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Exhibit 4.2    
    






COMPUDYNE CORPORATION  


 to  


 WACHOVIA BANK OF DELAWARE, NATIONAL ASSOCIATION,

as Trustee  




 INDENTURE  


 Dated as of  






      % CONVERTIBLE SUBORDINATED NOTES DUE 2011  









 
  
 

    Cross-Reference Table*    
    



	Trust Indenture Act Section
 
	 	Indenture Section

	310	(a)(1)	 	8.09
	 	(a)(2)	 	8.09
	 	(a)(3)	 	n/a
	 	(a)(4)	 	n/a
	 	(a)(5)	 	8.09
	 	(b)	 	8.08
	 	(c)	 	n/a
	311	(a)	 	8.13
	 	(b)	 	8.13
	 	(c)	 	n/a
	312	(a)	 	6.01
	 	(b)	 	6.02
	 	(c)	 	6.02
	313	(a)	 	6.03
	 	(b)(1)	 	n/a
	 	(b)(2)	 	6.03
	 	(c)	 	6.03, 17.03
	 	(d)	 	6.03
	314	(a)(1),(2),(3)	 	6.04
	 	(a)(4)	 	5.09
	 	(b)	 	n/a
	 	(c)(1)	 	17.05
	 	(c)(2)	 	17.05
	 	(c)(3)	 	n/a
	 	(d)	 	n/a
	 	(e)	 	17.05
	 	(f)	 	n/a
	315	(a)	 	8.01,8.02
	 	(b)	 	7.08, 17.03
	 	(c)	 	8.01
	 	(d)	 	8.01
	 	(e)	 	7.09
	316	(a)(last sentence)	 	9.04
	 	(a)(1)(A)	 	7.07
	 	(a)(1)(B)	 	7.07
	 	(a)(2)	 	n/a
	 	(b)	 	15.01, 7.04
	 	(c)	 	9.01
	317	(a)(1)	 	7.02
	 	(a)(2)	 	7.02
	 	(b)	 	5.04
	318	(a)	 	17.07
	 	(b)	 	n/a
	 	(c)	 	17.07







"n/a"
means not applicable. 


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


i






  



 
 

TABLE OF CONTENTS    
    



	 
	 	 
	 	Page

	

ARTICLE 1

DEFINITIONS
	

Section 1.01	
 	

Definitions	
 	

1
	

ARTICLE 2

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
	

Section 2.01	
 	

Designation, Amount and Issue of Notes	
 	

6
	

Section 2.02	
 	

Form of Notes	
 	

6
	

Section 2.03	
 	

Date and Denomination of Notes; Payments of Interest	
 	

7
	

Section 2.04	
 	

Execution of Notes	
 	

8
	

Section 2.05	
 	

Exchange and Registration of Transfer of Notes	
 	

8
	

Section 2.06	
 	

Mutilated, Destroyed, Lost or Stolen Notes	
 	

11
	

Section 2.07	
 	

Temporary Notes	
 	

11
	

Section 2.08	
 	

Cancellation of Notes	
 	

12
	

Section 2.09	
 	

CUSIP Numbers	
 	

12
	

ARTICLE 3

REDEMPTION OF NOTES
	

Section 3.01	
 	

Redemption of Notes At Option of the Company	
 	

12
	

Section 3.02	
 	

Optional Redemption of Notes Upon a Change in Control	
 	

12
	

Section 3.03	
 	

Notice of Redemption; Selection of Notes	
 	

13
	

Section 3.04	
 	

Payment of Notes Called for Redemption by the Company	
 	

14
	

ARTICLE 4

REPURCHASE OF NOTES UPON A CHANGE IN CONTROL
	

Section 4.01	
 	

Right to Require Repurchase	
 	

15
	

Section 4.02	
 	

Notices; Method of Exercising Repurchase Right, Etc	
 	

15
	

Section 4.03	
 	

Deposit of Repurchase Price	
 	

17
	

Section 4.04	
 	

Repayment to the Company	
 	

17
	

Section 4.05	
 	

Consolidation, Merger, Etc	
 	

17
	

Section 4.06	
 	

Compliance with Tender Offer Rules	
 	

18
	

ARTICLE 5

PARTICULAR COVENANTS OF THE COMPANY
	

Section 5.01	
 	

Payment of Principal, Premium and Interest	
 	

18
	

Section 5.02	
 	

Maintenance of Office or Agency	
 	

18
	

Section 5.03	
 	

Appointments to Fill Vacancies in Trustee's Office	
 	

18
	 	 	 	 	 



ii





 

	

Section 5.04	
 	

Provisions as to Paying Agent	
 	

18
	

Section 5.05	
 	

Existence	
 	

19
	

Section 5.06	
 	

Maintenance of Properties	
 	

19
	

Section 5.07	
 	

Payment of Taxes and Other Claims	
 	

19
	

Section 5.08	
 	

Stay, Extension and Usury Laws	
 	

20
	

Section 5.09	
 	

Compliance Certificate	
 	

20
	

ARTICLE 6

NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
	

Section 6.01	
 	

Noteholders' Lists	
 	

20
	

Section 6.02	
 	

Preservation and Disclosure of Lists	
 	

20
	

Section 6.03	
 	

Reports by Trustee	
 	

21
	

Section 6.04	
 	

Reports by Company	
 	

21
	

ARTICLE 7

REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
	

Section 7.01	
 	

Events of Default	
 	

21
	

Section 7.02	
 	

Payments of Notes on Default; Suit Therefor	
 	

23
	

Section 7.03	
 	

Application of Monies Collected by Trustee	
 	

24
	

Section 7.04	
 	

Proceedings by Noteholder	
 	

25
	

Section 7.05	
 	

Proceedings by Trustee	
 	

25
	

Section 7.06	
 	

Remedies Cumulative and Continuing	
 	

25
	

Section 7.07	
 	

Direction of Proceedings and Waiver of Defaults by Majority of Noteholders	
 	

26
	

Section 7.08	
 	

Notice of Defaults	
 	

26
	

Section 7.09	
 	

Undertaking To Pay Costs	
 	

26
	

ARTICLE 8

THE TRUSTEE
	

Section 8.01	
 	

Duties and Responsibilities of Trustee	
 	

27
	

Section 8.02	
 	

Reliance on Documents, Opinions, Etc	
 	

28
	

Section 8.03	
 	

No Responsibility For Recitals, Etc	
 	

29
	

Section 8.04	
 	

Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes	
 	

29
	

Section 8.05	
 	

Monies to Be Held in Trust	
 	

29
	

Section 8.06	
 	

Compensation and Expenses of Trustee	
 	

29
	

Section 8.07	
 	

Officers' Certificate as Evidence	
 	

30
	

Section 8.08	
 	

Conflicting Interests of Trustee	
 	

30
	

Section 8.09	
 	

Eligibility of Trustee	
 	

30
	 	 	 	 	 





iii





 

	

Section 8.10	
 	

Resignation or Removal of Trustee	
 	

30
	

Section 8.11	
 	

Acceptance by Successor Trustee	
 	

31
	

Section 8.12	
 	

Succession by Merger	
 	

32
	

Section 8.13	
 	

Preferential Collection of Claims	
 	

32
	

ARTICLE 9

THE NOTEHOLDERS
	

Section 9.01	
 	

Action by Noteholders	
 	

32
	

Section 9.02	
 	

Proof of Execution by Noteholders	
 	

32
	

Section 9.03	
 	

Who Are Deemed Absolute Owners	
 	

32
	

Section 9.04	
 	

Company-owned Notes Disregarded	
 	

33
	

Section 9.05	
 	

Revocation Of Consents, Future Holders Bound	
 	

33
	

ARTICLE 10

MEETINGS OF NOTEHOLDERS
	

Section 10.01	
 	

Purpose of Meetings	
 	

33
	

Section 10.02	
 	

Call of Meetings by Trustee	
 	

34
	

Section 10.03	
 	

Call of Meetings by Company or Noteholders	
 	

34
	

Section 10.04	
 	

Qualifications For Voting	
 	

34
	

Section 10.05	
 	

Regulations	
 	

34
	

Section 10.06	
 	

Voting	
 	

35
	

Section 10.07	
 	

No Delay of Rights by Meeting	
 	

35
	

ARTICLE 11

SUPPLEMENTAL INDENTURES
	

Section 11.01	
 	

Supplemental Indentures Without Consent of Noteholders	
 	

35
	

Section 11.02	
 	

Supplemental Indenture With Consent of Noteholders	
 	

36
	

Section 11.03	
 	

Effect of Supplemental Indenture	
 	

37
	

Section 11.04	
 	

Notation on Notes	
 	

37
	

Section 11.05	
 	

Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee	
 	

37
	

ARTICLE 12

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
	

Section 12.01	
 	

Company May Consolidate on Certain Terms	
 	

37
	

Section 12.02	
 	

Successor to be Substituted	
 	

38
	

Section 12.03	
 	

Opinion of Counsel to be Given to Trustee	
 	

38
	

ARTICLE 13

SATISFACTION AND DISCHARGE OF INDENTURE
	

Section 13.01	
 	

Discharge of Indenture	
 	

38
	 	 	 	 	 



iv





 

	

Section 13.02	
 	

Deposited Monies to be Held in Trust by Trustee	
 	

39
	

Section 13.03	
 	

Paying Agent to Repay Monies Held	
 	

39
	

Section 13.04	
 	

Return of Unclaimed Monies	
 	

39
	

Section 13.05	
 	

Reinstatement	
 	

39
	

ARTICLE 14

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
	

Section 14.01	
 	

Indenture and Notes Solely Corporate Obligations	
 	

39
	

ARTICLE 15

CONVERSION OF NOTES
	

Section 15.01	
 	

Right to Convert	
 	

40
	

Section 15.02	
 	

Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends	
 	

40
	

Section 15.03	
 	

Cash Payments in Lieu of Fractional Shares	
 	

41
	

Section 15.04	
 	

Conversion Rate	
 	

42
	

Section 15.05	
 	

Adjustment of Conversion Rate	
 	

42
	

Section 15.06	
 	

Effect of Reclassification, Consolidation, Merger or Sale	
 	

48
	

Section 15.07	
 	

Taxes on Shares Issued	
 	

49
	

Section 15.08	
 	

Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock	
 	

49
	

Section 15.09	
 	

Responsibility of Trustee	
 	

49
	

Section 15.10	
 	

Notice to Holders Prior to Certain Actions	
 	

50
	

ARTICLE 16

SUBORDINATION
	

Section 16.01	
 	

Agreement of Subordination	
 	

50
	

Section 16.02	
 	

Payments to Holders	
 	

51
	

Section 16.03	
 	

Subrogation of Notes	
 	

53
	

Section 16.04	
 	

Authorization to Effect Subordination	
 	

54
	

Section 16.05	
 	

Notice to Trustee	
 	

54
	

Section 16.06	
 	

Trustee's Relation to Senior Indebtedness	
 	

55
	

Section 16.07	
 	

No Impairment of Subordination	
 	

55
	

Section 16.08	
 	

Certain Conversions Deemed Payment	
 	

55
	

Section 16.09	
 	

Article Applicable to Paying Agents	
 	

55
	

Section 16.10	
 	

Senior Indebtedness Entitled to Rely	
 	

55
	 	 	 	 	 





v





 

	

ARTICLE 17

MISCELLANEOUS PROVISIONS
	

Section 17.01	
 	

Provisions Binding on Company's Successors	
 	

56
	

Section 17.02	
 	

Official Acts by Successor Corporation	
 	

56
	

Section 17.03	
 	

Addresses for Notices, Etc	
 	

56
	

Section 17.04	
 	

Governing Law	
 	

56
	

Section 17.05	
 	

Evidence of Compliance With Conditions Precedent, Certificates to Trustee	
 	

56
	

Section 17.06	
 	

Legal Holidays	
 	

57
	

Section 17.07	
 	

Trust Indenture Act	
 	

57
	

Section 17.08	
 	

No Security Interest Created	
 	

57
	

Section 17.09	
 	

Benefits of Indenture	
 	

57
	

Section 17.10	
 	

Table of Contents, Headings, Etc	
 	

57
	

Section 17.11	
 	

Authenticating Agent	
 	

57
	

Section 17.12	
 	

Execution in Counterparts	
 	

58
	

Section 17.13	
 	

Severability	
 	

58
	

Exhibit A	
 	

Form of Note	
 	

A-1




vi






   INDENTURE  


        INDENTURE dated as
of                              between CompuDyne Corporation, a Nevada corporation (hereinafter
called the "Company"), and Wachovia Bank of Delaware,
National Association, a national banking association, as trustee hereunder (hereinafter called the "Trustee"). 


