EX-4.6







Exhibit 4.6



GENTA INCORPORATED




and




U.S. BANK NATIONAL ASSOCIATION




as Trustee




 






INDENTURE




Dated as of [___], 2009




 

 






$[___] Principal Amount




[___]% Senior Subordinated Secured Convertible Notes due 2011 




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I.
	 	DEFINITIONS AND INCORPORATION BY REFERENCE	 	 	1	 
	 
	 	 	 	 	 	 
	 
	 	Section 1.1                Definitions	 	 	1	 
	 
	 	Section 1.2                Other Definitions	 	 	8	 
	 
	 	Section 1.3                Incorporation by Reference of Trust Indenture Act	 	 	9	 
	 
	 	Section 1.4                Rules of Construction	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE II.
	 	THE SECURITIES	 	 	10	 
	 
	 	 	 	 	 	 
	 
	 	Section 2.1                Form and Dating	 	 	10	 
	 
	 	Section 2.2                Execution and Authentication of Securities	 	 	10	 
	 
	 	Section 2.3                Registrar, Paying Agent and Conversion Agent	 	 	10	 
	 
	 	Section 2.4                Paying Agent to Hold Money in Trust	 	 	11	 
	 
	 	Section 2.5                Securityholder Lists	 	 	11	 
	 
	 	Section 2.6                Transfer and Exchange	 	 	11	 
	 
	 	Section 2.7                Interest Payment and Record Dates	 	 	12	 
	 
	 	Section 2.8                Mutilated, Destroyed, Lost and Stolen Securities	 	 	12	 
	 
	 	Section 2.9                Outstanding Securities	 	 	13	 
	 
	 	Section 2.10               Cancellation	 	 	13	 
	 
	 	Section 2.11               No Additional Amounts or Sinking Fund	 	 	14	 
	 
	 	Section 2.12               Defaulted Interest	 	 	14	 
	 
	 	Section 2.13               Global Securities	 	 	14	 
	 
	 	Section 2.14               CUSIP Numbers	 	 	15	 
	 
	 	Section 2.15               Deposit of Moneys	 	 	15	 
	 
	 	Section 2.16               Ranking	 	 	16	 
	 
	 	Section 2.17               Additional Securities	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE III.
	 	COVENANTS	 	 	16	 
	 
	 	 	 	 	 	 
	 
	 	Section 3.1                Payment of Principal and Interest	 	 	16	 
	 
	 	Section 3.2                Maintenance of Office or Agency	 	 	16	 
	 
	 	Section 3.3                SEC Reports	 	 	17	 
	 
	 	Section 3.4                Compliance Certificate	 	 	18	 
	 
	 	Section 3.5                Stay, Extension and Usury Laws	 	 	18	 
	 
	 	Section 3.6                Corporate Existence	 	 	18	 
	 
	 	Section 3.7                Taxes	 	 	18	 
	 
	 	Section 3.8                Further Instruments and Acts	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE IV.
	 	SUCCESSORS	 	 	19	 
	 
	 	 	 	 	 	 
	 
	 	Section 4.1                When Company May Merge, Etc.	 	 	19	 
	 
	 	Section 4.2                Successor Corporation Substituted	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE V.
	 	DEFAULTS AND REMEDIES	 	 	19	 
	 
	 	 	 	 	 	 
	 
	 	Section 5.1                Events of Default	 	 	19	 






i









 





TABLE OF CONTENTS
(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	Section 5.2                Acceleration of Maturity; Rescission and Annulment	 	 	21	 
	 
	 	Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee	 	 	22	 
	 
	 	Section 5.4 Trustee May File Proofs of Claim	 	 	23	 
	 
	 	Section 5.5 Trustee May Enforce Claims Without Possession of Securities	 	 	24	 
	 
	 	Section 5.6      Application of Money Collected	 	 	24	 
	 
	 	Section 5.7      Limitation on Suits	 	 	24	 
	 
	 	Section 5.8 Unconditional Right of Holders to Receive Principal and Interest	 	 	25	 
	 
	 	Section 5.9        Restoration of Rights and Remedies	 	 	25	 
	 
	 	Section 5.10       Rights and Remedies Cumulative	 	 	25	 
	 
	 	Section 5.11       Delay or Omission Not Waiver	 	 	26	 
	 
	 	Section 5.12       Control by Holders	 	 	26	 
	 
	 	Section 5.13       Waiver of Past Defaults	 	 	26	 
	 
	 	Section 5.14       Undertaking for Costs	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE VI.
	 	TRUSTEE	 	 	27	 
	 
	 	 	 	 	 	 
	 
	 	Section 6.1        Duties of Trustee	 	 	27	 
	 
	 	Section 6.2        Rights of Trustee	 	 	28	 
	 
	 	Section 6.3        Individual Rights of Trustee	 	 	29	 
	 
	 	Section 6.4        Trustee’s Disclaimer	 	 	29	 
	 
	 	Section 6.5        Notice of Defaults	 	 	29	 
	 
	 	Section 6.6        Reports by Trustee to Holders	 	 	29	 
	 
	 	Section 6.7        Compensation and Indemnity	 	 	29	 
	 
	 	Section 6.8        Replacement of Trustee	 	 	30	 
	 
	 	Section 6.9        Successor Trustee by Merger, Etc.	 	 	31	 
	 
	 	Section 6.10       Eligibility; Disqualification	 	 	31	 
	 
	 	Section 6.11       Preferential Collection of Claims Against Company	 	 	31	 
	 
	 	 	 	 	 	 
	ARTICLE VII.
	 	SATISFACTION AND DISCHARGE	 	 	31	 
	 
	 	 	 	 	 	 
	 
	 	Section 7.1        Satisfaction and Discharge of Indenture	 	 	31	 
	 
	 	Section 7.2        Application of Trust Funds; Indemnification	 	 	32	 
	 
	 	Section 7.3        Repayment to Company	 	 	33	 
	 
	 	Section 7.4        Reinstatement	 	 	33	 
	 
	 	 	 	 	 	 
	ARTICLE VIII.
	 	AMENDMENTS AND WAIVERS	 	 	33	 
	 
	 	 	 	 	 	 
	 
	 	Section 8.1        Without Consent of Holders	 	 	33	 
	 
	 	Section 8.2        With Consent of Holders	 	 	34	 
	 
	 	Section 8.3        Compliance with Trust Indenture Act	 	 	35	 
	 
	 	Section 8.4        Revocation and Effect of Consents	 	 	35	 
	 
	 	Section 8.5        Notation on or Exchange of Securities	 	 	35	 






ii









 






Table of Contents
(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	Section 8.6        Trustee Protected	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE IX.
	 	CONVERSION	 	 	36	 
	 
	 	 	 	 	 	 
	 
	 	Section 9.1        Conversion Privilege; Restrictive Legends	 	 	36	 
	 
	 	Section 9.2        Limitation on the Right to Convert	 	 	36	 
	 
	 	Section 9.3        Forced Conversion	 	 	37	 
	 
	 	Section 9.4        Conversion Procedure and Payment Upon Conversion	 	 	38	 
	 
	 	Section 9.5        Taxes on Conversion	 	 	39	 
	 
	 	Section 9.6        Company to Provide Stock	 	 	39	 
	 
	 	Section 9.7        Adjustment of Conversion Rate	 	 	39	 
	 
	 	Section 9.8        No Adjustment	 	 	43	 
	 
	 	Section 9.9        Other Adjustments	 	 	44	 
	 
	 	Section 9.10       Adjustments for Tax Purposes	 	 	44	 
	 
	 	Section 9.11       Notice of Adjustment	 	 	44	 
	 
	 	Section 9.12       Notice of Certain Transactions	 	 	44	 
	 
	 	Section 9.13 Effect of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or Sale on Conversion Privilege	 	 	45	 
	 
	 	Section 9.14 Trustee’s Disclaimer	 	 	46	 
	 
	 	Section 9.15 Rights Distributions Pursuant to the Stockholder Rights Plan	 	 	46	 
	 
	 	 	 	 	 	 
	ARTICLE X.
	 	MISCELLANEOUS	 	 	46	 
	 
	 	 	 	 	 	 
	 
	 	Section 10.1       Trust Indenture Act Controls	 	 	46	 
	 
	 	Section 10.2       Notices	 	 	46	 
	 
	 	Section 10.3       Communication by Holders with Other Holders	 	 	47	 
	 
	 	Section 10.4       Certificate and Opinion as to Conditions Precedent	 	 	47	 
	 
	 	Section 10.5       Statements Required in Certificate or Opinion	 	 	47	 
	 
	 	Section 10.6       Rules by Trustee and Agents	 	 	48	 
	 
	 	Section 10.7       Legal Holidays	 	 	48	 
	 
	 	Section 10.8       No Recourse Against Others	 	 	48	 
	 
	 	Section 10.9       Counterparts	 	 	48	 
	 
	 	Section 10.10      Governing Laws	 	 	48	 
	 
	 	Section 10.11      No Adverse Interpretation of Other Agreements	 	 	48	 
	 
	 	Section 10.12      Successors	 	 	48	 
	 
	 	Section 10.13      Severability	 	 	49	 
	 
	 	Section 10.14      Table of Contents, Headings, Etc	 	 	49	 
	 
	 	Section 10.15      Calculations in respect of the Securities	 	 	49	 
	 
	 	Section 10.16      Securities in ECU	 	 	49	 
	 
	 	Section 10.17      Judgment Currency	 	 	50	 






 iii





 









 








Genta Incorporated

Reconciliation and tie between Trust Indenture Act of 1939 and

Indenture, dated as of [_________], 2009




	 	 	 
	Section 310(a)(1)

	 	Section 5.10
	(a)(2)

	 	Section 5.10
	(a)(3)

	 	Not Applicable
	(a)(4)

	 	Not Applicable
	(a)(5)

	 	Section 5.10
	(b)

	 	Section 5.10
	Section 311(a)

	 	Section 5.11
	(b)

	 	Section 5.11
	(c)

	 	Not Applicable
	Section 312(a)

	 	Section 2.6
	(b)

	 	Section 8.3
	(c)

	 	Section 8.3
	Section 313(a)

	 	Section 5.6
	(b)(1)

	 	Section 5.6
	(b)(2)

	 	Section 5.6
	(c)(1)

	 	Section 5.6
	(d)

	 	Section 5.6
	Section 314(a)

	 	Section 3.3, Section 8.5
	(b)

	 	Not Applicable
	(c)(1)

	 	Section 8.4
	(c)(2)

	 	Section 8.4
	(c)(3)

	 	Not Applicable
	(d)

	 	Not Applicable
	(e)

	 	Section 8.5
	(f)

	 	Not Applicable
	Section 315(a)

	 	Section 5.1
	(b)

	 	Section 5.5
	(c)

	 	Section 5.1
	(d)

	 	Section 5.1
	(e)

	 	Section 5.14
	Section 316(a)

	 	Section 2.10
	(a)(1)(A)

	 	Section 5.12
	(a)(1)(B)

	 	Section 5.13
	(b)

	 	Section 5.8
	Section 317(a)(1)

	 	Section 5.3
	(a)(2)

	 	Section 5.4
	(b)

	 	Section 2.5
	Section 318(a)

	 	Section 8.1





Note: This reconciliation and tie shall not, for any purpose, be deemed to be part of the
Indenture.




 









 





          Indenture dated as of [                    ], 2009 between Genta Incorporated, a Delaware corporation (the
“Company”), and U.S. Bank National Association, a national banking association, as trustee (the
“Trustee”).




WITNESSED THAT:




          WHEREAS, pursuant to the terms of this Indenture, the Company desires to provide for the
establishment of a series of its Securities, to be titled as its [___]% Senior Subordinated Secured
Convertible Notes due 2011 (the “Securities”), the form and substance of such Securities and the
terms, provisions and conditions thereof to be set forth as provided herein;




NOW, THEREFORE:




          Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Securities.




ARTICLE I.

DEFINITIONS AND INCORPORATION BY REFERENCE




Section 1.1 Definitions.




          “2008 Notes” means those certain 15% Senior Secured Convertible Notes due June 2010.



          “Affiliate” of any specified person means any other person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified person. For the
purposes of this definition, “control” (including, with correlative meanings, the terms “controlled
by” and “under common control with”), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of such person, whether through the ownership of voting securities or by agreement or
otherwise.




          “Agent” means any Registrar, Paying Agent, Service Agent or authenticating agent.




          “Authorization Date” means the later of (i) the date on which the Company’s effects an
increase in the Company’s authorized Common Stock from 6,000,000,000 to [___]; and (ii) the date on
which the Company’s effects a 1-___reverse stock split of its Common Stock.




          “Authorized Newspaper” means a newspaper in an official language of the country of publication
customarily published at least once a day for at least five days in each calendar week and of
general circulation in the place in connection with which the term is used.




 









 







If it shall be impractical to make any publication of any notice required hereby in an
Authorized Newspaper, any publication or other notice in lieu thereof that is made or given by the
Trustee shall constitute a sufficient publication of such notice.




          “Beneficial Holder” means, with respect to a Global Security registered in the name of the
Depository, the Person for which the Security is beneficially held.




          “Board of Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.




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




          “Business Day” means, unless otherwise provided by Board Resolution, Officers’ Certificate or
supplemental indenture hereto, any day except a Saturday, Sunday or a legal holiday in The City of
New York, New York on which banking institutions are authorized or required by law, regulation or
executive order to close.




          “Capital Stock” of any Person means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of such Person and all warrants or options to
acquire such capital stock.




          “Collateral” shall have the meaning ascribed to such term in the Security Agreement.




          “Common
Stock” shall mean the Company’s Common Stock,
including, except with respect to the payment of any interest
hereunder, any securities into which
the Common Stock is reclassified pursuant to Section 9.13.




          “Company” means the party named as such above until a successor replaces it and thereafter
means the successor.




          “Company Order” means a written order signed in the name of the Company by two Officers, one
of whom must be the Company’s chief executive officer, chief financial officer or principal
accounting officer.




          “Company Request” means a written request signed in the name of the Company by its Chairman of
the Board, a President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.




          “Contingent Obligation” means, as to any person, any liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other obligation of another person
if the primary purpose or intent of the person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such liability will be paid
or discharged, or that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with respect thereto.




2









 








          “Conversion Date” means, with respect to a Security to be converted in accordance with ARTICLE
IX, the date on which the Holder of such Security satisfies all the requirements for such
conversion set forth in ARTICLE IX and in paragraph 6 of the Securities; provided, however, that if
such date is not a Trading Day, then the Conversion Date shall be deemed to be the next day that is
a Trading Day.




          “Conversion Price” means, as of any date of determination, the dollar amount derived by
dividing one thousand dollars ($1,000) by the Conversion Rate in effect on such date.




          “Conversion Rate” shall initially be [___] shares of Common Stock per $1,000 principal
amount of Securities, subject to adjustment as provided in ARTICLE IX.




          “Corporate Trust Office” means the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered.




          “Daily VWAP” means, for any date, (i) the daily volume weighted average price of the Common
Stock for such date on the principal Trading Market for the Common Stock as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time);
(ii) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the
Common Stock are then reported in the “Pink Sheets” published by the Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price
per share of the Common Stock so reported; or (iii) in all other cases, the most recent quoted bid
price and if not available, the average midpoint of the last bid or
ask prices from at least three
investment bankers engaged for purposes of determining the Daily VWAP.




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




          “Depository” means, with respect to the Securities issuable or issued in whole or in part in
the form of one or more Global Securities, the person designated as Depository for such Securities
by the Company, which Depository shall be a clearing agency registered under the Exchange Act; and
if at any time there is more than one such person, “Depository” as used with respect to the
Securities shall mean the Depository with respect to the Securities.



3









 





          “Dollars” means the currency of The United States of America.




          “DTC” means The Depository Trust Company, its nominees and successors.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder.




          “Exchange Rate Contract” means, with respect to any Person, any currency swap agreements,
forward exchange rate agreements, foreign currency futures or options, exchange rate collar
agreements, exchange rate insurance and other agreements or arrangements, or combination thereof,
the principal purpose of which is to provide protection against fluctuations in currency exchange
rates. An Exchange Rate Contract may also include an Interest Rate Agreement.




