Document:

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                                                                     EXHIBIT 4.1

                                    CRAY INC.

                                    AS ISSUER

                            ------------------------

                    THE BANK OF NEW YORK TRUST COMPANY, N.A.

                                   AS TRUSTEE

                            -------------------------

               3.0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2024

                             -----------------------

                                    INDENTURE

                          DATED AS OF DECEMBER 6, 2004

                              ---------------------

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.....................................................................      1
           Section 1.1.            Definitions...........................................................................      1
           Section 1.2.            Incorporation by Reference of Trust Indenture Act.....................................     12
           Section 1.3.            Rules of Construction.................................................................     13
           Section 1.4.            Acts of Holders.......................................................................     13

ARTICLE II THE NOTES.....................................................................................................     14
           Section 2.1.            Form and Dating.......................................................................     14
           Section 2.2.            Execution and Authentication..........................................................     16
           Section 2.3.            Registrar, Paying Agent and Conversion Agent..........................................     17
           Section 2.4.            Paying Agent to Hold Assets in Trust..................................................     17
           Section 2.5.            Holder Lists..........................................................................     18
           Section 2.6.            Transfer and Exchange.................................................................     18
           Section 2.7.            Replacement Notes.....................................................................     19
           Section 2.8.            Outstanding Notes; Determinations of Holders' Action..................................     19
           Section 2.9.            Temporary Notes.......................................................................     20
           Section 2.10.           Cancellation..........................................................................     20
           Section 2.11.           Persons Deemed Owners.................................................................     21
           Section 2.12.           Additional Transfer and Exchange Requirements.........................................     21
           Section 2.13.           CUSIP Numbers.........................................................................     26

ARTICLE III REDEMPTION OF NOTES..........................................................................................     27
           Section 3.1.            The Company's Right to Redeem; Notice to Trustee......................................     27
           Section 3.2.            Selection of Notes to Be Redeemed.....................................................     27
           Section 3.3.            Notice of Redemption..................................................................     28
           Section 3.4.            Effect of Notice of Redemption........................................................     28
           Section 3.5.            Deposit of Redemption Price...........................................................     29
           Section 3.6.            Notes Redeemed in Part................................................................     29
           Section 3.7.            Repayment to the Company..............................................................     29
           Section 3.8.            No Sinking Fund.......................................................................     29
           Section 3.9.            Provisional Redemption; Make-Whole Premium............................................     29
           Section 3.10.           Availability of Shelf Registration Statement..........................................     30

ARTICLE IV PURCHASE AT THE OPTION OF HOLDERS ON SPECIFIC DATES...........................................................     30
           Section 4.1.            Optional Put..........................................................................     30
           Section 4.2.            Effect of Purchase Notice; Withdrawal of Purchase Notice..............................     33
           Section 4.3.            Deposit of Purchase Price.............................................................     33
           Section 4.4.            Certificated Securities Purchased in Part.............................................     34
           Section 4.5.            Covenant to Comply With Securities Laws Upon Purchase of Notes........................     34
           Section 4.6.            Repayment to the Company..............................................................     34
           Section 4.7.            No Purchase Upon Event of Default.....................................................     34
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ARTICLE V PURCHASE AT THE OPTION OF HOLDERS  UPON A FUNDAMENTAL CHANGE...................................................     35
           Section 5.1.            Fundamental Change Put................................................................     35
           Section 5.2.            Effect of Fundamental Change Purchase Notice..........................................     37
           Section 5.3.            Deposit of Fundamental Change Purchase Price..........................................     38
           Section 5.4.            Certificated Securities Purchased in Part.............................................     39
           Section 5.5.            Covenant to Comply With Securities Laws Upon Purchase of Notes........................     39
           Section 5.6.            Repayment to the Company..............................................................     39

ARTICLE VI COVENANTS.....................................................................................................     39
           Section 6.1.            Payment of Notes......................................................................     39
           Section 6.2.            SEC and Other Reports to the Trustee..................................................     40
           Section 6.3.            Compliance Certificate................................................................     41
           Section 6.4.            Further Instruments and Acts..........................................................     41
           Section 6.5.            Maintenance of Office or Agency of the Trustee, Registrar, Paying
                                   Agent and Conversion Agent............................................................     42
           Section 6.6.            Delivery of Information Required Under Rule 144A......................................     42
           Section 6.7.            Waiver of Stay, Extension or Usury Laws...............................................     42
           Section 6.8.            Statement by Officers as to Default...................................................     43

ARTICLE VII SUCCESSOR CORPORATION........................................................................................     43
           Section 7.1.            When Company May Merge or Transfer Assets.............................................     43

ARTICLE VIII DEFAULTS AND REMEDIES.......................................................................................     44
           Section 8.1.            Events of Default.....................................................................     44
           Section 8.2.            Acceleration..........................................................................     46
           Section 8.3.            Other Remedies........................................................................     46
           Section 8.4.            Waiver of Past Defaults...............................................................     47
           Section 8.5.            Control by Majority...................................................................     47
           Section 8.6.            Limitation on Suits...................................................................     47
           Section 8.7.            Rights of Holders to Receive Payment or to Convert....................................     48
           Section 8.8.            Collection Suit by Trustee............................................................     48
           Section 8.9.            Trustee May File Proofs of Claim......................................................     48
           Section 8.10.           Priorities............................................................................     49
           Section 8.11.           Undertaking for Costs.................................................................     49

ARTICLE IX TRUSTEE.......................................................................................................     50
           Section 9.1.            Duties of Trustee.....................................................................     50
           Section 9.2.            Rights of Trustee.....................................................................     51
           Section 9.3.            Individual Rights of Trustee..........................................................     52
           Section 9.4.            Trustee's Disclaimer..................................................................     53
           Section 9.5.            Notice of Defaults....................................................................     53
           Section 9.6.            Reports by Trustee to Holders.........................................................     53
           Section 9.7.            Compensation and Indemnity............................................................     53
           Section 9.8.            Replacement of Trustee................................................................     54
           Section 9.9.            Successor Trustee by Merger...........................................................     55
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           Section 9.10.           Eligibility; Disqualification.........................................................     55
           Section 9.11.           Preferential Collection of Claims Against Company.....................................     55

ARTICLE X DISCHARGE OF INDENTURE.........................................................................................     56
           Section 10.1.           Discharge of Liability on Notes.......................................................     56
           Section 10.2.           Deposited Monies to Be Held in Trust by Trustee.......................................     56
           Section 10.3.           Repayment to the Company..............................................................     56

ARTICLE XI AMENDMENTS....................................................................................................     57
           Section 11.1.           Without Consent of Holders of Notes...................................................     57
           Section 11.2.           With Consent of Holders of Notes......................................................     58
           Section 11.3.           Compliance with Trust Indenture Act...................................................     59
           Section 11.4.           Revocation and Effect of Consents, Waivers and Actions................................     59
           Section 11.5.           Notation on or Exchange of Notes......................................................     60
           Section 11.6.           Trustee to Sign Supplemental Indentures...............................................     60
           Section 11.7.           Effect of Supplemental Indentures.....................................................     60

ARTICLE XII CONVERSION...................................................................................................     60
           Section 12.1.           Conversion Right......................................................................     60
           Section 12.2.           Conversion Procedures; Conversion Rate; Fractional Shares.............................     62
           Section 12.3.           Adjustment of Conversion Rate.........................................................     65
           Section 12.4.           Consolidation or Merger of the Company................................................     74
           Section 12.5.           Notice of Adjustment..................................................................     76
           Section 12.6.           Notice in Certain Events..............................................................     76
           Section 12.7.           Company To Reserve Stock:  Registration; Listing......................................     77
           Section 12.8.           Taxes on Conversion...................................................................     78
           Section 12.9.           Conversion After Regular Record Date..................................................     78
           Section 12.10.          Company Determination Final...........................................................     78
           Section 12.11.          Responsibility of Trustee for Conversion Provisions...................................     79
           Section 12.12.          Option to Satisfy Conversion Obligation with Cash, Common Stock
                                   or Combination Thereof................................................................     79
           Section 12.13.          Conversion After a Public Acquirer Change of Control..................................     82

ARTICLE XIII SUBORDINATION...............................................................................................     83
           Section 13.1.           Agreement to Subordinate..............................................................     83
           Section 13.2.           Liquidation, Dissolution, Bankruptcy..................................................     83
           Section 13.3.           Default on Senior Debt and/or Designated Senior Debt..................................     83
           Section 13.4.           Acceleration of Notes.................................................................     84
           Section 13.5.           When Distribution Must Be Paid Over...................................................     84
           Section 13.6.           Notice by Company.....................................................................     85
           Section 13.7.           Subrogation...........................................................................     85
           Section 13.8.           Relative Rights.......................................................................     85
           Section 13.9.           Subordination May Not Be Impaired by Company..........................................     86
           Section 13.10.          Distribution or Notice to Representative..............................................     86
           Section 13.11.          Rights of Trustee and Paying Agent....................................................     86
           Section 13.12.          Authorization to Effect Subordination.................................................     87
           Section 13.13.          Article Applicable to Paying Agents...................................................     87
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           Section 13.14.          Senior Debt Entitled to Rely..........................................................     87
           Section 13.15.          Permitted Payments....................................................................     87
           Section 13.16.          No Waiver of Subordination Provisions.................................................     87

ARTICLE XIV MISCELLANEOUS................................................................................................     88
           Section 14.1.           Trust Indenture Act Controls..........................................................     88
           Section 14.2.           Notices...............................................................................     88
           Section 14.3.           Communication by Holders with Other Holders...........................................     89
           Section 14.4.           Certificate and Opinion as to Conditions Precedent....................................     89
           Section 14.5.           Statements Required in Certificate or Opinion.........................................     89
           Section 14.6.           Separability Clause...................................................................     90
           Section 14.7.           Rules by Trustee, Paying Agent, Conversion Agent, Registrar...........................     90
           Section 14.8.           Legal Holidays........................................................................     90
           Section 14.9.           Governing Law; Submission to Jurisdiction; Service of Process.........................     90
           Section 14.10.          No Recourse Against Others............................................................     91
           Section 14.11.          Successors............................................................................     91
           Section 14.12.          Multiple Originals....................................................................     91
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EXHIBIT A   Form of Note

EXHIBIT B   Form of Certificate to be Delivered by Transferee in Connection with
            Transfers to Institutional Accredited Investors

EXHIBIT C   Form of Restrictive Legend for Common Stock Issues Upon Conversion

SCHEDULE I  Conversion Rate Adjustment Table

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            INDENTURE, dated as of December 6, 2004, between CRAY INC., a
Washington corporation (the "COMPANY"), and The Bank of New York Trust Company,
N.A., as trustee (the "TRUSTEE").

                             RECITALS OF THE COMPANY

            The Company has duly authorized the creation of an issue of its 3.0%
Convertible Senior Subordinated Notes due 2024 (the "NOTES") having the terms,
tenor, amount and other provisions hereinafter set forth.

            All things necessary to make the Notes, when the Notes are duly
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, in accordance with their
and its terms, have been done.

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

            Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of the Notes:

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

      Section 1.1. Definitions.

            "ADDITIONAL INTEREST" has the meaning set forth in the Registration
Rights Agreement.

            "ADDITIONAL SHARES" has the meaning set forth in Section 12.2.

            "AFFILIATE" of any specified person means any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

            "AGENT MEMBERS" has the meaning set forth in Section 2.1(c).

            "APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Note, in each case to the extent
applicable to such transaction and as in effect from time to time.

            "APPLICABLE STOCK" means (a) the Common Stock and/or (b) in the
event of a transaction referred to in Section 12.4 in which the Notes become
convertible into Equity

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Interests of another Person, such Equity Interests or any other Equity Interests
into which such Equity Interests shall be reclassified or changed.

            "BANKRUPTCY LAW" means Title 11, United States Code, or any similar
United States federal or state law for the relief of debtors.

            "BOARD OF DIRECTORS" means either the board of directors of the
Company or any duly authorized committee of such board.

            "BOARD RESOLUTION" means a resolution of the Board of Directors or
any duly appointed committee thereof.

            "BUSINESS DAY" means each day of the year other than a Saturday or a
Sunday or other day on which banking institutions in the City of New York are
required or authorized by law, regulation or executive order to close.

            "CASH" means such coin or currency of the United States as at any
time of payment is legal tender for the payment of public and private debts.

            "CASH AMOUNT" has the meaning set forth in Section 12.12(a).

            "CASH SETTLEMENT AVERAGING PERIOD" has the meaning set forth in
Section 12.12(a).

            "CERTIFICATED SECURITIES" means Notes that are in substantially the
form attached hereto as Exhibit A and that do not include the information called
for by footnotes 1 and 3 thereof.

            "CLOSING SALE PRICE" means with respect to a share of Applicable
Stock on any date, the closing sale price of a share of Applicable Stock (or, if
no closing sale price is reported, the average of the bid and ask prices or, if
there is more than one bid or ask price, the average of the average bid and the
average ask prices) on such date as reported on a national securities exchange
such as the New York Stock Exchange or, if the shares of Applicable Stock are
not listed on a national securities exchange, as reported by the Nasdaq National
Market system or the Nasdaq SmallCap Market system, as applicable. If the
Applicable Stock is not listed for trading on a national securities exchange and
not quoted by the Nasdaq National Market or the Nasdaq SmallCap Market on the
relevant date, the "Closing Sale Price" shall be the last quoted bid for the
Applicable Stock in the over-the-counter market on the relevant date as reported
by the National Quotation Bureau or similar organization. If the Applicable
Stock is not so quoted, the "Closing Sale Price" shall be the average of the
midpoint of the last bid and ask prices for the Applicable Stock on the relevant
date from each of at least three nationally recognized independent investment
banking firms selected by the Company for this purpose.

            "CODE" means the United States Internal Revenue Code of 1986, as
amended.

            "COMMON STOCK" means the common stock, $0.01 par value per share, of
the Company as that stock exists on the date of this Indenture or any other
Equity Interests of the Company into which such Common Stock shall be
reclassified or changed; provided, that after

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the consummation of any transaction referred to in Section 12.4, all references
to "Common Stock" shall, to the extent necessary to protect the interests of the
Holders of the Notes, become references to "Applicable Stock.

            "COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company by any two Officers, at least one of
whom is the Chief Executive Officer or the Chief Financial Officer.

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

            "CONVERSION AGENT" has the meaning set forth in Section 2.3.

            "CONVERSION NOTICE" has the meaning set forth in Section 12.2(b).

            "CONVERSION OBLIGATION" has the meaning set forth in Section
12.1(a).

            "CONVERSION PERIOD" means the period from and including the
designated mid-point date in a fiscal quarter of the Company to, but not
including, the designated mid-point date (or if that day is not a Trading Day,
then the next Trading Day) in the immediately following fiscal quarter of the
Company. The "designated mid-point dates" for the Company's fiscal quarters are
February 15, May 15, August 15 and November 15 and, for purposes of determining
Conversion Periods hereunder, such designated mid-point dates shall not change
notwithstanding any change in the Company's fiscal periods.

            "CONVERSION PRICE" means, at any time, $1,000 divided by the
Conversion Rate in effect at such time, rounded to two decimal places (rounded
up if the third decimal place thereof is 5 or more and otherwise rounded down).

            "CONVERSION RATE" means the number of shares of Common Stock
issuable upon conversion of each $1,000 of the principal amount of the Notes,
which is initially 207.2002 shares, subject to adjustments as set forth in this
Indenture.

            "CONVERSION RETRACTION PERIOD" has the meaning set forth in Section
12.12(a).

            "CONVERSION SETTLEMENT STOCK PRICE" means the arithmetic average of
the Closing Sale Prices of Common Stock during the Cash Settlement Averaging
Period.

            "CORPORATE TRUST OFFICE" means the principal office of the Trustee
at which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 700 South Flower Street, Suite 500, Los
Angeles, CA 90017, or such other address as the Trustee may designate from time
to time by notice to the Holders and the Company, or the principal corporate
trust office of any successor Trustee (or such other address as a successor
Trustee may designate from time to time by notice to the Holders and the
Company).

            "CURRENT MARKET PRICE" has the meaning set forth in Section 12.3(g).

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            "CUSTODIAN" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.

            "DEFAULT" means, when used with respect to the Notes, any event
which is, or after notice or passage of time or both would be, an Event of
Default.

            "DEPOSITARY" means, with respect to any Global Securities, a
securities clearing agency that is registered as such under the Exchange Act and
is designated by the Company to act as Depositary for such Global Securities (or
any successor securities clearing agency so registered), which shall initially
be DTC.

            "DESIGNATED SENIOR DEBT" means, with respect to the Company,
indebtedness under the Senior Credit Facility and any other Senior Debt in which
the instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such Senior Debt shall be "Designated Senior Debt" for
purposes of this Indenture.

            "DISTRIBUTED ASSETS" has the meaning set forth in Section 12.3(d).

            "DTC" means The Depository Trust Company, a New York corporation.

            "EDGAR" has the meaning set forth in Section 6.2(b).

            "EQUITY INTEREST" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person.

            "EVENT OF DEFAULT" has the meaning set forth in Section 8.1.

            "EXCESS CONVERSION OBLIGATION" has the meaning set forth in Section
12.12(a).

            "EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended.

            "EX-DIVIDEND TIME" means, with respect to any issuance or
distribution on Common Stock, the first Trading Day on which the Common Stock
trades regular way on the principal securities market on which the Common Stock
is then traded without the right to receive such issuance or distribution.

            "EXPIRATION TIME" has the meaning set forth in Section 12.3(f).

            "FAIR MARKET VALUE" has the meaning set forth in Section 12.3(g).

            "FINAL NOTICE DATE" has the meaning set forth in Section 12.12(a).