WITNESSETH:  


        WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issue of its            % Convertible
Subordinated Notes Due 2011 (hereinafter
called the "Notes"), in an aggregate principal amount not to exceed $28,750,000 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,
the Notes, the certificate of authentication to be borne by the Notes, a form of assignment, a form of election to require repurchase upon a change in control 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 1.01 (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 1.01. All other terms used in this Indenture that are defined in the Trust Indenture Act or which are by reference therein 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 Trust Indenture Act and 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. 


        "Adjustment
Event" has the meaning specified in Section 15.05(k). 


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


1





 



        "Agent
Members" has the meaning specified in Section 2.05(b). 


        "Board
of Directors" means the Board of Directors of the Company or a committee of such Board duly authorized to act for it hereunder. 


        "Business
Day" means any day except a Saturday, Sunday or legal holiday on which banking institutions in the City of New York are authorized or obligated by law, regulation or executive
order to be closed. 


        "Change
in Control" shall be deemed to have occurred at the time, after the original issuance of the Notes, (i) any person or group of persons (within the meaning of Sections
13(d) or 14(a) of the Exchange Act shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the Commission under said Act) 50% or more of the
voting capital stock of the Company; or (ii) within a period of twelve (12) consecutive calendar months, individuals who were directors of the Company on the first day of such period
(together with any new directors whose election to the board of directors, or whose nomination for election, was approved by a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for election was previously so approved) shall cease to constitute a majority of the board of directors of the Company. 


        "Change
in Control Redemption" has the meaning specified in Section 3.02. 


        "Change
in Control Redemption Date" has the meaning specified in Section 3.02. 


        "Closing
Sale Price" of the shares of Common Stock on any date means the closing sale price per share (or, if no closing sale price is reported, the average of the closing bid and ask
prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported in composite transactions for the principal United
States securities exchange on which shares of Common Stock are traded or, if the shares of Common Stock are not listed on a United States national or regional securities exchange, as reported by
Nasdaq or by the National Quotation Bureau Incorporated. In the absence of such quotations, the Company shall be entitled to determine the Closing Sale Price on the basis it considers appropriate. The
Closing Sale Price shall be determined without reference to extended or after hours trading. 


        "Commission"
means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. 



        "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 15.06, 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 $.75) 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. 


2





 



        "Company"
means the corporation named as the "Company" in the first paragraph of this Indenture, and, subject to the provisions of Article 12 and Section 15.06, shall
include its successors and assigns. 


        "Company
Notice" has the meaning specified in Section 4.02. 


        "Conversion
Price" as of any day will equal $1,000 divided by the Conversion Rate as of such date. 


        "Conversion
Rate" has the meaning specified in Section 15.04. 


        "Corporate
Trust Office" or other similar term, means the designated office of the Trustee at which at any particular time its corporate trust business as it relates to this Indenture
shall be administered, which office is, at the date as of which this Indenture is dated, located at 9300 Shelbyville Road, Suite 507, Louisville, Kentucky 40222. 


        "Current
Market Price" has the meaning specified in Section 15.05(g). 


        "Custodian"
means Wachovia Bank of Delaware, National Association, as custodian with respect to the Notes in global form, or any successor entity thereto. 



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


        "Defaulted
Interest" has the meaning specified in Section 2.03. 


        "Depositary"
means the clearing agency registered under the Exchange Act that is designated to act as the Depositary for the Global Notes. The Depository Trust Company shall be the
initial Depositary, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, "Depositary" shall mean or include such
successor. 


        "Determination
Date" has the meaning specified in Section 15.05(k). 


        "Event
of Default" means any event specified in Section 7.01 as an Event of Default. 


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


        "Expiration
Time" has the meaning specified in Section 15.05(f). 


        "Fair
Market Value" has the meaning specified in Section 15.05(g). 


        "Final
Maturity Date" means                   , 2011. 


        "GAAP"
means generally accepted accounting principles in the United States of America as in effect as of the date of this Indenture. 


        "Global
Note" has the meaning specified in Section 2.02. 


        "Indebtedness"
means with respect to any Person, without duplication, (a) all indebtedness, obligations and other liabilities (contingent or otherwise) of such Person
(i) for borrowed money (including obligations of such Person in respect of overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements, and any
loans or advances from banks, whether or not evidenced by notes or similar instruments), (ii) evidenced by credit or loan agreements, bonds, debentures, notes or similar instruments (whether or
not the recourse of the lender is to the whole of the assets of such Person or to only a portion thereof) or (iii) for obligations incurred in the ordinary course of business in connection with
the obtaining of materials or services (including any accounts payable or other accrued current trade liability), (b) all reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit, bank guarantees or bankers' acceptances, (c) all obligations and liabilities (contingent or otherwise) of such Person (i) in
respect of leases of such Person required, in conformity with GAAP, to be accounted for as capitalized 


3





 



lease
obligations on the balance sheet of such Person (as determined by the Company) or (ii) under any lease or related document (including a purchase agreement, conditional sale or other title
retention agreement) in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease) which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed upon residual value of the leased property to the lessor (whether or not such lease
transaction is characterized as an operating lease or a capitalized lease in accordance with GAAP), including the obligations of such Person to purchase or cause a third party to purchase such leased
property or to pay such agreed upon residual value, (d) all obligations (contingent or otherwise) of such Person with respect to any interest rate or other swap, cap, floor or collar agreement,
hedge agreement, forward contract, or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement; (e) all direct or indirect
guaranties, agreements to be jointly liable or similar agreements by such Person in respect of, and obligations or liabilities of such Person to purchase or otherwise acquire or otherwise assure a
creditor against loss in respect of, indebtedness, obligations or liabilities of another Person of the kind described in clauses (a) through (d); (f) indemnity obligations to sureties
under bid, payment and performance bonding arrangements; and (g) any and all deferrals, renewals, extensions, refinancings and refundings of, or amendments, modifications or supplements to, any
indebtedness, obligation or liability of the kind described in clauses (a) through (f). 


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



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


        "Non-Electing
Share" has the meaning specified in Section 15.06. 


        "Note"
or "Notes" means any Note or Notes, as the case may be, authenticated and delivered under this Indenture, including any Global Note. 


        "Note
Register" has the meaning specified in Section 2.05. 


        "Note
Registrar" has the meaning specified in Section 2.05. 


        "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 Note Registrar's books. 


        "Officers'
Certificate", when used with respect to the Company, means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the 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 the Treasurer or any Assistant Treasurer, or the Secretary or Assistant
Secretary of the Company. 


        "Opinion
of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or other counsel reasonably acceptable to the Trustee. 


        "Optional
Redemption" has the meaning specified in Section 3.01. 


        "Outstanding",
when used with reference to the Notes and subject to the provisions of Section 9.04, 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
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 



4





 




        (c)   Notes
converted into Common Stock pursuant to Article 15 and Notes deemed not outstanding pursuant to Article 3 or Article 4. 




        "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. 


        "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, for the purposes of this
definition, 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
that it replaces. 


        "Premium"
means any premium payable under the terms of the Notes. 


        "Purchased
Shares" has the meaning specified in Section 15.05(f). 


        "Record
Date" has the meaning specified in Section 2.03. 



        "Repurchase
Date" has the meaning specified in Section 4.01. 


        "Repurchase
Price" has the meaning specified in Section 4.01 


        "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 and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such person's knowledge of or any
familiarity with the particular subject. 


        "Securities"
has the meaning specified in Section 15.05(d). 


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


        "Senior
Indebtedness" means the principal of, premium, if any, and interest (including all interest accruing subsequent to the commencement of any bankruptcy or similar proceeding,
whether or not a claim for post-petition interest is allowed as a claim in any such proceeding) payable on or in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, all Indebtedness of the Company, whether secured or unsecured, absolute or contingent, due or to become due, outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company (including all deferrals, renewals, extensions or refundings of, or amendments, modifications or supplements to, the
foregoing), unless in the case of any particular Indebtedness the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness shall not
be senior in right of payment to the Notes or expressly provides that such Indebtedness is "pari passu" or "junior" to the Notes. If any payment made to
any holder of any Senior Indebtedness or its Representative with respect to such Senior Indebtedness is rescinded or must otherwise be returned by such holder or Representative upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, the reinstated Indebtedness of the Company arising as a result of such rescission or return shall constitute Senior Indebtedness effective as
of the date of such rescission or return. 


        "Significant
Subsidiary" means, as of any date of determination, a Subsidiary of the Company that would constitute a "Significant Subsidiary" as such term is defined under
Rule 1-02(w) of Regulation S-X of the Commission as in effect on the date of this Indenture. 


        "Subsidiary"
means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of capital
stock or other equity interest entitled (without regard to the occurrence of any contingency) to vote in the election of 


5





 



directors,
managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or managing general partner of which is such Person or a subsidiary of such Person or (b) the only general partners of which
are such Person or of one or more subsidiaries of such Person (or any combination thereof). 


        "Trading
Day" has the meaning specified in Section 15.05(g). 


        "Trigger
Event" has the meaning specified in Section 15.05(d). 


        "Trust
Indenture Act" means the Trust Indenture Act of 1939, as amended, as it was in force at the date of this Indenture, except as provided in Sections 11.03 and 15.06; provided that
if the Trust Indenture Act of 1939 is amended after the date hereof, the term "Trust Indenture Act" shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939 as so amended. 



        "Trustee"
means Wachovia Bank of Delaware, National Association and its successors and any corporation resulting from or surviving any consolidation or merger to which it or its
successors may be a party and any successor trustee at the time serving as successor trustee hereunder. 


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 "            %
CONVERTIBLE SUBORDINATED NOTES DUE 2011". Notes not to exceed the aggregate principal amount of $28,750,000 (except pursuant to Sections 2.05, 2.06, 3.01, 4.02 and 15.02 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.    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 and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby. 


        Any
of the 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 or 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. 


        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 (a "Global Note"). 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 


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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. 


        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, 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 and interest and
premium, if any, on any Global Note shall be made to the holder of such Note. 


        Section 2.03    Date and Denomination of Notes; Payments of Interest.    The Notes shall be issuable in
registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof. Each Note shall be dated the date of its authentication and shall bear interest from the
date specified on the face of the form of Note attached as Exhibit A hereto and shall be payable semiannually
on                and                of each year commencing
on                ,
2004. Interest on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months. 


        The
Person in whose name any Note (or its Predecessor Note) is registered on the Note Register at the close of business on any Record Date with respect to any interest payment date
(including any Note that is converted after the Record Date and on or before the interest payment date) shall be entitled to receive the interest payable on such interest payment date notwithstanding
the cancellation of such Note upon any transfer, exchange or conversion subsequent to the Record Date and on or prior to such interest payment date, except that the interest payable upon redemption of
the Notes or repurchase upon the occurrence of a Change in Control will be payable to the Person to whom principal is payable pursuant to such redemption or repurchase. Interest shall be payable at
the office of the Company maintained by the Company for such purposes in the Borough of Manhattan, City of New York, which shall initially be an office or agency of the Trustee. The Company shall pay
interest (i) on any Notes in certificated form by check mailed to the address of the Person entitled thereto as it appears in the Note Register or (ii) on any Global Note by wire
transfer of immediately available funds to the account of the Depositary or its nominee. The term "Record Date" with respect to any interest payment date shall mean
the                or
                preceding the
applicable                or                interest payment date, respectively.



        Any
interest on any Note which is payable, but is not punctually paid or duly provided for, on
any                or                (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Noteholder on the relevant record date by virtue of his having been such Noteholder, and such Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below: 



        (1)   The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the
close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner. 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 (which shall be not less than twenty-five (25) days after the receipt by the Trustee of such
notice, unless the Trustee shall consent to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust 



7





 

for
the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which
shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment, and not less than ten (10) days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first-class postage prepaid, to each holder at his address as it appears in the Note Register, not less
than ten (10) days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be
payable pursuant to the following clause (2) of this Section 2.03. 


        (2)   The
Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated
quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. 




        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, manually executed by the Trustee (or an authenticating agent appointed by the Trustee as provided by Section 17.11), shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee (or such an authenticating agent) upon any Note executed by the Company shall be conclusive evidence that the Note
so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. 


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


        Section 2.05    Exchange and Registration of Transfer of Notes.    


        (a)   The
Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office and in any other office or agency of the Company
designated pursuant to Section 5.02 being herein sometimes collectively referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Notes and of transfers of Notes. The Note Register shall be in written form or in any form capable of being converted into written form within a reasonably prompt
period of time. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more
co-registrars in accordance with Section 5.02. 


8









   
        Upon surrender for registration of transfer of any Note to the Note Registrar or any co-registrar, and satisfaction of the requirements for such transfer set forth in this
Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture. 



        Notes
may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at any such office or agency
maintained by the Company pursuant to Section 5.02. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Noteholder making the exchange is entitled to receive bearing registration numbers not contemporaneously outstanding. 