          “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment of the accounting
profession, which are applied on a consistent basis.




          “Global Security” or “Global Securities” means a Security or Securities, as the case may be,
in the form established pursuant to Section 2.2 evidencing all or part of the Securities, issued to
the Depository or its nominee, and registered in the name of such Depository or nominee.




          “Guarantee” means a guarantee, other than by endorsement of negotiable instruments for
collection in the ordinary course of business, direct or indirect, in any manner, including,
without limitation, letters of credit and reimbursement agreements in respect thereof, of all or
any part of any Indebtedness.




          “Holder” or “Securityholder” means a person in whose name a Security is registered.




          “Indebtedness” means, with respect to any Person, any indebtedness of such Person, whether or
not contingent, in respect of borrowed money or evidenced by bonds, notes, Securities or similar
instruments or letters of credit, bank guarantees or bankers’ acceptances, or reimbursement
agreements in respect thereof, or representing the balance deferred and unpaid of the purchase
price of any property, including pursuant to capital leases and sale-and-leaseback transactions, or
representing the Company’s obligations and liabilities, contingent or otherwise, in respect of
leases required, in conformity with GAAP, to be accounted for as capitalized lease obligations on
the Company’s balance sheet, or under other leases for facilities, equipment or related assets,
whether or not capitalized, entered into or leased for financing purposes, or representing any
hedging obligations under an Exchange Rate Contract or an Interest Rate Agreement, except any such
balance that constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness, other than obligations under an Exchange Rate




4









 




Contract or an Interest Rate Agreement, would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, and also includes, to the extent not otherwise
included, the Guarantee of items which would be included within this definition. The amount of any
Indebtedness outstanding as of any date shall be the accreted value thereof, in the case of any
Indebtedness issued with original issue discount. Indebtedness shall not include liabilities for
taxes of any kind.




          “Indenture” means this Indenture as amended from time to time and shall include the form and
terms of particular Securities established as contemplated hereunder.




          “Intercreditor Agreement” mean that certain Intercreditor Agreement dated as of [___], 2009,
by and between the Company, the Trustee and
[___], as Representative of the holders of the
2008 Notes, as the same may be amended, restated, renewed, replaced,
supplemented, superseded or otherwise modified, or replaced,
including, without limitation, any amendments, restatements,
renewals, replacements, supplements, superseding agreements or other
modifications to add, replace, substitute or remove any holders of
Senior Debt (or their respective Representatives).



          “Interest Rate Agreement” means, with respect to any Person, any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar agreement the
principal purpose of which is to protect the party indicated therein against fluctuations in
interest rates.




          “Issue Date” means [___], 2009.




          “Maturity Date” means [___], 2011 or such other date on which the principal of the Securities
becomes due and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration or otherwise.




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




          “Officers’ Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal accounting officer.




          “Opinion of Counsel” means a written opinion of legal counsel who is acceptable to the
Trustee. The counsel may be an employee of or counsel to the Company.




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




          “principal” of a Security means the principal of the Security.




          “Release Date” means the earlier of (a) 105 days following the Issue Date and (b) the
Authorization Date.




          “Representative” means (a) the indenture trustee or other trustee, agent or representative for
holders of Senior Debt or (b) with respect to any Senior Debt that does not have any such trustee,
agent or other representative, (i) in the case of such Senior Debt issued




5









 




pursuant to an agreement providing for voting arrangements as among the holders or owners of
such Senior Debt, any holder or owner of such Senior Debt acting with the consent of the required
persons necessary to bind such holders or owners of such Senior Debt and (ii) in the case of all
other such Senior Debt, the holder or owner of such Senior Debt.




          “Responsible Officer” means any officer of the Trustee in its Corporate Trust Office and also
means, with respect to a particular corporate trust matter, any other officer to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity with a particular
subject.




          “Rights Agreement” means that certain Rights Agreement dated as of September 20, 2005, by and
between the Company and Mellon Investor Services LLC, as rights agent, as the same may be amended,
supplemented or superseded.




          “SEC” means the Securities and Exchange Commission.




          “Securities” means the [___]% Senior Subordinated Secured Convertible Notes due 2011
authenticated, delivered and issued under this Indenture.




          “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the SEC thereunder.




          “Securities Agent” means any Registrar, Paying Agent, Conversion Agent or co-Registrar or
co-agent.




          “Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as of
[___], 2009, by and among the Company and [___].




          “Security Agreement” means that certain Security Agreement dated as of [___], 2009, by and
between the Company and the Trustee, as collateral agent and secured
party, as the same may be amended, restated, renewed, replaced,
supplemented, superseded or otherwise modified.



          “Security Documents” shall have the meaning ascribed to such term in the Security Agreement.



          “Senior Debt” means Indebtedness (including any monetary obligation in respect of the 2008
Notes, and interest, whether or not allowable, accruing on Indebtedness incurred pursuant to the
2008 Notes after the filing of a petition initiating any proceeding under any bankruptcy,
insolvency or similar law) of the Company arising under the 2008
Notes or any other secured Indebtedness of
the Company, whether outstanding on the date of this Indenture or thereafter created, incurred,
assumed or guaranteed by the Company. Notwithstanding anything to the contrary in the foregoing,
Senior Debt shall not include: (a) Indebtedness of or amounts owed by the Company for compensation
to employees, or for goods or materials purchased or for services obtained in the ordinary course
of business; (b) Indebtedness of the Company to any Subsidiary
of the Company; (c) unsecured Indebtedness; or (d) Indebtedness
of the Company that expressly provides that it shall not be senior in right of payment to the
Securities or expressly provides that it is pari passu or junior to
the Securities. If any payment made to any holder of any Senior Debt
or its Representative with respect to such Senior Debt is rescinded
or must otherwise be returned by such holder or Representative upon
the insolvency, bankruptcy or reorganization of the Company or
otherwise, the reinstated Indebtedness of the Company arising as a
result of such rescission or return shall constitute Senior Debt
effective as of the date of such rescission or return.




6









 








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




          “Subsidiary” of any specified person means (i) any corporation of which at least a majority of
the outstanding stock having by the terms thereof ordinary voting power for the election of
directors of such corporation (irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by such person, or by one or more
other Subsidiaries, or by such person and one or more other Subsidiaries or (ii) any other person
(other than a corporation) of which at least a majority of the ownership interest is at the time
directly or indirectly owned by such person, or by one or more other Subsidiaries, or by such
person and one or more other Subsidiaries.




          “TIA” means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect
on the date of this Indenture; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such
amendment, the Trust Indenture Act as so amended.




          “Tradable” with respect to any shares of Common Stock as of any time means that as of such
time (i) such shares shall be held, or eligible to be held, in an account on behalf of the Holder
at the DTC, (ii) there shall be no SEC or judicial stop trade order or trading suspension
stop-order or any restriction in place with the transfer agent for the Common Stock with
restricting the trading of such Common Stock and (iii) such shares shall be then eligible under all
applicable federal and state securities laws for immediate resale to the public without volume,
manner of sale, holding period, prospectus delivery, filing, registration, qualification or other
limitations, requirements or restrictions.




          “Trading Day” means: (a) a day on which the Common Stock is traded on a Trading Market, or (b)
if the Common Stock is not traded on a Trading Market, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting prices); provided, however,
that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof,
then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York are authorized or required
by law or other government action to close.




          “Trading Market” means the OTC Bulletin Board, the New York Stock Exchange, the NASDAQ Capital
Market, the NASDAQ Global Market, the NASDAQ Global Select Market or the NYSE Alternext US LLC.




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




7









 








          “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 and acting as an agency 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, and which in the case of (i) and (ii) are not callable
or redeemable at the option of the issuer thereof, 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 evidenced by such depository receipt.




          “Voting Stock” of any Person means the total voting power of all classes of the Capital Stock
of such Person entitled to vote generally in the election of directors of such Person.




Section 1.2 Other Definitions.




	 	 	 	 	 
	 	 	DEFINED IN
	TERM	 	SECTION
	“Aggregate Amount”

	 	 	9.7	(e)
	“Bankruptcy Law”

	 	 	5.1	 
	“Conversion Agent”
	 	 	2.3	 
	“Custodian”
	 	 	5.1	 
	“Equity Conditions”
	 	 	2.7	 
	“Event of Default”
	 	 	5.1	 
	“Ex Date”
	 	 	9.7	(g)
	“Expiration Date”

	 	 	9.7	(e)
	“Expiration Time”

	 	 	9.7	(e)
	“Legal Holiday”
	 	 	10.7	 
	“Mandatory Conversion Date”
	 	 	9.3	 
	“Participant”

	 	 	2.13.1	 
	“Paying Agent”

	 	 	2.3	 
	“Purchased Shares”

	 	 	9.7	(e)
	“Reference Property”

	 	 	9.13	 
	“Registrar”

	 	 	2.3	 
	“Rights”

	 	 	9.7	(c)
	“Service Agent”

	 	 	2.3	 
	“successor person”

	 	 	4.1	 
	“Underlying Shares”

	 	 	9.7	 






8









 






Section 1.3 Incorporation by Reference of Trust Indenture Act.




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




          “Commission” means the SEC.




          “indenture securities” means the Securities.




          “indenture security holder” means a Securityholder or Holder.




          “indenture to be qualified” means this Indenture.




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




          “obligor” on the indenture securities means the Company and any successor obligor upon the
Securities.




          All other terms used in this Indenture that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used
herein as so defined.




Section 1.4 Rules of Construction.




          Unless the context otherwise requires:




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




          (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles;




          (c) references to “generally accepted accounting principles” shall mean generally accepted
accounting principles in effect as of the time when and for the period as to which such accounting
principles are to be applied;




          (d) “or” is not exclusive;




          (e) “including” means “including without limitation”;




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




          (g) provisions apply to successive events and transactions.




9









 








ARTICLE II.

THE SECURITIES




Section 2.1 Form and Dating.




          The Securities and the Trustee’s certificate of authentication shall be substantially in the
form set forth in Exhibit A, which is incorporated in and forms a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication.




          The Securities shall be issued initially in the form of one or more Global Securities,
substantially in the form set forth in Exhibit A (the “Global Security”), deposited with the
Trustee, as custodian for DTC (who shall be the initial Depository with respect to the Securities),
duly executed by the Company and authenticated by the Trustee and bearing the legend set forth in
Exhibit B. The aggregate principal amount of the Global Security may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as
hereinafter provided; provided, that, except as permitted by Section 2.13, in no event shall the
aggregate principal amount of the Global Security or Securities exceed $[___].




          Securities issued in exchange for interests in a Global Security pursuant to Section 2.13.2
may be issued in the form of permanent certificated Securities in registered form in substantially
the form set forth in Exhibit A (the “Physical Securities”) and, if applicable, bearing any legends
required hereby.




          The Securities shall be denominated in Dollars, and all cash payments due thereon shall be
made in Dollars. The Securities shall be issuable only in registered form without interest coupons
and only in denominations of $1,000 principal amount and any integral multiple thereof.




Section 2.2 Execution and Authentication of Securities.




          Two Officers shall sign the Securities for the Company by manual or facsimile signature. If
an Officer whose signature is on a Security no longer holds that office at the time the Security is
authenticated, the Security shall nevertheless be valid.




          A Security shall not be valid until authenticated by the manual signature of the Trustee or an
authenticating agent. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.




          Upon a Company Order, the Trustee shall authenticate Securities for original issue in the
aggregate principal amount of $[___]. The aggregate principal amount of Securities outstanding at
any time may not exceed $[___] except as provided in Section 2.13.2.




Section 2.3 Registrar, Paying Agent and Conversion Agent.




          The Company shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (“Registrar”), an office or agency where Securities may be
presented for payment (“Paying Agent”) and an office or agency where




10









 




Securities may be presented for conversion (“Conversion Agent”). The Corporate Trust Office
shall serve as the office or agency for the aforementioned purposes. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may appoint or change
one or more co-Registrars, one or more additional paying agents and one or more additional
conversion agents without notice and may act in any such capacity on its own behalf. The term
“Registrar” includes any co-Registrar; the term “Paying Agent” includes any additional paying
agent; and the term “Conversion Agent” includes any additional conversion agent.




          The Company shall enter into an appropriate agency agreement with any Securities Agent not a
party to this Indenture. The agreement shall implement the provisions of this Indenture that relate
to such Securities Agent. The Company shall notify the Trustee of the name and address of any
Securities Agent not a party to this Indenture. If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as such.




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




Section 2.4 Paying Agent to Hold Money in Trust.




          Each Paying Agent shall hold in trust for the benefit of the Securityholders or the Trustee
all moneys held by the Paying Agent for the payment of the Securities, and shall notify the Trustee
of any Default by the Company in making any such payment. While any such Default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent shall have no further liability for such money. If the Company acts
as Paying Agent, it shall segregate and hold as a separate trust fund all money held by it as
Paying Agent.




Section 2.5 Securityholder 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 the Securityholders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least ten days before each interest payment date 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 the Securityholders.




Section 2.6 Transfer and Exchange.




          Subject to Section 2.13.2, where Securities are presented to the Registrar with a request to
register a transfer or to exchange them for an equal principal amount of Securities, the Registrar
shall register the transfer or make the exchange if its requirements for such transactions are met.
To permit registrations of transfers and exchanges, the Trustee shall authenticate the Securities
at the Registrar’s request




          No service charge shall be made for any transfer, exchange or conversion of Securities, but
the Company may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge that may be imposed in connection with any transfer, exchange or




11









 





conversion of Securities, other than exchanges pursuant to Section 8.5 or Section 9.3, not
involving any transfer.




Section 2.7 Interest Payment and Record Dates.




          Interest will be due and payable on the Interest Payment Dates. The “Interest Payment Dates”
for the Securities shall be March ___ and September ___ of each calendar year, beginning with, and
including, September ___, 2009, and on each Conversion Date, Mandatory Conversion Date and the
Maturity Date, as applicable. The Record Date for an Interest Payment Date that falls on March ___
shall be the immediately preceding March 1, the Record Date for an Interest Payment Date that falls
on September ___ shall be the immediately preceding September 1.




          Interest will accrue on the Securities from and including the Issue Date, or from and
including the Record Date with respect to the previous Interest Payment Date, to, but excluding,
the current Record Date, Conversion Date, Mandatory Conversion Date or Maturity Date, as
applicable. Interest will accrue on the basis of a 360-day year consisting of twelve 30-day
months.




          Interest will be payable in cash or, at the Company’s option at any time following the
Authorization Date, in shares of Common Stock, valued at 90% of the Daily VWAP on the Trading Day
immediately preceding the Interest Payment Date, Conversion Date, Mandatory Conversion Date or the
Maturity Date; provided that interest may only be paid in shares of Common Stock if the following
conditions (the “Equity Conditions”), have been met: (1) the Company has sufficient authorized
shares available to cover the payment of interest in shares; (2) the shares of Common Stock to be
issued shall not require registration with, or approval of, any governmental authority under any
state law or any other federal law before such shares may be validly issued or delivered 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 applicable Interest Payment Date, Conversion Date,
Mandatory Conversion Date or Maturity Date, as applicable; and (3) the shares of Common Stock to
be issued will, upon issuance, be duly and validly issued and fully paid and nonassessable and free
of any preemptive or similar rights.




          Certificates for shares of Common Stock issued as interest payments hereunder shall be
transmitted by the Company to its transfer agent who will transfer such certificates to the Holder
(or Beneficial Holder) by crediting the account of the Holder’s prime broker with the DTC through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such
system on or before the applicable Interest Payment Date, Conversion Date, Mandatory Conversion
Date or Maturity Date, as applicable.




Section 2.8 Mutilated, Destroyed, Lost and Stolen Securities.




          If any mutilated Security is surrendered to the Trustee, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.