            "FUNDAMENTAL CHANGE" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange

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Act), is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed to have beneficial
ownership of all shares that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total outstanding Voting Stock of the
Company; (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election to such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a vote of at least
66-2/3% of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of such
Board of Directors then in office; (iii) the Company consolidates with or merges
with or into any Person, or conveys, transfers, sells or otherwise disposes of
or leases all or substantially all of its assets to any Person, or any
corporation consolidates with or merges into or with the Company, in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Company is changed into or exchanged for cash, securities or other property,
other than any such transaction where the outstanding Voting Stock of the
Company is not changed or exchanged at all (except to the extent necessary to
reflect a change in the jurisdiction of incorporation of the Company), or where
(A) the outstanding Voting Stock of the Company is changed into or exchanged for
cash, securities and other property (other than Equity Interests of the
surviving corporation) and (B) the shareholders of the Company immediately
before such transaction own, directly or indirectly, immediately following such
transaction, more than 50% of the total outstanding Voting Stock of the
surviving corporation; (iv) the Company is liquidated or dissolved or adopts a
plan of liquidation or dissolution other than in a transaction which complies
with the provisions described under ARTICLE VII; or (v) the Company's Common
Stock ceases to be traded on a national securities exchange or quoted on the
Nasdaq National Market or the Nasdaq SmallCap Market or traded on an established
automated over-the-counter trading market in the United States.

            Notwithstanding the foregoing provisions, a "Fundamental Change"
shall not be deemed to have occurred if either:

                  (1) the Closing Sale Price of the Common Stock for each of at
      least five Trading Days within:

                  (i) the period of the ten consecutive Trading Days immediately
            after the later of the Fundamental Change or the public announcement
            of the Fundamental Change, in the case of a Fundamental Change
            resulting solely from a Fundamental Change in clause (i) of the
            definition of Fundamental Change; or

                  (ii) the period of the ten consecutive Trading Days
            immediately preceding the Fundamental Change, in the case of a
            Fundamental Change resulting from a Fundamental Change in clauses
            (ii), (iii) or (iv) of the definition of Fundamental Change;

      is at least equal to 105% of the quotient where the numerator is the
      principal amount of a Note and the denominator is the Conversion Rate in
      effect on each of

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      such five Trading Days, with such calculation being made for each Trading
      Day (the "105% TRADING PRICE EXCEPTION"); or

                  (2) in the case of a merger or consolidation described in
      clause (iii) of the definition of Fundamental Change, at least 90% of the
      consideration, excluding cash payments for fractional shares and cash
      payments pursuant to dissenters' appraisal rights, in the merger or
      consolidation constituting the Fundamental Change, consists of common
      stock traded on a U.S. national securities exchange or quoted on the
      Nasdaq National Market or the Nasdaq SmallCap Market (or which shall be so
      traded or quoted when issued or exchanged in connection with such
      Fundamental Change) and as a result of such transaction or transactions
      the Notes become convertible solely into such common stock, excluding cash
      payments for fractional shares.

            "FUNDAMENTAL CHANGE PURCHASE DATE" has the meaning set forth in
Section 5.1(a).

            "FUNDAMENTAL CHANGE PURCHASE NOTICE" has the meaning set forth in
Section 5.1(c).

            "FUNDAMENTAL CHANGE PURCHASE PRICE" has the meaning set forth in
Section 5.1(a).

            "GLOBAL SECURITIES" means Notes that are in substantially the form
attached hereto as Exhibit A and that include the information called for by
footnotes 1 and 3 thereof and that are deposited with the Depositary or its
custodian and registered in the name of the Depositary or its nominee.

            "HOLDER" means a person in whose name a Note, including any Global
Security, is registered on the Registrar's books.

            "INDEBTEDNESS" means, with respect to any person,

                  (a) all obligations, contingent or otherwise, of such person
      (i) for borrowed money (whether or not the recourse of the lender is to
      the whole of the assets of such person or only to a portion thereof), (ii)
      evidenced by a note, debenture, bond or written instrument (including a
      purchase money obligation), (iii) in respect of leases of such person
      required, in conformity with United States generally accepted accounting
      principles, to be accounted for as capitalized lease obligations on the
      balance sheet of such person; or (iv) in respect of letters of credit
      (including reimbursement obligations with respect thereto), local
      guarantees or bankers' acceptances;

                  (b) all obligations secured by a mortgage, pledge, lien,
      encumbrance, charge or adverse claim affecting title or resulting in an
      encumbrance to which the property or assets of such person are subject and
      as are reflected as debt on the balance sheet of such person, whether or
      not the obligations secured thereby shall have been assumed by or shall
      otherwise be such person's legal liability;

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                  (c) all obligations of such person under interest rate and
      currency swap agreements, cap, floor and collar agreements, spot and
      forward contracts and similar agreements and arrangements; and

                  (d) all obligations of others of the type described in clause
      (a), (b) or (c) above assumed by or guaranteed in any manner by such
      person or in effect guaranteed by such person through an agreement to
      purchase, contingent or otherwise (and the obligations of such person
      under any such assumptions, guarantees or other such arrangements).
      "INDENTURE" means this Indenture, as amended or supplemented from time to
      time in accordance with the terms hereof, including the provisions of the
      TIA that are explicitly incorporated in this Indenture by reference to the
      TIA.

            "INITIAL PURCHASER" means Bear, Stearns & Co. Inc., as initial
purchaser pursuant to the Purchase Agreement.

            "INSTITUTIONAL ACCREDITED INVESTOR" means an institutional investor
that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.

            "INTEREST PAYMENT DATE" has the meaning set forth in Exhibit A
attached hereto.

            "ISSUE DATE" means, with respect to any Note, the date on which such
Note was originally issued or deemed issued as set forth on the face of the
Note.

            "LEGAL HOLIDAY" means any day other than a Business Day.

            "NON-ELECTING SHARE" has the meaning set forth Section 12.4.

            "NOTES" has the meaning set forth in the Recitals.

            "OBLIGATIONS" means any principal, interest accruing on or after the
filing of any petition of bankruptcy or for reorganization, whether or not a
claim for post-filing interest is allowed in such proceeding, penalties, fees,
charges, expenses, indemnifications, reimbursement obligations, additional
amounts, guarantees and other liabilities or amounts payable under the
documentation governing any indebtedness or in respect thereto.

            "OFFICER" means the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President, the Treasurer or the Secretary of
the Company.

            "OFFICERS' CERTIFICATE" means a written certificate containing the
information specified in Section 14.4 and Section 14.5, signed in the name of
the Company by any two Officers, at least one of whom is the Chief Executive
Officer or the Chief Financial Officer, and delivered to the Trustee. An
Officers' Certificate given pursuant to Section 6.3 shall be signed by the Chief
Financial Officer and one other Officer.

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            "OPINION OF COUNSEL" means a written opinion containing the
information specified in Section 14.4 and Section 14.5, from legal counsel
reasonably satisfactory to the Trustee. The counsel may be an employee of, or
counsel to, the Company.

            "PAYING AGENT" has the meaning set forth in Section 2.3.

            "PAYMENT BLOCKAGE NOTICE" has the meaning set forth in Section
13.3(b).

            "PAYMENT BLOCKAGE PERIOD" has the meaning set forth in Section
13.3(b).

            "PAYMENT DEFAULT" has the meaning set forth in Section 13.3(a).

            "PERSON" or "PERSON" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof (and for purposes of the definition of "Fundamental Change"
shall also have the meaning set forth in such definition).

            "PRINCIPAL CONVERSION SETTLEMENT ELECTION" has the meaning set forth
in Section 12.12(a).

            "PUBLIC ACQUIRER CHANGE OF CONTROL" means any event constituting a
Fundamental Change (or that would otherwise constitute a Fundamental Change, but
for the application of the 105% Trading Price Exception) of the type described
in Section 12.3(e) in which the acquirer has a class of common stock traded on
any U.S. national securities exchange or quoted on the Nasdaq National Market or
the Nasdaq SmallCap Market or which will be so traded or quoted when issued or
exchanged in connection with such Fundamental Change or other event (the "PUBLIC
ACQUIRER COMMON STOCK"). If an acquirer does not itself have a class of common
stock satisfying the foregoing requirement, it will be deemed to have Public
Acquirer Common Stock if a Subsidiary of the acquirer has a class of common
stock satisfying the foregoing requirement; in such case, all references to
Public Acquirer Common Stock shall refer to such class of common stock.

            "PUBLIC ACQUIRER COMMON STOCK" has the meaning assigned to it in the
definition of Public Acquirer Change of Control.

            "PUBLIC NOTICE" by the Company shall mean publication of a notice in
a press release through Dow Jones & Co., Inc., Business Wire or Bloomberg
Business News Company or, if such organizations are not in existence at the time
of issuance of such press release, such other news or press organization as is
reasonably calculated to broadly disseminate the relevant information to the
public and publication of such information on the Company's corporate website or
through such other public medium as the Company may use at that time.

            "PURCHASE AGREEMENT" means the Purchase Agreement, dated December 1,
2004, by and between the Company and the Initial Purchaser relating to the
purchase and sale of the Notes.

            "PURCHASE DATE" has the meaning set forth in Section 4.1(a).

                                       8
<PAGE>

            "PURCHASE NOTICE" has the meaning set forth in Section 4.1(c).

            "PURCHASE PRICE" has the meaning set forth in Section 4.1(a).

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

            "RECORD DATE" has the meaning set forth in Section 12.3(g).

            "REDEMPTION DATE" means, when used with respect to any Note to be
redeemed, the date fixed for redemption pursuant to this Indenture.

            "REDEMPTION PRICE" means when used with respect to any Note to be
redeemed pursuant to any provision in this Indenture, the price at which it is
to be redeemed pursuant to this Indenture and the Notes.

            "REFERENCE PERIOD" has the meaning set forth in Section 12.3(d).

            "REGISTER" has the meaning set forth in Section 2.3.

            "REGISTRAR" has the meaning set forth in Section 2.3.

            "REGISTRATION DEFAULT PERIOD" has the meaning set forth in the
Registration Rights Agreement.

            "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated December 6, 2004, between the Company and Bear, Stearns & Co.
Inc., as amended or supplemented from time to time.

            "REGULAR RECORD DATE" has the meaning set forth in Exhibit A
attached hereto.

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

            "RESTRICTED CERTIFICATED SECURITY" means a Certificated Security
which is a Transfer Restricted Security.

            "RESTRICTED GLOBAL SECURITY" means a Global Security that is a
Transfer Restricted Security.

            "RESTRICTED SECURITY" means a Restricted Certificated Security or a
Restricted Global Security.

                                       9
<PAGE>

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

            "SEC" means the United States Securities and Exchange Commission, or
any successor thereto.

            "SECURITIES ACT" means the United States Securities Act of 1933, as
amended, or any successor statute thereto and the rules and regulations
thereunder.

            "SENIOR CREDIT FACILITY" means that certain Credit Agreement, dated
as of April 10, 2003, between Wells Fargo Bank, N.A. and the Company, as
amended, modified or extended from time to time.

            "SENIOR DEBT" means, with respect to the Company, the principal of,
premium, if any, and interest on (including interest accruing after, or which
would accrue but for the filing of a petition initiating any proceeding pursuant
to Bankruptcy Law at the rate specified in the applicable Senior Debt, whether
or not a claim for such interest would be allowed), all Indebtedness of the
Company, (i) arising under the Senior Credit Facility or (ii) as to which the
instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such Indebtedness shall be "Senior Debt" for purposes of
this Indenture, whether outstanding on the date of the Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
(including all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to the foregoing); provided, however, that Senior
Debt does not include:

                  (a) Indebtedness evidenced by the Notes;

                  (b) Indebtedness of the Company to any Subsidiary of the
      Company;

                  (c) any liability for federal, state, foreign, local or other
      taxes owed or owing by the Company; and

                  (d) accounts payable or other liabilities of the Company to
      trade creditors arising in the ordinary course of business.

            "SETTLEMENT NOTICE PERIOD" has the meaning set forth in Section
12.12(a).

            "SHELF REGISTRATION STATEMENT" means any registration statement to
be filed by the Company covering resales by holders of the Notes and the Common
Stock issuable upon conversion of the Notes, as specified in the Registration
Rights Agreement.

            "SIGNIFICANT SUBSIDIARY" means any existing or future, direct or
indirect, Subsidiary of the Company that would constitute a "significant
subsidiary" as such term is defined under Rule 1-02 of Regulation S-X.

            "SPECIAL RECORD DATE" has the meaning set forth in Exhibit A
attached hereto.

                                       10
<PAGE>

            "SPIN-OFF" has the meaning set forth in Section 12.3(d).

            "STATED MATURITY", when used with respect to any Note, means
December 1, 2024.

            "STOCK PRICE" means the price paid per share of Common Stock in a
transaction to which Section 12.2(e) applies. If holders of Common Stock receive
only cash in such transaction, the Stock Price shall be the cash amount paid per
share. Otherwise, the Stock Price shall be the average of the Closing Sale
Prices of the Common Stock on the five Trading Days prior to but not including
the effective date of such transaction.

            "SUBSIDIARY" means any person of which at least a majority of the
outstanding Voting Stock shall at the time directly or indirectly be owned or
controlled by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.

            "SURRENDERED SECURITY" has the meaning set forth in Section
12.12(a).

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

            "TRADING DAY" means a day during which trading in securities
generally occurs on the principal U.S. national or regional securities exchange
on which the Applicable Stock is then listed or, if the Applicable Stock is not
listed on a U.S. national or regional securities exchange, on the Nasdaq
National Market system or Nasdaq SmallCap Market system or, if the Applicable
Stock is not listed on a U.S. national or regional securities exchange, and not
quoted on the Nasdaq National Market system, on the principal other market on
which the Applicable Stock is then traded (provided that no day on which trading
of the Applicable Stock is suspended on such exchange or other trading market
will count as a Trading Day) (it being understood that for purposes of this
definition a market shall include obtaining quotations as provided in the last
sentence of the definition of "Closing Sale Price," if applicable).

            "TRANSFER CERTIFICATE" has the meaning set forth in Section 2.12(e).

            "TRANSFER RESTRICTED SECURITY" has the meaning set forth in Section
2.12(e).

            "TRIGGER EVENT" has the meaning set forth in Section 12.3(d).

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

            "UNDISRUPTED TRADING DAY" means a Trading Day on which the
Applicable Stock does not experience any of the following at any time during the
one-hour period ending at the conclusion of the regular Trading Day:

                                       11
<PAGE>

                  (a) any suspension of or limitation imposed on trading of the
      Applicable Stock on any national or regional securities exchange or
      association or over-the-counter market;

                  (b) any event (other than an event listed in clause (c) below)
      that disrupts or impairs the ability of market participants in general to
      (i) effect transactions in or obtain market values for the Applicable
      Stock on any relevant national or regional securities exchange or
      association or over-the-counter market or (ii) effect transactions in or
      obtain market values for, futures or options contracts relating to the
      Applicable Stock on any relevant national or regional securities exchange
      or association or over-the-counter market; or

                  (c) any relevant national or regional securities exchange or
      association or over-the-counter market on which the Applicable Stock
      trades closes on any exchange Trading Day prior to its scheduled closing
      time unless such earlier closing time is announced by the exchange at
      least one hour prior to the earlier of (i) the actual closing time for the
      regular trading session on such exchange and (ii) the submission deadline
      for orders to be entered into the exchange for execution on such Trading
      Day,

if, in the case of clauses (a) and (b) (but not clause (c)) above, the Company
determines the effect of such suspension, limitation, disruption or impairment
is material.

            "UNRESTRICTED CERTIFICATED SECURITY" means a Certificated Security
that is not a Transfer Restricted Security.

            "UNRESTRICTED GLOBAL SECURITY" means a Global Security that is not a
Transfer Restricted Security.

            "VOTING STOCK" of a person means the Equity Interest of such person
of the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such person (irrespective of whether
or not at the time the Equity Interest of any other class or classes shall have
or might have voting power by reason of the happening of any contingency).

      Section 1.2. 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:

            "INDENTURE SECURITIES" means the Notes.

            "INDENTURE SECURITY HOLDER" means a Holder.

            "INDENTURE TO BE QUALIFIED" means this Indenture.

            "INDENTURE TRUSTEE" or "institutional trustee" means the Trustee.

                                       12
<PAGE>

            "OBLIGOR" on the indenture securities means the Company.

            All other TIA terms used but not defined in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by
SEC rule have the meanings assigned to them by such definitions.

      Section 1.3. 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 accounting principles generally accepted in
the United States as in effect from time to time;

            (c) "or" is not exclusive;

            (d) "including" means including, without limitation; and

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

      Section 1.4. Acts of Holders.

            (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company, as
described in Section 14.2. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section 1.4.

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

                                       13
<PAGE>

            (c) The principal amount and serial number of any Note and the
record ownership of Notes shall be proved by the Register maintained by the
Registrar for the Notes.

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

            (e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
outstanding Notes have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Notes shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.

                                   ARTICLE II

                                    THE NOTES

      Section 2.1. Form and Dating.

            (a) The Notes shall be designated as the "3.0% Convertible Senior
Subordinated Notes due 2024" of the Company. The aggregate principal amount of
Notes outstanding at any time may not exceed $65,000,000 (or up to $80,000,000
if the Initial Purchaser's option to purchase additional Notes set forth in the
Purchase Agreement is exercised in full) except as provided in Section 2.7.

            The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A attached hereto, which is incorporated in
and made a part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage (provided that any
such notation, legend or endorsement required by usage is in a form acceptable
to the Company). The Company shall provide any such notations, legends or
endorsements to the Trustee in writing. Each Note shall be dated the date of its
authentication.

