exv4w1



 





Exhibit 4.1




GASCO ENERGY, INC.




5.50% Convertible Senior Notes due 2011










INDENTURE




Dated as of October 20, 2004










WELLS FARGO BANK, NATIONAL ASSOCIATION




TRUSTEE










 









 








	 	 	 	 	 
	ARTICLE 1

Definitions And Other Provisions Of General Application
	 	 	 	 
	Section 1.01. Definitions
	 	 	1	 
	Section 1.02. Other Definitions
	 	 	8	 
	Section 1.03. Incorporation by Reference of Trust Indenture Act
	 	 	9	 
	Section 1.04. Rules of Construction
	 	 	9	 
	Section 1.05. Acts of Holders
	 	 	10	 
	ARTICLE 2

The Notes
	 	 	 	 
	Section 2.01. Designation Amount and Issue of Notes
	 	 	11	 
	Section 2.02. Form of Notes
	 	 	11	 
	Section 2.03. Execution and Authentication
	 	 	12	 
	Section 2.04. Note Registrar, Paying Agent and Conversion Agent
	 	 	12	 
	Section 2.05. Paying Agent to Hold Money and Notes in Trust
	 	 	13	 
	Section 2.06. Noteholder Lists
	 	 	13	 
	Section 2.07. Transfer and Exchange; Restrictions on Transfer; Depositary
	 	 	13	 
	Section 2.08. Replacement Notes
	 	 	20	 
	Section 2.09. Outstanding Notes; Determination of Holders’ Action
	 	 	21	 
	Section 2.10. Temporary Notes
	 	 	22	 
	Section 2.11. Cancellation
	 	 	22	 
	Section 2.12. Persons Deemed Owners
	 	 	22	 
	Section 2.13. CUSIP Numbers
	 	 	22	 
	Section 2.14. Default Interest
	 	 	23	 
	ARTICLE 3

Redemption and Repurchase Upon A Change Of Control
	 	 	 	 
	Section 3.01. Company’s Right to Redeem
	 	 	23	 
	Section 3.02. Notice of Optional Redemption; Selection of Notes
	 	 	23	 
	Section 3.03. Payment of Notes Called for Redemption by the Company
	 	 	25	 
	Section 3.04. Conversion Arrangement on Call for Redemption
	 	 	26	 
	Section 3.05. Purchase of Notes at Option of the Holder Upon Change of Control
	 	 	26	 
	Section 3.06. Effect of Change of Control Purchase Notice
	 	 	34	 
	Section 3.07. Deposit of Change of Control Purchase Price
	 	 	35	 
	Section 3.08. Notes Purchased in Part
	 	 	36	 
	Section 3.09. Covenant to Comply with Securities Laws upon Purchase of Notes
	 	 	36	 
	Section 3.10. Repayment to the Company
	 	 	36	 







 









 






	 	 	 	 	 
	ARTICLE 4

Covenants
	 	 	 	 
	Section 4.01. Payment of Principal, Premium, Interest on the Notes
	 	 	37	 
	Section 4.02. Reports by the Company
	 	 	37	 
	Section 4.03. Compliance Certificate
	 	 	37	 
	Section 4.04. Further Instruments and Acts
	 	 	38	 
	Section 4.05. Maintenance of Office or Agency
	 	 	38	 
	Section 4.06. Delivery of Certain Information
	 	 	38	 
	Section 4.07. Existence
	 	 	38	 
	Section 4.08. Maintenance of Properties
	 	 	39	 
	Section 4.09. Payment of Taxes and Other Claims
	 	 	39	 
	Section 4.10. Liquidated Damages Notice
	 	 	39	 
	ARTICLE 5

Successor Corporation
	 	 	 	 
	Section 5.01. When Company May Merge Or Transfer Assets
	 	 	40	 
	ARTICLE 6

Defaults And Remedies
	 	 	 	 
	Section 6.01. Events of Default
	 	 	41	 
	Section 6.02. Acceleration
	 	 	43	 
	Section 6.03. Other Remedies
	 	 	43	 
	Section 6.04. Waiver of Past Defaults
	 	 	44	 
	Section 6.05. Control By Majority
	 	 	44	 
	Section 6.06. Limitation On Suits
	 	 	44	 
	Section 6.07. Rights of Holders to Receive Payment
	 	 	45	 
	Section 6.08. Collection Suit by Trustee
	 	 	45	 
	Section 6.09. Trustee May File Proofs of Claim
	 	 	45	 
	Section 6.10. Priorities
	 	 	46	 
	Section 6.11. Undertaking For Costs
	 	 	46	 
	Section 6.12. Waiver Of Stay, Extension Or Usury Laws
	 	 	46	 
	ARTICLE 7

Trustee
	 	 	 	 
	Section 7.01. Duties And Responsibilities Of The Trustee; During Default; Prior To Default
	 	 	47	 
	Section 7.02. Certain Rights of the Trustee
	 	 	48	 
	Section 7.03. Trustee not Responsible for Recitals, Dispositions of Notes or Application of Proceeds Thereof
	 	 	49	 
	Section 7.04. Trustee and Agents May Hold Notes; Collections, Etc
	 	 	49	 
	Section 7.05. Moneys Held by Trustee
	 	 	50	 
	Section 7.06. Compensation and Indemnification of Trustee and Its Prior Claim
	 	 	50	 







ii









 






	 	 	 	 	 
	 
	 	 	51	 
	Section 7.07. Right of Trustee to Rely on Officers’ Certificate, Etc
	 	 	51	 
	Section 7.08. Conflicting Interests
	 	 	51	 
	Section 7.09. Persons Eligible for Appointment as Trustee
	 	 	51	 
	Section 7.10. Resignation and Removal; Appointment of Successor Trustee
	 	 	51	 
	Section 7.11. Acceptance of Appointment by Successor Trustee
	 	 	53	 
	Section 7.12. Merger, Conversion, Consolidation or Succession to Business of Trustee
	 	 	53	 
	Section 7.13. Preferential Collection of Claims Against the Company
	 	 	54	 
	Section 7.14. Reports By The Trustee
	 	 	54	 
	Section 7.15. Trustee to Give Notice of Default, But May Withhold in Certain Circumstances
	 	 	54	 
	ARTICLE 8

Discharge Of Indenture
	 	 	 	 
	Section 8.01. Discharge Of Indenture
	 	 	54	 
	Section 8.02. [intentionally Omitted]
	 	 	55	 
	Section 8.03. Paying Agent to Repay Monies Held
	 	 	55	 
	Section 8.04. Return Of Unclaimed Monies
	 	 	55	 
	ARTICLE 9

Supplemental Indentures
	 	 	 	 
	Section 9.01. Without Consent Of Holders
	 	 	55	 
	Section 9.02. With Consent Of Holders
	 	 	56	 
	Section 9.03. Compliance with Trust Indenture Act
	 	 	57	 
	Section 9.04. Revocation and Effect of Consents, Waivers and Actions
	 	 	57	 
	Section 9.05. Notation on or Exchange of Notes
	 	 	58	 
	Section 9.06. Trustee to Sign Supplemental Indentures
	 	 	58	 
	Section 9.07. Effect of Supplemental Indentures
	 	 	58	 
	ARTICLE 10

Conversion
	 	 	 	 
	Section 10.01. Conversion Right and Conversion Price
	 	 	58	 
	Section 10.02. Exercise of Conversion Right
	 	 	59	 
	Section 10.03. Fractions of Shares
	 	 	60	 
	Section 10.04. Adjustment of Conversion Price
	 	 	60	 
	Section 10.05. Notice of Adjustments of Conversion Price
	 	 	68	 
	Section 10.06. Notice Prior to Certain Actions
	 	 	69	 
	Section 10.07. Company to Reserve Common Stock
	 	 	70	 







iii









 






	 	 	 	 	 
	Section 10.08. Taxes on Conversions
	 	 	70	 
	Section 10.09. Covenant as to Common Stock
	 	 	70	 
	Section 10.10. Cancellation of Converted Notes
	 	 	70	 
	Section 10.11. Effect of Reclassification, Consolidation, Merger or Sale
	 	 	70	 
	Section 10.12. Responsibility of Trustee for Conversion Provisions
	 	 	72	 
	ARTICLE 11

Security
	 	 	 	 
	Section 11.01. Security
	 	 	72	 
	ARTICLE 12

Miscellaneous
	 	 	 	 
	Section 12.01. Trust Indenture Act Controls
	 	 	74	 
	Section 12.02. Notices
	 	 	75	 
	Section 12.03. Communication by Holders with Other Holders
	 	 	75	 
	Section 12.04. Certificate and Opinion as to Conditions Precedent
	 	 	76	 
	Section 12.05. Statements Required in Certificate or Opinion
	 	 	76	 
	Section 12.06. Separability Clause
	 	 	76	 
	Section 12.07. Rules by Trustee, Paying Agent, Conversion Agent and Note Registrar
	 	 	76	 
	Section 12.08. Legal Holidays
	 	 	76	 
	Section 12.09. GOVERNING LAW
	 	 	77	 
	Section 12.10. No Recourse Against Others
	 	 	77	 
	Section 12.11. Successors
	 	 	77	 
	Section 12.12. Benefits of Indenture
	 	 	77	 
	Section 12.13. Table of Contents, Heading, Etc
	 	 	77	 
	Section 12.14. Authenticating Agent
	 	 	77	 
	Section 12.15. Execution In Counterparts
	 	 	78	 







EXHIBITS




Exhibit A Form of Global Note

Exhibit B-1 Transfer Certificate



iv









 






CROSS REFERENCE TABLE*




	 	 	 
	TIA SECTION
	 	INDENTURE SECTION
	310(a)(1)
	 	7.09
	(a)(2)
	 	7.09
	(a)(3)
	 	N.A.
	(a)(4)
	 	N.A.
	(a)(5)
	 	7.09
	(b)
	 	7.08; 7.09; 7.10; 7.11
	(c)
	 	N.A.
	311(a)
	 	7.13
	(b)
	 	7.13
	(c)
	 	N.A.
	312(a)
	 	2.06
	(b)
	 	12.03
	(c)
	 	12.03
	313(a)
	 	7.14(a)
	(b)(1)
	 	7.14(a)
	(b)(2)
	 	7.14(a)
	(c)
	 	12.02
	(d)
	 	7.14(b)
	314(a)
	 	4.02; 4.03; 12.02
	(b)
	 	11.01(e)
	(c)(1)
	 	12.04
	(c)(2)
	 	12.04
	(c)(3)
	 	N.A.
	(d)
	 	11.01(d)
	(e)
	 	12.05
	(f)
	 	N.A.
	315(a)
	 	7.01
	(b)
	 	7.15; 12.02
	(c)
	 	7.01
	(d)
	 	7.01
	(e)
	 	6.11
	316(a) (last sentence)
	 	2.09
	(a)(1)(A)
	 	6.05
	(a)(1)(B)
	 	6.04
	(a)(2)
	 	N.A.
	(b)
	 	6.07
	317(a)(1)
	 	6.08
	(a)(2)
	 	6.09
	(b)
	 	2.05
	318(a)
	 	12.01







 









 






N.A. means Not Applicable










     Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of the Indenture.



vi









 





     INDENTURE dated as of October 20, 2004 between GASCO ENERGY, INC., a
Nevada corporation (the “Company”) and WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association, as Trustee hereunder (the “Trustee”).



RECITALS OF THE COMPANY




     The Company has duly authorized the creation of an issue of its 5.50%
Convertible Senior Notes due 2011 (herein called the “Notes”) of substantially
the tenor and amount hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this Indenture.



     All things necessary to make the Notes, when the Notes are executed by the
Company and authenticated and delivered hereunder, the valid and legally
binding obligations of the Company, and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms, have been
done. Further, all things necessary to duly authorize the issuance of the
Common Stock of the Company issuable upon the conversion of the Notes, and to
duly reserve for issuance the number of shares of Common Stock issuable upon
such conversion, have been done.



     The Notes will be partially secured pursuant to the terms of the Pledge
Agreement (as defined herein) by Pledged Securities as provided by Article 11
of this Indenture.



     This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act of 1939, as amended, that are required to be a part of
and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.



     NOW, THEREFORE, THIS INDENTURE WITNESSETH:



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



ARTICLE 1

Definitions And Other Provisions Of General Application




     Section 1.01.
Definitions. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:




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




          (2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and



1









 






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



     “Additional Notes” means an unlimited principal amount of Notes (other
than the Initial Notes) issued from time to time with the same terms and
conditions and the same CUSIP number as the Initial Notes under this Indenture
in accordance with Section 2.01 hereof.



     “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 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.



     “Board of Directors” means either the board of directors of the Company,
or any duly authorized committee of such board.



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



     “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which the banking institutions in The City of New York or
the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.



     “Capital Stock” of any corporation means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) stock issued by that corporation.



     “Closing Date” has the meaning specified in the Purchase Agreement.



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




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




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



2









 






          (3) if such security is not so listed on a U.S. national or regional
securities exchange, the closing sale price as reported by the NASDAQ
National Market, or if such security is not listed on the NASDAQ
National Market, the closing sale price as reported by the
Over-the-Counter Bulletin Board;




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




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



     “Collateral Account” means an account established with the Collateral
Agent pursuant to the terms of the Pledge Agreement for the deposit of the
Pledged Securities to be purchased by the Company with a portion of the net
proceeds from the sale of the Notes.



     “Collateral Agent” means Wells Fargo Bank, National Association, as
collateral agent under the Pledge Agreement.



     “Common Stock” means the common stock, par value $.0001 per share, of the
Company, authorized at the date of this instrument as originally executed.



     “common stock” means any stock of any class of capital stock 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 issuer.



     “Company” means the party named as the “Company” in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.



     “Company Order” means a written order signed in the name of the Company by
any two Officers of the Company.



     “Conversion Agent” means any person authorized by the Company to convert
Notes in accordance with Article 10 hereof.



     “Corporate Trust Office” means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 505 Main Street, Suite 301, Fort
Worth, TX 76102, or such other address as the Trustee may designate from
time to time by notice to the Holders and the Company, or the principal
corporate trust office of any successor Trustee (or such other address as a
successor Trustee may designate from time to time by notice to the Holders
and the Company).



3









 





     “Date of Delivery” has the meaning specified in the Purchase Agreement.



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



     “Depositary” means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in 2.07(d) as the Depositary
with respect to such Notes, 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.



     “GAAP” means United States generally accepted accounting principles as in
effect from time to time.



     “Holder” or “Noteholder” 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.



     “Indenture” means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.



     “Initial Notes” means Notes in an aggregate principal amount not to exceed
$65,000,000 issued under this Indenture.



     “Initial Purchasers” means J.P. Morgan Securities Inc. and First Albany
Capital Inc.



     “Initial Purchasers’ Option” means the option granted by the Company to
the Initial Purchasers to purchase up to $20,000,000 aggregate principal amount
of Notes pursuant to the Purchase Agreement.



     “Interest Payment Date” means the Stated Maturity of an installment of
interest on the Notes.



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



     “Lien” means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction with respect to
any such lien, pledge, charge or security interest).



4









 





     “Liquidated Damages” has the meaning specified for “Liquidated Damages
Amount” in Section 2(e) of the Registration Rights Agreement.



     “Notes” has the meaning ascribed to it in the first paragraph under the
caption “Recitals of the Company”. The Initial Notes and any Additional Notes
will rank equally and ratably and shall be treated as a single class for all
purposes under this Indenture.



     “Offering Memorandum” means the offering memorandum dated October 14, 2004
in connection with the sale of the Notes.



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



     “Officers’ Certificate” means a written certificate containing the
information specified in Sections 12.04 and 12.05, signed in the name of the
Company by any two Officers of the Company, and delivered to the Trustee. An
Officers’ Certificate given pursuant to Section 4.03 shall be signed by an
authorized financial or accounting Officer of the Company but need not contain
the information specified in Sections 12.04 and 12.05.



     “Opinion of Counsel” means a written opinion containing the information
specified in Sections 12.04 and 12.05, from legal counsel. The counsel may be
an employee of, or counsel to, the Company.



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



     “Pledge Agreement” means the Collateral Pledge and Security Agreement,
dated as of October 20, 2004, among the Company, the Trustee and the Collateral
Agent, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.



     “Pledged Securities” means the U.S. Government Obligations to be purchased
by the Company and held in the Collateral Account in accordance with the Pledge
Agreement.



     “Portal Market” means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.



     “principal” of a Note means the principal amount due on the Stated
Maturity as set forth on the face of the Note or the amount of any Change
of Control Purchase Price



5









 





and Make-Whole Premium, if any, payable pursuant to
Section 3.05(a), whichever is applicable.



     “Purchase Agreement” means the Purchase Agreement dated as of October 14,
2004, between the Company and the Initial Purchasers.



     “QIB” means a “qualified institutional buyer” as defined in Rule 144A.



     “Registration Rights Agreement” means that certain Registration Rights
Agreement, dated as of October 20, 2004, between the Company and the Initial
Purchasers, as amended from time to time in accordance with its terms.



     “Regular Record Date” means, with respect to the interest payable on any
Interest Payment Date, the close of business on March 15 or
September 15 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date.



     “Responsible Officer” means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant treasurer, trust officer or
any other officer of the Trustee who customarily performs functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of such
person’s knowledge of and familiarity with the particular subject, and who
shall have direct responsibility for the administration of this Indenture.



     “Rule 144A” means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.



     “SEC” means the Securities and Exchange Commission.



     “Securities Act” means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.



     “Significant Subsidiary” means any direct or indirect Subsidiary of the
Company that meets any of the following conditions:




          (1) the Company’s and its other Subsidiaries’ investments in and
advances to such Subsidiary exceed 10% of the total assets of the Company
and its Subsidiaries consolidated as of the end of the most recently
completed fiscal year;




          (2) the Company’s and its other Subsidiaries’ proportionate share of
the total assets (after intercompany eliminations) of such Subsidiary
exceed 10% of the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or




          (3) the Company’s and its other Subsidiaries’ equity in the income
from continuing operations before income taxes, extraordinary items and



6









 






cumulative effect of a change in accounting principle of such Subsidiary
exceed 10% of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year.



     “Stated Maturity,” when used with respect to any Note or any installment
of interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.



     “Subsidiary” means (i) a corporation, a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is, at the
date of determination, directly or indirectly owned by the Company, by one or
more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company, (ii) a partnership in which the Company or a Subsidiary of the
Company holds a majority interest in the equity capital or profits of such
partnership, or (iii) any other person (other than a corporation) in which the
Company, a Subsidiary of the Company or the Company and one or more
Subsidiaries of the Company, directly or indirectly, at the date of
determination, has (x) at least a majority ownership interest or (y) the power
to elect or direct the election of a majority of the directors or other
governing body of such person.