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



        All
Notes presented or surrendered for registration of transfer or for exchange, redemption, repurchase or conversion shall (if so required by the Company or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, and the Notes shall be duly executed by the Noteholder thereof or his attorney duly
authorized in writing. 


        No
service charge shall be made to any holder for any registration of, transfer or exchange of Notes, but the Company may require payment by the holder of a sum sufficient to cover any
tax, assessment or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes. 



        Neither
the Company nor the Trustee nor any Note Registrar shall be required to exchange or register a transfer of (a) any Notes or portions thereof surrendered for conversion
pursuant to Article 15 or (b) any Notes or portions thereof tendered for repurchase pursuant to Section 4.02. 


        (b)   The
following provisions shall apply only to Global Notes: 



          (i)  Each
Global Note authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to such Depositary or a nominee
thereof or Custodian therefor, and each such Global Note shall constitute a single Note for all purposes of this Indenture. 


         (ii)  Notwithstanding
any other provision in this Indenture, no Global Note may be exchanged in whole or in part for Notes registered, and no transfer of a Global Note in
whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless (a) the Depositary (i) has notified the Company that it is unwilling
or unable to continue as Depositary for such Global Note and a successor depositary has not been appointed by the Company within ninety days or (ii) has ceased to be a clearing agency
registered under the Exchange Act, (b) an Event of Default has occurred and is continuing or (c) the Company, in its sole discretion, notifies the Trustee in writing that it no longer
wishes to have all the Notes represented by Global Notes. Any Global Note exchanged pursuant to clause (A) or (B) above shall be so exchanged in whole and not in part and any Global Note
exchanged pursuant to clause (C) above may be exchanged in whole or from time to time in part as directed by the Company. Any Note issued in exchange for a Global Note or any portion thereof
shall be a Global Note; provided that any such Note so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Note. 



9





 




        (iii)  Notes
issued in exchange for a Global Note or any portion thereof pursuant to clause (ii) above shall be issued in definitive, fully registered form, without
interest coupons, shall have an aggregate principal amount equal to that of such Global Note or portion thereof to be so exchanged, shall be registered in such names and be in such authorized
denominations as the Depositary shall designate and shall bear any legends required hereunder. Any Global Note to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Note
Registrar. With regard to any Global Note to be exchanged in part, either such Global Note shall be so surrendered for exchange or, if the Trustee is acting as Custodian for the Depositary or its
nominee with respect to such Global Note, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the
records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and make available for delivery the Note issuable on such exchange to or upon the written order of the
Depositary or an authorized representative thereof. 


        (iv)  In
the event of the occurrence of any of the events specified in clause (ii) above, the Company will promptly make available to the Trustee a reasonable supply
of certificated Notes in definitive, fully registered form, without interest coupons. 


         (v)  Neither
any members of, or participants in, the Depositary ("Agent Members") nor any other Persons on whose behalf Agent Members may act shall have any rights under this
Indenture with
respect to any Global Note registered in the name of the Depositary or any nominee thereof, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner and holder of such Global 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 such nominee, as the case may be, or
impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the
rights of a holder of any Note. 


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




        (c)   The
Trustee shall have no responsibility or obligation to any Agent Members or any other Person with respect to the accuracy of the books or records, or the acts or
omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any Agent Member or other
Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to
the Noteholders and all payments to be made to Noteholders under the Notes shall be given or made only to or upon the order of the registered Noteholders (which shall be the Depositary or its nominee
in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the customary procedures of the Depositary. The Trustee may
rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its Agent Members. 


10





 

        The
Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Note (including any transfers between or among Agent Members in any global indenture) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof. 


        Section 2.06    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 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 tendered for repurchase upon a Change in Control 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 2.06 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. To the extent permitted by law, all Notes shall be held and owned upon the
express condition that the foregoing provisions are exclusive with respect to the replacement or payment or conversion or redemption of mutilated, destroyed, lost or stolen Notes and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment or conversion or redemption of
negotiable instruments or other securities without their surrender. 


        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 


11





 



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 5.02 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 Note 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, or satisfaction of the indebtedness represented by such Notes unless and until the same are delivered to the Trustee for cancellation. 


        Section 2.09    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 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 and that reliance may be placed only on the other identification numbers printed on the Notes,
and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. 


ARTICLE 3

REDEMPTION OF NOTES  


        Section 3.01    Redemption of Notes At Option of the Company.    Except upon the occurrence of a Change in
Control or as otherwise provided in Section 4.01, the Company may not redeem any Notes prior to                , 2009. On any interest payment date occurring on or
after                , 2009,
and prior to maturity, the Notes may be redeemed at the option of the Company (an "Optional Redemption"), in whole or in part, upon notice as set forth in Section 3.03, at the redemption price
set forth in the form of Note attached as Exhibit A hereto, together with accrued and unpaid interest, if any, to, but excluding the date fixed for redemption. 


        Section 3.02    Optional Redemption of Notes Upon a Change in Control.    Upon the occurrence of a Change in
Control, the Notes may be redeemed at the option of the Company (a "Change in Control Redemption"), in whole but not in part, not later than five Business Days following the effective date of the
event or circumstance resulting in the Change in Control (the "Change in Control Redemption Date"), upon notice as set forth in Section 3.03, at the redemption prices set forth in the form of
Note attached as Exhibit A hereto, together with accrued and unpaid interest, if any, to, but excluding the date fixed for redemption. 


12





 



        Section 3.03    Notice of Redemption; Selection of Notes.    



        (a)   In
case the Company shall desire to exercise the right to redeem all or, as the case may be, any part of the Notes pursuant to Section 3.01, it shall fix a date
for redemption and it or, at its written request received by the Trustee not fewer than forty-five (45) days prior (or such shorter period of time as may be acceptable to the
Trustee) to the date fixed for redemption, the Trustee in the name of and at the expense of the Company, shall mail or cause to be mailed a notice of such redemption not fewer than thirty
(30) nor more than sixty (60) days prior to the redemption date to each holder of Notes so to be redeemed as a whole or in part at its last address as the same appears on the Note
register; provided that if the Company shall give such notice, it shall also give written notice of the redemption date to the Trustee. Such mailing shall be by first class mail. The notice, if mailed
in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in
the notice to the holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Concurrently with the
mailing of any such notice of redemption, the Company shall issue a press release announcing such redemption, the form and content of which press release shall be determined by the Company in its sole
discretion. The failure to issue any such press release or any defect therein shall not affect the validity of the redemption notice or any of the proceedings for the redemption of any Note called for
redemption. 


        (b)   If
the Company elects to exercise its right to redeem the Notes pursuant to Section 3.02, it or, at its written request received by the Trustee not fewer than
thirty (30) days prior (or such shorter period of time as may be acceptable to the Trustee) to the date fixed for redemption, the Trustee in the name of and at the expense of the Company, shall
mail or cause to be mailed a notice of such redemption not later than thirty (30) days following the date of first public announcement of the event or circumstance which has or may result in a
Change in Control to each holder of Notes at its last address as the same appears on the Note register; provided that if the Company shall give such notice, it shall also give written notice of the
redemption date to the Trustee. Such mailing shall be by first class mail. The notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Note shall not affect the validity of the proceedings for the
redemption of any other Note. The notice shall indicate the event or circumstance which has or may result in a Change in Control, shall be accompanied by a copy of any press release or other public
announcement of the Change in Control event, and may state that the Company's obligation to redeem the Notes is subject to consummation of the Change in Control event. Concurrently with the mailing of
any such notice of redemption, the Company shall issue a press release announcing such redemption, the form and content of which press release shall be determined by the Company in its sole
discretion. The failure to issue any such press release or any defect therein shall not affect the validity of the redemption notice or any of the proceedings for the redemption of any Note called for
redemption. 


        (c)   Each
such notice of redemption shall specify the aggregate principal amount of Notes to be redeemed, the CUSIP number or numbers of the Notes being redeemed, the date
fixed for redemption (which shall be a Business Day), the redemption price at which Notes are to be redeemed, the place or places of payment, that payment will be made upon presentation and surrender
of such Notes, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon or on the portion thereof to be
redeemed will cease to accrue. Such notice shall also state the current Conversion Rate and the date on which the right to convert such Notes or portions thereof into Common Stock will expire. If
fewer than all the Notes are to be redeemed, the notice of redemption shall identify the Notes to be redeemed (including CUSIP numbers, if any). In case any Note is to be redeemed in part only, the
notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that, on and after the 


13





 



redemption
date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof will be issued. 



        (d)   On
or prior to the redemption date specified in the notice of redemption given as provided in this Section 3.03, the Company will deposit with the Trustee or with
one or more paying agents (or, if the Company is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 5.04) an amount of money in immediately available
funds sufficient to redeem on the redemption date all the Notes (or portions thereof) so called for redemption (other than those theretofore surrendered for conversion into Common Stock) at the
appropriate redemption price, together with accrued interest to, but excluding, the redemption date; provided that if such payment is made on the redemption date it must be received by the Trustee or
paying agent, as the case may be, by 10:00 a.m. New York City time on such date. The Company shall be entitled to retain any interest, yield or gain on amounts deposited with the Trustee or any
paying agent pursuant to this Section 3.03 in excess of amounts required hereunder to pay the redemption price and accrued interest to, but excluding, the redemption date. If any Note called
for redemption is converted pursuant hereto prior to such redemption date, any money deposited with the Trustee or any paying agent or so segregated and held in trust for the redemption of such Note
shall be paid to the Company, or, if then held by the Company, shall be discharged from such trust. Whenever any Notes are to be redeemed pursuant to Sections 3.01 or 3.02, the Company will give the
Trustee written notice in the form of an Officers' Certificate not fewer than forty-five (45) days in the case of an Optional Redemption, or thirty (30) days in the case of a
Change in Control Redemption (or such shorter period of time as may be acceptable to the Trustee) prior to the redemption date as to the aggregate principal amount of Notes to be redeemed. 


        (e)   If
less than all of the outstanding Notes are to be redeemed, the Trustee shall select the Notes or portions thereof of the Global Note or the Notes in certificated form
to be redeemed (in principal amounts of $1,000 or multiples thereof) by lot, on a pro rata basis or by another method the Trustee deems fair and appropriate. If any Note selected for partial
redemption is submitted for conversion in part after such selection, the portion of such Note submitted for conversion shall be deemed (so far as may be possible) to be the portion to be selected for
redemption. The Notes (or portions thereof) so selected shall be deemed duly selected for redemption for all purposes hereof, notwithstanding that any such Note is submitted for conversion in part
before the mailing of the notice of redemption. 


        (f)    Upon
any redemption of less than all of the outstanding Notes, the Company and the Trustee may (but need not), solely for purposes of determining the pro rata allocation
among such Notes as are unconverted and outstanding at the time of redemption, treat as outstanding any Notes surrendered for conversion during the period of fifteen (15) days next preceding
the mailing of a notice of redemption and may (but need not) treat as outstanding any Note authenticated and delivered during such period in exchange for the unconverted portion of any Note converted
in part during such period. 


        Section 3.04    Payment of Notes Called for Redemption by the Company.    If notice of redemption has been
given as provided in Section 3.03, the Notes or portion of Notes with respect to which such notice has been given shall, unless converted into Common Stock pursuant to the terms hereof, become
due and payable on the date fixed for redemption and at the place or places stated in such notice at the applicable redemption price, together with interest accrued to (but excluding) the redemption
date, and on and after said date (unless the Company shall default in the payment of such Notes at the redemption price, together with interest accrued to said date) interest on the Notes or portion
of the Notes so called for redemption shall cease to accrue and, after the closing of business on the Business Day immediately preceding the redemption date, such Notes shall cease to be convertible
into Common Stock and, except as provided in Sections 8.05 and 13.04, to be entitled to any benefit or security under this Indenture, and the holders thereof shall have no right in respect of such
Notes except the right to receive the redemption price thereof and unpaid interest to (but excluding) the redemption date. On presentation and surrender of such Notes at a place of payment in said
notice 


14





 



specified,
the said Notes or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to, but excluding, the
redemption date; provided that if the applicable redemption date is an interest payment date, the interest payable on such interest payment date shall be payable to the holders of record of such Notes
on the applicable record date instead of the holders surrendering such Notes for redemption on such date. 


        Upon
presentation of any Note redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of
the Company, a new Note or Notes, of authorized denominations, in principal amount equal to the unredeemed portion of the Notes so presented. 


        Notwithstanding
the foregoing, the Trustee shall not redeem any Notes or mail any notice of redemption during the continuance of a default in payment of interest or premium, if any, on
the Notes. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid or duly provided for, bear interest from
the redemption date at a rate equal to 1% per annum plus the rate borne by the Note (without duplication of the 1% increase provided for under Section 7.02) and such Note shall remain
convertible into Common Stock until the principal and premium, if any, and interest shall have been paid or duly provided for. 