          If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction
of the destruction, loss or theft of any Security and (ii) such security or indemnity as




12









 




may be required by them to save each of them and any agent of either of them harmless, then,
in the absence of notice to the Company or the Trustee that such Security has been acquired by a
protected purchaser, the Company shall execute and upon its request the Trustee shall authenticate
and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new
Security and of like tenor and principal amount and bearing a number not contemporaneously
outstanding.




          In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a new Security, pay
such Security.




          Upon the issuance of any new Security under this Section, 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) connected
therewith.




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




          The provisions of this Section 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 Securities.




Section 2.9 Outstanding Securities.




          If the Paying Agent (other than the Company) holds on the Maturity Date, money sufficient to
pay the principal amount with respect to all Securities to be paid upon maturity plus, if
applicable, accrued and unpaid interest, if any, payable as herein provided upon maturity, then
(unless there shall be a Default in the payment of such principal amount, or of such accrued and
unpaid interest), except as otherwise provided herein, on and after such date such Securities shall
be deemed to be no longer outstanding, interest on such Securities shall cease to accrue, and such
Securities shall be deemed paid whether or not such Securities are delivered to the Paying Agent.
Thereafter, all rights of the Holders of such Securities shall terminate with respect to such
Securities, other than the right to receive the principal amount plus, if applicable, such accrued
and unpaid interest, in accordance with this Indenture.




          If a Security is converted in accordance with ARTICLE IX, then, from and after the time of
such conversion on the Conversion Date, such Security shall cease to be outstanding, and interest,
if any, shall cease to accrue on such Security unless there shall be a Default in the payment or
delivery of the consideration payable hereunder upon such conversion.




Section 2.10 Cancellation.




          The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar
and the Paying Agent shall forward to the Trustee any Securities surrendered to




13









 




them for registration of transfer, exchange, conversion, or payment. The Trustee shall cancel
all Securities surrendered for transfer, exchange, conversion, payment, replacement or cancellation
and shall destroy such canceled Securities (subject to the record retention requirement of the
Exchange Act) and deliver a certificate of such destruction to the Company, unless the Company
otherwise directs. The Company may not issue new Securities to replace Securities that it has paid
or delivered to the Trustee for cancellation or that has been converted.




Section 2.11 No Sinking Fund.




          There shall be no sinking fund with
respect to the Securities.




Section 2.12 [Intentionally Omitted]




Section 2.13 Global Securities.




          2.13.1 Terms of Securities. The Global Securities initially shall (i) be registered in the
name of the Depository for the Securities or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as required hereby. Members
of, or participants in, the Depository for the Securities (“Participants”) shall have no rights
under this Indenture with respect to any Global Security held on their behalf by such Depository,
or the Trustee as its custodian, or under the Global Security, and such Depository may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of
the Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by such Depository or
impair, as between such Depository and Participants, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.




          2.13.2 Transfer and Exchange. Notwithstanding any provisions to the contrary contained in
Section 2.6 of the Indenture and in addition thereto, any Global Security shall be exchangeable
pursuant to Section 2.6 of the Indenture for Securities registered in the names of Holders other
than the Depository for such Security or its nominee only if (i) such Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global Security or if at
any time such Depository ceases to be a clearing agency registered under the Exchange Act, and, in
either case, the Company fails to appoint a successor Depository within 90 days of such event, (ii)
the Company executes and delivers to the Trustee an Officers’ Certificate to the effect that such
Global Security shall be so exchangeable or (iii) an Event of Default with respect to the
Securities represented by such Global Security shall have happened and be continuing. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for
Securities registered in such names as the Depository shall direct in writing in an aggregate
principal amount equal to the principal amount of the Global Security with like tenor and terms.




          Except as provided in this Section 2.13.2, a Global Security may not be transferred except as
a whole by the Depository with respect to such Global Security to a




14









 




nominee of such Depository, by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any such nominee to a successor Depository or a
nominee of such a successor Depository.




          2.13.3 Legend. Unless otherwise provided pursuant to Section 2.2, any Global Security issued
hereunder shall bear a legend in substantially the following form:




               “This Security is a Global Security within the meaning of the Indenture hereinafter referred
to and is registered in the name of the Depository or a nominee of the Depository. This Security is
exchangeable for Securities registered in the name of a person other than the Depository or its
nominee only in the limited circumstances described in the Indenture, and may not be transferred
except as a whole by the Depository to a nominee of the Depository, by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or any such nominee to
a successor Depository or a nominee of such a successor Depository.”



          2.13.4 Acts of Holders. The Depository, as a Holder, may appoint agents and otherwise
authorize participants to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action which a Holder is entitled to give or take under the Indenture.




          2.13.5 Payments. Notwithstanding the other provisions of this Indenture, unless otherwise
specified as contemplated by Section 2.2, payment of the principal of and interest, if any, on any
Global Security shall be made to the Holder thereof.




          2.13.6 Consents, Declaration and Directions. Except as provided in Section 2.13.5, the
Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of
outstanding Securities represented by a Global Security as shall be specified in a written
statement of the Depository with respect to such Global Security, for purposes of obtaining any
consents, declarations, waivers or directions required to be given by the Holders pursuant to this
Indenture.




Section 2.14 CUSIP Numbers.




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




Section 2.15 Deposit of Moneys.




          Prior to [11:00 A.M.], New York City time, on each interest payment date or the Maturity Date,
the Company shall have deposited with a Paying Agent (other than the Company) money, in funds
immediately available on such date, sufficient to make cash payments, if any,




15









 




due on such interest payment date, if applicable, or, the Maturity Date, as the case may be,
in a timely manner which permits the Paying Agent to remit payment to the Holders on such interest
payment date, if applicable, or, the Maturity Date, as the case may be.




Section 2.16 Ranking.




          The Securities will be secured on a second-priority lien basis by all of the Company’s assets,
subordinated to existing and future Senior Debt, senior to
any existing and future Indebtedness that by its terms ranks junior to the Securities, pari-passu
with the Company’s other existing and future Indebtedness except in the case of existing and future
unsecured Indebtedness to the extent of the value of assets securing the Securities remaining after
application to any Senior Debt.




Section 2.17 Additional Securities.




          The Company may, without the consent of the Holders and notwithstanding Section 2.1 and
Section 2.2 hereof, reopen the Securities and issue additional Securities hereunder with the same
terms and conditions (except for any difference in the issue price therefor and interest accrued
prior to the date of issuance thereof) and with the same CUSIP number as the Securities initially
issued hereunder in an aggregate principal amount of up to $[___], which will form the same series
with the Securities initially issued hereunder, provided that such additional Securities constitute
the same issue as the Securities initially issued hereunder for U.S. federal income tax purposes.
The Securities initially issued hereunder and any such additional Securities would rank equally and
ratably and would be treated as a single series of debt securities for all purposes under the
Indenture.




ARTICLE III.

COVENANTS




Section 3.1 Payment of Principal and Interest.




          3.1.1 The Company shall pay all amounts due with respect to the Securities on the dates and in
the manner provided in the Securities. All such amounts shall be considered paid on the date due if
the Paying Agent (other than the Company) holds on that date money sufficient to pay the amount
then due with respect to the Securities (unless there shall be a Default in the payment of such
amounts to the respective Holder(s)).




          3.1.2 The Company shall pay, in cash, interest on any overdue amount (including, to the extent
permitted by applicable law, overdue interest) at the rate borne by the Securities.




Section 3.2 Maintenance of Office or Agency.




          The Company will maintain an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-Registrar) in New York City, New York, where Securities
may be surrendered for registration of transfer or exchange, payment or conversion and where
notices and demands to or upon the Company in respect of the Securities




16









 




and this Indenture may be served. The Corporate Trust Office will initially serve as the
office or agency for such purposes. The Company will give prompt written notice to the Trustee of
any change in the location of such office or agency. 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
of any change in the location thereof, such presentations, surrenders, notices and demands may
continue to be made or served at the Corporate Trust Office of the Trustee.




          The Company may also from time to time designate one or more other offices or agencies where
the Securities 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 [___] for such
purposes. The Company will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.




          The Company hereby designates the Corporate Trust Office of the Trustee as an agency of the
Company in accordance with Section 2.3.




Section 3.3 SEC Reports.




          3.3.1 The Company shall deliver to the Trustee, no later than fifteen (15) days after the date
such report is required to be filed with the SEC pursuant to the Exchange Act (after giving effect,
to the extent applicable, any extension permitted by Rule 12b-25 under the Exchange Act), a copy of
each report (or copies of such portions of such report as the SEC may from time to time by rules
and regulations prescribe) the Company is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act; provided, however, 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; provided further, each such report will be deemed to be so delivered to the Trustee at the
time such report is filed with the SEC through the SEC’s EDGAR database.




          3.3.2 If the Company is, at any time while any Securities are outstanding, no longer subject
to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, then the Company
shall continue to provide to the Trustee (and, unless the SEC will not accept such filing, file
with the SEC in accordance with rules and regulations prescribed from time to time by the SEC) and,
upon request, to each Holder, no later than the date the Company would have been required to file
the same with the SEC, the reports the Company would have been required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act (after giving effect, to the extent it would
have been applicable, any extension permitted by Rule 12b-25 under the Exchange Act) if the Company
had securities listed and registered on a national securities exchange and were subject to the
reporting requirements of such sections. The Company shall also deliver to the Trustee copies of
the Company’s annual report to stockholders, containing audited financial statements, and any other
financial reports which the Company furnishes to its stockholders. The Company also shall comply
with the other provisions of TIA § 314(a). Delivery of such reports, information and documents to
the Trustee is for informational purposes only, and the Trustee’s receipt thereof shall not
constitute constructive notice of any information contained therein or determinable from
information contained therein,




17









 




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 3.4 Compliance Certificate.




          The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of
the Company, or, if earlier, the date the Company is, or would be, required to file with the SEC
the Company’s annual report (whether on Form 10-K under the Exchange Act or another appropriate
form) for such fiscal year, an Officers’ Certificate stating that a review of the activities of the
Company during the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed, performed and fulfilled
its obligations under this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof (or, if a Default
or Event of Default shall have occurred, describing all such Defaults or Events of Default of which
he may have knowledge).




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




Section 3.5 Stay, Extension and Usury Laws.




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




Section 3.6 Corporate Existence.




          Subject to ARTICLE IV, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the rights (charter and
statutory), licenses and franchises of the Company; provided, however, that the
Company shall not be required to preserve any such right, license or franchise, if the Board of
Directors shall determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.




Section 3.7 Taxes.




          The Company shall pay prior to delinquency all taxes, assessments and governmental levies,
except as contested in good faith and by appropriate proceedings.





18











 





Section 3.8 Further Instruments and Acts.




          Upon request of the Trustee, the Company shall 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.



ARTICLE IV.

SUCCESSORS




Section 4.1 When Company May Merge, Etc.




          The Company shall not consolidate with or merge into, or convey, transfer or lease all or
substantially all of its properties and assets to, any person (a “successor person”), and may not
permit any person to merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, the Company, whether in a single transaction or a series of
related transactions, unless:



          (a) the successor person (if any) is a corporation organized and validly existing under the
laws of any U.S. domestic jurisdiction and expressly assumes by supplemental indenture the
Company’s obligations on the Securities and under this Indenture; and



          (b) immediately after giving effect to the transaction, no Default or Event of Default, shall
have occurred and be continuing.



          The Company shall deliver to the Trustee prior to the consummation of the proposed transaction
an Officers’ Certificate to the foregoing effect and an Opinion of Counsel stating that the
proposed transaction and such supplemental indenture comply with this Indenture.



Section 4.2 Successor Corporation Substituted.




          Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company in accordance with Section 4.1, the successor
corporation formed by such consolidation or into or with which the Company is merged or to which
such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with the same effect as
if such successor person has been named as the Company herein; provided, however,
that the predecessor Company in the case of a sale, lease, conveyance or other disposition shall
not be released from the obligation to pay the principal of and interest, if any, on the
Securities.




ARTICLE V.

DEFAULTS AND REMEDIES




Section 5.1 Events of Default.




          An “Event of Default” is deemed to occur with respect to the Securities if and only if:




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          (a) the Company fails to pay the principal of any Security when the same becomes due and
payable whether on the Maturity Date or otherwise;




          (b) the Company fails to pay an installment of interest on any Security when due, if such
failure continues for thirty (30) days after the date when due;




          (c) with respect to any Security, the Company fails to satisfy its conversion obligations
under such Security upon exercise of a Holder’s conversion rights pursuant hereto;




          (d) the Company fails to comply with any material covenant, condition or agreement set forth
in the Securities, the Security Agreement, the Intercreditor Agreement, the Securities Purchase
Agreement or this Indenture and such failure continues for thirty
(30) days after notice thereof is sent to the Company by the
Trustee or to the Company and the Trustee by Holders of at least
twenty five (25%) in aggregate principal amount of the Securities
then outstanding, each in accordance with this Indenture;




          (e) the Company defaults in the payment when due, after the expiration of any applicable grace
period, of principal of, or interest on, Indebtedness for money borrowed, in the aggregate
principal amount then outstanding of $250,000 or more, or the acceleration of Indebtedness of the
Company for money borrowed in such aggregate principal amount or more so that it becomes due and
payable prior to the date on which it would otherwise become due and payable and such default is
not cured or waived, or such acceleration is not rescinded, within
thirty (30) days after notice thereof is sent to
the Company by the Trustee or to the Company and the Trustee by Holders of at least [twenty five
percent (25%) in aggregate principal amount of the Securities then outstanding, each in accordance
with this Indenture;




          (f) the
security interest in favor of the Holders pursuant to the Security
Documents or any of the security provided for therein shall, at any time, cease to be
in full force and effect for any reason (except for releases of
collateral in accordance with Section 11.x) or any security interest created thereunder shall be declared invalid or unenforceable
or the Company or any of its Subsidiaries or Affiliates shall assert, in any pleading in any court
of competent jurisdiction, that any such security interest is invalid or unenforceable.




          (g) the Company either:




               (i) commences a voluntary case,



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



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



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



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




               (i) is for relief against the Company in an involuntary case or proceeding, or adjudicates the
Company insolvent or bankrupt,



               (ii) appoints a Custodian of the Company for all or substantially all of the property of the
Company, or



               (iii) orders the winding up or liquidation of the Company,



               (iv) and, in the case of each of the foregoing clauses (i), (ii) and (iii) of this Section
5.1(h), the order or decree remains unstayed and in effect for at least ninety (90) consecutive
days.



          (i) the Company fails to have a sufficient number of authorized shares for conversion after
the Release Date.




          (j) the Company is no longer quoted on the OTC Bulletin Board and is not listed on at least
one Trading Market for a period of 5 consecutive Trading Days.




          (k) the Company shall be unable for any reason to deliver Tradable shares of Common Stock upon
conversion of the Securities at the election of Holder.




          (l) there shall be any SEC or judicial stop trade order or trading suspension stop-order or
any restriction in place with the transfer agent for the Common Stock restricting the trading of
such Common Stock.




          (m) the Authorization Date shall have failed to occur prior to the date that is 105 days from
the Issue Date.




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




          A Default under clause (d) above is not an Event of Default until (I) the Trustee notifies the
Company, or the Holders of at least twenty five percent (25%) in aggregate principal amount of the
Securities then outstanding notify the Company and the Trustee, of the Default and (II) the Default
is not cured within sixty (60) days after receipt of such notice. Such notice must specify the
Default, demand that it be remedied and state that the notice is a “Notice of Default.” If the
Holders of at least twenty five percent (25%) in aggregate principal amount of the outstanding
Securities request the Trustee to give such notice on their behalf, the Trustee shall do so. When a
Default is cured, it ceases.




Section 5.2 Acceleration of Maturity; Rescission and Annulment.




          If an Event of Default with respect to Securities at the time outstanding occurs and is
continuing (excluding an Event of Default referred to in
Sections 5.1(g) or (h) with respect to the Company, then in every such case, subject to restrictions set



21









 







forth in the Intercreditor Agreement, the Trustee or the Holders of not less than 25% in
principal amount of the outstanding Securities may declare the principal amount of and accrued and
unpaid interest, if any, on all of the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such
principal amount and accrued and unpaid interest, if any, shall become immediately due and payable.
If an Event of Default specified in Sections 5.1(g) or (h) with
respect to the Company shall occur, the principal amount of and
accrued and unpaid interest, if any, on all outstanding Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder.