            (b) Restricted Global Securities. All of the Notes are being
initially offered and sold only to QIBs in reliance on Rule 144A and shall be
issued, initially in the form of one or more Restricted Global Securities, which
shall be deposited with the Trustee at its Corporate Trust Office, as custodian
for the Depositary and registered in the name of DTC or the nominee

                                       14
<PAGE>

thereof, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. If any Notes are resold to an Institutional Accredited
Investor, the Company shall duly execute and the Trustee shall duly authenticate
and deliver, in accordance with Section 2.2, one or more additional Restricted
Global Securities, which shall be deposited with the Trustee at its Corporate
Trust Office, as custodian for the Depositary and registered in the name of DTC
or the nominee thereof and in which beneficial interests may be held by
Institutional Accredited Investors in accordance with the Applicable Procedures.
Subject to Section 2.1(a), the aggregate principal amount of the Restricted
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary as hereinafter provided.
Without limiting the generality of the foregoing, the aggregate principal amount
of the Restricted Global Securities may be increased in order to reflect the
issuance of Notes following the exercise by the Initial Purchaser of the option
set forth in the Purchase Agreement to purchase additional Notes.

            (c) Global Securities in General. Each Global Security shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall initially represent the aggregate amount of
outstanding Notes stated thereon, but that the aggregate amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions, repurchases and conversions of
such Notes.

            Any adjustment of the aggregate principal amount of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee in accordance
with instructions given by the Holder thereof as required by Section 2.12 and
shall be made on the records of the Trustee and the Depositary.

            Neither any members of, or participants in, the Depositary
(collectively, the "AGENT MEMBERS") nor any other persons on whose behalf Agent
Members may act may exercise any rights under this Indenture with respect to any
Global Security registered in the name of the Depositary or any nominee thereof,
or under any such Global Security, and the Depositary or such nominee, as the
case may be, may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner and holder of such Global Security
for all purposes whatsoever. Notwithstanding the foregoing, nothing contained
herein shall (A) prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or such nominee, as the case may be,
or (B) impair, as between the Depositary, its Agent Members and any other person
on whose behalf an Agent Member may act, the operation of customary practices of
such Persons governing the exercise of the rights of a holder of any Note.

            (d) Certificated Securities. Certificated Securities will be issued
only under the limited circumstances provided in Section 2.12(a)(i).

                                       15
<PAGE>

      Section 2.2. Execution and Authentication.

            The Notes shall be executed on behalf of the Company by any Officer.
The signature of the Officer on the Notes may be manual or facsimile.

            A Note bearing the manual or facsimile signature of an individual
who was at the time of the execution of the Note an Officer shall bind the
Company, notwithstanding that such individual has ceased to hold such office(s)
prior to the authentication and delivery of such Notes or did not hold such
office(s) at the date of authentication of such Notes.

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

            The Trustee shall authenticate and deliver the Notes for original
issuance in an aggregate principal amount of $65,000,000 (or up to $80,000,000
if the Initial Purchaser's option to purchase additional Notes set forth in the
Purchase Agreement is exercised) upon one or more Company Orders. The aggregate
principal amount of the Notes outstanding at any time may not exceed the amount
set forth in the foregoing sentence except as provided in Section 2.7. In
authenticating such Notes, and accepting the additional responsibilities under
this Indenture in relation to such Notes, the Trustee shall receive and shall be
fully protected in relying upon:

            (a) a copy of the Board Resolution in or pursuant to which the terms
and form of the Notes were established, the issuance and sale of, and the terms
of, the Notes was authorized, this Indenture was authorized and specified
Officers were authorized to establish the form of the Notes and the form of this
Indenture, to execute the Notes and this Indenture on behalf of the Company and
to take any other necessary actions relating thereto and evidence of any actions
taken by authorized Officers pursuant to that Board Resolution, certified by the
President, Secretary, an Assistant Secretary or the General Counsel of the
Company to have been duly adopted by the Board of Directors or taken by any
authorized Officer and to be in full force and effect as of the date of such
certificate; and

            (b) an Officers' Certificate delivered in accordance with to Section
14.4 and Section 14.5.

            The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.

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

                                       16
<PAGE>

      Section 2.3. Registrar, Paying Agent and Conversion Agent.

            The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR"), an office
or agency where Notes may be presented for redemption, repurchase or payment
("PAYING AGENT"), an office or agency where Notes may be presented for
conversion ("CONVERSION AGENT") and an office or agency where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. Such office shall be the Corporate Trust Office of the Trustee. Pursuant
to Section 6.5, the Company shall at all times maintain a Registrar, Paying
Agent, Conversion Agent and an office or agency where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served in the
Borough of Manhattan, The City of New York. Such office in New York shall be
initially located at 101 Barclay Street, Floor 8W, New York, New York 10286. The
Registrar shall keep a register of the Notes (the "REGISTER") and of their
transfer and exchange.

            The Company may have one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
Paying Agent includes any additional paying agent, including any named pursuant
to Section 6.5. The term Conversion Agent includes any additional conversion
agent, including any named pursuant to Section 6.5.

            The Company shall enter into an appropriate limited agency agreement
with any Registrar, Paying Agent, Conversion Agent or co-registrar (in each
case, if such Registrar, agent or co-registrar is a Person other than the
Trustee). Each such agreement shall implement the provisions of this Indenture
that relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying
Agent or Conversion Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 9.7.

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

      Section 2.4. Paying Agent to Hold Assets in Trust.

            Except as otherwise provided herein, prior to 10:00 a.m., New York
City time, on each due date of payments in respect of any Note, the Company
shall deposit with the Paying Agent cash (in immediately available funds if
deposited on the due date) sufficient to make such payments when so becoming
due. The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all cash held by the Paying Agent for the making of
payments in respect of the Notes and shall notify the Trustee of any default by
the Company in making any such payment. The Company at any time may require a
Paying Agent to pay all cash held by it to the Trustee, and to account for any
funds disbursed by it, and the Trustee may at any time during the continuance of
any such default, upon the written request to the Paying Agent, require such
Paying Agent to forthwith pay to the Trustee all cash so held in trust. Upon
doing so, the Paying Agent shall have no further liability for the cash.

                                       17
<PAGE>

      Section 2.5. Holder 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
Holders. If the Trustee is not the Registrar, the Company shall cause to be
furnished to the Trustee on or before each semiannual 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 Holders.

      Section 2.6. Transfer and Exchange.

            (a) Subject to compliance with any applicable additional
requirements contained in Section 2.12, when a Note is presented to the
Registrar with a request to register a transfer thereof or to exchange such Note
for an equal principal amount of Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested;
provided, however, that every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by an assignment form
and, if applicable, a transfer certificate, each in the form included in Exhibit
A attached hereto and in form satisfactory to the Registrar and each duly
executed by the Holder thereof or its attorney duly authorized in writing. To
permit registration of transfers and exchanges, upon surrender of any Note for
registration of transfer or exchange at an office or agency maintained for such
purpose pursuant to Section 2.3, the Company shall execute, and the Trustee
shall authenticate, Notes of a like aggregate principal amount at the
Registrar's request. Any transfer or exchange shall be without charge, except
that the Company or the Registrar may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges that may be imposed in
connection with the transfer or exchange of the Notes from the Holder requesting
such transfer or exchange.

            Neither the Company, the Registrar nor the Trustee shall be required
to exchange or register a transfer of (i) any Notes selected for redemption
(except, in the case of Notes to be redeemed in part, the portion thereof not to
be redeemed), (ii) any Notes in respect of which a Purchase Notice or a
Fundamental Change Purchase Notice has been given and not withdrawn by the
Holder thereof in accordance with the terms of this Indenture (except, in the
case of Notes to be purchased in part, the portion thereof not to be purchased)
or (iii) any Notes surrendered for conversion (except, in the case of Notes to
be converted in part, the portion thereof not to be converted).

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

            (b) Any Registrar appointed pursuant to Section 2.3 shall provide to
the Trustee such information as the Trustee may reasonably require in connection
with the delivery by such Registrar of Notes upon transfer or exchange of Notes.

            (c) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under

                                       18
<PAGE>

applicable law with respect to any transfer of any interest in any Note between
or among Agent Members or other beneficial owners of interests in any Global
Security other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.

      Section 2.7. Replacement Notes.

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

            In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, or is about to be redeemed by the
Company pursuant to ARTICLE III or repurchased by the Company pursuant to
ARTICLE IV or ARTICLE V, the Company in its discretion may, instead of issuing a
new Note, pay, redeem or repurchase such Note, as the case may be.

            Upon the issuance of any new Notes under this Section 2.7, the
Company may require the payment of a sum sufficient to cover any tax, assessment
or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee or the Registrar)
connected therewith.

            Every new Note issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Notes duly issued hereunder.

            The provisions of this Section 2.7 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.

      Section 2.8. Outstanding Notes; Determinations of Holders' Action.

            Notes outstanding at any time are all the Notes authenticated by the
Trustee, except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.8 as not outstanding. If a
Note is replaced pursuant to Section 2.7, the replaced Note ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser unaware that such Note has been
replaced.

                                       19
<PAGE>

            Subject to Section 2.12(f), a Note does not cease to be outstanding
because the Company or an Affiliate thereof holds the Note; provided, however,
that in determining whether the Holders of the requisite principal amount of
Notes have given or concurred in any request, demand, authorization, direction,
notice, consent, waiver, or other Act hereunder, Notes owned by the Company or
any other obligor upon the Notes or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other Act,
only Notes which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Subject to the foregoing, only Notes outstanding
at the time of such determination shall be considered in any such determination.

      If the Paying Agent holds, in accordance with the terms of this Indenture,
prior to 10:00 a.m., New York City time, on a Redemption Date, a Purchase Date,
a Fundamental Change Purchase Date or Stated Maturity, as the case may be, cash
or securities, if permitted hereunder, sufficient to pay Notes payable on that
date, then on such Redemption Date, Purchase Date, Fundamental Change Purchase
Date or Stated Maturity, as the case may be, such Notes shall cease to be
outstanding and interest (including Additional Interest, if any) on such Notes
shall cease to accrue.

            If a Note is converted in accordance with ARTICLE XII, then from and
after the time of conversion on the date of conversion, such Note shall cease to
be outstanding and interest (including Additional Interest, if any) on such Note
shall cease to accrue.

      Section 2.9. Temporary Notes.

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

            If temporary Notes are issued, the Company shall cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 2.3, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits and subject to the same limitations under this
Indenture as definitive Notes.

      Section 2.10. Cancellation.

                                       20
<PAGE>

            All Notes surrendered for payment, purchase by the Company pursuant
to ARTICLE IV or ARTICLE V, conversion, redemption or registration of transfer
or exchange shall, if surrendered to any person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it or, if
surrendered to the Trustee, shall be promptly cancelled by it. The Company shall
promptly deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Trustee. The Company may not issue new Notes to replace Notes that it has paid
or delivered to the Trustee for cancellation or that any Holder has converted
pursuant to ARTICLE XII. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section 2.10, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be disposed of by the Trustee in accordance with the Trustee's customary
procedure.

      Section 2.11. Persons Deemed Owners.

            Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of, Redemption Price, Purchase Price
or Fundamental Change Purchase Price, and interest (including Additional
Interest, if any) on, the Note, for the purpose of receiving cash or Applicable
Stock upon conversion and for all other purposes whatsoever, whether or not such
Note be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.

      Section 2.12. Additional Transfer and Exchange Requirements.

            (a) Transfer and Exchange of Global Securities.

            (i) Certificated Securities shall be issued in exchange for
      interests in the Global Securities only if (x) the Depositary notifies the
      Company that it is unwilling or unable to continue as Depositary for the
      Global Securities or if at any time the Depositary ceases to be a
      "clearing agency" registered under the Exchange Act, if so required by
      applicable law or regulation, and a successor Depositary is not appointed
      by the Company within 90 calendar days or (y) an Event of Default has
      occurred and is continuing and the Registrar receives a request from the
      Depository that the notes be issued in definitive form. In any such case,
      the Company shall execute, and the Trustee shall, upon receipt of a
      Company Order (which the Company agrees to deliver promptly), authenticate
      and deliver Certificated Securities in an aggregate principal amount equal
      to the principal amount of such Global Securities in exchange therefor.
      Only Restricted Certificated Securities shall be issued in exchange for
      beneficial interests in Restricted Global Securities, and only
      Unrestricted Certificated Securities shall be issued in exchange for
      beneficial interests in Unrestricted Global Securities. Certificated
      Securities issued in exchange for beneficial interests in Global
      Securities shall be registered in such names and shall be in such
      authorized denominations as the Depositary, pursuant to instructions from
      its direct or indirect participants or otherwise, shall instruct the
      Trustee. The Trustee shall deliver or cause to be delivered such

                                       21
<PAGE>

      Certificated Securities to the Persons in whose name such Notes are so
      registered. Such exchange shall be effected in accordance with the
      Applicable Procedures.

            (ii) Notwithstanding any other provisions of this Indenture other
      than the provisions set forth in Section 2.12(a)(i), a Global Security may
      not be transferred except as a whole by the Depositary to a nominee of the
      Depositary or by a nominee of the Depositary to the Depositary or another
      nominee of the Depositary or by the Depositary or any such nominee to a
      successor Depositary or a nominee of such successor Depositary.

            (b) Transfer and Exchange of Certificated Securities. In the event
that Certificated Securities are issued in exchange for beneficial interests in
Global Securities in accordance with Section 2.12(a)(i), and, on or after such
event, Certificated Securities are presented by a Holder to the Registrar with a
request:

            (x) to register the transfer of the Certificated Securities to a
person who will take delivery thereof in the form of Certificated Securities
only; or

            (y) to exchange such Certificated Securities for an equal principal
amount of Certificated Securities of other authorized denominations,

such Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Securities presented or surrendered for
register of transfer or exchange:

            (i) shall be duly endorsed or accompanied by a written instrument of
      transfer in accordance with the proviso in the first paragraph of Section
      2.6(a); and

            (ii) in the case of a Restricted Certificated Security, such request
      shall be accompanied by the following additional information and
      documents, as applicable:

                  (A) if such Restricted Certificated Security is being
            delivered to the Registrar by a Holder for registration in the name
            of such Holder, without transfer, or such Restricted Certificated
            Security is being transferred to the Company or a Subsidiary of the
            Company, a certification to that effect from such Holder (in
            substantially the form set forth in the Transfer Certificate);

                  (B) if such Restricted Certificated Security is being
            transferred to a person the Holder reasonably believes is a QIB in
            compliance with Rule 144A, pursuant to the exemption from the
            registration requirements of the Securities Act provided by Rule 144
            (if available) or pursuant to an effective registration statement
            under the Securities Act, a certification to that effect from such
            Holder (in substantially the form set forth in the Transfer
            Certificate); or

                  (C) if such Restricted Certificated Security is being
            transferred pursuant to an exemption from the registration
            requirements of the Securities Act to an Institutional Accredited
            Investor (other than to a QIB in accordance with Rule 144A), that,
            prior to such transfer, furnishes to the Trustee a certificate
            containing certain representations and warranties by such
            Institutional Accredited

                                       22
<PAGE>

            Investor (in substantially the form set forth in Exhibit B), an
            Opinion of Counsel if required by the Company or the Trustee and a
            certification to that effect from the Holder (in substantially the
            form set forth in the Transfer Certificate).

            (c) Transfer of a Beneficial Interest in a Restricted Global
Security for a Beneficial Interest in an Unrestricted Global Security. Any
person having a beneficial interest in a Restricted Global Security may upon
request, subject to the Applicable Procedures, transfer such beneficial interest
to a person who is required or permitted to take delivery thereof in the form of
an Unrestricted Global Security. Upon receipt by the Trustee of written
instructions, or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any person having a
beneficial interest in a Restricted Global Security and the following additional
information and documents in such form as is customary for the Depositary from
the Depositary or its nominee on behalf of the person having such beneficial
interest in the Restricted Global Security (all of which may be submitted by
facsimile or electronically):

            (i) if such beneficial interest is being transferred pursuant to an
      effective registration statement under the Securities Act, a certification
      to that effect from the Holder (in substantially the form set forth in the
      Transfer Certificate); or

            (ii) if such beneficial interest is being transferred pursuant to
      the exemption from the registration requirements of the Securities Act
      provided by Rule 144, a certification to that effect from the Holder (in
      substantially the form set forth in the Transfer Certificate),

the Trustee, as the Registrar, shall reduce or cause to be reduced the aggregate
principal amount of the Restricted Global Security by the appropriate principal
amount and shall increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Security by a like principal amount. Such
transfer shall otherwise be effected in accordance with the Applicable
Procedures. If no Unrestricted Global Security is then outstanding, the Company
shall execute and the Trustee shall, upon receipt of a Company Order (which the
Company agrees to deliver promptly), authenticate and deliver an Unrestricted
Global Security.

