated by
a number or numbers or word or words added before or after the title “Vice
President”) and attested by the manual or facsimile signature of its Secretary
or any of its Assistant Secretaries or its Treasurer or any of its Assistant
Treasurers (which may be printed, engraved or otherwise reproduced thereon, by
facsimile or otherwise).  Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto upon a written order of the Company signed by an
Officer (an “Authentication Order”), manually executed by the
Trustee (or an authenticating agent appointed by the Trustee as provided by 
Section 15.10), shall be entitled to the benefits of this Indenture or be
valid or obligatory for any purpose.  Such certificate by the Trustee (or such
an authenticating agent) upon any Note executed by the Company shall be
conclusive evidence that the Note so authenticated has been duly authenticated
and delivered hereunder and that the holder is entitled to the benefits of this
Indenture.


In case any officer of the Company who shall have signed any of
the Notes shall cease to be such officer before the Notes so signed shall have
been authenticated and delivered by the Trustee, or disposed of by the Company,
such Notes nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.


32




Section 2.05.   Exchange and
Registration of Transfer of Notes; Restrictions on Transfer.


(a)


As provided herein, interests in a Global Note will be exchanged,
upon 45 days' notice by a holder of an interest in such Global Note for
Definitive Notes. Each Global Note shall be deposited with the Depositary, which
shall hold such Global Note in safe custody for the account of DTC and instruct
DTC or both of them, as the case may be, to credit the principal amounts of the
Notes represented by such Global Note to the holder's distribution account with
DTC. Each relevant Global Note shall be exchangeable in whole for an interest,
equal to the principal amount of such Global Note being exchanged, for
Definitive Notes in the same principal amount, upon request of DTC to the
Registrar, but only upon delivery by DTC, acting on behalf of the beneficial
owners of such interests, to the Registrar at its principal office in the City
of New York, of certificates substantially in the form of Exhibit C
hereto. The delivery to the Registrar of any certificate in the form referred to
above may be relied upon by the Company, the Trustee and the Registrar as
conclusive evidence that related certificates have been delivered to DTC as
contemplated by the terms of this Section.


(b)


In accordance with the terms of a Global Note and this Indenture,
the Registrar shall deliver at the cost of the Company, upon not less than 45
days' notice to the Registrar by DTC, the relevant Definitive Notes in exchange
for interests in such Global Note. For this purpose, the Registrar is authorized
and it shall (A) authenticate each such Definitive Note and (B) deliver each
such Definitive Note to or to the order of DTC, in exchange for interests in
such Global Note. The Registrar shall promptly notify the Company upon receipt
of a request for issue of Definitive Notes the aggregate principal amount of the
relevant Global Note to be exchanged in connection therewith. The Company
undertakes to deliver to, or to the order of, the Registrar sufficient numbers
of duly executed Definitive Notes to enable the Registrar to comply with its
obligations under this Section 2.05(b). Such exchange shall be made free
of charge to the holder and the beneficial owners of the relevant Global Note
and to the holders of the Definitive Notes issued in exchange as provided above,
except that a Person receiving Definitive Notes must bear the cost of insurance,
postage, transportation and the like in the event that such Person does not
receive such Definitive Notes in person at the offices of a Registrar.
Notwithstanding the above, interests in a Global Note shall be exchangeable in
whole (but not in part) at the cost of the Company for Definitive Notes under
the conditions described in Section 2.02(e).


(c)


Upon any exchange of an interest in a Global Note for Definitive
Notes, the relevant Global Note shall be endorsed by the Trustee or the
Registrar to reflect the reduction of its principal amount by the aggregate
principal amount so exchanged. Until exchanged in full, the holder of any
interest in any Global Note shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes authenticated and delivered
hereunder. Once exchanged in full, a Global Note shall be canceled and disposed
of by the Trustee in accordance with its customary procedures and a certificate
of disposition will be sent to the Company.


33




(d)


The Trustee or the Registrar shall cause all Global Notes and
Definitive Notes delivered to it and held by it hereunder to be maintained in
safe custody in accordance with this Section.


(e)


The Security Register shall be in written form in the English
language and shall include a record of the certificate number of each Note that
has been issued, and shall show the amount of such Notes, the date of issue, all
subsequent transfers and changes in ownership in respect thereof and the names,
tax identifying numbers (if relevant to a specific holder), addresses of the
holders of the Notes and any payment instructions with respect thereto (if
different from a holder's registered address).


(f)


The Registrar shall at all reasonable times during office hours
make the Security Register available to the Trustee, the Paying Agent, the
Company and the holders of such Notes or any person authorized by the Company in
writing for inspection and for taking of copies thereof or extracts therefrom,
and at the expense of the Company, the Registrar shall deliver to such persons
all lists of holders of such Notes, their addresses, amounts of such holdings
and other details as they may request.


(g)


The Registrar shall handle all requests for the registration of
transfer, or exchange, repurchase or conversion, of Notes and receive
certificates for the Notes deposited with the transfer agent for transfer, or
exchange, repurchase or conversion, and in doing so, shall ensure that every
Note presented or surrendered for registration of transfer, or exchange,
repurchase or conversion, (if so required by the Company, the Trustee, the
Paying Agent or the Registrar) be duly endorsed by, or be accompanied by a
written instrument or instruments of transfer (in form satisfactory to the
Company and the Registrar) duly executed by the holder thereof or by such
holder's attorney duly authorized in writing.


(h)


Neither the Company nor the Trustee nor any Registrar shall be
required to exchange or register a transfer of (a) any Notes or portions thereof
surrendered for conversion pursuant to Article 14 or (b) any Notes or
portions thereof tendered for purchase pursuant to Section 3.02 (and not
withdrawn).


(i)


Until the expiration of the holding period applicable to sales
thereof under Rule 144 under the Securities Act (or any successor provision),
the Notes shall not be transferred and any certificate evidencing such Note (and
all securities issued in exchange therefor or substitution thereof, other than
Common Stock, if any, issued upon conversion thereof, which shall bear the
legend set forth in Exhibit D, if applicable) shall bear a legend set
forth in Exhibit A, unless such Note has been sold pursuant to a
registration statement that has been declared effective under the Securities Act
(and which continues to be effective at the time of such transfer), pursuant to
Rule 144 or other available exemptions from registration under the Securities
Act or any similar provision then in force, or unless otherwise agreed by the
Company in writing, with written notice thereof to the Trustee.


(j)


Any stock certificate representing Common Stock issued upon
conversion of such Note shall bear a legend substantially in the form of 
Exhibit D.


34




(k)


The Trustee and the Registrar shall be entitled to treat a
telephone, telex or facsimile communication from a person purporting to be (and
who the Trustee or the Registrar believe in good faith to be) the authorized
representative of the Company, named in a list furnished to the Trustee and the
Registrar from time to time, as sufficient instructions and authority of the
Company for the Trustee and the Registrar to act in accordance with this
Section.


(l)


Title to the Notes shall pass by delivery. However, title to
Notes issued in the form of Global Notes held through DTC shall be transferable
only in accordance with the rules and procedures of DTC, as appropriate.


Section 2.06.   Mutilated, Destroyed,
Lost or Stolen Notes.  


In case any Note shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute, and upon its written request
the Trustee or an authenticating agent appointed by the Trustee shall
authenticate and make available for delivery, a new Note, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Note, or in lieu of and in substitution for the Note so destroyed, lost or
stolen.  In every case, the applicant for a substituted Note shall furnish to
the Company, to the Trustee and, if applicable, to such authenticating agent
such security or indemnity as may be required by them to save each of them
harmless for any loss, liability, cost or expense caused by or connected with
such substitution, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company, to the Trustee and, if applicable,
to such authenticating agent evidence to their satisfaction of the destruction,
loss or theft of such Note and of the ownership thereof.


Following receipt by the Trustee or such authenticating agent, as
the case may be, of satisfactory security or indemnity and evidence, as
described in the preceding paragraph, the Trustee or such authenticating agent
may authenticate any such substituted Note and make available for delivery such
Note.  Upon the issuance of any substituted Note, the Company or the Trustee, as
the case may be, may require the payment by the holder of a sum sufficient to
cover any tax, assessment or other governmental charge that may be imposed in
relation thereto and any other expenses connected therewith.  In case any Note
which has matured or is about to mature or has been called for redemption or has
been tendered for repurchase upon a Termination of Trading (and not withdrawn)
or is to be converted into Common Stock shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Note, pay or
authorize the payment of or convert or authorize the conversion of the same
(without surrender thereof except in the case of a mutilated Note), as the case
may be, if the applicant for such payment or conversion shall furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent such
security or indemnity as may be required by them to save each of them harmless
for any loss, liability, cost or expense caused by or in connection with such
substitution, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company, the Trustee and, if applicable, any paying
agent or conversion agent evidence to their satisfaction of the destruction,
loss or theft of such Note and of the ownership thereof.


Every substitute Note issued pursuant to the provisions of this
Section by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.  If, after the delivery of such replacement Note, a
protected purchaser of the original Note in lieu of which such replacement Note
was issued presents for payment, registration or conversion of such original
Note, the Trustee shall be entitled to recover such replacement Note from the
Person to whom it was delivered or any Person taking therefrom, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Company, the Trustee and any authenticating agent in connection
therewith.


35




Section 2.07.   Temporary Notes.
 


Pending the preparation of Notes in certificated form, the
Company may execute and the Trustee or an authenticating agent appointed by the
Trustee shall, upon the written request of the Company, authenticate and deliver
temporary Notes (printed or lithographed).  Temporary Notes shall be issuable in
any authorized denomination, and substantially in the form of the Notes in
certificated form, but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company.  Every
such temporary Note shall be executed by the Company and authenticated by the
Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the Notes in
certificated form.  Without unreasonable delay, the Company will execute and
deliver to the Trustee or such authenticating agent Notes in certificated form
and thereupon any or all temporary Notes may be surrendered in exchange therefor,
at each office or agency maintained by the Company pursuant to Section 4.02
and the Trustee or such authenticating agent shall authenticate and make
available for delivery in exchange for such temporary Notes an equal aggregate
principal amount of Notes in certificated form.  Such exchange shall be made by
the Company at its own expense and without any charge therefor.  Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as Notes in
certificated form authenticated and delivered hereunder.


Section 2.08.   Cancellation of Notes.
 


All Notes surrendered for the purpose of payment, redemption,
repurchase, conversion, exchange or registration of transfer shall, if
surrendered to the Company or any paying agent or any Registrar or any
conversion agent, be surrendered to the Trustee and promptly canceled by it, or,
if surrendered to the Trustee, shall be promptly canceled by it, and no Notes
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture.  The Trustee shall dispose of such canceled Notes
in accordance with its customary procedures.  If the Company shall acquire any
of the Notes, such acquisition shall not operate as a redemption, repurchase or
satisfaction of the indebtedness represented by such Notes unless and until the
same are delivered to the Trustee for cancellation.


Section 2.09.   Defaulted Interest.
 


If the Company defaults in a payment of any Installment
Redemption Amount on the Notes, it shall pay the defaulted interest in any
lawful manner to the Persons who are holders on a subsequent special record
date, in each case at the rate provided in the Notes and in Section 4.01
hereof. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Note and the date of the proposed
payment. The Company shall fix or cause to be fixed each such special record
date and payment date. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to holders a
notice that states the special record date, the related payment date and the
amount of such defaulted interest to be paid.


36




Section 2.10.   CUSIP Numbers.
 


The Company in issuing the Notes may use CUSIP numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption or repurchases as a convenience to Noteholders; provided that
any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Notes or as contained in any notice of
a redemption or a repurchase and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such numbers.
 The Company will promptly notify the Trustee in writing of any change in the
CUSIP numbers.


ARTICLE 3



REDEMPTION AND REPURCHASE OF NOTES


Section 3.01.   Redemption 
.  


(a)


Redemption in Installments.  Unless
previously redeemed or converted or purchased and cancelled, the Company shall
redeem the Notes in installments on the dates (each an “Installment
Redemption Date”) and, for each US$100,000 principal amount of the
Notes, in the amounts (each an “Installment Redemption Amount”)
set forth below:

	
    
    Installment Redemption Date
	
    
    Installment Redemption Amount (US$), 

    
    for each US$100,000 principal amount of the Notes

	
    
    March 2, 2010

    
    

 
	
    US$
     12,500.00

	
    
    September 2, 2010

    
    

 
	
    $
     12,500.00

	
    
    March 2, 2011

    
    

 
	
    $
     12,500.00

	
    
    September 2, 2011

    
    

 
	
    $
     12,500.00

	
    
    March 2, 2012

    
    

 
	
    $
     25,000.00

	
    
    September 2, 2012

    
    

 
	
    
    $  25,000.00

	
    
           Total:
	
    
    US$100,000.00




 


(b)


Voluntary Redemption.  At any time
prior to the Final Redemption Date, the Company may, if the Company gives the
Trustee and each holder at such holder's address appearing in the Security
Register not less than five (5) Business Days' prior written notice (the “Voluntary
Redemption Notice”), redeem the Notes (in whole or in part) without any
premium or penalty, except for Default Interest, if any (such redemption of the
Notes being a “Tranche A Voluntary Redemption”),
provided that: 


37




(i) 


the Company shall redeem the Tranche B Notes (in whole or in
part) on the same date subject to any equivalent provision under the Tranche B
Notes and the Tranche B Indenture (such redemption of the Tranche B Notes being
a “Tranche B Voluntary Redemption” and collectively with the
Tranche A Voluntary Redemption, a “Voluntary Redemption”) after
giving equivalent notice therefor in relation the Tranche B Notes pursuant to
applicable provisions under the Tranche B Notes and the Tranche B Indenture;


(ii) 


the aggregate amount of any Voluntary Redemption shall be
allocated between the Notes and the Tranche B Notes on a prorated basis
according to the respective amounts of the Notes and the Tranche B Notes
outstanding immediately prior such Voluntary Redemption after taking into
account any and all prior redemptions; 


(iii) 


subject to subclause (iv) below, the aggregate amount of any
Tranche A Voluntary Redemption shall be allocated among the Notes on a prorated
basis according to the respective amounts of each Note outstanding immediately
prior such Tranche A Voluntary Redemption after taking into account any and all
prior redemptions of the Notes, subject to rounding to the nearest $1,000;



(iv)


with respect to each Note, the aggregate amount of any Tranche A
Voluntary Redemption shall be applied towards reducing the Installment
Redemption Amounts of such Note falling on or after such Tranche A Voluntary
Redemption in chronological order; and


(v) 


the amount of any Tranche A Voluntary Redemption or Tranche B
Voluntary Redemption shall be at least $100,000 or integral multiples of $1,000
in excess thereof.  


The Voluntary Redemption Notice shall be irrevocable and obligate
the Company to make such redemption on such date as specified in the Voluntary
Redemption Notice.


Section 3.02.   Offer to Purchase.


(a)


In the event that, pursuant to Section 4.12, Section
4.17 or Section 4.23 hereof, the Company shall be required to
commence an Asset Sale Offer, a Change of Control Offer or a Termination of
Trading Offer (each of the foregoing, an “Offer to Purchase”),
respectively, it shall follow the procedures specified below.


(b)


The Company shall commence the Offer to Purchase by sending, by
first-class mail, with a copy to the Trustee, to each holder at such holder's
address appearing in the Security Register, a notice the terms of which shall
govern the Offer to Purchase stating:


(i)


that the Offer to Purchase is being made pursuant to this Section
and Section 4.12, Section 4.17 or Section 4.23, as the case
may be, and, in the case of a Change of Control Offer or Termination of Trading
Offer, that such event has occurred, the circumstances and relevant facts
regarding such event and that a Change of Control Offer or Termination of
Trading Offer is being made pursuant to Section 4.17 or Section 4.23,
respectively;


38




(ii)


the principal amount of Notes required to be purchased pursuant
to Section 4.12, Section 4.17 or Section 4.23, as the case
may be (the “Offer Amount”), the purchase price set forth in 
Section 4.12, Section 4.17 or Section 4.23, as applicable (the
“Purchase Price”), the Offer Period and the Purchase Date (each as
defined below);


(iii)


except as provided in clause (ix), that all Notes timely tendered
and not withdrawn shall be accepted for payment;


(iv)


that holders electing to have a Note purchased pursuant to an
Offer to Purchase may elect to have Notes purchased in integral multiples of
$1,000 only;


(v)


that holders electing to have a Note purchased pursuant to any
Offer to Purchase shall be required to surrender the Note, with the form
entitled “Purchase Notice” on the reverse of the Note completed, or transfer by
book-entry transfer, to the Company, the Depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice before the
close of business on the third Business Day before the Purchase Date;


(vi)


that holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the holder, the principal
amount of the Note (or portions thereof) the holder delivered for purchase and a
statement that such holder is withdrawing his election to have such Note
purchased;


(vii)


that, in the case of an Asset Sale Offer, if the aggregate
principal amount of Notes surrendered by holders exceeds the Offer Amount, the
Company shall select the Notes to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $100,000 or integral multiples of $1,000 in excess thereof
shall be purchased); 


(viii)


that holders whose Notes were purchased in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer); and


(ix)


any other procedures the holders must follow in order to tender
their Notes (or portions thereof) for payment and the procedures that holders
must follow in order to withdraw an election to tender Notes (or portions
thereof) for payment.


(c)


The Offer to Purchase shall remain open for a period of at least
30 days but no more than 60 days following its commencement, except to the
extent that a longer period is required by applicable law (the “Offer
Period”).  No later than five (5) Business Days (and in any event no
later than the 60th day following any Change of Control or Termination of
Trading) after the termination of the Offer Period (the “Purchase Date”),
the Company shall purchase the Offer Amount or, if less than the Offer Amount
has been tendered, all Notes tendered in response to the Offer to Purchase.
 Payment for any Notes so purchased shall be made in the same manner as interest
payments are made.  The Company shall publicly announce the results of the Offer
to Purchase on the Purchase Date.


39




(d)


On or prior to the Purchase Date, the Company shall, to the
extent lawful:


(i)


accept for payment (on a pro rata basis to the extent
necessary in connection with an Asset Sale Offer) from each tendering holder,
the Offer Amount of Notes or portions of Notes properly tendered and not
withdrawn pursuant to the Offer to Purchase, or if less than the Offer Amount
has been tendered, all Notes tendered; and


(ii)


surrender to the Trustee the Notes properly accepted to be
cancelled by the Trustee in accordance Section 2.08 hereof, together with
an Officers' Certificate stating the aggregate principal amount of Notes or
portions of Notes being purchased by the Company and that such Notes or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section.  


(e)


Upon receipt of the Notes in accordance with Section 3.02(d)(i),
the Company shall promptly, and in any event within (1) Business Day after the
Purchase Date, deliver to each tendering holder the Purchase Price. In the event
that any portion of the Notes surrendered is not purchased by the Company, the
Company shall promptly execute and issue a new Note in a principal amount equal
to such unpurchased portion of the Note surrendered, and, upon receipt of an
Authentication Order in accordance with Section 2.04 hereof, the Trustee
shall authenticate and deliver (or cause to be transferred by book-entry) such
new Note to such holder, in a principal amount equal to any unpurchased portion
of the Note surrendered; provided, however, that each such new
Note shall be in a principal amount of $100,000 or an integral multiple of
$1,000 in excess thereof.   Any Note not so accepted shall be promptly mailed or
delivered by the Company to the holder thereof.