ARTICLE 4

REPURCHASE OF NOTES UPON A CHANGE IN CONTROL  


        Section 4.01    Right to Require Repurchase.    In the event that a Change in Control shall occur, and the
Company shall not have redeemed the Notes pursuant to Section 3.02 by the applicable Change in Control Redemption Date, then each Holder shall have the right, at the Holder's option, to require
the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder's Notes not theretofore called for redemption, or any portion of the principal amount
thereof that is equal to U.S. $1,000 or any integral multiple of U.S. $1,000 in excess thereof (provided that no single Note may be repurchased in part unless the portion of the principal amount of
such Note to be Outstanding after such repurchase is equal to U.S. $1,000 or integral multiples of U.S. $1,000 in excess thereof), on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined in Section 4.02) (or if such date is not a Business Day then the next succeeding Business Day) at a purchase price equal to 100% of the principal amount
of the Notes to be repurchased plus interest accrued but unpaid to, but excluding, the Repurchase Date (the "Repurchase Price"); provided, however, that installments of interest on Notes whose Final
Maturity Date is on or prior to the Repurchase Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such on the relevant Record Date according to their
terms and the provisions of Section 2.03. Such right to require the repurchase of the Notes shall not continue after a discharge of the Company from its obligations with respect to the Notes in
accordance with Article 13, unless a Change in Control shall have occurred prior to such discharge. Whenever in this Indenture there is a reference, in any context, to the principal of any Note
as of any time, such reference shall be deemed to include reference to the Repurchase Price payable in respect of such Note to the extent that such Repurchase Price is, was or would be so payable at
such time, and express mention of the Repurchase Price in any provision of this Indenture shall not be construed as excluding the Repurchase Price in those provisions of this Indenture when such
express mention is not made. 


        Section 4.02    Notices; Method of Exercising Repurchase Right, Etc.    (a) Unless the Company shall
have theretofore called for redemption all of the Outstanding Notes, on or before the 30th day after the occurrence of a Change in Control, the Company or, at the request (and expense)
of the Company on or before the 15th day after such occurrence, the Trustee, shall give to all Holders of Notes, in the manner provided in Section 17.03, notice (the "Company
Notice") of the occurrence of the



15





 

Change
of Control and of the repurchase right set forth herein arising as a result thereof. The Company shall also deliver a copy of such Company Notice to the Trustee. 



        Each
Company Notice shall state: 



          (i)  the
Repurchase Date, 


         (ii)  the
date by which the repurchase right must be exercised, 


        (iii)  the
Repurchase Price, 


        (iv)  a
description of the procedure that a Holder must follow to exercise a repurchase right, and the place or places where such Notes are to be surrendered for payment of
the Repurchase Price and accrued interest, if any, to the Repurchase Date, 



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


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



       (vii)  the
place or places that the Note certificate with the Election of Holder to Require Repurchase upon a Change in Control as specified in Exhibit A shall be
delivered. 




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


        If
any of the foregoing provisions or other provisions of this Article 4 are inconsistent with applicable law, such law shall govern. 



        (b)   To
exercise a repurchase right, a Holder shall deliver to the Trustee on or before the 30th day after the date of the Company Notice (i) irrevocable
written notice of the Holder's exercise of such right, which notice shall set forth the name of the Holder, the principal amount of the Notes to be repurchased (and, if any Note is to be repurchased
in part, the serial number thereof, the portion of the principal amount thereof to be repurchased and the name of the Person in which the portion thereof to remain Outstanding after such repurchase is
to be registered) and a statement that an election to exercise the repurchase right is being made thereby, and (ii) the Notes with respect to which the repurchase right is being exercised. Such
written notice shall be irrevocable, except that the right of the Holder to convert the Notes with respect to which the repurchase right is being exercised shall continue until the close of business
on the Business Day immediately preceding the Repurchase Date. 


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


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


16





 



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


        (f)    All
Notes delivered for repurchase shall be delivered to the Trustee to be canceled at the direction of the Trustee, which shall dispose of the same as provided in
Section 2.08. 


        Section 4.03    Deposit of Repurchase Price.    (a) Prior to 10:00 a.m. (New York City Time) on
the Repurchase Date, the Company shall deposit with the Trustee (or other paying agent appointed by the Company; or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the
paying agent, shall segregate and hold in trust as provided in Section 5.04) an amount of cash (in immediately available funds if deposited on the Repurchase Date), sufficient to pay the
aggregate repurchase price of all the Notes or portions thereof that are to be repurchased as of the Repurchase Date. 


        (b)   If
the Trustee or other paying agent appointed by the Company, or the Company or a Subsidiary or Affiliate of either of them, if such entity is acting as the paying
agent, holds cash sufficient to pay the aggregate repurchase price of all the Notes, or portions thereof, that are to be repurchased as of the Repurchase Date, on or after the Repurchase Date
(i) the Notes will cease to be outstanding, (ii) interest on the Notes will cease to accrue, and (iii) all other rights of the holders of such Notes will terminate, whether or not
book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee or paying agent, other than the right to receive the Repurchase Price upon delivery of the
Notes. 


        Section 4.04    Repayment to the Company.    The Trustee (or other paying agent appointed by the Company) shall
return to the Company any cash that remains unclaimed as provided in Section 13.04. 



        Section 4.05    Consolidation, Merger, Etc.    In the case of any merger, consolidation, conveyance, sale,
transfer or lease of all or substantially all of the assets of the Company to which Section 12.01 applies, in which the Common Stock of the Company is changed or exchanged as a result into the
right to receive shares of stock and other securities or property or assets (including cash) which includes shares of Common Stock of the Company or common stock of another Person that are, or upon
issuance will be, traded on a United States national securities exchange or approved for trading on an established automated over-the-counter trading market in the United
States and such shares constitute at the time such change or exchange becomes effective in excess of 50% of the aggregate fair market value of such shares of stock and other securities, property and
assets (including cash) (as determined by the Company, which determination shall be conclusive and binding), then the Person formed by such consolidation or resulting from such merger or combination
or which acquires the properties or assets (including cash) of the Company, as the case may be, shall execute and deliver to the Trustee a supplemental indenture (which shall comply with the Trust
Indenture Act as in force at the date of execution of such supplemental indenture) modifying the provisions of this Indenture relating to the right of Holders to cause the Company to repurchase the
Notes following a Change in Control, including without limitation the applicable provisions of this Article 4 and the definitions of the Common Stock and Change in Control, as appropriate, and
such other related definitions set forth herein as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provisions apply in the event of a
subsequent Change in Control to the common stock and the issuer thereof if different from the Company and Common Stock of the Company (in lieu of the Company and the Common Stock of the Company). 


17







   
        Section 4.06    Compliance with Tender Offer Rules.    The Company will comply with the provisions of
Rule 13e-4 and any other tender offer rules under the Exchange Act to the extent then applicable in connection with the repurchase rights of the holders of Notes in the event of a
Change in Control. 


ARTICLE 5

PARTICULAR COVENANTS OF THE COMPANY  


        Section 5.01    Payment of Principal, Premium and Interest.    The Company covenants and agrees that it will
duly and punctually pay or cause to be paid the principal of and premium, if any (including the redemption price payable upon redemption pursuant to Article 3 and the Repurchase Price payable
upon a Change in Control pursuant to Article 4), and interest, on each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes. 



        Section 5.02    Maintenance of Office or Agency.    The Company will maintain an office or agency in the
Borough of Manhattan, the City of New York, where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or for conversion or redemption and where
notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. 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, Note Registrar, Custodian and conversion agent and the Corporate Trust Office 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 Note Registrar, the Trustee agrees to mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the third paragraph of
Section 8.11. 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 5.03    Appointments to Fill Vacancies in Trustee's Office.    The Company, whenever necessary to avoid
or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. 



        Section 5.04    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 5.04: 



        (1)   that
it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, 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; 



        (2)   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 and premium, if any, or
interest on the Notes when the same shall be due and payable; and 



18





 




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




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


        (b)   If
the Company shall act as its own paying agent, it will, on or before each due date of the principal of, premium, if any, 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, premium, if any, or interest so becoming due and will promptly notify the Trustee 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, premium, if any, or interest on the Notes when the same
shall become due and payable. 


        (c)   Anything
in this Section 5.04 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 5.04, such sums to be
held by the Trustee upon the trusts herein contained and upon such payment by the Company or any paying agent to the Trustee, the Company or such paying agent shall be released from all further
liability with respect to such sums. 


        (d)   Anything
in this Section 5.04 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 5.04 is subject to Sections
13.03 and 13.04. 


        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 5.05    Existence.    Subject to Article 12, 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 5.06    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 selling or discontinuing the operation or maintenance of any
of such properties (including the sale of any Subsidiary) if such sale or discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any subsidiary
and not disadvantageous in any material respect to the Noteholders. 



        Section 5.07    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 


19





 



issuance,
conversion or redemption 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 5.08    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, premium, if any, or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted. 


        Section 5.09    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 5.09 shall be delivered to a Responsible Officer of the Trustee at its Corporate Trust Office. 


ARTICLE 6

NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE  


        Section 6.01    Noteholders' Lists.    The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee, semiannually, not more than fifteen (15) days after each July 15 and January 15 in each year beginning with January 15, 2004, and at such other
times as the Trustee may request in writing, within thirty (30) days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the holders of Notes as of a date not
more than fifteen (15) days (or such other date as the Trustee may reasonably request in order to so provide any such notices) prior to the time such information is furnished, except that no
such list need be furnished by the Company to the Trustee so long as the Trustee is acting as the sole Note Registrar. 



        Section 6.02    Preservation and Disclosure of Lists.    (a) The Trustee shall preserve, in as current
a form as is reasonably practicable, all information as to the names and addresses of the holders of Notes contained in the most recent list furnished to it as provided in Section 6.01 or
maintained by the Trustee in its capacity as Note Registrar or co-registrar in respect of the Notes, if so acting. The 


20





 



Trustee
may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished. 



        (b)   The
rights of Noteholders to communicate with other holders of Notes with respect to their rights under this Indenture or under the Notes, and the corresponding rights
and duties of the Trustee, shall be as provided by the Trust Indenture Act. 


        (c)   Every
Noteholder, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them
shall be held accountable by reason of any disclosure of information as to names and addresses of holders of Notes made pursuant to the Trust Indenture Act. 



        Section 6.03    Reports by Trustee.    (a) Within sixty (60) days after July 15 of each
year commencing with the year 2004, the Trustee shall transmit to holders of Notes such reports dated as of July 15 of the year in which such reports are made concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant
thereto. In the event that no events have occurred under the applicable sections of the Trust Indenture Act the Trustee shall be under no duty or obligation to provide such reports. 



        (b)   A
copy of such report shall, at the time of such transmission to holders of Notes, be filed by the Trustee with each stock exchange and automated quotation system upon
which the Notes are listed and with the Company. The Company will promptly notify the Trustee in writing when the Notes are listed on any stock exchange or automated quotation system or delisted
therefrom. 


        Section 6.04    Reports by Company.    The Company shall file with the Trustee (and the Commission if at any
time after the Indenture becomes qualified under the Trust Indenture Act), and transmit to holders of Notes, such information, documents and other reports and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act, whether or not the Notes are governed by such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within fifteen (15) days after the same
is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on an Officers' Certificates). 