          At any time after such a declaration of acceleration with respect to the Securities has been
made and before a judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of a majority in principal amount of the
outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul
such declaration and its consequences if:



          (a) the Company has paid or deposited with the Trustee a sum sufficient to pay



               (i) all overdue interest, if any, on all Securities,



               (ii) the principal of any Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities,



               (iii) to the extent that payment of such interest is lawful, interest upon any overdue
principal and overdue interest at the rate or rates prescribed therefor in such Securities, and



               (iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel; and



          (b) all Events of Default with respect to Securities, other than the non-payment of the
principal of Securities which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13.




          No such rescission shall affect any subsequent Default or impair any right consequent thereon.




Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.




          The Company covenants that if:



          (a) default is made in the payment of any interest on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or



          (b) default is made in the payment of principal of any Security at the Maturity thereof,



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then,
subject to the Intercreditor Agreement, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of
such Securities, the whole amount then due and payable on such Securities for principal and
interest and, to the extent that payment of such interest shall be legally enforceable, interest on
any overdue principal or any overdue interest, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.



          If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, subject to any restrictions in the Intercreditor
Agreement, may institute a judicial proceeding for the collection of the sums so due and unpaid,
may prosecute such proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be
payable in the manner provided by law out of the property of the Company or any other obligor upon
such Securities, wherever situated.



          If an Event of Default with respect to any Securities occurs and is continuing, subject to any
restrictions in the Intercreditor Agreement, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in
this Indenture or the Security Documents or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.



Section 5.4 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 Securities or the property of the Company or of such other
obligor or their creditors, subject to the restrictions in the Intercreditor Agreement, the Trustee
(irrespective of whether the principal of the Securities 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 overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,



          (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid
in respect of the Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and 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 other 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 to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and



23









 







advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7.



          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 Securities 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 5.5 Trustee May Enforce Claims Without Possession of Securities.




          All rights of action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.




Section 5.6 Application of Money Collected.




          Any money collected by the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or interest, upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:



          First: To the payment of all amounts due the Trustee under Section 6.7; and



          Second: To the payment of the amounts then due and unpaid for principal of and interest on
the Securities in respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and interest, respectively; and



          Third: To the Company.



Section 5.7 Limitation on Suits.




          No Holder of any Security shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, except in compliance with any restrictions in the Intercreditor
Agreement and unless




          (a) such Holder has previously given written notice to the Trustee of a continuing Event of
Default with respect to the Securities;




          (b) the Holders of not less than 25% in principal amount of the outstanding Securities shall
have made written request to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;




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          (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the
losses, expenses or liabilities to be incurred in compliance with such request;




          (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity
has failed to institute any such proceeding; and




          (e) no direction inconsistent with such written request has been given to the Trustee during
such 60 day period by the Holders of a majority in principal amount of the outstanding Securities;



it being understood and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such Holders.



Section 5.8 Unconditional Right of Holders to Receive Principal and Interest and to Convert
Securities.




          Notwithstanding any other provision in this Indenture, the Holder of any Security
shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such
Security on the Stated Maturity or Stated Maturities expressed in such Security, to convert any
Security into shares of Common Stock in accordance with the terms of
such Security and, subject to the Intercreditor Agreement, to institute
suit for the enforcement of any such payment, and such rights shall not be impaired without the
consent of such Holder.



Section 5.9 Restoration of Rights and Remedies.




          If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding had been
instituted.



Section 5.10 Rights and Remedies Cumulative.




          Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or remedy.



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Section 5.11 Delay or Omission Not Waiver.




          No delay or omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.



Section 5.12 Control by Holders.




          The Holders of a majority in principal amount of the outstanding Securities shall have the
right to direct the time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:




          (a) such
direction shall not be in conflict with any rule of law or with this
Indenture or the Intercreditor Agreement,




          (b) the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and




          (c) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to
follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the
Trustee, determine that the proceeding so directed would involve the Trustee in personal liability.




Section 5.13 Waiver of Past Defaults.




          Subject to Section 5.2, the Holders of not less than a majority in principal amount of the
outstanding Securities may on behalf of the Holders of all the Securities waive any past Default
hereunder with respect the Securities and its consequences, except (a) a Default in the payment of
the principal of or interest on any Security, (b) a Default with respect to a Holder’s right to
convert Securities, or (c) a Default with respect to any covenant the amendment of which would
require the consent of each Holder (provided, however, that the Holders of [a majority] in
principal amount of the outstanding Securities may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.




Section 5.14 Undertaking for Costs.




          All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its



26









 







discretion assess reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the
outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment
of the principal of or interest on any Security on or after the Stated Maturity or Stated
Maturities expressed in such Security (or, in the case of redemption, on the redemption date).



ARTICLE VI.

TRUSTEE




Section 6.1 Duties of Trustee.




          (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the conduct of his own
affairs.



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



               (i) The Trustee need perform only those duties that are specifically set forth in this
Indenture and no others.



               (ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon Officers’
Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of
this Indenture; however, in the case of any such Officers’ Certificates or Opinions of
Counsel which by any provisions hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine such Officers’ Certificates and Opinions of Counsel to determine whether
or not they conform to the requirements of this Indenture.



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




               (i) This paragraph does not limit the effect of paragraph (b) of this Section.



               (ii) The Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts.



               (iii) The Trustee shall not be liable with respect to any action taken, suffered or omitted to
be taken by it with respect to Securities in good faith in accordance with the direction of the
Holders of a majority in principal amount of the outstanding Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the
Securities.



27









 





          (d) Every provision of this Indenture that in any way relates to the Trustee is subject to
paragraph (a), (b) and (c) of this Section.




          (e) The Trustee may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or expense.




          (f) Upon
request of the Company, the Trustee is hereby authorized to and shall
enter into the Intercreditor Agreement and the Security Documents,
and any amendment, restatement, renewal, replacement, supplement,
superseding agreement or other modification in accordance with this
Indenture.




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




          (h) No provision of this Indenture shall require the Trustee to risk its own funds or
otherwise incur any financial liability in the performance of any of its duties, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk is not reasonably assured to it.




          (i) The Paying Agent, the Registrar and any authenticating agent shall be entitled to the
protections and immunities as are set forth in paragraphs (a), (b) and (c) of this Section with
respect to the Trustee; provided that such protections and immunities shall not apply to the
Company in its role as Paying Agent or Registrar.




Section 6.2 Rights of Trustee.




          (a) The Trustee may rely on and shall be protected in acting or refraining from acting upon
any document believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the document.




          (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.




          (c) The Trustee may act through agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care. No Depository shall be deemed an agent of the
Trustee and the Trustee shall not be responsible for any act or omission by any Depository.




          (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers conferred upon it under this
Indenture.




          (e) The Trustee may consult with counsel and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.




          (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders of Securities unless such
Holders shall have offered to the Trustee reasonable security or indemnity



28









 






against the costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.




Section 6.3 Individual Rights of Trustee.




          The Trustee in its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or an Affiliate with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights. The Trustee is also
subject to Sections 6.10 and 6.11.




Section 6.4 Trustee’s Disclaimer.




          The Trustee makes no representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities,
and it shall not be responsible for any statement in the Securities other than its authentication.




Section 6.5 Notice of Defaults.




          If a Default or Event of Default occurs and is continuing with respect to the Securities and
if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Securityholder of the Securities notice of a Default or Event of Default within 30 days after it
occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or
Event of Default. Except in the case of a Default or Event of Default in payment of principal of or
interest on any Security, the Trustee may withhold the notice if and so long as its corporate trust
committee or a committee of its Responsible Officers in good faith determines that withholding the
notice is in the interests of Securityholders.




Section 6.6 Reports by Trustee to Holders.




          Within 60 days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept by the Registrar, a brief
report dated as of such May 15, in accordance with, and to the extent required under, TIA Section
313.




          A copy of each report at the time of its mailing to Securityholders shall be filed with the
SEC and each stock exchange on which the Securities are listed. The Company shall promptly notify
the Trustee when Securities are listed on any stock exchange.




Section 6.7 Compensation and Indemnity.




          The Company shall pay to the Trustee from time to time reasonable compensation for its
services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee’s agents and counsel.




29









 








          The Company shall indemnify the Trustee (including the cost of defending itself) against any
loss, liability or expense incurred by it except as set forth in the next paragraph in the
performance of its duties under this Indenture as Trustee or Agent. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably withheld. This
indemnification shall apply to officers, directors, employees, shareholders and agents of the
Trustee.




          The Company need not reimburse any expense or indemnify against any loss or liability incurred
by the Trustee or by any officer, director, employee, shareholder or agent of the Trustee through
negligence or bad faith.




          To secure the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the Trustee, except that held
in trust to pay principal and interest on particular Securities.




          When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 5.1(g) or Section 5.1(h) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law.




Section 6.8 Replacement of Trustee.




          A resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.




          The Trustee may resign with respect to the Securities by so notifying the Company. The Holders
of a majority in principal amount of the Securities may remove the Trustee by so notifying the
Trustee and the Company. The Company may remove the Trustee with respect to Securities if:




          (a) the Trustee fails to comply with Section 6.10;




          (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;




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




          (d) the Trustee becomes incapable of acting.




          If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee appointed by the
Company.




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




          If the Trustee with respect to the Securities fails to comply with Section 6.10, any
Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.




          A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee subject to the lien provided for in Section
6.7, the resignation or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with respect to the Securities
for which it is acting as Trustee under this Indenture. A successor Trustee shall mail a notice of
its succession to each Securityholder. Notwithstanding replacement of the Trustee pursuant to this
Section 6.8, the Company’s obligations under Section 6.7 hereof shall continue for the benefit of
the retiring trustee with respect to expenses and liabilities incurred by it prior to such
replacement.




Section 6.9 Successor Trustee by Merger, Etc.




          If the Trustee consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee.




Section 6.10 Eligibility; Disqualification.




          This Indenture shall always have a Trustee who satisfies the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall always have a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b).




Section 6.11 Preferential Collection of Claims Against Company.




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




ARTICLE VII.

SATISFACTION AND DISCHARGE




Section 7.1 Satisfaction and Discharge of Indenture.




          This Indenture shall upon Company Order cease to be of further effect (except as hereinafter
provided in this Section 7.1), and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when




31









 








          (a) either




               (i) all Securities theretofore authenticated and delivered (other than Securities that have
been destroyed, lost or stolen and that have been replaced or paid) have been delivered to the
Trustee for cancellation; or



               (ii) all
such Securities not theretofore delivered to the Trustee for
cancellation have become due and payable.



and the Company has deposited or caused to be deposited with the Trustee as trust funds in trust an
amount sufficient for the purpose of paying and discharging the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to
the date of such deposit (in the case of Securities which have become due and payable on or prior
to the date of such deposit) or to the Stated Maturity, as the case may be;




          (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company;
and




          (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.




          Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the
Trustee under Section 6.7, and, if money shall have been deposited with the Trustee pursuant to
clause (a) of this Section, the provisions of Section 2.4, Section 2.7, Section 2.8, Section 6.1,
Section 6.2, and Section 6.5 shall survive.




Section 7.2 Application of Trust Funds; Indemnification.




          (a) All funds deposited with the Trustee pursuant to Section 7.1 and all interest earned on
such funds, shall be held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may determine, to the persons
entitled thereto, of the principal and interest for whose payment such money has been deposited
with or received by the Trustee.




          (b) The Trustee shall deliver or pay to the Company from time to time upon Company Request any
funds held by Trustee which, in the opinion of a nationally recognized firm of independent
certified public accountants expressed in a written certification thereof delivered to the Trustee,
are then in excess of the amount thereof which then would have been required to be deposited for
the purpose for which such funds were deposited or received.




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Section 7.3 Repayment to Company.




          The Trustee and the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal and interest that remains unclaimed for
two years. Thereafter, the Trustee and
Paying Agent may withhold paying any such money to the Company until they publish in a newspaper of
general circulation in the City of New York, or mail to each Holder, a notice stating that the
money will be paid to the Company if unclaimed after a date no less than 30 days from the
publication or mailing. After that, Securityholders entitled to the money must look to the Company
for payment as general creditors unless an applicable abandoned property law designates another
person, and all liability of the Trustee and the Paying agent with respect to the money will cease.




Section 7.4 Reinstatement.




          If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in
accordance with Section 6.1, by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section 6.1, until such time
as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations
in accordance with Section 6.1; provided, however, that if the Company makes any payment of
principal of, premium, if any, or interest on any Securities because of reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.




ARTICLE VIII.

AMENDMENTS AND WAIVERS




Section 8.1 Without Consent of Holders.




          The Company, subject to any restrictions in the Intercreditor Agreement, with the consent of
the Trustee, may amend or supplement this Indenture or the Securities without notice to or the
consent of any Securityholder:




          (a) to
comply with Section 4.2 and Section 9.13;




          (b) to grant additional security for the obligations of the Company in respect of the
Securities;




          (c) to
add to the covenants of the Company described in this Indenture for
the benefit of the Holders;




          (d) to surrender any right or power conferred upon the Company; and




          (e) to make provisions with respect to adjustments to the Conversion Rate as required by this
Indenture.




          In addition, the Company and the Trustee, subject to any restrictions in the Intercreditor
Agreement, may enter into a supplemental indenture without the consent of Holders of the Securities
to cure any ambiguity, defect, omission or inconsistency in this Indenture in a



33









 






manner that does not, individually or in the aggregate with all other modifications made or to
be made to the Indenture, adversely affect the rights of any Holder.




Section 8.2 With Consent of Holders.




          The Company, with the consent of the Trustee, subject to any restrictions in the Intercreditor
Agreement, may amend or supplement this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities. Subject to Section 5.2, Section 5.8 and Section
5.13, the Holders of a majority in aggregate principal amount of the outstanding Securities may, by
notice to the Trustee, subject to any restrictions in the Intercreditor Agreement, waive compliance
by the Company with any provision of this Indenture or the Securities without notice to any other
Securityholder. Notwithstanding anything herein to the contrary, without the consent of each Holder
of each outstanding Security affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 5.2, Section 5.3 or Section 5.13, may not:




          (a) change the Stated Maturity of the principal of, or the payment date of any installment of
interest on, any Security;




          (b) reduce the principal amount of, or any interest or interest rate on, any Security;




          (c) change the place, manner or currency of payment of principal of, or any interest on, any
Security;




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




          (e) modify the provisions of Section 2.13 in a manner adverse to Holders;




          (f) except as provided in this Indenture, the Security Agreement and the Intercreditor
Agreement, release all or substantially all of the Collateral other than in accordance with this
Indenture, the Security Agreement and the Intercreditor Agreement;




          (g) adversely affect the right of Holders to convert Securities in accordance with ARTICLE IX;




          (h) reduce the percentage of the aggregate principal amount of the outstanding Securities
whose Holders must consent to a modification to or amendment of any provision of this Indenture or
the Securities;




          (i) reduce the percentage of the aggregate principal amount of the outstanding Securities
whose Holders must consent to a waiver of compliance with any provision of this Indenture or the
Securities or a waiver of any Default or Event of Default; or




34














 





          (j) modify the provisions of this Indenture with respect to modification and waiver (including
waiver of a Default or an Event of Default), except to increase the percentage required for
modification or waiver or to provide for the consent of each affected Holder.




          Promptly after an amendment, supplement or waiver under Section 8.1 or this Section 8.2
becomes effective, the Company shall mail, or cause to be mailed, to Securityholders a notice
briefly describing such amendment, supplement or waiver. Any failure of the Company to mail such
notice shall not in any way impair or affect the validity of such amendment, supplement or waiver.