(f)


The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent those laws and regulations are
applicable in connection with the Offer to Purchase.  To the extent that the
provisions of any securities laws or regulations conflict with Section 4.12,
Section 4.17 or Section 4.23, as applicable, this Section or other
provisions of this Indenture, the Company shall comply with applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under Section 4.12, Section 4.17 or Section 4.23,
as applicable, this Section or such other provision by virtue of such
compliance.


ARTICLE 4



PARTICULAR COVENANTS OF THE COMPANY


Section 4.01.   Payment of Principal.
 


The Company covenants and agrees that it will duly and punctually
pay or cause to be paid the principal (including each Installment Redemption
Amount, the purchase price upon an Offer to Purchase or the repurchase price
upon repurchase, in each case pursuant to Article 3) and premium, if any,
of each of the Notes at the places, at the respective times and in the manner
provided herein and in the Notes.


The Company shall pay, from time to time on demand, interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
accrued on overdue principal (including, for the avoidance of doubt, any
Installment Redemption Amount not paid on the Installment Redemption Date on
which such Installment Redemption Amount is due) and premium, if any, at a rate
that is 5% per annum.


40




Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.


Section 4.02.   Maintenance of Office or
Agency.  


The Company will maintain an office or agency in the City of New
York, where the Notes may be surrendered for registration of transfer or
exchange (“Registrar”) or for presentation for payment or for
conversion, redemption or repurchase (“Paying Agent”) and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served. The Registrar shall keep a register (the “Security
Register”) of the Notes and of their transfer and exchange. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency not designated or appointed by the
Trustee.  If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office.


The Company may also from time to time designate co-registrars
and one or more offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations.  The Company will give prompt written notice of any such
designation or rescission and of any change in the location of any such other
office or agency.


The Company hereby initially designates the Trustee as paying
agent, Registrar, Custodian and conversion agent and each of the Corporate Trust
Office and the office of agency of the Trustee in City of New York, shall be
considered as one such office or agency of the Company for each of the aforesaid
purposes.


So long as the Trustee is the Registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 7.08(a) and
the third paragraph of Section 7.09.  If co-registrars have been
appointed in accordance with this Section, the Trustee shall mail such notices
only to the Company and the holders of Notes it can identify from its records.


Section 4.03.   Provisions as to Paying
Agent.  


(a)


If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company will
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section:


(i)


that it will hold all sums held by it as such agent for the
payment of the principal of or Interest on the Notes (whether such sums have
been paid to it by the Company or by any other obligor on the Notes) in trust
for the benefit of the holders of the Notes;


41




(ii)


that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of the
principal of or Interest on the Notes when the same shall be due and payable;
and


(iii)


that at any time during the continuance of an Event of Default,
upon request of the Trustee, it will forthwith pay to the Trustee all sums so
held in trust.


(b)


The Company shall, on the Business Day prior to each due date of
the principal or Default Interest, if any, on the Notes, deposit with the paying
agent a sum (in funds which are immediately available on the due date for such
payment) sufficient to pay such principal or Default Interest, if any, and
(unless such paying agent is the Trustee) the Company will promptly notify the
Trustee in writing of any failure to take such action; provided that if such
deposit is made on the due date, such deposit shall be received by the paying
agent by 10:00 a.m. New York City time, on such date.


(c)


If the Company shall act as its own paying agent, it will, on the
Business Day prior to each due date of the principal of or Interest on the
Notes, set aside, segregate and hold in trust for the benefit of the holders of
the Notes a sum sufficient to pay such principal or Interest so becoming due and
will promptly notify the Trustee in writing of any failure to take such action
and of any failure by the Company (or any other obligor under the Notes) to make
any payment of the principal of or Interest on the Notes when the same shall
become due and payable.


(d)


Anything in this Section to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section, such sums to be held by the Trustee upon the trusts
herein contained and upon such payment by the Company or any paying agent to the
Trustee, the Company or such paying agent shall be released from all further
liability with respect to such sums.


(e)


Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to 
Sections 11.03 and 11.04.


The Trustee shall not be responsible for the actions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying agents.


Section 4.04.   Existence.
 


Subject to Article 5, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and rights (charter and statutory); provided that the Company
shall not be required to preserve any such right if the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and that the loss thereof is not disadvantageous in any
material respect to the Noteholders.


Section 4.05.   Maintenance of
Properties.  


The Company will cause all properties used or useful in the
conduct of its business or the business of any Significant Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any subsidiary and not disadvantageous in any
material respect to the Noteholders.


42




Section 4.06.   Payment of Taxes and
Other Claims.  


The Company will pay or discharge, or cause to be paid or
discharged, before the same may become delinquent, (i) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Significant
Subsidiary or upon the income, profits or property of the Company or any
Significant Subsidiary, (ii) all claims for labor, materials and supplies which,
if unpaid, might by law become a lien or charge upon the property of the Company
or any Significant Subsidiary and (iii) all stamp taxes and other duties, if
any, which may be imposed by the United States or any political subdivision
thereof or therein in connection with the issuance, transfer, exchange,
conversion, redemption or repurchase of any Notes or with respect to this
Indenture; provided that, in the case of clauses (i) and (ii), the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(B) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.


Section 4.07.   Stay, Extension and
Usury Laws.  


The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or Default Interest, if any, on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.


Section 4.08.   Payments for Consent.


The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to or for the
benefit of any holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all holders that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.


43




Section 4.09.   Incurrence of Additional
Debt; Financial Covenants.


(a)


The Company shall not, and shall not permit any of its
Subsidiaries to, Incur, directly or indirectly, any Debt unless, after giving
effect to the application of the proceeds thereof, no Default or Event of
Default would occur as a consequence of such Incurrence or be continuing
following such Incurrence.


(b)


The Company shall maintain: 


(i)


a Leverage Ratio, as determined as of the last day of each Fiscal
Quarter, for the four Fiscal Quarters ending on such day, not exceeding 4.50 to
1.00. 


(c)


Notwithstanding anything to the contrary contained in this
Section,


(i)


the Company shall not, and shall not permit any
Guarantor to, Incur any Debt pursuant to this covenant if the proceeds thereof
are used, directly or indirectly, to Refinance any Subordinated Obligations
unless such Debt shall be subordinated to the Notes or the applicable Guarantee,
as the case may be, to at least the same extent as such Subordinated Debt;



(ii)


the Company shall not permit any of its Subsidiaries that is not
a Guarantor to Incur any Debt pursuant to this covenant if the proceeds thereof
are used, directly or indirectly, to Refinance any Debt of the Company or any
Guarantor; and


(iii)


accrual of interest, accretion or amortization of original issue
discount and the payment of interest or dividends in the form of additional
Debt, will be deemed not to be an Incurrence of Debt for purposes of this
Section.


Section 4.10.   Restricted Payments.


The Company shall not make, and shall not permit any of its
Subsidiaries to make, directly or indirectly, any Restricted Payment if at the
time of, and after giving effect to, such proposed Restricted Payment,


(a)


a Default or Event of Default shall have occurred and be
continuing, or


(b)


the Company could not Incur at least $1.00 of additional Debt in
compliance with Section 4.09, or


(c)


the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made since the Issue Date (the amount of any
Restricted Payment, if made other than in cash, to be based upon Fair Market
Value at the time of such Restricted Payment) would exceed an amount equal to
the sum of:


(1)


10% of the aggregate amount of Consolidated Net Income accrued
during the period (treated as one accounting period) from the beginning of the
Fiscal Quarter after the Issue Date to the end of the most recent Fiscal Quarter
ending prior to the date of such Restricted Payment (or if the aggregate amount
of Consolidated Net Income for such period shall be a deficit, minus 100% of
such deficit), plus


44




(2)


100% of the Capital Stock Sale Proceeds, plus


(3)


the sum of:


(A)


the aggregate net cash proceeds received by the Company or any
Guarantor from the issuance or sale after the Issue Date of convertible or
exchangeable Debt that has been converted into or exchanged for Capital Stock
(other than Disqualified Stock) of the Company, and 


(B)


the aggregate amount by which Debt (other than Subordinated
Obligations) of the Company or any Guarantor is reduced on the Company's
consolidated balance sheet on or after the Issue Date upon the conversion or
exchange of any Debt issued or sold on or prior to the Issue Date that is
convertible or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company,


excluding, in the case of clause (A) or (B):


(x) 


any such Debt issued or sold to the Company or a Subsidiary of
the Company or an employee stock ownership plan or trust established by the
Company or any such Subsidiary for the benefit of their employees, and 



(y) 


the aggregate amount of any cash or other Property distributed by
the Company or any of its Subsidiaries upon any such conversion or exchange,
plus


(4)


an amount equal to the net reduction in Investments in any Person
other than the Company or any of its Subsidiaries resulting from dividends,
repayments of loans or advances or other transfers of Property, in each case to
the Company or any of its Subsidiaries from such Person.


Notwithstanding the foregoing limitation, the Company may:


(a)


pay dividends on its Capital Stock within 60 days of the
declaration thereof if, on the declaration date, such dividends could have been
paid in compliance with the Indenture; provided, however, that at
the time of such payment of such dividend, no other Default or Event of Default
shall have occurred and be continuing (or result therefrom); provided further,
however, that such dividend shall be included in the calculation of the
amount of Restricted Payments;


45




(b)


purchase, repurchase, redeem, legally defease, acquire or retire
for value Capital Stock of the Company or Subordinated Obligations in exchange
for, or out of the proceeds of the substantially concurrent sale of, Capital
Stock of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any such Subsidiary for the benefit
of their employees); provided, however, that 


(1)


such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the amount of
Restricted Payments and


(2)


the Capital Stock Sale Proceeds from such exchange or sale shall
be excluded from the calculation pursuant to clause (c)(2) above; and


(c)


purchase, repurchase, redeem, legally defease, acquire or retire
for value any Subordinated Obligations in exchange for, or out of the proceeds
of the substantially concurrent sale of, Permitted Refinancing Debt; provided,
however, that such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the amount of
Restricted Payments.


Section 4.11.   Liens.


The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, Incur or suffer to exist, any Lien
(other than Permitted Liens) upon any of its Property (including Capital Stock
of any of its Subsidiaries), whether owned at the Issue Date or thereafter
acquired, or any interest therein or any income or profits therefrom, unless it
has made or will make effective provision whereby the Notes or the applicable
Guarantee will be secured by such Lien equally and ratably with (or, if such
other Debt constitutes Subordinated Debt, prior to) all other Debt of the
Company or any of its Subsidiaries secured by such Lien for so long as such
other Debt is secured by such Lien.


Section 4.12.   Asset Sales.


The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless:



(a)


the Company or such Subsidiary receives consideration at the time
of such Asset Sale at least equal to the Fair Market Value of the Property
subject to such Asset Sale;


(b)


at least 50% of the consideration paid to the Company or such
Subsidiary in connection with such Asset Sale is in the form of cash or Cash
Equivalents or the assumption by the purchaser of liabilities of the Company or
any of its Subsidiaries (other than contingent liabilities or liabilities that
are by their terms subordinated to the Notes or the applicable Guarantee) as a
result of which the Company and its Subsidiaries are no longer obligated with
respect to such liabilities; and 


46




(c)


the Company delivers an Officers' Certificate to the Trustee
certifying that such Asset Sale complies with the foregoing clauses (a) and (b).


The Net Available Cash (or any portion thereof) from Asset Sales
may be applied by the Company or any of its Subsidiaries, to the extent the
Company or such Subsidiary elects (or is required by the terms of any Debt) (i)
to Repay Senior Debt of the Company or any Guarantor or Debt of any Subsidiary
that is not a Guarantor (excluding, in any such case, any Debt owed to the
Company or an Affiliate of the Company), or (ii) to reinvest in Additional
Assets (including by means of an Investment in Additional Assets by any
Subsidiary of the Company with Net Available Cash received by the Company or
another Subsidiary of the Company).


Any Net Available Cash from an Asset Sale not applied in
accordance with the preceding paragraph within 180 days from the date of the
receipt of such Net Available Cash shall constitute “Excess Proceeds”.
 


When the aggregate amount of Excess Proceeds exceeds $10.0
million (taking into account income earned on such Excess Proceeds, if
any), the Company will be required to make an offer to repurchase (the “Asset
Sale Offer”) the Notes, which offer shall be in the amount of the
Allocable Excess Proceeds (rounded to the nearest $1,000), on a pro rata
basis according to principal amount, at the Repurchase Amount, in accordance
with the procedures (including prorating in the event of oversubscription) set
forth in Section 3.02.  To the extent that any portion of the amount of
Net Available Cash remains after compliance with the preceding sentence and 
provided that all holders of Notes have been given the opportunity to tender
their Notes for repurchase in accordance with Section 3.02, the Company
or such Subsidiary may use such remaining amount first to Repay the Credit
Facilities or any other Senior Debt of the Company or any Guarantor or Debt of
any Subsidiary of the Company that is not a Guarantor (excluding, in any such
case, any Debt owed to the Company or an Affiliate of the Company), and only
thereafter, for any purpose permitted by this Indenture, and the amount of
Excess Proceeds will be reset to zero. 


The term “Allocable Excess Proceeds” shall mean the
product of: 


(a)


the Excess Proceeds and 


(b)


a fraction, 


(1)


the numerator of which is the aggregate principal amount of the
Notes outstanding on the date of the Asset Sale Offer, and 


(2)


the denominator of which is the sum of the aggregate principal
amount of the Notes outstanding on the date of the Asset Sale Offer and the
aggregate principal amount (or accreted value, if applicable) of other Debt of
the Company outstanding on the date of the Asset Sale Offer that is pari
passu in right of payment with the Notes and subject to terms and conditions
in respect of Asset Sales similar in all material respects to this Section and
requiring the Company to make an offer to repurchase such Debt at substantially
the same time as the Asset Sale Offer.


Section 4.13.   Restrictions on
Distributions from Subsidiaries.


The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist any consensual restriction on the right of any of its Subsidiaries to:


47




(a)


pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock owned by, or pay any Debt or
other obligation owed, to, the Company or any other Subsidiary of the Company,



(b)


make any loans or advances to the Company or any other Subsidiary
of the Company, or 


(c)


transfer any of its Property to the Company or any other
Subsidiary of the Company.  


The foregoing limitations will not apply:


(1)


with respect to clauses (a), (b) and (c), to restrictions:


(A)


in effect on the Issue Date (including, without limitation,
restrictions pursuant to the Notes and this Indenture), 


(B)


relating to Debt of any Subsidiary of the Company and existing at
the time it became a Subsidiary of the Company if such restriction was not
created in connection with or in anticipation of the transaction or series of
transactions pursuant to which such Subsidiary became a Subsidiary of the
Company or was acquired by the Company, or 


(C)


that result from the Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (1)(A) or (B) above or in clause (2)(A) or (B)
below, provided such restrictions are not less favorable to the holders
of Notes than those under the agreement evidencing the Debt so Refinanced, and


(2)


with respect to clause (c) only, to restrictions:


(A)


relating to Debt that is permitted to be Incurred and secured
without also securing the Notes or the applicable Guarantee in
compliance with Section 4.09 and Section 4.11 that limit the right
of the debtor to dispose of the Property securing such Debt,


(B)


encumbering Property at the time such Property was acquired by
the Company or any of its Subsidiaries, so long as such restrictions relate
solely to the Property so acquired and were not created in connection with or in
anticipation of such acquisition,


(C)


resulting from customary provisions restricting subletting or
assignment of leases or customary provisions in other agreements that restrict
assignment of such agreements or rights thereunder, or


48




(D)


customary restrictions contained in asset sale agreements
limiting the transfer of such Property pending the closing of such sale.


Section 4.14.   Affiliate Transactions.


The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, conduct any business or enter into or
suffer to exist any transaction or series of transactions (including the
purchase, sale, transfer, assignment, lease, conveyance or exchange of any
Property or the rendering of any service) with, or for the benefit of, any
Affiliate of the Company (an “Affiliate Transaction”), unless:


(a)


the terms of such Affiliate Transaction are:


(1)


set forth in writing, 


(2)


in the best interest of the Company or such Subsidiary, as the
case may be, and 


(3)


no less favorable to the Company or such Subsidiary, as the case
may be, than those that could be obtained in a comparable arm's-length
transaction with a Person that is not an Affiliate of the Company,


(b)


if such Affiliate Transaction involves aggregate payments or
value in excess of $1.0 million, the Board of Directors (including a majority of
the disinterested members of the Board of Directors) approves such Affiliate
Transaction and, in its good faith judgment, believes that such Affiliate
Transaction complies with clauses (a)(2) and (3) of this paragraph as evidenced
by a Board Resolution promptly delivered to the Trustee, and 


(c)


if such Affiliate Transaction involves aggregate payments or
value in excess of $5.0 million, the Company obtains a written opinion from an
Independent Financial Advisor to the effect that the consideration to be paid or
received in connection with such Affiliate Transaction is fair, from a financial
point of view, to the Company and its Subsidiaries.


Notwithstanding the foregoing limitation, the Company or any of
its Subsidiaries may enter into or suffer to exist the following:


(a)


any transaction or series of transactions between the Company and
one or more of its Subsidiaries or between two or more of its Subsidiaries in
the ordinary course of business, provided that no more than 5% of the
total voting power of the Voting Stock (on a fully diluted basis) of any such
Subsidiary is owned by an Affiliate of the Company (other than any Subsidiary of
the Company);


49




(b)


any Restricted Payment permitted to be made pursuant to 
Section 4.10 or any Permitted Investment;


(c)


the payment of compensation (including amounts paid pursuant to
employee benefit plans) for the personal services of officers, directors and
employees of the Company or any of its Subsidiaries, so long as the Board of
Directors in good faith shall have approved the terms thereof and deemed the
services theretofore or thereafter to be performed for such compensation to be
fair consideration therefor; and


(d)


loans and advances to employees made in the ordinary course of
business and consistent with the past practices of the Company or such
Subsidiary, as the case may be, provided that such loans and advances do
not exceed $300,000 in the aggregate at any one time outstanding; provided,
however, that the Company and its Subsidiaries shall comply in all
material respects with all provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith that would be
applicable to an issuer with debt securities registered under the Securities Act
relating to such loans and advances.


Section 4.15.   Issuance or Sale of
Capital Stock of Subsidiaries.


The Company shall not:


(a)


sell, pledge, hypothecate or otherwise dispose of any shares of
Capital Stock of any of its Subsidiaries, or 


(b)


permit any Subsidiary of the Company to, directly or indirectly,
issue or sell or otherwise dispose of any shares of its Capital Stock, 



other than, in the case of either (a) or (b):


(1)


directors' qualifying shares, 


(2)


to the Company or a Wholly Owned Subsidiary, or


(3)


a disposition of 100% of the shares of Capital Stock of such
Subsidiary; provided, however, that, in the case of this clause (3),


(A)


such disposition is effected in compliance with Section 4.12,
and


(B)


upon consummation of such disposition and execution and delivery
of a supplemental indenture in form satisfactory to the Trustee, such Subsidiary
shall be released from any Guarantee previously made by such Subsidiary.


(4)


a disposition of shares of Capital Stock of any Subsidiary that
is not a Significant Subsidiary; provided, however, that, in the case of
this clause (4),


50




(A)


25% of the proceeds raised by the Company or any of its
Subsidiary from such disposition shall be used to repay any outstanding
principal amount of the Notes within 15 Business Days following the receipt
thereof, and


(B)


The remaining 75% of such proceeds shall be effected in
compliance with Section 4.12.


Section 4.16.   Maintenance of
Consolidated Tangible Net Worth.