            (d) Transfers of Certificated Securities for Beneficial Interests in
Global Securities. In the event that Certificated Securities are issued in
exchange for beneficial interests in Global Securities and, thereafter, the
events or conditions specified in Section 2.12(a)(i) which required such
exchange shall cease to exist, the Company shall mail notice to the Trustee and
to the Holders stating that Holders may exchange Certificated Securities for
interests in Global Securities by complying with the procedures set forth in
this Indenture and briefly describing such procedures and the events or
circumstances requiring that such notice be given. Thereafter, if Certificated
Securities are presented by a Holder to a Registrar with a request:

            (x) to register the transfer of such Certificated Securities to a
      person who will take delivery thereof in the form of a beneficial interest
      in a Global Security, which request shall specify whether such Global
      Security will be a Restricted Global Security or an Unrestricted Global
      Security, or

                                       23
<PAGE>

            (y) to exchange such Certificated Securities for an equal principal
      amount of beneficial interests in a Global Security, which beneficial
      interests shall be owned by the Holder transferring such Certificated
      Securities (provided that in the case of such an exchange, Restricted
      Certificated Securities may be exchanged only for Restricted Global
      Securities and Unrestricted Certificated Securities may be exchanged only
      for Unrestricted Global Securities), the Registrar shall register the
      transfer or make the exchange as requested by canceling such Certificated
      Security and causing, or directing the Registrar to cause, the aggregate
      principal amount of the applicable Global Security to be increased
      accordingly and, if no such Global Security is then outstanding, the
      Company shall issue and the Trustee shall, upon receipt of a Company Order
      (which the Company agrees to deliver promptly) authenticate and deliver a
      new Global Security;

provided, however, that the Certificated Securities presented or surrendered for
registration of transfer or exchange:

                        (1) shall be duly endorsed or accompanied by a written
                  instrument of transfer in accordance with the proviso in the
                  first paragraph of Section 2.6(a);

                        (2) in the case of a Restricted Certificated Security to
                  be transferred for a beneficial interest in an Unrestricted
                  Global Security, such request shall be accompanied by the
                  following additional information and documents, as applicable:

                        (i) if such Restricted Certificated Security is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certification to that effect from
                  such Holder (in substantially the form set forth in the
                  Transfer Certificate); or

                        (ii) if such Restricted Certificated Security is being
                  transferred pursuant to the exemption from the registration
                  requirements of the Securities Act provided by Rule 144, a
                  certification to that effect from such Holder (in
                  substantially the form set forth in the Transfer Certificate);

                        (3) in the case of a Restricted Certificated Security to
                  be transferred or exchanged for a beneficial interest in a
                  Restricted Global Security, such request shall be accompanied
                  by a certification from such Holder (in substantially the form
                  set forth in the Transfer Certificate) to the effect that such
                  Restricted Certificated Security is being transferred to a
                  person the Holder reasonably believes is a QIB (which, in the
                  case of an exchange, shall be such Holder) in compliance with
                  Rule 144A or, in the case of a transfer to an Institutional
                  Accredited Investor (other than to a QIB in accordance with
                  Rule 144A), by a certificate containing certain
                  representations and warranties by such Institutional
                  Accredited Investor (in substantially the form set forth in
                  Exhibit B), an Opinion of Counsel if required by the Company
                  or the Trustee and a certification to that effect

                                       24
<PAGE>

                  from the Holder (in substantially the form set forth in the
                  Transfer Certificate); and

                        (4) in the case of an Unrestricted Certificated Security
                  to be transferred or exchanged for a beneficial interest in an
                  Unrestricted Global Security, such request need not be
                  accompanied by any additional information or documents.

            (e) Legends.

                        (1) Except as permitted by the following paragraphs (2),
                  (3) and (4), each Global Security and Certificated Security
                  (and all Notes issued in exchange therefor or upon
                  registration of transfer or replacement thereof) shall bear a
                  legend in substantially the form called for by footnote 2 to
                  Exhibit A and footnote 1 to Exhibit C attached hereto (each a
                  "TRANSFER RESTRICTED SECURITY"), for so long as it is required
                  by this Indenture to bear such legend. Each Transfer
                  Restricted Security shall have attached thereto a certificate
                  (a "TRANSFER CERTIFICATE") in substantially the form called
                  for by footnote 4 to Exhibit A attached hereto.

                        (2) Upon any sale or transfer of a Transfer Restricted
                  Security (x) pursuant to Rule 144 or (y) pursuant to an
                  effective registration statement under the Securities Act:

                        (i) in the case of any Restricted Certificated Security,
                  any Registrar shall permit the Holder thereof to exchange such
                  Restricted Certificated Security for an Unrestricted
                  Certificated Security, or (under the circumstances described
                  in Section 2.12(d)) to transfer such Restricted Certificated
                  Security to a transferee who shall take such Note in the form
                  of a beneficial interest in an Unrestricted Global Security,
                  and in each case shall rescind any restriction on the transfer
                  of such Note; and

                        (ii) in the case of any beneficial interest in a
                  Restricted Global Security, the Trustee shall permit the
                  beneficial owner thereof to transfer such beneficial interest
                  to a transferee who shall take such interest in the form of a
                  beneficial interest in an Unrestricted Global Security and
                  shall rescind any restriction on transfer of such beneficial
                  interest; provided, that such Unrestricted Global Security
                  shall continue to be subject to the provisions of Section
                  2.12(a)(ii).

                        (3) Upon the expiration of the holding period pursuant
                  to Rule 144(k) of the Securities Act, the Company shall remove
                  any restriction of transfer on such Note, and the Company
                  shall execute, and the Trustee shall authenticate and deliver
                  Notes that do not bear such legend and that do not have a
                  Transfer Certificate attached thereto.

                                       25
<PAGE>

                        (4) Until the expiration of the holding period
                  applicable to sales of the Notes under Rule 144(k) of the
                  Securities Act or a transfer of the Notes pursuant to Rule 144
                  or pursuant to an effective registration statement under the
                  Securities Act, the Applicable Stock issued upon conversion of
                  the Notes shall bear the legend in substantially the form
                  called for by Exhibit C attached hereto.

            (f) Transfers to the Company. Nothing contained in this Indenture or
in the Notes shall prohibit the sale or other transfer of any Notes (including
beneficial interests in Global Securities) to the Company or any of its
Subsidiaries. The Company shall ensure that if any such Notes shall be reissued,
such reissuance shall comply with applicable law and any Notes reissued as
Transfer Restricted Securities shall be assigned a different "CUSIP" number than
any other Notes.

            (g) Amendments to Rule 144(k). Notwithstanding any other provision
in this Indenture, if Rule 144(k) as promulgated under the Securities Act is
amended to shorten the two-year period under Rule 144(k), then the references to
"two years" in the restrictive legend of each Transfer Restricted Security shall
be deemed to refer to such shorter period from and after receipt by the Trustee
of the documents described in Section 2.12(d)(2) from the Company or from a
Holder of a Transfer Restricted Security; provided that a Transfer Restricted
Security shall not be deemed to refer to such shorter period if to do so would
be prohibited by, or would otherwise cause a violation of, the U.S. federal
securities laws applicable at the time. As soon as practicable after a
Responsible Officer of the Company receives notice of the effectiveness of any
such amendment to shorten the two-year period under Rule 144(k), unless causing
the Transfer Restricted Securities to refer to such shorter period would
otherwise be prohibited by, or would otherwise cause a violation of, the U.S.
federal securities laws applicable at the time, the Company shall provide to the
Trustee the documents described in Section 2.12(d)(2) respecting the
effectiveness of such amendment.

      Section 2.13. CUSIP Numbers.

            The Company may issue the Notes with one or more "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption or repurchase 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 Notes or as contained in any notice of
a redemption or repurchase and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such numbers.
The Company shall promptly notify the Trustee of any change in the CUSIP
numbers.

                                       26
<PAGE>

                                   ARTICLE III

                               REDEMPTION OF NOTES

      Section 3.1. The Company's Right to Redeem; Notice to Trustee.

            Subject to the terms and conditions of this ARTICLE III, the Company
may, at its option, redeem for cash all or a portion of the Notes at any time on
or after December 1, 2009 at a Redemption Price equal to 100% of the principal
amount of the Notes to be redeemed plus accrued and unpaid interest (including
Additional Interest, if any) to, but not including, the Redemption Date.

            In the event that the Company elects to redeem Notes on a date that
is after any Regular Record Date but on or before the corresponding Interest
Payment Date, the Company shall be required to pay any accrued and unpaid
interest (including Additional Interest, if any) to the holder of the redeemed
Note and not the Holder on the corresponding Regular Record Date.

            If the Company elects to redeem Notes, it shall notify the Trustee
in writing of the Redemption Date, the principal amount of Notes to be redeemed
and the Redemption Price. The Company shall give this notice to the Trustee by a
Company Order at least 40 calendar days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee).

      Section 3.2. Selection of Notes to Be Redeemed.

            If fewer than all of the outstanding Notes are to be redeemed,
unless the procedures of the Depositary provide otherwise, the Trustee shall
select the Notes to be redeemed by lot or on a pro rata basis or by another
method the Trustee considers fair and appropriate. The Trustee shall make the
selection within five Business Days after it receives the notice provided for in
Section 3.1 from outstanding Notes not previously called for redemption.

            Notes and portions of Notes that the Trustee selects shall be in
principal amounts of $1,000 or an integral multiple thereof. Provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of the Notes to be redeemed.

            Notes and portions of Notes that are to be redeemed are convertible
by the Holder until 5:00 p.m., New York City time, on the second Business Day
immediately preceding the Redemption Date. If any Note selected for partial
redemption is converted in part before termination of the conversion right with
respect to the portion of the Note so selected, the converted portion of such
Note shall be deemed (so far as may be) to be the portion selected for
redemption. Notes which have been converted during a selection of Notes to be
redeemed may be treated by the Trustee as outstanding for purposes of such
selection.

                                       27
<PAGE>

      Section 3.3. Notice of Redemption.

            At least 30 calendar days but not more than 60 calendar days before
a Redemption Date, the Company shall mail a notice of redemption by first-class
mail, postage prepaid, to each Holder of Notes to be redeemed.

            The notice of redemption shall identify the Notes to be redeemed and
shall state:

            (a) the Redemption Date;

            (b) the Redemption Price;

            (c) the Conversion Rate and any adjustment thereto;

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

            (e) that Notes called for redemption may be converted at any time
prior to 5:00 p.m., New York City time, on the second Business Day immediately
preceding the Redemption Date;

            (f) that Holders who want to convert their Notes must satisfy the
requirements set forth in ARTICLE XII;

            (g) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;

            (h) if fewer than all of the outstanding Notes are to be redeemed,
the serial numbers, if any, and principal amounts of the particular Notes to be
redeemed;

            (i) that, unless the Company defaults in making payment of such
Redemption Price, interest (including Additional Interest, if any) on Notes
called for redemption shall cease to accrue on and after the Redemption Date;

            (j) the CUSIP number(s) of the Notes; and

            (k) any other information the Company wants to present.

            At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company makes such request at least ten Business Days (unless
a shorter period shall be satisfactory to the Trustee) prior to the date by
which such notice of redemption must be given to Holders in accordance with this
Section 3.3; provided, further, that the text of the notice of redemption shall
be prepared by the Company.

      Section 3.4. Effect of Notice of Redemption.

            Once notice of redemption is given, Notes called for redemption
become due and payable on the Redemption Date and at the Redemption Price,
except for Notes which are

                                       28
<PAGE>

converted in accordance with the terms of this Indenture. Upon surrender to the
Paying Agent, such Notes shall be paid at the Redemption Price.

      Section 3.5. Deposit of Redemption Price.

            Prior to 10:00 a.m., New York City time, on the applicable
Redemption Date, the Company shall irrevocably deposit with the Paying Agent an
amount of cash (in immediately available funds if deposited on the Redemption
Date) sufficient to pay the aggregate Redemption Price of all Notes or portions
thereof which are to be redeemed as of such Redemption Date other than Notes or
portions of Notes called for redemption which on or prior thereto have been
delivered by the Company to the Trustee for cancellation or have been converted.

            If the Paying Agent holds, in accordance with the terms hereof, at
10:00 a.m., New York City time, on the applicable Redemption Date, cash
sufficient to pay the Redemption Price of any Notes for which notice of
redemption is given, then, on such Redemption Date, such Notes shall cease to be
outstanding and interest (including Additional Interest, if any) on such Notes
shall cease to accrue, whether or not such Notes are delivered to the Paying
Agent, and the rights of the Holders in respect thereof shall terminate (other
than the right to receive the Redemption Price upon delivery of such Notes).

      Section 3.6. Notes Redeemed in Part.

            Any Certificated Security which is to be redeemed only in part shall
be surrendered at the office of the Paying Agent and the Company shall execute
and the Trustee shall authenticate and deliver to the Holder of such Note,
without charge, a new Note or Notes, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to the unredeemed portion of
the Note surrendered.

      Section 3.7. Repayment to the Company.

            To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 3.5 exceeds the aggregate Redemption Price of the
Notes or portions thereof which the Company is redeeming as of the Redemption
Date, then, promptly after the Redemption Date, the Paying Agent shall return
any such excess to the Company.

      Section 3.8. No Sinking Fund.

            The Notes shall not have a sinking fund.

      Section 3.9. Provisional Redemption; Make-Whole Premium.

            Subject to the foregoing terms and conditions of this ARTICLE III,
the Company may, at its option, redeem for cash all or a portion of the Notes at
any time on or after December 1, 2007 and prior to December 1, 2009 at a
Redemption Price equal to 100% of the principal amount of the Notes to be
redeemed plus accrued and unpaid interest (including Additional Interest, if
any) to, but not including, the Redemption Date, plus the Make-Whole Premium
described below, if the Closing Sale Price of the Common Stock exceeds 150% of
the Conversion Price for at least twenty (20) Trading Days in any consecutive
thirty (30) Trading

                                       29
<PAGE>

Day period ending on the Trading Day prior to the mailing of the notice of
redemption. The Company shall mail a notice of redemption at least 30 calendar
days but not more than 60 calendar days before a Redemption Date in the manner
set forth in Section 3.3.

            In the event that the Company elects to redeem Notes on a date that
is after any Regular Record Date but on or before the corresponding Interest
Payment Date, the Company shall be required to pay any accrued and unpaid
interest (including Additional Interest, if any) to the holder of the redeemed
Note and not the Holder on the corresponding Regular Record Date.

            If the Company elects to redeem Notes, it shall notify the Trustee
in writing of the Redemption Date, the principal amount of Notes to be redeemed
and the Redemption Price. The Company shall give this notice to the Trustee by a
Company Order at least 45 calendar days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee).

            The Make-Whole Premium with respect to any redemption pursuant to
this Section 3.9 shall equal the sum of (a) $150.00 per $1,000 principal amount
of the Notes to be redeemed, minus (b) the amount of any interest actually paid
or accrued and unpaid to, but not including, the Redemption Date. The provisions
of Sections 3.2 through 3.7 of this ARTICLE III shall apply to any redemption
under this Section 3.9; provided, however, that the Make-Whole Premium shall be
deposited and paid, as provided in Section 3.5, in addition to the other amounts
to be deposited and paid as set forth therein. The Make-Whole Premium shall be
paid in cash.

      Section 3.10. Availability of Shelf Registration Statement.
Notwithstanding any other provision of this Article III, the Company shall not
be entitled to redeem any Notes pursuant to this Article III unless the Shelf
Registration Statement is effective and available for use and is expected to
remain effective and available for use during the 30 days following the
redemption date, unless registration is no longer required.

                                   ARTICLE IV

               PURCHASE AT THE OPTION OF HOLDERS ON SPECIFIC DATES

      Section 4.1. Optional Put.

            (a) Subject to the provisions of this Article IV, each Holder shall
have the right, at the Holder's option, to require the Company to purchase, and
upon the exercise of such right, the Company shall purchase, all of such
Holder's Notes not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to $1,000 or an integral multiple
thereof, as directed by such Holder pursuant to this Section 4.1, on each of
December 1, 2009, December 1, 2014 and December 1, 2019 (each a "PURCHASE
DATE"). The Company shall be required to purchase such Notes at a purchase price
in cash equal to 100% of the principal amount of such Notes plus accrued and
unpaid interest (including Additional Interest, if any) to, but not including,
the Purchase Date (the "PURCHASE PRICE").

            (b) No later than 22 Business Days prior to each Purchase Date, the
Company shall mail a written notice of the purchase right by first class mail to
the Trustee (and the Paying

                                       30
<PAGE>

Agent if the Trustee is not then acting as a Paying Agent) and to each Holder at
its address shown in the Register of the Registrar, and to beneficial owners as
required by applicable law. The notice shall include a form of Purchase Notice
to be completed by the Holder and shall briefly state, as applicable:

            (i) the date by which the Purchase Notice must be delivered to the
      Paying Agent in order for a Holder to exercise the purchase right pursuant
      to this Section 4.1;

            (ii) the Purchase Date;

            (iii) the Purchase Price;

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

            (v) briefly, the conversion rights of the Notes, if any, and that
      the Holder must satisfy the requirements set forth in Article XII in order
      to convert the Notes;

            (vi) the Conversion Rate and any adjustments thereto;

            (vii) that the Notes as to which a Purchase Notice has been given
      may be converted into Common Stock if they are otherwise convertible
      pursuant to ARTICLE XII of this Indenture only if the Purchase Notice has
      been withdrawn in accordance with the terms of this Indenture;

            (viii) that the Notes must be surrendered to the Paying Agent to
      collect the Purchase Price;

            (ix) that the Purchase Price for any Notes as to which a Purchase
      Notice has been duly given and not withdrawn shall be paid promptly
      following the later of the Purchase Date and the time of surrender of such
      Notes as described in Section 4.1(b)(viii);

            (x) the procedures the Holder must follow to exercise its rights
      under this Section 4.1 and a brief description of such rights;

            (xi) the procedures for withdrawing a Purchase Notice, including a
      form of notice of withdrawal;

            (xii) that, unless the Company defaults in making payment of such
      Purchase Price, interest (including any Additional Interest, if any) on
      Notes surrendered for purchase by the Company shall cease to accrue on and
      after the Purchase Date; and

            (xiii) the CUSIP number(s) of the Notes.

            At the Company's request, the Trustee shall give the notice of
purchase right in the Company's name and at the Company's expense; provided,
however, that the Company makes such request at least five Business Days (unless
a shorter period shall be satisfactory to the Trustee) prior to the date by
which such notice of purchase right must be given to the Holders

                                       31
<PAGE>

in accordance with this Section 4.1(b); provided, further, that the text of the
notice of purchase right shall be prepared by the Company.

            If any of the Notes is in the form of a Global Security, then the
Company shall modify such notice to the extent necessary to comply with the
Applicable Procedures.

            Simultaneously with delivering the written notice pursuant to this
Section 4.1(b), the Company shall make a Public Notice containing all
information specified in such written notice.