ARTICLE 7

REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT  


        Section 7.01    Events of Default.    In case one or more of the following Events of Default (whatever the
reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body) shall have occurred and be continuing: 



        (a)   default
in the payment of any installment of interest upon any of the Notes as and when the same shall become due and payable, and continuance of such default for a
period of thirty (30) days; or 


        (b)   default
in the payment of the principal of or 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 pursuant to Article 3 or repurchase pursuant to Article 4, by acceleration or otherwise; or 



21





 




        (c)   default
in the Company's obligation to convert any Notes following the exercise by the Noteholder of the right to convert such Notes into Common Stock pursuant to and in
accordance with Article 15; or 


        (d)   default
in the Company's obligation to provide the Company Notice upon the occurrence of a Change in Control as provided in Section 4.02; or 


        (e)   failure
on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Notes or in this Indenture
(other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section 7.01 specifically dealt with) for a period of sixty (60) days after the
date on which written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee, or the Company and a Responsible Officer of the Trustee by
the holders of at least twenty-five percent (25%) in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 9.04; or 


        (f)    the
Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding
commenced against the Company, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or 


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




        then,
and in each and every such case (other than an Event of Default specified in Section 7.01(f) or 7.01(g)), unless the principal of all of the Notes shall have already become
due and payable, either the Trustee or the holders of not less than twenty-five percent (25%) in aggregate principal amount of the Notes then outstanding hereunder determined in accordance
with Section 9.04, by notice in writing to the Company (and to the Trustee if given by Noteholders), may declare the principal of and premium, if any, on all the Notes and the interest accrued
thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Notes contained to the
contrary notwithstanding. If an Event of Default specified in Section 7.01(f) or 7.01(g) occurs, the principal of all the Notes and the interest accrued thereon shall be immediately and
automatically due and payable without necessity of further action. This provision, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so
declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with
the Trustee a sum sufficient to pay all matured installments of interest upon all Notes and the principal of and premium, if any, on any and all Notes which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium, if 


22





 

any,
at the rate borne by the Notes, to the date of such payment or deposit) and amounts due to the Trustee pursuant to Section 8.06, and if any and all defaults under this Indenture, other
than the nonpayment of principal of and premium, if any, and accrued interest on Notes which shall have become due by acceleration, shall have been cured or waived pursuant to Section 7.07,
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 7.02    Payments of Notes on Default; Suit Therefor.    The Company covenants that (a) in case
default shall be made in the payment of any installment of interest upon any of the Notes as and when the same shall become due and payable, and such default shall have continued for a period of
thirty (30) days, or (b) in case default shall be made in the payment of the principal of or premium, if any, on 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, by or under this Indenture, declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for
the benefit of the holders of the Notes, the whole amount that then shall have become due and payable on all such Notes for principal
and premium, if any, or interest as the case may be, with interest upon the overdue principal and premium, if any, and (to the extent that payment of such interest is enforceable under applicable law)
upon the overdue installments of interest at the rate borne by the Notes, plus 1% and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection,
including reasonable compensation to the Trustee, its agents, attorneys and counsel, and all other amounts due the Trustee under Section 8.06. Until such demand by the Trustee, the Company may
pay the principal of and premium, if any, and interest on the Notes to the registered holders, whether or not the Notes are overdue. 


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


        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 Title 11 of the United States Code, or any
other applicable 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 7.02, shall be entitled and empowered, by intervention in such
proceedings or



23





 

otherwise,
to file and prove a claim or claims for the whole amount of principal, premium, if any, 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 8.06, 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 reasonable 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 reasonable 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 reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the
holders of the Notes. 


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


        Section 7.03    Application of Monies Collected by Trustee.    Any monies collected by the Trustee pursuant to
this Article 7 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes, and stamping
thereon the payment, if only partially paid, and upon surrender thereof, if fully paid: 


        FIRST:
To the payment of all amounts due the Trustee under Section 8.06; 


        SECOND:
In case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on the Notes in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the rate borne by the Notes, such
payments to be made ratably to the Persons entitled thereto; 


        THIRD:
In case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount then owing and unpaid upon the
Notes for principal and premium, if any, and interest, with interest on the overdue principal and premium, if any, and (to the extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Notes, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such
principal and premium, if any, and interest without preference or priority of principal and premium, if any, over interest, or of interest over principal and premium, if any, or of any installment of
interest over any 


24





 



other
installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal and premium, if any, and accrued and unpaid interest; and 


        FOURTH:
To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto. 



        Section 7.04    Proceedings by Noteholder.    No Noteholder 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 such holder previously shall have given to the Trustee written notice of an Event of Default and of the
continuance thereof, as hereinbefore provided, and unless also 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 reasonable 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 7.07; 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
Noteholders 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 Noteholders (except as otherwise provided herein). For the protection and enforcement of this Section 7.04, each and every Noteholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity. 


        Notwithstanding
any other provision of this Indenture and any provision of any Note, the right of any Noteholder to receive payment of the principal of and premium, if any (including the
redemption price payable upon redemption pursuant to Article 3 and the Repurchase Price payable upon a Change in Control pursuant to Article 4), and accrued interest on such Note, on or
after the respective due dates expressed in such Note or in the event of redemption, 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 Noteholder. 


        Anything
in this Indenture or the Notes to the contrary notwithstanding, any Noteholder, without the consent of either the Trustee or any other Noteholder, 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 7.05    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 7.06    Remedies Cumulative and Continuing.    Except as provided in Section 2.06, all powers
and remedies given by this Article 7 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 Noteholders, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no
delay 


25





 



or
omission of the Trustee or of any Noteholder 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 7.04, every power and remedy given by this Article 7 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 7.07    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 9.04 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. The holders of a majority in aggregate
principal amount of the Notes at the time outstanding determined in accordance with Section 9.04 may, on behalf of the holders of all of the Notes, waive any past default or Event of Default
hereunder and its consequences except (i) a default in the payment of interest or premium, if any, on, or the principal of, the Notes, (ii) a failure by the Company to convert any Notes
into Common Stock, (iii) a default in the payment of the redemption price pursuant to Article 3 or the Repurchase Price pursuant to Article 4 or (iv) a default in respect
of a covenant or provisions hereof which under Article 11 cannot be modified or amended without the
consent of the holders of each or all 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 7.07, said default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to
be not continuing; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 


        Section 7.08    Notice of Defaults.    The Trustee shall, within ninety (90) days after a Responsible
Officer of the Trustee has knowledge of the occurrence of a default, mail to all Noteholders, as the names and addresses of such holders appear upon the Note Register, notice of all defaults known to
a Responsible Officer, unless such defaults 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
premium, if any, 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 7.09    Undertaking To Pay Costs.    All parties to this Indenture agree, and each Noteholder 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 7.09 (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 9.04, or to
any suit instituted by any Noteholder for the enforcement of the payment of the principal of or premium, if any, 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 15. 


26






   ARTICLE 8

THE TRUSTEE  


        Section 8.01    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 his own affairs. 


        (a)   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 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 Trust Indenture Act, 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 or obligations shall be read into this Indenture and the
Trust Indenture Act 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 in 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, 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 9.04 relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. 


        (d)   Whether
or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall
be subject to the provisions of this Section. 


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


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



        (g)   Except
with respect to the failure to make any payment due to the Trustee pursuant to the terms herein, the Trustee shall not be deemed to have knowledge of any Event of
Default hereunder unless it shall have been notified in writing of such Event of Default by the Company or the holders of at least 10% in aggregate principal amount of the Notes. 


27





 



        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 8.02    Reliance on Documents, Opinions, Etc.    Except as otherwise provided in Section 8.01: 


        (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, Note, 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; 


        (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; 


        (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 reasonable 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, Note 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 sole
cost of the Company and shall incur no liability or additional 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; 


28





 



        (j)    any
permissive right or authority granted to the Trustee shall not be construed as a mandatory duty; and 


        (k)   in
no event shall the Trustee be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss
of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. 



        Section 8.03    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 8.04    Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes.    The Trustee, any
paying agent, any conversion agent or Note 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 or Note Registrar. 


        Section 8.05    Monies to Be Held in Trust.    Subject to the provisions of Section 13.04, 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 8.06    Compensation and Expenses of Trustee.    The Company 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 will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad
faith. The Company also covenants to indemnify the Trustee and any predecessor Trustee (or any officer, director or employee of the Trustee), in any capacity under this Indenture and 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 negligence or bad faith on the part of the Trustee or such officers, directors, employees and agent 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) or liability in connection with enforcing the provisions of this Section 8.06, except to the extent that such loss, damage, claim, liability or expense is due to its own
negligence or bad faith. The obligations of the Company under this Section 8.06 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. 



        When
the Trustee and its agents and any authenticating agent incur expenses or render services after an Event of Default specified in Section 7.01(f) or (g) with respect to
the Company occurs, the 


29





 



expenses
and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws. 


        Section 8.07    Officers' Certificate as Evidence.    Except as otherwise provided in Section 8.01,
whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith or willful misconduct on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the Trustee. 


        Section 8.08    Conflicting Interests of Trustee.    If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture. 


        Section 8.09    Eligibility of Trustee.    There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 


        Section 8.10    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, 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 120 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, appoint a successor identified in such notice or may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor trustee, or, if 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 7.09, 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. 


        (b)   In
case at any time any of the following shall occur: 



        (i)  the
Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who has been a bona fide holder of a Note or
Notes for at least six (6) months; or 


        (ii)  the
Trustee shall cease to be eligible in accordance with the provisions of Section 8.09 and shall fail to resign after written request therefor by the Company
or by any such Noteholder; or 


        (iii)  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; 



30





 





        then,
in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, 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 7.09, 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 the Noteholders 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 8.10(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 8.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section 8.11. 


        (e)   Notwithstanding
the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 8.06 shall continue for the benefit of the
retiring Trustee. 


        Section 8.11    Acceptance by Successor Trustee.    Any successor trustee appointed as provided in
Section 8.10 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 8.06, 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 8.06. 



        No
successor trustee shall accept appointment as provided in this Section 8.11 unless, at the time of such acceptance, such successor trustee shall be qualified under the
provisions of Section 8.08 and be eligible under the provisions of Section 8.09. 


        Upon
acceptance of appointment by a successor trustee as provided in this Section 8.11, 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 Note 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. 


31





 



        Section 8.12    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 qualified under the provisions of Section 8.08 and eligible under the provisions of Section 8.09. 


        In
case 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 authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or
consolidation. 


        Section 8.13    Preferential Collection of Claims.    If and when the Trustee shall be or become a creditor of
the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of the claims against the Company (or any such
other obligor). 


ARTICLE 9

THE NOTEHOLDERS  


        Section 9.01    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 10, 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 holders of the Notes, 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 9.02    Proof of Execution by Noteholders.    Subject to the provisions of Sections 8.01, 8.02 and
10.05, 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 Note Registrar. 


        The
record of any Noteholders' meeting shall be proved in the manner provided in Section 10.06. 



        Section 9.03    Who Are Deemed Absolute Owners.    The Company, the Trustee, any paying agent, any conversion
agent and any Note Registrar may deem the Person in whose name such Note shall be registered upon the Note 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 


32





 



thereon
made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any conversion agent nor any Note Registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability
for monies payable upon any such Note. 


        Section 9.04    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 actually 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 9.04 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 8.01, 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 9.05    Revocation Of Consents, Future Holders Bound.    At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 9.01, 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 9.02, 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. 


ARTICLE 10

MEETINGS OF NOTEHOLDERS  


        Section 10.01    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 10 for any of the following purposes: 



        (1)   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 7; 



        (2)   to
remove the Trustee and nominate a successor trustee pursuant to the provisions of Article 8; 


        (3)   to
consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 11.02; or 



33





 




        (4)   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 10.02    Call of Meetings by Trustee.    The Trustee may at any time call a meeting of Noteholders to
take any action specified in Section 10.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Noteholders, setting forth the time and the
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 9.01, shall be mailed to holders of Notes
at their addresses as they shall appear on the Note 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 10.03    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 ten percent (10%) 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 10.01, by mailing notice thereof as provided in Section 10.02. 



        Section 10.04    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. 



        Section 10.05    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
Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Noteholders as provided in
Section 10.03, in which case the Company or the Noteholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the 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 9.04, at any meeting each Noteholder or proxyholder shall be entitled to one vote for each $1,000 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 


34





 



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 10.02 or 10.03 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 quorum, and the meeting may be held as so
adjourned without further notice. 


        Section 10.06    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 10.02. 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. 


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



        Section 10.07    No Delay of Rights by Meeting.    Nothing contained in this Article 10 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 11

SUPPLEMENTAL INDENTURES  


        Section 11.01    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 15.06 and the repurchase obligations of the
Company pursuant to the requirements of Section 4.05; 


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


        (c)   to
evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and
obligations of the Company pursuant to Article 12; 


        (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; 



35







  



        (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 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; or 



        (h)   to
modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualifications of this Indenture under the Trust
Indenture Act, or under any similar federal statute hereafter enacted. 




        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, 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, but 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 11.01 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 11.02. 


        Section 11.02    Supplemental Indenture With Consent of Noteholders.    With the consent (evidenced as provided
in Article 9) of the holders of at least 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, without the consent of the holder of each Note so affected, (i) extend the fixed maturity of any Note, (ii) reduce the rate or extend the time of payment of interest thereon,
(iii) reduce the principal amount thereof or premium, if any, thereon, or reduce any amount payable on redemption thereof, (iv) impair the right of any Noteholder to institute suit for
the payment thereof, (v) make the principal thereof or interest or premium, if any, thereon payable in any coin or currency other than that provided in the Notes, (vi) change the
obligation of the Company to repurchase any Note upon the occurrence of a Change in Control in a manner adverse to the Noteholders, (vii) impair the right to convert the Notes or reduce the
number of shares of Common Stock or the amount of any other property receivable upon conversion, subject to the terms set forth herein, including Section 15.06, in each case,
(viii) modify any of the provisions of this Section 11.02 or Section 7.07, 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, (ix) change any obligation of the Company to maintain an office or agency in the places and for the
purposes set forth in Section 5.02, (x) reduce the quorum or voting requirements set forth in Article 10 or (xi) reduce the aforesaid percentage of Notes, the holders of
which are required to consent to any such supplemental indenture. 