The Company shall not, on the Issue Date (after giving effect to
the issuance of the Notes) or at the end of any Fiscal Quarter thereafter,
permit its Consolidated Tangible Net Worth to be less than the Consolidated
Tangible Net Worth Threshold. The “Consolidated Tangible Net Worth Threshold”
shall be equal to $50.0 million from the Issue Date until the first annual
anniversary thereof, and at each annual anniversary of the Issue Date shall
increase by an amount equal to $5.0 million. 


Section 4.17.   Repurchase at the Option
of Holders Following a Change of Control.


(a)


Upon the occurrence of a Change of Control, the Company shall,
within 7 days thereafter notify the Trustee and the holders of such Change of
Control, and within 30 days of a Change of Control, make an offer (the “Change
of Control Offer”) pursuant to the procedures set forth in Section
3.02.  Each holder shall have the right to accept such offer and require the
Company to repurchase all or any portion (equal to $100,000 or an integral
multiple of $1,000 in excess thereof) of such holder's Notes pursuant to the
Change of Control Offer at a purchase price, in cash equal to the Repurchase
Amount.


(b)


The Company shall not be required to make a Change of Control
Offer following a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes properly tendered and not withdrawn
under such Change of Control Offer.


Section 4.18.   Future Guarantors.


(a)


When permitted under the applicable laws (including the laws of
the PRC) and subject to obtaining all necessary Governmental Approvals, the
Operating Subsidiary hereby agrees, and each of the Company and Safetech, hereby
agrees, jointly and severally, to cause each Operating Subsidiary, to execute
and deliver to the Trustee a Guarantee to the fullest extent permitted under
applicable laws (including the laws of the PRC). 


(b)


The Company shall cause each Person that becomes a Significant
Subsidiary following the Issue Date to execute and deliver to the Trustee a
Guarantee at the time such Person becomes a Significant Subsidiary, provided
that, in the case of a Person that becomes a Significant Subsidiary incorporated
in the PRC, the Company shall cause such Significant Subsidiary to execute and
deliver to the Trustee a Guarantee to the fullest extent permitted by applicable
laws (including the laws of the PRC) and subject to obtaining all necessary
Governmental Approval. 


51




Section 4.19.   Business Activities.


The Company shall not, and the Company shall not permit any of
its Subsidiaries to, directly or indirectly, engage in any business other than a
Related Business.


Section 4.20.   Sale and Leaseback
Transactions.


The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any Sale and Leaseback Transaction with respect to
any Property unless:


(a)


the Company or such Subsidiary would be entitled to:


(1)


Incur Debt in an amount equal to the Attributable Debt with
respect to such Sale and Leaseback Transaction in compliance with Section
4.09 and 


(2)


create a Lien on such Property securing such Attributable Debt
without also securing the Notes or the applicable Guarantee 
pursuant to Section 4.11 and 


(b)


such Sale and Leaseback Transaction is effected in compliance
with Section 4.12.


Section 4.21.   Reserved.


Section 4.22.   Maintenance of Insurance.


The Company shall, and shall cause its Subsidiaries to, maintain
insurance policies covering such risks, in such amounts and with such terms as
are normally carried by similar companies engaged in a similar business to the
Related Business in the PRC.


Section 4.23.   Repurchase Upon
Termination of Trading.


Upon the occurrence of a Termination of Trading, the Company
shall, within 7 days thereafter notify the Trustee and the holders of such
Termination of Trading, and within 30 days of a Termination of Trading, make an
offer (the “Termination of Trading Offer”) pursuant to the
procedures set forth in Section 3.02. Each holder shall have the right to
accept such offer and require the Company to repurchase all or any portion
(equal to $100,000 or an integral multiple of $1,000 in excess thereof) of such
holder's Notes pursuant to the Termination of Trading Offer at a purchase price,
in cash equal to the Repurchase Amount.


Section 4.24.   Government Approvals and
Licenses; Compliance with Law.


The Company shall, and shall cause its Subsidiaries to, (a)
obtain and maintain in full force and effect all Governmental Approvals,
authorizations, consents, permits, concessions and licenses as are necessary to
engage in a Related Business, (b) preserve and maintain good and valid title to
its properties and assets (including land-use rights) free and clear of any
Liens other than Permitted Liens and (c) comply with all laws, regulations,
orders, judgments and decrees of any governmental body, except to the extent
that failure so to obtain, maintain, preserve and comply would reasonably be
expected to have a material adverse effect on (1) the business, results of
operations or prospects of the Company and its Subsidiaries taken as a whole or
(2) the ability of the Company or any Guarantor to perform its obligations under
the Notes, the relevant Guarantee of the Notes or this Indenture.


52




Section 4.25.   [RESERVED].


Section 4.26.   Notes to Rank Senior.


The Notes and all other obligations of the Company and the
Guarantors under this Indenture are and at all times shall remain direct and
unsecured obligations of the Company and each Guarantor ranking pari passu
in right and priority of payment, without any preference or priority among
themselves and at least equally with all other present and future unsecured
Indebtedness (actual or contingent) of the Company and each Guarantor (except as
otherwise required by law).


Section 4.27.   Compliance Certificate.
 


The Company shall deliver to the Trustee, within one hundred
twenty (120) days after the end of each fiscal year of the Company, a
certificate signed by either the principal executive officer, principal
financial officer or principal accounting officer of the Company, stating
whether or not to the best knowledge of the signer thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.


The Company will deliver to the Trustee, forthwith upon becoming
aware of (i) any default in the performance or observance of any covenant,
agreement or condition contained in this Indenture, or (ii) any Event of
Default, an Officers' Certificate specifying with particularity such Default or
Event of Default and further stating what action the Company has taken, is
taking or proposes to take with respect thereto.


Any notice required to be given under this Section shall be
delivered to a Responsible Officer of the Trustee at its Corporate Trust Office.


Section 4.28.   Calculation of Original
Issue Discount.  


The Company shall file with the Trustee, solely for purposes of
making such information available to the holders upon request, promptly at the
end of each calendar year (i) a written notice specifying the amount of Tax
Original Issue Discount (including daily rates and accrual periods) accrued on
outstanding Notes as of the end of such year and (ii) such other specific
information relating to such Tax Original Issue Discount as may then be required
under the Code, or the Treasury regulations promulgated thereunder.


53




ARTICLE 5



SUCCESSORS


Section 5.01.   Merger, Consolidation
and Sale of Assets.


(a)


The Company shall not merge, consolidate or amalgamate with or
into any other Person (other than a merger of a Wholly Owned Subsidiary into the
Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all of its Property in any one transaction or series of
transactions unless:  


(i)


the Company shall be the Surviving Person in such merger,
consolidation or amalgamation, or the Surviving Person (if other than the
Company) formed by such merger, consolidation or amalgamation or to which such
sale, transfer, assignment, lease, conveyance or disposition is made shall be a
corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;


(ii)


the Surviving Person (if other than the Company) expressly
assumes, by supplemental indenture in form satisfactory to the Trustee, executed
and delivered to the Trustee by such Surviving Person, the due and punctual
payment of the principal of, and premium, if any, and any Default Interest on,
all the Notes, according to their tenor, and the due and punctual performance
and observance of all the covenants and conditions of this Indenture to be
performed by the Company; 


(iii)


in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all the Property of the Company, such
Property shall have been transferred as an entirety or virtually as an entirety
to one Person or a group of related persons; 


(iv)


immediately before and after giving effect to such transaction or
series of transactions on a pro forma basis (and treating, for purposes of this
clause (iv) and clauses (v) and (vi) below, any Debt that becomes, or is
anticipated to become, an obligation of the Surviving Person or any Subsidiary
of the Company as a result of such transaction or series of transactions as
having been Incurred by the Surviving Person or such Subsidiary at the time of
such transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing; 


(v)


immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Surviving Person shall have a
Consolidated Net Worth in an amount which is not less than the Consolidated Net
Worth of the Company immediately prior to such transaction or series of
transactions;


(vi)


the Company shall deliver, or cause to be delivered, to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction or series of transactions and the supplemental indenture, if
any, in respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction or series of
transactions have been satisfied; and


54




(vii)


the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the holders will not recognize income, gain or loss
for federal income tax purposes as a result of such transaction and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such transaction had not occurred.


The foregoing provisions (other than clause (iv)) shall not apply
to any transaction or series of transactions which constitute an Asset Sale if
the Company has complied with Section 4.12.


(b)


The Company shall not permit any Guarantor to merge, consolidate
or amalgamate with or into any other Person (other than a merger of a Wholly
Owned Subsidiary into the Company or such Guarantor) or sell, transfer, assign,
lease, convey or otherwise dispose of all or substantially all its Property in
any one transaction or series of transactions unless:


(i)


the Surviving Person (if other than such Guarantor) expressly
assumes, to the extent permitted by applicable laws, by supplemental indenture
in form satisfactory to the Trustee, executed and delivered to the Trustee by
such Surviving Person, the due and punctual performance and observance of all
the obligations of such Guarantor under its Guarantee; 


(ii)


in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all the Property of such Guarantor,
such Property shall have been transferred as an entirety or virtually as an
entirety to one Person; 


(iii)


immediately before and after giving effect to such transaction or
series of transactions on a pro forma basis (and treating, for purposes of this
clause (iii) and clauses (iv) and (v) below, any Debt that becomes, or is
anticipated to become, an obligation of the Surviving Person, the Company or any
of its Subsidiaries as a result of such transaction or series of transactions as
having been Incurred by the Surviving Person, the Company or such Subsidiary at
the time of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing; 


(iv)


immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Company shall have a Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction or series of transactions;


(v)


the Company shall deliver, or cause to be delivered, to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction or series of transactions and the supplemental indenture, if
any, in respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction or series of
transactions have been satisfied; and


(vi)


the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the holders will not recognize income, gain or loss
for federal income tax purposes as a result of such transaction and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such transaction had not occurred.


55




The foregoing provisions (other than clause (iii)) shall not
apply to any transaction or series of transactions which constitute an Asset
Sale if the Company has complied with Section 4.12.


Section 5.02.   Successor Corporation
Substituted.


The Surviving Person shall succeed to, and be substituted for,
and may exercise every right and power of the Company or a Guarantor, as
applicable, under this Indenture; provided, however, that the
predecessor entity shall not be released from any of the obligations or
covenants under this Indenture, including with respect to the payment of the
Notes and obligations under the Guarantee, as the case may be, in the case of:


(a)


a sale, transfer, assignment, conveyance or other disposition
(unless such sale, transfer, assignment, conveyance or other disposition is of
all or substantially all of the assets of the Company, taken as a whole or, in
the case of a Guarantor, such sale, transfer, assignment, conveyance or other
disposition is of all or substantially all of the assets of such Guarantor to a
Person that is not (either before or after giving effect to such transaction) a
Subsidiary of the Company, or such portion of the Capital Stock of such
Guarantor ceases to be a Subsidiary of the Company), or


(b)


a lease.


ARTICLE 6



REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT


Section 6.01.   Events of Default.
 


In case one or more of the following Events of Default (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:


(a)


default in the payment of the principal of, and premium, if any,
on, any of the Notes as and when the same shall become due and payable either at
maturity or in connection with any redemption, repurchase or otherwise, in each
case pursuant to Article 3, by acceleration or otherwise (including, for
the avoidance of doubt, default in the payment of any Installment Redemption
Amount on the Installment Redemption Date on which such Installment Redemption
Amount is due); or


(b)


default in the Company's obligation to provide an Offer to
Purchase when required in connection with an Asset Sale, a Change of Control or
Termination of Trading as provided in Section 3.02; or


(c)


failure to comply with Section 5.01;


(d)


failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the Notes or
in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with) continued for a period of thirty (30) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the holders of at least twenty-five
percent (25%) in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 12.04; or


56




(e)


the Company, any of its Significant Subsidiaries (or any group of
Subsidiaries that, when taken together, would constitute a Significant
Subsidiary) pursuant to or within the meaning of any Bankruptcy Law:


(i)


commences a voluntary case or gives notice of intention to make a
proposal under any Bankruptcy Law;


(ii)


consents to the entry of an order for relief against it in an
involuntary case or consents to its dissolution or winding up;


(iii)


consents to the appointment of a receiver, interim receiver,
receiver and manager, liquidator, trustee or custodian of it or for all or
substantially all of its property;


(iv)


makes a general assignment for the benefit of its creditors; or


(v)


admits in writing its inability to pay its debts as they become
due or otherwise admits its insolvency; or


(f)


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


(i)


is for relief against the Company, any of its Significant
Subsidiaries (or any group of Subsidiaries that, when taken together, would
constitute a Significant Subsidiary) in an involuntary case; or


(ii)


appoints a receiver, interim receiver, receiver and manager,
liquidator, trustee or custodian of the Company, any of its Significant
Subsidiaries (or any group of Subsidiaries that, when taken together, would
constitute a Significant Subsidiary) for all or substantially all of the
property of the Company, any of its Significant Subsidiaries (or any group of
Subsidiaries that, when taken together, would constitute a Significant
Subsidiary); or


(iii)


orders the liquidation of the Company, any of its Significant
Subsidiaries (or any group of Subsidiaries that, when taken together, would
constitute a Significant Subsidiary);


and such order or decree remains unstayed and in effect for 60
consecutive days;


(g)


a default under any Debt by the Company or any of its
Subsidiaries that results in acceleration of the maturity of such Debt, or
failure to pay any such Debt when due (including, for the avoidance of doubt,
any installment payment due on the applicable payment date under the Tranche B
Notes and the Tranche B Indenture), (in cases of Debt other than the Debt under
the Tranche B Notes and the Tranche B Indenture) in an aggregate amount greater
than $10.0 million or its foreign currency equivalent at the time;


57




(h)


any judgment or judgments for, the payment of money in an
aggregate amount potentially in excess of $10.0 million (or its foreign currency
equivalent at the time) that shall be rendered against the Company or any of its
Subsidiaries;


(i)


any Guarantee ceases to be in full force and effect (other than
in accordance with the terms of such Guarantee) or any Guarantor denies or
disaffirms its obligations under its Guarantee;


(j)


the Company, the Guarantor or the Operating Subsidiary amends or
modifies their respective constitutive documents in such a manner that would
have a Material Adverse Effect or engages any business other than a Related
Business;


(k)


 the Indenture, the Notes, any Guarantee or any loan made
directly or indirectly from the Company to the Operating Subsidiary, shall be
(A) declared by any Governmental Authority to be illegal or unenforceable or (B)
terminated prior to its scheduled termination date (for the avoidance of doubt,
any termination resulting from the Voluntary Redemption shall not constitute a
default or an Event of Default hereunder);


(l)


(i) the confiscation, expropriation or nationalization by any
Governmental Authority of any material Property of the Company or any of its
Subsidiaries, provided that for the purposes of this paragraph (i), the
determination of what is “material” shall be determined by the holders of not
less than 25% in aggregate principal amount of the Notes then outstanding; or
(ii) if such revocation or repudiation could reasonably be expected to have a
Material Adverse Effect, the revocation or repudiation by any Governmental
Authority of any previously granted Governmental Approval to the Operating
Subsidiary that is material to the operation of the Related Business; or (iii)
the imposition or introduction of material and discriminatory taxes, tariffs,
royalties, customs or excise duties imposed on the Operating Subsidiary, or the
material and discriminatory withdrawal or suspension of material privileges or
specifically granted material rights of a fiscal nature; or


(m)


failure by the Company or any Affiliate thereof (other than any
Person who is an Affiliate solely because such Person is a holder of Notes) to
comply with any of the agreements in the Amended Investor Rights Agreement if
such failure continues for 30 days after written notice is given to the Company
by the Trustee or the holders of not less than 25% in aggregate principal amount
of the Notes then outstanding specifying the default, demanding that it be
remedied and stating that such notice is a “Notice of Default;”


then, and in each and every such case (other than an Event of
Default specified in Section 6.01(f) or 6.01(g)), unless any
Installment Redemption Amount shall have already become due and payable, either
the Trustee or the holders of not less than twenty-five percent (25%) in
aggregate principal amount of the Notes then outstanding hereunder determined in
accordance with Section 12.04, by notice in writing to the Company (and
to the Trustee if given by Noteholders), may declare the principal of all the
Notes (including, for the avoidance of doubt, any and all unpaid Installment
Redemption Amounts), Interest accrued thereon, if any, and premium, if any, to
be due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this Indenture or
in the Notes contained to the contrary notwithstanding.  If an Event of Default
specified in Section 6.01(f) or 6.01(g) occurs, the principal of
all the Notes (including, for the avoidance of doubt, any and all unpaid
Installment Redemption Amounts), Default Interest, if any, and premium, if any,
shall be immediately and automatically due and payable without necessity of
further action.  


58




This provision, however, is subject to the conditions that if, at
any time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the monies due
shall have been obtained or entered as hereinafter provided, (i) the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
principal of any and all Notes (including, for the avoidance of doubt, any and
all unpaid Installment Redemption Amounts) which shall have become due otherwise
than by acceleration, Default Interest, if any, and amounts due to the Trustee
pursuant to Section 7.06, (ii) if any and all defaults under this
Indenture, other than the nonpayment of principal (including, for the avoidance
of doubt, any Installment Redemption Amount) of Notes which shall have become
due by acceleration, shall have been cured or waived pursuant to Section 6.07,
then and in every such case the holders of a majority in aggregate principal
amount of the Notes then outstanding, by written notice to the Company and to
the Trustee, may waive all Defaults or Events of Default and rescind and annul
such declaration and its consequences; but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent Default or Event of
Default, or shall impair any right consequent thereon.  The Company shall notify
in writing a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.


In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such waiver or rescission and annulment or for any other
reason or shall have been determined adversely to the Trustee, then and in every
such case the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been taken.


Section 6.02.   Payments of Notes on
Default; Suit Therefor.  


The Company covenants that in case default shall be made in the
payment of the principal of any of the Notes as and when the same shall have
become due and payable, whether at maturity of the Notes or in connection with
any redemption or repurchase, by or under this Indenture by declaration or
otherwise (including, for the avoidance of doubt, default in the payment of any
Installment Redemption Amount on the Installment Redemption Date on which such
Installment Redemption Amount is due), then, upon demand of the Trustee, the
Company will pay to the Trustee, for the benefit of the holders of the Notes,
the whole amount that then shall have become due and payable on all such Notes
for principal with interest upon the overdue principal at the rate of 2% per
annum and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including compensation to the
Trustee, its agents, attorneys and counsel, and all other amounts due the
Trustee under Section 7.06.  Until such demand by the Trustee, the
Company may pay the principal (including, for the avoidance of doubt, any and
all unpaid Installment Redemption Amounts) of the Notes, and Default Interest,
if any, to the registered holders, whether or not the Notes are overdue.


59




In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Company or any other obligor on the
Notes and collect in the manner provided by law out of the property of the
Company or any other obligor on the Notes wherever situated the monies adjudged
or decreed to be payable.


In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
any Bankruptcy Law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or such other obligor, the
property of the Company or such other obligor, or in the case of any other
judicial proceedings relative to the Company or such other obligor upon the
Notes, or to the creditors or property of the Company or such other obligor, the
Trustee, irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and Interest owing and unpaid in respect of the Notes, and,
in case of any judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee and of the Noteholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Notes, its or their
creditors, or its or their property, and to collect and receive any monies or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of any amounts due the Trustee under Section 7.06,
and to take any other action with respect to such claims, including
participating as a member of any official committee of creditors, as it
reasonably deems necessary or advisable, and, unless prohibited by law or
applicable regulations, and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized
by each of the Noteholders to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Trustee any amount due it for compensation,
expenses, advances and disbursements, including counsel fees and expenses
incurred by it up to the date of such distribution.  To the extent that such
payment of compensation, expenses, advances and disbursements out of the estate
in any such proceedings shall be denied for any reason, payment of the same
shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.