     “Supplement” has the meaning specified in the Pledge Agreement.



     “TIA” means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture; provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.



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



     “Trustee” means the party named as the “Trustee” in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.



     “United States” means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (its “possessions” including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).



     “U.S. Government Obligations” means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by or acting as an agency



7









 





or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any
time prior to the Stated Maturity of the Notes, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.



     “Voting Stock” means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors
of such Person.



     Section 1.02.
Other Definitions.



	 	 	 
	 	 	Defined in
	Term	 	Section
	“Act”
	 	1.05(a)
	“Agent Members”
	 	2.07(d)
	“Authenticating Agent”
	 	12.14
	“Bankruptcy Law”
	 	6.01
	“beneficial ownership”
	 	3.02(a)
	“Certificated Notes”
	 	2.07(b)
	“Change of Control”
	 	3.05(a)
	“Change of Control Purchase Date”
	 	3.05(a)
	“Change of Control Purchase Notice”
	 	3.05(e)
	“Change of Control Purchase Price”
	 	3.05(a)
	“Conversion Price”
	 	10.01
	“Conversion Rate”
	 	10.01
	“Current Market Price”
	 	10.04(g)
	“Custodian”
	 	6.01
	“Effective Date”
	 	3.05(a)
	“Event of Default”
	 	6.01
	“Exchange Act”
	 	3.02(a)
	“excluded securities”
	 	10.04(d)
	“Expiration Time”
	 	10.04(f)
	“fair market value”
	 	10.04(g)
	“Global Note”
	 	2.07(b)
	“Legal Holiday”
	 	12.08
	“Liquidated Damages Notice”
	 	4.10
	“Make-Whole Premium”
	 	3.05(a)
	“Non-Electing Share”
	 	10.11
	“Note Register”
	 	2.04







8









 






	 	 	 
	 	 	Defined in
	Term	 	Section
	“Note Registrar”
	 	2.04
	“Notice of Default”
	 	6.01
	“Paying Agent”
	 	2.04
	“Principal Amount”
	 	2.07(b)
	“Public Acquirer Change of Control.
	 	3.05(d)
	“Public Acquirer Common Stock
	 	3.05(d)
	“Purchased Shares”
	 	10.04(f)
	“Record Date”
	 	10.04(g)
	“Redemption Date”
	 	3.02
	“Redemption Notice”
	 	3.02
	“Redemption Price”
	 	3.01
	“Reference Period”
	 	10.04(d)
	“Restricted Note”
	 	10.02
	“Restricted Securities”
	 	2.07(d)
	“Rule 144A Information”
	 	4.06
	“Stock Price”
	 	3.05(a)
	“transfer”
	 	2.07(d)
	“Trigger Event”
	 	10.04(d)







     Section 1.03.
Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:



     “Commission” means the SEC.



     “indenture Notes” means the Notes.



     “indenture Note holder” means a Noteholder.



     “indenture to be qualified” means this Indenture.



     “indenture trustee” or “institutional trustee” means the Trustee.



     “obligor” on the indenture Notes means the Company.



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



     Section 1.04. Rules of Construction. Unless the context otherwise
requires:



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



     (b) “or” is not exclusive;



9









 





     (c) “including” means including, without limitation; and



     (d) words in the singular include the plural, and words in the plural
include the singular.



     Section 1.05.
Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by their agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
“Act” of Holders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.



     (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer’s individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer’s authority. The fact and date of
the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.



     The ownership of Notes shall be proved by the Note Register or by a
certificate of the Note Registrar.



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



     If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, by or pursuant to a resolution of the Board of Directors,
fix in advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for purposes of determining whether Holders of the requisite
proportion of



10









 





outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the outstanding Notes shall be computed as of such
record date; provided that no such authorization, agreement or consent by the
Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six
months after the record date.



ARTICLE 2

The Notes




     Section 2.01.
 Designation Amount and Issue of Notes. The Notes shall be
designated as “5.50% Convertible Senior Notes due 2011”. Except pursuant to
Sections 2.07, 2.08, 3.08 and 10.02 hereof, Initial Notes not to exceed the
aggregate principal amount of $65,000,000 upon the execution of this
Indenture, may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Initial Notes upon a Company Order, without any further action by the Company
hereunder. In addition, the Trustee shall authenticate and deliver Additional
Notes in aggregate principal amounts specified by the Company, without the
consent of the Holders.



     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, which is incorporated in and made a part of this Indenture.



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



     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 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, 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.



     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



11









 





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.



     Section 2.03.
Execution and Authentication. The Notes shall be executed
on behalf of the Company by an Officer of the Company. The signatures of such
Officer on the Notes may be manual or facsimile.



     Notes bearing the manual or facsimile signatures of individuals who were
at the time of the execution of the Notes the proper Officers of the Company
shall bind the Company, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Notes or did not hold such offices at the date of authentication of such
Notes. Notes shall be dated the date of their authentication.



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



     The Notes shall be issued only in registered form without coupons and only
in denominations of $1,000 in principal amount and any integral multiple
thereof.



     Section 2.04.
Note Registrar, Paying Agent and Conversion Agent. The
Company shall maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (“Note Registrar”), an office or
agency where Notes may be presented for purchase or payment (“Paying Agent”)
and an office or agency where Notes may be presented for conversion
(“Conversion Agent”). The Note Registrar shall keep a register (the “Note
Register”) in which, subject to such reasonable regulations as it may prescribe
it shall provide for the registration and transfer of the Notes. The Company
may have one or more co-registrars, one or more additional paying
agents and one or more additional conversion agents. The term Paying Agent
includes any additional paying agent, including any named pursuant to Section
4.05. The term Conversion Agent includes any additional conversion agent,
including any named pursuant to Section 4.05.



     The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Note Registrar, Paying Agent or
Conversion Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.06. The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent, Note
Registrar, Conversion Agent or co-registrar.



     The Company initially appoints the Trustee as Note Registrar, Conversion
Agent and Paying Agent in connection with the Notes.



12









 





     Section 2.05.
Paying Agent to Hold Money and Notes in Trust. Except as
otherwise provided herein, on or prior to each due date of payments in respect
of any Note, the Company shall deposit with the Paying Agent a sum of money (in
immediately available funds if deposited on the due date) or , to the extent
applicable, Common Stock sufficient to make such payments when so becoming
due. The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Noteholders or the Trustee all money and Common Stock held by the Paying Agent
for the making of payments in respect of the Notes and shall notify the Trustee
of any default by the Company in making any such payment. At any time during
the continuance of any such default, the Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money and Common Stock
so held in trust. If the Company, a Subsidiary or an Affiliate of the Company
acts as Paying Agent, it shall segregate the money and Common Stock held by it
as Paying Agent and hold it as a separate trust fund. The Company at any time
may require a Paying Agent to pay all money and Common Stock held by it to the
Trustee and to account for any funds and Common Stock disbursed by it. Upon
doing so, the Paying Agent shall have no further liability for the money or
Common Stock.



     Section 2.06.
Noteholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Noteholders. If the Trustee is not the Note
Registrar, the Company shall cause to be furnished to the Trustee at least
semiannually on April 1 and October 1 a listing of Noteholders
dated within 15 days of the date on which the list is furnished and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
Noteholders.



     Section 2.07.
Transfer and Exchange; Restrictions on Transfer;
Depositary.  (a) Upon surrender for registration of transfer of any Note, together
with a written instrument of transfer satisfactory to the Note Registrar duly
executed by the Noteholder or such Noteholder’s attorney duly authorized in
writing, at the office or agency of the company designated as Note Registrar or
co-registrar pursuant to Section 2.04, and satisfaction of
the requirements of such transfer set forth in this Section, 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 denomination or denominations, of a like aggregate principal amount
and bearing such restrictive legends as may be required by this Indenture. The
Company shall not charge a service charge for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges that may be imposed in
connection with the transfer or exchange of the Notes from the Noteholder
requesting such transfer or exchange.



     At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denomination or denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged, together with a written instrument
of transfer satisfactory to the Note Registrar duly executed by the Noteholder
or such Noteholder’s attorney duly authorized in writing, at such office or
agency. Whenever any Notes are so



13









 





surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Notes which the
Holder making the exchange is entitled to receive.



     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.



     The Company shall not be required to make, and the Note Registrar need not
register, transfers or exchanges of any Notes in respect of which a Change of
Control Purchase Notice (as defined in Section 3.05(e)) has been given and not
withdrawn by the Holder thereof in accordance with the terms of this Indenture
(except, in the case of Notes to be purchased in part, the portion thereof not
to be purchased).



     (b) So long as the Notes are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, all Notes that, upon initial
issuance are beneficially owned by QIBs or as a result of a sale or transfer
after initial issuance are beneficially owned by QIBs, will be represented by
one or more Notes in global form registered in the name of the Depositary or
the nominee of the Depositary (the “Global Note”), except as otherwise
specified below. 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 procedures of the Depositary therefor. The Trustee shall make
appropriate endorsements to reflect increases or decreases in the principal
amounts of any such Global Note as set forth on the face of the Note
(“Principal Amount”) to reflect any such transfers. Except as provided below,
beneficial owners of a Global Note shall not be entitled to have certificates
registered in their names, will not receive or be entitled to receive physical
delivery of certificates in definitive form (“Certificated Notes”) and will not
be considered holders of such Global Note.



     (c) So long as the Notes are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, upon any transfer of a
Certificated Note to a QIB in accordance with Rule 144A that requests delivery
of such Note in the form of an interest in the Global Note, and upon receipt of
the Certificated Note or Notes being so transferred, together with a
certification, substantially in the form of Exhibit B-1 hereto, from the
transferor that the transfer is being made in compliance with Rule 144A (or
other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Global Note to reflect an increase in the aggregate
Principal Amount of the Notes represented by such Global Note, and the Trustee
shall cancel such Certificated Note or Notes in accordance with the standing
instructions and procedures of the Depositary.




          (ii) Upon any sale or transfer of a Note to the Company or any
Subsidiary thereof (other than pursuant to a registration statement that
has been declared effective under the Securities Act or after the
expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act), the transferor shall, prior to such
sale or transfer, furnish to the Company and/or Trustee such
certifications, including a certification substantially in the form of
Exhibit B-1 hereto, legal opinions or other information as they may
reasonably



14









 






require to confirm that the proposed transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. Upon any transfer of a
beneficial interest in the Global Note to the Company or such Subsidiary,
as the case may be, the Trustee shall make an endorsement on the Global
Note to reflect a decrease in the aggregate Principal Amount of the Notes
represented by such Global Note, and the Company shall execute a
Certificated Note or Notes in exchange therefor, and the Trustee, upon
receipt of such Certificated Note or Notes and a Company Order, shall
authenticate and deliver such, Certificated Note or Notes.




          (iii) Upon any sale or transfer of a Note pursuant to the exemption
from registration provided by Rule 144 under the Securities Act, the
transferor shall, prior to such sale or transfer, furnish to the Company
and/or the Trustee such certifications, including a certification
substantially in the form of Exhibit B-1 hereto, legal opinions or other
information as they may reasonably require to confirm that the proposed
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act. Upon
any transfer of a beneficial interest in the Global Note to such
transferee, the Trustee shall make an endorsement on the Global Note to
reflect a decrease in the aggregate Principal Amount of the Notes
represented by such Global Note, and, at the request of the transferee,
either (1) the Company shall execute a Certificated Note or Notes in
exchange therefor, and the Trustee, upon receipt of such Certificated
Note or Notes and a Company Order, shall authenticate and deliver such,
Certificated Note or Notes or (2) if a Global Note that does not bear the
legend set forth in Section 2.07(d) has previously been executed and
authenticated, the Trustee shall make an endorsement on such
Global Note to reflect a corresponding increase in the aggregate
Principal Amount of Notes represented by such Global Note.



     Any Global Note may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Trustee, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Notes to be tradeable on The Portal Market or as may be required for the Notes
to be tradeable on any other market developed for trading of securities
pursuant to Rule 144A or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Notes are subject.



     (d) Every Note that bears or is required under this Section 2.07(d) to
bear the legend set forth in this Section 2.07(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend set
forth in Section 2.07(e), collectively, the “Restricted Securities”) shall be
subject to the restrictions on transfer set forth in this Section 2.07(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Noteholder’s acceptance
thereof,



15









 





agrees to be bound by all such restrictions on transfer. As used in
Sections 2.07(d) and 2.07(c), the term “transfer” encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Restricted Security.



     Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.07(e),
if applicable) shall bear a legend in substantially the following form, unless
such Note has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be
effective at the time of such transfer), or unless otherwise agreed by the
Company in writing, with written notice thereof to the Trustee:




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




THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES THEREOF UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION) (THE “RESALE RESTRICTION
PERIOD”) ONLY (A) TO GASCO ENERGY, INC. OR ANY SUBSIDIARY
THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, OR (D) PURSUANT TO



16









 






ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, INCLUDING UNDER RULE
144, IF AVAILABLE, SUBJECT IN EACH OF THE FOREGOING CASES
TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS
PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR
ACCOUNTS BE AT ALL TIME WITHIN ITS OR THEIR CONTROL. PRIOR
TO THE EXPIRATION OF THE RESALE RESTRICTION PERIOD, THE
COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO THE COMPANY, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE EXPIRATION OF THE RESALE RESTRICTION PERIOD.



     Any Note (or security issued in exchange or substitution therefor) as to
which such restrictions on transfer shall have expired in accordance with their
terms or as to
conditions for removal of the foregoing legend set forth therein have been
satisfied may, upon surrender of such Note for exchange to the Note Registrar
in accordance with the provisions of this Section 2.07, be exchanged for a new
Note or Notes, of like tenor and aggregate principal amount, which shall not
bear the restrictive legend required by this Section 2.07(d).



     Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 2.07(c), with respect to transfers of
beneficial interests in a Global Note, and in this Section 2.07(d)), a Global
Note may not be transferred as a whole or in part except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.



     Neither any members of, or participants in, the Depositary (collectively,
the “Agent Members”) nor any other Persons on whose behalf Agent Members may
act shall have any rights under this Indenture with respect to any Global Note
registered in the name of the Depositary or any nominee thereof, or under any
such Global Note, 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



17









 





Member may act, the operation of customary practices of such Persons governing
the exercise of the rights of a holder of any Note.



     The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Notes in global form. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Trustee, as custodian for
Cede & Co.



     If at any time the Depositary for a Global Note notifies the Company that
it is unwilling or unable to continue as Depositary for such Note, the Company
may appoint a successor Depositary with respect to such Note. If a successor
Depositary is not appointed by the Company within ninety (90) days after the
Company receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers’ Certificate for the authentication and delivery of
Notes, will authenticate and deliver, Certificated Notes, in aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note.



     If a Certificated Note is issued in exchange for any portion of a Global
Note after the close of business at the office or agency where such exchange
occurs on any Regular
Record Date and before the opening of business at such office or agency on
the next succeeding Interest Payment Date, interest will not be payable on such
Interest Payment Date in respect of such Certificated Note, but will be payable
on such Interest Payment Date only to the Person to whom interest in respect of
such portion of such Global Note is payable in accordance with the provisions
of this Indenture.



     Certificated Notes issued in exchange for all or a part of a Global Note
pursuant to this Section 2.07 shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall deliver such Certificated Notes
to the Persons in whose names such Certificated Notes are so registered.



     At such time as all interests in a Global Note have been converted,
canceled, exchanged for Certificated Notes, or transferred to a transferee who
receives Certificated Notes thereof, 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 Trustee. At any time prior
to such cancellation, if any interest in a Global Note is exchanged for
Certificated Notes, converted, repurchased or canceled, or transferred to a
transferee who receives Certificated Notes therefor or any Certificated Note is
exchanged or transferred for part of a Global Note, the principal amount of
such Global Note shall, in accordance with the standing procedures and
instructions existing between the Depositary and the Trustee, be appropriately
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Note, by the Trustee to reflect such reduction or increase.



18









 





     (e) Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
stock certificate representing Common Stock issued upon conversion of any Note
shall bear a legend in substantially the following form, unless such Common
Stock has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer) or such Common Stock has been issued upon conversion of
Notes that have been transferred pursuant to a registration statement that has
been declared effective under the Securities Act, or unless otherwise agreed by
the Company in writing with written notice thereof to the transfer agent:




THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.




THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES THEREOF UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION) (THE “RESALE RESTRICTION
PERIOD”) ONLY (A) TO GASCO ENERGY, INC. OR ANY SUBSIDIARY
THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, INCLUDING UNDER RULE
144, IF AVAILABLE, SUBJECT IN EACH OF THE FOREGOING CASES
TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS



19









 






PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR
ACCOUNTS BE AT ALL TIME WITHIN ITS OR THEIR CONTROL. PRIOR
TO THE EXPIRATION OF THE RESALE RESTRICTION PERIOD, THE
COMPANY AND THE TRANSFER AGENT RESERVE THE RIGHT TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO THE COMPANY, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER
AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE EXPIRATION OF THE RESALE RESTRICTION
PERIOD.



     Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for
removal of the
foregoing legend set forth therein have been satisfied may, upon surrender
of the certificates representing such shares of Common Stock for exchange in
accordance with the procedures of the transfer agent for the Common Stock, be
exchanged for a new certificate or certificates for a like number of shares of
Common Stock, which shall not bear the restrictive legend required by this
Section 2.07(e).



     (f) Any Note or Common Stock issued upon the conversion or exchange of a
Note that, prior to the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such Notes
or Common Stock, as the case may be, no longer being “restricted securities”
(as defined under Rule 144).



     Section 2.08.
Replacement Notes. If any mutilated Note is surrendered
to the Trustee, or the Company, the Trustee and, if applicable, the
Authenticating Agent receive evidence to their satisfaction of the destruction,
loss or theft of any Note, and there is delivered to the Company, the Trustee
and, if applicable, the Authenticating Agent such Note or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company, the Trustee or, if applicable, the Authenticating Agent that
such Note has been acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Trustee or the Authenticating Agent shall
authenticate and deliver, in exchange for any such mutilated Note or in lieu of
any such destroyed, lost or stolen Note, a new Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.



     In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, or is about to be purchased by the Company
pursuant to



20









 





Article 3 hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.



     Upon the issuance of any new Notes under this Section 2.08, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and any Authenticating
Agent) connected therewith.



     Every new Note issued pursuant to this Section 2.08 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Notes duly issued hereunder.



     The provisions of this Section 2.08 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.