36





 



        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, 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 11.02 to approve the particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof. 


        Section 11.03    Effect of Supplemental Indenture.    Any supplemental indenture executed pursuant to the
provisions of this Article 11 shall comply with the Trust Indenture Act, as then in effect, provided that this Section 11.03 shall not require such supplemental indenture or the Trustee
to be qualified under the Trust Indenture Act prior to the time such qualification is in fact required under the terms of the Trust Indenture Act or the Indenture has been qualified under the Trust
Indenture Act, nor shall it constitute any admission or acknowledgment by any party to such supplemental indenture that any such qualification is required prior to the time such qualification is in
fact required under the terms of the Trust Indenture Act or the Indenture has been qualified under the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this Article 11, this Indenture shall be and 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 be deemed to be part of the terms and
conditions of this Indenture for any and all purposes. 


        Section 11.04    Notation on Notes.    Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article 11 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 17.11) and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding. 


        Section 11.05    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 11 and is otherwise authorized or permitted by this Indenture. 


ARTICLE 12

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE  


        Section 12.01    Company May Consolidate on Certain Terms.    Subject to the provisions of
Section 12.02, unless the Company shall have redeemed the Notes pursuant to Section 3.02 by the applicable Change in Control Redemption Date, the Company shall not consolidate or merge
with or into any other Person or Persons (whether or not affiliated with the Company), nor shall the Company or its successor or successors be a party or parties to successive consolidations or
mergers, nor shall the Company sell, convey, transfer or lease the property and assets of the Company substantially as an entirety, to any other Person (whether or not affiliated with the Company),
unless: (i) the Company is 


37





 

the
surviving Person, or the resulting, surviving or transferee Person is organized and existing under the laws of the United States of America, any state thereof or the District of Columbia;
(ii) upon any such consolidation, merger, sale, conveyance, transfer or lease, the due and punctual payment of the principal of and premium, if any, and interest on all of the Notes, according
to their tenor and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Company, shall be expressly assumed, by supplemental
indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company) formed by such consolidation, or into which the Company shall have been
merged, or by the Person that shall have acquired or leased such property, and such supplemental indenture shall provide for the applicable conversion rights set forth in Section 15.06; and
(iii) immediately after giving effect to the transaction described above, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing. 


        Section 12.02    Successor to be Substituted.    In case of any such consolidation, merger, sale, conveyance,
transfer or lease and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the
Company, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party of this first part. Such successor Person thereupon
may cause to be signed, and may issue either in its own name or in the name of CompuDyne Corporation any or all of the Notes, issuable hereunder that theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the officers of the Company to the Trustee
for authentication, and any Notes that such successor Person thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the
same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of
the execution hereof. In the event of any such consolidation, merger, sale, conveyance, transfer or lease, upon compliance with the provisions of this Article 12, the Person named as the
"Company" in the first paragraph of this Indenture or any successor that shall thereafter have become such in the manner prescribed in this Article 12 may be dissolved, wound up and liquidated
at any time thereafter and such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture. 



        In
case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be
issued as may be appropriate. 


        Section 12.03    Opinion of Counsel to be Given to Trustee.    The Trustee shall receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption complies with the provisions of this
Article 12. 


ARTICLE 13

SATISFACTION AND DISCHARGE OF INDENTURE  


        Section 13.01    Discharge of Indenture.    When the Company shall deliver to the Trustee for cancellation all
Notes theretofore authenticated (other than any Notes that have been 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 converted, or all the Notes not theretofore canceled, converted or delivered to the Trustee for cancellation or conversion shall have become due and 


38





 

payable,
and the Company shall deposit with the Trustee, in trust, funds sufficient to pay 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 converted or delivered to the Trustee for cancellation or conversion, including
principal and premium, if any, and interest due, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further
effect (except as to (i) rights hereunder of Noteholders to receive payments of principal of and premium, if any, and interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee and (ii) 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 17.05 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 reasonably
and properly incurred by the Trustee and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Notes. 



        Section 13.02    Deposited Monies to be Held in Trust by Trustee.    Subject to Section 13.04, all
monies deposited with the Trustee pursuant to Section 13.01, 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 and interest and premium, if any. 



        Section 13.03    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 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 13.04    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 of, premium, if any, or interest on Notes and not applied but remaining unclaimed by the holders of Notes for two years after the
date upon which the principal of, premium, if any, or interest on such Notes, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee and all liability of
the Trustee shall thereupon cease with respect to such monies; and the holder of any of the Notes shall thereafter look only to the Company for any payment that such holder may be entitled to collect
unless an applicable abandoned property law designates another Person. 


        Section 13.05    Reinstatement.    If the Trustee or the paying agent is unable to apply any money in
accordance with Section 13.02 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 13.01 until such time as the Trustee or the paying agent is
permitted to apply all such money in accordance with Section 13.02; provided that if the Company makes any payment of interest on or principal of any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of such Notes to receive such payment from the money held by the Trustee or paying agent. 


ARTICLE 14

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS  



        Section 14.01    Indenture and Notes Solely Corporate Obligations.    No recourse for the payment of the
principal of or premium, if any, or interest on any Note, or for any claim based thereon or 


39





 

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, stockholder, 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. 


ARTICLE 15

CONVERSION OF NOTES  


        Section 15.01    Right to Convert.    



        (a)   Subject
to and upon compliance with the provisions of this Indenture, at any time prior to the close of business on the Final Maturity Date, the holder of any Note shall
have the right, at such holder's option, 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, in the manner provided in Section 15.02. 


        (b)   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 15. 


        Section 15.02    Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest or
Dividends.    


        (a)   In
order to exercise the conversion privilege 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 Section 15.02(c). 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 15.07. 


        In
order to exercise the conversion privilege 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 Section 15.02(c) and any transfer
taxes if required pursuant to Section 15.07. 


        (b)   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 5.02, 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 


40





 



this
Article 15 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 15.03. In case any Note of a denomination greater than $1,000 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 him, 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 on which the requirements set forth above in this Section 15.02 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. 


        (c)   Any
Note or portion thereof surrendered for conversion during the period from the close of business on the record date for any interest payment date to the close of
business on the Business Day preceding the following interest payment date shall be accompanied by payment, in immediately available funds or other funds acceptable to the Company, of an amount equal
to the interest otherwise payable on such interest payment date on the principal amount being converted; provided that no such payment need be made to the extent of any overdue interest at the time of
conversion with respect to such Note. Except as provided above in this Section 15.02, no payment or other adjustment shall be made for interest accrued on any Note converted or for dividends on
any shares issued upon the conversion of such Note as provided in this Article 15. 


        Upon
the conversion of a Note, that portion of the accrued but unpaid interest, with respect to the converted Note shall not be cancelled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the holder thereof through delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Note being converted
pursuant to the provisions hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent
thereof, first in exchange for and in satisfaction of the Company's obligation to pay the principal amount of the converted Note, the accrued but unpaid interest, 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. 


        (d)   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. 


        Section 15.03    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 current price thereof
to the holder of Notes. The current price of a share of Common Stock shall be the Closing 


41





 



Sale
Price on the last Trading Day immediately preceding the day on which the Notes (or specified portions thereof) are deemed to have been converted. 


        Section 15.04    Conversion Rate.    Each $1,000 principal amount of the Notes shall be convertible into
                        shares of Common Stock (herein called the "Conversion Rate"), subject to adjustment as provided in this
Article 15. 


        Section 15.05    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 stockholders 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
stockholders entitled to receive such dividend or other distribution plus the total number of shares of Common Stock constituting such dividend or other distribution; and 



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





such
increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purpose of this clause (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 15.05(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 stockholders 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 on the date fixed for determination of stockholders entitled to receive such rights or warrants, the Conversion Rate shall be increased so that the
same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the date fixed for determination of stockholders 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 stockholders 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
stockholders 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 with such rights or warrants would
purchase at such Current Market Price. 





        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 stockholders 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 


42





 

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 stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or
purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the
Board of Directors. 



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


        (d)   In
case the Company shall, by dividend or otherwise, distribute to all holders of its 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 15.05(b), and excluding any dividend or distribution (x) paid exclusively in
cash or (y) referred to in Section 15.05(a) (any of the foregoing hereinafter in this Section 15.05(d)) called the "Securities")), then, in each such case, 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 15.05(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. 


        If
the dividend or distribution requiring an adjustment pursuant to this clause (d) consists of capital stock of any class or series, or similar equity interests, of or relating
to a Subsidiary or other business unit of the Company, for purposes of making such adjustment, (i) the Current Market Price shall be determined as of the date (the "Ex-Dividend
Rate") on which "ex-dividend trading" 


43





 



commences
for such distribution on the Nasdaq National Market or such other national or regional exchange or market on which such securities are then listed or quoted, based on 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 Date and (ii) the Fair Market
Value of such dividend or distribution 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 for the ten (10) Trading Days commencing on and including the fifth Trading Day after the Ex-Dividend Date. 


        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 (a "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 15.05
(and no adjustment to the Conversion Rate under this Section 15.05 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 15.05(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 15.05 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. 


        For
purposes of this Section 15.05(d) and Section 15.05(a) and (b), any dividend or distribution to which this Section 15.05(d) is applicable that also includes
shares of Common Stock, or such rights or warrants to subscribe for or purchase shares of Common Stock of the type described in Section 15.05(b) (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 15.05(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 15.05(a) and 15.05(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 stockholders entitled to receive such dividend or other distribution", "the
date fixed for the determination of stockholders entitled to receive such rights or warrants" and "the date fixed for such determination" within the meaning of Section 15.05(a) and 15.05(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 15.05(a). 


44





 



        (e)   In
case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding (x) any quarterly cash dividend on the Common
Stock to the extent the aggregate cash dividends per share of Common Stock in any twelve-month period do not exceed 5.00% of the
arithmetic average of the Closing Sale Prices during the ten Trading Days immediately prior to the date of declaration of such dividend, calculated at the time of each dividend or distribution, and
(y) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary), then, in such case, the Conversion Rate shall
be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on such Record Date by a fraction, 



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


         (ii)  the
denominator of which shall be the Current Market Price on such Record Date less the amount of cash so distributed (and not excluded as provided above) 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. If any adjustment is required to be made as set
forth in this Section 15.05(e) as a result of a distribution that is a quarterly dividend, such adjustment shall be based upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an adjustment is required to be made as set forth in this Section 15.05(e) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the distribution. 



        (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 stockholders 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 stockholders based on
the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) 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 




45





 





by
the Closing Sale Price of a share of Common Stock on the Trading Day next succeeding the Expiration Time 





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



        (g)   For
purposes of this Section 15.05, the following terms shall have the meaning indicated: 



          (i)  "Current
Market Price" shall mean the average of the daily Closing Sale Prices per share of Common Stock for the ten consecutive Trading Days selected by the Company
commencing no more than 30 Trading Days before and ending not later than the earlier of such date of determination and the day before the "ex" date with respect to the issuance, distribution,
subdivision or combination requiring such computation immediately prior to the date in question. For purpose of this clause (i), 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 15.05 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)  "Fair
Market Value" shall mean the amount which a willing buyer would pay a willing seller in an arm's-length transaction. 


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


        (iv)  "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 or (y) if the
applicable security is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the 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. 




        (h)   The
Company may make such increases in the Conversion Rate, in addition to those required by Section 15.05(a), (b), (c), (d), (e) or (f) as the
Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase 



46





 

Common
Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. 



        To
the extent permitted by applicable law, the Company from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least twenty
(20) 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. 



        (i)    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 15.05(i) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations
under this Article 15 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. 


        (j)    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 Note
Register provided for in Section 2.05 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. 


        (k)   In
any case in which this Section 15.05 provides that an adjustment shall become effective immediately after (1) a Record Date for an event, (2) the
date fixed for the determination of stockholders entitled to receive a dividend or distribution pursuant to Section 15.05(a), (3) a date fixed for the determination of stockholders
entitled to receive rights or warrants pursuant to Section 15.05(b) or (4) the Expiration Time for any tender or exchange offer pursuant to Section 15.05(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 



47





 




holder
any amount in cash in lieu of any fraction pursuant to Section 15.03. For purposes of this Section 15.05(k), 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. 




        (l)    For
purposes of this Section 15.05, 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 15.06    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 a subdivision or combination to which Section 15.05(c) applies), (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 (which shall comply with the Trust Indenture Act as in force
at the date of execution of such supplemental indenture) 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 his 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 15.06 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 15. 



        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 Note Register provided for in
Section 2.05 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. 


48





 



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



        If
this Section 15.06 applies to any event or occurrence, Section 15.05 shall not apply. 