All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the holders of the Notes.


60




In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.


Section 6.03.   Application of Monies
Collected by Trustee.  


Any monies or property collected by the Trustee pursuant to this
Article shall be applied in the order following, at the date or dates fixed by
the Trustee for the distribution of such monies or property, upon presentation
of the several Notes and either (i) stamping thereon the payment, if only
partially paid, or (ii) upon surrender thereof, if fully paid.


FIRST:  To the payment of all amounts due the Trustee under 
Section 7.06 in connection with the Trustee's performance of its duties
under this Indenture or the Notes;


SECOND:  To the payment of principal (including, for the
avoidance of doubt, any and all unpaid Installment Redemption Amount) and
Default Interest, if any, without preference or priority of any Installment
Redemption Amount over another Installment Redemption Amount, principal over
Default Interest, or of Default Interest over principal, or of any Default
Interest over any other Default Interest, or of any Note over any other Note,
ratably to the aggregate of such principal and Default Interest, if any; and


THIRD:  To the payment of the remainder, if any, to the Company
or the Guarantors or to whomever may be lawfully entitled thereto.


Section 6.04.   Proceedings by
Noteholder.  


No holder of any Note shall have any right by virtue of or by
reference to any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture,
or for the appointment of a receiver, trustee, liquidator, custodian or other
similar official, or for any other remedy hereunder, unless (a) such holder
previously shall have given to the Trustee written notice of an Event of Default
and of the continuance thereof, as hereinbefore provided, (b) the holders of not
less than twenty-five percent (25%) in aggregate principal amount of the Notes
then outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such security or indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for sixty (60) days after its receipt of such notice, request and offer
of indemnity shall have neglected or refused to institute any such action, suit
or proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 6.07; it being understood
and intended, and being expressly covenanted by the taker and holder of every
Note with every other taker and holder and the Trustee, that no one or more
holders of Notes shall have any right in any manner whatever by virtue of or by
reference to any provision of this Indenture to affect, disturb or prejudice the
rights of any other holder of Notes, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
 For the protection and enforcement of this Section each and every Noteholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.


61




Notwithstanding any other provision of this Indenture and any
provision of any Note, the right of any holder of any Note to receive payment of
the principal of (including any Installment Redemption Amount, or the purchase
price upon an Offer to Purchase, in each case pursuant to Article 3) such
Note and Default Interest, if any, on or after the respective due dates (for the
avoidance of doubt, including, with respect to any Installment Redemption
Amount, the Installment Redemption Date on which such Installment Redemption
Amount is due) expressed in such Note or in the event of an Offer to Purchase,
as the case may be, or to institute suit for the enforcement of any such payment
on or after such respective dates against the Company shall not be impaired or
affected without the consent of such holder.


Anything in this Indenture or the Notes to the
contrary notwithstanding, the holder of any Note, without the consent of either
the Trustee or the holder of any other Note, in its own behalf and for its own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, its rights of conversion as provided herein. 



Section 6.05.   Proceedings by Trustee.
 


In case of an Event of Default, the Trustee may, in its
discretion, proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as are necessary to protect
and enforce any of such rights, either by suit in equity or by action at law or
by proceeding in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.


Section 6.06.   Remedies Cumulative and
Continuing.  


Except as provided in Section 2.06, all powers and
remedies given by this Article to the Trustee or to the Noteholders shall, to
the extent permitted by law, be deemed cumulative and not exclusive of any
thereof or of any other powers and remedies available to the Trustee or the
holders of the Notes, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any holder of any of
the Notes to exercise any right or power accruing upon any Default or Event of
Default occurring and continuing as aforesaid shall impair any such right or
power, or shall be construed to be a waiver of any such default or any
acquiescence therein, and, subject to the provisions of Section 6.04,
every power and remedy given by this Article or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Noteholders.


Section 6.07.   Direction of Proceedings
and Waiver of Defaults by Majority of Noteholders.  


The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 12.04
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided that (a) such direction shall
not be in conflict with any rule of law or with this Indenture, (b) the Trustee
may take any other action which is not inconsistent with such direction, (c) the
Trustee may decline to take any action that would benefit some Noteholder to the
detriment of other Noteholders and (d) the Trustee may decline to take any
action that would involve the Trustee in personal liability.  Subject to 
Section 6.01, the holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 12.04
may, on behalf of the holders of all of the Notes, waive any past Default or
Event of Default hereunder and its consequences except (i) a default in the
payment of the principal of the Notes (including, for the avoidance of doubt, a
default to pay any Installment Redemption Amount on the Installment Redemption
Date, on which such Installment Redemption Amount is due) and Default Interest,
if any, (ii) a failure by the Company to convert any Notes into Common Stock,
(iii) a default in the payment of the purchase price pursuant to Section 3.02
or (iv) a default in respect of a covenant or provisions hereof which under 
Article 8 cannot be modified or amended without the consent of the holders
of each or all of the Notes then outstanding or affected thereby.  Upon any such
waiver, the Company, the Trustee and the holders of the Notes shall be restored
to their former positions and rights hereunder; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon.  Whenever any Default or Event of Default hereunder shall
have been waived as permitted by this Section, said Default or Event of Default
shall for all purposes of the Notes and this Indenture be deemed to have been
cured and to be not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.


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Section 6.08.   Notice of Default.
 


If the Trustee receives notice of any Default or Event of Default
from the Company, the Trustee shall mail to all Noteholders, as the names and
addresses of such holders appear upon the Security Register, Notice of the
Default or Event of Default within 90 days after it occurs, unless the Default
or Event of Default shall have been cured or waived before the giving of such
notice; provided that except in the case of default in the payment of the
principal of or Interest on any of the Notes, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Noteholders.


Section 6.09.   Undertaking to Pay Costs.
 


All parties to this Indenture agree, and each holder of any Note
by his acceptance thereof shall be deemed to have agreed, that any court may, in
its discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; 
provided that the provisions of this Section (to the extent permitted by
law) shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Noteholder, or group of Noteholders, holding in the aggregate
more than ten percent in principal amount of the Notes at the time outstanding
determined in accordance with Section 12.04, or to any suit instituted by
any Noteholder for the enforcement of the payment of the principal of or
Interest on any Note on or after the due date expressed in such Note or to any
suit for the enforcement of the right to convert any Note in accordance with the
provisions of Article 14.


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ARTICLE 7



THE TRUSTEE


Section 7.01.   Duties and
Responsibilities of Trustee.  


The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture.  In case an Event of Default has occurred (which has not been cured
or waived), the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.


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


(a)


prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:


(i)


the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Indenture and no implied covenants, duties or
obligations shall be read into this Indenture against the Trustee; and


(ii)


in the absence of bad faith and willful misconduct on the part of
the Trustee, the Trustee may conclusively rely as to the truth of the statements
and the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the Trustee under
this Indenture, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture but
need not confirm or investigate the accuracy of mathematical calculations or
other facts stated therein;


(b)


the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless the
Trustee was negligent in ascertaining the pertinent facts;


(c)


the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Notes at the time outstanding determined as provided in Section 12.04
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee under this Indenture;


64




(d)


whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this Section;


(e)


the Trustee shall not be liable in respect of any payment (as to
the correctness of amount, entitlement to receive or any other matters relating
to payment) or notice effected by the Company or any paying agent or any records
maintained by any co-registrar with respect to the Notes;


(f)


if any party fails to deliver a notice relating to an event the
fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred; and


(g)


the Trustee shall not be deemed to have knowledge of any Default
or Event of Default hereunder unless a Responsible Officer of the Trustee at the
Corporate Trust Office shall have been notified in writing of such Default or
Event of Default by the Company or the holders of at least 25% in aggregate
principal amount of the Notes.


None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.


Section 7.02.   Rights of Trustee.
 


(a)


The Trustee may conclusively rely and shall be protected in
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, note, coupon or other paper or
document (whether in its original or facsimile form) believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties.


(b)


Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company; the
Trustee shall be entitled to accept such certificate as sufficient and
conclusive evidence of the fulfillment of the applicable conditions precedent,
in which event it shall be conclusive and binding on the Noteholders.


(c)


The Trustee may consult with counsel of its own selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel; the Trustee
shall be entitled to accept such opinion as sufficient and conclusive evidence
of the fulfillment of the applicable conditions precedent, in which event it
shall be conclusive and binding on the Noteholders.


65




(d)


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


(e)


The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney at the expense of the Company, and shall incur no
liability of any kind by reason of such inquiry or investigation.


(f)


The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.


(g)


The Trustee shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.


(h)


The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.


(i)


The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded. 


(j)


Any permissive right or authority granted to the Trustee shall
not be construed as a mandatory duty.


(k)


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


(l)


The Trustee shall have no duty to inquire as to the performance
of the Company's covenants herein.


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(m)


Neither the Trustee nor any clearing system through which the
Notes are traded shall have any obligation or duty to monitor, determine or
inquire as to compliance, and shall not be responsible or liable for compliance,
with restrictions on transfer, exchange, redemption, purchase or repurchase, as
applicable, of minimum denominations imposed hereunder or under applicable law
or regulation with respect of any transfer, exchange, redemption, purchase or
repurchase, as applicable, of interest in any Note.


(n)


In the event the Trustee receives inconsistent or conflicting
requests and indemnity from two or more groups of Noteholders, each representing
less than a majority in aggregate principal amount of the Notes then
outstanding, pursuant to the provisions of this Indenture, the Trustee, in its
sole discretion, may determine what action, if any, will be taken.


(o)


The Trustee is entitled to enter into business transactions with
the Company, its Affiliates or any entity related thereto without accounting for
any profit.


(p)


In connection with the exercise of its functions (including but
not limited to those in relation to any proposed modification, authorization,
waiver or substitution), the Trustee will have regard to the interests of the
Noteholders as a class, and will not have regard to the consequences of such
exercise for individual Noteholders. The Trustee will not be entitled to
require, nor will any Noteholder be entitled to claim, from the Company or any
Guarantor, any indemnification or payment in respect of any tax consequences of
any such exercise upon individual Noteholders.


(q)


The Trustee may refrain from taking any action in any
jurisdiction if the taking of such action in that jurisdiction would, in its
opinion based upon legal advice in the relevant jurisdiction, be contrary to any
law of that jurisdiction or, to the extent applicable, of the State of New York.
Furthermore, the Trustee may also refrain from taking such action if it would
otherwise render it liable to any person in that jurisdiction or the State of
New York or if, in its opinion based upon such legal advice, it would not have
the power to do the relevant thing in that jurisdiction by virtue of any
applicable law in that jurisdiction or in the State of New York or if it is
determined by any court or other competent authority in that jurisdiction or in
the State of New York that it does not have such power.


(r)


The Trustee shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Indenture arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities, computer (hardware or software) or
communications service; accidents; labor disputes; acts of civil or military
authority or governmental actions; it being understood that the Trustee shall
use its best efforts to resume performance as soon as practicable under the
circumstances.


(s)


In no event shall the Trustee be liable for any special, indirect
or consequential loss or damage of any kind whatsoever (including, but not
limited to, lost profits), even if the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.


67




Notwithstanding any provision herein to the contrary, the Trustee
shall not be obligated to take any action with respect to an Event of Default
pursuant to Section 6.01(j) and 6.01(l), unless it has been first
notified to do so in writing by the Holders of at least 25% in aggregate
principal amount of the outstanding notes.


Section 7.03.   No Responsibility for
Recitals, Etc.  


The recitals contained herein and in the Notes (except in the
Trustee's certificate of authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same.  The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Notes.  The Trustee shall not be accountable for the
use or application by the Company of any Notes or the proceeds of any Notes
authenticated and delivered by the Trustee in conformity with the provisions of
this Indenture.


Section 7.04.   Trustee, Paying Agents,
Conversion Agents, Depositary or Registrar May Own Notes.
 


The Trustee, any paying agent, any conversion agent, Depositary
or Registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent, Depositary or Registrar.


Section 7.05.   Monies to Be Held in
Trust.  


Subject to the provisions of Section 11.04, all monies
received by the Trustee shall, until used or applied as herein provided, be held
in trust for the purposes for which they were received.  Money held by the
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by law.  The Trustee shall be under no liability for interest on
any money received by it hereunder except as may be agreed in writing from time
to time by the Company and the Trustee.


Section 7.06.   Compensation and
Expenses of Trustee.  


The Company and each Guarantor, jointly and severally, covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation for all services rendered by it hereunder in any
capacity (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) as mutually agreed to from time
to time in writing between the Company and the Trustee, and the Company and each
Guarantor, jointly and severally, will pay or reimburse the Trustee upon its
request for all expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the compensation and the expenses and disbursements of its counsel and of all
Persons not regularly in its employ), except any such expense, disbursement or
advance as shall be determined to have been caused by its own gross negligence
or willful misconduct.  The Company and each Guarantor, jointly and severally,
also covenants to indemnify the Trustee and any predecessor Trustee (or any
officer, director or employee of the Trustee) in any capacity under this
Indenture (which, for the avoidance of doubt, includes its duties as paying
agent, conversion agent, Depositary or Registrar) and its agents and any
authenticating agent for, and to hold them harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes based on
the income of the Trustee) incurred without gross negligence, bad faith or
willful misconduct on the part of the Trustee or such officers, directors,
employees and agents or authenticating agent, as the case may be, and arising
out of or in connection with the acceptance or administration of this trust or
in any other capacity hereunder, including the costs and expenses of defending
themselves against any claim (whether asserted by the Company, any holder or any
other Person) of liability in the premises.  The obligations of the Company
under this Section to compensate or indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Notes.  The obligation of the Company under this
Section shall survive the satisfaction and discharge of this Indenture pursuant
to Article 11 hereof, the termination of this Indenture, the resignation
or removal of the Trustee or payment in full of the Notes through the expiration
of the applicable statute of limitations.


68




To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal, premium,
if any, and interest on particular Notes.  Such Lien shall survive the
satisfaction and discharge of this Indenture pursuant to Article 11
hereof, the termination of this Indenture, the resignation or removal of the
Trustee or payment in full of the Notes through the expiration of the applicable
statute of limitations.


When the Trustee and its agents and any authenticating agent
incur expenses or render services after an Event of Default specified in 
Section 6.01(f) or (g) with respect to the Company occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any bankruptcy, insolvency or similar laws.


Section 7.07.   Eligibility of Trustee.
 


There shall at all times be a Trustee hereunder which shall be a
Person that has a combined capital and surplus of at least $50,000,000 (or, if
such Person is a member of a bank holding company system, its bank holding
company shall have a combined capital and surplus of at least $50,000,000).  If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of any supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.


Section 7.08.   Resignation or Removal
of Trustee.


(a)


The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes.  Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee.  If no successor trustee shall
have been so appointed and have accepted appointment sixty (60) days after the
mailing of such notice of resignation to the Noteholders, the resigning Trustee
may, upon ten (10) Business Days' notice to the Company and the Noteholders,
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor trustee, or, any Noteholder who has been a bona
fide holder of a Note or Notes for at least six (6) months may, subject to the
provisions of Section 6.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
 Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.


69




(b)


In case at any time any of the following shall occur:


(i)


the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.09 and shall fail to resign after written request
therefor by the Company or by any such Noteholder; or


(ii)


the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;


then, in any such case, the Company may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor trustee, or, subject to
the provisions of Section 6.09, any Noteholder who has been a bona fide
holder of a Note or Notes for at least six (6) months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor trustee; 
provided that if no successor Trustee shall have been appointed and have
accepted appointment sixty (60) days after either the Company or such Noteholder
has removed the Trustee, or the Trustee resigns, the Trustee so removed may
petition, at the expense of the Company, any court of competent jurisdiction for
an appointment of a successor trustee.  Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.


(c)


The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee which shall be deemed appointed as successor trustee unless,
within ten (10) days after notice to the Company of such nomination, the Company
objects thereto, in which case the Trustee so removed or any Noteholder, or, if
such Trustee so removed or any Noteholder fails to act, the Company, upon the
terms and conditions and otherwise as in Section 7.08(a) provided, may
petition any court of competent jurisdiction for an appointment of a successor
trustee.


(d)


Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 7.09.


(e)


Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.06 shall continue for
the benefit of the retiring Trustee.


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Section 7.09.   Acceptance by Successor
Trustee.  


Any successor trustee appointed as provided in Section 7.08
shall execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Company or of the
successor trustee, the trustee ceasing to act shall, upon payment of any amount
then due it pursuant to the provisions of Section 7.06, execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the trustee so ceasing to act.  Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers.  Any trustee ceasing to act shall, nevertheless, retain a
lien upon all property and funds held or collected by such trustee as such,
except for funds held in trust for the benefit of holders of particular Notes,
to secure any amounts then due it pursuant to the provisions of Section 7.06.


No successor trustee shall accept appointment as provided in this
Section unless, at the time of such acceptance, such successor trustee shall be
eligible under the provisions of Section 7.07.


Upon acceptance of appointment by a successor trustee as provided
in this Section, the Company (or the former trustee, at the written direction of
the Company) shall mail or cause to be mailed notice of the succession of such
trustee hereunder to the holders of Notes at their addresses as they shall
appear on the Security Register.  If the Company fails to mail such notice
within ten (10) days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Company.


Section 7.10.   Succession by Merger.
 


Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee (including any trust created by this Indenture), shall
be the successor to the Trustee hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that in the case of any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee, such corporation shall be eligible
under the provisions of Section 7.09.  The Trustee shall provide the
Company with a written notice within thirty (30) days after the closing of such
merger, conversion or consolidation.


In any case where at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture, any of the Notes shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee or
authenticating agent appointed by such predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not have
been authenticated, any successor to the Trustee or any authenticating agent
appointed by such successor trustee may authenticate such Notes in the name of
the successor trustee; and in all such cases such certificates shall have the
full force that is provided in the Notes or in this Indenture; provided
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Notes in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.


71




Section 7.11.   Trustee's Application
for Instructions from the Company.  


Any application by the Trustee for written instructions from the
Company (other than with regard to any action proposed to be taken or omitted to
be taken by the Trustee that affects the rights of the holders of the Notes
under this Indenture) may, at the option of the Trustee, set forth in writing
any action proposed to be taken or omitted by the Trustee under this Indenture
and the date on and/or after which such action shall be taken or such omission
shall be effective.  The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than three (3) Business Days after the date any Officer of the
Company actually receives such application, unless any such Officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.


Section 7.12.   Reserved.
 


Section 7.13.   Certain Provisions.


Each Noteholder by accepting a Note authorizes and directs on his
or her behalf the Trustee to enter into and to take such actions and to make
such acknowledgements as are set forth in this Indenture or other documents
entered into in connection therewith.


ARTICLE 8



SUPPLEMENTAL INDENTURES


Section 8.01.   Supplemental Indentures
Without Consent of Noteholders.  


The Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time, and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:


(a)


make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 14.05 and the
purchase obligations of the Company pursuant to the requirements of Section
3.02;


(b)


to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Notes, any property or assets;


72




(c)


to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article 11;


(d)


to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a Default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided that, in respect
of any such additional covenant, restriction or condition, such supplemental
indenture may provide for a particular period of grace after Default (which
period may be shorter or longer than that allowed in the case of other Defaults)
or may provide for an immediate enforcement upon such default or may limit the
remedies available to the Trustee upon such Default;


(e)


to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;


(f)


to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture that shall not materially adversely affect the
interests of the holders of the Notes;


(g)


to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes;


(h)


add additional Guarantees or additional obligors with respect to
the Notes or release Guarantors from guarantees as permitted by the terms of
this Indenture; or


(i)


to increase, from time to time, the per annum interest rate on
the Notes for any period.


Upon the written request of the Company, accompanied by a copy of
the resolutions of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any supplemental indenture (in
form satisfactory to the Trustee), the Trustee is hereby authorized to join with
the Company in the execution of any such supplemental indenture, to make any
further appropriate agreements and stipulations that may be therein contained
and to accept the conveyance, transfer and assignment of any property thereunder;
provided that the Trustee shall not be obligated to, but may in its
discretion, enter into any supplemental indenture that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.


Any supplemental indenture authorized by the provisions of this
Section may be executed by the Company and the Trustee without the consent of
the holders of any of the Notes at the time outstanding, notwithstanding any of
the provisions of Section 8.02.


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Section 8.02.   Supplemental Indenture
with Consent of Noteholders.  


With the consent (evidenced as provided in Article 12) of
the holders of a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental
indenture shall:


(a)


extend the fixed maturity of any Note (including, for the
avoidance of doubt, extending, with respect to any Installment Redemption
Amount, the Installment Redemption Date on which such Installment Redemption
Amount is due); 


(b)


reduce the rate or extend the time of payment of Interest; 



(c)


reduce the principal amount thereof (including, for the avoidance
of doubt, any Installment Redemption Amount) or reduce any amount payable on
redemption or repurchase thereof; 


(d)


change the obligation of the Company to repurchase any Note upon
the happening of a Termination of Trading in a manner adverse to the holders of
Notes;


(e)


impair the right of any Noteholder to institute suit for the
payment thereof; 


(f)


make the principal thereof (including, for the avoidance of
doubt, any Installment Redemption Amount) or Interest payable in any coin or
currency other than that provided in the Notes; 


(g)


impair the right to convert the Notes into Common Stock or reduce
the number of shares of Common Stock or any other property receivable by a
Noteholder upon conversion subject to the terms set forth herein, including 
Section 14.05, in each case, without the consent of the holder of each Note
so affected; 


(h)


modify any of the provisions of this Section or Section 6.07,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the holder of each Note so affected; 


(i)


change any obligation of the Company to maintain an office or
agency in the places and for the purposes set forth in Section 4.02;



(j)


reduce the quorum or voting requirements set forth in Article
13; 


(k)


subordinate the Notes or any Guarantee to any other obligation of
the Company or the applicable Guarantor; 


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(l)


release any security interest that may have been granted in favor
of the holders of the Notes other than pursuant to the terms of such security
interest; 


(m)


at any time after a Change of Control has occurred, change the
time at which the Change of Control Offer relating thereto must be made or at
which the Notes must be repurchased pursuant to such Change of Control Offer;



(n)


at any time after the Company is obligated to make an Asset Sale
Offer with the Excess Proceeds from Asset Sales, change the time at which such
Asset Sale Offer must be made or at which the Notes must be repurchased pursuant
thereto; 


(o)


make any change in any Guarantee that would adversely affect the
holders; or 


(p)


reduce the aforesaid percentage of Notes, the holders of which
are required to consent to any such supplemental indenture, 


in each case, without the consent of the holders of all Notes
then outstanding.


Upon the written request of the Company, accompanied by a copy of
the resolutions of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any such supplemental indenture
(in form satisfactory to the Trustee), and upon the filing with the Trustee of
evidence of the consent of Noteholders as aforesaid, the Trustee shall join with
the Company in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.


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


Section 8.03.   Effect of Supplemental
Indenture.  


Upon the execution of any supplemental indenture pursuant to the
provisions of this Article, this Indenture shall be and shall be deemed to be
modified and amended in accordance therewith and the respective rights,
limitation of rights, obligations, duties and immunities under this Indenture of
the Trustee, the Company and the holders of Notes shall thereafter be
determined, exercised and enforced hereunder, subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.


Section 8.04.   Notation on Notes.
 


Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture.  If the Company or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may, at the Company's expense, be prepared and executed
by the Company, authenticated by the Trustee (or an authenticating agent duly
appointed by the Trustee pursuant to Section 15.10) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.


75




Section 8.05.   Evidence of Compliance
of Supplemental Indenture to Be Furnished to Trustee.
 


Prior to entering into any supplemental indenture, the Trustee
shall be provided with an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article and is otherwise authorized or
permitted by this Indenture.


ARTICLE 9



GUARANTEES


Section 9.01.   Guarantee.


Subject to this Article 9, each Guarantor hereby
unconditionally guarantees to each holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns:  (a) the due
and punctual payment of the principal of and premium, if any, subject to any
applicable grace period, whether at Stated Maturity, by acceleration, redemption
or otherwise (including, for the avoidance of doubt, the due and punctual
payment of each Installment Redemption Amount on the Installment Redemption Date
on which such Installment Redemption Amount is due), the due and punctual
payment of the Default Interest, if any, and the due and punctual performance of
all other obligations of the Company to the holders or the Trustee under this
Indenture or any other agreement with or for the benefit of the holders or the
Trustee, all in accordance with the terms hereof and thereof; and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration pursuant to Section 6.01, redemption or
otherwise.  Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately.  Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.


Each Guarantor hereby agrees that its obligations with regard to
its Guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Notes or the obligations of the Company under
this Indenture, the absence of any action to enforce the same, the recovery of
any judgment against the Company or any other obligor with respect to this
Indenture, the Notes or the Obligations of the Company under this Indenture or
the Notes, any action to enforce the same or any other circumstances (other than
complete performance) which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor.  Each Guarantor further, to the extent
permitted by law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited to:
 (a) any right to require any of the Trustee, the holders or the Company (each a
“Benefited Party”), as a condition of payment or performance by
such Guarantor, to (1) proceed against the Company, any other guarantor
(including any other Guarantor) of the Obligations under the Guarantees or any
other Person, (2) proceed against or exhaust any security held from the Company,
any such other guarantor or any other Person, (3) proceed against or have resort
to any balance of any deposit account or credit on the books of any Benefited
Party in favor of the Company or any other Person, or (4) pursue any other
remedy in the power of any Benefited Party whatsoever; (b) any defense arising
by reason of the incapacity, lack of authority or any disability or other
defense of the Company including any defense based on or arising out of the lack
of validity or the unenforceability of the Obligations under the Guarantees or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of the Company from any cause other than payment in full of the
Obligations under the Guarantees; (c) any defense based upon any statute or rule
of law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (d) any
defense based upon any Benefited Party's errors or omissions in the
administration of the Obligations under the Guarantees, except behavior which
amounts to bad faith; (e)(1) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of the Guarantees
and any legal or equitable discharge of such Guarantor's obligations hereunder,
(2) the benefit of any statute of limitations affecting such Guarantor's
liability hereunder or the enforcement hereof, (3) any rights to set-offs,
recoupments and counterclaims and (4) promptness, diligence and any requirement
that any Benefited Party protect, secure, perfect or insure any security
interest or lien or any property subject thereto; (f) notices, demands,
presentations, protests, notices of protest, notices of dishonor and notices of
any action or inaction, including acceptance of the Guarantees, notices of
Default under the Notes or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Obligations under the
Guarantees or any agreement related thereto, and notices of any extension of
credit to the Company and any right to consent to any thereof; (g) to the extent
permitted under applicable law, the benefits of any “One Action” rule and (h)
any defenses or benefits that may be derived from or afforded by law which limit
the liability of or exonerate guarantors or sureties, or which may conflict with
the terms of the Guarantees.  Except to the extent expressly provided herein,
including Section 9.05, each Guarantor hereby covenants that its
Guarantee shall not be discharged except by complete performance of the
obligations contained in its Guarantee and this Indenture.


76




If any holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such holder, the
Guarantee of such Guarantor, to the extent theretofore discharged, shall be
reinstated in full force and effect.


Each Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
 Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.01
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such obligations as provided in Section 6.01 hereof, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Guarantee.  The Guarantors shall have the
right to seek contribution from any non-paying Guarantor so long as the exercise
of such right does not impair the rights of the holders under the Guarantee.


77




Section 9.02.   Limitation on Guarantor
Liability.


(a)


Each Guarantor, and by its acceptance of Notes, each holder,
hereby confirms that it is the intention of all such parties that the Guarantee
of such Guarantor not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any guarantee.  To effectuate the foregoing intention, the
Trustee, the holders and the Guarantors hereby irrevocably agree that each
Guarantor's liability shall be that amount from time to time equal to the
aggregate liability of such Guarantor under the guarantee, but shall be limited
to the lesser of (a) the aggregate amount of the Company's obligations under the
Notes and this Indenture or (b) the amount, if any, which would not have (1)
rendered the Guarantor “insolvent” (as such term is defined in Bankruptcy Law
and in the Debtor and Creditor Law of the State of New York) or (2) left it with
unreasonably small capital at the time its guarantee with respect to the Notes
was entered into, after giving effect to the incurrence of existing Debt
immediately before such time; provided, however, it shall be a
presumption in any lawsuit or proceeding in which a Guarantor is a party that
the amount guaranteed pursuant to the guarantee with respect to the Notes is the
amount described in clause (a) above unless any creditor, or representative of
creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in a lawsuit that the aggregate liability of the
Guarantor is limited to the amount described in clause (b). 


(b)


In making any determination as to the solvency or sufficiency of
capital of a Guarantor in accordance with the proviso of Section 9.02(a),
the right of each Guarantor to contribution from other Guarantors and any other
rights such Guarantor may have, contractual or otherwise, shall be taken into
account.


Section 9.03.   Execution and Delivery
of Guarantee.


To evidence its Guarantee set forth in Section 9.01, each
Guarantor hereby agrees that a notation of such Guarantee in substantially the
form included in Exhibit B attached hereto shall be endorsed by an
Officer of such Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor by
its President or one of its Vice Presidents.


Each Guarantor hereby agrees that its Guarantee set forth in 
Section 9.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.


If an Officer whose signature is on this Indenture or on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Guarantee is endorsed, the Guarantee shall be valid
nevertheless.


78




The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantors.


The Company hereby agrees that it shall cause each Person that
becomes obligated to provide a Guarantee pursuant to Section 4.18 (each,
a “Future Guarantor”) to execute a supplemental indenture in form
and substance satisfactory to the Trustee, pursuant to which such Person
provides the guarantee set forth in this Article 9 and otherwise assumes
the obligations and accepts the rights of a Guarantor under this Indenture, in
each case with the same effect and to the same extent as if such Person had been
named herein as a Guarantor.  The Company also hereby agrees to cause each such
new Guarantor to evidence its guarantee by endorsing a notation of such
guarantee on each Note as provided in this Section.


Section 9.04.   Guarantors May
Consolidate, etc., on Certain Terms.


Except as otherwise provided in Section 9.05, no Guarantor
may consolidate with or merge with or into (whether or not such Guarantor is the
Surviving Person) another Person whether or not affiliated with such Guarantor
unless:


(a)


subject to Section 9.05, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance satisfactory to the Trustee, under
this Indenture, the Guarantee on the terms set forth herein or therein; and


(b)


the Guarantor complies with the requirements of Article 5
hereof.


In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form and substance to the
Trustee, of the Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor.  Such successor Person thereupon may cause to be signed
any or all of the Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee.  All the Guarantees so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Guarantees had been issued at the date of the execution
hereof.


Except as set forth in Articles 4 and 5, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.


Section 9.05.   Releases Following
Merger, Consolidation or Sale of Assets, Etc.


In the event of a sale or other disposition of all or
substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the Capital
Stock of any Guarantor, in each case to a Person that is not (either before or
after giving effect to such transactions) a Subsidiary of the Company, then such
Guarantor (in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the Capital Stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be released and relieved of any obligations under its Guarantee; provided
that the net proceeds of such sale or other disposition shall be applied in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.12. Upon delivery by the Company to the Trustee of
an Officers' Certificate and an Opinion of Counsel to the effect that such sale
or other disposition was made by the Company in accordance with the provisions
of this Indenture, including without limitation Section 4.12, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Guarantee.


79




Any Guarantor not released from its obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 9.


ARTICLE 10



[RESERVED]


ARTICLE 11



SATISFACTION AND DISCHARGE OF INDENTURE


Section 11.01.   Discharge of Indenture.
 


When (a) the Company shall deliver to the Trustee for
cancellation all Notes theretofore authenticated (other than any Notes that have
been mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Notes shall have been authenticated and delivered) and not
theretofore canceled, or (b) all the Notes not theretofore canceled or delivered
to the Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within three years or are to be called for
redemption within three years under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity (or with respect to any
Installment Redemption Amount, the Installment Redemption Date on which such
Installment Redemption Amount is due) or upon redemption of all of the Notes
(other than any Notes that shall have been mutilated, destroyed, lost or stolen
and in lieu of or in substitution for which other Notes shall have been
authenticated and delivered) not theretofore canceled or delivered to the
Trustee for cancellation, including principal (including, for the avoidance of
doubt, any Installment Redemption Amount) and Interest due or to become due to
such date of maturity, the applicable Installment Redemption Date or redemption
date, as the case may be, accompanied by a verification report, as to the
sufficiency of the deposited amount, from an independent certified accountant or
other financial professional satisfactory to the Trustee, and if the Company
shall also pay or cause to be paid all other sums payable hereunder by the
Company, and in the case of either clause (a) or (b), no Default or Event of
Default with respect to this Indenture or the Notes shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit shall not result in a breach or violation of, or
constitute a default under, any other instrument or agreement to which the
Company is a party or by which it is bound, then this Indenture shall cease to
be of further effect (except as to (i) remaining rights of registration of
transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders to receive payments of principal (including, for the
avoidance of doubt, any Installment Redemption Amount) of and Default Interest,
if any, on the Notes and the other rights, duties and obligations of Noteholders,
as beneficiaries hereof with respect to the amounts, if any, so deposited with
the Trustee and (iii) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on written demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 15.05
and at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter incurred by the Trustee and to compensate the Trustee for any
services thereafter rendered by the Trustee in connection with this Indenture or
the Notes. The Trustee shall hold in trust money deposited with it pursuant to
this Article. It shall apply the deposited money through the Paying Agent and in
accordance with this Indenture to the payment of principal (including, for the
avoidance of doubt, any Installment Redemption Amount) of and Interest, if any,
on the Notes. 


80




Section 11.02.   Deposited Monies to Be
Held in Trust by Trustee.  


Subject to Section 11.04, all monies deposited with the
Trustee pursuant to Section 11.01 shall be held in trust for the sole
benefit of the Noteholders, and such monies shall be applied by the Trustee to
the payment, either directly or through any paying agent (including the Company
if acting as its own paying agent), to the holders of the particular Notes for
the payment or redemption of which such monies have been deposited with the
Trustee of all sums due and to become due thereon for principal (including, for
the avoidance of doubt, any Installment Redemption Amount), premium, if any, and
Interest, if any.


Section 11.03.   Paying Agent to Repay
Monies Held.  


Upon the satisfaction and discharge of this Indenture, all monies
then held by any paying agent of the Notes (other than the Trustee) shall, upon
written request of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such monies.


Section 11.04.   Return of Unclaimed
Monies.  


Subject to the requirements of applicable law, any monies
deposited with or paid to the Trustee for payment of the principal (including,
for the avoidance of doubt, any Installment Redemption Amount) or Interest, if
any, on Notes and not applied but remaining unclaimed by the holders of Notes
for two years (or such shorter period of time under applicable escheat law)
after the date upon which the principal (including, for the avoidance of doubt,
any Installment Redemption Amount) of or Interest, if any, on such Notes, as the
case may be, shall have become due and payable, shall be repaid to the Company
by the Trustee on demand and all liability of the Trustee shall thereupon cease
with respect to such monies; and the holder of any of the Notes shall thereafter
look only to the Company for any payment that such holder may be entitled to
collect unless an applicable abandoned property law designates another Person.


81




Section 11.05.   Reinstatement.
 


If the Trustee or the paying agent is unable to apply any money
in accordance with Section 11.02 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and
the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 11.01 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 11.02;
provided that, if the Company makes any payment of Interest, if any, on
or principal (including, for the avoidance of doubt, any Installment Redemption
Amount) of any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the holders of such Notes to receive such
payment from the money held by the Trustee or paying agent.


ARTICLE 12



THE NOTEHOLDERS


Section 12.01.   Action by Noteholders.
 


Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Notes may take any
action (including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that, at the time
of taking any such action, the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by Noteholders in person or by agent or proxy appointed
in writing, or (b) by the record of the holders of Notes voting in favor thereof
at any meeting of Noteholders duly called and held in accordance with the
provisions of Article 13, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Noteholders.  Whenever the
Company or the Trustee solicits the taking of any action by the Noteholders, the
Company or the Trustee may fix in advance of such solicitation a date as the
record date for determining holders entitled to take such action.  The record
date shall be not more than fifteen (15) days prior to the date of commencement
of solicitation of such action.


Section 12.02.   Proof of Execution by
Noteholders.  


Subject to the provisions of Sections 7.01, 7.02
and 13.04, proof of the execution of any instrument by a Noteholder or
its agent or proxy shall be sufficient if made in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee.  The holding of Notes shall be
proved by the registry of such Notes or by a certificate of the Registrar.


The record of any Noteholders' meeting shall be proved in the
manner provided in Section 13.05.


Section 12.03.   Who Are Deemed Absolute
Owners.  


The Company, the Trustee, any paying agent, any conversion agent,
any Depositary and any Registrar may deem the Person in whose name such Note
shall be registered upon the Security Register to be, and may treat it as, the
absolute owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon made by any
Person other than the Company or any Registrar) for the purpose of receiving
payment of or on account of the principal (including, for the avoidance of
doubt, any Installment Redemption Amount) of and Interest, if any, on such Note,
for conversion of such Note and for all other purposes; and neither the Company
nor the Trustee nor any paying agent, Depositary, conversion agent nor any
Registrar shall be affected by any notice to the contrary.  All such payments so
made to any holder for the time being, or upon such holder's order, shall be
valid and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for monies payable upon any such Note.


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Section 12.04.   Company-owned Notes
Disregarded.  


In determining whether the holders of the requisite aggregate
principal amount of Notes have concurred in any direction, consent, waiver or
other action under this Indenture, Notes which are owned by the Company or any
other obligor on the Notes or any Affiliate of the Company or any other obligor
on the Notes shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that, for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, consent, waiver or other action, only Notes which a Responsible
Officer knows are so owned shall be so disregarded.  Notes so owned which have
been pledged in good faith may be regarded as outstanding for the purposes of
this Section if the pledgee shall establish to the satisfaction of the Trustee
the pledgee's right to vote such Notes and that the pledgee is not the Company,
any other obligor on the Notes or any Affiliate of the Company or any such other
obligor.  In the case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.  Upon
request of the Trustee, the Company shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Notes, if any, known by the
Company to be owned or held by or for the account of any of the above-described
Persons, and, subject to Section 7.01, the Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts therein
set forth and of the fact that all Notes not listed therein are outstanding for
the purpose of any such determination.


Section 12.05.   Revocation of Consents;
Future Holders Bound.  