     Section 2.09.
Outstanding Notes; Determination of Holders’ Action.
Notes outstanding at any time are all the Notes authenticated by the Trustee
except for those cancelled by it or delivered to it for cancellation, those
paid pursuant to Section 2.08 and those described in this Section 2.09 as not
outstanding. A Note does not cease to be outstanding because the Company or an
Affiliate thereof holds the Note; provided, however, that in determining
whether the Holders of the requisite principal amount of the outstanding Notes
have given or concurred in any request, demand, authorization, direction,
notice, consent or waiver hereunder, Notes owned by the Company or any other
obligor upon the Notes or any Affiliate of the Company or such other obligor
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes which a Responsible Officer of the Trustee actually knows to be so owned
shall be so disregarded. Subject to the foregoing, only Notes outstanding at
the time of such determination shall be considered in any such determination
(including, without limitation, determinations pursuant to Articles 6 and 9).



     If a Note is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.



     If the Paying Agent holds, in accordance with this Indenture, on the
Business Day following the Change of Control Purchase Date, or on Stated
Maturity, money or securities, if permitted hereunder, sufficient to pay Notes
payable on that date, then immediately after such Change of Control Purchase
Date or Stated Maturity, as the case may be, such Notes shall cease to be
outstanding and interest on such Notes shall cease to accrue.



21









 





     If a Note is converted in accordance with Article 10, then from and after
the time of conversion on the conversion date, such Note shall cease to be
outstanding and interest shall cease to accrue on such Note.



     Section 2.10.
Temporary Notes. Pending the preparation of definitive
Notes, the Company may execute, and upon a Company Order the Trustee shall
authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.



     If temporary Notes are issued, the Company will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the
temporary Notes shall be exchangeable for definitive Notes upon surrender
of the temporary Notes at the office or agency of the Company designated for
such purpose pursuant to Section 2.04, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes the Company shall
execute and the Trustee or an Authenticating Agent shall authenticate and
deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.



     Section 2.11.
Cancellation. All Notes surrendered for payment, purchase
by the Company pursuant to Article 3, conversion or registration of transfer or
exchange shall, if surrendered to any person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly cancelled
by the Trustee. The Company may not issue new Notes to replace Notes it has
paid or delivered to the Trustee for cancellation or that any Holder has
converted pursuant to Article 10. No Notes shall be authenticated in lieu of or
in exchange for any Notes cancelled as provided in this Section 2.11, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be disposed of by the Trustee in its customary manner.



     Section 2.12.
Persons Deemed Owners. Prior to due presentment of a Note
for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of the Note or the payment of any Change of Control Purchase Price in
respect thereof, and interest thereon, for the purpose of conversion and for
all other purposes whatsoever, whether or not such Note be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.



     Section 2.13.
CUSIP Numbers. The Company in issuing the Notes may use
“CUSIP” numbers (if then generally in use). No representation is made as to
the



22









 





correctness of such CUSIP numbers and reliance may be placed only on the
other identification numbers printed on the Notes. The Company will promptly
notify the Trustee of any change in the CUSIP numbers.



     Section 2.14.
Default Interest. If the Company defaults in a payment of
interest on the Notes, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) any interest payable on the defaulted interest, to
the Persons who are Holders on a subsequent special record date. A special
record date, as used in this Section 2.14 with respect to the payment of any
defaulted interest, shall mean the 15th day next preceding the date fixed by
the Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder and to the Trustee a notice that states the
subsequent special record date, the payment date and the amount of defaulted
interest to be paid.



ARTICLE 3

Redemption and Repurchase Upon A Change Of Control




     Section 3.01.
Company’s Right to Redeem. Prior to October 10, 2009, the
Notes shall not be redeemable at the Company’s option. At any time on or after
October 10, 2009 and prior to Stated Maturity, the Company, at its option, may
redeem the Notes, in whole or in part, in accordance with the provisions of
Section 3.02, Section 3.03 and Section 3.04 on the Redemption Date for a
redemption price (the “Redemption Price”) in cash equal to 100% of the
principal amount of the Notes plus any accrued and unpaid interest and
Liquidated Damages, if any, on the Notes redeemed to but excluding the
Redemption Date if the Closing Price of the Common Stock has exceeded 130% of
the Conversion Price for at least 20 Trading Days in any consecutive 30 Trading
Day period. In addition, if beginning on October 10, 2009, on any Interest
Payment Date, the aggregate principal amount of the Notes outstanding is less
than 15% of the aggregate principal amount of Notes outstanding after the Issue
Date, the Company, at its option, may redeem the Notes, in whole but not in
part, in accordance with the provisions of Section 3.02, Section 3.03 and
Section 3.04 on the Redemption Date for a Redemption Price in cash equal to
100% of the principal amount of the Notes plus any accrued and unpaid Interest
and Liquidated Damages, if any, on the Notes to but not including the
Redemption Date. The Company will make an additional payment equal to the
total value of the aggregate amount of the interest otherwise payable on the
Notes from the last day through which interest was paid on the Notes through
the Redemption Date.



     Section 3.02.
Notice of Optional 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 (the “Redemption Date”) and it or, at its
written request (which request must include the information listed in Section
3.02(b) and be received by the Trustee not fewer than thirty-five (35) days
prior (or such shorter period of time as may be acceptable to the Trustee) to
the Redemption Date), the Trustee in the name of and at the expense of the




23









 




Company, shall mail or cause to be mailed a notice of such redemption (a
“Redemption Notice”) not fewer than twenty (20) 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
Redemption Notice, 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) Each such Redemption Notice shall specify the aggregate principal
amount of Notes to be redeemed, the CUSIP, ISIN or similar number or numbers of
the Notes being redeemed, the Redemption Date (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 and unpaid up to but not including the Redemption
Date 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 Shares will
expire. If fewer than all the Notes are to be redeemed, the Redemption Notice
shall identify the Notes to be redeemed (including CUSIP, ISIN or similar
number or numbers, if any). In case any Note is to be redeemed in part only,
the Redemption Notice shall state the portion of the principal amount thereof
to be redeemed and shall state that, on and after the Redemption Date, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued.



     (c) On or prior to the Redemption Date specified in the Redemption Notice
given as provided in this Section 3.02, the Company will deposit with the
Trustee or with one or more Paying Agents 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 Shares) at the appropriate Redemption
Price; 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 3.02(c) in excess of amounts required hereunder
to pay the Redemption Price. Subject to the last sentence of Section 7.05, 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 upon its written request, or, if then



24









 







held by the Company, shall be discharged from such trust. Whenever any
Notes are to be redeemed, the Company will give the Trustee written notice in
the form of an Officers’ Certificate not fewer than thirty-five (35) days (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.



     (d) If the Company opts to redeem less than all of the Outstanding Notes,
the Trustee shall select or cause to be selected 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 integral 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 from the portion 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 Redemption
Notice.



     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 Redemption
Notice 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 3.03. Payment of Notes Called for Redemption by the Company. If
notice of redemption has been given as provided in Section 3.02(a), the Notes
or portion of Notes with respect to which such notice has been given shall,
unless converted into Common Shares pursuant to the terms hereof, become due
and payable on the Redemption Date and at the place or places stated in such
notice at the applicable Redemption Price, unless the Company shall default in
the payment of the Redemption Price. Interest on the Notes or portion of Notes
so called for redemption shall cease to accrue and after the close of business
on the Business Day immediately preceding the Redemption Date (unless
the Company shall default in the payment of the Redemption Price), such Notes
shall cease to be convertible into Common Shares and, except as provided in
Section 7.05, 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. On presentation and surrender
of such Notes at a place of payment in said notice specified, the said Notes or
the specified portions thereof shall be paid and redeemed by the Company at the
applicable Redemption Price; provided that if the applicable Redemption Date is
an Interest Payment Date, the Interest payable on such Interest Payment Date
shall be paid on such Interest Payment Date 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



25









 







the expense of the Company, a new Note or Notes, of authorized
denominations, in principal amount equal to the unredeemed portion of the Note
or Notes so presented.



     Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any Redemption Notices during the continuance of a default in payment of
Interest on the Notes. If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, continue to bear interest at the rate borne by the Note,
and such Note shall remain convertible into Common
Shares, cash or a combination of cash and Common Shares until the principal and
Interest shall have been paid or duly provided for. The Company will notify
all of the holders if the Company redeems any of the Notes.



     Section 3.04. Conversion Arrangement on Call for Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more
investment banks or other purchasers to purchase such Notes by paying to the
Trustee in trust for the Noteholders, on or before the date fixed for
redemption, an amount not less than the applicable redemption price, together
with Interest accrued and unpaid to, but excluding, the date fixed for
redemption, of such Notes. Notwithstanding anything to the contrary contained
in this Article 3, the obligation of the Company to pay the redemption price of
such Notes, together with Interest accrued and unpaid to, but excluding, the
date fixed for redemption, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by such purchasers. If such an agreement is
entered into, a copy of which will be filed with the Trustee prior to the date
fixed for redemption, any Notes not duly surrendered for conversion by the
holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the date fixed for redemption (and the right to
convert any such Notes shall be extended through such time), subject to payment
of the above amount as aforesaid. At the direction of the Company, the Trustee
shall hold and dispose of any such amount paid to it in the same manner as it
would monies deposited with it by the Company for the redemption of Notes.
Without the Trustee’s prior written consent, no arrangement between the Company
and such purchasers for the purchase and conversion of any Notes shall increase
or otherwise affect any of the powers, duties, responsibilities or obligations
of the Trustee as set forth in this Indenture.



     Section 3.05. Purchase of Notes at Option of the Holder Upon Change of
Control. (a) If there shall have occurred a Change of Control, all or any
portion of the Notes of any Holder equal to $1,000 or a whole multiple of
$1,000, shall be repurchased by the Company, at the option of such Holder, at a
repurchase price equal to 100% of the aggregate principal amount of the Notes
to be repurchased, together with accrued and unpaid interest and Liquidated
Damages, if any, to, but excluding, the purchase date (the “Change of Control
Purchase Price”), on the date (the “Change of Control Purchase Date”) that is
45 days after the date the Company delivered the notice required under Section
3.05(d) (or if such 45th day is not a Business Day, the next succeeding
Business Day); provided, however, that if the Change of Control Purchase Date
is after a Regular Record Date but on or prior to the corresponding Interest
Payment Date, the accrued and



26









 







unpaid interest becoming due on such Interest Payment Date shall be
payable to the Holders of such Notes, or one or more predecessor Notes,
registered as such on the relevant Regular Record Date according to their
terms.



     If there shall have occurred a Change of Control pursuant to clause (ii)
of the definition thereof set forth in this Section 3.05(a), the Company will
pay on the Change of Control Purchase Date a Make-Whole Premium to the Holders
of the Notes in addition to the Change of Control Purchase Price. The
Make-Whole Premium will also be paid on the Change of Control Purchase Date to
the Holders of the Notes who convert their Notes on or after the date on which
the Company has given a notice to all Holders of Notes in accordance with
Section 3.05(d) hereof and on or before the Change of Control Purchase Date.



     The “Make-Whole Premium” will be determined by reference to the table
below and is based on the date on which the Change of Control becomes effective
(the “Effective Date”) and the price (the “Stock Price”) paid per share of the
Company’s Common Stock in the transaction constituting the Change of Control.
If the holders of the Company’s Common Stock receive only cash in the
transaction, the Stock Price shall be the cash amount paid per share of the
Company’s Common Stock. Otherwise, the Stock Price shall be equal to the
average Closing Price per share of the Company’s Common Stock over the ten
Trading Day period ending on the Trading Day immediately preceding the
Effective Date.



     The following table shows what the Make-Whole Premium would be for each
hypothetical Stock Price and Effective Date set forth below, expressed as a
percentage of the principal amount of the Notes.



     Make-Whole Premium Upon a Change of Control (% of Face Value)



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Stock Price on Effective Date

	Effective Date
	 	$	3.02	 	 	$	4.00	 	 	$	5.00	 	 	$	6.00	 	 	$	7.00	 	 	$	8.00	 	 	$	9.00	 	 	$	10.00	 	 	$	11.00	 	 	$	12.00	 	 	$	13.00	 	 	$	14.00	 	 	$	15.00	 	 	$	20.00	 
	October 20, 2004
	 	 	0.0	%	 	 	22.0	%	 	 	19.8	%	 	 	18.1	%	 	 	16.7	%	 	 	15.5	%	 	 	14.5	%	 	 	13.5	%	 	 	12.6	%	 	 	11.7	%	 	 	10.9	%	 	 	10.2	%	 	 	9.5	%	 	 	6.4	%
	October 20, 2005
	 	 	0.0	%	 	 	19.5	%	 	 	17.2	%	 	 	15.4	%	 	 	13.9	%	 	 	12.8	%	 	 	11.8	%	 	 	10.9	%	 	 	10.1	%	 	 	9.4	%	 	 	8.7	%	 	 	8.0	%	 	 	7.4	%	 	 	4.8	%
	October 20, 2006
	 	 	0.0	%	 	 	17.2	%	 	 	14.6	%	 	 	12.6	%	 	 	11.2	%	 	 	10.0	%	 	 	9.1	%	 	 	8.4	%	 	 	7.7	%	 	 	7.1	%	 	 	6.5	%	 	 	6.0	%	 	 	5.4	%	 	 	3.4	%
	October 20, 2007
	 	 	0.0	%	 	 	15.2	%	 	 	11.9	%	 	 	9.7	%	 	 	8.3	%	 	 	7.3	%	 	 	6.5	%	 	 	5.9	%	 	 	5.3	%	 	 	4.9	%	 	 	4.4	%	 	 	4.1	%	 	 	3.7	%	 	 	2.1	%
	October 20, 2008
	 	 	0.0	%	 	 	12.5	%	 	 	8.6	%	 	 	6.1	%	 	 	4.8	%	 	 	4.0	%	 	 	3.5	%	 	 	3.2	%	 	 	2.9	%	 	 	2.7	%	 	 	2.5	%	 	 	2.3	%	 	 	2.1	%	 	 	1.2	%
	October 20, 2009
	 	 	0.0	%	 	 	9.3	%	 	 	1.9	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%
	October 20, 2010
	 	 	0.0	%	 	 	9.0	%	 	 	1.6	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%
	October 20, 2011
	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%







     The Make-Whole Premiums set forth above are based upon an interest rate of
5.50%, a reference price per share of the Common Stock of $3.02 and a
Conversion Rate that results in a Conversion Price of $4.00, which is 32.5%
higher than the closing sale price per share of the Common Stock on October 14,
2004.



     The actual Stock Price and Effective Date may not be set forth on the
table, in which case:



27









 






     (i) If the actual Stock Price on the Effective Date is between two
Stock Prices on the table or the actual Effective Date is between two
Effective Dates on
the table, the Make-Whole Premium will be determined by a
straight-line interpolation between the Make-Whole Premiums set forth for
the two Stock Prices and the two Effective Dates on the table based on a
365-day year, as applicable;




     (ii) If the Stock Price on the Effective Date exceeds $20.00 per
share (subject to adjustment described below), no Make-Whole Premium will
be paid; and




     (iii) If the Stock Price on the Effective Date is less than or equal
to $3.02 per share (subject to adjustment described below), no Make-Whole
Premium will be paid.



     The Stock Prices set forth in the first column of the table above will be
adjusted as of any date on which the Conversion Rate is adjusted. The adjusted
Stock Prices will equal the Stock Prices applicable immediately prior to such
adjustment multiplied by a fraction, the numerator of which is the Conversion
Rate immediately prior to the adjustment giving rise to the Stock Price
adjustment and the denominator of which is the Conversion Rate so adjusted.



     The Company shall pay, at its option, the Change of Control Purchase Price
and/or Make-Whole Premium in cash or shares of its Common Stock or, in the case
of the Make-Whole Premium, the same form of consideration used to pay for the
shares of the Company’s Common Stock in connection with the transaction
constituting the Change of Control.



     If the Company pays the Change of Control Purchase Price and/or Make-Whole
Premium in shares of its Common Stock, the value of its Common Stock to be
delivered in respect of the Change of Control Purchase Price and/or Make-Whole
Premium shall be deemed to be equal to the average Closing Price per share over
the ten Trading Day period ending on the Trading Day immediately preceding the
Change of Control Purchase Date. The Company may pay the Change of Control
Purchase Price and/or Make-Whole Premium in shares of its Common Stock only if
the information necessary to calculate the Closing Price per share is published
in a daily newspaper of general circulation or by other appropriate means.



     If the Company pays the Make-Whole Premium in the same form of
consideration used to pay for the shares of the Company’s Common Stock in
connection with the transaction constituting the Change of Control, the value
of the consideration to be delivered in respect of the Make-Whole Premium will
be calculated as follows:




     (i) securities that are traded on a United States national
securities exchange or approved for quotation on the Nasdaq National
Market or any similar system of automated dissemination of quotations of
securities prices will be valued based on the average Closing Price,
over



28









 







the ten Trading Day period ending on
the Trading Day immediately preceding the Change of Control Purchase
Date;




     (ii) other securities, assets or property (other than cash) will be
valued based on 98% of the average of the fair market value of such
securities, assets or property (other than cash) as determined by two
independent nationally recognized investment banks selected by the
trustee; and




     (iii) 100% of any cash.



     Whenever in this Indenture (including Sections 2.01, 6.01(a) and 6.07
hereof) or Exhibit A annexed hereto 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 Change of Control Purchase Price in respect to such
Note to the extent that such Change of Control Purchase Price is, was or would
be so payable at such time, plus any applicable Make-Whole Premium, and express
mention of the Change of Control Purchase Price in any provision of this
Indenture shall not be construed as excluding the Change of Control Purchase
Price in those provisions of this Indenture when such express mention is not
made.



     A “Change of Control” of the Company shall be deemed to have occurred at
such time after the original issuance of the Notes as any of the following
events shall occur:




     (i) any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), acquires the beneficial ownership (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that such Person shall be
deemed to have “beneficial ownership” of all securities that such Person
has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, through a
purchase, merger or other acquisition transaction, of 50% or more of the
total voting power of the total outstanding Voting Stock of the Company
other than an acquisition by the Company, any of its Subsidiaries or any
employee benefit plans of the Company; or




     (ii) the Company consolidates with, or merges with or into, another
Person or conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person consolidates
with or merges with or into the Company other than:




     (A) any transaction (1) that does not result in any
reclassification, conversion (other than the conversion of the
Company’s Series B Preferred Stock outstanding on the date
hereof), exchange or cancellation of outstanding shares of the
Capital Stock of the Company and (2) pursuant to which holders of
the Capital Stock of the Company immediately prior to the
transaction are entitled to exercise, directly or indirectly, 50%
or more of the total voting power of all shares of the



29









 







Capital
Stock of the Company entitled to vote generally in the election
of directors of the continuing or surviving person immediately
after the transaction;




     (B) any merger for the purpose of changing the Company’s
jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding shares of
Common Stock solely into shares of common stock of the surviving
entity; or




     (C) any transaction in which all of the consideration for
the Common Stock (excluding cash payments for fractional shares
and cash payments made in respect of dissenters’ appraisal
rights) in the transaction or transactions constituting the
Change of Control consists of common stock traded on a United
States national securities exchange or quoted on the Nasdaq
National Market, or which will be so traded or quoted when issued
or exchanged in connection with the Change of Control, and as a
result of such transaction or transactions the Notes become
convertible solely into such common stock, or




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




     (iv) the stockholders of the Company pass a special resolution
approving a plan of liquidation or dissolution and no additional
approvals of the Company’s stockholders are required under applicable law
to cause a liquidation or dissolution.