        Section 15.07    Taxes on Shares Issued.    The issue of stock certificates on conversions of Notes shall be
made without charge to the converting Noteholder for any documentary, stamp or similar issue or transfer tax in respect of the issue thereof. The Company shall not, however, be required to pay any
such tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of any Note converted, and the Company shall not be
required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. 


        Section 15.08    Reservation of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common
Stock.    The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common
Stock to provide for the conversion of the Notes from time to time as such Notes are presented for conversion. 



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


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


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


        The
Company further covenants that, if at any time the Common Stock shall be listed on the Nasdaq National 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 Note; 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 15.09    Responsibility of Trustee.    The Trustee and any other conversion agent shall not at any time
be under any duty or responsibility to any holder of Notes 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 


49





 



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 15. 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 15.06 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 15.06 or to any adjustment to be made with respect thereto,
but, subject to the provisions of Section 8.01, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate
(which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. 


        Section 15.10    Notice to Holders Prior to Certain Actions.    In case: 



        (a)   the
Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Rate pursuant to
Section 15.05; 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 stockholders 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 holder of Notes at his address appearing on the Note Register provided for in Section 2.05 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. 


ARTICLE 16

SUBORDINATION  


        Section 16.01    Agreement of Subordination.    The Company covenants and agrees, and each Holder of Notes
issued hereunder by its acceptance thereof likewise covenants and agrees, that all Notes shall be issued subject to the provisions of this Article 16; and each Person holding any Note, whether
upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees to be bound by such provisions. 


50





 

        The
payment of the principal of, premium, if any, and interest on all Notes (including, but not limited to, the Redemption Price and the Repurchase Price with respect to the Notes
subject to optional redemption or repurchase by the Company in accordance with Articles 3 and 4 as provided in this Indenture) issued hereunder shall, to the extent and in the manner hereinafter set
forth, be subordinated and subject in right of payment to the prior payment in full in cash or payment satisfactory to the holders of Senior Indebtedness of all Senior Indebtedness, whether
outstanding at the date of this Indenture or thereafter incurred. 


        No
provision of this Article 16 shall prevent the occurrence of any default or Event of Default hereunder. 


        Section 16.02    Payments to Holders.    No payment shall be made with respect to the principal of, or premium,
if any, or interest on the Notes (including, but not limited to, the Redemption Price and the Repurchase Price with respect to the Notes subject to optional redemption or repurchase by the Company in
accordance with Articles 3 and 4 as provided in this Indenture), except payments and distributions made by the Trustee as permitted by Section 16.05, if: 




          (i)  a
default in the payment of principal, premium, interest or other obligations due on any Senior Indebtedness occurs and is continuing (or, in the case of Senior
Indebtedness for which there is a period of grace, in the event of such a default that continues beyond the period of grace, if any, specified in the instrument or lease evidencing such Senior
Indebtedness), unless and until such default shall have been cured or waived or shall have ceased to exist; or 



         (ii)  a
default, other than a payment default, on any Senior Indebtedness occurs and is continuing that then permits holders of such Senior Indebtedness to accelerate its
maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Representative or holder of such Senior Indebtedness or the Company. 





        Subject
to the provisions of Section 16.05, if the Trustee receives any Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment Blockage Notice shall
be effective for purposes of this Section unless and until at least 365 days shall have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee (unless such default was waived,
cured or otherwise ceased to exist and thereafter subsequently reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage Notice. 


        The
Company may and shall resume payments on and distributions in respect of the Notes upon the earlier of: 



        (a)   in
the case of a default referred to in clause (i) above, the date upon which the default is cured or waived or ceases to exist, or 



51







  



        (b)   in
the case of a default referred to in clause (ii) above, the earlier of the date on which such default is cured or waived or ceases to exist or 179 days
pass after the date on which the applicable Payment Blockage Notice is received, if the maturity of such Senior Indebtedness has not been accelerated, unless this Article 16 otherwise prohibits
the payment or distribution at the time of such payment or distribution. 




        Upon
any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company (whether voluntary or involuntary) or in bankruptcy, insolvency, receivership or similar proceedings, all amounts due or to
become due upon all Senior Indebtedness shall first be paid in full in cash to the holders of Senior Indebtedness before any payment is made on account of the principal of, premium, if any, or
interest on the Notes (except payments made pursuant to Article 13 from monies deposited with the Trustee pursuant thereto prior to commencement of proceedings for such dissolution,
winding-up, liquidation or reorganization); and upon any such dissolution or winding-up or liquidation or reorganization of the Company or bankruptcy, insolvency, receivership
or other proceeding, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Notes or the
Trustee would be entitled, except for the provision of this Article 16, shall (except as aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Holders of the Notes or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness
(pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, or as otherwise required by law or a court order) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear,
to the extent necessary to pay all Senior Indebtedness in full in cash, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment
or distribution is made to the Holders of the Notes or to the Trustee. 


        For
purposes of this Article 16, the words, "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this
Article 16 with respect to the Notes to the payment of all Senior Indebtedness which may at the time be outstanding; provided that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii) the rights of the holders of Senior Indebtedness (other than leases which are not assumed by the Company or the
new corporation, as the case may be) are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of the Company following the conveyance, transfer or lease of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article 12 shall not
be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 16.02 if such other corporation shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions stated in Article 12. 



        In
the event of the acceleration of the Notes because of an Event of Default, no payment or distribution shall be made to the Trustee or any Holder of Notes in respect of the principal
of, premium, if any, or interest on the Notes by the Company (including, but not limited to, the Redemption Price and the Repurchase Price with respect to the Notes subject to optional redemption or
repurchase by the Company in accordance with Articles 3 and 4 as provided in this Indenture), except payments and distributions made by the Trustee as permitted by Section 16.05, until all
Senior Indebtedness has been paid in full in cash or such acceleration is rescinded in accordance with the 


52





 



terms
of this Indenture. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of such acceleration. 


        In
the event that, notwithstanding the foregoing provisions, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities
(including, without limitation, by way of setoff or otherwise), prohibited by the foregoing, shall be received by the Trustee, the Paying Agent or the Holders of the Notes before all Senior
Indebtedness is paid in full in cash or other payment satisfactory to the holders of Senior Indebtedness, or provision is made for such payment thereof in accordance with its terms in cash, such
payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or their Representative or Representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the
Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in cash, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness. 


        Nothing
in this Section 16.02 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 8.06. This Section 16.02 shall be subject to the
further provisions of Section 16.05. 


        Section 16.03    Subrogation of Notes.    Subject to the payment in full in cash of all Senior Indebtedness,
the rights of the Holders of the Notes shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this
Article 16 (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same
extent as the Notes are subordinated and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the principal, premium, if any, and interest on the Notes shall be paid in full in cash; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the
Notes or the Trustee would be entitled except for the provisions of this Article 16, and no payment over pursuant to the provisions of this Article 16, to or for the benefit of the
holders of Senior Indebtedness by Holders of the Notes or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Notes, be deemed
to be a payment by the Company to or on account of the Senior Indebtedness; and no payments or distributions of cash, property or securities to or for the benefit of the Holders of the Notes pursuant
to the subrogation provisions of this Article 16, which would otherwise have been paid to the holders of Senior Indebtedness shall be deemed to be a payment by the Company to or for the account
of the Notes. It is understood that the provisions of this Article 16 are and are intended solely for the purposes of defining the relative rights of the Holders of the Notes, on the one hand,
and the holders of the Senior Indebtedness, on the other hand. 


        Nothing
contained in this Article 16 or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders of the Notes, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Notes the principal of (and premium, if any) and
interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Notes and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any, under this Article 16 of the holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. 


53





 



        Upon
any payment or distribution of assets of the Company referred to in this Article 16, the Trustee, subject to the provisions of Section 8.01, and the Holders of the
Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such bankruptcy, dissolution, winding-up, liquidation or reorganization
proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, delivered to the Trustee or to the
Holders of the Securities, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon and all other facts pertinent thereto or to this Article 16. 



        Section 16.04    Authorization to Effect Subordination.    Each Holder of a Note by the Holder's acceptance
thereof authorizes and directs the Trustee on the Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 16 and
appoints the Trustee to act as the Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 16.03 hereof at least 30 days before the expiration of the time to file such claim, the holders of any Senior Indebtedness or their
Representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. 



        Section 16.05    Notice to Trustee.    The Company shall give prompt written notice in the form of an Officers'
Certificate to a Responsible Officer of the Trustee and to any Paying Agent of any fact known to the Company which would prohibit the making of any payment of monies to or by the Trustee or any Paying
Agent in respect of the Notes pursuant to the provisions of this Article 16. Notwithstanding the provisions of this Article 16 or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee in respect of the Notes pursuant to the provisions of this
Article 16, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office from the Company (in the form of an Officers'
Certificate) or a Representative or a Holder or Holders of Senior Indebtedness or from any trustee thereof; and before the receipt of any such written notice, the Trustee, subject to the provisions of
Section 8.01, shall be entitled in all respects to assume that no such facts exist; provided that if on a date not less than one Business Day prior to the date upon which by the terms hereof
any such monies may become payable for any purpose (including, without limitation, the payment of the principal of, or premium, if any, or interest on any Security) the Trustee shall not have
received, with respect to such monies, the notice provided for in this Section 16.05, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such
prior date. Notwithstanding anything in this Article 16 to the contrary, nothing shall prevent any payment by the Trustee to the Holders of monies deposited with it pursuant to
Article 13, and any such payment shall not be subject to the provisions of this Article 16. 


        The
Trustee, subject to the provisions of Section 8.01, shall be entitled to rely on the delivery to it of a written notice by a Representative or a person representing himself to
be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a Representative or a holder of Senior Indebtedness or a trustee on behalf of
any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article 16, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under
this Article 16, and if such evidence is not furnished the 


54





 



Trustee
may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 


        Section 16.06    Trustee's Relation to Senior Indebtedness.    The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article 16 in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing
in Section 8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its rights as such holder. 



        With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this
Article 16, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the provisions of Section 8.01, the Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay over or deliver to Holders of
Notes, the Company or any other person money or assets to which any holder of Senior Indebtedness shall be entitled by virtue of this Article 16 or otherwise. 



        Section 16.07    No Impairment of Subordination.    No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with. 


        Section 16.08    Certain Conversions Deemed Payment.    For the purposes of this Article 16 only,
(1) the issuance and delivery of junior securities upon conversion of Notes in accordance with Article 15 shall not be deemed to constitute a payment or distribution on account of the
principal of (or premium, if any) or interest on Notes or on account of the purchase or other acquisition of Notes, and (2) the payment, issuance or delivery of cash (except in satisfaction of
fractional shares pursuant to Section 15.03), property or securities (other than junior securities) upon conversion of a Note shall be deemed to constitute payment on account of the principal
of such Note. For the purposes of this Section 16.08, the term "junior securities" means (a) shares of any stock of any class of the Company, or (b) securities of the Company
which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this Article. Nothing contained in this Article 16 or elsewhere in this Indenture or in the Notes is intended to or shall
impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders, the right, which is absolute and unconditional, of the Holder of any Note to convert such Note in
accordance with Article 15. 


        Section 16.09    Article Applicable to Paying Agents.    If at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall (unless the context otherwise requires) be construed as extending to and
including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however,
that the first paragraph of Section 16.05 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. 


        Section 16.10    Senior Indebtedness Entitled to Rely.    The holders of Senior Indebtedness (including,
without limitation, Designated Senior Indebtedness) shall have the right to rely upon this Article 16, and no amendment or modification of the provisions contained herein shall diminish the
rights of such holders unless such holders shall have agreed in writing thereto. 


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ARTICLE 17

MISCELLANEOUS PROVISIONS  


        Section 17.01    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 17.02    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 17.03    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: to CompuDyne Corporation, 7249 National Drive,
Hanover, MD 21076, Telecopier No.: (410) 712-0677, Attention: Geoffrey F. Feidelberg. Any notice, direction, request or demand hereunder to or upon the Trustee 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: Wachovia Bank of Delaware, National Association, 9300 Shelbyville Road, Suite 507, Louisville, Kentucky 40222, Telecopier No.: (502) 423-1932,
Attention: Joseph A. Clark. 


        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 him by first class mail, postage prepaid, at his address as it appears on the Note Register and shall be
sufficiently given to him 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 17.04    Governing Law.    This Indenture and each Note shall be deemed to be a contract made under the
laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof. 



        Section 17.05    Evidence of Compliance With Conditions Precedent, Certificates to Trustee.    Upon any
application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with. 


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


56





 



        Section 17.06    Legal Holidays.    In any case in which the date of maturity of interest on or principal of
the Notes or the redemption date of any Note will not be a Business Day, then payment of such interest on or principal of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of maturity or the redemption date, and no interest shall accrue for the period from and after such date. 