            (c) A Holder may exercise its rights specified in clause (a) of this
Section 4.1 upon delivery of a written notice (which shall be in substantially
the form included on the reverse side of the Notes entitled "Option of Holder to
Elect Purchase" hereto and which may be delivered by letter, overnight courier,
hand delivery, facsimile transmission or in any other written form and, in the
case of Global Securities, may be delivered by other means in accordance with
the Depositary's customary procedures) of the exercise of such rights (a
"PURCHASE NOTICE") to the Paying Agent at any time from the opening of business
on the date that is 22 Business Days prior to the relevant Purchase Date until
the close of business on the second Business Day prior to such Purchase Date.

            The Purchase Notice delivered by a Holder shall state (i) the
relevant Purchase Date, (ii) if certificated Notes, the certificate number or
numbers of the Note or Notes which the Holder shall deliver to be purchased (if
not certificated, the notice must comply with Applicable Procedures), (iii) the
portion of the principal amount of the Note which the Holder shall deliver to be
purchased, which portion must be $1,000 or an integral multiple thereof, and
(iv) that such Note shall be purchased pursuant to the terms and conditions
specified in the Notes and this Section 4.1.

            Delivery of a Note to the Paying Agent by book-entry transfer or
physical delivery prior to, on or after the applicable Purchase Date (together
with all necessary endorsements) at the offices of the Paying Agent is a
condition to receipt by the Holder of the Purchase Price therefor; provided,
however, that such Purchase Price shall be so paid pursuant to this Section 4.1
only if the Note so delivered to the Paying Agent shall conform in all respects
to the description thereof in the related Purchase Notice, as determined by the
Company.

            The Company shall purchase from the Holder thereof, pursuant to this
Section 4.1, a portion of a Note if the principal amount of such portion is
$1,000 or an integral multiple thereof. Provisions of this Indenture that apply
to the purchase of all of a Note pursuant to Section 4.1 through Section 4.7
also apply to the purchase of such portion of such Note.

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

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

                                       32
<PAGE>

      Section 4.2. Effect of Purchase Notice; Withdrawal of Purchase Notice.

            (a) Upon receipt by the Paying Agent of the Purchase Notice
specified in Section 4.1(c), the Holder of the Note in respect of which such
Purchase Notice was given shall (unless such Purchase Notice is withdrawn as
specified in the following paragraph) thereafter be entitled to receive solely
the Purchase Price with respect to such Note. Such Purchase Price shall be paid
to such Holder, subject to receipt of cash by the Paying Agent, promptly
following the later of (a) the Purchase Date with respect to such Note (provided
the conditions in Section 4.1(c) have been satisfied) and (b) the time of
book-entry transfer or delivery of such Note to the Paying Agent by the Holder
thereof in the manner required by Section 4.1(c). Notes in respect of which a
Purchase Notice has been given by the Holder thereof may not be converted
pursuant to ARTICLE XII on or after the date of the delivery of such Purchase
Notice unless such Purchase Notice has first been validly withdrawn as specified
in the following paragraph.

            (b) A Purchase Notice may be withdrawn by means of a written notice
(which may be delivered by letter, overnight courier, hand delivery, facsimile
transmission or in any other written form and, in the case of Global Securities,
may be delivered by other means in accordance with Applicable Procedures) of
withdrawal delivered by the Holder to the Paying Agent at any time prior to the
close of business on the Business Day immediately preceding the Purchase Date,
specifying (a) the principal amount of the Note or portion thereof (which must
be a principal amount of $1,000 or an integral multiple thereof) with respect to
which such notice of withdrawal is being submitted, (b) if certificated Notes
have been issued, the certificate numbers of the withdrawn Notes, or if not
certificated, such notice must comply with Applicable Procedures, and (c) the
principal amount, if any, which remains subject to the Purchase Notice. If a
Purchase Notice has been properly withdrawn pursuant to this Section 4.2(b)
prior to the Purchase Date, the Company shall not be obligated to purchase those
Notes so identified in such notice of withdrawal.

      Section 4.3. Deposit of Purchase Price.

            Prior to 10:00 a.m., New York City time, on the applicable Purchase
Date, the Company shall irrevocably deposit with the Paying Agent an amount of
cash (in immediately available funds if deposited on such Business Day)
sufficient to pay the aggregate Purchase Price of all the Notes or portions
thereof which are to be purchased as of such Purchase Date.

            If the Paying Agent holds, in accordance with the terms hereof, at
10:00 a.m., New York City time, on the applicable Purchase Date, cash sufficient
to pay the Purchase Price of any Notes for which a Purchase Notice has been
tendered and not withdrawn pursuant to Section 4.2(b), then, on such Purchase
Date, such Notes shall cease to be outstanding and interest (including
Additional Interest, if any) on such Notes shall cease to accrue, whether or not
book-entry transfer of such Notes is made and whether or not such Notes are
delivered to the Paying Agent, and the rights of the Holders in respect thereof
shall terminate (other than the right to receive the Purchase Price upon
delivery of such Notes).

            The Company shall make a Public Notice of the aggregate principal
amount of Notes purchased on the applicable Purchase Date on such date or as
soon as practicable thereafter.

                                       33
<PAGE>

      Section 4.4. Certificated Securities Purchased in Part.

            Any Certificated Security which is to be purchased only in part
shall be surrendered at the office of the Paying Agent (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and promptly after
the applicable Purchase Date the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without charge, a new Note
or Notes, of any authorized denomination or denominations as may be requested by
such Holder, in aggregate principal amount equal to, and in exchange for, the
portion of the Principal Amount of the Note so surrendered that is not
purchased.

      Section 4.5. Covenant to Comply With Securities Laws Upon Purchase of
Notes.

            When complying with the provisions of Article IV, and subject to any
exemptions available under applicable law, the Company shall:

            (a) if such offer or purchase constitutes an "issuer tender offer"
for purposes of Rule 13e-4 (which term, as used herein, includes any successor
provision thereto) under the Exchange Act at the time of such offer or purchase,
(i) if applicable, comply with Rule 13e-4 and Rule 14e-1 (or any successor
provision) under the Exchange Act and (ii) file the related Schedule TO (or any
successor schedule, form or report) if required under the Exchange Act; and

            (b) otherwise comply with all applicable federal and state
securities laws so as to permit the rights and obligations under this ARTICLE IV
to be exercised in the time and in the manner specified therein.

      Section 4.6. Repayment to the Company.

            To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 4.3 exceeds the aggregate Purchase Price of the
Notes or portions thereof which the Company is obligated to purchase as of the
applicable Purchase Date, then, promptly after such Purchase Date, the Paying
Agent shall return any such excess to the Company, together with interest, if
any, thereon.

      Section 4.7. No Purchase Upon Event of Default. There shall be no purchase
of any Notes pursuant to this ARTICLE IV if there has occurred (prior to, on or
after, as the case may be, the giving by each of the Holders of such Notes of
the required Purchase Notice but, in any event, prior to the applicable Purchase
Date) and is continuing, as of such Purchase Date, an Event of Default (other
than a default in the payment of the Purchase Price with respect to such Notes).
The Paying Agent shall promptly return to the respective Holders thereof any
Notes (a) with respect to which a Purchase Notice has been delivered in
compliance with this Indenture, or (b) held by it during the continuance of an
Event of Default (other than a default in the payment of the Purchase Price with
respect to such Notes), in which case, upon such return, the Purchase Notice
with respect thereto shall be deemed to have been withdrawn.

                                       34
<PAGE>

                                   ARTICLE V

                        PURCHASE AT THE OPTION OF HOLDERS
                            UPON A FUNDAMENTAL CHANGE

      Section 5.1. Fundamental Change Put.

            (a) In the event that a Fundamental Change shall occur at any time
prior to the Stated Maturity, each Holder shall have the right, at the Holder's
option, but subject to the provisions of this Section 5.1, to require the
Company to purchase, and upon the exercise of such right, the Company shall
purchase, all of such Holder's Notes not theretofore called for redemption, or
any portion of the principal amount thereof that is equal to $1,000 or an
integral multiple thereof, as directed by such Holder pursuant to this Section
5.1, on the date designated by the Company (the "FUNDAMENTAL CHANGE PURCHASE
DATE") that is a Business Day no later than 35 Business Days after the date of
notice pursuant to Section 5.1(b) of the occurrence of a Fundamental Change
(subject to extension to comply with applicable law). The Company shall be
required to purchase such Notes at a purchase price in cash equal to 100% of the
principal amount plus any accrued and unpaid interest (including Additional
Interest, if any) to, but excluding, the Fundamental Change Purchase Date (the
"FUNDAMENTAL CHANGE PURCHASE PRICE"). In the event that a Fundamental Change
Purchase Date is a date that is after any Regular Record Date but on or before
the corresponding Interest Payment Date, the Company shall be required to pay
accrued and unpaid interest (including Additional Interest, if any) to the
holder of the repurchased Note and not the Holder on the Regular Record Date.

            (b) No later than 10 Business Days after the occurrence of a
Fundamental Change, the Company shall mail a written notice of the Fundamental
Change by first class mail to the Trustee (and the Paying Agent if the Trustee
is not then acting as Paying Agent) and to each Holder at its address shown in
the Register of the Registrar, and to beneficial owners as required by
applicable law. The notice shall include a form of Fundamental Change Purchase
Notice to be completed by the Holder and shall briefly state, as applicable:

            (i) the date of such Fundamental Change and, briefly, the events
      causing such Fundamental Change;

            (ii) the date by which the Fundamental Change Purchase Notice must
      be delivered to the Paying Agent in order for a Holder to exercise the
      purchase right pursuant to this Section 5.1;

            (iii) the Fundamental Change Purchase Date;

            (iv) the Fundamental Change Purchase Price;

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

            (vi) briefly, the conversion rights of the Notes, and that the
      Holder must satisfy the requirements set forth in Article XII in order to
      convert the Notes;

            (vii) the Conversion Rate and any adjustments thereto;

                                       35

<PAGE>

            (viii) that the Notes as to which a Fundamental Change Purchase
      Notice has been given may be converted into Common Stock pursuant to
      ARTICLE XII of this Indenture only if the Fundamental Change Purchase
      Notice has been withdrawn in accordance with the terms of this Indenture;

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

            (x) that the Fundamental Change Purchase Price for any Note as to
      which a Fundamental Change Purchase Notice has been duly given and not
      withdrawn shall be paid promptly following the later of the Fundamental
      Change Purchase Date and the time of surrender of such Note as described
      in Section 5.1(b)(ix);

            (xi) the procedures the Holder must follow to exercise rights under
      this Section 5.1 and a brief description of such rights;

            (xii) the procedures for withdrawing a Fundamental Change Purchase
      Notice, including a form of notice of withdrawal;

            (xiii) that, unless the Company defaults in making payment of such
      Fundamental Change Purchase Price, interest (including Additional
      Interest, if any) on Notes surrendered for purchase by the Company shall
      cease to accrue on and after the Fundamental Change Purchase Date; and

            (xiv) the CUSIP number(s) of the Notes.

            At the Company's request, the Trustee shall give the notice of
purchase right in the Company's name and at the Company's expense; provided,
however, that the Company makes such request at least five Business Days (unless
a shorter period shall be satisfactory to the Trustee) prior to the date by
which such notice of purchase right must be given to the Holders in accordance
with this Section 5.1(b); provided, further, that the text of the notice of
purchase right shall be prepared by the Company.

            If any of the Notes is in the form of a Global Security, then the
Company shall modify such notice to the extent necessary to accord with
Applicable Procedures.

            Simultaneously with delivering the written notice pursuant to this
Section 5.1(b), the Company shall make a Public Notice containing all
information specified in such written notice.

            (c) A Holder may exercise its rights specified in clause (a) of this
Section 5.1 upon delivery of a written notice (which shall be in substantially
the form included on the reverse side of the Notes entitled "Option of Holder to
Elect Purchase" hereto and which may be delivered by letter, overnight courier,
hand delivery, facsimile transmission or in any other written form and, in the
case of Global Securities, may be delivered by other means in accordance with
the Depositary's customary procedures) of the exercise of such rights (a
"FUNDAMENTAL CHANGE PURCHASE NOTICE") to the Paying Agent at any time on or
before the

                                       36

<PAGE>

20th Business Day after the date of the Company's notice of the Fundamental
Change (subject to extension to comply with applicable law).

            The Fundamental Change Purchase Notice delivered by a Holder shall
state (i) the Fundamental Change Purchase Date, (ii) if Certificated Securities,
the certificate number or numbers of the Note or Notes which the Holder shall
deliver to be purchased (if not certificated, the notice must comply with
Applicable Procedures), (iii) the portion of the principal amount of the Note
which the Holder shall deliver to be purchased, which portion must be $1,000 or
an integral multiple thereof, and (iv) that such Note shall be purchased
pursuant to the terms and conditions specified in the Notes and this Article V.

            Delivery of a Note (together with all necessary endorsements) to the
Paying Agent by book-entry transfer or physical delivery prior to, on or after
the Fundamental Change Purchase Date at the offices of the Paying Agent is a
condition to receipt by the Holder of the Fundamental Change Purchase Price
therefor; provided, however, that such Fundamental Change Purchase Price shall
be so paid pursuant to this Section 5.1 only if the Note so delivered to the
Paying Agent shall conform in all respects to the description thereof in the
related Fundamental Change Purchase Notice, as determined by the Company.

            The Company shall purchase from the Holder thereof, pursuant to this
Section 5.1, a portion of a Note if the principal amount of such portion is
$1,000 or an integral multiple thereof. Provisions of the Indenture that apply
to the purchase of all of a Note also apply to the purchase of such portion of
such Note.

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

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

            (d) Notwithstanding the foregoing provisions of this Section 5.1,
the Company shall not be required to issue a Fundamental Change Purchase Notice
upon a Fundamental Change (i) if a third party issues a Fundamental Change
Purchase Notice in the manner, at the times and otherwise in compliance with the
requirements set forth in Section 5.1(b) applicable to a Fundamental Change
Purchase Notice made by the Company and otherwise complies with the provisions
of this Article V as if it were the Company and purchases, and pays for, all
Notes validly tendered and not withdrawn pursuant to such Fundamental Change
Purchase Notice and (ii) provided that if such third party fails to comply with
any of the provisions of this Article V, the Company shall as promptly as
reasonably practicable deliver the Fundamental Change Purchase Notice in
accordance with, and otherwise comply with, all provisions of this Article V.

      Section 5.2. Effect of Fundamental Change Purchase Notice.

            (a) Upon receipt by the Paying Agent of the Fundamental Change
Purchase Notice specified in Section 5.1(c), the Holder of the Note in respect
of which such Fundamental

                                       37

<PAGE>

Change Purchase Notice was given shall (unless such Fundamental Change Purchase
Notice is withdrawn as specified in the following paragraph) thereafter be
entitled to receive the Fundamental Change Purchase Price with respect to such
Note. Such Fundamental Change Purchase Price shall be paid to such Holder,
subject to receipt of cash by the Paying Agent, promptly following the later of
(i) the Fundamental Change Purchase Date with respect to such Note (provided
that the Paying Agent has received an Opinion of Counsel and Officers'
Certificate stating that all of the conditions in Section 5.1(c) have been
satisfied) and (ii) the time of book-entry transfer or delivery of such Note to
the Paying Agent by the Holder thereof in the manner required by Section 5.1(c).
Notes in respect of which a Fundamental Change Purchase Notice has been given by
the Holder thereof may not be converted pursuant to ARTICLE XII on or after the
date of the delivery of such Fundamental Change Purchase Notice unless such
Fundamental Change Purchase Notice has first been validly withdrawn as specified
in the following paragraph.

            (b) A Fundamental Change Purchase Notice may be withdrawn by means
of a written notice (which may be delivered by letter, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered by other means in accordance with the
Depositary's customary procedures) of withdrawal delivered by the Holder to the
Paying Agent at any time prior to the close of business on the Business Day
immediately preceding the Fundamental Change Purchase Date (or such later time
as may be required by applicable law), specifying (i) the principal amount of
the Note or portion thereof (which must be a principal amount of $1,000 or an
integral multiple thereof) with respect to which such notice of withdrawal is
being submitted, (ii) if certificated Notes have been issued, the certificate
numbers of the withdrawn Notes, or if not certificated, such notice must comply
with Applicable Procedures, and (iii) the principal amount, if any, which
remains subject to the Fundamental Change Purchase Notice. If a Fundamental
Change Purchase Notice has been properly withdrawn pursuant to this Section
5.2(b) prior to the Fundamental Change Purchase Date, the Company shall not be
obligated to purchase those Notes so identified in such notice of withdrawal.

      Section 5.3. Deposit of Fundamental Change Purchase Price.

            Prior to 10:00 a.m., New York City time, on the applicable
Fundamental Change Purchase Date, the Company shall irrevocably deposit with the
Paying Agent an amount of cash (in immediately available funds if deposited on
such Business Day) sufficient to pay the aggregate Fundamental Change Purchase
Price of all the Notes or portions thereof which are to be purchased as of such
Fundamental Change Purchase Date.

            If the Paying Agent holds, in accordance with the terms hereof, at
10:00 a.m., New York City time, on the applicable Fundamental Change Purchase
Date, cash sufficient to pay the Fundamental Change Purchase Price of any Notes
for which a Fundamental Change Purchase Notice has been tendered and not
withdrawn pursuant to Section 5.2(b), then, on such Fundamental Change Purchase
Date, such Notes shall cease to be outstanding and interest and Additional
Interest, if any, on such Notes shall cease to accrue, whether or not book-entry
transfer of such Notes is made and whether or not such Notes are delivered to
the Paying Agent, and the rights of the Holders in respect thereof shall
terminate (other than the right to receive the Fundamental Change Purchase Price
upon delivery of such Notes).

                                       38

<PAGE>

            The Company shall make a Public Notice of the aggregate principal
amount of Notes purchased as a result of such Fundamental Change on or as soon
as practicable after the Fundamental Change Purchase Date.

      Section 5.4. Certificated Securities Purchased in Part.