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



     (b) The following are conditions to the Company’s election to pay for the
Change of Control Purchase Price and Make-Whole Premium in Common Stock:




     (i) The shares of Common Stock to be issued upon repurchase of Notes
hereunder:




     (A) shall not require registration under any federal
securities law before such shares may be freely transferable
without being subject to any transfer restrictions under the
Securities Act upon repurchase or, if



30









 






such registration is
required, such registration shall be completed and shall become
effective prior to the Change of Control Purchase Date; and




     (B) shall not require registration with, or approval of, any
governmental authority under any state law or any other federal
law before shares may be validly issued or delivered upon
repurchase or if such registration is required or such approval
must be obtained, such registration shall be completed or such
approval shall be obtained prior to the Change of Control
Purchase Date.




     (ii) The shares of Common Stock to be listed upon repurchase of
Notes hereunder are, or shall have been, approved for listing on the
Nasdaq National Market or the New York Stock Exchange or listed on
another national securities exchange or the Over-the-Counter Bulletin
Board, in any case, prior to the Change of Control Purchase Date.




     (iii) All shares of Common Stock which may be issued upon repurchase
of Notes will be issued out of the Company’s authorized but unissued
Common Stock and will, upon issue, be duly and validly issued and fully
paid and nonassessable and free of any preemptive or similar rights.




     (iv) If any of the conditions set forth in clauses (i) through (iii)
of this Section 3.05(b) are not satisfied in accordance with the terms
thereof, the Change of Control Purchase Price and Make-Whole Premium
shall be paid by the Company only in cash. The Company may not change
the form of consideration to be paid with respect to the Change of
Control Purchase Price and Make-Whole Premium once it has given notice
set forth in Section 3.05(d) to Holders, except as described in the
immediately preceding sentence.



     (c) Notwithstanding the foregoing, in the case of a Public Acquirer Change
of Control (as defined below), the Company may, in lieu of paying a Make-Whole
Premium as described in Section 3.05(a), elect to adjust the Conversion Rate
and the related conversion obligation such that from and after the effective
date of such Public Acquirer Change of Control, Holders of the Notes will be
entitled to convert the Notes into a number of shares of Public Acquirer Common
Stock (as defined below) by multiplying the Conversion Rate in effect
immediately before the Public Acquirer Change of Control by a fraction:




     (i) the numerator of which will be (i) in the case of a share
exchange, consolidation, merger or binding share exchange, pursuant to
which the Common Stock is converted into cash, securities or other
property, the average value of all cash and any other consideration (as
determined by the Board of Directors) paid or payable per share of Common
Stock or (ii) in the case of any other Public Acquirer Change of Control,
the average of the last reported sale price of the Common Stock for the
five consecutive trading days prior to but excluding the effective date
of such Public Acquirer Change of Control, and



31









 






     (ii) the denominator of which will be the average of the last
reported sale prices of the Public Acquirer Common Stock for the five
consecutive trading
days commencing on the Trading Day next succeeding the effective
date of such Public Acquirer Change of Control.



     A “Public Acquirer Change of Control” means any event constituting a
Change Of Control that would otherwise obligate the Company to pay a Make-Whole
Premium as described in Section 3.05(a) and the acquirer (or any entity that is
a directly or indirectly wholly-owned Subsidiary of the acquirer or of which
the acquirer is a directly or indirectly wholly-owned Subsidiary) has a class
of common stock traded on a national securities exchange or quoted on the
Nasdaq National Market or which will be so traded or quoted when issued or
exchanged in connection with such event (the “Public Acquirer
Common Stock”).



     After the adjustment of the Conversion Rate in connection with a Public
Acquirer Change of Control, the Conversion Rate will be subject to further
similar adjustments in the event that any of the events described in Section
10.01 occur thereafter.



     Upon a Public Acquirer Change of Control, if the Company so elects,
Holders may convert the Notes at the adjusted Conversion Rate described in the
second preceding paragraph but will not be entitled to the Make-Whole Premium
described under Section 3.05(a). The Company is required to notify Holders of
its election in writing of such transaction. In addition, the Holder can also,
subject to certain conditions, require the Company to repurchase all or a
portion of its Notes as described under Section 3.05(a).



     (d) Prior to or on the 30th day after the occurrence of a Change of
Control, the Company, or, at the written request and expense of the Company
prior to or on the 30th day after such occurrence, the Trustee, shall give to
all Holders, in the manner provided in Section 12.02 hereof, notice of the
occurrence of the Change of Control and of the purchase right set forth herein
arising as a result thereof. The Company shall also deliver a copy of such
notice of a purchase right to the Trustee. The notice shall include a form of
Change of Control Purchase Notice (as defined in Section 3.05(e)) to be
completed by the Holder and shall state:




     (1) briefly, the events causing a Change of Control
and the date of such Change of Control;




     (2) the date by which the Change of Control Purchase
Notice pursuant to this Section 3.05 must be given;




     (3) the Change of Control Purchase Date;




     (4) the Change of Control Purchase Price and whether
the Change of Control Purchase Price will be payable in
cash or Common Stock;



32









 






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




     (6) that Notes as to which a Change of Control
Purchase Notice has been given may be converted pursuant
to Article 10 hereof only if the Change of Control
Purchase Notice has been withdrawn in accordance with the
terms of this Indenture;




     (7) that Notes must be surrendered to the Paying
Agent to collect payment;




     (8) that the Change of Control Purchase Price for any
Note as to which a Change of Control Purchase Notice has
been duly given and not withdrawn will be paid promptly
following the later of the Change of Control Purchase Date
and the time of surrender of such Note as described in (7)
above;




     (9) briefly, the procedures the Holder must follow to
exercise rights under this Section 3.05;




     (10) briefly, the conversion rights of the Notes,
including the Conversion Rate and any adjustments thereto;




     (11) the procedures for withdrawing a Change of
Control Purchase Notice;




     (12) the CUSIP number of the Notes;




     (13) whether a Make-Whole Premium shall be paid by
the Company and the form of consideration to be paid in
respect of the Make-Whole Premium; and




     (14) if a Make-Whole Premium is paid by the Company,
that a Make-Whole Premium shall be paid by the Company on
the Change of Control Purchase Date to Holders of Notes
who have converted their Notes into the Company’s Common
Stock on or after the date the Company has given notice to
all Holders in accordance with Section 3.05(d) and on or
before the Change of Control Purchase Date.



     (e) A Holder may exercise its rights specified in this Section 3.05 upon
delivery of a written notice of purchase (“Change of Control Purchase Notice”)
to the Paying Agent prior to the Change of Control Purchase Date, stating:




     (1) the certificate number of the Note, if any, which
the Holder will deliver to be purchased or the appropriate
Depositary procedures if the Notes are not in certificated
form;



33









 






     (2) the portion of the principal amount of the Note
which the Holder will deliver to be purchased, which
portion must be $1,000 or any whole multiple thereof; and




     (3) that such Note shall be purchased pursuant to the
terms and conditions specified in paragraph 5 on the
reverse side of the Notes and in this Indenture.



     If the Notes are not in certificated form, a Holder’s Change of Control
Purchase must comply with the appropriate DTC procedures.



     The delivery of such Note to the Paying Agent prior to the Change of
Control Purchase Date (together with all necessary endorsements) at the offices
of the Paying Agent shall be a condition to the receipt by the Holder of the
Change of Control Purchase Price therefor; provided, however, that such Change
of Control Purchase Price shall be so paid pursuant to this Section 3.05 only
if the Note so delivered to the Paying Agent shall conform in all respects to
the description thereof set forth in the related Change of Control Purchase
Notice.



     The Company shall purchase from the Holder thereof, pursuant to this
Section 3.05, a portion of a Note so delivered for purchase if the principal
amount of such portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to the purchase of all of a Note also apply to the
purchase of such portion of such Note.



     Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.05 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Change of Control
Purchase Date and the time of delivery of the Note to the Paying Agent in
accordance with this Section 3.05.



     Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Change of Control Purchase Notice contemplated by this
Section 3.05 shall have the right to withdraw such Change of Control Purchase
Notice at any time prior to the close of business on the Business Day prior to
the Change of Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.06.



     The Paying Agent shall promptly notify the Company of the receipt by it of
any Change of Control Purchase Notice or written withdrawal thereof.



     Section 3.06. Effect of Change of Control Purchase Notice. Upon receipt
by the Paying Agent of the Change of Control Purchase Notice specified in
Section 3.05(e), the Holder of the Note in respect of which such Change of
Control Purchase Notice was given shall (unless such Change of Control Purchase
Notice is withdrawn as specified in the following two paragraphs) thereafter be
entitled to receive solely the Change of Control Purchase Price with respect to
such Note. Such Purchase Price (along with the Make-Whole Premium, if any)
shall be paid to such Holder, subject to receipt of consideration for the Notes
by the Paying Agent, promptly following the later of (x) the



34









 





Change of Control Purchase Date with respect to such Note (provided the
conditions in Section 3.05(e), as the case may be, have been satisfied) or (y)
the time of delivery of such Note to the Paying Agent by the Holder thereof in
the manner required by Section 3.05(e), as the case may be. Notes in respect
of which a Change of Control Purchase Notice has been given by the Holder
thereof may not be converted pursuant to Article 10 hereof on or after the date
of the delivery of such Change of Control Purchase Notice unless such Change of
Control Purchase Notice has first been validly withdrawn as specified in the
following two paragraphs.




     A Change of Control Purchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Paying Agent in accordance
with the Change of Control Purchase Notice at any time prior to the close of
business on the Business Day immediately preceding the Change of Control
Purchase Date specifying:




     (1) the certificate number of the Note in respect of
which such notice of withdrawal is being submitted or, if
not in certificated form, the applicable Depositary
procedures,




     (2) the principal amount of the Note with respect to
which such notice of withdrawal is being submitted, and




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



     There shall be no purchase of any Notes pursuant to Section 3.05 if there
has occurred (prior to, on or after, as the case may be, the giving, by the
Holders of such Notes, of the required Change of Control Purchase Notice) and
is continuing an Event of Default (other than a default in the payment of the
Change of Control Purchase Price with respect to such Notes). The Paying Agent
will promptly return to the respective Holders thereof any Notes (x) with
respect to which a Change of Control Purchase Notice has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a default in the payment of the Change of Control
Purchase Price with respect to such Notes) in which case, upon such return, the
Change of Control Purchase Notice with respect thereto shall be deemed to have
been withdrawn.



     Section 3.07. Deposit of Change of Control Purchase Price. Prior to
10:00 a.m. (New York City time) on the Change of Control Purchase Date, the
Company shall deposit with the Trustee or with the Paying Agent (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 2.05) an
amount of cash (in immediately available funds if deposited on such Business
Day) or Common Stock sufficient to pay the aggregate Change of Control Purchase
Price of all the Notes or portions thereof which are to be purchased as of the
Change of Control Purchase Date and an amount in cash or shares of Common Stock
sufficient to pay any Make-Whole Premium.



35









 





     If the Trustee or other Paying Agent appointed by the Company, or the
Company or an Affiliate of the Company, if it or such Affiliate is acting as
the Paying Agent, holds cash or shares of Common Stock sufficient to pay the
aggregate Change of Control Purchase Price of all the Notes or portions thereof
that are to be purchased as of the Change of Control Purchase Date and an
amount in cash or shares of Common Stock sufficient to pay any Make-Whole
Premium, then immediately after the Change of Control Purchase Date (i) such
Notes will cease to be outstanding, (ii) interest on such Notes will cease to
accrue and (iii) all other rights of the holders of such Notes will terminate
other than the right to receive the Change of Control Purchase Price and the
Make-Whole Premium, if any, upon delivery of the Notes, whether or not
book-entry transfer of the Notes has been made or the Notes have been delivered
to the Trustee or Paying Agent.



     Section 3.08.
Notes Purchased in Part. Any Note which is to be
purchased only in part shall be surrendered at the office of the Paying Agent
(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 such Holder’s attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without service charge, a
new Note or Notes, of any authorized denomination as requested by such Holder
in aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Note so surrendered which is not purchased.



     Section 3.09. Covenant to Comply with Securities Laws upon Purchase of
Notes. In connection with any offer to purchase or purchase of Notes under
Section 3.05 hereof (provided that such offer or purchase constitutes an
“issuer tender offer” for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act at the time of
such offer or purchase), the Company shall (i) comply with Rule 13e-4, Rule
14e-1 and any other tender offer rules under the Exchange Act which may then be
applicable, (ii) file the related Schedule TO (or any successor schedule, form
or report) or any other schedule required under the Exchange Act, and (iii)
otherwise comply with all federal and state securities laws so as to permit the
rights and obligations under Section 3.05 to be exercised in the time and in
the manner specified in Section 3.05.



     Section 3.10. Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company any cash or shares of Common Stock that
remains unclaimed as provided in paragraph 12 of the Notes, together with
interest or dividends, if any, thereon, held by them for the payment of the
Change of Control Purchase Price and Make-Whole Premium, if any; provided,
however, that to the extent that the aggregate amount of cash or shares of
Common Stock deposited by the Company pursuant to Section 3.07 exceeds the
aggregate Change of Control Purchase Price of the Notes and Make-Whole Premium,
if any, or portions thereof which the Company is obligated to purchase as of
the Change of Control Purchase Date then promptly after the Business Day
following the Change of Control Purchase Date the Trustee shall return any such
excess to the Company together with interest or dividends, if any, thereon.



36









 





ARTICLE 4

Covenants




     Section 4.01. Payment of Principal, Premium, Interest on the Notes. The
Company will duly and punctually pay the principal of and premium, if any, and
interest (including Liquidated Damages, if any) in respect of the Notes in
accordance with the terms of the Notes and this Indenture. The Company will
deposit or cause to be deposited with the Trustee as directed by the Trustee,
no later than the day of the Stated Maturity of any Note or installment of
interest, all payments so due. Principal amount, Change of Control Purchase
Price, cash interest and any applicable Make-Whole Premium shall be considered
paid on the applicable date due if on such date (or, in the case of a Change of
Control Purchase Price or any applicable Make-Whole Premium on the Business
Day following the applicable Change of Control Purchase Date) the Trustee or
the Paying Agent holds, in accordance with this Indenture, money or Notes, if
permitted hereunder, sufficient to pay all such amounts then due.



     The Company shall, to the extent permitted by law, pay cash interest on
overdue amounts at the rate per annum set forth in paragraph 1 of the Notes,
which interest shall accrue from the date such overdue
amount was originally due to the date payment of such amount, including
interest thereon, has been made or duly provided for. All such interest shall
be payable on demand.



     Section 4.02. Reports by the Company. The Company shall file with the
Trustee (and the SEC after the Indenture becomes qualified under the TIA), and
transmit to holders of Notes, such information, documents and other reports and
such summaries thereof, as may be required pursuant to the TIA at the times and
in the manner provided pursuant to the TIA, whether or not the Notes are
governed by the TIA; provided, however, that any such information, documents or
reports required to be filed with the SEC 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 SEC; provided, however, that
delivery may be effected in accordance with the provisions of Rule 19a-1 under
the TIA if and during any time the Company is eligible thereunder; and provided
further, that the Company shall not be required to deliver to the Trustee any
material for which the Company has sought and received confidential treatment
by the SEC. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee’s receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers’ Certificates).



     Section 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on December 31, 2004) an Officers’
Certificate, stating whether or not to the best knowledge of the signers
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



37









 







Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.



     Section 4.04. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.



     Section 4.05. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, the City of New York, an office or agency
of the Trustee, Note Registrar, Paying Agent and Conversion Agent where Notes
may be presented or surrendered for payment, where Notes may be surrendered for
registration of transfer, exchange, purchase or conversion and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Corporate Trust Office and each office or agency of the
Trustee in the Borough of Manhattan, the City of New York, shall initially be
one such office or agency for all of the aforesaid purposes. The Company shall
give prompt written notice to the Trustee of the location, and of any change in
the location, of any such office or agency (other than a change in the location
of the office of 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 address of the Trustee set forth in
Section 12.02.



     The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes.



     Section 4.06. Delivery of Certain Information. At any time when the
Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the
request of a holder or any beneficial holder of Notes or shares of Common Stock
issued upon conversion thereof, the Company will promptly furnish or cause to
be furnished Rule 144A Information (as defined below) to such Holder or any
beneficial holder of Notes or holder of shares of Common Stock issued upon
conversion of Notes, or to a prospective purchaser of any such security
designated by any such holder, as the case may be, to the extent required to
permit compliance by such Holder or holder with Rule 144A under the Securities
Act in connection with the resale of any such security. “Rule 144A Information”
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act.



     Section 4.07. Existence. Subject to Article 5, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however,
that the Company shall not be required to preserve any such right if the
Company shall determine that the preservation thereof is



38









 







no longer desirable in the conduct of the business of the Company and that
the loss thereof is not disadvantageous in any material respect to the
Noteholders.



     Section 4.08. 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, however, that nothing in this
Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Significant Subsidiary and not disadvantageous in any material
respect to the Noteholders.



     Section 4.09. 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 stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection
with the issuance, transfer, exchange or conversion of any Notes or with
respect to this Indenture; provided, however, that, in the case of clauses (i)
and (ii), the Company shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim (A) if the failure
to do so will not, in the aggregate, have a material adverse impact on the
Company, or (B) if the amount, applicability or validity is being contested in
good faith by appropriate proceedings.



     Section 4.10. Liquidated Damages Notice. In the event that the Company
is required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Agreement, the Company will provide written notice
(“Liquidated Damages Notice”) to the Trustee of its obligation to pay
Liquidated Damages no later than fifteen days prior to the proposed payment
date for the Liquidated Damages, and the Liquidated Damages Notice shall set
forth the amount of Liquidated Damages to be paid by the Company on such
payment date. The Trustee shall not at any time be under any duty or owe a
responsibility to any holder of Notes to determine the Liquidated Damages, or
with respect to the nature, extent or calculation of the amount of Liquidated
Damages when made, or with respect to the method employed in such calculation
of the Liquidated Damages.