          It shall not be necessary for the consent of the Holders of Securities under this Section 8.2
to approve the particular form of any proposed supplemental indenture or waiver, but it shall be
sufficient if such consent approves the substance thereof. After a waiver under this section
becomes effective, the Company shall mail to the Holders of Securities affected thereby, a notice
briefly describing the supplemental indenture or waiver. Any failure by the Company to mail or
publish such notice, or any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture or waiver.




Section 8.3 Compliance with Trust Indenture Act.




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




Section 8.4 Revocation and Effect of Consents.




          Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder’s Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every Holder.




          After an amendment, supplement or waiver becomes effective with respect to the Securities, it
shall bind every Holder unless such amendment, supplement or waiver makes a change that requires,
pursuant to Section 8.2, the consent of each Holder affected. In that case, the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to it and, provided
that notice of such amendment, supplement or waiver is reflected on a Security that evidences the
same debt as the consenting Holder’s Security, every subsequent Holder of a Security or portion of
a Security that evidences the same debt as the consenting Holder’s Security.




Section 8.5 Notation on or Exchange of Securities.




          If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver such amendment, supplement or waiver to the Trustee. The
Trustee may place an appropriate notation on the Security as directed and



35









 






prepared by the Company about the changed terms and return it to the Holder. Alternatively, if
the Company so determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms.




Section 8.6 Trustee Protected.




          The Trustee shall sign any amendment, supplemental indenture or waiver authorized pursuant to
this ARTICLE VIII; provided, however, that the Trustee need not sign any amendment, supplement or
waiver authorized pursuant to this ARTICLE VIII that adversely affects the Trustee’s rights,
duties, liabilities or immunities. The Trustee shall be entitled to receive and conclusively rely
upon an Opinion of Counsel as to legal matters and an Officers’ Certificate as to factual matters
that any supplemental indenture, amendment or waiver is permitted or authorized pursuant to this
Indenture and that all conditions precedent to the execution of such supplemental indenture have
been fulfilled.




ARTICLE IX.

CONVERSION




Section 9.1 Conversion Privilege; Restrictive Legends.




          (a) Subject to the provisions of ARTICLE IX, the Securities shall be convertible, at any time,
in integral multiples of $1,000 principal amount, into shares of Common Stock in accordance with
this ARTICLE IX.




          (b) The Company shall not issue fractional shares of Common Stock upon conversion. In the
event of fractional shares, the Company shall pay a cash adjustment for fractional shares based on
the close sale price per share of the Common Stock on the Trading Day immediately preceding the
Conversion Date.




          (c) Notwithstanding anything herein to the contrary, the right to convert the Securities
pursuant to this ARTICLE IX shall terminate at the close of business on the Maturity Date.




          (d) The
initial Conversion Rate shall be            shares of Common Stock per $1,000 principal
amount of Securities. The Conversion Rate shall be subject to adjustment in accordance with
Section 9.7 through Section 9.15.




          (e) A Holder may convert a portion of the principal amount of a Security if such portion is
$1,000 principal amount or an integral multiple of $1,000 principal amount. Provisions of this
Indenture that apply to conversion of all of a Security also apply to conversion of a portion of
such Security.




Section 9.2 Limitation on the Right to Convert.




          9.2.1
Provisional Limitation on the Right to Convert. Until the
Release Date: (i) each Security shall only be convertible by a Holder (or Beneficial Holder) or by the Company pursuant to
Section 9.3 on any day to the extent that, together with all prior conversions under such Security
or, in the case of a Global Security held for the benefit of a Beneficial Holder, the



36









 






total
amount of such Security that has been converted for the benefit of
such Holder (Beneficial
Holder) does not exceed the product of (A) 10% of the original principal amount of all Securities held by
such Holder (or Beneficial Holder), and (B) the number of whole or partial calendar weeks since the
Issue Date; and (ii) a Holder (or Beneficial Holder) may only convert such Securities to the extent
of such Holders (or Beneficial Holder’s) pro rata allocation of [___] shares of Common Stock.




          9.2.2 Permanent Limitation on the Right to Convert. At no time may the Company effect the
conversion of any Securities or issue to a Holder (or Beneficial Holder) shares of Common Stock, or
a Holder (or Beneficial Holder) convert all or a portion of the Securities into shares of Common
Stock, if following such issuance or conversion, the aggregate number of shares of Common Stock
held by any Beneficial Holder of such Securities would exceed, when aggregated with all other
shares of Common Stock then-owned by such Beneficial Holder and all shares of Common Stock that
such Beneficial Holder is then the beneficial owner of (as determined in accordance with Section
13(d) of the Exchange Act and the rules thereunder), the number of shares of Common Stock that
would result in such Beneficial Holder beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules thereunder) more than 4.999% of all of the Common
Stock outstanding following such conversion.




Section 9.3
Mandatory Conversion.




          The Company may elect to cause all or a portion of the principal amount of the Securities to
convert into a number of fully paid and nonassessable shares of Common Stock equal to the quotient
of (i) the principal amount of the Securities divided by (ii) the Conversion Price in effect on the
date of such conversion (the “Mandatory Conversion Date”) by providing thirty (30) days prior
written notice of such Mandatory Conversion Date. Notwithstanding the foregoing, the Company may
not elect to cause all or a portion of the Securities to convert into Common Stock on a Mandatory
Conversion Date if, on the proposed Mandatory Conversion Date (i) the Daily VWAP is equal to or
greater than $      (as appropriately adjusted for stock splits, stock dividends, reorganizations,
recapitalizations, stock combinations and the like) for each of the twenty (20) consecutive prior
trading days ending on the trading day immediately prior to such date, (ii) the Common Stock
issuable upon the mandatory conversion would, immediately upon issuance, be Tradable and (iii) we
have sufficient authorized and unissued shares of Common Stock for full conversion of the
Securities. Any such conversion shall be made pro-rata among all Holders of Securities and subject
to the limitations set forth in Section 9.2. On any such Mandatory Conversion Date, the Company
shall also pay the Holders an amount in cash or, at the Company’s option following the
Authorization Date, provided that the Equity Conditions are met as of the Mandatory Conversion
Date, in shares of Common Stock, valued at 90% of the Daily VWAP on the Trading Day immediately
preceding the Mandatory Conversion Date, in each case equal to the then accrued and unpaid interest
on the outstanding principal balance of the Securities.




37









 








Section 9.4 Conversion Procedure and Payment Upon Conversion.




          9.4.1
To convert a Security (other than a mandatory conversion pursuant
to Section 9.3), a Holder must satisfy the requirements of paragraph 6 of the Securities. If a Security
is tendered for conversion or upon a mandatory conversion pursuant to
Section 9.3 in accordance with this ARTICLE IX, then:




          (a) the Company shall deliver, through the Conversion Agent, the following to the Holder of
such Security:




               (i) a certificate for, or to the extent permissible, in book entry form through DTC, the
number of full shares of Common Stock into which the Securities are converted (the “Conversion
Shares”);



               (ii) any cash payment for fractional shares (the “Cash Payment”); and



               (iii) cash or, at the Company’s option following the Authorization Date, provided that the
Equity Conditions are met as of the Conversion Date, shares of Common Stock valued at 90% of the
Daily VWAP on the Trading Day immediately preceding the Conversion Date, in each case in an amount
equal to all accrued and unpaid interest from, and including, the last Record Date through and
excluding the Conversion Date;



          (b) the Company shall deliver such Conversion Shares and such cash interest Payment or shares
of Common Stock in lieu of interest as soon as practicable following the Conversion Date applicable
to such conversion, but in no event more than two (2) Business Days after the Conversion Date; and




          (c) at and after the close of business on the Conversion Date, the person in whose name such
certificate representing such Conversion Shares is to be registered shall be treated as a
stockholder of record with respect to such Conversion Shares, and all rights of the Holder of such
Security shall terminate, other than the right to receive the consideration deliverable upon
conversion of such Security as provided herein.




          9.4.2 If any Holder surrenders a Security for conversion after the close of business on the
Record Date for the payment of an installment of interest and prior to the related Interest Payment
Date, then, notwithstanding such conversion, the interest payable with respect to such Security on
such Interest Payment Date shall be paid on such Interest Payment Date to the Holder of record of
such Security at the close of business on such Record Date.




          9.4.3 If a Holder converts more than one Security at the same time, the number of full shares
of Common Stock issuable upon such conversion, if any, shall be based on the total principal amount
of all Securities converted.




          9.4.4 Upon surrender of a Security that is converted in part, the Trustee shall authenticate
for the Holder a new Security equal in principal amount to the unconverted portion of the Security
surrendered.




38









 








          9.4.5 If the last day on which a Security may be converted is a Legal Holiday in a place where
a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next
succeeding day that is not a Legal Holiday.




Section 9.5 Taxes on Conversion.




          If a Holder converts its Security, the Company shall pay any documentary, stamp or similar
issue or transfer tax or duty due on the issue, if any, of shares of Common Stock upon the
conversion. However, such Holder shall pay any such tax or duty which is due because such shares
are issued in a name other than such Holder’s name. The Conversion Agent may refuse to deliver a
certificate representing the shares of Common Stock to be issued in a name other than such Holder’s
name until the Conversion Agent receives a sum sufficient to pay any tax or duty which will be due
because such shares are to be issued in a name other than such Holder’s name. Nothing herein shall
preclude any tax withholding required by law or regulation.




Section 9.6 Company to Provide Stock.




          9.6.1 Subject to Section 9.6.2, the Company shall at all times reserve out of its authorized
but unissued Common Stock or Common Stock held in its treasury enough shares of Common Stock to
permit the conversion, in accordance herewith, of all of the Securities into shares of Common
Stock.




          All shares of Common Stock which may be issued upon conversion of the Securities shall be
validly issued, fully paid and non-assessable and shall be free of preemptive or similar rights and
free of any lien or adverse claim.




          The Company shall comply with all securities laws regulating the offer and delivery of shares
of Common Stock upon conversion of Securities and shall list such shares on each national
securities exchange or automated quotation system on which the Common Stock is listed.




          9.6.2 Notwithstanding the foregoing, as of the date hereof, the Company will not have a
sufficient number of shares of Common Stock authorized and available for issuance to enable it to
convert the Securities or pay interest in shares of Common Stock. The Company shall seek
stockholder approval at its next annual meeting of stockholders, or alternatively, at a special
meeting of stockholders, of, and shall, no later than the date that is 105 days from the Issue
Date, (i) increase the number of shares of the Company’s Common Stock that is authorized from
6,000,000,000 to at least [___]; and (ii) effect a 1-                     reverse stock split of its Common Stock
and to reserve for issuance upon conversion of the Securities such additional shares of Common
Stock sufficient to permit the Company to allow conversion of the Securities and to pay interest in
shares of Common Stock.




Section 9.7 Adjustment of Conversion Rate.




          The Conversion Rate shall be subject to adjustment from time to time as follows:




          (a) In case the Company shall (1) pay a dividend in shares of Common Stock to all or
substantially all holders of Common Stock, (2) make a distribution in shares of Common



39









 






Stock to all holders of Common Stock, (3) subdivide the outstanding shares of Common Stock
into a greater number of shares of Common Stock or (4) combine the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, the Conversion Rate shall be adjusted by
multiplying the Conversion Rate in effect immediately prior to close of business on the record date
or effective date, as applicable, of such dividend, distribution, subdivision or combination by the
number of shares of Common Stock which a person who owns only one share of Common Stock immediately
before the record date or effective date, as applicable, of such dividend, distribution,
subdivision or combination and who is entitled to participate in such dividend, distribution,
subdivision or combination would own immediately after giving effect to such dividend,
distribution, subdivision or combination (without giving effect to any arrangement pursuant to such
dividend, distribution, subdivision or combination not to issue fractional shares of Common Stock).
Any adjustment made pursuant to this Section 9.7(a) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision or combination.




          (b) In case the Company shall issue rights (other than rights pursuant to a stockholder rights
plan) or warrants to all or substantially all holders of Common Stock, entitling them to subscribe
for or purchase shares of Common Stock (or securities convertible into or exchangeable or
exercisable for Common Stock), at a price per share (or having a conversion, exchange or exercise
price per share) that is less than the current market price (as determined pursuant to Section
9.7(g)) per share of Common Stock on Trading Day immediately preceding the announcement of the
issuance of such rights or warrants, the Conversion Rate shall be increased by multiplying the
Conversion Rate in effect immediately prior to such record date by a fraction of which (A) the
numerator shall be the sum of (I) the number of shares of Common Stock outstanding at the close of
business on such record date and (II) the aggregate number of shares (the “Underlying Shares”) of
Common Stock underlying all such issued rights or warrants (whether by exercise, conversion,
exchange or otherwise), and (B) the denominator shall be the sum of (I) number of shares of Common
Stock outstanding at the close of business on such record date and (II) the number of shares of
Common Stock which the aggregate exercise, conversion, exchange or other price at which the
Underlying Shares may be subscribed for or purchased pursuant to such rights or warrants would
purchase at such current market price per share of Common Stock. Such increase shall become
effective immediately prior to the opening of business on the day following such record date. In no
event shall the Conversion Rate be decreased pursuant to this Section 9.7(b).




          (c) In case the Company shall dividend or distribute to all or substantially all holders of
Common Stock shares of Capital Stock of the Company or any existing or future Subsidiary of the
Company (other than Common Stock), evidences of Indebtedness or other assets (other than dividends
or distributions requiring an adjustment to the Conversion Rate in accordance with Section 9.7(d)
or Section 9.7(e)), or shall dividend or distribute to all or substantially all holders of Common
Stock rights or warrants to subscribe for or purchase securities (other than dividends or
distributions of rights or warrants requiring an adjustment to the Conversion Rate in accordance
with Section 9.7(b)) (the foregoing hereinafter in this Section 9.7 called the “Additional




40









 






Property, then in each such case the Conversion Rate shall be increased by multiplying the
Conversion Rate in effect immediately prior to the close of business on the record date for the
determination of stockholders entitled to such dividend or distribution by a fraction of which (A)
the numerator shall be the current market price per share of Common Stock (as determined pursuant
to Section 9.7(g)) on such record date and (B) the denominator shall be an amount equal to (I) such
current market price per share of Common Stock less (II) the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be conclusive and described in a
Board Resolution), on such record date, of the portion of the
Additional Property to be
dividended or distributed applicable to one share of Common Stock, such increase to become
effective immediately prior to the opening of business on the day following such record date;
provided, however, that if such denominator is equal to or less than zero, then, in lieu of the
foregoing adjustment to the Conversion Rate, adequate provision shall be made so that each Holder
shall have the right to receive upon conversion of its Securities, in addition to any consideration
otherwise payable as herein provided upon such conversion, an amount, per $1,000 principal amount
of such Securities that a person owns on such record date, of
Additional Property that such
Holder would have received as a result of such dividend or distribution had such Holder converted
the Securities (or a portion thereof) immediately prior to such record date. Notwithstanding the
foregoing, in the event that the Company shall distribute rights or warrants (other than
distributions of rights or warrants requiring an adjustment to the Conversion Rate in accordance
with Section 9.7(b) and other than rights under the Rights Agreement or stockholders’ rights plan
the Company may have in effect at such time) (collectively, “Rights”) pro rata to holders of Common
Stock, the Company may, in lieu of making any adjustment pursuant to this Section 9.7(c), make
proper provision so that each Holder of a Security who converts such Security (or any portion
thereof) on or after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such conversion, in addition to any
consideration otherwise payable as herein provided upon such conversion, a number of Rights, per
$1,000 principal amount of such Security, equal to the number of Rights to which a holder of a
number of shares of Common Stock equal to the Conversion Rate in effect at the close of business on
such record date would be entitled at the time of such conversion in accordance with the terms and
provisions of and applicable to the Rights. Notwithstanding the first sentence of this Section
9.7(c), a distribution of rights pursuant to a stockholders’ rights plan shall not constitute a
dividend or distribution requiring an adjustment to the Conversion Rate pursuant to the first
sentence of this Section 9.7(c), provided that (1) such rights have not separated from the Common
Stock at the time of such distribution; and (2) the Company has made adequate provision in
accordance with Section 9.15 for Holders to receive such rights upon conversion. In no event shall
the Conversion Rate be decreased pursuant to this Section 9.7(c).