            Any Certificated Security that is to be purchased only in part shall
be surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and promptly after
the Fundamental Change Purchase Date the Company shall execute and the Trustee
shall authenticate and deliver to the Holder of such Note, without charge, a new
Note or Notes, of any authorized denomination or denominations as may be
requested by such Holder, in aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Note so surrendered
that is not purchased.

      Section 5.5. Covenant to Comply With Securities Laws Upon Purchase of
Notes.

            When complying with the provisions of Article V, and subject to any
exemptions available under applicable law, the Company shall:

            (a) if such offer or purchase constitutes an "issuer tender offer"
for purposes of Rule 13e-4 (which term, as used herein, includes any successor
provision thereto) under the Exchange Act at the time of such offer or purchase,
(i) if applicable, comply with Rule 13e- 4 and Rule 14e-1 (or any successor
provision) under the Exchange Act and (ii) file the related Schedule TO (or any
successor schedule, form or report) if required under the Exchange Act; and

            (b) otherwise comply with all applicable federal and state
securities laws so as to permit the rights and obligations under this ARTICLE V
to be exercised in the time and in the manner specified therein.

      Section 5.6. Repayment to the Company.

            To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 5.3 exceeds the aggregate Fundamental Change
Purchase Price of the Notes or portions thereof which the Company is obligated
to purchase as of the Fundamental Change Purchase Date then, promptly after the
Fundamental Change Purchase Date, the Paying Agent shall return any such excess
to the Company.

                                   ARTICLE VI

                                    COVENANTS

      Section 6.1. Payment of Notes.

            The Company shall pay interest on the Notes as provided in the
Notes. The Company shall promptly make all payments in respect of the Notes on
the dates and in the manner provided in the Notes or pursuant to this Indenture.
Principal, Redemption Price,

                                       39

<PAGE>

Purchase Price and Fundamental Change Purchase Price and accrued and unpaid
interest (including Additional Interest, if any) shall be considered paid on the
applicable date due if by 10:00 a.m., New York City time, on such date the
Paying Agent holds, in accordance with this Indenture, cash or securities, if
permitted hereunder, sufficient to pay all such amounts then due. The Company
shall, to the fullest extent permitted by law, pay interest on overdue principal
and overdue installments of interest (including Additional Interest, if any) at
the rate borne by the Notes per annum. All references in this Indenture or the
Notes to interest shall, without duplication, be deemed to include Additional
Interest, if any, payable pursuant to the Registration Rights Agreement.

            Payment of the principal of and interest (including Additional
Interest, if any) on the Notes shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.

            Subject to Section 3.1, Section 4.1 and Section 5.1, the Company
shall pay interest (including Additional Interest, if any) on the Notes to the
Person in whose name the Notes are registered at the close of business on the
Regular Record Date next preceding the corresponding Interest Payment Date. Any
such interest (including Additional Interest, if any) not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may be paid (a) to the Person in whose name the Notes
are registered at the close of business on a Special Record Date for the payment
of such defaulted interest (including Additional Interest, if any) to be fixed
by the Company, notice whereof shall be given to the Holders not less than 10
calendar days prior to such Special Record Date or (b) at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange.

            The Holder must surrender the Notes to the Paying Agent to collect
payment of principal. Payment of interest (including Additional Interest, if
any) on Certificated Securities in the aggregate principal amount of $5,000,000
or less shall be made by check mailed to the address of the Person entitled
thereto as such address appears in the Register, and payment of cash interest
(including Additional Interest) if any, on Certificated Securities in aggregate
principal amount in excess of $5,000,000 shall be made by wire transfer in
immediately available funds if requested in writing by the Holder, otherwise by
check mailed to the address of the Holder. Notwithstanding the foregoing, so
long as the Notes are registered in the name of a Depositary or its nominee, all
payments with respect to the Notes shall be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee. At the Stated
Maturity, interest (including Additional Interest, if any) on Certificated
Securities will be payable at the office or agency of the Trustee, Registrar,
Paying Agent and Conversion Agent as described in Section 6.5 herein.

      Section 6.2. SEC and Other Reports to the Trustee.

            (a) The Company shall ensure delivery to the Trustee within 15
calendar days after it files such annual and quarterly reports, information,
documents and other reports with the SEC, copies of its annual report and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe)

                                       40

<PAGE>

which the Company is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act in accordance with TIA Section 314(a). In the event
the Company is at any time no longer subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, it shall continue to provide the
Trustee with reports containing substantially the same information as would have
been required to be filed with the SEC had the Company continued to have been
subject to such reporting requirements. In such event, such reports shall be
provided at the times the Company would have been required to provide reports
had it continued to have been subject to such reporting requirements. The
Company also shall comply with the other provisions of TIA Section 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely conclusively on Officers' Certificates). The Trustee shall have
no duty or responsibility to review such reports, information or documents. In
the event that the Company shall provide the Trustee with any such report and
shall not have filed such report on EDGAR, the Trustee, at the request of the
Company, shall promptly mail copies of such reports to each Holder (other than
reports provided solely pursuant to TIA Section 314(a)).

            (b) The Company intends to file the reports referred to in paragraph
(a) above in this Section 6.2 hereof with the SEC in electronic form pursuant to
Regulation S-T of the SEC using the SEC's Electronic Data Gathering, Analysis
and Retrieval ("EDGAR") system. The Company shall notify the Trustee in the
manner prescribed herein of each such filing. The Trustee is hereby authorized,
but not obligated to access the EDGAR system for purposes of retrieving the
reports so filed. Compliance with the foregoing shall constitute delivery by the
Company of such reports to the Trustee in compliance with the provisions of
Section 6.2(a) and TIA Section 314(a). The Trustee shall have no duty to search
for or obtain any electronic or other filings that the Company makes with the
SEC, regardless of whether such filings are periodic, supplemental or otherwise.
Delivery of the reports, information and documents to the Trustee pursuant to
this Section 6.2(b) shall be solely for the purposes of compliance with this
Section 6.2(b) and with TIA Section 314(a). The Trustee's receipt of such
reports, information and documents shall not constitute notice to it of the
consent thereof or of any matter determinable from the content thereof,
including the Company's compliance with any of its covenants hereunder, as to
which the Trustee is entitled to rely upon Officers' Certificates.

      Section 6.3. Compliance Certificate.

            The Company shall deliver to the Trustee within 120 calendar days
after the end of each fiscal year of the Company an Officers' Certificate,
stating whether or not to the knowledge of the signers thereof, the Company is
in compliance with all conditions and covenants under this Indenture.

      Section 6.4. Further Instruments and Acts.

            Upon request of the Trustee, or as otherwise necessary, 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.

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      Section 6.5. Maintenance of Office or Agency of the Trustee, Registrar,
Paying Agent and Conversion Agent.

            The Company shall maintain in the Borough of Manhattan, New York,
New York, an office where Notes may be presented or surrendered for payment,
where Notes may be surrendered for registration of transfer, exchange,
redemption, repurchase or conversion and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The office
at 101 Barclay Street, 8 West, New York, New York 10286 shall initially be such
office or agency for all of the aforesaid purposes. The Company shall give
prompt written notice to the Trustee of the location, and of any change in the
location, of any such office or agency (other than a change in the location of
the office of the Trustee). If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 14.2.

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

      Section 6.6. Delivery of Information Required Under Rule 144A.

            Prior to the expiration of the holding period applicable to sales of
the Notes under Rule 144(k) of the Securities Act (or any successor provision),
upon the request of a Holder or any beneficial owner of Notes or holder or
beneficial owner of Common Stock issued upon conversion thereof, the Company
shall, during any period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act, promptly furnish or cause to be furnished the
information required pursuant to Rule 144A(d)(4) under the Securities Act to
such Holder or any beneficial owner of Notes or holder or beneficial owner of
Common Stock, or to a prospective purchaser of any such security designated by
any such holder, as the case may be, to the extent required to permit compliance
by such Holder or holder with Rule 144A under the Securities Act in connection
with the resale of any such security. Whether a person is a beneficial owner
shall be determined by the Company to the Company's reasonable satisfaction. It
is understood that any request from anyone other than a Holder shall be made
solely to, by and through the Company, and not to, by or through the Trustee.

      Section 6.7. Waiver of Stay, Extension or Usury Laws.

            The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury or other law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or any portion of
the principal amount, Redemption Price, Purchase Price or Fundamental Change
Purchase Price in respect of Notes, or any interest (including Additional
Interest, if any) on such amounts, as contemplated herein, or which may affect
the covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives

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<PAGE>

all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law had been enacted.

      Section 6.8. Statement by Officers as to Default.

            The Company shall deliver to the Trustee, as soon as practicable and
in any event within five Business Days after the Company becomes aware of the
occurrence of any Default or Event of Default, an Officers' Certificate setting
forth the details of such Default or Event of Default and the action which the
Company proposes to take with respect thereto.

                                  ARTICLE VII

                              SUCCESSOR CORPORATION

      Section 7.1. When Company May Merge or Transfer Assets.

            The Company shall not consolidate with or merge with or into any
other person or convey, transfer, sell, lease or otherwise dispose of all or
substantially all of its properties and assets to any person, unless:

            (a) either (i) the Company shall be the continuing corporation or
(ii) the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance,
transfer, sale, lease or other disposition all or substantially all of the
properties and assets of the Company substantially as an entirety (1) shall be
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (2) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, all of the obligations of the Company
under the Notes, this Indenture and the Registration Rights Agreement and, to
the extent applicable, otherwise comply with the provisions of Section 12.4;

            (b) immediately before and after giving effect to such transaction,
no Default shall have occurred and be continuing; and

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

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

                                       43

<PAGE>

            The successor Person formed by such consolidation or into which the
Company is merged or the successor Person to which such conveyance, transfer,
sale, lease 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 had been named as the Company herein;
and thereafter, except in the case of a conveyance, transfer, sale, lease or
other disposition and any obligations the Company may have under a supplemental
indenture, the Company shall be discharged from all obligations and covenants
under this Indenture and the Notes. Subject to Section 11.6, the Company, the
Trustee and the successor Person shall enter into a supplemental indenture to
evidence the succession and substitution of such successor Person and such
discharge and release of the Company.

                                  ARTICLE VIII

                              DEFAULTS AND REMEDIES

      Section 8.1. Events of Default.

            So long as any Notes are outstanding, each of the following shall be
an "EVENT OF DEFAULT":

            (a) the failure by the Company to pay the principal of (or premium,
if any, on) any Note when the same becomes due and payable as therein provided
or as provided in this Indenture;

            (b) the failure by the Company to pay any accrued and unpaid
interest (including Additional Interest, if any) on any Note, in each case, when
due and payable, and such default shall continue for a period of 30 days;

            (c) the failure by the Company to convert any portion of any Note
following the exercise by the Holder of the right to convert such Note into
Common Stock (or cash or a combination of cash and Common Stock, if the Company
elects) pursuant to and in accordance with ARTICLE XII;

            (d) the failure by the Company to redeem any Note, or any portion
thereof, called for redemption by the Company pursuant to and in accordance with
ARTICLE III;

            (e) the failure by the Company to provide notice in the event of a
Fundamental Change in accordance with Section 5.1(b);

            (f) the failure by the Company to purchase any Note, or any portion
thereof, in accordance with ARTICLE IV or ARTICLE V, upon the exercise by the
Holder of such Holder's right to require the Company to purchase such Notes
pursuant thereto;

            (g) the failure by the Company to perform or observe any other term,
covenant or agreement contained in the Notes or this Indenture (other than a
term, covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section 8.1 specifically dealt with) for a period of 60 days
after written notice of such failure has been given (1) to the Company by the
Trustee or (2) to the

                                       44

<PAGE>

Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding;

            (h) there shall have occurred a default under any credit agreement,
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness of the Company or any of its
Subsidiaries whether such Indebtedness now exists, or is created after the date
of this Indenture, which default (i) involves the failure to pay principal of or
any premium or interest on such Indebtedness when such Indebtedness becomes due
and payable at the stated maturity thereof, and such default shall continue
after any applicable grace period or (ii) results in the acceleration of such
Indebtedness prior to the stated maturity thereof (without such acceleration
being rescinded or annulled), and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness so unpaid at its stated maturity or the stated maturity of which
has been so accelerated, aggregates $1,000,000 or more;

            (i) there shall be a failure by the Company or any of its
Subsidiaries to pay final judgments not covered by insurance aggregating in
excess of $2,500,000, which judgments are not paid, discharged or stayed for a
period of 60 calendar days;

            (j) the Company or any Significant Subsidiary, or any group of two
or more Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, pursuant to or under or within the meaning of any Bankruptcy Law:

            (i) commences a voluntary case or proceeding;

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

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

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

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

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

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

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

            (ii) appoints a Custodian of the Company or any Significant
      Subsidiary or for any substantial part of the property of either; or

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<PAGE>

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

            (l) and the order of decree remains unstayed and in effect for 60
days.

      Section 8.2. Acceleration.

            If an Event of Default (other than an Event of Default specified in
Section 8.1(j) or Section 8.1(k) with respect to the Company) occurs and is
continuing (including an Event of Default specified in Section 8.1(j) or Section
8.1(k) with respect to one or more Significant Subsidiaries), the Trustee by
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the Notes at the time outstanding by notice to the Company and the
Trustee, may declare the principal of, and accrued and unpaid interest
(including Additional Interest, if any) on, all the Notes to be immediately due
and payable. Upon such a declaration, such accelerated amount shall be due and
payable immediately.

            If an Event of Default specified in Section 8.1(j) or Section 8.1(k)
occurs with respect to the Company and is continuing, the principal of, and
accrued and unpaid interest (including Additional Interest, if any) on, all the
Notes shall become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holders.

            The Holders of a majority in aggregate principal amount of the Notes
at the time outstanding, by notice to the Trustee (and without notice to any
other Holder) may rescind an acceleration and its consequences if (a) the
rescission would not conflict with any judgment or decree (b) all existing
Events of Default have been cured or waived, except nonpayment of the principal
of, premium, if any, or any accrued and unpaid interest (including Additional
Interest, if any) that have become due solely as a result of acceleration and
(c) all amounts due to the Trustee under Section 9.7 have been paid. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.

      Section 8.3. Other Remedies.

            If an Event of Default occurs and is continuing, the Trustee may,
but shall not be obligated to, pursue any available remedy to collect the
payment of the principal plus accrued and unpaid interest (including Additional
Interest, if any) on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.

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

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<PAGE>

      Section 8.4. Waiver of Past Defaults.

            Subject to Section 8.7 and Section 11.2, the Holders of a majority
in aggregate principal amount of the Notes at the time outstanding, by notice to
the Trustee (and without notice to any other Holder), may waive an existing
Default and its consequences except:

            (a) a Default described in Section 8.1(a), Section 8.1(b), Section
8.1(d) or Section 8.1(f);

            (b) a Default which constitutes a failure to convert any Note in
accordance with the terms of ARTICLE XII; or

            (c) a Default in respect of any provision of this Indenture or the
Notes, which, under Section 11.2, cannot be amended or modified without the
consent of each Holder affected thereby.

            When a Default is waived, it is deemed cured, but no such waiver
shall extend to any subsequent or other Default or impair any consequent right.
This Section 8.4 shall be in lieu of Section 316(a)1(B) of the TIA and such
Section 316(a)1(B) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

      Section 8.5. Control by Majority.

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

      Section 8.6. Limitation on Suits.

            A Holder may not pursue any remedy with respect to this Indenture or
the Notes unless:

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

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

            (c) such Holder or Holders offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against any loss, liability or
expense;

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

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<PAGE>

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

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

      Section 8.7. Rights of Holders to Receive Payment or to Convert.

            Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of the principal, Redemption Price, Purchase
Price, Fundamental Change Purchase Price, and interest (including Additional
Interest, if any) in respect of the Notes held by such Holder, on or after the
respective due dates expressed in the Notes and in this Indenture, and to
convert such Notes in accordance with ARTICLE XII, or to bring suit for the
enforcement of any such payment on or after such respective dates or the right
to convert, is absolute and unconditional and shall not be impaired or affected
adversely without the consent of such Holder.

      Section 8.8. Collection Suit by Trustee.

            If an Event of Default described in Section 8.1(a), Section 8.1(b),
Section 8.1(d) or Section 8.1(f) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or another obligor on the Notes for the whole amount owing with respect
to the Notes and the amounts provided for in Section 9.7.

      Section 8.9. Trustee May File Proofs of Claim.

            In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal, Redemption Price,
Purchase Price, Fundamental Change Purchase Price and interest (including
Additional Interest, if any) in respect of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
any such amount) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

            (a) to file and prove a claim for the whole amount of the principal,
Redemption Price, Purchase Price, Fundamental Change Purchase Price and interest
(including Additional Interest, if any) and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel or any other
amounts due the Trustee under Section 9.7) 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;

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<PAGE>

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 9.7.

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

      Section 8.10. Priorities.

            If the Trustee collects any money pursuant to this ARTICLE VIII, it
shall pay out the money in the following order:

            FIRST: to the Trustee for amounts due under Section 9.7;

            SECOND: to Holders for amounts due and unpaid on the Notes for the
principal, Redemption Price, Purchase Price, Fundamental Change Purchase Price
and interest (including Additional Interest, if any) as the case may be,
ratably, without preference or priority of any kind, according to such amounts
due and payable on the Notes; and

            THIRD: the balance, if any, to the Company.

            The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Section 8.10. At least 10 calendar days prior to
such record date, the Trustee shall mail to each Holder and the Company a notice
that states the record date, the payment date and the amount to be paid.

      Section 8.11. Undertaking for Costs.