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ARTICLE 5

Successor Corporation




     Section 5.01. When Company May Merge Or Transfer Assets. The Company
shall not consolidate with, merge with or convert into any other person or
convey, transfer or lease all or substantially all of its properties and assets
to any Person, unless:



     (a) either (1) the Company shall be the continuing Person or
(2) the Person (if other than the Company) formed by such consolidation
or into which the Company is merged or the person which acquires by conveyance,
transfer or lease all or substantially all of the properties and assets of the
Company (i) shall be a Person (other than an individual) organized
and validly existing under the laws of the United States or any State thereof
or the District of Columbia and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company under the
Notes and this Indenture;



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



     (c) the Company shall have delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Article 5 and that all conditions precedent herein provided
for relating to such transaction have been satisfied.



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



     The successor person formed by such consolidation or into which the
Company is merged or the successor person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor had been named as the Company herein; and thereafter, except in
the case of a lease and obligations the Company may have under a supplemental
indenture pursuant to Section 10.11, the Company shall be discharged from all
obligations and covenants under this Indenture and the Notes. Subject to
Section 9.06, the Company, the Trustee and the successor person shall enter
into a supplemental indenture to evidence the succession and substitution of
such successor person and such discharge and release of the Company.



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ARTICLE 6

Defaults And Remedies




     Section 6.01. Events of Default. An “Event of Default” occurs if:



     (a) the Company fails to pay when due the principal of or premium, if any,
on any of the Notes at maturity, upon exercise of a repurchase right or
otherwise;



     (b) the Company fails to pay an installment of interest (including
Liquidated Damages, if any) on any of the Notes that continues for 30 days
after the date when due; provided that a failure to make any of the first six
scheduled interest payments on the Notes on the applicable Interest Payment
Date shall constitute an Event of Default with no grace or cure period (unless
the failure to make such payment results from the failure by the Trustee to
release such proceeds from the Collateral Account, provided such
failure is not caused by any act or omission by the Company);



     (c) the Company fails to deliver shares of Common Stock, together with
cash in lieu of fractional shares, when such Common Stock or cash in lieu of
fractional shares is required to be delivered upon conversion of a Note and
such failure continues for 10 days after such delivery date;



     (d) the Company fails to give notice regarding a Change of Control within
the time period specified in Section 3.02(c);



     (e) the Company fails to perform or observe any other term, covenant or
agreement contained in the Notes or this Indenture for a period of 60 days
after receipt by the Company of a Notice of Default (as defined below);



     (f) (i) the Company or any Significant Subsidiary fails to make any
payment by the end of the applicable grace period, if any, after the final
scheduled payment date for such payment with respect to any indebtedness for
borrowed money in an aggregate amount in excess of $5 million or (ii)
indebtedness for borrowed money of the Company or any Significant Subsidiary in
an aggregate amount in excess of $5 million shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or repurchased
(other than by regularly scheduled required prepayment) prior to the scheduled
maturity thereof as a result of a default with respect to such indebtedness, in
either case without such indebtedness referred to in subclause (i) or (ii) of
this clause (f) having been discharged, cured, waived, rescinded or annulled,
for a period of 30 days after receipt by the Company of a Notice of Default;



     (g) the Company, or any Significant Subsidiary, or any Subsidiaries of the
Company which in the aggregate would constitute a Significant Subsidiary
pursuant to or under or within the meaning of any Bankruptcy Law:




     (i) commences a voluntary case or proceeding;



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




     (iii) consents to the appointment of a Custodian of it or for any
substantial part of its property;




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




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




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



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




     (i) is for relief against the Company or any Significant Subsidiary
or any Subsidiaries of the Company which in the aggregate would
constitute a Significant Subsidiary in an involuntary case or proceeding,
or adjudicates the Company or any Significant Subsidiary or any
Subsidiaries of the Company which in the aggregate would constitute a
Significant Subsidiary insolvent or bankrupt;




     (ii) appoints a Custodian of the Company or any Significant
Subsidiary or any Subsidiaries of the Company which in the aggregate
would constitute a Significant Subsidiary or for any substantial part of
its or their properties; or




     (iii) orders the winding up or liquidation of the Company or any
Significant Subsidiary or any Subsidiaries of the Company which in the
aggregate would constitute a Significant Subsidiary;



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




     (i) the Pledge Agreement shall cease to be in full force and effect or
enforceable other than in accordance with its terms or fail to give the Trustee
the liens, rights, power and privileges purported to be created thereby.



     For purposes of Sections 6.01(g) and 6.01(h) above:




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




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



42









 





     A Default under clause (e) or (f) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding notify the Company and
the Trustee, of the Default and the Company does not cure such Default (and
such Default is not waived) within the time specified in clause (e) or (f)
above after actual receipt of such notice. Any such notice must specify the
Default, demand that it be remedied and state that such notice is a “Notice of
Default.”



     The Company shall deliver to the Trustee, within five Business Days of
becoming aware of the occurrence of an Event of Default, written notice
thereof. In addition, the Company shall deliver to the Trustee, within 30 days
after they become aware of the occurrence thereof, written notice of any event
which with the lapse of time would become an Event of Default under clause (e)
above, its status and what action the Company is taking or proposes to take
with respect thereto.



     Section 6.02. Acceleration. If an Event of Default (other than an Event
of Default specified in Section 6.01(g) or 6.01(h)) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding by notice to
the Company and the Trustee, may declare the Notes due and payable at their
principal amount together with accrued interest (including Liquidated Damages,
if any). Upon a declaration of acceleration, such principal and accrued and
unpaid interest to the date of payment shall be immediately due and payable.
If an Event of Default is cured prior to any such declaration by the Trustee or
the Holders, the Trustee and the Holders shall not be entitled to declare the
Notes due and payable as provided herein as a result of such cured Event of
Default and any such cured Event of Default shall be deemed waived by the
Holders and the Trustee.



     If an Event of Default specified in Sections 6.01(g) or 6.01(h) above
occurs and is continuing, then the principal and the accrued interest
(including Liquidated Damages, if any) on all the Notes shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholders.



     The Holders of a majority in aggregate principal amount of the Notes at
the time outstanding, by notice to the Trustee (and without notice to any other
Noteholder) may rescind or annul an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of the principal
and any accrued cash interest (including Liquidated Damages, if any) that have
become due solely as a result of acceleration and if all amounts due to the
Trustee under Section 7.06 have been paid. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.



     Section 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the principal, the premium, if any, and any accrued cash interest (including
Liquidated Damages, if any) on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.



43









 





     The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Notes or produce any of the Notes in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of, or acquiescence in, the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.



     Section 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Notes at the time outstanding, by notice to
the Trustee (and without notice to any other Noteholder), may waive an existing
Event of Default and its consequences except (1) an Event of Default described
in Section 6.01(a) or 6.01(b), (2) an Event of Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Noteholder affected or (3) an Event of Default which constitutes a failure to
convert any Note in accordance with the terms of Article 11. When an Event of
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Event of Default or impair any consequent right.



     Section 6.05. Control By Majority. The Holders of a majority in
aggregate principal amount of the Notes at the time outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is prejudicial
to the rights of other Noteholders or would involve the Trustee in personal
liability unless the Trustee is offered indemnity satisfactory to it against
loss, liability or expense.



     Section 6.06. Limitation On Suits. A Noteholder may not pursue any
remedy with respect to this Indenture or the Notes unless:




     (1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;




     (2) the Holders of at least 25% in aggregate principal amount of the
Notes at the time outstanding make a written request to the Trustee to
pursue the remedy;




     (3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;




     (4) the Trustee does not comply with the request within 60 days
after receipt of such notice, request and offer of security or indemnity;
and




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



44









 





     A Noteholder may not use this Indenture to prejudice the rights of any
other Noteholder or to obtain a preference or priority over any other
Noteholder.



     Section 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment
of the principal amount, premium, if any, Change of Control Purchase Price, the
Make-Whole Premium, if applicable, or any accrued cash interest (including
Liquidated Damages, if any) in respect of the Notes held by such Holder, on or
after the respective due dates expressed in the Notes or any Change of Control
Purchase Date, and to convert the Notes in accordance with Article 10, or to
bring suit for the enforcement of any such payment on or after such respective
dates or the right to convert, shall not be impaired or affected adversely
without the consent of such Holder.



     Section 6.08. Collection Suit by Trustee. If an Event of Default
described in Section 6.01(a) or 6.01(b) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount owing with respect to the Notes and the
amounts provided for in Section 7.06.



     Section 6.09. Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Notes or the property of the Company
or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal amount, Change of Control Purchase Price, any applicable
Make-Whole Premium or any accrued cash interest in respect 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 on the Company
for the payment of any such amount) shall be entitled and empowered, by
intervention in such proceeding or otherwise,



     (a) to file and prove a claim for the whole amount of the principal
amount, Change of Control Purchase Price, any applicable Make-Whole Premium or
any accrued cash interest and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel or any other amounts due the Trustee
under Section 7.06) and of the Holders allowed in such judicial proceeding, and



     (b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.06.




45









 








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




     Section 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:




     (1) to the Trustee for amounts due under Section 7.06;




     (2) to Noteholders for amounts due and unpaid on the Notes for the
principal amount, Change of Control Purchase Price or any accrued cash
interest (including Liquidated Damages, if any) as the case may be,
ratably, without preference or priority of any kind, according to such
amounts due and payable on the Notes; and




     (3) the balance, if any, to the Company.



     The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10. At least 15 days before such record
date, the Trustee shall mail to each Noteholder and the Company a notice that
states the record date, the payment date and the amount to be paid.



     Section 6.11. Undertaking For Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit
of an undertaking to pay the costs of the suit in the manner and to the extent
provided in the TIA, and the court in its discretion may assess reasonable
costs, including reasonable attorneys’ fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Notes at the
time outstanding.



     Section 6.12. Waiver Of Stay, Extension Or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit
or forgive the Company from paying all or any portion of the principal amount,
Change of Control Purchase Price, any applicable Make-Whole Premium or any
accrued cash interest (including Liquidated Damages, if any) in respect of
Notes, or any interest on such amounts, as contemplated herein, or which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power



46









 





herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.




ARTICLE 7

Trustee




     Section 7.01. Duties And Responsibilities Of The Trustee; During
Default; Prior To Default. The Trustee, prior to the occurrence of an Event of
Default hereunder and after the curing or waiving of all such 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
hereunder 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
reasonable person would exercise or use under the circumstances in the
conduct of his own affairs.



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



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




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




     (ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision 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;



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



     (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 direction of the
Holders pursuant to Section 6.05 relating to the time, method and place of
conducting any proceeding for any



47









 







remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.



     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.



     Section 7.02. Certain Rights of the Trustee. Subject to Section 7.01:



     (a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, Officers’ Certificate or
any other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, Note or other paper or document
(whether in its original or facsimile form) believed by it 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 selection and any advice
or Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken 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 trusts
or powers vested in it by this Indenture with 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
might be incurred therein or thereby;



     (e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture;



     (f) prior to the occurrence of an Event of Default hereunder and after the
curing or waiving of all such Events of Default, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, appraisal, bond, debenture, note, coupon, security, or other
paper or document unless requested in writing to do so by the Holders of not
less than a majority in aggregate principal amount of the Notes then
outstanding; provided that, if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms
of this Indenture, the Trustee may require



48









 





reasonable indemnity against such expenses or liabilities as a condition
to proceeding; the reasonable expenses of every such investigation shall be
paid by the Company or, if paid by the Trustee or any predecessor trustee,
shall be repaid by the Company upon demand;




     (g) 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 not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;



     (h) the Trustee shall not be required to take notice or be deemed to have
notice of any Event of Default,
except failure of the Company to cause to be made any of the payments required
to be made to the Trustee, unless the Trustee shall be specifically notified by
a writing of such default by the Company or by the Holders of at least 25%
aggregate principal amount of the Notes then outstanding delivered to the
Corporate Trust Office of the Trustee and, in the absence of such notice so
delivered the Trustee may conclusively assume no default exists;



     (i) the rights, privileges, protections, immunities and benefits given to
the Trustee, 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;



     (j) before taking any action or refraining from taking any action
under this Indenture, the Trustee may require that indemnity satisfactory to it
be furnished for the reimbursement of all expenses to which it may be put and
to protect it against all liability, including costs incurred in defending
itself against any and all charges, claims, complaints, allegations, assertions
or demands of any nature whatsoever, except liability which is adjudicated to
be a result of the Trustee’s negligence or willful misconduct in connection
with any such action; and



     (k) whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct of, or affecting the liability of, or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.02.



     Section 7.03. Trustee not Responsible for Recitals, Dispositions of
Notes or Application of Proceeds Thereof. The recitals contained herein and in
the Notes, except the Trustee’s certificates 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 representation 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 of the
Notes or of the proceeds thereof.



     Section 7.04. Trustee and Agents May Hold Notes; Collections, Etc.. The
Trustee or any agent of the Company or the Trustee, in its individual or any
other



49









 







capacity, may become the owner or pledgee of Notes with the same rights it
would have if it were not the Trustee or such agent and, subject to Sections
7.08 and 7.13, if operative, may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the same rights it
would have if it were not the Trustee or such agent.



     Section 7.05. Moneys Held by Trustee. Subject to the provisions of
Section 8.04 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Company or the Trustee shall be under any liability for interest on any
moneys received by it hereunder. Under no circumstances shall the Trustee be
liable in its individual capacity for the obligations evidenced by the Notes.
In accepting the trust hereby created, the Trustee acts solely as Trustee for
the Holders of the Notes and not in its individual capacity and all persons,
including without limitation the Holders of Notes and the Company having any
claim against the Trustee arising from this Indenture shall look only to the
funds and accounts held by the Trustee hereunder for payment except as
otherwise provided herein.



     Section 7.06. Compensation and Indemnification of Trustee and Its Prior
Claim. The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee
of an express trust) to be agreed to in writing by the Trustee and the Company,
and the Company covenants and agrees to pay or reimburse the Trustee and each
predecessor Trustee upon its request for all expenses, disbursements and
advances incurred or made by or on behalf of it in accordance with any of the
provisions of this Indenture (including (i) the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ and (ii) interest at the prime rate on any
disbursements and advances made by the Trustee and not paid by the Company
within 5 days after receipt of an invoice for such disbursement or advance)
except any such expense, disbursement or advance as shall be determined by a
court of competent jurisdiction to have been caused by its own negligence or
bad faith. The Company also covenants to fully indemnify each of the Trustee,
each predecessor Trustee, any Authenticating Agent and any officer, director,
employee or agent of the Trustee, each such predecessor Trustee or any such
Authenticating Agent for, and to hold it harmless against, any and all loss,
liability, claim, damage or expense (including legal fees and expenses)
incurred without negligence or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises. The obligations of the Company under this Section 7.06 to compensate
and indemnify the Trustee, each predecessor Trustee, any Authenticating Agent
and any officer, director, employee or agent of the Trustee, each such
predecessor Trustee or any such Authenticating Agent and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall



50









 







survive the satisfaction and discharge of this Indenture. Such additional
indebtedness shall be a senior claim 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, and the Notes are hereby
effectively subordinated to such senior claim to such extent. The provisions of
this Section 7.06 shall survive the termination of this Indenture and the
resignation or removal of the Trustee. The Trustee’s fees and expenses are
intended to constitute an “Administrative Expense” under the Bankruptcy Law.



     No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if repayment of such funds or adequate indemnity against such
risk or liability is not assured to its satisfaction.



     Section 7.07. Right of Trustee to Rely on Officers’ Certificate, Etc..
Subject to Sections 7.01 and 7.02, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers’ Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture upon the faith thereof.



     Section 7.08. Conflicting Interests. If the Trustee has or shall
acquire a conflicting interest within the meaning of the TIA, 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 TIA.



     Section 7.09. Persons Eligible for Appointment as Trustee. The Trustee
shall at all times be a corporation or banking association having a combined
capital and surplus of at least $50,000,000. If such corporation or banking
association publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section 7.09, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 7.09, the Trustee shall resign immediately in the manner and
with the effect specified in Section 7.10.



     Section 7.10. Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may at any
time resign with respect to one or more or all series of Notes by giving
written notice of resignation to the Company and by mailing notice thereof by
first class mail to the Holders of Notes at their last addresses as they shall
appear on the Note Register. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee or trustees by written
instrument in duplicate, executed by authority of the Board of Directors, one
copy



51









 







of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee or trustees. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the
mailing of such notice of resignation, the resigning trustee may petition, at
the expense of the Company, any court of competent jurisdiction for the
appointment of a successor trustee, or any Noteholder who has been a bona fide
Holder of a Note for at least six months may, subject to the provisions of
Section 7.11, 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 the provisions of Section
7.08 with respect to any Notes after written request therefor by the
Company or by any Noteholder who has been a bona fide Holder of a Note
for at least six months; or




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




     (iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator 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; or




     (iv) the Company shall determine that the Trustee has failed to
perform its obligations under this Indenture in any material respect;



then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.11, any Noteholder who has been a bona fide Holder of a
Note for at least six 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. Such court may thereupon,
after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee. If no successor trustee shall have
been appointed and have accepted appointment within 30 days after a notice of
removal has been given, the removed trustee may petition a court of competent
jurisdiction for the appointment of 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 appoint a
successor trustee by delivering to the Trustee so removed, to the successor
trustee so appointed and to the Company the evidence provided for in Section
1.05 of the action in that regard taken by the Noteholders.



52









 





     (d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section 7.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.11.



     Section 7.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 7.10 shall execute and
deliver to the Company and to the 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 rights,
powers, duties and obligations of its predecessor hereunder, with like effect
as if originally named as trustee hereunder; but, nevertheless, on the written
request of the Company or of the successor trustee, upon payment of its charges
then unpaid, the trustee ceasing to act shall pay over to the successor trustee
all moneys at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor trustee all such rights, powers,
duties and obligations. 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 prior claim upon all
property or funds held or collected by such trustee to secure any amounts then
due it pursuant to the provisions of Section 7.06.



     No successor trustee shall accept appointment as provided in this Section
7.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 7.08 and eligible under the
provisions of Section 7.09.



     Upon acceptance of appointment by any successor trustee as provided in
this Section 7.11, the Company shall mail notice thereof by first class mail to
the Holders of Notes at their last addresses as they shall appear in the Note
Register. If the acceptance of appointment is substantially contemporaneous
with the resignation, then the notice called for by the preceding sentence may
be combined with the notice called for by Section 7.10. If the Company fails to
mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed
at the expense of the Company.