        Section 17.07    Trust Indenture Act.    This Indenture is hereby made subject to, and shall be governed by,
the provisions of the Trust Indenture Act required to be part of and to govern indentures qualified under
the Trust Indenture Act; provided that this Section 17.07 shall not require this Indenture or the Trustee to be qualified under the Trust Indenture Act prior to the time such qualification is
in fact required under the terms of the Trust Indenture Act, nor shall it constitute any admission or acknowledgment by any party to the Indenture that any such qualification is required prior to the
time such qualification is in fact required under the terms of the Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be
included in an indenture qualified under the Trust Indenture Act, such required provision shall control. 



        Section 17.08    No Security Interest Created.    Nothing in this Indenture or in the Notes, expressed or
implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction in which property
of the Company or its subsidiaries is located. 


        Section 17.09    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 Note 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 17.10    Table of Contents, Headings, Etc.    The table of contents and the titles and headings of the
Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or
provisions hereof. 


        Section 17.11    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 and 4.02, 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 8.09. 


        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 17.11, 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. 


57





 

        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 Note
Register. 


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


        The
provisions of Sections 8.02, 8.03, 8.04 and 9.03 and this Section 17.11 shall be applicable to any authenticating agent. 


        Section 17.12    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 17.13    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. 


58





 

        The
Trustee hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions herein above set forth. 



	 	 	COMPUDYNE CORPORATION
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

 	
 	

WACHOVIA BANK OF DELAWARE,

NATIONAL ASSOCIATION, as Trustee
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:




59






  



 
 

Exhibit A    
    



[Include
only for Global Notes:] 


        [UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE "DEPOSITARY", WHICH TERM
INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREIN IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.] 


COMPUDYNE CORPORATION  


       % CONVERTIBLE SUBORDINATED NOTE DUE 2011  



	 	 	CUSIP:  
	No.	 	$             





        CompuDyne
Corporation, a corporation duly organized and validly existing under the laws of the State of Nevada (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                        or its
registered assigns, [the principal sum of                        
DOLLARS] [the principal sum set forth on Schedule I hereto]1 on                   , 2011 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, and to pay interest, semiannually
on                   and                   of each year,
commencing
                   , 2004, on said principal sum, in like coin or currency, at the rate per annum
of            %, from the                   or
                   , as the case may be, next preceding the date of this Note to which interest has been paid or duly provided for, unless the date hereof
is a date to which interest
has been paid or duly provided for, in which case from the date of this Note, or unless no interest has been paid or duly provided for on the Notes, in which case
from                        , 2004, until
payment of said principal sum has been made or duly provided for. Notwithstanding the foregoing, if the date hereof is after any                   or
                   , as the case may be, and before the
following                   or                   , this Note
shall bear interest from
such                   or                   , provided that
if the Company shall default in the payment of interest due on such
                   or                   , then this Note
shall bear interest from the next preceding                   or
                   to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for on such Note,
from                        , 2004. Except as
otherwise provided in the Indenture, the interest payable on this Note pursuant to the Indenture on
any                   or                   will be paid to
the Person entitled thereto as it appears in the Note Register at the close of business on the record date, which shall be the                   or
                   (whether or not a Business Day) next preceding
such                   or                   , as provided in
the Indenture;
provided that any such interest not punctually paid or duly provided for shall be payable as provided in Section 2.03 of the Indenture. Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months. 




	(1)
	For
Global Notes only. 


A-1





 

        The
Company shall pay interest (i) on any Notes in certificated form by check mailed to the address of the Person entitled thereto as it appears in the Note Register (or, upon
written notice by such Person, by wire transfer in immediately available funds, if such Person is entitled to interest on aggregate
principal in excess of $2.0 million) or (ii) on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee. 


        The
Company promises to pay interest on overdue principal, premium, if any, and (to the extent that payment of such interest is enforceable under applicable law) interest at the rate of
            % per annum. 



        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 deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of the State
of New York, without regard to conflicts of laws principles thereof. 


        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. 


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



	 	 	COMPUDYNE CORPORATION
	

 	
 	

By:	
 	

    

	

 	
 	

By:	
 	

    





A-2





 
TRUSTEE'S CERTIFICATE OF AUTHENTICATION 


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


Dated:




	WACHOVIA BANK OF DELAWARE,

NATIONAL ASSOCIATION, as Trustee	 	 
	

By:	
 	

    
	
 	

 
	 	 	 	 	Authorized Signatory	 	 
	

, or        	
 	

 
	

By:	
 	

    
	
 	

 
	 	 	 	 	As Authenticating Agent

(if different from Trustee)	 	 
	

 	
 	

By:	
 	

    
 Authorized Signatory	
 	

 




A-3






   
[FORM OF REVERSE OF NOTE] 


COMPUDYNE
CORPORATION 


      %
CONVERTIBLE SUBORDINATED NOTE DUE 2011 


        This
Note is one of a duly authorized issue of Notes of the Company, designated as its            % Convertible Subordinated Notes Due 2011 (herein called the "Notes"), limited in
aggregate principal amount to $28,750,000, issued and to be issued under and pursuant to an Indenture dated as of                , 2004 (herein called the "Indenture"),
between the Company and
Wachovia Bank of Delaware, National Association, as trustee (herein called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. 


        The
Notes are issuable in fully registered form, without coupons, in denominations of $1,000 principal amount and any multiple of $1,000. 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. 


        At
any time on or after                , 2009 and prior to maturity, the Notes may be redeemed at the option of the Company, in whole or in part, upon mailing a notice of
such redemption
not less than 30 days but not more than 60 days before the redemption date to the holders of Notes at their last registered addresses, all as provided in the Indenture, at a redemption
price equal to 102% of the principal amount of the Notes to be redeemed, together with accrued and unpaid interest to, but excluding, the redemption date; provided that if the redemption date is on a
                or                , then the interest payable on such date shall be paid
to the holder of record on the preceding                or                , respectively.



        The
Company may not give notice of any redemption of the Notes if a default in the payment of interest, or premium, if any, on the Notes has occurred and is continuing. 


        The
Notes are not subject to redemption through the operation of any sinking fund. 


        If
a Change in Control occurs at any time prior to maturity of the Notes, the Notes may be redeemed at the option of the Company, in whole but not in part, on the effective date of the
event or circumstance resulting in the Change in Control, upon mailing a notice of such redemption not more than 30 days after the date of first public announcement of the event or circumstance
which has or may result in a Change in Control to holders of the Notes as provided in the Indenture, at the following redemption prices (expressed as a percentage of the principal amount of the Notes
to be redeemed), together with accrued and unpaid interest to, but excluding, the redemption date: 



	If the Change in Control

Occurs within the

Twelve Months

Preceding                ,
	 	Redemption Price
	 
	2005	 	105	%
	2006	 	105	%
	2007	 	104	%
	2008	 	104	%
	2009	 	103	%





A-4





 

        If
a Change in Control occurs at any time prior to maturity of the Notes, and the Company shall not have exercised its right to redeem the Notes, the Holder of this Note, at the Holder's
option, shall have the right, in accordance with the provisions of the Indenture, to require the Company to repurchase this Note (or any portion of the principal amount hereof that is at least $1,000
or an integral multiple of $1,000 in excess thereof, provided that the portion of the principal amount of this Note to be Outstanding after such repurchase is at least equal to $1,000) at a Repurchase
Price equal to 100% of the principal amount thereof, together with accrued interest to (but excluding) the Repurchase Date, as provided in Article 4 of the Indenture. 


        Subject
to compliance with the provisions of the Indenture, prior to the close of business on the Final Maturity Date of the Notes, the holder hereof has the right, at its option, to
convert each $1,000 principal amount of this Note into                        shares (the "Conversion Rate") of the Company's
Common Stock, as such shares shall be constituted at the date of conversion and
subject to adjustment from time to time as provided in the Indenture. 


        No
adjustment in respect of interest on any Note converted or dividends on any shares issued upon conversion of such Note will be made upon any conversion except as set forth in the next
sentence. If this Note (or portion hereof) is surrendered for conversion during the period from the close of business on any record date for the payment of interest to the close of business on the
Business Day preceding the following interest payment date, this Note (or portion hereof being converted) must be accompanied by payment, in immediately available funds or other funds acceptable to
the Company, of an amount equal to the interest otherwise payable on such interest payment date on the principal amount being converted; provided that no such payment shall be required to the extent
of any overdue interest at the time of conversion with respect to this Note. 


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


        The
indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness of the Company. Any Holder by accepting this Note agrees to and shall be bound by such subordination provisions and authorizes the Trustee to give them effect. In addition to all
other rights of Senior Indebtedness described in the Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any terms of any instrument relating to the Senior Indebtedness or any extension or renewal of the Senior Indebtedness. 


        In
case an Event of Default shall have occurred and be continuing, the principal of, premium, if any, and accrued interest, on all Notes may be declared by either the Trustee or the
holders of not less than 25% in aggregate principal amount of the 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 at least 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, subject to the exceptions set forth in Section 11.02 of the Indenture. 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, subject to the exceptions set
forth in the Indenture. 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 


A-5





 



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. 



        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 any premium and interest, on this Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed. 


        The
Company, the Trustee, any authenticating agent, any paying agent, any conversion agent and any Note 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 Note 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 Note Registrar shall be affected by any notice to the contrary. All payments made to or upon the order of such registered holder shall, to the extent of the sum or
sums paid, satisfy and discharge liability for monies payable on this Note. 


        No
recourse for the payment of the principal of or any premium or interest on this Note, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture or any supplemental indenture or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, 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. 


        Terms
used in this Note and defined in the Indenture are used herein as therein defined. 


A-6





 
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 under Uniform Gifts to Minors Act survivorship and not as tenants in common	 	    
 (State)





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


A-7








   
CONVERSION NOTICE 


	To:
	CompuDyne
Corporation

Wachovia Bank of Delaware, National Association 



        The
undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion thereof (which is $1,000 or a multiple thereof) below
designated, into shares of Common Stock of CompuDyne Corporation 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 accompanies this Note. 



	

Dated:            	
 	

 
	

 	
 	

    

	

 	
 	

    
 Signature(s)
	

 	
 	

Signature(s) must be guaranteed by an "Eligible Guarantor Institution" meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, Stamp, all in accordance with the Securities Exchange Act of 1934, as amended.
	

 	
 	

    
 Signature Guarantee




A-8





 

        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)	
 	

 
	

 Please print name and address	
 	

 
	

Principal amount to be converted

(if less than all):	
 	

 
	

$	
 	

 
	

Social Security or Other Taxpayer

Identification Number:	
 	

 
	

	
 	

 




A-9





 
ELECTION
OF HOLDER TO REQUIRE REPURCHASE

UPON A CHANGE IN CONTROL 


	To:
	CompuDyne
Corporation

Wachovia Bank of Delaware, National Association 



        Pursuant
to Section 4.01 of the Indenture, the undersigned hereby elects to have this Note repurchased by the Company. The undersigned hereby directs the Trustee or the Company to
pay it or                        an amount in cash equal to 100% of the principal amount to be repurchased (as set forth below),
plus interest accrued to, but excluding, the Repurchase Date, as provided in
the Indenture. 



	

Dated:	
 	

 
	

	
 	

 
	

 Signature(s)	
 	

 
	

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

 
	

 Signature Guaranteed	
 	

 
	

Principal amount to be repurchased (at least U.S. $1,000 or an integral multiple of $1,000 in excess thereof):	
 	

 
	

Remaining principal amount following such repurchase (not less than U.S. $1,000):	
 	

 




A-10





 
ASSIGNMENT



        For
value received                        hereby sell(s) assign(s) and transfer(s)
unto                        (Please insert social security or other Taxpayer Identification Number of assignee) the
within Note, and hereby irrevocably constitutes and appoints                        attorney to transfer said Note on the books of
the Company, with full power of substitution in the premises. 



	

Dated:	
 	

 
	

 	
 	


	

 	
 	

 Signature(s)
	

 	
 	

Signature(s) must be guaranteed by an "Eligible Guarantor Institution" meeting the requirements of the Note 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 Note Registrar in addition to, or in substitution for, Stamp, all in accordance with the Securities Exchange Act of 1934, as amended.
	

 	
 	

 Signature Guarantee





        NOTICE:
The signature on the Conversion Notice, the Election of Holder to Require Repurchase Upon a Change in Control, or the Assignment 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-11










[Include Schedule I only for a Global Note] 


COMPUDYNE CORPORATION  


      %
Convertible Subordinated Note Due 2011 


No.            



	Date
 
	 	Principal Amount
	 	Notation Explaining

Principal Amount Recorded
	 	Authorized Signature

of Trustee or Custodian

	    	 	 	 	 	 	 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	

	

    	
 	

 	
 	

 	
 	

 
	
	 	
	 	
	 	












QuickLinks



Exhibit 4.2


Cross-Reference Table


TABLE OF CONTENTS



Exhibit A