At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 12.01, of the taking of any action by the
holders of the percentage in aggregate principal amount of the Notes specified
in this Indenture in connection with such action, any holder of a Note which is
shown by the evidence to be included in the Notes the holders of which have
consented to such action may, by filing written notice with the Trustee at its
Corporate Trust Office and upon proof of holding as provided in Section 12.02,
revoke such action so far as concerns such Note.  Except as aforesaid, any such
action taken by the holder of any Note shall be conclusive and binding upon such
holder and upon all future holders and owners of such Note and of any Notes
issued in exchange or substitution therefor, irrespective of whether any
notation in regard thereto is made upon such Note or any Note issued in exchange
or substitution therefor.


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ARTICLE 13



MEETINGS OF NOTEHOLDERS


Section 13.01.   Purpose of Meetings.
 


A meeting of Noteholders may be called at any time and from time
to time pursuant to the provisions of this Article for any of the following
purposes:


(a)


to give any notice to the Company or to the Trustee or to give
any directions to the Trustee permitted under this Indenture, or to consent to
the waiving of any Default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by Noteholders pursuant to
any of the provisions of Article 6;


(b)


to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article 7;


(c)


to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 8.02; or


(d)


to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of the Notes under
any other provision of this Indenture or under applicable law.


Section 13.02.   Call of Meetings by
Company or Noteholders.  


In case at any time the Company, pursuant to a resolution of its
Board of Directors, or the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes then outstanding, shall have requested
the Trustee to call a meeting of Noteholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within twenty (20) days
after receipt of such request, then the Company or such Noteholders may
determine the time and the place for such meeting and may call such meeting to
take any action authorized in Section 13.01 by mailing notice a notice of
meeting. Notice of every meeting of the Noteholders, setting forth the time and
place of such meeting and in general terms the action proposed to be taken at
such meeting and the establishment of any record date pursuant to Section
12.01, shall be mailed to holders of Notes at their addresses as they shall
appear on the Security Register.  Such notice shall also be mailed to the
Company.  Such notices shall be mailed not less than twenty (20) nor more than
ninety (90) days prior to the date fixed for the meeting.


Any meeting of Noteholders shall be valid without notice if the
holders of all Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.


Section 13.03.   Qualifications for
Voting.  


To be entitled to vote at any meeting of Noteholders, a person
shall (a) be a holder of one or more Notes on the record date pertaining to such
meeting or (b) be a person appointed by an instrument in writing as proxy by a
holder of one or more Notes on the record date pertaining to such meeting.  The
only persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.


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Section 13.04.   Regulations.
 


Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Noteholders, in regard to proof of the holding of Notes and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.


The Company or the Noteholders calling the meeting, as the case
may be, shall, by an instrument in writing, appoint a temporary chairman of the
meeting.  A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of a majority in principal amount of the Notes
represented at the meeting and entitled to vote at the meeting.


Subject to the provisions of Section 12.04, at any meeting
each Noteholder or proxyholder shall be entitled to one vote for each $100,000
principal amount of Notes held or represented by him; provided that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding.  The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders.  Any
meeting of Noteholders duly called pursuant to the provisions of Section
13.02 may be adjourned from time to time by the holders of a majority of the
aggregate principal amount of Notes represented at the meeting, whether or not
constituting a majority of the aggregate principal amount of Notes outstanding,
the latter of which shall constitute a quorum, and the meeting may be held as so
adjourned without further notice.


Section 13.05.   Voting.
 


The vote upon any resolution submitted to any meeting of
Noteholders shall be by written ballot on which shall be subscribed the
signatures of the holders of Notes or of their representatives by proxy and the
outstanding principal amount of the Notes held or represented by them.  The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting.  A record in duplicate of
the proceedings of each meeting of Noteholders shall be prepared by the
secretary of the meeting, and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
mailed as provided in Section 13.02.  The record shall show the principal
amount of the Notes voting in favor of or against any resolution.  The record
shall be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.


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Any record so signed and verified shall be conclusive evidence of
the matters therein stated.


Section 13.06.   No Delay of Rights by
Meeting.  


Nothing contained in this Article shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Noteholders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Noteholders under any of the provisions of
this Indenture or of the Notes.


ARTICLE 14



CONVERSION OF NOTES


Section 14.01.   Right to Convert.
 


(a)


Subject to and upon compliance with the provisions of this
Indenture, the holder of any Note shall have the right, at such holder's option
at any time prior to the close of business on the date of maturity of the Notes,
to convert the principal amount of the Note, or any portion of such principal
amount which is a multiple of $1,000, into fully paid and non-assessable shares
of Common Stock (as such shares shall then be constituted) at the Conversion
Rate in effect at such time, by surrender of the Note so to be converted in
whole or in part, together with any required funds, under the circumstances
described in this Section and in the manner provided in Section 14.02.  


(b)


A Note in respect of which a holder is electing to exercise its
option to require the Company to purchase such holder's Notes upon an Asset Sale
Offer, Change of Control Offer or Termination of Trading Offer pursuant to 
Section 3.02 may be converted only if such holder withdraws its election in
accordance with Section 3.02.  A holder of Notes is not entitled to any
rights of a holder of Common Stock until such holder has converted his Notes to
Common Stock, and only to the extent such Notes are deemed to have been
converted to Common Stock under this Article.


Section 14.02.   Exercise of Conversion
Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or
Dividends.  


In order to exercise the conversion right with respect to any
Note in certificated form, the Company must receive at the office or agency of
the Company maintained for that purpose or, at the option of such holder, the
Corporate Trust Office, such Note with the original or facsimile of the form
entitled “Conversion Notice” on the reverse thereof, duly
completed and manually signed, together with such Notes duly endorsed for
transfer, accompanied by the funds, if any, required by this Section.  Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock which shall be
issuable on such conversion shall be issued, and shall be accompanied by
transfer or similar taxes, if required pursuant to Section 14.08.


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In order to exercise the conversion right with respect to any
interest in a Global Note, the beneficial holder must complete, or cause to be
completed, the appropriate instruction form for conversion pursuant to the
Depositary's book-entry conversion program, deliver, or cause to be delivered,
by book-entry delivery an interest in such Global Note, furnish appropriate
endorsements and transfer documents if required by the Company or the Trustee or
conversion agent, and pay the funds, if any, required by this Section and any
transfer taxes if required pursuant to Section 14.08.


As promptly as practicable after satisfaction of the requirements
for conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such Noteholder at the office or agency maintained by the Company for such
purpose pursuant to Section 4.02 a certificate or certificates for the
number of full shares of Common Stock issuable upon the conversion of such Note
or portion thereof as determined by the Company in accordance with the
provisions of this Article and a check or cash in respect of any fractional
interest in respect of a share of Common Stock arising upon such conversion,
calculated by the Company as provided in Section 14.03.  In case any Note
of a denomination greater than $100,000 shall be surrendered for partial
conversion, and subject to Section 2.03, the Company shall execute and
the Trustee shall authenticate and deliver to the holder of the Note so
surrendered, without charge to such holder, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.


Each conversion shall be deemed to have been effected as to any
such Note (or portion thereof) on the date (the “Conversion Date”)
on which the requirements set forth above in this Section have been satisfied as
to such Note (or portion thereof), and the Person in whose name any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become on said date the holder of record of
the shares represented thereby; provided that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
constitute the Person in whose name the certificates are to be issued as the
record holder thereof for all purposes on the next succeeding day on which such
stock transfer books are open, but such conversion shall be at the Conversion
Rate in effect on the date upon which such Note shall be surrendered.


Upon the conversion of an interest in a Global Note, the Trustee
(or other conversion agent appointed by the Company), or the Custodian at the
direction of the Trustee (or other conversion agent appointed by the Company),
shall make a notation on such Global Note as to the reduction in the principal
amount represented thereby.  The Company shall notify the Trustee in writing of
any conversions of Notes effected through any conversion agent other than the
Trustee.


Upon the conversion of a Note, that portion of Default Interest,
if any, to the Conversion Date, with respect to the converted Note shall not be
canceled, extinguished or forfeited, but rather shall be deemed to be paid in
full to the holder thereof through delivery of the Common Stock (together with
the cash payment, if any in lieu of fractional shares) in exchange for the Note
being converted pursuant to the provisions hereof, and the Fair Market Value of
such shares of Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first in
exchange for and in satisfaction of the Company's obligation to pay the
principal amount of the converted Note, the Default Interest, if any, through
the Conversion Date and the balance, if any, of such Fair Market Value of such
Common Stock (and any such cash payment) shall be treated as issued in exchange
for and in satisfaction of the right to convert the Note being converted
pursuant to the provisions hereof.


87




Section 14.03.   Cash Payments in Lieu
of Fractional Shares.  


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


Section 14.04.   Conversion Rate.
 


Each $100,000 principal amount of the Notes shall be initially
convertible into 10,000 shares of Common Stock at the initial Conversion
Price of $10.00 per share, as specified in the form of Note (herein called the “Conversion
Rate”) attached as Exhibit A hereto, subject to adjustment as
provided in this Article.


Section 14.05.   Adjustment of
Conversion Rate.  


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


(a)


In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Rate shall be increased so that the same shall equal the
rate determined by multiplying the Conversion Rate in effect at the opening of
business on the date following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution by a
fraction,


(i)


the numerator of which shall be the sum of the number of shares
of Common Stock outstanding at the close of business on the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution plus the total number of shares of Common Stock constituting such
dividend or other distribution; and


(ii)


the denominator of which shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination,


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such increase to become effective immediately after the opening
of business on the day following the date fixed for such determination.  For the
purpose of this paragraph (a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company.  The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.  If any dividend or distribution of
the type described in this Section 14.05(a) is declared but not so paid
or made, the Conversion Rate shall again be adjusted to the Conversion Rate that
would then be in effect if such dividend or distribution had not been declared.


(b)


In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them (for a period expiring
within forty-five (45) days after the date fixed for determination of
shareholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price immediately preceding the date such distribution is first publicly
announced by the Company, the Conversion Rate shall be increased so that the
same shall equal the rate determined by multiplying the Conversion Rate in
effect immediately prior to the date fixed for determination of shareholders
entitled to receive such rights or warrants by a fraction,


(i)


the numerator of which shall be the number of shares of Common
Stock outstanding on the date fixed for determination of shareholders entitled
to receive such rights or warrants plus the total number of additional shares of
Common Stock offered for subscription or purchase, and


(ii)


the denominator of which shall be the sum of the number of shares
of Common Stock outstanding at the close of business on the date fixed for
determination of shareholders entitled to receive such rights or warrants plus
the number of shares that the aggregate offering price of the total number of
shares so offered would purchase at a price equal to the Current Market Price
immediately preceding the date such distribution is first publicly announced by
the Company,


such adjustment shall be successively made whenever any such
rights or warrants are issued, and shall become effective immediately after the
opening of business on the day following the date fixed for determination of
shareholders entitled to receive such rights or warrants.  To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Conversion Rate shall be readjusted to the Conversion Rate that
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered.  If such rights or warrants are not
so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate
that would then be in effect if such date fixed for the determination of
shareholders entitled to receive such rights or warrants had not been fixed.  In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase shares of Common Stock at a price less than the Current Market Price
immediately preceding the date such distribution is first publicly announced by
the Company, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants and any amount payable on exercise or
conversion thereof, the value of such consideration, if other than cash, to be
determined by the Board of Directors.


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(c)


In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately reduced, such increase or reduction,
as the case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.


(d)


In case the Company shall, by dividend or otherwise, distribute
to all holders of Common Stock shares of any class of capital stock of the
Company or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 14.05(b), and
excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 14.05(a) (any of the foregoing hereinafter in this
Section 14.05(d) called the “Securities”)), then, in each
such case (unless the Company elects to reserve such Securities for distribution
to the Noteholders upon the conversion of the Notes so that any such holder
converting Notes will receive upon such conversion, in addition to the shares of
Common Stock to which such holder is entitled, the amount and kind of such
Securities which such holder would have received if such holder had converted
its Notes into Common Stock immediately prior to the Record Date for such
distribution of the Securities) the Conversion Rate shall be increased so that
the same shall be equal to the rate determined by multiplying the Conversion
Rate in effect on the Record Date with respect to such distribution by a
fraction,


(i)


the numerator of which shall be the Current Market Price on such
Record Date; and


(ii)


the denominator of which shall be the Current Market Price on
such Record Date less the Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) on the Record Date of the portion of the
Securities so distributed applicable to one share of Common Stock,


such adjustment to become effective immediately prior to the
opening of business on the day following such Record Date; provided that,
if the then Fair Market Value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of Securities such
holder would have received had such holder converted each Note on the Record
Date.  If such dividend or distribution is not so paid or made, the Conversion
Rate shall again be adjusted to be the Conversion Rate that would then be in
effect if such dividend or distribution had not been declared.  If the Board of
Directors determines the Fair Market Value of any distribution for purposes of
this Section 14.05(d) by reference to the actual or when issued trading
market for any securities, it must in doing so consider the prices in such
market over the same period used in computing the Current Market Price on the
applicable Record Date.  Notwithstanding the foregoing, if the Securities
distributed by the Company to all holders of its Common Stock consist of capital
stock of, or similar equity interests in, a Subsidiary or other business unit,
the Conversion Rate shall be increased so that the same shall be equal to the
rate determined by multiplying the Conversion Rate in effect on the Record Date
with respect to such distribution by a fraction,


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(i)


the numerator of which shall be the sum of (A) the average of the
Closing Sale Prices of the Common Stock for the ten (10) Trading Days commencing
on and including the fifth Trading Day after the Ex-Dividend Time plus (B) the
Fair Market Value of the securities distributed in respect of each share of
Common Stock for which this Section 14.05(d) applies, which shall equal
the number of Securities distributed in respect of each share of Common Stock
multiplied by the average of the closing sale prices of those Securities
distributed (where such closing sale prices are available) for the ten (10)
Trading Days commencing on and including the fifth Trading Day after the
Ex-Dividend Time; and


(iii)


the denominator of which shall be the average of the Closing Sale
Prices of the Common Stock for the ten (10) Trading Days commencing on and
including the fifth Trading Day after the Ex-Dividend Time,


such adjustment to become effective immediately prior to the
opening of business on the day following such Record Date; provided that
the Company may in lieu of the foregoing adjustment make adequate provision so
that each Noteholder shall have the right to receive upon conversion the amount
of Securities such holder would have received had such holder converted each
Note on the Record Date with respect to such distribution.


Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events (“Trigger Event”):  (i) are deemed to be
transferred with such shares of Common Stock; (ii) are not exercisable; and
(iii) are also issued in respect of future issuances of Common Stock, shall be
deemed not to have been distributed for purposes of this Section (and no
adjustment to the Conversion Rate under this Section will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and warrants
shall be deemed to have been distributed and an appropriate adjustment (if any
is required) to the Conversion Rate shall be made under this Section 14.05(d).
 If any such right or warrant, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to events, upon the
occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof).  In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Rate under this Section was
made, (1) in the case of any such rights or warrants that shall all have been
redeemed or repurchased without exercise by any holders thereof, the Conversion
Rate shall be readjusted upon such final redemption or repurchase to give effect
to such distribution or Trigger Event, as the case may be, as though it were a
cash distribution, equal to the per share redemption or repurchase price
received by a holder or holders of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of such rights or warrants that shall have expired or been
terminated without exercise by any holders thereof, the Conversion Rate shall be
readjusted as if such rights and warrants had not been issued.


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No adjustment of the Conversion Rate shall be made pursuant to
this Section 14.05(d) in respect of rights or warrants distributed or
deemed distributed on any Trigger Event to the extent that such rights or
warrants are actually distributed, or reserved by the Company for distribution
to holders of Notes upon conversion by such holders of Notes to Common Stock.


For purposes of this Section 14.05(d) and Sections
14.05(a) and 14.05(b), any dividend or distribution to which this 
Section 14.05(d) is applicable that also includes shares of Common Stock, or
rights or warrants to subscribe for or purchase shares of Common Stock (or
both), shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets or shares of capital stock other than such
shares of Common Stock or rights or warrants (and any Conversion Rate adjustment
required by this Section 14.05(d) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants (and any
further Conversion Rate adjustment required by Sections 14.05(a) and 
14.05(b) with respect to such dividend or distribution shall then be made),
except (A) the Record Date of such dividend or distribution shall be substituted
as “the date fixed for the determination of shareholders entitled to receive
such dividend or other distribution”, “the date fixed for the determination of
shareholders entitled to receive such rights or warrants” and “the date fixed
for such determination” within the meaning of Sections 14.05(a) and 
14.05(b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed “outstanding at the close of business on the
date fixed for such determination” within the meaning of Section 14.05(a).


(e)


In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any dividend or distribution
in connection with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary), then, in such case, the Conversion Rate shall
be increased so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on such
Record Date by a fraction,


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(i)


the numerator of which shall be the Current Market Price on such
Record Date; and


(ii)


the denominator of which shall be the Current Market Price on
such Record Date less the amount of cash so distributed applicable to one share
of Common Stock,


such adjustment to be effective immediately prior to the opening
of business on the day following the Record Date; provided that if the
portion of the cash so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price on the Record Date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion the amount of cash
such holder would have received had such holder converted each Note on the
Record Date.  If such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been declared.


(f)


In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to shareholders of consideration per share of Common Stock having a
Fair Market Value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that as of the last time (the “Expiration Time”) tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended) exceeds the Closing Sale Price of a share of Common Stock on the
Trading Day next succeeding the Expiration Time, the Conversion Rate shall be
increased so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the Expiration Time by a
fraction,


(i)


the numerator of which shall be the sum of (x) the Fair Market
Value (determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted up to any
such maximum, being referred to as the “Purchased Shares”) and (y)
the product of the number of shares of Common Stock outstanding (less any
Purchased Shares) at the Expiration Time and the Closing Sale Price of a share
of Common Stock on the Trading Day next succeeding the Expiration Time, and


(ii)


the denominator of which shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) at the Expiration
Time multiplied by the Closing Sale Price of a share of Common Stock on the
Trading Day next succeeding the Expiration Time,


such adjustment to become effective immediately prior to the
opening of business on the day following the Expiration Time.  If the Company is
obligated to purchase shares pursuant to any such tender or exchange offer, but
the Company is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Rate shall again
be adjusted to be the Conversion Rate that would then be in effect if such
tender or exchange offer had not been made.


93




(g)


On March 2, 2011, the Conversion Rate shall be adjusted to equal the
quotient obtained by dividing (i) $100,000 by (ii) the Trading Reference VWAP;
provided that no such adjustment shall be made if the number of shares
issuable upon conversion of the Notes at such adjusted Conversion Rate would be
lower than the number of shares issuable at then existing Conversion Rate (after
giving effect to prior adjustments permitted pursuant to this clause).