     Section 7.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation or banking association into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
banking association succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder;
provided that such corporation or banking association shall be qualified under
the provisions of Section 7.08 and eligible under the provisions of Section
7.09, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding. 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




53










 





Trustee may adopt the certificate of
authentication of any predecessor Trustee or Authenticating Agent 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 either in
the name of any predecessor hereunder or in the name of the successor Trustee;
and in all such cases such certificate shall have the full force and effect
that this Indenture provides for the certificate of authentication of the
Trustee; provided that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.




     Section 7.13.
Preferential Collection of Claims Against the Company. 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
TIA regarding the collection of the claims against the Company (or any such
other obligor).



     Section 7.14. Reports By The Trustee. (a) Within sixty (60) days after
May 15 of each year commencing with the year 2004, the Trustee shall transmit
to Holders and other persons such reports dated as of May 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 TIA.



     (b) A copy of each such report shall, at the time of such transmission to
Noteholders, be furnished to the Company and be filed by the Trustee with each
stock exchange upon which the Notes are listed and also with the SEC. The
Company agrees to notify the Trustee when and as the Notes become admitted to
trading on any national securities exchange or become delisted therefrom.



     Section 7.15. Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. The Trustee shall transmit to the Noteholders, as the
names and addresses of such Holders appear on the Note Register, notice by mail
of all Defaults which have occurred, such notice to be transmitted within 90
days after the occurrence thereof, unless such defaults shall have been cured
before the giving of such notice; provided that, except in the case of Default
in the payment of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on any of the Notes when due or in the payment of
any repurchase obligation, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors or trustees and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
best interests of the Noteholders.



ARTICLE 8



DISCHARGE OF INDENTURE




     Section 8.01. Discharge Of Indenture. When all outstanding Notes will
become due and payable within one year of their Stated Maturity and the Company
has deposited



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with the Trustee cash sufficient to pay and discharge all
outstanding Notes on the date of their Stated Maturity, then the Company may
discharge its obligations under this Indenture while Notes remain outstanding;
provided that provisions of Section 2.04, Section 2.05, Section 2.06, Section
2.07, Section 2.08, Section 4.01, Section 4.05, Section 7.06, Article 10 and
this Article 8 shall survive until the Notes have been paid in full. The
Trustee shall join in the execution of a document prepared by the Company
acknowledging satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers’ Certificate and Opinion of Counsel as
required by Section 12.04 and at the cost and expense of the Company; 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. The
Company will remain obligated to issue shares of its Common
Stock upon conversion of the Notes until such maturity as described under
Article 10.




     Section 8.02. [intentionally Omitted].



     Section 8.03. Paying Agent to Repay Monies Held. Upon the discharge of
this Indenture, all monies then held by any Paying Agent of the Notes (other
than the Trustee) shall, upon written request of the Company, be repaid to it
or paid to the Trustee, and thereupon such Paying Agent shall be released from
all further liability with respect to such monies.



     Section 8.04. Return Of Unclaimed Monies. Subject to the requirements
of applicable law, any monies deposited with or paid to the Trustee or the
Paying Agent 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 or the Paying Agent on written demand and
all liability of the Trustee or the Paying Agent 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.



ARTICLE 9



SUPPLEMENTAL INDENTURES




     Section 9.01. Without Consent Of Holders. The Company and the Trustee
may, from time to time and at any time, enter into an indenture or indentures
supplemental hereto without the consent of any Noteholder for one or more of
the following purposes:



     (a) adding to the Company’s covenants for the benefit of the Holders;



     (b) surrendering any right or power conferred upon the Company, including,
without limitation, the right to pay the Purchase Price upon Change of Control
and/or Make-Whole Premium in shares of the Company’s Common Stock;



55









 





     (c) providing for the assumption of the Company’s obligations to the
Holders in the case of a merger, consolidation, conveyance, transfer or lease
in accordance with Article 5;



     (d) increasing the Conversion Rate or reducing the Conversion Price;
provided that the increase or reduction will not adversely affect the interests
of Holders in any material respect;



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



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



     (g) curing any ambiguity or correcting or supplementing any defective
provision contained in this Indenture; provided that such modification or
amendment does not adversely affect the interests of the Holders in any
material respect; provided, however, that any change to conform this Indenture
to the Description of the Notes contained in the Offering Memorandum shall be
deemed not to adversely affect the interests of the Holders of the Notes in any
material respect;



     (h) adding or modifying any other provisions which the Company and the
Trustee may deem necessary or desirable and which will not adversely affect the
interests of the Holders in any material respect;



     (i) complying with the requirements regarding merger or transfer of
assets; or



     (j) providing for uncertificated Notes in addition to the certificated
Notes so long as such uncertificated Notes are in registered form for purpose
of the Internal Revenue Code of 1986.



Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Agreement.




     Section 9.02. With Consent Of Holders. With the written consent of the
Holders of at least a majority in aggregate principal amount of the Notes at
the time outstanding, the Company 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 change 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. However, without the consent of each
Noteholder so affected, a supplemental indenture may not:



56









 





     (a) change the maturity of the principal of or any installment of interest
on any Note (including any payment of Liquidated Damages);



     (b) reduce the principal amount of, or any premium or interest on
(including any payment of Liquidated Damages), any Note;



     (c) change the currency of payment of such Note or interest thereon;



     (d) impair the right to institute suit for the enforcement of any payment
on or with respect to any Note;



     (e) modify the Company’s obligations to maintain an office or agency in
New York City;



     (f) except as otherwise permitted or contemplated by provisions concerning
corporate reorganizations, adversely affect the repurchase option of Holders
upon a Change of Control or the conversion rights of Holders;



     (g) modify Article 11 in a manner that adversely affects the interest of
the Holders; or



     (h) reduce the percentage in aggregate principal amount of Notes
outstanding necessary to modify or amend this Indenture or to waive any past
default.



     It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent approves the substance
thereof.



     After a supplemental indenture under this Section 9.02 becomes effective,
the Company shall mail to each Holder a notice briefly describing the
supplemental indenture.



     Section 9.03. Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA; provided
that this Section 9.03 shall not require such supplemental indenture or the
Trustee to be qualified under the TIA prior to the time such qualification is
in fact required under the terms of the TIA or the Indenture has been qualified
under the TIA, 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
TIA or the Indenture has been qualified under the TIA.



     Section 9.04. Revocation and Effect of Consents, Waivers and Actions.
Until a supplemental indenture, waiver or other action by Holders becomes
effective, a consent
thereto by a Holder of a Note hereunder is a continuing consent by the
Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same obligation as the consenting Holder’s Note, even if notation
of the consent, waiver or action is not made on the Note. However, any such
Holder or subsequent Holder may revoke the consent, waiver or action as to such
Holder’s Note or portion of the Note if the Trustee



57









 





receives the notice of
revocation before the date the supplemental indenture, waiver or action becomes
effective. After a supplemental indenture, waiver or action becomes effective,
it shall bind every Noteholder.




     Section 9.05. Notation on or Exchange of Notes. Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Notes so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee or an Authenticating Agent in
exchange for outstanding Notes.



     Section 9.06. Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9 if
the amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall be provided with, and (subject to the provisions of Section
7.01) shall be fully protected in relying upon, an Officers’ Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.



     Section 9.07. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Notes theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.



ARTICLE 10



CONVERSION




     Section 10.01. Conversion Right and Conversion Price. Subject to and
upon compliance with the provisions of this Article, at the option of the
Holder thereof, any Note or any portion of the principal amount thereof which
is $1,000 or an integral multiple of $1,000 may be converted at the principal
amount thereof, or of such portion thereof, into duly authorized, fully paid
and nonassessable shares of Common Stock, at the Conversion Price, determined
as hereinafter provided, in effect at the time of conversion. Such conversion
right shall expire at the close of business on the final maturity date of the
Notes.



     In the case of a Change of Control for which the Holder exercises its
repurchase right with respect to a Note or portion thereof, such conversion
right in respect of the Note or portion thereof shall expire at the close of
business on the Business Day immediately preceding the Change of Control
Purchase Date.



58









 





     The price at which shares of Common Stock shall be delivered upon
conversion (the “Conversion Price”) shall be initially equal to $4.00 per share
of Common Stock, which is equal to a conversion rate of 250 shares of Common
Stock per $1,000 principal amount of Notes (the “Conversion Rate”). The
Conversion Price shall be adjusted in certain instances as provided in
paragraphs (a), (b), (c), (d), (e), (f), (h) and (i) of Section 10.04 hereof.



     Section 10.02. Exercise of Conversion Right. To exercise the conversion
right, the Holder of any Note to be converted shall surrender such Note duly
endorsed or assigned to the Company or in blank, at the office of any
Conversion Agent, accompanied by a duly signed conversion notice substantially
in the form attached to the Note to the Company stating that the Holder elects
to convert such Note or, if less than the entire principal amount thereof is to
be converted, the portion thereof to be converted.



     Notes surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business on the next
succeeding Interest Payment Date shall be accompanied by payment in New York
Clearing House funds or other funds acceptable to the Company of an amount
equal to the interest to be received on such Interest Payment Date on the
principal amount of Notes being surrendered for conversion.



     Notes shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Notes for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Notes as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall cause to be issued and delivered to such Conversion Agent a certificate
or certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share as
provided in Section 10.03 hereof.



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



     If shares of Common Stock to be issued upon conversion of a Note that is a
Restricted Security (a “Restricted Note”), or securities to be issued upon
conversion of a Restricted Note in part only, are to be registered in a name
other than that of the Holder of such Restricted Note, such Holder must deliver
to the Conversion Agent a certificate
in substantially the form of Exhibit B-1 hereto, dated the date of
surrender of such Restricted Note and signed by such Holder, as to compliance
with the restrictions on transfer applicable to such Restricted Note. Neither
the Trustee nor any Conversion Agent, Note Registrar or transfer agent shall be
required to register in a name other than



59









 





that of the Holder of Notes or shares
of Common Stock issued upon conversion of any such Restricted Note not so
accompanied by a properly completed certificate.




     Section 10.03. Fractions of Shares. No fractional shares of Common
Stock shall be issued upon conversion of any Note or Notes. If more than one
Note shall be surrendered for conversion at one time by the same Holder, the
number of full shares which shall be issued upon conversion thereof shall be
computed on the basis of the aggregate principal amount of the Notes (or
specified portions thereof) so surrendered. Instead of any fractional share of
Common Stock which would otherwise be issued upon conversion of any Note or
Notes (or specified portions thereof), the Company shall pay a cash adjustment
in respect of such fraction (calculated to the nearest one-100th of a share) in
an amount equal to the same fraction of the quoted price of the Common Stock as
of the Trading Day preceding the date of conversion.



     Section 10.04. Adjustment of Conversion Price. The Conversion Price
shall be subject to adjustments, calculated by the Company, from time to time
as follows:



     (a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction:




     (1) the numerator of which shall be the number of shares of Common
Stock outstanding at the close of business on the Record Date (as defined
in Section 10.04(g)) fixed for such determination, and




     (2) the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution.



Such reduction shall become effective immediately after the opening of business
on the day following the Record Date. For the purpose of this paragraph (a),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company. If any dividend or distribution of the type described
in this Section 10.04(a) is declared but not so paid or made, the Conversion
Price shall again be adjusted to the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.




     (b) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective
shall be proportionately reduced, and conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately increased, such



60









 





reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.




     (c) 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
Closing Price on the Trading Day immediately preceding
the time of announcement of such issuance (“Market Price”), the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
such Record Date by a fraction:




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




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



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




     (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
(other than any dividends or distributions to which Section 10.04(a) applies)
or evidences of its indebtedness, cash or other assets, including securities,
but excluding (1) any rights or



61









 





warrants referred to in Section 10.04(c), (2)
any stock, securities or other property or assets (including cash) distributed
in connection with a reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance to which Section 10.11 hereof
applies and (3) dividends and distributions paid exclusively in cash (the
securities described in foregoing clauses (1), (2) and (3) hereinafter in this
Section 10.04(d) called the “excluded securities”), then, in each such case
(unless the Company elects to reserve such securities for distribution to the
Noteholders upon the conversion of the Notes so that any such Holder converting
Notes will receive upon such conversion, in addition to the shares of Common
Stock to which such Holder is entitled, the amount and kind of such securities
which such Holder would have received if such Holder had converted its Notes
into Common Stock immediately prior to the Record Date), subject to the second
succeeding paragraph of this Section 10.04(d), the Conversion Price shall be
adjusted so that the same shall be equal to the price determined by multiplying
the Conversion Price in effect immediately prior to the close of business on
the Record Date (as defined in Section 10.04(g)) with respect to such
distribution by a fraction:





     (1) the numerator of which shall be the Current Market Price
(determined as provided in Section 10.04(g)) on such Record Date less the
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and set forth in a Board Resolution) on
such Record Date of the portion of the securities so distributed (other
than excluded securities) applicable to one share of Common Stock
(determined on the basis of the number of shares of the Common Stock
outstanding on the Record Date), and




     (2) the denominator of which shall be such Current Market Price.



Such reduction shall become effective immediately prior to the opening of
business on the day following the Record Date. However, in the event that the
then fair market value (as so determined) of the portion of the securities so
distributed (other than excluded securities) applicable to one share of Common
Stock is equal to or greater than the Current Market Price on the Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each Holder shall have the right to receive upon conversion of a Note (or any
portion thereof) the amount of securities so distributed (other than excluded
securities) such Holder would have received had such Holder converted such Note
(or portion thereof) immediately prior to such Record Date. In the event that
such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.




     If the Board of Directors determines the fair market value of any
distribution for purposes of this Section 10.04(d) by reference to the actual
or when issued trading market for any securities comprising all or part of such
distribution (other than excluded securities), it must in doing so consider the
prices in such market over the same period
(the “Reference Period”) used in computing the Current Market Price
pursuant to Section 10.04(g) to the extent possible, unless the Board of
Directors in a Board Resolution determines in good faith that determining the
fair market value during the Reference Period would not be in the best interest
of the Holder.



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     Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company’s Capital Stock (either initially or under certain circumstances),
which rights or warrants, until the occurrence of a specified event or events
(“Trigger Event”):




	(i)	 	are deemed to be transferred with such shares of Common Stock;
	 
	(ii)	 	are not exercisable; and
	 
	(iii)	 	are also issued in respect of future issuances of Common
Stock,





shall be deemed not to have been distributed for purposes of this Section
10.04(d) (and no adjustment to the Conversion Price under this Section 10.04(d)
will be required) until the occurrence of the earliest Trigger Event. If such
right or warrant is subject to subsequent events, upon the occurrence of which
such right or warrant shall become exercisable to purchase different
securities, evidences of indebtedness or other assets or entitle the holder to
purchase a different number or amount of the foregoing or to purchase any of
the foregoing at a different purchase price, then the occurrence of each such
event shall be deemed to be the date of issuance and Record Date with respect
to a new right or warrant (and a termination or expiration of the existing
right or warrant without exercise by the holder thereof). In addition, in the
event of any distribution (or deemed distribution) of rights or warrants, or
any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto, that resulted in an adjustment to the
Conversion Price under this Section 10.04(d):





     (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any
holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or
repurchase price received by a holder of Common Stock with respect
to such rights or warrant (assuming such holder had retained such
rights or warrants), made to all holders of Common Stock as of the
date of such redemption or repurchase, and




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



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




     For purposes of this Section 10.04(d) and Sections 10.04(a), 10.04(b) and
10.04(c), any dividend or distribution to which this Section 10.04(d) is
applicable that



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also includes shares of Common Stock, a subdivision or
combination of Common Stock to which Section 10.04(b) applies, or rights or
warrants to subscribe for or purchase shares of Common Stock to which Section
10.04(c) applies (or any combination thereof), shall be deemed instead to be:





     (1) a dividend or distribution of the evidences of indebtedness,
assets, shares of Capital Stock, rights or warrants other than such
shares of Common Stock, such subdivision or combination or such rights or
warrants to which Sections 10.04(a), 10.04(b) and 10.04(c) apply,
respectively (and any Conversion Price reduction required by this Section
10.04(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, such
subdivision or combination or such rights or warrants (and any further
Conversion Price reduction required by Sections 10.04(a), 10.04(b) and
10.04(c) with respect to such dividend or distribution shall then be
made), except:




     (A) the Record Date of such dividend or distribution shall
be substituted as (x) “the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution”, “Record Date fixed for such determinations” and
“Record Date” within the meaning of Section 10.04(a), (y) “the
day upon which such subdivision becomes effective” and “the day
upon which such combination becomes effective” within the meaning
of Section 10.04(b), and (z) as “the date fixed for the
determination of stockholders entitled to receive such rights or
warrants”, “the Record Date fixed for the determination of the
stockholders entitled to receive such rights or warrants” and
such “Record Date” within the meaning of Section 10.04(c), and




     (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed “outstanding at the close of
business on the date fixed for such determination” within the
meaning of Section 10.04(a) and any reduction or increase in the
number of shares of Common Stock resulting from such subdivision
or combination shall be disregarded in connection with such
dividend or distribution.



     (e) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance to which Section 10.11 hereof applies or as
part of a distribution referred to in Section 10.04(d) hereof), then and in
each such case, immediately after the close of business on such date, the
Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such Record Date by a
fraction:




     (i) the numerator of which shall be equal to the Current Market
Price on the Record Date less an amount equal to the quotient of (x) such
amount



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distributed to all holders of its Common Stock and (y) the number
of shares of Common Stock outstanding on the Record Date, and




     (ii) the denominator of which shall be equal to the Current Market
Price on such date.



However, in the event that the then fair market value (as so determined) of the
portion of the securities so distributed (other than excluded securities)
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive
upon conversion of a Note (or any portion thereof) the amount of cash such
Holder would have received had such Holder converted such Note (or portion
thereof) immediately prior to such Record Date. In the event that such dividend
or distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.




     (f) In case a tender offer made by the Company or any of its Subsidiaries
for all or any portion of the Common Stock shall expire and such tender offer
(as amended upon the expiration thereof) shall require the payment to
stockholders (based on the acceptance (up to any maximum specified in the terms
of the tender offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and set forth in a Board
Resolution) that combined together with the aggregate of the cash plus the fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and set forth in a Board Resolution), as of the expiration
of such tender offer, of other consideration payable in respect of any other
tender offers, by the Company or any of its Subsidiaries for all or any portion
of the Common Stock expiring within the 12 months preceding the expiration of
such tender offer and in respect of which no adjustment pursuant to this
Section 10.04(f) has been made exceeds 10% of the product of the Current Market
Price (determined as provided in Section 10.04(g)) as of the last time (the
“Expiration Time”) tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to close of business on the date of the Expiration Time by a
fraction:




     (i) the numerator of which shall be the number of shares of Common
Stock outstanding (including any tendered shares) at the Expiration Time
multiplied by the Current Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time, and




     (ii) the denominator 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



65









 





of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed
so accepted, up to any such maximum, being referred to as the “Purchased
Shares”) and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) on the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time.