          (d) In case the Company shall, by dividend or otherwise, at any time make a distribution of
cash (excluding any cash that is distributed as part of a distribution requiring a Conversion Rate
adjustment pursuant to Section 9.7(e)) to all or substantially all holders of Common Stock, the
Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior
to the Ex Date for such distribution by a fraction (A) whose numerator shall be the current market
price per share of Common Stock (as determined pursuant to Section




41









 







9.7(g)) on the Trading Day immediately preceding the Ex Date and (B) whose denominator shall
be an amount equal to (I) such current market price per share of Common Stock less (II) the amount
of the distribution per share of Common Stock; provided, however, that the Conversion Rate shall
not be adjusted pursuant to this Section 9.7(d) to the extent, and only to the extent, such
adjustment would cause the Conversion Price to be less than par value; provided further that, if
the denominator of such fraction shall be equal to or less than zero, the Conversion Rate shall be
instead adjusted so that the Conversion Price is equal to par value. An adjustment to the
Conversion Rate pursuant to this Section 9.7(d) shall become effective immediately after the
opening of business on such Ex Date. In no event shall the Conversion Rate be decreased pursuant
to this Section 9.7(d).




          (e) In case the Company shall distribute cash or other consideration in respect of a tender
offer or exchange offer made by the Company for all or any portion of the Common Stock where the
sum of the aggregate amount of such cash distributed and the aggregate fair market value (as
determined in good faith by the Board of Directors, whose determination shall be conclusive and set
forth in a Board Resolution), as of the Expiration Date (as defined below), of such other
consideration distributed (such sum, the “Aggregate Amount”) expressed as an amount per share of
Common Stock validly tendered or exchanged, and not withdrawn, pursuant to such tender offer or
exchange offer as of the Expiration Time (as defined below) (such tendered or exchanged shares of
Common Stock, the “Purchased Shares”) exceeds the Daily VWAP on the first Trading Day after last
date (such last date, the “Expiration Date”) on which tenders or exchanges could have been made
pursuant to such tender offer or exchange offer (as the same may be amended through the Expiration
Date), then the Conversion Rate shall be increased by multiplying the Conversion Rate in effect
immediately prior to the close of business on the Expiration Date by a fraction (A) whose numerator
is equal to the sum of (I) the Aggregate Amount and (II) the product of (a) the Daily VWAP on the
first Trading Day after the Expiration Date and (b) an amount equal to (i) the number of shares of
Common Stock outstanding as of the last time (the “Expiration Time”) at which tenders or exchanges
could have been made pursuant to such tender offer or exchange offer (including all Purchased
Shares) less (ii) the Purchased Shares and (B) whose denominator is equal to the product of (I) the
number of shares of Common Stock outstanding as of the Expiration Time (including all Purchased
Shares) and (II) such Daily VWAP.




          An increase, if any, to the Conversion Rate pursuant to this Section 9.7(e) shall become
effective immediately prior to the opening of business on the second (2nd) Business Day following
the Expiration Date. In the event that the Company is obligated to purchase shares of Common Stock
pursuant to any such tender offer or exchange offer, but the Company is permanently prevented by
applicable law from effecting any such purchases, or all such purchases are rescinded, then the
Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if
such tender offer or exchange offer had not been made. If the application of this Section 9.7(e) to
any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment
shall be made for such tender offer or exchange offer under this Section 9.7(e).




          (f) Reserved




42









 








          (g) For the purpose of any computation under subsections (a), (b), (c) or (d) above of this
Section 9.7, the current market price per share of Common Stock on any date shall be deemed to be
the average of the Daily VWAP for the ten (10) consecutive Trading Days ending on, but excluding,
the earlier of such date and the Ex Date with respect to the issuance or distribution requiring
such computation; provided, however, that such current market price per share of Common Stock shall
be appropriately adjusted by the Company, in its good faith determination, to account for any
adjustment, pursuant hereto, to the Conversion Rate that shall become effective, or any event
requiring, pursuant hereto, an adjustment to the Conversion Rate where the Ex Date of such event
occurs, at any time during the period that begins on, and includes, the first day of such ten (10)
consecutive Trading Days and ends on, and includes, the date when the adjustment to the Conversion
Rate on account of the event requiring the computation of such current market price becomes
effective.




          The term “Ex Date,” (i) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades the regular way on the relevant exchange or in the
relevant market from which the Daily VWAP was obtained without the right to receive such issuance
or distribution, (ii) when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades the regular way on such exchange or in
such market after the time at which such subdivision or combination becomes effective, and (iii)
when used with respect to any tender offer or exchange offer means the first date on which the
Common Stock trades the regular way on such exchange or in such market after the expiration time of
such tender offer or exchange offer (as it may be amended or extended).




Section 9.8 No Adjustment.




          If any rights, options or warrants issued by the Company and requiring an adjustment to the
Conversion Rate in accordance with Section 9.7 are only exercisable upon the occurrence of certain
triggering events, then the Conversion Rate will not be adjusted as provided in Section 9.7 until
the earliest of such triggering event occurs. Upon the expiration or termination of any such
rights, options or warrants without the exercise of such rights, options or warrants, the
Conversion Rate then in effect shall be adjusted immediately to the Conversion Rate which would
have been in effect at the time of such expiration or termination had such rights, options or
warrants, to the extent outstanding immediately prior to such expiration or termination, never been
issued. However, if prior to the occurrence of such a triggering event, the Holder of a Security
converts into Common Stock, in addition to the issuance of the Common Stock, upon conversion the
Company will also issue such Holder the rights, options or warrants subject to such triggering
events that such Holder would have received if the Holder had converted into Common Stock prior to
the issuance of such rights, options or warrants.




          If any dividend or distribution is declared and the Conversion Rate is adjusted pursuant to
Section 9.7 on account of such dividend or distribution, but such dividend or distribution is
thereafter not paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate
which would then be in effect had such dividend or distribution not been declared.




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          No adjustment to the Conversion Rate need be made pursuant to Section 9.7 for a transaction if
Holders are to participate in the transaction without conversion on a basis and with notice that
the Board of Directors determines in good faith to be fair and appropriate in light of the basis
and notice on which holders of Common Stock participate in the transaction (which determination
shall be described in a Board Resolution).




Section 9.9 Other Adjustments.




          In the event that, as a result of an adjustment made pursuant to this ARTICLE IX, the Holder
of any Security thereafter surrendered for conversion shall become entitled to receive any shares
of Capital Stock other than shares of Common Stock, thereafter the Conversion Rate of such other
shares so receivable upon conversion of any Security shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to
Common Stock contained in this ARTICLE IX.




Section 9.10 Adjustments for Tax Purposes.




          Except as prohibited by law or by the rules of the OTC Bulletin Board or any other stock
exchange on which the Company’s Common Stock is then traded, the Company may make such increases in
the Conversion Rate, in addition to those required by Section 9.7 hereof, as it determines to be
advisable in order that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities or distribution of securities convertible into or exchangeable for
stock made by the Company or to its stockholders will not be taxable to the recipients thereof.




Section 9.11 Notice of Adjustment.




          Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders at the
addresses appearing on the Registrar’s books a notice of the adjustment and file with the Trustee
an Officers’ Certificate briefly stating the facts requiring the adjustment and the manner of
computing it. The certificate shall be conclusive evidence of the correctness of such adjustment.




Section 9.12 Notice of Certain Transactions.




          In the event that:




          (a) the Company takes any action, or becomes aware of any event, which would require an
adjustment in the Conversion Rate,




          (b) the Company takes any action that would require a supplemental indenture pursuant to
Section 9.13, or




          (c) there is a dissolution or liquidation of the Company,



the Company shall mail to Holders at the addresses appearing on the Registrar’s books and the
Trustee a written notice stating the proposed record, effective or expiration date, as the case may
be, of any transaction referred to in clause (a), (b) or (c) of this Section 9.12. The Company
shall


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mail such notice at least twenty (20) days before such date; however, failure to mail such notice
or any defect therein shall not affect the validity of any transaction referred to in clause (a),
(b) or (c) of this Section 9.12.



Section 9.13 Effect of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or
Sale on Conversion Privilege.




          If any of the following shall occur, namely: (i) any reclassification or change in the Common
Stock issuable upon conversion of Securities (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a subdivision or combination
of Common Stock), (ii) any consolidation, merger or binding share exchange to which the Company is
a party other than a merger in which the Company is the continuing Person and which does not result
in any reclassification of, or change (other than a change in name, or par value, or from par value
to no par value, or from no par value to par value or as a result of a subdivision or combination)
in, the Common Stock or (iii) any sale, transfer, lease, conveyance or other disposition of all or
substantially all of the Company’s property or assets, in each case pursuant to which the Common
Stock would be converted into or exchanged for, or would constitute solely the right to receive,
cash, securities or other property, then the Company or such successor or purchasing Person, as the
case may be, shall, as a condition precedent to such reclassification, change, consolidation,
merger, binding share exchange, sale, transfer, lease, conveyance or disposition, execute and
deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
providing that, at and after the effective time of such reclassification, change, consolidation,
merger, binding share exchange, sale, transfer, lease, conveyance or disposition, the Holder of
each Security then outstanding shall have the right to convert such Security (if otherwise
convertible pursuant to this ARTICLE IX) into the kind and amount of cash, securities or other
property (collectively, “Reference Property”) receivable upon such reclassification, change,
consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition
which a Holder of such Security would have received if the Holder
had converted the Security immediately before the transaction (assuming, if holders of Common Stock
shall have the opportunity to elect the form of consideration to receive pursuant to such
reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease,
conveyance or disposition, that the Collective Election shall have been made with respect to such
election). If holders of Common Stock shall have the opportunity to elect the form of consideration
to receive pursuant to such reclassification, change, consolidation, merger, binding share
exchange, sale, transfer, lease, conveyance or disposition, then the Company shall make adequate
provision to give Holders, treated as a single class, a reasonable opportunity to elect (the
“Collective Election”) the form of such consideration for purposes of determining the composition
of the Reference Property referred to in the immediately preceding sentence, and once such election
is made, such election shall apply to all Holders after the effective time of such
reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease,
conveyance or disposition. The supplemental indenture referred to in the first sentence of this
paragraph shall provide for adjustments of the Conversion Rate which shall be as nearly equivalent
as may be practicable to the adjustments of the Conversion Rate provided for in this ARTICLE IX.
The foregoing, however, shall not in any way affect the right a Holder of a Security may otherwise
have, pursuant to Section 9.7(c) or Section 9.15, to receive rights or warrants upon conversion of
a



45









 






Security. If, in the case of any such consolidation, merger, binding share exchange, sale,
transfer, lease, conveyance or disposition, the stock or other securities and property (including
cash) receivable thereupon by a holder of Common Stock includes shares of stock or other securities
and property of a Person other than the successor or purchasing Person, as the case may be, in such
consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition,
then such supplemental indenture shall also be executed by such other Person and shall contain such
additional provisions to protect the interests of the Holders of the Securities as the Board of
Directors in good faith shall reasonably determine necessary by reason of the foregoing (which
determination shall be described in a Board Resolution). The provisions of this Section 9.13 shall
similarly apply to successive consolidations, mergers, binding share exchanges, sales, transfers,
leases, conveyances or dispositions.




          In the event the Company shall execute a supplemental indenture pursuant to this Section 9.13,
the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the
reasons therefor, the kind or amount of shares of stock or securities or property (including cash)
receivable by Holders of the Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease,
conveyance or disposition and any adjustment to be made with respect thereto.




          The Company shall not become a party to any such reclassification, change, consolidation,
merger, binding share exchange, sale, transfer, lease, conveyance or disposition unless the terms
thereof are consistent with this Section 9.13.




Section 9.14 Trustee’s Disclaimer.




          The Trustee has no duty to determine when an adjustment under this ARTICLE IX should be made,
how it should be made or what such adjustment should be, but may accept as conclusive evidence of
the correctness of any such adjustment, and shall be protected in relying upon, the Officers’
Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant
to Section 9.11 hereof. The Trustee makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible
for the failure by the Company to comply with any provisions of this ARTICLE IX.




          The Trustee shall not be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to Section 9.13, but may
accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon,
the Officers’ Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 9.13 hereof.




Section 9.15 Rights Distributions Pursuant to the Stockholder Rights Plan.




          Upon conversion of any Security or a portion thereof, the Company shall make provision for the
Holder thereof, to the extent such Holder is to receive shares of Common Stock upon such
conversion, to receive, in addition to, and concurrently with the delivery of, the consideration
otherwise payable hereunder upon such conversion, the rights described in the Rights Agreement or
any other stockholders’ rights plan the Company may have in effect at such



46









 






time, unless such rights have separated from the Common Stock at the time of such conversion,
in which case the Conversion Rate shall be adjusted upon such separation in accordance with Section
9.7(c).




ARTICLE X.

SUBORDINATION




Section 10.1 Agreement of Subordination.




          The Company covenants and agrees, and each holder of Securities issued hereunder by its
acceptance thereof likewise covenants and agrees, that all Securities shall be issued subject to
the provisions of this Article X, and each Holder, whether upon original issue or upon registration
of transfer, assignment or exchange thereof, accepts and agrees to be bound by such provisions.




          The payment of the principal of and interest on all Securities issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to
the prior payment in full of all Senior Debt, whether outstanding at the date of this Indenture or
thereafter incurred.




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




Section 10.2 Payments to Holders.




          No payment shall be made with respect to the principal of or interest on the Securities,
except payments and distributions made by the Trustee as permitted by the first or second paragraph
of Section 10.5, if:



      (A) a default in the payment of principal, interest, rent or other obligations in respect of
Senior Debt occurs and is continuing beyond any applicable period of
grace (a “Payment Default”), unless and until such Payment Default
shall have been cured or waived or shall have ceased to exist; or



      (B) a default, other than a Payment Default, on any Senior Debt occurs and is continuing that
then permits holders of such Senior Debt or a Representative thereof to accelerate its maturity (or
in the case of any lease, a default occurs and is continuing that permits the lessor to either
terminate the lease or require the Company to make an irrevocable offer to terminate the lease
following an event of default thereunder) (a “Non-Payment
Default”), unless and until such Non-Payment Default shall have
been cured or waived or shall have ceased to exist.




          The Company may and shall resume payments on and distributions in respect of the Securities
upon the date upon which any such Payment Default or Non-Payment is cured or waived or ceases to exist.




          Upon any payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any dissolution or winding up
or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior
Debt shall first be paid in full in cash or other payment satisfactory to the holders



47









 






of such
Senior Debt or provision is made for such payment thereof in accordance with its terms
provided for in cash or other payment satisfactory to the holders of such Senior Debt before any payment is made on account of the principal of or interest on
the Securities (except payments made pursuant to Article VII from monies deposited with the Trustee
pursuant thereto prior to commencement of proceedings for such dissolution, winding up, liquidation
or reorganization), and upon any such dissolution or winding up or liquidation or reorganization of
the Company or bankruptcy, insolvency, receivership or other similar proceeding, any payment by the
Company, or distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the holders of the Securities or the Trustee would be entitled,
except for the provisions of this Article X, shall (except as aforesaid) be paid by the Company or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the holders of the Securities or by the Trustee under this Indenture
if received by them or it, directly to the holders of Senior Debt (pro rata to such holders on the
basis of the respective amounts of Senior Debt held by such holders, or as otherwise required by
law or a court order) or their Representative or Representatives, as their respective interests may
appear, to the extent necessary to pay all Senior Debt in full, in cash or other payment
satisfactory to the holders of such Senior Debt, after giving effect to
any concurrent payment or distribution to or for the holders of Senior Debt, before any payment or
distribution is made to the holders of the Securities or to the Trustee.