(h)


If at any time after the Issue Date the Company shall issue or
sell its Common Stock at a price per share less than 80.0% of the Current Market
Price then in effect (provided, however, that in connection with issuance or
sales of Common Stock to Persons other than an Affiliate of the Company in
transactions that do not price and close on the same date, if the Current Market
Price of the Common Stock appreciates between the date of the pricing and the
closing of the transaction, then determination of whether this provision is
implicated will be based upon the date of the pricing and not the closing of
such transaction), the Conversion Rate shall be increased such that the
Conversion Price is equal to the lowest price at which the Company has issued or
sold its Common Stock after the Issue Date such adjustment (hereinafter referred
to as the "Special Adjustment") to take effect as of the date of the
issuance or sale of such Common Stock; provided, however, that
no Special Adjustment shall be made to the Conversion Price for the (i) issuance
of Common Stock pursuant to exercise of warrants existing on the Issue Date,
(ii) issuance of Common Stock or any other securities exercisable into shares of
Common Stock (so long as all such issuances in the aggregate do not exceed
twenty percent (20%) of the Common Stock of the Company issued and outstanding
immediately prior to such issuance or grants) pursuant to exercise of stock
options whether granted or reserved under the Company's 2007 Equity Incentive
Plan, (iii) issuance or sale of any Common Stock or any other securities
exercisable into shares of Common Stock,(x) fifty percent (50%) of the proceeds
of which are used for the repayment of the outstanding principal amount of the
Notes within fifteen (15) Business Days following the receipt thereof and (y)
the remaining fifty percent (50%) of the proceeds of which are used for the
repayment of the outstanding principal amount of the Notes on or prior to the
Installment Redemption Date immediately falling thereafter (it being understood
that, in the case of (y), the Company shall be permitted to use such proceeds
for general working capital purposes pending such Installment Redemption
Date). Notwithstanding the foregoing provisions, the Company shall not be
obligated to make the Special Adjustment as required under this Section 14.05(h)
if the Special Adjustment shall cause the Company to breach its obligations
under the rules or regulations of any applicable Trading Market, provided
that such limitation shall not apply in the event that the Company (A)
obtains the relevant approval of its stockholders as required by the applicable
rules of such Trading Market and the Special Adjustment is or would otherwise be
in compliance with the applicable rules of such Trading Market or (B) obtains a
written opinion from outside counsel to the Company that such approval is not
required and the Special Adjustment is otherwise in compliance with the
applicable rules of such Trading Market; and provided, further, that in
the event that the Company issues or sells any of its Common Stock as provided
in this Section 14.05(h) but does not make the Special Adjustment as provided in
this Section 14.05(h) (except in cases described in subclauses (i) and (ii) in
this Section 14.05(h)), the Company shall apply the proceeds from such issuance
or sale in the manner provided in subclause (iii) in this Section 14.05(h).


94




(i)


For purposes of this Section 14.05, the following terms
shall have the meaning indicated:


(i)


“Current Market Price” shall mean the average of
the daily Closing Sale Prices per share of Common Stock for the twenty (20)
consecutive Trading Days ending on the earlier of the Trading Day immediately
preceding the relevant date and the day before the “ex” date with respect to the
closing of the issuance, distribution, subdivision or combination requiring such
computation.  For purpose of this paragraph, the term “ex” date, (1) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades, regular way, on the relevant exchange or in the relevant
market from which the Closing Sale Price was obtained without the right to
receive such issuance or distribution, and (2) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date on
which the Common Stock trades, regular way, on such exchange or in such market
after the time at which such subdivision or combination becomes effective.


If another issuance, distribution, subdivision or combination to
which Section 14.05 applies occurs during the period applicable for
calculating “Current Market Price” pursuant to the definition in the preceding
paragraph, “Current Market Price” shall be calculated for such period in a
manner determined by the Board of Directors to reflect the impact of such
issuance, distribution, subdivision or combination on the Closing Sale Price of
the Common Stock during such period.


(ii)


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


(iii)


“Trading Day” shall mean (x) if the applicable
security is quoted on the NASDAQ Global Market, the NASDAQ Global Select Market
or the NASDAQ Capital Market, a day on which trades may be made thereon, (y) if
the applicable security is listed or admitted for trading on the American Stock
Exchange, New York Stock Exchange or another national securities exchange, a day
on which the American Stock Exchange, New York Stock Exchange or another
national securities exchange is open for business, or (z) if the applicable
security is not so listed, admitted for trading or quoted, any day other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.


95




(j)


The Company may make such increases in the Conversion Rate, in
addition to those required by Section 14.05(a) through (h) as the
Board of Directors considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes.


To the extent permitted by applicable law and NASDAQ Marketplace
rules, the Company from time to time may increase the Conversion Rate by any
amount for any period of time if the period is at least twenty (20) Business
Days, the increase is irrevocable during the period and the Board of Directors
shall have made a determination that such increase would be in the best
interests of the Company, which determination shall be conclusive.  Whenever the
Conversion Rate is increased pursuant to the preceding sentence, the Company
shall mail to holders of record of the Notes a notice of the increase at least
fifteen (15) days prior to the date the increased Conversion Rate takes effect,
and such notice shall state the increased Conversion Rate and the period during
which it will be in effect.


(k)


No adjustment in the Conversion Rate shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such rate; provided that any adjustments that by reason of this
Section 14.05(l) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under this
Article shall be made by the Company and shall be made to the nearest cent or to
the nearest one-ten thousandth (1/10,000) of a share, as the case may be.  No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest or for any issuance of
Common Stock or convertible or exchangeable securities or rights to purchase
Common Stock or convertible or exchangeable securities.  To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities.  Interest will not accrue on any cash into
which the Notes are convertible.


(l)


Whenever the Conversion Rate is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Rate after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.  Unless and until a Responsible Officer of the Trustee shall have
received such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Rate and may assume that the last
Conversion Rate of which it has knowledge is still in effect.  Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and
the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Conversion Rate to the holder of each Note at his last
address appearing on the Security Register provided for in Section 4.02
of this Indenture, within twenty (20) days after execution thereof.  Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.


96




(m)


In any case in which this Section provides that an adjustment
shall become effective immediately after (1) a record date or Record Date for an
event, (2) the date fixed for the determination of shareholders entitled to
receive a dividend or distribution pursuant to Section 14.05(a), (3) a
date fixed for the determination of shareholders entitled to receive rights or
warrants pursuant to Section 14.05(b), or (4) the Expiration Time for any
tender or exchange offer pursuant to Section 14.05(f), (each a “Determination
Date”), the Company may elect to defer until the occurrence of the
applicable Adjustment Event (as hereinafter defined) (x) issuing to the holder
of any Note converted after such Determination Date and before the occurrence of
such Adjustment Event, the additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment required by such
Adjustment Event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder any amount
in cash in lieu of any fraction pursuant to Section 14.03.  For purposes
of this Section 14.05(n), the term “Adjustment Event” shall
mean:


(i)


in any case referred to in clause (1) hereof, the occurrence of
such event,


(ii)


in any case referred to in clause (2) hereof, the date any such
dividend or distribution is paid or made,


(iii)


in any case referred to in clause (3) hereof, the date of
expiration of such rights or warrants, and


(iv)


in any case referred to in clause (4) hereof, the date a sale or
exchange of Common Stock pursuant to such tender or exchange offer is
consummated and becomes irrevocable.


(n)


For purposes of this Section, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock.  The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.


Section 14.06.   Effect of
Reclassification, Consolidation, Merger or Sale.


If any of the following events occur, namely (i) any
reclassification or change of the outstanding shares of Common Stock (other than
(x) a subdivision or combination to which Section 14.05(c) applies) as a
result of which holders of Common Stock shall be entitled to receive stock,
other securities or other property or assets (including cash) with respect to or
in exchange for such Common Stock, (ii) any consolidation, merger or combination
of the Company with another Person as a result of which holders of Common Stock
shall be entitled to receive stock, other securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or (iii)
any sale or conveyance of all or substantially all of the properties and assets
of the Company to any other Person as a result of which holders of Common Stock
shall be entitled to receive stock, other securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing Person, as the case may be, shall execute
with the Trustee a supplemental indenture (in form satisfactory to the Trustee)
providing that each Note shall be convertible into the kind and amount of shares
of stock, other securities or other property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Notes (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock are available to convert
all such Notes) immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance assuming such holder of
Common Stock did not exercise such holder's  rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or
amount of stock, other securities or other property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance is not the same for each share of Common Stock
in respect of which such rights of election shall not have been exercised (“Non-electing
share”), then for the purposes of this Section the kind and amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance for each Non-electing share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-electing shares).  Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article.


97




The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each holder of Notes, at its address
appearing on the Security Register provided for in Section 4.02 of this
Indenture, within twenty (20) days after execution thereof.  Failure to deliver
such notice shall not affect the legality or validity of such supplemental
indenture.


The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.


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


Section 14.07.   [RESERVED].
 


Section 14.08.   Taxes on Shares Issued.
 


The issue of stock certificates on conversions of Notes shall be
made without charge to the converting Noteholder for any documentary, stamp or
similar issue or transfer tax in respect of the issue thereof.  The Company
shall not, however, be required to pay any such tax which may be payable in
respect of any transfer involved in the issue and delivery of stock in any name
other than that of the holder of any Note converted, and the Company shall not
be required to issue or deliver any such stock certificate unless and until the
Person or Persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.


98




Section 14.09.   Reservation of Shares;
Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing of
Common Stock.  


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


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


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


The Company covenants that, if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible, to the extent then permitted by the
rules and interpretations of the Commission (or any successor thereto), endeavor
to secure such registration or approval, as the case may be.


The Company further covenants that, if at any time the Common
Stock shall be listed on the NASDAQ Global Market, NASDAQ Global Select Market
or NASDAQ Capital Market or any other national securities exchange or automated
quotation system, the Company will, if permitted by the rules of such exchange
or automated quotation system, list and keep listed, so long as the Common Stock
shall be so listed on such exchange or automated quotation system, all Common
Stock issuable upon conversion of the Notes; provided that if the rules
of such exchange or automated quotation system permit the Company to defer the
listing of such Common Stock until the first conversion of the Notes into Common
Stock in accordance with the provisions of this Indenture, the Company covenants
to list such Common Stock issuable upon conversion of the Notes in accordance
with the requirements of such exchange or automated quotation system at such
time.


Section 14.10.   Responsibility of
Trustee.  


The Trustee and any other conversion agent shall not at any time
be under any duty or responsibility to any Noteholder to determine the
Conversion Rate or whether any facts exist which may require any adjustment of
the Conversion Rate, or with respect to the nature or extent or calculation of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
 The Trustee and any other conversion agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of Common
Stock, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Note; and the Trustee and any other
conversion agent make no representations with respect thereto.  Neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender of any
Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.  Without
limiting the generality of the foregoing, neither the Trustee nor any conversion
agent shall be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture entered into pursuant to 
Section 14.06 relating either to the kind or amount of shares of stock or
securities or property (including cash) receivable by Noteholders upon the
conversion of their Notes after any event referred to in such Section 14.06
or to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.01, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, the
Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.


99




Section 14.11.   Notice to Holders Prior
to Certain Actions.  


In case:


(a)


the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion Rate
pursuant to Section 14.05; or


(b)


the Company shall authorize the granting to the holders of all or
substantially all of its Common Stock of rights or warrants to subscribe for or
purchase any share of any class or any other rights or warrants; or


(c)


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


(d)


of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;


the Company shall cause to be filed with the Trustee and to be
mailed to each Noteholder at such holder's address appearing on the Security
Register provided for in Section 4.02 of this Indenture, as promptly as
possible but in any event at least ten (10) days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.
 Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.


100




Section 14.12.   Shareholder Rights
Plans.  


Each share of Common Stock issued upon conversion of Notes
pursuant to this Article shall be entitled to receive the appropriate number of
rights, if any, and the certificates representing the Common Stock issued upon
such conversion shall bear such legends, if any, in each case as may be provided
by the terms of any shareholder rights plan adopted by the Company, as the same
may be amended from time to time.  If at the time of conversion, however, the
rights have separated from the shares of Common Stock in accordance with the
provisions of the applicable shareholder rights agreement so that the holders of
the Notes would not be entitled to receive any rights in respect of Common Stock
issuable upon conversion of the Notes, the conversion rate will be adjusted in
accordance with Section 14.05(d) treating all rights previously issued as
Securities for purposes of such adjustment, subject to readjustment in the event
of the expiration, termination or redemption of the rights.


ARTICLE 15



MISCELLANEOUS PROVISIONS


Section 15.01.   Provisions Binding on
Company's Successors.  


All the covenants, stipulations, promises and agreements by the
Company contained in this Indenture shall bind its successors and assigns
whether so expressed or not.


Section 15.02.   Official Acts by
Successor Corporation.  


Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any Person that shall at the
time be the lawful sole successor of the Company.


Section 15.03.   Addresses for Notices, Etc.  


Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Notes on the Company shall be deemed to have been sufficiently given or made,
for all purposes, if given or served by being deposited postage prepaid by
registered or certified mail in a post office letter box or sent by telecopier
transmission addressed as follows:  


If to the Company:


China Security & Surveillance Technology, Inc.

13/F, Shenzhen Special Zone Press Tower

Shennan Road, Futian, Shenzhen

People's Republic of China


Attention: Mr. Tu Guo Shen 

Facsimile No:  +86 755 83510815


101




With a copy to:


Pillsbury Winsthrop Shaw Pitman LLP

2300 N Street, N.W.

Washington, DC 20001


U.S.A.

Attention: Louis A. Bevilacqua, Esq.

Facsimile No: +1 202 663-8007


If to the Trustee:


The Bank of New York Mellon

101 Barclay Street

Floor 4E

New York, NY 10286

U.S.A.

Attention:  Global Corporate Trust

Facsimile No: +1 212 815 5802/5803 


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


Any notice or communication mailed to a Noteholder shall be
mailed to such holder by first-class mail, postage prepaid, at his address as it
appears on the Security Register and shall be sufficiently given to such holder
if so mailed within the time prescribed.


Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
 If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.


Section 15.04.   Governing Law.
 


THIS INDENTURE, THE GUARANTEE AND THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.


EACH OF PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


Section 15.05.   Evidence of Compliance
with Conditions Precedent; Certificates to Trustee.  


Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent have been complied with.


102




Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include:  (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.


Section 15.06.   Legal Holidays.
 


In any case in which the date of payment of Interest on or
principal of the Notes or the redemption date (including, for the avoidance of
doubt, any Installment Redemption Date) of any Note will not be a Business Day,
then payment of such Interest on or principal (including, for the avoidance of
doubt, any Installment Redemption Amount) of the Notes need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date of maturity or the redemption date, and no
Interest shall accrue for the period from and after such date.


Section 15.07.   Company Responsible for
Making Calculations.


The Company will be responsible for making all calculations
required under the Notes. The Company will make these calculations in good faith
and absent manifest error, these calculations will be final and binding on the
Noteholders. Promptly after the calculation thereof, the Company will provide to
each of the Trustee and any other conversion agent an Officers' Certificate
setting forth a schedule of its calculations, and each of the Trustee and any
other conversion agent is entitled to conclusively rely upon the accuracy of
such calculations without independent verification. The Trustee will forward the
Company's calculations to any holder upon the written request of such holder.



Section 15.08.   Benefits of Indenture.
 


Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person, other than the parties hereto, any paying agent, any
authenticating agent, any conversion agent, any Depositary, any Registrar and
their successors hereunder and the holders of Notes any benefit or any legal or
equitable right, remedy or claim under this Indenture.


Section 15.09.   Table of Contents, Headings, Etc.  


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


103




Section 15.10.   Authenticating Agent.
 


The Trustee may appoint an authenticating agent that shall be
authorized to act on its behalf, and subject to its direction, in the
authentication and delivery of Notes in connection with the original issuance
thereof and transfers and exchanges of Notes hereunder, including under 
Sections 2.04, 2.05, 2.06, 2.07, 3.02 and 
14.02, as fully to all intents and purposes as though the authenticating
agent had been expressly authorized by this Indenture and those Sections to
authenticate and deliver Notes.  For all purposes of this Indenture, the
authentication and delivery of Notes by the authenticating agent shall be deemed
to be authentication and delivery of such Notes “by the Trustee” and a
certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee's certificate of authentication.  Such authenticating
agent shall at all times be a Person eligible to serve as trustee hereunder
pursuant to Section 7.07.


Any corporation into which any authenticating agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or the authenticating agent or such successor
corporation.


Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company.  The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating agent and to the Company.  Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any authenticating agent shall cease to be eligible under this Section, the
Trustee shall either promptly appoint a successor authenticating agent or itself
assume the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Security Register.


The Company agrees to pay to the authenticating agent from time
to time such compensation for its services as shall be agreed upon in writing
between the Company and the authenticating agent.


The provisions of Sections 7.02, 7.03, 7.04
and 12.03 and this Section shall be applicable to any authenticating
agent.


Section 15.11.   Indenture and Notes
Solely Corporate Obligations.  


No recourse for the payment of the principal (including, for the
avoidance of doubt, any Installment Redemption Amount”) of, premium, if any, or
Interest, if any, on any Note, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or in any supplemental indenture or
in any Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, shareholder, employee, agent, officer,
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Notes.


104




Section 15.12.   Execution in
Counterparts.  


This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.


Section 15.13.   Severability.
 


In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, then (to the extent permitted by law) the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.


Section 15.14.   Consent to
Jurisdiction; Consent to Service of Process.


The Company hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States sitting in the State and City of New
York, County and Borough of Manhattan, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Indenture or the
Notes, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
state court sitting in the State and City of New York, County and Borough of
Manhattan or, to the extent permitted by law, in such federal court sitting in
the State and City of New York, County and Borough of Manhattan.  The Company
further irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by any parties thereto by
registered or certified mail, postage prepaid, to the Company at Corporation
Service Company, Suite 3100, 1133 Avenue of the Americas, New York, NY, 10036.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. 


The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Indenture or the Notes in any New York State
or federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.


105




Section 15.15.   Currency Indemnity.


U.S. dollars are the sole currency of account and payment for all
sums payable by us in cash under or in connection with the Notes, including
damages. Any amount received or recovered in a currency other than U.S. dollars
(as a result of, or through the enforcement of, a judgment or order of a court
of any jurisdiction, in the Company's winding-up or dissolution or otherwise) by
any Holder of a Note in respect of any sum expressed to be due to it from the
Company will only constitute a discharge to the Company to the extent of the
U.S. dollar amount that the recipient is able to purchase with the amount so
received or recovered in that other currency on the date of that receipt or
recovery (or, if it is not practicable to make that purchase on that date, on
the first date on which it is practicable to do so). If that U.S. dollar amount
is less than the U.S. dollar amount expressed to be due to the recipient under
any Note, the Company shall indemnify such Holder against any loss sustained by
it as a result; and if the amount of U.S. dollars so purchased is greater than
the sum originally due to such Holder, such Holder will, by accepting a Note, be
deemed to have agreed to repay such excess. In any event, the Company shall
indemnify the recipient against the cost of making any such purchase.


Section 15.16.   U.S.A. Patriot Act.


The parties hereto acknowledge that in accordance with Section
326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and
in order to help fight the funding of terrorism and money laundering, is
required to obtain, verify, and record information  that identifies each person
or legal entity that establishes a relationship or opens an account with the
Trustee.  The parties to this Indenture agree that they will provide the Trustee
with all such information as it may request in order to satisfy the requirements
or its obligations under such act.


 


[Signature page(s) to follow.]


 


106




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

 


  	CHINA SECURITY & SURVEILLANCE
      TECHNOLOGY, INC.
	 
	 
	
      By: /s/ Tu Guo Shen                        
      
	
       Authorized Signatory

	
       

	 
	CHINA SAFETECH HOLDINGS LIMITED
	 
	 
	
      By: /s/ Tu Guo Shen                        
      
	
       Authorized Signatory

	 







 




  	 
	FOR THE PURPOSE OF SECTION
      4.18(A) ONLY
	 
	 
	CHINA SECURITY & SURVEILLANCE
      TECHNOLOGY (PRC), INC.
	 