            In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant (other than the Trustee) in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 8.11 does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 8.7 or a suit by Holders
of more than 10% in aggregate principal amount of the Notes at the time
outstanding. This Section 8.11 shall be in lieu of Section 315(e) of the TIA and
such Section 315(e) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

                                       49

<PAGE>

                                   ARTICLE IX

                                     TRUSTEE

      Section 9.1. 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 its exercise of those rights and powers
as a prudent person would exercise or use under the circumstances in the conduct
of such person's 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; and

            (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 certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture, but
      in the case of any such certificates or opinions which by any provision
      hereof are specifically required to be furnished to the Trustee, the
      Trustee shall examine the certificates and opinions to determine whether
      or not they conform to the requirements of this Indenture, but need not
      confirm or investigate the accuracy of mathematical calculations or other
      facts stated therein.

            This Section 9.1(b) shall be in lieu of Section 315(a) of the TIA
and such Section 315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

            (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 clause (c) does not limit the effect of clause (b) of this
      Section 9.1;

            (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; and

            (iii) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 8.5.

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

            (d) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
(acting in any capacity hereunder)

                                       50

<PAGE>

shall be under no liability for interest on any money received by it hereunder
unless otherwise agreed in writing with the Company.

            (e) The Trustee shall comply with the reporting requirements set
forth in Section 313 of the TIA.

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

      Section 9.2. Rights of Trustee.

            Subject to its duties and responsibilities under the TIA and this
      Indenture,

            (a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
(whether in its original or facsimile form) believed by it to be genuine and to
have been signed or presented by the proper party or parties;

            (b) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate;

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

            (d) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith which it reasonably believes to be
authorized or within its rights or powers conferred under this Indenture;

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

            (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, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which may be
incurred therein or thereby;

            (g) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;

                                       51

<PAGE>

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

            (i) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture;

            (j) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, including that of Conversion Agent, and to each
agent, custodian and other person employed to act hereunder; and

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

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

            (m) in no event shall the Trustee be responsible or liable for any
failure or delay in the performance of its obligations hereunder arising out of
or caused by, directly or indirectly, forces beyond its control, including,
without limitation strikes, work stoppages, accidents, acts of war or terrorism,
civil or military disturbances, nuclear or natural catastrophes or acts of God,
and interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services; it being understood that the Trustee shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.

      Section 9.3. Individual Rights of Trustee.

            The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee; provided
that the Trustee must comply with Section 9.10 and Section 9.11. Any Paying
Agent, Registrar, Conversion Agent or co-registrar may do the same with like
rights.

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      Section 9.4. Trustee's Disclaimer.

            The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Notes, it shall not be accountable for the Company's
use or application of the proceeds from the Notes, it shall not be responsible
for any statement in any registration statement for the Notes under the
Securities Act or in any offering document for the Notes, this Indenture or the
Notes (other than its certificate of authentication), or the determination as to
which beneficial owners are entitled to receive any notices or reports
hereunder.

      Section 9.5. Notice of Defaults.

            If a Default occurs and if it is known to the Trustee, the Trustee
shall give to each Holder notice of the Default within 90 calendar days after it
occurs or, if later, within 15 calendar days after it is known to the Trustee,
unless such Default shall have been cured or waived before the giving of such
notice. Notwithstanding the preceding sentence, except in the case of a Default
described in Section 8.1(a), Section 8.1(b), Section 8.1(d) or Section 8.1(f),
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of the Holders. The preceding sentence shall be in lieu of the
proviso to Section 315(b) of the TIA and such proviso is hereby expressly
excluded from this Indenture, as permitted by the TIA.

      Section 9.6. Reports by Trustee to Holders.

            Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to each Holder a brief report
dated as of such May 15 that complies with TIA Section 313(a), if required by
such Section 313(a). The Trustee also shall comply with TIA Section 313(b).

            A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange, if any, on which the Notes are
listed. The Company agrees to notify the Trustee promptly whenever the Notes
become listed on any securities exchange and of any delisting thereof.

      Section 9.7. Compensation and Indemnity.

            The Company agrees to:

            (a) pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited (to
the extent permitted by law) by any provision of law in regard to the
compensation of a trustee of an express trust);

            (b) reimburse the Trustee upon its request for all expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the compensation and the reasonable
expenses, advances and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its own negligence or
willful misconduct; and

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            (c) fully indemnify the Trustee or any predecessor Trustee and their
agents for, and to hold them harmless against, any and all loss, damage, claim,
liability, cost or expense (including attorney's fees and expenses, and taxes
(other than taxes based upon, measured by or determined by the income of the
Trustee)) incurred without the Trustee's negligent action, negligent failure to
act or willful misconduct, arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of defending
itself against any claim (whether asserted by the Company or any Holder or any
other person) or liability in connection with the exercise or performance of any
of its powers or duties hereunder, or in connection with enforcing the
provisions of this Section 9.7.

            With regard to its indemnification rights under this Section 9.7(c)
where the Company has assumed the defense in any action or proceeding, the
Trustee shall have the right to employ separate counsel in any such action or
proceeding and participate in the investigation and defense thereof, and the
Company shall pay the reasonable fees and expenses of such separate counsel;
provided, however, that the Trustee may only employ separate counsel at the
expense of the Company if in the judgment of the Trustee (i) a conflict of
interest exists by reason of common representation or (ii) there are legal
defenses available to the Trustee that are different from or are in addition to
those available to the Company or if all parties commonly represented do not
agree as to the action (or inaction) of counsel.

            To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay the principal amount,
Redemption Price, Purchase Price, Fundamental Change Purchase Price or interest
(including Additional Interest, if any) as the case may be, on particular Notes.

            The Company's payment obligations pursuant to this Section 9.7 shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 8.1(j) or Section 8.1(k), the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any Bankruptcy Law.

      Section 9.8. Replacement of Trustee.

            The Trustee may resign by so notifying the Company; provided,
however, that no such resignation shall be effective until a successor Trustee
has accepted its appointment pursuant to this Section 9.8. The Holders of a
majority in aggregate principal amount of the Notes at the time outstanding may
remove the Trustee by so notifying the Trustee and the Company. The Company
shall remove the Trustee if:

            (a) the Trustee fails to comply with Section 9.10;

            (b) the Trustee is adjudged bankrupt or insolvent;

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

            (d) the Trustee otherwise becomes incapable of acting.

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            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, by
resolution of its Board of Directors, a successor Trustee.

            A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon 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 under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, upon payment of all the retiring Trustee's
fees and expenses then due and payable and subject to the lien provided for in
Section 9.7.

            If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may petition at the expense of the Company any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.

            If the Trustee fails to comply with Section 9.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

      Section 9.9. Successor Trustee by Merger.

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

      Section 9.10. Eligibility; Disqualification.

            The Trustee and any successor Trustee shall at all times satisfy the
requirements of TIA Sections 310(a)(1) and 310(b). The Trustee (or its parent
holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. Nothing contained herein shall prevent the Trustee from filing with
the SEC the application referred to in the penultimate paragraph of TIA Section
310(b). If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 9.10, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.

      Section 9.11. Preferential Collection of Claims Against Company.

            The Trustee shall comply with 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
therein.

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                                   ARTICLE X

                             DISCHARGE OF INDENTURE

      Section 10.1. Discharge of Liability on Notes.

            When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced or repaid pursuant to Section 2.7) for cancellation
or (ii) all Notes not theretofore delivered to the Trustee for cancellation (a)
have become due and payable, (b) shall become due and payable at their stated
maturity within one year whether on a Purchase Date, Fundamental Change Purchase
Date or upon conversion, or (c) are to be called for redemption within one year
under arrangements reasonably satisfactory to the Trustee, and the Company has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of, and
premium, if any, and interest (including Additional Interest, if any) on the
Notes to the date of deposit together with irrevocable instructions from the
Company directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; and if in either case the Company
pays all other sums payable hereunder by the Company, and the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent under this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with, then this
Indenture shall, subject to Section 9.7 and subject to the satisfaction of any
obligations of the Company under Article XII to effect settlement upon
conversion of the Notes, cease to be of further effect. The Trustee shall join
in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and Opinion of Counsel, each stating
that all conditions precedent under this Indenture relating to the satisfaction
and discharge of the Indenture have been complied with and at the cost and
expense of the Company. Notwithstanding the foregoing, the obligations of the
Company under Section 9.7 shall survive the discharge of the Indenture and the
Notes.

      Section 10.2. Deposited Monies to Be Held in Trust by Trustee.

            Subject to Section 10.3, all monies deposited with the Trustee
pursuant to Section 10.1 shall be held in trust for the sole benefit of the
Holders and not to be subject to the subordination provisions of ARTICLE XIII;
provided, that such monies were not deposited in violation of ARTICLE XIII. Such
deposited monies shall be applied by the Trustee to the payment, either directly
or through any paying agent, to the holders of the particular Notes for the
payment of which such monies have been deposited with the Trustee, of all sums
due and to become due thereon for principal and interest and Additional
Interest, if any.

      Section 10.3. Repayment to the Company.

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

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Trustee shall have no further liability to the Holders with respect to such cash
or securities for that period commencing after the return thereof.

                                   ARTICLE XI

                                   AMENDMENTS

      Section 11.1. Without Consent of Holders of Notes.

            The Company and the Trustee may amend this Indenture or the Notes
without the consent of any Holder to:

            (a) add to the covenants of the Company for the benefit of the
Holders of Notes;

            (b) surrender any right or power herein conferred upon the Company;

            (c) provide for conversion rights of Holders of Notes if any
reclassification or change of the Common Stock or any consolidation, merger or
sale of all or substantially all of the Company's assets occurs;

            (d) provide for the assumption of the Company's obligations to the
Holders of Notes in the case of a merger, consolidation, conveyance, transfer,
sale, lease or other disposition pursuant to ARTICLE VII;

            (e) increase the Conversion Rate; provided, however, that such
increase in the Conversion Rate shall not adversely affect the interests of the
Holders of Notes (after taking into account tax and other consequences of such
increase);

            (f) require the Company to settle its Conversion Obligation in cash
with respect to the principal amount of Notes surrendered for conversion if a
Principal Conversion Settlement Election has been made;

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

            (h) make any changes or modifications necessary in connection with
the registration of the Notes under the Securities Act as contemplated in the
Registration Rights Agreement; provided, however, that such action pursuant to
this clause (h) does not, in the good faith opinion of the Board of Directors
(as evidenced by a Board Resolution on which the Trustee may conclusively rely),
adversely affect the interests of the Holders of Notes in any material respect;

            (i) to evidence and provide the acceptance of the appointment of a
successor trustee hereunder;

            (j) add guarantees with respect to the Notes or secure the Notes;

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            (k) cure any ambiguity or correct or supplement any provision herein
which may be inconsistent with any other provision herein or which is otherwise
defective, or to make any other provisions with respect to matters or questions
arising under this Indenture which the Company may deem necessary or desirable
and which shall not be inconsistent with the provisions of this Indenture;
provided, however, that such action pursuant to this clause (k) does not, in the
good faith opinion of the Board of Directors (as evidenced by a Board Resolution
on which the Trustee may conclusively rely), adversely affect the interests of
the Holders of Notes in any material respect;

            (l) evidence the succession of another Person to the Company or any
other obligor upon the Notes, and the assumption by any such successor of the
covenants of the Company or such obligor herein and in the Notes, in each case
in compliance with the provisions of this Indenture; or

            (m) add or modify any other provisions herein with respect to
matters or questions arising hereunder which the Company and the Trustee may
deem necessary or desirable and which in the good faith opinion of the Board of
Directors (as evidenced by a Board Resolution on which the Trustee may
conclusively rely) shall not adversely affect the interests of the Holders of
Notes.

      Section 11.2. With Consent of Holders of Notes.

            Except as provided below in this Section 11.2, this Indenture or the
Notes may be amended, modified or supplemented, and noncompliance in any
particular instance with any provision of this Indenture or the Notes may be
waived, in each case with the written consent or affirmative vote of the Holders
of at least a majority of the principal amount of the Notes at the time
outstanding.

            Without the written consent or the affirmative vote of each Holder
of Notes affected thereby (in addition to the written consent or the affirmative
vote of the holders of at least a majority of the principal amount of the Notes
at the time outstanding), an amendment or waiver under this Section 11.2 may
not:

            (a) change the maturity of the principal amount of, or the payment
date of any installment of interest (including Additional Interest, if any) on,
any Note;

            (b) reduce the principal amount, Redemption Price, Purchase Price or
Fundamental Change Purchase Price of, or interest (including Additional
Interest, if any) on, any Note;

            (c) change the currency of payment of the principal amount,
Redemption Price, Purchase Price or Fundamental Change Purchase Price of, or
interest (including Additional Interest, if any) on, any Note from U.S. Dollars;

            (d) impair or adversely affect the rate of accrual of interest
(including Additional Interest, if any) on any Note, or the manner of
calculation thereof;

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            (e) impair the right of any Holder to institute suit for the
enforcement of any payment or with respect to, or conversion of, any Note;

            (f) modify the Company's obligation to maintain a Registrar, Paying
Agent, Conversion Agent and an office or agency where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served in the
Borough of Manhattan, New York City;

            (g) modify the optional redemption provisions of ARTICLE III in a
manner adverse to the Holders of Notes;

            (h) impair or adversely affect the purchase rights of the Holders of
the Notes as provided in ARTICLE IV or ARTICLE V;

            (i) impair or adversely affect the conversion rights of the Holders
of the Notes as provided in ARTICLE XII;

            (j) modify the subordination provisions of ARTICLE XIII in a manner
adverse to the Holders of Notes;

            (k) reduce the percentage of the principal amount of the outstanding
Notes the written consent or affirmative vote of whose Holders is required for
any such amendment, modification or supplement;

            (l) reduce the percentage of the principal amount of the outstanding
Notes the written consent or affirmative vote of whose Holders is required to
rescind an acceleration and its consequences or for any waiver of any past
Default provided for in this Indenture; or

            (m) waive any matter set forth in Section 8.4(a), Section 8.4(b), or
Section 8.4(c).

            It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.

            After an amendment under this Section 11.2 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment.

      Section 11.3. Compliance with Trust Indenture Act.

            Every supplemental indenture executed pursuant to this Article shall
comply with the TIA.

      Section 11.4. Revocation and Effect of Consents, Waivers and Actions.

            Until an amendment, waiver or other action by Holders becomes
effective, a consent thereto by a Holder of a Note hereunder is a continuing
consent by the Holder and every subsequent Holder of that Note or portion of the
Note that evidences the same obligation as the consenting Holder's Note, even if
notation of the consent, waiver or action is not made on the

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Note. However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Note or portion of the Note if the Trustee
receives the notice of revocation before the date the amendment, waiver or
action becomes effective. After an amendment, waiver or action becomes
effective, it shall bind every Holder.

      Section 11.5. Notation on or Exchange of Notes.

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

      Section 11.6. Trustee to Sign Supplemental Indentures.

            The Trustee shall sign any supplemental indenture authorized
pursuant to this ARTICLE XI if the amendment contained therein does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign such supplemental indenture. In
signing any supplemental indenture the Trustee shall receive, and (subject to
the provisions of Section 9.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture, and that all conditions precedent to
the execution of the Supplement have been complied with.

      Section 11.7. Effect of Supplemental Indentures.

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

                                  ARTICLE XII

                                   CONVERSION

      Section 12.1. Conversion Right.

            (a) Subject to and upon compliance with the provisions of this
ARTICLE XII, a Holder of a Note shall have the right, at such Holder's option,
to convert all or any portion (if the portion to be converted is $1,000 of the
principal amount or an integral multiple thereof) of such Note into, subject to
Section 12.12 and the provisions of this Section 12.1, a number of fully paid
and nonassessable shares of Common Stock equal to the product of (x) the
Conversion Rate in effect on the date of conversion times (y) the quotient of
the principal amount of the Note or portion thereof surrendered for conversion
divided by $1,000:

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            (i) during any Conversion Period if, on each of at least 20 Trading
      Days in the period of 30 consecutive Trading Days ending on the first
      Trading Day of the Conversion Period, the Closing Sale Price of the Common
      Stock exceeds 120% of the Conversion Price in effect on the 30th Trading
      Day of such period of 30 consecutive Trading Days;

            (ii) at any time prior to 5:00 p.m., New York City time, on the
      second Business Day preceding the Redemption Date, if such Note has been
      called for redemption pursuant to ARTICLE III; or

            (iii) as provided in clause (b) of this Section 12.1.

            The Company's obligations in respect of conversion of the Notes as
provided above are referred to as the "CONVERSION OBLIGATION."

            The Company shall determine on the first day of each Conversion
Period whether the Notes shall be convertible as a result of the occurrence of
an event specified in clause (a)(i) above and, if the Notes shall be so
convertible, shall promptly deliver to the Trustee notice thereof and make
Public Notice to the Holders thereof on the first day of such Conversion Period.
Any notice so given shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice.

            Notes called for redemption may be converted at any time on and
after the date that the Company mails the notice to the Holders required in
Section 3.3 until 5:00 p.m., New York City time, on the second Business Day
preceding the corresponding Redemption Date.

            With respect to any conversion of a Note during a Registration
Default Period following satisfaction of any of the conditions to conversion
described in the Indenture (and during the prescribed time periods in respect
thereof), a Holder shall be entitled, subject to Section 12.12, to 103% of the
number of shares of Common Stock that the Holder would have otherwise been
entitled to upon conversion.