          For purposes of this Article X, the words, “cash, property or securities” shall not be deemed
to include shares of stock of the Company as reorganized or readjusted, or securities of the
Company or any other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article X with respect to
the Securities to the payment of all Senior Debt which may at the time be outstanding provided that
(i) the Senior Debt is assumed by the new corporation, if any, resulting from any reorganization or
readjustment, and (ii) the rights of the holders of Senior Debt (other than leases which are not
assumed by the Company or the new corporation, as the case may be) are not, without the consent of
such holders, altered by such reorganization or readjustment. The consolidation of the Company
with, or the merger of the Company into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of its property as an entirety, or substantially
as an entirety, to another Person upon the terms and conditions provided for in Section 9.13 shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 10.2 if such other Person shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Section 9.13.




          In the event of the acceleration of the Securities because of an Event of Default, no payment
or distribution shall be made to the Trustee or any holder of Securities in respect of the
principal of or interest on the Securities except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 10.5, until all Senior Debt has been paid in
full in cash or other payment satisfactory to the holders of Senior Debt



48









 






If payment of the Securities is accelerated because of an Event of Default, the Company
or the Trustee shall promptly notify holders of Senior Debt of the acceleration.




          In the event that, notwithstanding the foregoing provisions, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or securities (including,
without limitation, by way of setoff or otherwise), prohibited by the foregoing provisions in this
Section 10.2, shall be received by the Trustee or the holders of the Securities before all Senior
Debt is paid in full in cash or other payment satisfactory to the holders of such Senior Debt, or provision is made for such payment thereof in accordance with its terms
in cash or other payment satisfactory to the holders of such Senior Debt,
such payment or distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the holders of Senior Debt or their Representative or Representatives, as their
respective interests may appear, as calculated by the Company, for application to the payment of
any Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt in full in cash or
other payment satisfactory to the holders of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of such Senior Debt.




          Nothing in this Section 10.2 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 6.7. This Section 10.2 shall be subject to the further provisions of Section
10.5.




Section 10.3 Subrogation of Securities.




          Subject to the payment in full of all Senior Debt, the rights of the holders of the Securities
shall be subrogated to the extent of the payments or distributions made to the holders of such
Senior Debt pursuant to the provisions of this Article X (equally and ratably with the holders of
all indebtedness of the Company which by its express terms is subordinated to other indebtedness of
the Company to substantially the same extent as the Securities are subordinated and is entitled to
like rights of subrogation) to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the Senior Debt until
the principal and interest on the Securities shall be paid in full, and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property
or securities to which the holders of the Securities or the Trustee would be entitled except for
the provisions of this Article X, and no payment over pursuant to the provisions of this Article X,
to or for the benefit of the holders of Senior Debt by holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior Debt, and the holders of
the Securities, be deemed to be a payment by the Company to or on account of the Senior Debt, and
no payments or distributions of cash, property or securities to or for the benefit of the holders
of the Securities pursuant to the subrogation provisions of this Article X, which would otherwise
have been paid to the holders of Senior Debt, shall be deemed to be a payment by the Company to or
for the account of the Securities. It is understood that the provisions of this



49









 






Article X are and are intended solely for the purposes of defining the relative rights of the
holders of the Securities, on the one hand, and the holders of the Senior Debt, on the other hand.




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




          Upon any payment or distribution of assets of the Company referred to in this Article X, the
Trustee, subject to the provisions of Section 6.1, and the holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent jurisdiction in which such
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or to the holders of the Securities,
for the purpose of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable
thereon and all other facts pertinent thereto or to this Article X.




Section 10.4 Authorization to Effect Subordination.




          Each holder of a Security by the holder’s acceptance thereof authorizes and directs the
Trustee on the holder’s behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in this Article X and appoints the Trustee to act as the holder’s
attorney-in-fact for any and all such purposes. Subject to the
Intercreditor Agreement, if the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in Section 5.4 hereof at least thirty (30) days before the expiration of the time to file such claim,
the holders of any Senior Debt or their Representatives are hereby authorized to file an
appropriate claim for and on behalf of the holders of the Securities.




Section 10.5 Notice to Trustee.




          The Company shall give prompt written notice in the form of an Officers’ Certificate to a
Responsible Officer of the Trustee and to any paying agent of any fact known to the Company that
would prohibit the making of any payment of monies to or by the Trustee or any paying agent in
respect of the Securities pursuant to the provisions of this Article X. Notwithstanding the
provisions of this Article X or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts that would prohibit the making of any payment
of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this
Article X, unless and until a Responsible Officer of the Trustee shall have received written notice
thereof at the Corporate Trust Office from the Company (in the form of





50











 




an Officers’ Certificate) or a Representative or a holder or holders of Senior Debt, and before the
receipt of any such written notice, the Trustee, subject to the provisions of Section 6.1, shall be
entitled in all respects to assume that no such facts exist; provided, however, that if on a date
not less than one Business Day prior to the date upon which by the terms hereof any such monies may
become payable for any purpose (including, without limitation, the payment of the principal of or
interest on any Security) the Trustee shall not have received, with respect to such monies, the
notice provided for in this Section 10.5, then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to apply monies received to the
purpose for which they were received, and shall not be affected by any notice to the contrary that
may be received by it on or after such prior date.




          Notwithstanding anything in this Article X to the contrary, nothing shall prevent any payment
by the Trustee to the Holders of monies deposited with it pursuant to Section 7.1, if a Responsible
Officer of the Trustee shall not have received written notice at the Corporate Trust Office on or
before one Business Day prior to the date such payment is due that such payment is not permitted
under Section 10.1 or 10.2.




          The Trustee, subject to the provisions of Section 6.1, shall be entitled to rely on the
delivery to it of a written notice by a Representative or a person representing himself to be a
holder of Senior Debt (or a trustee on behalf of such holder) to establish that such notice has
been given by a Representative or a holder of Senior Debt or a trustee on behalf of any such holder
or holders. The Trustee shall not be required to make any payment or distribution to or on behalf
of a holder of Senior Debt pursuant to this Article X unless it has received satisfactory evidence
as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the rights of such
Person under this Article X.




Section 10.6 Trustee’s Relation to Senior Debt.




          The Trustee, in its individual capacity, shall be entitled to all the rights set forth in this
Article X in respect of any Senior Debt at any time held by it, to the same extent as any other
holder of Senior Debt, and nothing in Section 6.11 or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.




          With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in this Article X, and no
implied covenants or obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and, subject to the provisions of Section 6.1, the Trustee shall not be
liable to any holder of Senior Debt (i) for any failure to make any payments or distributions to
such holder or (ii) if it shall pay over or deliver to holders of Securities, the Company or any
other Person money in compliance with this Article X.




Section 10.7 No Impairment of Subordination.




          No right of any present or future holder of any Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any




51









 







act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless
of any knowledge thereof which any such holder may have or otherwise be charged with. Senior Debt
may be created, renewed or extended and holders of Senior Debt may exercise any rights under any
instrument creating or evidencing such Senior Debt, including, without limitation, any waiver of
default thereunder, without any notice to or consent from the holders of the Securities or the
Trustee. No compromise, alteration, amendment, modification, extension, renewal or other change of,
or waiver, consent or other action in respect of, any liability or obligation under or in respect
of the Senior Debt or any terms or conditions of any instrument creating or evidencing such Senior
Debt shall in any way alter or affect any of the provisions of this Article X or the subordination
of the Securities provided thereby.




Section 10.8 Certain Conversions Not Deemed Payment.




          For the purposes of this Article X only, (1) the issuance and delivery of junior securities
upon conversion of Securities in accordance with Article IX shall not be deemed to constitute a
payment or distribution on account of the principal of or interest on Securities or on account of
the purchase or other acquisition of Securities, (2) the issuance and delivery of Common Stock as payment of interest in accordance with
Section 2.7 shall not be deemed to constitute a payment or distribution on account of the principal
of or interest on Securities or on account of the purchase or other acquisition of Securities and
(3) the payment, issuance or delivery of cash
(except in satisfaction of fractional shares pursuant to Section 9.4), property or securities
(other than junior securities) upon conversion of a Security shall be deemed to constitute payment
on account of the principal of or interest on such Security. For the purposes of this Section 10.8,
the term “junior securities” means (a) shares of any stock of any class of the Company or (b)
securities of the Company that are subordinated in right of payment to all Senior Debt that may be
outstanding at the time of issuance or delivery of such securities to substantially the same extent
as, or to a greater extent than, the Securities are so subordinated as provided in this Article X.
Nothing contained in this Article X or elsewhere in this Indenture or in the Securities is intended
to or shall impair, as among the Company, its creditors (other than holders of Senior Debt) and the
Holders, the right, which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with Article IX.




Section 10.9 Article Applicable to Paying Agents.




          If at any time any paying agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article X shall (unless
the context otherwise requires) be construed as extending to and including such paying agent within
its meaning as fully for all intents and purposes as if such paying agent were named in this
Article X in addition to or in place of the Trustee; provided, however, that the first paragraph of
Section 10.5 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as paying agent.




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




52









 





Section 10.10 Senior Debt Entitled to Rely.




          The holders of Senior Debt shall have
the right to rely upon this Article X, and no amendment or modification of the provisions contained
herein shall diminish the rights of such holders unless such holders shall have agreed in writing
thereto.




Section 10.11 Reliance on Judicial Order or Certificate of Liquidating Agent.




          Upon any payment or distribution of assets of the Company referred to in this Article X, the
Trustee and the Holders shall be entitled to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate
of the trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or distribution, delivered to the Trustee or
to the Holders, for the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article X.




Section 10.12 Intercreditor Agreement and Security Documents.




                         10.12.1 The due and punctual payment of the principal of, and interest on, the
Securities when due and as the same shall be due and payable, whether on an Interest Payment Date,
at Stated Maturity, by acceleration, conversion or otherwise, interest on the overdue principal of
and interest (to the extent permitted by law), if any, on the Securities and performance of all
other obligations under this Indenture, the Securities, and the Security Documents shall be secured
as provided in the Security Documents and shall be subject to the Intercreditor Agreement. The
security interests in the Collateral created by the Security Documents as now or hereafter in
effect shall be held by the Trustee for the equal and ratable benefit and security of the Holders
of the Securities without preference, priority or distinction of any thereof over any other by
reason, or difference in time, of issuance, sale or otherwise, and for the enforcement of the
payment of principal of, and interest on, the Securities in accordance with their terms.



                         10.12.2 Each Holder, by its acceptance of the Securities, consents and agrees to
the terms of the Security Documents and the Intercreditor Agreement (including without limitations
the provisions providing for the foreclosure and release of Collateral) as the same may be in
effect from time to time in accordance with their terms and authorizes and directs the Trustee to
enter into the Security Documents and the Intercreditor Agreement and to perform its obligations
and exercise its rights thereunder in accordance therewith. The Company initially appoints the
Trustee as collateral agent under the Security Documents and the Intercreditor Agreement. Any
successor Trustee will act as collateral agent and/or Trustee under the Security Documents and the
Intercreditor Agreement or appoint another Person to act in such capacity.



                         10.12.3 Collateral shall be released from the liens created by the Security
Documents from time to time at the sole cost and expense of the Company:



                         (a) upon payment in full of the Securities and discharge of the indenture in
accordance with Article VII;



                         (b) upon any sale, transfer or other disposition by the Company of such Collateral
(provided that only the Collateral subject to such sale, transfer or other disposition shall be
released); and



                         (c) as required pursuant to the terms of the Intercreditor Agreement;



provided that the Trustee shall not release any such liens unless and until it shall have
received an Officer’s Certificate and if requested by the Trustee, an Opinion of Counsel,
stating that all conditions precedent hereunder have been met. Upon compliance with the
foregoing, the Trustee shall execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of Collateral in accordance with the
provisions hereof, the Security Documents and the Intercreditor Agreement.



                         10.12.4 Subject to the terms of the Intercreditor Agreement, the Trustee may, in
its 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 (a) enforce any of the terms of the Security
Documents, and (b) collect and receive any and all amounts payable in respect of the obligations of
the Company hereunder and under the Securities and the Security Documents. Subject to the terms of
the Intercreditor Agreement, the Trustee shall have the power to institute and maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Indenture or the Security Documents, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its interest and the interests
of the Holders in the Collateral and the proceeds arising therefrom, including power to institute
and 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
granted under the Security Documents or be prejudicial to the interests of the Holders or the
Trustee.



                         10.12.5 Subject to the Intercreditor Agreement, the Trustee is authorized to
receive any funds for the benefit of the Holders distributed pursuant to the Security Documents and
to make further distributions of such funds to the Holders according to the provisions of this
Indenture and the Security Documents.




ARTICLE XI.

MISCELLANEOUS




Section 11.1 Trust Indenture Act Controls.




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




Section 11.2 Notices.




          Any notice or communication by the Company or the Trustee to the other is duly given if in
writing and delivered in person or mailed by first-class mail:




if to the Company:



Genta Incorporated

200 Connell Drive

Berkeley Heights, NJ 07922

Attention: Chief Financial Officer




53









 








if to the Trustee:



U.S. Bank National Association

U.S. Bank Westside Flats Operations Center

60 Livingston Avenue

St. Paul, Minnesota 55107

Attention: Specialized Finance




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




          Any notice or communication to a Securityholder shall be mailed by first-class mail to his
address shown on the register kept by the Registrar. Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with respect to other
Securityholders.




          If a notice or communication is mailed or published in the manner provided above, within the
time prescribed, it is duly given, whether or not the Securityholder receives it.




          If the Company mails a notice or communication to Securityholders, it shall mail a copy to the
Trustee and each Agent at the same time.




Section 11.3 Communication by Holders with Other Holders.




          Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section 312(c).




Section 11.4 Certificate and Opinion as to Conditions Precedent.




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




          (a) 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




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




Section 11.5 Statements Required in Certificate or Opinion.




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




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




54









 








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




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




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




Section 11.6 Rules by Trustee and Agents.




          The Trustee may make reasonable rules for action by or a meeting of Securityholders. Any Agent
may make reasonable rules and set reasonable requirements for its functions.




Section 11.7 Legal Holidays.




          Unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental
indenture, a “Legal Holiday” is any day that is not a Business Day. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.




Section 11.8 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 Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.




Section 11.9 Counterparts.




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




Section 11.10 Governing Laws.




          THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF
LAWS PROVISIONS THEREOF THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW.





55









 








Section 11.11 No Adverse Interpretation of Other Agreements.




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




Section 11.12 Successors.




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




Section 11.13 Severability.




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




Section 11.14 Table of Contents, Headings, Etc.




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




Section 11.15 Calculations in respect of the Securities.




          The Company and its agents shall make all calculations under this Indenture and the Securities
in good faith. In the absence of manifest error, such calculations shall be final and binding on
all Holders. The Company shall provide a copy of such calculations to the Trustee as required
hereunder, and, absent such manifest error, the Trustee shall be entitled to rely on the accuracy
of any such calculation without independent verification. The Trustee shall not be responsible for
making any calculations required by the Indenture.




[ SIGNATURE PAGE TO FOLLOW ]




56









 








          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.




	 	 	 	 	 
	 	GENTA INCORPORATED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Its: 	 
	 
	 	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Its: 	 



57









 






	 	 	 	 	 



EXHIBIT A




FORM OF SECURITY




[Face of Security]




GENTA INCORPORATED 




Certificate No.                     




[INSERT GLOBAL SECURITY LEGEND AS REQUIRED]




[___]% Senior Subordinated Secured Convertible Note due 2011




CUSIP No.                     





     Genta Incorporated, an Delaware corporation (the “Company”), for value received, hereby
promises to pay to Cede & Co., or its registered assigns, the principal sum of
                                         dollars ($                    ) on [___], 2011 and to pay interest thereon, as provided
on the reverse hereof, until the principal and any unpaid and accrued interest are paid or duly
provided for.



     Interest Payment Dates: [March ___and September ___, with the first payment to be made on
September ___, 2009.]



     Regular Record Dates: March 1 and September 1.



     The provisions on the back of this certificate are incorporated as if set forth on the face
hereof.



A-1









 





     IN WITNESS WHEREOF, Genta Incorporated has caused this instrument to be duly signed.