Such reduction (if any) shall become effective immediately prior to the opening
of business on the day following the Expiration Time. In the event that the
Company or any such Subsidiary, as the case may be, is obligated to purchase
shares pursuant to any such tender offer, but the Company or any such
Subsidiary, as the case may be, is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made. If the application of
this Section 10.04(f) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer under this
Section 10.04(f).




     (g) For purposes of this Section 10.04, the following terms shall have the
meanings indicated:




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




     (i) the “ex” date (as hereinafter defined) for any event (other than
the issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 10.04(a), (b),
(c), (d), (e) or (f) occurs during such ten consecutive Trading Days, the
Closing Price for each Trading Day prior to  the “ex” date for such
other event shall be adjusted by multiplying such Closing Price by the
same fraction by which the Conversion Price is so required to be adjusted
as a result of such other event;




     (ii) the “ex” date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to
the Conversion Price pursuant to Section 10.04(a), (b), (c), (d), (e) or
(f) occurs on or after the “ex” date for the issuance or distribution
requiring such computation and prior to the day in question, the Closing
Price for each Trading Day on and after the “ex” date for such other
event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required
to be adjusted as a result of such other event; and




     (iii) the “ex” date for the issuance or distribution requiring such
computation is prior to the day in question, after taking into account
any adjustment required pursuant to clause (i)or (ii) of this proviso,
the Closing Price for each Trading Day on or after such “ex” date shall
be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors in a manner consistent
with any determination of such value



66









 





for purposes of Section 10.04(d) or
(f), whose determination shall be conclusive and set forth in a Board
Resolution) of the evidences of indebtedness, shares of Capital Stock or
assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such “ex” date.



     For purposes of any computation under Section 10.04(f), the Current Market
Price of the Common Stock on any date shall be deemed to be the average of the
daily Closing Prices per share of Common Stock for such day and the next two
succeeding Trading Days; provided, however, that if the “ex” date for any event
(other than the tender offer requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 10.04(a), (b), (c), (d),
(e) or (f) occurs on or after the Expiration Time for the tender offer
requiring such computation and prior to the day in question, the Closing Price
for each Trading Day on and after the “ex” date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal of the fraction by
which the Conversion Price is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term “ex” date, when used:




     (A) with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the
Closing Price was obtained without the right to receive such
issuance or distribution;




     (B) with respect to any subdivision or combination of shares
of Common Stock, means the first date on which the Common Stock
trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective,
and




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



Notwithstanding the foregoing, whenever successive adjustments to the
Conversion Price are called for pursuant to this Section 10.04, such
adjustments shall be made to the Current Market Price as may be necessary or
appropriate to effectuate the intent of this Section 10.04 and to avoid unjust
or inequitable results as determined in good faith by the Board of Directors.




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




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



67









 





property (whether such date is fixed by the
Board of Directors or by statute, contract or otherwise).



     (h) The Company may make such increases in the Conversion Rate, in
addition to those required by Section 10.04(a), (b), (c), (d), (e) or (f), as
the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.



     To the extent permitted by applicable law, the Company from time to time
may increase the Conversion Rate by any amount for any period of time if the
period is at least 20 days and the reduction is irrevocable during the period
and the Board of Directors determines in good faith that such reduction would
be in the best interests of the Company, which determination shall be
conclusive and set forth in a Board Resolution. Whenever the Conversion Price
is reduced pursuant to the preceding sentence, the Company shall mail to the
Trustee and each Holder at the address of such Holder as it appears in the Note
Register a notice of the increase at least 15 days prior to the date the
increased Conversion Rate takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.



     (i) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section
10.04(i) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 10
shall be made by the Company and shall be made to the nearest one hundredth of
a cent or to the nearest one hundredth of a share, as the case may be. No
adjustment need be made for a change in the par value or no par value of the
Common Stock.



     (j) In any case in which this Section 10.04 provides that an adjustment
shall become effective immediately after a Record Date for an event, the
Company may defer until the occurrence of such event (i) issuing to the Holder
of any Note converted after such Record Date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment and (ii)
paying to such holder any amount in cash in lieu of any fraction pursuant to
Section 10.03 hereof.



     (k) For purposes of this Section 10.04, 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 10.05. Notice of Adjustments of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided (other than in the case of an adjustment



68









 





pursuant to the second paragraph of Section 10.04(h) for which the
notice required by such paragraph has been provided), the Company shall
promptly file with the Trustee and any Conversion Agent other than the Trustee
an Officers’ Certificate setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based.
Promptly after delivery of such Officers’ Certificate, the Company shall
prepare a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective, and shall mail such notice to each Holder at the
address of such Holder as it appears in the Note Register within 20 days of the
effective date of such adjustment. Failure to deliver such notice shall not
effect the legality or validity of any such adjustment.



     Section 10.06. Notice Prior to Certain Actions. In case at any time
after the date hereof:





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




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




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




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



the Company shall cause to be filed at each office or agency maintained for the
purpose of conversion of Notes pursuant to Section 4.03 hereof, and shall cause
to be provided to the Trustee and all Holders in accordance with Section 12.02
hereof, at least 20 days (or 10 days in any case specified in clause (1) or (2)
above) prior to the applicable record or effective date hereinafter specified,
a notice stating:




     (A) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, or, if a
record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or



69









 






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



     Neither the failure to give such notice nor any defect therein shall
affect the legality or validity of the proceedings or actions described in
clauses (1) through (4) of this Section 10.06.



     Section 10.07. Company to Reserve Common Stock. The Company shall at
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Notes, the full number of shares of fully paid and nonassessable
Common Stock then issuable upon the conversion of all Notes outstanding.



     Section 10.08. Taxes on Conversions. Except as provided in the next
sentence, the Company will pay any and all taxes (other than taxes on income)
and duties that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Notes pursuant hereto. A Holder delivering a Note
for conversion shall be liable for and will be required to pay any tax or duty
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Note or Notes to be converted, and no such issue or delivery shall be made
unless the Person requesting such issue has paid to the Company the amount of
any such tax or duty, or has established to the satisfaction of the Company
that such tax or duty has been paid.



     Section 10.09. Covenant as to Common Stock. The Company covenants that
all shares of Common Stock which may be issued upon conversion of Notes will
upon issue be fully paid and nonassessable and, except as provided in Section
10.08, the Company will pay all taxes, liens and charges with respect to the
issue thereof.



     Section 10.10. Cancellation of Converted Notes. All Notes delivered for
conversion shall be delivered to the Trustee to be canceled by or at the
direction of the Trustee, which shall dispose of the same as provided in
Section 2.11.



     Section 10.11. Effect of Reclassification, Consolidation, Merger or
Sale. If any of following events occur, namely:




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




70









 






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




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



the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee and the Company a supplemental indenture (which
shall comply with the TIA as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so
comply) providing that such Note shall be convertible into the kind and amount
of shares of stock and other securities or property or assets (including cash)
which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance had such Notes been converted into Common Stock
immediately prior to such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, merger, consolidation, statutory share exchange, 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 10.11 the kind and amount of securities,
cash or other property receivable upon such reclassification, change, merger,
consolidation, statutory share exchange, 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 10. If, in
the case of any such reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance, the stock or other securities
and assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, then such supplemental indenture shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holders of the Notes as the Board of Directors
shall reasonably
consider necessary by reason of the foregoing, including to the extent
practicable the provisions providing for the repurchase rights set forth in
Section 3.05 hereof.



     The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at the address of such Holder as it
appears on the Note



71









 





Register, within 20 days after execution thereof. Failure
to deliver such notice shall not affect the legality or validity of such
supplemental indenture.




     The above provisions of this Section 10.11 shall similarly apply to
successive reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.



     If this Section 10.11 applies to any event or occurrence, Section 10.04
hereof shall not apply.



     Section 10.12. Responsibility of Trustee for Conversion Provisions. The
Trustee, subject to the provisions of Section 7.01 hereof, and any Conversion
Agent shall not at any time be under any duty or responsibility to any Holder
of Notes to determine whether any facts exist which may require any adjustment
of the Conversion Price, or with respect to the nature or intent of any such
adjustments when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same. Neither
the Trustee, subject to the provisions of Section 7.01 hereof, nor any
Conversion Agent shall be accountable with respect to the validity or value (of
the kind or amount) of any Common Stock, or of any other securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and it or they do not make any representation with respect thereto.
Neither the Trustee, subject to the provisions of Section 7.01 hereof, nor any
Conversion Agent shall be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of stock or share
certificates or other securities or property upon the surrender of any Note for
the purpose of conversion; and the Trustee, subject to the provisions of
Section 7.01 hereof, and any Conversion Agent shall not be responsible or
liable for any failure of the Company to comply with any of the covenants of
the Company contained in this Article.




ARTICLE 11



SECURITY




     Section 11.01. Security. (a) At the Closing Date, the Company shall (i)
enter into the Pledge Agreement and comply with the terms and provisions
thereof and (ii) purchase the Pledged Securities to be pledged to the
Collateral Agent for the benefit of the Trustee and the ratable benefit of the
Holders in such amount as will be sufficient upon receipt of scheduled interest
and principal payments of such Pledged Securities, in the opinion of the
Company’s independent public accountants, or another nationally recognized firm
of independent public accountants selected by the Company, to provide for
payment in full of the first six scheduled interest payments due on the Notes.
The Pledged Securities shall be pledged by the Company to the Collateral Agent
for the benefit of the Trustee
and the ratable benefit of the Holders and shall be held by the Collateral
Agent in the Collateral Account pending disposition pursuant to the Pledge
Agreement.



     (b) Each Holder, by its acceptance of a Note, consents and agrees to the
terms of the Pledge Agreement (including, without limitation, the provisions
providing for



72









 





foreclosure and release of the Pledged Securities) as the same
may be in effect or may be amended from time to time in writing by the parties
thereto (provided that no amendment that would materially adversely affect the
rights of the Holders may be effected without the consent of each Holder
affected thereby), and authorizes and directs the Trustee and the Collateral
Agent to enter into the Pledge Agreement and to perform its respective
obligations and exercise its respective rights thereunder in accordance
therewith. The Company will do or cause to be done all such acts and things as
may be necessary or proper, or as may be required by the provisions of the
Pledge Agreement, to assure and confirm to the Trustee and the Collateral Agent
the security interest in the Pledged Securities contemplated hereby, by the
Pledge Agreement or any part thereof, as from time to time constituted, so as
to render the same available for the security and benefit of this Indenture and
of the Notes secured hereby, according to the intent and purpose herein
expressed. The Company shall take, or shall cause to be taken, upon request of
the Trustee or the Collateral Agent, any and all actions reasonably required
to cause the Pledge Agreement to create and maintain, as security for the
obligations of the Company under this Indenture and the Notes as provided in
the Pledge Agreement, valid and enforceable first priority liens in and on all
the Pledged Securities, in favor of the Collateral Agent for the benefit of the
Trustee and the ratable benefit of the Holders, superior to and prior to the
rights of third Persons and subject to no other Liens.




     (c) The release of any Pledged Securities pursuant to the Pledge Agreement
will not be deemed to impair the security under this Indenture in contravention
of the provisions hereof if and to the extent the Pledged Securities are
released pursuant to this Indenture and the Pledge Agreement. To the extent
applicable, the Company shall cause Section 314(d) of the TIA relating to the
release of property or securities from the Lien and security interest of the
Pledge Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement to be complied with. Any certificate or opinion required by Section
314(d) of the TIA may be made by an Officer of the Company, except in cases
where Section 314(d) of the TIA requires that such certificate or opinion be
made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected by the Company.



     (d) The Company shall cause Section 314(b) of the TIA, relating to
Opinions of Counsel regarding the Lien under the Pledge Agreement, to be
complied with. The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance of the foregoing
provisions the appropriate statements contained in such Opinions of Counsel.



     (e) The Trustee and the Collateral Agent may, in their sole discretion and
without the consent of the Holders, on behalf of the Holders, take all actions
it deems necessary or appropriate in order to (i) enforce any of the terms of
the Pledge Agreement
and (ii) collect and receive any and all amounts payable in respect of the
obligations of the Company thereunder. The Trustee and the Collateral Agent
shall have the authority necessary in order to institute and
maintain such
suits and proceedings as the Trustee and the Collateral Agent may deem
expedient to preserve or protect its interests and the interests of the Holders
in the Pledged Securities (including the authority to institute and


73









 





maintain
suits or proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair the security interest
hereunder or be prejudicial to the interests of the Holders, the Collateral
Agent or the Trustee).



     (f) Beyond the exercise of reasonable care in the custody and preservation
thereof, the Trustee and the Collateral Agent shall have no duty as to any
Pledged Securities in their possession or any income thereon or as to
preservation of rights against prior parties or any other rights pertaining
thereto, and the Trustee and the Collateral Agent shall not be responsible for
filing any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting
or maintaining the perfection of any security interest in the Pledged
Securities. The Trustee and the Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Securities in its possession if the Pledged Securities are accorded treatment
substantially equal to that which it accords its own property or property held
in similar accounts and shall not be liable or responsible for any loss or
diminution in the value of any of the Pledged Securities, by reason of the act
or omission of the Collateral Agent, any carrier, forwarding agency or other
agent or bailee selected by the Trustee in good faith.



     (g) The Trustee shall not be responsible for the existence, genuineness or
value of any of the Pledged Securities or for the validity, perfection,
priority or enforceability of the Liens in any of the Pledged Securities,
whether impaired by operation of law or otherwise, for the validity or
sufficiency of the Pledged Securities or any agreement or assignment contained
therein, for the validity of the title of the Company to the Pledged
Securities, for insuring the Pledged Securities or for the payment of taxes,
charges, assessments or Liens upon the Pledged Securities or otherwise as to
the maintenance of the Pledged Securities. The Trustee shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Indenture or the Pledge Agreement by the Company or the Collateral Agent.



ARTICLE 12



MISCELLANEOUS




     Section 12.01.
Trust Indenture Act Controls.  This Indenture is hereby
made subject to, and shall be governed by, the provisions of the TIA required
to be part of and to govern indentures qualified under the TIA; provided,
however, that, unless otherwise required by law, notwithstanding the foregoing,
this Indenture and the Notes issued hereunder shall not be subject to the
provisions of subsections (a)(1), (a)(2), and (a)(3) of
Section 314 of the TIA as now in effect or as hereafter amended or
modified; provided further that this Section 12.01 shall not require this
Indenture or the Trustee to be qualified under the TIA prior to the time such
qualification is in fact required under the terms of the TIA, 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


74









 





is in
fact required under the terms of the TIA. If any provision of this Indenture
limits, qualifies, or conflicts with another provision which is required to be
included in this Indenture by the TIA, the required provision shall control.



     Section 12.02.
Notices. Any request, demand, authorization, notice,
waiver, consent or communication shall be in writing and delivered in person or
mailed by first-class mail, postage prepaid, addressed as follows or
transmitted by facsimile transmission (confirmed by guaranteed overnight
courier) to the following facsimile numbers:



     if to the Company:


Gasco Energy, Inc.

Suite 236, Building H, 14 Inverness Drive

Englewood, CO 80112

Attention: Chief Financial Officer

Facsimile No. (303) 483-0011



     if to the Trustee:


Wells Fargo Bank, National Association

505 Main Street, Suite 301

Forth Worth, TX 76102

Attention: Corporate Trust Administration

Facsimile No. 817-885-8650



     The Company or the Trustee by notice given to the other in the manner
provided above may designate additional or different addresses for subsequent
notices or communications.



     Any notice or communication given to a Noteholder shall be mailed to the
Noteholder, by first-class mail, postage prepaid, at the Noteholder’s address
as it appears on the registration books of the Note Registrar and shall be
sufficiently given 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 received by the addressee.



     If the Company mails a notice or communication to the Noteholders, it
shall mail a copy to the Trustee and each Note Registrar, Paying Agent,
Conversion Agent or co-registrar.



     Section 12.03.
Communication by Holders with Other Holders. Noteholders
may communicate pursuant to Section 312(b) of the TIA with other Noteholders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Note



75









 





Registrar, the Paying Agent, the Conversion Agent and
anyone else shall have the protection of Section 312(c) of the TIA.



     Section 12.04.
Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:





     (1) an Officers’ Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and




     (2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.



     Section 12.05. Statements Required in Certificate or Opinion. Each
Officers’ Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:




     (1) a statement that each person making such Officers’ Certificate
or Opinion of Counsel has read such covenant or condition;




     (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officers’ Certificate or Opinion of Counsel are based;




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




     (4) a statement that, in the opinion of such person, such covenant
or condition has been complied with.



     Section 12.06. Separability Clause. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.



     Section 12.07.
Rules by Trustee, Paying Agent, Conversion Agent and Note
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Noteholders. The Note Registrar, Conversion Agent and the Paying Agent may
make reasonable rules for their functions.



     Section 12.08. Legal Holidays. A “Legal Holiday” is any day other than
a Business Day. If any specified date (including a date for giving notice) is a
Legal
Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Notes, no interest, if any, shall accrue for the intervening
period.



76









 





     Section 12.09. GOVERNING LAW. THIS INDENTURE AND THE NOTES WILL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.



     Section 12.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Note, each Noteholder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Notes.



     Section 12.11. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successor.



     Section 12.12. 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 12.13. Table of Contents, Heading, 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 12.14. Authenticating Agent. The Trustee may appoint an
authenticating agent (the “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 2.03,
2.07, 2.08, 3.08 and 10.02, as fully to all intents and purposes as though the
authenticating agent had been expressly authorized by this Indenture and those
Sections to authenticate and deliver Notes. For all purposes of this
Indenture, the authentication and delivery of Notes by the Authenticating Agent
shall be deemed to be authentication and delivery of such Notes “by the
Trustee” and a certificate of authentication executed on behalf of the Trustee
by an Authenticating Agent shall be deemed to satisfy any requirement hereunder
or in the Notes for the Trustee’s certificate of authentication. Such
Authenticating Agent shall at all times be a Person eligible to serve as
trustee hereunder pursuant to Section 7.09.



     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 all or substantially all 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 2.14, without the



77









 





execution or filing of any paper
or any further act on the part of the parties hereto or the Authenticating
Agent or such successor corporation.



     Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section, the
Trustee shall either promptly appoint a successor Authenticating Agent or
itself assume the duties and obligations of the former Authenticating Agent
under this Indenture and, upon such appointment of a successor Authenticating
Agent, if made, shall give written notice of such appointment of a successor
Authenticating Agent to the Company and shall mail notice of such appointment
of a successor Authenticating Agent to all holders of Notes as the names and
addresses of such holders appear on the 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 2.12, 7.03, 7.04, 7.07 and this Section 2.14
shall be applicable to any Authenticating Agent.



     Section 12.15.
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.



78









 





     IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.


	 	 	 	 	 
	 	GASCO ENERGY, INC.

 	 
	 	By:  	/s/ W. King Grant
 	 
	 	 	Name:  	W. King Grant 	 
	 	 	Title:  	Executive Vice
President,
Chief Financial
Officer and Treasurer 	 
	 



	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL

ASSOCIATION,

as Trustee

 	 
	 	By:  	/s/ Melissa Scott
 	 
	 	 	Name:  	Melissa Scott 	 
	 	 	Title:  	Vice President 	 




79









 






	 	 	 	 	 



EXHIBIT A





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



     TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]



     IF REQUIRED PURSUANT TO SECTION 2.07(d): [THIS SECURITY AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.



     THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES THEREOF UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) (THE “RESALE RESTRICTION PERIOD”)
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON WHICH GASCO ENERGY, INC. OR ANY AFFILIATE OF GASCO ENERGY,



A-1









 





INC. WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH ENTITY)
ONLY (A) TO GASCO ENERGY, INC. OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, INCLUDING UNDER RULE 144, IF AVAILABLE, SUBJECT IN EACH OF
THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS
PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIME
WITHIN ITS OR THEIR CONTROL. PRIOR TO THE EXPIRATION OF THE RESALE RESTRICTION
PERIOD, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
TO THE COMPANY, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF THE RESALE RESTRICTION
PERIOD.]



A-2









 








GASCO ENERGY, INC.



5.50 % Convertible Senior Notes due 2011




	 	 	 
	No. 

	 	CUSIP: 367220AA8
	Issue Date:
	 	 







     GASCO ENERGY, INC., a Nevada corporation promises to pay to                     or
registered assigns, the principal sum of [                   ] DOLLARS
($[                   ]) on [   , 2011].



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



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


	 	 	 	 	 
	Dated:__________ 	GASCO ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 




A-3









 






	 	 	 	 	 



TRUSTEE’S CERTIFICATE OF



AUTHENTICATION





     This is one of the Notes referred to in the within-mentioned Indenture (as
defined on the other side of this Note).



	 	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
	 
	 	 
	By:
	 	 
	

	 	

	

	 	   Authorized Signatory
	 
	 	 
	By:
	 	 
	

	 	

	

	 	   As Authenticating Agent
	

	 	   (if different from Trustee)
	 
	 	 
	Dated:
	 	 
	

	 	









A-4










 





[FORM OF REVERSE SIDE OF NOTE]




5.50% Convertible Senior Note due 2011




1. Cash Interest.




     The Company promises to pay interest in cash on the principal amount of
this Note at the rate per annum of 5.50%. The Company will pay cash interest
semiannually in arrears on April 5 and October 5 of each year (each an
“Interest Payment Date”), beginning April 5, 2005, to Holders of record at the
close of business on March 15 and September 15 (whether or not a business day)
(each a “Regular Record Date”), as the case may be, immediately preceding such
Interest Payment Date, and the Company will pay interest in arrears on the
Maturity Date to the Holder to whom it pays the principal of this Note. Cash
interest on the Notes will accrue from the most recent date to which interest
has been paid or duly provided or, if no interest has been paid, from the Issue
Date. Cash interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay cash interest on overdue principal at the
rate borne by the Notes plus 2% per annum, and it shall pay interest in cash on
overdue installments of cash interest (including Liquidated Damages, if any) at
the same rate to the extent lawful. All such overdue cash interest shall be
payable on demand. The Company further promises to pay Liquidated Damages that
it may from time to time be required to pay pursuant to Section 2(e) of the
Registration Rights Agreement at the same time and in the same manner as
payments of interest as specified herein.



2. Method of Payment.




     Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of the principal of, premium, if any, and cash
interest on this Note and in respect of Change of Control Purchase Price and
any applicable Make-Whole Premium to Holders who surrender Notes to a Paying
Agent to collect such payments in respect of the Notes. The Company will pay
cash amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may make
such cash payments by check payable in such money. A holder of Notes with an
aggregate principal amount in excess of $3,000,000 will be
paid by wire transfer in immediately available funds at the election of such
holder. Any payment required to be made on any day that is not a Business Day
will be made on the next succeeding Business Day.



3. Paying Agent, Conversion Agent and Note Registrar.




     Initially,
Wells Fargo Bank, National Association (the “Trustee”), will
act as Paying Agent, Conversion Agent and Note Registrar. The Company may



A-5









 





appoint and change any Paying Agent, Conversion Agent, Note Registrar or
co-registrar without notice, other than notice to the Trustee except that the
Company
will maintain at least one Paying Agent in the State of New York, City of
New York, Borough of Manhattan, which shall initially be an office or agency of
the Trustee. The Company or any of its Subsidiaries or any of their Affiliates
may act as Paying Agent, Conversion Agent, Note Registrar or co-registrar.




4. Indenture.




     The Company issued the Notes under an Indenture dated as of October 20,
2004 (the “Indenture”), between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as in effect from
time to time (the “TIA”). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Notes are subject to
all such terms, and Noteholders are referred to the Indenture and the TIA for a
statement of those terms.



     The Notes are general unsecured obligations of the Company (except as
provided in Paragraph 12 hereof) limited to $65,000,000 aggregate principal amount (subject to Section 2.08 of the Indenture). The
Indenture does not limit other indebtedness of the Company, secured or
unsecured.



5. Redemption and Repurchase by the Company at the Option of the Holder.




     Prior to October 10, 2009, the Notes shall not be redeemable at the
Company’s option. At any time on or after October 10, 2009 and prior to Stated
Maturity, the Company, at its option, may redeem the Notes, in whole or in
part, in accordance with the Indenture on the Redemption Date for a Redemption
Price in cash equal to 100% of the principal amount of the Notes plus any
accrued and unpaid interest and Liquidated Damages, if any, on the Notes
redeemed to but not including the Redemption Date if the Closing Price of the
Company’s Common Stock has exceeded 130% of the Conversion Price for at least
20 Trading Days in any consecutive 30 Trading Day period. In addition, if
beginning on October 10, 2009, on any Interest Payment Date, the aggregate
principal amount of the Notes outstanding is less than 15% of the aggregate
principal amount of Notes outstanding after the Issue Date, the Company, at its
option, may redeem the Notes, in whole but not in part, in accordance with the
Indenture on the Redemption Date for a Redemption Price in cash equal to 100%
of the principal amount of the Notes plus any accrued and unpaid Interest and
Liquidated Damages, if any, on the Notes to but not including the Redemption
Date. The Company will make an additional payment equal to the total value of
the aggregate amount of the interest otherwise payable on the Notes from the
last day through which Interest was paid on the Notes through the Redemption
Date.



A-6









 





     If there shall have occurred a Change of Control (subject to certain
conditions provided for in the Indenture), each Holder, at such Holder’s
option, shall have the right, in accordance with the provisions of the
Indenture, to require
the Company to purchase its Notes (or any portion of the principal amount
hereof that is at least $1,000 or any whole multiple thereof, provided that the
portion of the principal amount of this Note to be outstanding after such
purchase is at least equal to $1,000) at the Change of Control Purchase Price
in cash or Common Stock, at the Company’s option, plus any accrued and unpaid
interest to but not including the Change of Control Purchase Date.



     If there shall have occurred a Change of Control pursuant to clause (ii)
of the definition thereof, and a Holder surrenders its Notes
for purchase, the Company shall pay to such Holder a Make-Whole Premium in
addition to the Change of Control Purchase Price. The Make-Whole Premium will
also be paid on the Change of Control Purchase Date to the Holders of the Notes
who convert their Notes on or after the date on which the Company has given a
notice to all Holders of Notes in accordance with Section 3.05(d) of the
Indenture and on or before the Change of Control Purchase Date.



     The Company may, in lieu of paying a Make-Whole Premium, elect to adjust
the Conversion Rate and the related conversion obligation such that from and
after the effective date of such Public Acquirer Change of Control, Holders of
the Notes will be entitled to convert their Notes into a number of shares of
Public Acquirer Common Stock by adjusting the Conversion Rate in effect
immediately before the Public Acquirer Change of Control as set forth in the
Indenture.



     A written notice of the Change of Control will be given to the Holders as
provided in the Indenture. To exercise a purchase right, a Holder must deliver
to the Trustee a Change of Control Purchase Notice as provided in the
Indenture.



     Holders have the right to withdraw any Change of Control Purchase Notice
by delivering to the Paying Agent a written notice of withdrawal in accordance
with the provisions of the Indenture.



6. Conversion.




     Subject to the next two succeeding sentences, a Holder of a Note may
convert it into Common Stock of the Company at any time before the close of
business on the final maturity date of the Note. A Note in respect of which a
Holder has delivered a Change of Control Purchase Notice exercising the option
of such Holder to require the Company to purchase such Note may be converted
only if such notice of exercise is withdrawn in accordance with the terms of
the Indenture.



A-7









 





     The initial Conversion Price shall be initially equal to $4.00 per share
of Common Stock, which is equal to a Conversion Rate of 250 shares of Common
Stock per $1,000 principal amount of the Notes, subject to adjustment in
certain events described in the Indenture. The Company shall pay a cash
adjustment as provided in the Indenture in lieu of any fractional share of
Common Stock.



     To convert a Note, a Holder must (1) complete and manually sign the
conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the Note
to the Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Conversion Agent, the Company or the Trustee and
(4) pay any transfer or similar tax, if required.



7. Denominations; Transfer; Exchange.




     The Notes are in fully registered form, without coupons, in denominations
of $1,000 of principal amount and integral multiples of $1,000. A Holder may
transfer or exchange Notes in accordance with the Indenture. The Note Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Note Registrar need not transfer or exchange
any Notes in respect of which a Change of Control Purchase Notice has been
given and not withdrawn (except, in the case of a Note to be purchased in part,
the portion of the Note not to be purchased).



8. Persons Deemed Owners.




     The registered Holder of this Note may be treated as the owner of this
Note for all purposes.



9. Unclaimed Money or Notes.




     The Trustee and the Paying Agent shall return to the Company upon written
request any money or Notes held by them for the payment of any amount with
respect to the Notes that remains unclaimed for two years, subject to
applicable unclaimed property law. After return to the Company, Holders
entitled to the money or Notes must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another
person.



10. Amendment; Waiver.




     Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders
of at least a majority in aggregate principal amount of the Notes at the time
outstanding and (ii) certain Defaults or Events of Default may be waived with
the written consent



A-8









 





of the Holders of a majority in aggregate principal amount of the Notes at
the time outstanding. Subject to certain exceptions set forth in the Indenture,
without the consent of any Noteholder, the Company and the Trustee may amend
the Indenture or the Notes, among other things, to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to make any change that does not adversely affect the rights of
any Noteholder, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA.




11. Defaults and Remedies.




     Under the Indenture, Events of Default include (1) the Company fails to
pay when due the principal of or premium, if any, on any of the Notes at
maturity, upon exercise of a repurchase right or otherwise; (2) the Company
fails to pay an installment of interest (including Liquidated Damages, if any)
on any of the Notes that continues for 30 days after the date when due;
provided that a failure to make any of the first six scheduled interest
payments on the Notes on the applicable Interest Payment Date shall constitute
an Event of Default with no grace or cure period (unless the failure to
make such payment results from the failure by the Trustee to release such
proceeds from the Collateral Account, provided such failure is not caused by
any act or omission by the Company); (3) the Company fails to deliver
shares of Common Stock, together with cash in lieu of fractional shares, when
such Common Stock or cash in lieu of fractional shares is required to be
delivered upon conversion of a Note and such failure continues for 10 days
after such required delivery date; (4) the Company fails to give notice
regarding a Change of Control within the time period specified in the
Indenture; (5) the Company fails to perform or observe any other term, covenant
or agreement contained in the Notes or the Indenture for a period of 60 days
after written notice of such failure, requiring the Company to remedy the same,
shall have been given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding; (6) (A) the Company or any Significant Subsidiary fails
to make any payment by the end of the applicable grace period, if any, after
the final scheduled payment date for such payment with respect to any
indebtedness for borrowed money in an aggregate amount in excess of $5 million
or (B) indebtedness for borrowed money of the Company or any Significant
Subsidiary in an aggregate amount in excess of $5 million shall have been
accelerated or otherwise declared due and payable, or required to be prepaid or
repurchased (other than by regularly scheduled required prepayment) prior to
the scheduled maturity thereof as a result of a default with respect to such
indebtedness referred to in subclause (A) or (B) hereof, in either case without
such having been discharged, cured, waived, rescinded or annulled, for a period
of 30 days after receipt by the Company of a Notice of Default; (7) certain
events of bankruptcy, insolvency or reorganization with respect to the Company
or any Significant Subsidiary or any Subsidiaries of the Company which in the
aggregate would
constitute a Significant Subsidiary



A-9









 





and (8) the Pledge Agreement shall
cease to be in full force and effect or enforceable other than in accordance
with its terms or fails to give the Trustee the liens, rights, power and
privileges purported to be created thereby. If an Event of Default (other than
an Event of Default specified in clause (7) above) occurs and is continuing,
the Trustee, or the Holders of at least 25% in aggregate principal amount of
the Notes at the time outstanding, may declare all the Notes to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Notes becoming due and payable immediately
upon the occurrence of such Events of Default.




     Noteholders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the Notes
at the time outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Noteholders notice of any continuing
Default (except a Default in payment of amounts specified in clause (1) or (2)
above) if it determines that withholding notice is in their interests.



12. Security




     The Company has entered into the Pledge Agreement and purchased and
pledged to the Collateral Agent for the benefit of the Trustee and the ratable
benefit of the Holders Pledged Securities in an amount sufficient upon receipt
of scheduled interest and principal payments on such securities to provide for
the payment in full of the first six scheduled interest payments due on the
Notes. The Pledged Securities will be pledged by the Company to the Collateral
Agent for the benefit of the Trustee and the ratable benefit of the Holders and
will be held by the Collateral Agent in the Collateral Account pending
disbursement pursuant to the Pledge Agreement.



13. Trustee Dealings with the Company.




     Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.



14. No Recourse Against Others.




     A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Note, each Noteholder waives
and



A-10









 





releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.




15. Authentication.




     This Note shall not be valid until an authorized signatory of the Trustee
or an Authenticating Agent manually signs the Trustee’s Certificate of
Authentication on the other side of this Note.



16. Abbreviations.




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



17. GOVERNING LAW.




     THE INDENTURE AND THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.






     The Company will furnish to any Noteholder upon written request and
without charge a copy of the Indenture which has in it the text of this Note in
larger type. Requests may be made to:


Gasco Energy, Inc.

Suite 236, Building H, 14 Inverness Drive

Englewood, CO 80112



A-11









 








CONVERSION NOTICE





		
	TO: 	GASCO ENERGY, INC.

WELLS FARGO BANK, 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 an
integral multiple thereof) below designated, into shares of Common Stock of
Gasco Energy, Inc. in accordance with the terms of the Indenture referred to in
this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. 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-12









 






     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-13









 





CHANGE OF CONTROL PURCHASE NOTICE





		
	TO: 	GASCO ENERGY, INC.

WELLS FARGO BANK, NATIONAL ASSOCIATION





     The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Gasco Energy, Inc. (the
“Company”) as to
the occurrence of a Change of Control with respect to the Company and requests
and instructs the Company to repay the entire principal amount of this Note
(Certificate No.                  ), or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note to the registered holder hereof. If the
Company has elected to pay the Change of Control Purchase Price and, if
applicable, the Make-Whole Premium, in Common Stock, the undersigned hereby
elects to receive the Change of Control Purchase Price in Common Stock.



Dated:                                       




	 	 	 
	

	 	                                                         
	 
	 	 
	

	 	                                                         
	

	 	Signature(s)
	 
	 	 
	

	 	NOTICE: The above signatures of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
	 
	 	 
	

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

	 	$                                                         
	 
	 	 
	

	 	       
                
                
                  
	

	 	Social Security or Other
	

	 	Taxpayer Identification Number







A-14









 






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.



     In connection with any transfer of the Note prior to the expiration of the
holding period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision) (other than any transfer pursuant
to a registration statement that has been declared effective under the
Securities Act), the undersigned confirms that such Note is being transferred:




		
	      o 	To Gasco Energy, Inc. or a subsidiary
thereof; or






		
	      o 	Inside the United States pursuant to and in
compliance with Rule 144A under the Securities Act
of 1933, as amended; or






		
	      o 	Pursuant to and in compliance with Rule 144
under the Securities Act of 1933, as amended;





and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an “affiliate” of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an
“Affiliate”).





A-15









 









		
	      o 	The transferee is an Affiliate of the
Company.





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 of the conversion notice, the Change of Control Purchase
Notice 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-16









 








EXHIBIT B-1




Transfer Certificate




     In connection with any transfer of any of the Notes within the period
prior to the expiration of the holding period applicable to the sales thereof
under Rule 144(k) under the Securities Act of 1933, as amended (the
“Securities
Act”) (or any successor provision), the undersigned registered owner of this
Note hereby certifies with respect to $                    principal amount of the
above-captioned Notes presented or surrendered on the date hereof (the
“Surrendered Notes”) for registration of transfer, or for exchange or
conversion where the Notes issuable upon such exchange or conversion are to be
registered in a name other than that of the undersigned registered owner (each
such transaction being a “transfer”), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Notes for the
reason checked below:




		
	o 	A transfer of the Surrendered Notes is made to the Company or any
subsidiaries; or






		
	o 	The transfer of the Surrendered Notes complies with Rule 144A under
the U.S. Securities Act of 1933, as amended (the “Securities
Act”); or






		
	o 	The transfer of the Surrendered Notes is pursuant to an effective
registration statement under the Securities Act, or






		
	o 	The transfer of the Surrendered Notes is pursuant to another available
exemption from the registration requirement of the Securities Act.





and unless the box below is checked, the undersigned confirms that, to the
undersigned’s knowledge, such Notes are not being transferred to
an “affiliate”
of the Company as defined in Rule 144 under the Securities Act (an
“Affiliate”).





		
	o 	The transferee is an Affiliate of the Company.





	 	 	 
	DATE:                                                          

	 	                                                                            
	

	 	Signature(s)







(If the registered owner is a corporation, partnership or

fiduciary, the title of the Person signing on behalf of

such registered owner must be stated.





B-1-1