	 
	
      By: /s/ Tu Guo Shen                        
      
	
       Authorized Signatory

	 
	 
	 
	 
	 
	 
	 







  	 
	THE BANK OF NEW YORK MELLON,
	a New York banking corporation,
	as Trustee
	 
	 
	
      By: /s/ Lici Zhu                       
      
	
      Name: Lici Zhu

	
      Title: Assistant Vice President

	 
	 
	 







 




 


EXHIBIT A


[FORM OF FACE OF NOTE]


[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY (“DTC”) TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF ITS AUTHORIZED NOMINEE OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
ITS AUTHORIZED NOMINEE, OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, ITS AUTHORIZED NOMINEE, HAS AN INTEREST HEREIN.]1

 


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

 


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

 


(3)


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

 


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



_____________________

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

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


A-1




 


CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.


 


TRANCHE A ZERO COUPON GUARANTEED SENIOR UNSECURED 


CONVERTIBLE NOTE 


 


CUSIP:  U16809 AA0

ISIN: USU 16809AA00


No. 1 $50,000,000




 


CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC., a corporation
duly organized and validly existing under the laws of the State of Delaware
(herein called the “Company”, which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value
received hereby promises to pay to Cede & Co., the nominee for The Depositary
Trust Company, or registered assigns, at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, (i) each
Installment Redemption Amount on the Installment Redemption Date such
Installment Redemption Amount is due as set forth on Schedule I hereto,
and (ii) interest on any overdue Installment Redemption Amount, if any, at said
office or agency, in like coin or currency, at the rate of 5.0% per annum.  


The Company shall pay Interest, if any, (i) on any Notes in
certificated form by check mailed to the address of the Person entitled thereto
as it appears in the Security Register (provided that the holder of Notes
with an aggregate principal amount in excess of $1,000,000 shall, at the written
election of such holder, be paid by wire transfer of immediately available
funds) or (ii) on any Global Note by wire transfer of immediately available
funds to the account of the Depositary or its nominee.


Reference is made to the further provisions of this Note set
forth on the reverse hereof, including, without limitation, provisions giving
the holder of this Note the right to convert this Note into Common Stock of the
Company on the terms and subject to the limitations referred to on the reverse
hereof and as more fully specified in the Indenture.  Such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.


This Note shall be governed by and construed in accordance with
the laws of the State of New York.


This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee or a duly authorized authenticating agent under the Indenture.

A-2





IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed.

	CHINA SECURITY & SURVEILLANCE
    TECHNOLOGY, INC.
	 
	
    By:____________________________________________
	
    Name:

	
    Title:

	 
	 





 


TRUSTEE'S CERTIFICATE OF AUTHENTICATION


 


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

	THE BANK OF NEW YORK MELLON,
	a New York banking corporation,
	as Trustee
	 
	 
	
    By:____________________________________________
	
    Authorized Signatory

	 
	Dated:


A-3





 


[FORM OF REVERSE OF NOTE]


 


CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.


 


TRANCHE A ZERO COUPON GUARANTEED SENIOR UNSECURED 


CONVERTIBLE NOTE 


 


This Note is one of a duly authorized issue of Notes of the
Company, designated as its Tranche A Zero Coupon Guaranteed Senior Unsecured
Convertible Notes (herein called the “Notes”), in an initial
aggregate principal amount of $50,000,000, issued and to be issued under and
pursuant to an Indenture dated September 2, 2009 (herein called the “Indenture”),
among the Company, China Safetech Holdings Limited, as the Guarantor, and 
The Bank of New York Mellon, a New York banking corporation, as trustee (herein
called the “Trustee”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes.


In case an Event of Default shall have occurred and be
continuing, the principal (including, for the avoidance of doubt, any
Installment Redemption Amount) of and accrued and unpaid Default Interest, if
any, on all Notes may be declared by either the Trustee or the holders of not
less than 25% in aggregate principal amount of the Notes then outstanding, and
upon said declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.


The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Notes at the time outstanding, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in any
manner the rights of the holders of the Notes; provided that no such
supplemental indenture shall (i) extend the fixed maturity of any Note
(including, for the avoidance of doubt, extending, with respect to any
Installment Redemption Amount, the Installment Redemption Date on which such
Installment Redemption Amount is due); (ii) reduce the rate or extend the time
of payment of Interest, if any; (iii) reduce the principal amount thereof
(including, for the avoidance of doubt, any Installment Redemption Amount) or
reduce any amount payable on redemption or repurchase thereof; (iv) change the
obligation of the Company to repurchase any Note upon the happening of a
Termination of Trading in a manner adverse to the holders of Notes; (v) impair
the right of any Noteholder to institute suit for the payment thereof; (vi) make
the principal thereof (including, for the avoidance of doubt, any Installment
Redemption Amount) or Interest, if any, payable in any coin or currency other
than that provided in the Notes; (vii) impair the right to convert the Notes
into Common Stock or reduce the number of shares of Common Stock or any other
property receivable by a Noteholder upon conversion subject to the terms set
forth herein, including Section 14.05 of the Indenture, in each case, without
the consent of the holder of each Note so affected; (viii) modify any of the
provisions of this Section or Section 6.07 of the Indenture, except to increase
any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the holder of each
Note so affected; (ix) change any obligation of the Company to maintain an
office or agency in the places and for the purposes set forth in Section 4.02 of
the Indenture; (x) reduce the quorum or voting requirements set forth in Article
13 of the Indenture; (xi) subordinate the Notes or any Guarantee to any other
obligation of the Company or the applicable Guarantor; (xii) release any
security interest that may have been granted in favor of the holders of the
Notes other than pursuant to the terms of such security interest; (xiii) at any
time after a Change of Control has occurred, change the time at which the Change
of Control Offer relating thereto must be made or at which the Notes must be
repurchased pursuant to such Change of Control Offer; (xiv) at any time after
the Company is obligated to make an Asset Sale Offer with the Excess Proceeds
from Asset Sales, change the time at which such Asset Sale Offer must be made or
at which the Notes must be repurchased pursuant thereto; (xv) make any change in
any Guarantee that would adversely affect the holders; or (xvi) reduce the
aforesaid percentage of Notes, the holders of which are required to consent to
any such supplemental indenture, in each case, without the consent of the
holders of all Notes then outstanding.  Subject to the provisions of the
Indenture, the holders of a majority in aggregate principal amount of the Notes
at the time outstanding may on behalf of the holders of all of the Notes waive
any past Default or Event of Default under the Indenture and its consequences
except (A) a default in the payment of the principal of, the Notes (including,
for the avoidance of doubt, a default to pay any Installment Redemption Amount
on the Installment Redemption Date, on which such Installment Redemption Amount
is due) and Default Interest, if any, (B) a failure by the Company to convert
any Notes into Common Stock, (C) a default in the payment of the purchase price
pursuant to Section 3.02 of the Indenture or (D) a default in respect of a
covenant or provisions hereof which under Article 8 of the Indenture cannot be
modified or amended without the consent of the holders of each or all of the
Notes then outstanding or affected thereby.  Any such consent or waiver by the
holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitution
hereof, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.

A-4





No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and Default
Interest, if any, on this Note at the place, at the respective times, at the
rate and in the coin or currency herein prescribed.


Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months.


The Notes are issuable in fully registered form, without coupons,
in denominations of $100,000 principal amount and any multiple of $1,000 in
excess thereof.  At the office or agency of the Company referred to on the face
hereof, and in the manner and subject to the limitations provided in the
Indenture, without payment of any service charge but with payment of a sum
sufficient to cover any tax, assessment or other governmental charge that may be
imposed in connection with any registration or exchange of Notes, Notes may be
exchanged for a like aggregate principal amount of Notes of any other authorized
denominations. 


The Notes are not subject to redemption through the operation of
any sinking fund. At any time prior to the Final Redemption Date, the Company
may redeem the Notes (in whole or in part)  without any premium or penalty,
except for Default Interest, if any.

A-5





In the event that the Company shall be required to commence an
Asset Sale Offer, a Change of Control Offer or a Termination of Trading Offer,
the Company shall mail to all holders of record of the Notes a notice which
states the terms of such Offer to Purchase, and, in the case of a Change of
Control Offer or Termination of Trading Offer, the circumstances and relevant
facts regarding such event.  Each holder shall have the right to accept such
offer and require the Company to repurchase all or any portion of such holder's
Notes in cash equal to the Repurchase Amount.


Holders electing to have a Note purchased pursuant to a Offer to
Purchase shall deliver to the Company such Note with the form entitled “Purchase
Notice” on the reverse thereof duly completed, together with the Note, duly
endorsed for transfer, at any time prior to the close of business on the
Business Day immediately preceding the Purchase Date, and shall deliver the
Notes to the Trustee (or other paying agent appointed by the Company) as set
forth in the Indenture.  


The Notes will be subject to repurchase in multiples of $1,000
principal amount. 


Holders have the right to withdraw any Purchase Notice by
delivering to the Trustee (or other paying agent appointed by the Company) a
written notice of withdrawal up to the close of business on the Business Day
immediately preceding the Purchase Date all as provided in the Indenture.


If money or cash, sufficient to pay the repurchase price of all
Notes or portions thereof to be purchased as of the Purchase Date is deposited
with the Trustee (or other paying agent appointed by the Company), on the
Purchase Date, interest, if any, will cease to accrue on such Notes (or portions
thereof) immediately after such Purchase Date, and the holder thereof shall have
no other rights as such other than the right to receive the repurchase price
upon surrender of such Note.


Subject to the occurrence of certain events and in compliance
with the provisions of the Indenture, prior to the final maturity date of the
Notes, the holder hereof has the right, at its option, to convert each $100,000
principal amount of the Notes into 10,000 shares of the Company's Common Stock
(a conversion price of approximately $10.00 per share), as such shares shall be
constituted at the date of conversion and subject to adjustment from time to
time as provided in the Indenture, upon surrender of this Note with the form
entitled “Conversion Notice” on the reverse thereof duly completed, to
the Company at the office or agency of the Company maintained for that purpose
in accordance with the terms of the Indenture, or at the option of such holder,
the Corporate Trust Office, and, unless the shares issuable on conversion are to
be issued in the same name as this Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or by his duly authorized attorney.  The Company will notify the
holder thereof in writing of any event triggering the right to convert the Notes
as specified above in accordance with the Indenture.


No fractional shares will be issued upon any conversion, but an
adjustment and payment in cash will be made, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Note or Notes for conversion.

A-6





A Note in respect of which a holder is exercising its right to
require repurchase upon an Asset Sale Offer, Change of Control Offer or
Termination of Trading Offer on a Purchase Date may be converted only if such
holder withdraws its election to exercise either such right in accordance with
the terms of the Indenture.


Upon due presentment for registration of transfer of this Note at
the office or agency of the Company maintained for that purpose in accordance
with the terms of the Indenture, a new Note or Notes of authorized denominations
for an equal aggregate principal amount will be issued to the transferee in
exchange thereof, subject to the limitations provided in the Indenture, without
charge except for any tax, assessment or other governmental charge imposed in
connection therewith.


The Company, the Trustee, any authenticating agent, any paying
agent, any conversion agent and any Registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Registrar) for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Registrar shall be affected by any notice to the contrary.  All payments made to
or upon the order of such registered holder shall, to the extent of the sum or
sums paid, satisfy and discharge liability for monies payable on this Note.


No recourse for the payment of the principal (including, for the
avoidance of doubt, any Installment Redemption Amount) of or Interest, if any,
on this Note, or for any claim based hereon or otherwise in respect hereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any supplemental indenture or in any Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, shareholder, employee, agent, officer or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.


For purposes of sections 1272, 1273 and 1275 of the Internal
Revenue Code of 1986, as amended, this Note is being issued with Tax Original
Issue Discount and the issue date of this Note is September 2, 2009.


This Note shall be governed by and construed in accordance with
the laws of New York.


Terms used in this Note and defined in the Indenture are used
herein as therein defined.

A-7





ABBREVIATIONS


The following abbreviations, when used in the inscription of the
face of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations.


	TEN COM	-	as tenants in common	UNIF GIFT MIN ACT - Custodian
	TEN ENT	-	as tenant by the entireties	(Cust) (Minor)
	JT TEN	-	as joint tenants
    with right of survivorship under Uniform Gifts to Minors Act and not as
    tenants in common



______________________________


(State)


 


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



 

A-8




 SCHEDULE I


CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.


 


Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible
Notes 


No. 2


 


The original principal amount of this Note is FIFTY MILLION
DOLLARS ($50,000,000).  The Company will pay such principal amount in
installments by paying each Installment Redemption Amount on the Installment
Redemption Date on which such Installment Redemption Amount is due, as follows:
 


 

	
    
    Installment Redemption Date
	
    
    Installment Redemption Amount (US$), 

    
    for each US$100,000 principal amount of the Notes

	
    
    March 2, 2010

    
    

 
	
    US$
        12,500.00

	
    
    September 2, 2010

    
    

 
	
    $
        12,500.00

	
    
    March 2, 2011

    
    

 
	
    $
        12,500.00

	
    
    September 2, 2011

    
    

 
	
    $
        12,500.00

	
    
    March 2, 2012

    
    

 
	
      $
      25,000.00

	
    
    September 2, 2012

    
    

 
	
    
    $   25,000.00

	
    
           Total:
	
    
     US$   100,000.00




 


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


 


Date 


Principal Amount


Notation Explaining Principal


Amount Recorded


 


Authorized Signature of Trustee or Custodian

A-9





CONVERSION NOTICE


TO:  CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.


 


_______


The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion thereof (which is
$100,000 or a multiple of $1,000 in excess thereof) below designated, into
shares of Common Stock of China Security & Surveillance Technology, Inc. in
accordance with the terms of the Indenture referred to in this Note, and directs
that the shares issuable and deliverable upon such conversion, together with any
check in payment for fractional shares and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below.  Capitalized
terms used herein but not defined shall have the meanings ascribed to such terms
in the Indenture.  If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
provide the appropriate information below and pay all transfer taxes payable
with respect thereto.  Any amount required to be paid by the undersigned on
account of interest, including additional interest, if any, accompanies this
Note.


  
  Dated:

 




  
  

 



Signature(s)


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



  
  

 



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



 




__________________________________


(Name)




__________________________________


(Street Address)




__________________________________


(City, State and Zip Code)

 

A-10





 


Please print name and address



Principal amount to be converted

(if less than all): 


 


$__________________________________


 


 


Social Security or Other Taxpayer


Identification Number: 




 


__________________________________









 

A-11





PURCHASE NOTICE


TO:  CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.


 


_______


 


The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from China Security & Surveillance Technology,
Inc. (the “Company”) regarding the right of holders to elect to
require the Company to repurchase the Notes upon the occurrence of either an
Asset Sale Offer, a Change of Control Offer or a Termination of Trading Offer
and requests and instructs the Company to repay the entire principal amount of
this Note, or the portion thereof (which is $100,000 or an integral multiple of
$1,000 in excess thereof) below designated, in accordance with the terms of the
Indenture at the price of the Repurchase Amount, to the registered holder
hereof.  


 


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




 


$


 principal amount of the Notes to which this Purchase Notice
relates (if less than entire principal amount) pursuant to 4.12, 4.17 or 4.23 of
the Indenture, check the box below:

	£       
    Section 4.12	Purchase Date:
	 	 
	
    £        Section 4.17	 
	 	 
	
    £        Section 4.23	 
	 	 



Dated:


Signature(s):


NOTICE:  The above signatures of the holder(s) hereof must
correspond with the name as written upon the face of the Note in every
particular without alteration or enlargement or any change whatever.

A-12




Note Certificate Number (if applicable):


Principal amount to be repurchased (if less than all):




 


Social Security or Other Taxpayer Identification Number:




 


Assignment Form


To assign this Note, fill in the form below: 


(I) or (we) assign and transfer this Note to


  
  

 



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


  
  

 



  
  

 



  
  

 



  
  

 



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

 


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


 


 

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


A-14





EXHIBIT B


FORM OF NOTATION OF GUARANTEE


For value received, each Guarantor (which term includes any
successor Person under the Indenture), jointly and severally, unconditionally
guarantees, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, dated September 2, 2009 (the “Indenture”),
among China Security & Surveillance Technology, Inc., as issuer (the “Company”),
the Guarantor listed on the signature pages thereto and The Bank of New York
Mellon, a New York banking corporation, as trustee (the “Trustee”),
(a) the due and punctual payment of the principal of, premium and interest, if
any, on the Notes, whether at maturity, by acceleration, redemption, repurchase
or otherwise, the due and punctual payment of interest on overdue principal and
premium, if any, and, to the extent permitted by law, interest and the due and
punctual performance of all other obligations of the Company to the holders or
the Trustee all in accordance with the terms of the Indenture and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.  The obligations of the Guarantors to
the holders of Notes and to the Trustee pursuant to the Guarantee and the
Indenture are expressly set forth in Article 9 of the Indenture and reference is
hereby made to the Indenture for the precise terms of the Guarantee.  This
Guarantee is subject to release as and to the extent set forth in Section 9.05
of the Indenture.  Each holder of a Note, by accepting the same agrees to and
shall be bound by such provisions. Capitalized terms used herein and not defined
are used herein as so defined in the Indenture.


  	[GUARANTOR NAME]
	 
	By:__________________________________
	
      Name:

	
      Title:

	 







 

B-1





EXHIBIT C


FORM OF CERTIFICATE OF TRANSFER


 


China Security & Surveillance Technology, Inc.


13/F, Shenzhen Special Zone Press Tower


Shennan Road, Futian, Shenzhen


People's Republic of China


 


The Bank of New York Mellon


101 Barclay Street

Floor 4E

New York, NY 10286

U.S.A.


Attention: Global Corporate Trust


 


Re:


TRANCHE A ZERO COUPON GUARANTEED SENIOR UNSECURED CONVERTIBLE
NOTES 


Reference is hereby made to the Indenture, dated September 2, 2009 (the “Indenture”),
among CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC., as issuer (the “Company”),
the Guarantors thereto and THE BANK OF NEW YORK MELLON, a New York banking
corporation, as trustee.  Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.


___________________, (the “Transferor”) owns and
proposes to transfer the Note[s] or interest in such Note[s] in the principal
amount of $___________ (the “Transfer”), to
 ___________________________ (the “Transferee”).  In connection
with the Transfer, the Transferor hereby certifies that:


[CHECK ALL THAT APPLY]


1.     £


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

C-1





2.     £


Check and complete if Transferee will take delivery of a
beneficial interest in the Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Regulation S.
 The Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Global Notes and Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that:


(i)


  such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act; or


(ii)


  such Transfer is being effected to the Company or a subsidiary
thereof; or


(iii)


  such Transfer is being effected pursuant to an effective
registration statement under the Securities Act.


This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.


  	 
	[Insert Name of
      Transferor]
	 
	By:__________________________________
	
      Name:

	
      Title:






 

C-2







EXHIBIT D

 


FORM OF RESTRICTIVE LEGEND FOR

COMMON STOCK ISSUED UPON CONVERSION




 


THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION,
AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE, BY
ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT WITHIN THE HOLDING PERIOD
SET FORTH IN RULE 144 UNDER THE SECURITIES ACT (A) RESELL OR OTHERWISE TRANSFER
THE SECURITY EVIDENCED HEREBY EXCEPT (I) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (II) TO A NON-U.S. PERSON OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 OR OTHERWISE UNDER THE SECURITIES ACT, IF
AVAILABLE, OR (IV) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER OR (B) ENGAGE IN HEDGING TRANSACTIONS WITH RESPECT TO THIS
SECURITY UNLESS IN COMPLIANCE WITH THE SECURITIES ACT; AND




 


 (3)


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


 

D-1