	 	 	 	 	 
	 	GENTA INCORPORATED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Dated:                                         




TRUSTEE’S CERTIFICATE OF AUTHENTICATION




This is one of the Securities of the series designated

therein referred to in the within-mentioned Indenture.




	 	 	 	 	 
	U.S. BANK NATIONAL ASSOCIATION, as Trustee

 	 
	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 



Dated:                                         





2









 








[REVERSE OF SECURITY]




GENTA INCORPORATED 




[__]% Senior Subordinated Secured Convertible Note due 2011





     1. Interest. Genta Incorporated, a Delaware corporation (the “Company”), promises to pay
interest on the principal amount of this Security at the rate per annum shown above. The Company
will pay interest, payable semi-annually in arrears, on March ___ and September ___ of each year and
on the Conversion Date, Mandatory Conversion Date or Maturity Date, as applicable, with the first
payment to be made on September ___, 2009. Interest on the Securities will accrue on the principal
amount from, and including, the most recent date to which interest has been paid or provided for
or, if no interest has been paid, from, and including, [___], in each case to, but excluding, the
next interest payment date, Conversion Date, Mandatory Conversion Date or Maturity Date, as the
case may be. Interest will be computed on the basis of a 360-day year of twelve 30-day months.



     Interest will be payable in cash or, at the Company’s option following the Authorization Date,
provided the Equity Conditions are met, shares of Common Stock valued at 90% of the Daily VWAP on
the Trading Day immediately preceding the Interest Payment Date, the Conversion Date, Mandatory
Conversion Date or the Maturity Date, as the case may be.



     2. Maturity. The Securities will mature on [___], 2011. On the Maturity Date or, if earlier
upon acceleration or redemption of this Security in accordance with the terms hereof, the Company
shall pay the Holder of this Security the principal amount of and accrued and unpaid interest, if
any, on this Security. The Company may not prepay any portion of the principal amount of this
Security without the prior written consent of the Holder, which may be withheld in the Holder’s
sole and absolute discretion.



     3. Method of Payment. Except as provided in the Indenture (as defined below), the Company
will pay interest on the Securities to the persons who are Holders of record of Securities at the
close of business on the record date set forth on the face of this Security next preceding the
applicable interest payment date. Holders must surrender Securities to a Paying Agent to collect
the principal amount of the Securities, plus if applicable, accrued and unpaid interest payable in
cash or, at the Company’s option following the Authorization Date, provided that the Equity
Conditions are met, in shares of Common Stock, valued at 90% of the Daily VWAP on the Trading Day
immediately preceding the Interest Payment Date, Conversion Date, Mandatory Conversion Date or the
Maturity Date, as the case may be. The Company will pay, in money of the United States that at the
time of payment is legal tender for payment of public and private debts, all amounts due in cash
with respect to the Securities, which amounts shall be paid (A) in the case this Security is in
global form, by wire transfer of immediately available funds to the account designated by the
Depository for the Securities or its nominee; (B) in the case of a Security that is held, other
than global form, by a Holder of Securities, by wire transfer of immediately available funds to the
account specified by such Holder or, if such Holder does not specify an account, by mailing a check
to the address of such Holder set forth in the register of the Registrar; and (C) in the case of a
Security that is held, other than global form, by a Holder of Securities, by mailing a check to the
address of such Holder set forth in the register of the Registrar.



3









 





     4. Paying Agent, Registrar, Conversion Agent. Initially, U.S. Bank National Association
(the “Trustee”) will act as Paying Agent, Registrar and Conversion Agent. The Company may change
any Paying Agent, Registrar or Conversion Agent without notice.



     5. Indenture. The Company issued the Securities under an indenture dated as of [___] (the
“Indenture”) between the Company and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S. Code §§ 77aaa-77bbbb) (the “TIA”) as amended and in effect from time to time. The
Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for
a statement of such terms. The Securities are junior obligations of the Company limited to $[___]
aggregate principal amount secured by all of the Company’s assets, will be subordinated to the
Company’s senior secured indebtedness and will be effectively senior to the Company’s existing and
future unsecured indebtedness. Terms used herein without definition and which are defined in the
Indenture have the meanings assigned to them in the Indenture.



     6. Conversion. The Securities shall be convertible, at any time, in integral multiples of
$1,000 principal amount, into cash, shares of Common Stock or a combination of cash and shares of
Common Stock in accordance with ARTICLE IX of the Indenture.



          Notwithstanding anything herein to the contrary, the right to convert the Securities pursuant
to ARTICLE IX of the Indenture shall terminate at the close of business on the Maturity Date.




          To
convert a Security (other than a mandatory conversion pursuant to
Section 9.3 of the Indenture), a Holder must (1) complete and sign the Conversion Notice, with
appropriate signature guarantee, on the back of the Security, (2) surrender the Security to a
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the
Registrar or Conversion Agent, and (4) pay any tax or duty if required pursuant to the Indenture. A
Holder may convert a portion of a Security if the portion is $1,000 principal amount or an integral
multiple of $1,000 principal amount. In the case of a Security issued as a Global Security, the
Beneficial Holder of such Security must also send a copy of the Conversion Notice, with appropriate
signature guarantee, on the back of the Security, to the Company, and
must comply with the Depository’s then applicable conversion
program procedures.




          If a Security is tendered for conversion in accordance with the Indenture, then the Holder of
such Security shall be entitled to receive shares of Common Stock and
cash, if applicable, in
accordance with Section 9.4.1 of the Indenture.




          The initial Conversion Rate is [___] shares of Common Stock per $1,000 principal amount of
Securities subject to adjustment in the event of certain circumstances as specified in the
Indenture. The Company will deliver a check in lieu of any fractional share. On conversion, the
Company shall pay to Holder all unpaid and accrued interest on the Securities. If any Holder
surrenders a Security for conversion after the close of business on the record date for the payment
of an installment of interest and prior to the related interest payment date, then, notwithstanding
such conversion, the interest payable with respect to such Security on such interest payment date
shall be paid on such interest payment date to the Holder of record of such Security at the close
of business on such record date.




     7. Mandatory Conversion. On any Mandatory Conversion Date, subject to the limitations on
conversion set forth in Section 8, the Company may cause all of the principal



4









 




amount of the
Securities to convert into a number of fully paid and nonassessable shares of Common Stock equal to
the quotient of (i) the principal amount of the Securities divided by (ii) the Conversion Price in
effect on the Mandatory Conversion Date by providing thirty (30) days prior written notice of such
Mandatory Conversion Date. Notwithstanding the foregoing, the Company may not elect to cause all
or a portion of the Securities to convert into Common Stock, unless at such time the Company shall
have met the conditions set forth in Section 9.3 of the Indenture. On any such Mandatory
Conversion Date, the Company shall also pay the Holders cash or, at the Company’s option following
the Authorization Date, provided the Equity Conditions are met, shares of Common Stock valued at
90% of the Daily VWAP on the Trading Day immediately preceding the Mandatory Conversion Date.




          11.15.1
8. Limitation on the Right to Convert. Until the Release Date: (i) the Security
shall only be convertible by a Holder (or Beneficial Holder) or by the Company pursuant to Section
9.3 of the Indenture on any day to the extent that, together with all prior conversions under such
Security or, in the case of a Global Security held for the benefit of a Beneficial Holder, the
total amount of such Security that has been converted for the benefit
of (or Beneficial Holder)
does not exceed the product of (A) 10% of the principal amount of all Securities held by such
Holder (or Beneficial Holder), and (B) the number of whole or partial calendar weeks since the
Issue Date; and (ii) a Holder (or Beneficial Holder) may only convert such Securities to the extent
of such Holders (or Beneficial Holder’s) pro rata allocation of [___] shares of Common Stock.



At no time may the Company effect the conversion of any Securities or issue to a Holder (or
Beneficial Holder) shares of Common Stock, or a Holder (or Beneficial Holder) convert all or a
portion of the Securities into shares of Common Stock, if following such issuance or conversion,
the aggregate number of shares of Common Stock held by any Beneficial Holder of such Securities
would exceed, when aggregated with all other shares of Common Stock then-owned by such Beneficial
Holder and all shares of Common Stock that such Beneficial Holder is then the beneficial owner of
(as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder), the
number of shares of Common Stock that would result in such Beneficial Holder beneficially owning
(as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) more
than 4.999% of all of the Common Stock outstanding following such conversion.




     9. Denominations, Transfer, Exchange. The Securities are in registered form, without
coupons, in denominations of $1,000 principal amount and integral multiples of $1,000 principal
amount. The transfer of Securities may be registered and Securities may be exchanged as provided in
the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or
similar governmental charge that may be imposed in connection with certain transfers or exchanges.



     10. Persons Deemed Owners. The registered Holder of a Security may be treated as the owner
of such Security for all purposes.



5









 





     11. Merger or Consolidation. The Company shall not consolidate with or merge into, or
convey, transfer or lease all or substantially all of its properties and assets to, any person (a
“successor person”), and may not permit any person to merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to, the Company, whether in a single transaction
or a series of related transactions, unless: (a) the successor person (if any) is a corporation
organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly
assumes by supplemental indenture the Company’s obligations on the Securities and under the
Indenture; and (b) immediately after giving effect to the transaction, no default or Event of
Default (as defined in the Indenture), shall have occurred and be continuing. The Company shall
deliver to the Trustee prior to the consummation of the proposed transaction an Officers’
Certificate to the foregoing effect and an opinion of counsel stating that the proposed transaction
and such supplemental indenture comply with the Indenture.



     12. Amendments, Supplements and Waivers. Subject to certain exceptions and to compliance
with the Intercreditor Agreement, the Indenture or the Securities may be amended or supplemented
with the consent of the Holders of at least a majority in aggregate principal amount of the
outstanding Securities, and certain existing Defaults or Events of Default may be waived with the
consent of the Holders of a majority in aggregate principal amount of the Securities then
outstanding. In accordance with the terms of the Indenture, subject to compliance with the
Intercreditor Agreement, the Company, with the consent of the Trustee, may amend or supplement the
Indenture or the Securities without notice to or the consent of any Securityholder: (i) to comply
with Section 4.2 and Section 9.13 of the Indenture; (ii) to grant additional security for the
obligations of the Company in respect of the Securities; (iii) to surrender any right or power
conferred upon the Company; (iv) to add to the covenants of the
Company described in this Indenture for the benefit of the Holders;
and (v) to make provisions with respect to adjustments to the
Conversion Rate as required by the Indenture (but not to increase the Conversion Rate). In
addition, the Company and the Trustee may enter into a Indenture without the consent of Holders of
the Securities to cure any ambiguity, defect, omission or inconsistency in the Indenture in a
manner that does not, individually or in the aggregate with all other modifications made or to be
made to the Indenture, adversely affect the rights of any Holder.



     13. Defaults and Remedies. If an Event of Default, with
respect to Securities at the time outstanding occurs and is
continuing (excluding an Event of Default referred to in
Sections 5.1(g) or (h)) with respect to the Company,
then in every such case, subject to restrictions set forth in the Intercreditor Agreement, the Trustee or the
Holders of not less than 25% in principal amount of the outstanding Securities may declare the
principal amount of and accrued and unpaid interest, if any, on all of the Securities to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee if given by
Holders), and upon any such declaration such principal amount and accrued and unpaid interest, if
any, shall become immediately due and payable. If an Event of
Default specified in Sections 5.1(g) or (h) with respect to the
Company shall occur, the principal amount of and accrued and unpaid
interest, if any, on all outstanding Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of the Trustee or any
Holder.



          Holders may not enforce the Indenture or the Securities except as provided in the Indenture
and subject to compliance with the Intercreditor Agreement. The Trustee may require indemnity
reasonably satisfactory to it before it enforces the Indenture or the Securities. Subject to
compliance with the Intercreditor Agreement, the Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with law




6









 







the
Indenture or the Intercreditor Agreement, is unduly prejudicial to the rights of other Holders or would involve the Trustee in
personal liability unless the Trustee is offered indemnity reasonably satisfactory to it; provided,
that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent
with such direction.




          If a Default or Event of Default occurs and is continuing as to which the Trustee has received
notice pursuant to the provisions of the Indenture, or as to which a Responsible Officer of the
Trustee shall have actual knowledge, the Trustee shall mail to each Holder a notice of the Default
or Event of Default within thirty (30) days after it occurs unless such Default or Event of Default
has been cured or waived. Except in the case of a Default or Event of Default in payment of any
amounts due with respect to any Security, the Trustee may withhold the notice if, and so long as it
in good faith determines that, withholding the notice is in the best interests of Holders. The
Company must deliver to the Trustee an annual compliance certificate.




     14. Trustee Dealings with the Company. The Trustee under the Indenture, or any banking
institution serving as successor Trustee thereunder, in its individual or any other capacity, may
make loans to, accept deposits from, and perform services for, the Company or its Affiliates, and
may otherwise deal with the Company or its Affiliates, as if it were not Trustee.



     15. No Recourse Against Others. No past, present or future director, officer, employee or
stockholder, as such, of the Company shall have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder, by accepting a Security, waives and releases all
such liability. The waiver and release are part of the consideration for the issue of the
Securities.



     16. Authentication. This Security shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent in accordance with the Indenture.



     17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (Uniform Gifts to Minors Act).



     THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE
INDENTURE. REQUESTS MAY BE MADE TO:


Genta Incorporated

    200 Connell Drive

    Berkeley Heights, NJ 07922

    Attention: Chief Financial Officer





7









 








[FORM OF ASSIGNMENT]




I or we assign to




PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER




	 	 	 
	 


	 	 
	 
	(please print or type name and address)
	 	 
	 
	 	 
	 
	 
	 	 
	 
	 
	 	 
	the within Security and all rights thereunder, and hereby irrevocably constitute and appoint
	 
	 	 
	 
	Attorney to transfer the Security on the books of the Company with full power of substitution in
the premises.
	 
	 	 
	Dated:                                                             

	 	                                                                                                                        
	 
	 	 
	 

	 	NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Security in every
particular without alteration or
enlargement or any change whatsoever
and be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents Medallion
Program or in such other guarantee
program acceptable to the Trustee.
	 
	 	 
	Signature Guarantee:  
                    
                                       
                                         
                    
                                       







8









 






CONVERSION NOTICE



To convert this Security in accordance with the Indenture, check the box: o



To convert only part of this Security, state the principal amount to be converted (must be in
multiples of $1,000):




$                                        




[To be completed by Beneficial Holders Only]
State the number of shares of Common Stock beneficially owned (as
determined in accordance with Section 13(d) of the Exchange Act
and the rules thereunder) as of the date of this Notice:



$                                        



$                                        



If you want the stock certificate representing the shares of Common Stock, if any, issuable upon
conversion made out in another person’s name, fill in the form below:





	 	 	 
	 

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

	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 

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

	 	 
	 
	 	 
	 


	 	 






	 	 	 	 	 
	Date:                      Signature(s):
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

(Sign exactly as your name(s)
appear(s) on the other side of
this Security)
	 	 
	 
	 	 	 	 
	Signature(s) guaranteed by:
	 	 	 	 
	 

	 	 

(All signatures must be guaranteed by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to
the Trustee.)
	 	 





9









 






SCHEDULE A 




SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY1 




     The following exchanges of a part of this Global Security for an interest in another Global
Security or for Securities in certificated form, have been made:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal amount of	 	 
	 	 	Amount of decrease	 	Amount of Increase	 	this Global	 	Signature or
	 	 	in Principal amount	 	in Principal amount	 	Security following	 	authorized signatory
	 	 	of this Global	 	of this Global	 	such decrease	 	of Trustee or Note
	Date of Exchange	 	Security	 	Security	 	or increase	 	Custodian
	 

	 	 
	 	 
	 	 
	 	 







 




			
	1	 	This is included in Global Securities only.




A-1









 










EXHIBIT B 




FORM OF LEGEND FOR GLOBAL SECURITY




Any Global Security authenticated and delivered hereunder shall bear a legend in substantially
the following form:




     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR
A SUCCESSOR DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.




     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), 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 DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.




     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE.




B-1