            (b) (i) In the event that:

                  (A) the Company distributes to all or substantially all
            holders of the Common Stock rights or warrants entitling them (for a
            period expiring within 60 days of the Record Date for such
            distribution) to subscribe for or purchase Common Stock, or
            securities convertible into or exchangeable for Common Stock, at a
            price per share of Common Stock less than the Closing Sale Price of
            the Common Stock on the Business Day immediately preceding the
            announcement of such distribution;

                  (B) the Company distributes to all or substantially all
            holders of its Common Stock cash or other assets, debt securities or
            rights or warrants to subscribe for or purchase its securities,
            including the declaration of any cash dividends, payable quarterly
            or otherwise, where the Fair Market Value (as determined by the
            Board of Directors) of such distribution per share of Common

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            Stock exceeds 10% of the Closing Sale Price of the Common Stock on
            the Business Day immediately preceding the date of declaration of
            such distribution; or

                  (C) a Fundamental Change occurs,

then, in each case, the Notes may be surrendered for conversion at any time on
and after the date that the Company gives notice (including by making a Public
Notice) to the Holders of such right, which shall be, in the case of (A) or (B),
not less than 20 Business Days prior to the Ex-Dividend Time for such
distribution, or, in the case of (C), within 20 Business Days after the
occurrence of the Fundamental Change, until 5:00 p.m., New York City time, on
the earlier of the Business Day immediately preceding the Ex-Dividend Time and
the date the Company announces that such distribution shall not take place in
the case of (A) or (B), or within 20 Business Days of the notice of the
Fundamental Change in the case of (C); provided, however, that in the case of
(A) or (B), a Holder of Notes may not surrender Notes for conversion if the
Holder is otherwise entitled to participate in such distribution in its capacity
as a Holder to the same extent as would have been the case had such Holder's
Notes been converted into Common Stock prior to such distribution.

            (ii) In addition, in the event that the Company consolidates or
      merges with or into another Person, or is a party to a binding share
      exchange pursuant to which the Common Stock would be converted into cash,
      securities or other property as set forth in Section 12.4 (except when the
      shareholders of the Company immediately before such transaction own,
      directly or indirectly, immediately following such transaction more than
      fifty percent (50%) of the total outstanding Voting Stock), then the Notes
      may be surrendered for conversion at any time from and after the date
      which is 15 calendar days prior to the date the Company announces by
      Public Notice as the anticipated effective time of such transaction until
      15 calendar days after the effective date of such transaction,
      irrespective of whether such transaction constitutes a Fundamental Change.

            (c) Notwithstanding the foregoing, a Note in respect of which a
Holder has delivered a Purchase Notice or a Fundamental Change Purchase Notice,
as the case may be, exercising such Holder's right to require the Company to
repurchase such Note may be converted only if such Purchase Notice or
Fundamental Change Purchase Notice is withdrawn in accordance with Section
4.2(b) or Section 5.2(b).

            (d) A Holder of Notes shall not be entitled to any rights of a
holder of Common Stock until such Holder has converted its Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock as provided in Section 12.2(c).

      Section 12.2. Conversion Procedures; Conversion Rate; Fractional Shares.

            (a) Subject to Section 12.12, each Note shall be convertible at the
office of the Conversion Agent into fully paid and nonassessable shares of
Common Stock (calculated to the nearest 1/10,000th of a share).

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            The Conversion Agent shall notify the Company when it receives a
Conversion Notice. Pursuant to Section 12.12, the Company shall determine the
number of shares of Common Stock and/or the amount of cash, if any, that the
Holder that submitted the Conversion Notice is entitled to receive upon
surrender of the Notes covered by that Conversion Notice. If the Company elects
to settle in Common Stock only, a certificate for the full number of shares of
Common Stock into which the Notes are converted (and cash in lieu of fractional
shares) shall be delivered by the Company to such Holder, assuming all of the
other requirements have been satisfied by such Holder, as soon as practicable,
but in any event not more than 5 Business Days, after the Company issues its
notification of its chosen method of settlement in accordance with Section
12.12. If the Company elects to settle in cash or a combination of cash and
Common Stock (including, without limitation, pursuant to a Principal Conversion
Settlement Election), the cash and, if applicable, a certificate for the full
number of shares of Common Stock into which the Notes are converted (and cash in
lieu of fractional shares) shall be paid and delivered to such Holder, assuming
all of the other requirements have been satisfied by such Holder, in accordance
with Section 12.12. Notwithstanding the foregoing, the Company shall not be
required to deliver certificates for Common Stock while the stock transfer books
for such stock or the security register are duly closed for any purpose, but
certificates for Common Stock shall be issued and delivered as soon as
practicable after the opening of such books or security register.

            The Company shall not issue fractional shares of its Common Stock
upon conversion of the Notes. In lieu thereof, the Company shall pay in cash the
value of such fractional shares based upon the Closing Sale Price of its Common
Stock on the Trading Day immediately prior to the date of conversion.

            Except as described in Section 12.9, the Company will not make any
payment or other adjustment for accrued and unpaid interest (including
Additional Interest, if any) on any Notes when they are converted. The Company's
delivery to the Holder of the full number of shares of Common Stock into which
the Note is convertible (or, at the Company's option, cash, or a combination of
cash and Common Stock, in lieu thereof as provided in Section 12.12), together
with any cash payment for such Holder's fractional shares, shall be deemed to
satisfy the Company's obligation to pay the principal of the Note and to satisfy
its obligation to pay accrued and unpaid interest (including Additional
Interest, if any) through the conversion date. As a result, accrued interest
(including Additional Interest, if any) is deemed paid in full rather than
cancelled, extinguished or forfeited. Notwithstanding the foregoing, accrued
interest (including Additional Interest, if any) will be payable upon any
conversion of Notes made concurrently with or after acceleration of the Notes
following an Event of Default.

            If a Holder has exercised its right to require the Company to
repurchase its Notes pursuant to ARTICLE IV or ARTICLE V, such Holder's
conversion rights on the Notes so subject to repurchase shall expire at 5:00
p.m., New York City time, on the Business Day immediately preceding the Purchase
Date or Fundamental Change Purchase Date, as the case may be. Notwithstanding
the foregoing, a Note in respect of which a Holder has delivered a Purchase
Notice or a Fundamental Change Purchase Notice, as the case may be, exercising
such Holder's right to require the Company to repurchase such Note may be
converted only if such Purchase Notice or Fundamental Change Purchase Notice is
withdrawn in accordance with Section 4.2(b) or Section 5.2(b).

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            (b) Before any Holder shall be entitled to convert any Notes into
Common Stock, such Holder shall, in the case of Global Securities, comply with
the Applicable Procedures of the Depositary in effect at that time, and in the
case of Certificated Securities, surrender such Notes, duly endorsed to the
Company or in blank, at the office of the Conversion Agent, and shall give
written notice to the Company at said office or place in the form of the
Conversion Notice attached to the Note (the "CONVERSION NOTICE") that such
Holder elects to convert the same and shall state in writing therein the
principal amount of Notes to be converted (in whole or in part so long as the
principal amount to be converted is in multiples of $1,000) and the name or
names (with addresses) in which such Holder wishes the certificate or
certificates for Common Stock to be issued.

            Before any such conversion, a Holder also shall pay all funds
required from such Holder, if any, relating to interest (including Additional
Interest, if any) on the Notes, as provided in Section 12.9, and all taxes or
duties, if any, as provided in Section 12.8.

            If more than one Note shall be surrendered for conversion at one
time by the same Holder, the number of shares of Common Stock that shall be
deliverable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted thereby) so surrendered.

            If shares of Common Stock to be issued upon conversion of a
Restricted Security are to be issued in the name of a Person other than the
Holder of such Restricted Security, such Holder shall deliver to the Conversion
Agent a certification in substantially the form set forth in a Transfer
Certificate dated the date of surrender of such Restricted Security and signed
by such Holder, as to compliance with the restrictions on transfer applicable to
such Restricted Security. The Company shall not be required to issue Common
Stock upon conversion of any such Restricted Security to a Person other than the
Holder if such Restricted Security is not so accompanied by a properly completed
certification, and the Registrar shall not be required to register Common Stock
upon conversion of any such Restricted Security in the name of a Person other
than the Holder if such Restricted Security is not so accompanied by a properly
completed certification.

            (c) A Note shall be deemed to have been converted immediately prior
to 5:00 p.m., New York City time, on the date on which all of the conversion
requirements set forth in Section 12.2(b) have been satisfied, and the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record Holder or Holders of such Common Stock
as of 5:00 p.m., New York City time, on such date.

            (d) In case any Certificated Security shall be surrendered for
partial conversion, the Company shall execute and the Trustee shall authenticate
and deliver to or upon the written order of the Holder of the Note so
surrendered, without charge to such Holder (subject to the provisions of Section
12.8), a new Note or Notes in authorized denominations in an aggregate principal
amount equal to the unconverted portion of the surrendered Certificated
Securities.

            (e) If and only to the extent a Holder elects to convert Notes in
connection with a Fundamental Change described in clause (i) or (iii) of the
definition thereof (or in connection with a transaction that would have been a
Fundamental Change under such clause (i) or (iii) but

                                       64

<PAGE>

for the application of the 105% Trading Price Exception (as defined in the
definition of a Fundamental Change)) that occurs on or prior to December 1, 2009
pursuant to which 10% or more of the consideration for the Common Stock (other
than cash payments for fractional shares and cash payments made in respect of
dissenters' appraisal rights) in such transaction consists of cash or securities
(or other property) that are not traded or scheduled to be traded immediately
following such transaction on a U.S. national securities exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market, such holder will be entitled to
receive, in addition to a number of shares of Common Stock equal to the
Conversion Rate per $1,000 principal amount of Notes, an additional number of
shares of Common Stock (the "ADDITIONAL SHARES") as described below, subject to
the Company's Principal Conversion Settlement Election as described in Section
12.12 and subject to the Company's rights in respect of a Public Acquirer Change
of Control as described in Section 12.13; provided, however, that if the Stock
Price paid in connection with such transaction is greater than $10.50 or less
than $3.51 (subject in each case to adjustment as described below), no
Additional Shares shall be issued. No Additional Shares shall be issuable under
this Section 12.2(e) unless the Holder elects to convert the Notes in connection
with such transaction.

            The number of Additional Shares issuable in connection with the
conversion of Notes as described in the immediately preceding paragraph will be
determined by reference to the table attached as Schedule I hereto, based on the
effective date of such transaction and the Stock Price paid in connection with
such transaction; provided that if the Stock Price is between two Stock Price
amounts in the table or such effective date is between two effective dates in
the table, the number of Additional Shares will be determined by the Company by
a straight-line interpolation between the number of Additional Shares set forth
for the higher and lower Stock Price amounts and the two effective dates, as
applicable, based on a 365-day year. The "EFFECTIVE DATE" with respect to a
Fundamental Change transaction means the date on which such Fundamental Change
becomes effective.

            The Stock Prices set forth in the first row of the table in Schedule
I hereto will be adjusted as of any date on which the Conversion Rate of the
Notes is adjusted pursuant to Section 12.3. The adjusted Stock Prices will equal
the Stock Prices applicable immediately prior to such adjustment, multiplied by
a fraction, the numerator of which is the Conversion Rate immediately prior to
the adjustment giving rise to the Conversion Rate adjustment and the denominator
of which is the Conversion Rate as so adjusted. The number of Additional Shares
will be adjusted in the same manner as the Conversion Rate as set forth in
Section 12.3.

            Notwithstanding the foregoing, in no event will the total number of
shares of Common Stock issuable upon conversion exceed 284.9003 per $1,000
principal amount of Notes, subject to adjustments in the same manner as the
Conversion Rate as set forth in Section 12.3.

      Section 12.3. Adjustment of Conversion Rate.

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

            (a) In case the Company shall, at any time or from time to time
after the initial Issue Date while any of the Notes are outstanding, pay a
dividend or make a distribution in

                                       65
<PAGE>
Common Stock to all or substantially all holders of its outstanding Common
Stock, then the Conversion Rate in effect immediately prior to the close of
business on the Record Date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be increased by multiplying
such Conversion Rate by a fraction:

            (i) the numerator of which shall be the sum of the total number of
      shares of Common Stock outstanding on such Record Date and the total
      number of shares of Common Stock constituting such dividend or other
      distribution; and

            (ii) the denominator of which shall be the number of shares of
      Common Stock outstanding at the close of business on such Record Date.

            Such increase shall become effective immediately prior to the
opening of business on the day following the Record Date fixed for such
determination. If any dividend or distribution of the type described in this
Section 12.3(a) is declared but not so paid or made, the Conversion Rate shall
again be adjusted to the Conversion Rate which would then be in effect if such
dividend or distribution had not been declared.

            (b) In case the Company shall, at any time or from time to time
after the initial Issue Date while any of the Notes are outstanding, subdivide
or split its outstanding shares of Common Stock into a greater number of shares
of Common Stock, the Conversion Rate in effect immediately prior to the opening
of business on the day following the day upon which such subdivision or split
becomes effective shall be proportionately increased, and, conversely, in case
the Company shall, at any time or from time to time after the initial Issue Date
while any of the Notes are outstanding, combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, the Conversion Rate in
effect immediately prior to the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately reduced,
such increase or reduction, as the case may be, to become effective immediately
prior to the opening of business on the day following the day upon which such
subdivision, split or combination becomes effective, so that the Holder of any
Note thereafter surrendered for conversion shall be entitled to receive that
number of shares of Common Stock which it would have received had such Note been
converted immediately prior to the happening of such event adjusted as a result
of such event.

            (c) In case the Company shall, at any time or from time to time
after the initial Issue Date while any of the Notes are outstanding, issue
rights or warrants for a period expiring within 60 days (other than any rights
or warrants referred to in Section 12.3(d)) to all or substantially all holders
of its outstanding Common Stock entitling them to subscribe for or purchase
Common Stock (or securities convertible into or exchangeable or exercisable for
Common Stock), at a price per share of Common Stock (or having a conversion,
exchange or exercise price per share of Common Stock) less than the Closing Sale
Price of the Common Stock on the Business Day immediately preceding the date of
announcement of such issuance (treating the conversion, exchange or exercise
price per share of Common Stock of the securities convertible, exchangeable or
exercisable into Common Stock as equal to (x) the sum of (i) the price for a
unit of the security convertible into or exchangeable or exercisable for Common
Stock and (ii) any additional consideration initially payable upon the
conversion of or exchange or exercise for such security into Common Stock
divided by (y) the number of shares of Common

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<PAGE>

Stock initially underlying such convertible, exchangeable or exercisable
security), then the Conversion Rate shall be increased by multiplying the
Conversion Rate in effect at the opening of business on the date after such date
of announcement by a fraction:

                  (i) the numerator of which shall be the number of shares of
            Common Stock outstanding at the close of business on the date of
            announcement, plus the total number of additional shares of Common
            Stock so offered for subscription or purchase (or into which the
            convertible, exchangeable or exercisable securities so offered are
            convertible, exchangeable or exercisable); and

                  (ii) the denominator of which shall be the number of shares of
            Common Stock outstanding on the close of business on the date of
            announcement, plus the number of shares of Common Stock (or
            convertible, exchangeable or exercisable securities) which the
            aggregate offering price of the total number of shares of Common
            Stock (or convertible, exchangeable or exercisable securities) so
            offered for subscription or purchase (or the aggregate conversion,
            exchange or exercise price of the convertible, exchangeable or
            exercisable securities so offered) would purchase at such Closing
            Sale Price of the Common Stock.

            Such increase shall become effective immediately prior to the
opening of business on the day following the Record Date for such determination.
To the extent that shares of Common Stock (or securities convertible,
exchangeable or exercisable into shares of Common Stock) are not delivered
pursuant to such rights or warrants, upon the expiration or termination of such
rights or warrants, the Conversion Rate shall be readjusted to the Conversion
Rate which would then be in effect had the adjustments made upon the issuance of
such rights or warrants been made on the basis of the delivery of only the
number of shares of Common Stock (or securities convertible, exchangeable or
exercisable into shares of Common Stock) actually delivered. In the event that
such rights or warrants are not so issued, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if the Record
Date fixed for the determination of stockholders entitled to receive such rights
or warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Closing Sale Price, and in determining the aggregate offering price of
such shares of Common Stock, there shall be taken into account any consideration
received for such rights or warrants, the value of such consideration if other
than cash, to be determined by the Board of Directors.

            (d)

            (A) In case the Company shall, at any time or from time to time
after the initial Issue Date while any of the Notes are outstanding, by dividend
or otherwise, distribute to all or substantially all holders of its outstanding
shares of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing corporation and
the shares of Common Stock are not changed or exchanged), shares of its capital
stock, evidences of its Indebtedness or other assets, including securities
(including shares of capital stock of one or more of the Company's
Subsidiaries), but excluding (i) dividends or distributions of Common Stock
referred to in Section 12.3(a), (ii) any rights or warrants referred to in
Section 12.3(c), (iii) dividends and distributions paid exclusively in cash

                                       67
<PAGE>

referred to in Section 12.3(c) and (iv) dividends and distributions of stock,
securities or other property or assets (including cash) in connection with the
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance to which Section 12.4 applies (such capital
stock, evidence of its indebtedness, other assets or securities being
distributed hereinafter in this Section 12.3(d) called the "DISTRIBUTED
ASSETS"), then, in each such case, subject to paragraphs (D) and (E) of this
Section 12.3(d), the Conversion Rate shall be increased by multiplying the
Conversion Rate in effect immediately prior to the close of business on the
Record Date with respect to such distribution by a fraction:

                  (i) the numerator of which shall be the Current Market Price;
            and

                  (ii) the denominator of which shall be such Current Market
            Price of the Common Stock, less the Fair Market Value on such date
            of the portion of the distributed assets so distributed applicable
            to one share of Common Stock (determined on the basis of the number
            of shares of Common Stock outstanding on the Record Date) on such
            date.

            Such increase shall become effective immediately prior to the
opening of business on the day following the Record Date for such distribution.
In the event that such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if such dividend or distribution had not been declared.

            (B) If the Board of Directors determines the Fair Market Value of
any distribution for purposes of this Section 12.3(d) by reference to the actual
or when issued trading market for any distributed assets comprising all or part
of such distribution, it must in doing so consider the prices in such market
over the same period (the "REFERENCE PERIOD") used in computing the Current
Market Price pursuant to Section 12.3(g) below to the extent possible, unless
the Board of Directors determines in good faith that determining the Fair Market
Value during the Reference Period would not be in the best interest of the
Holders.

            (C) In the event any such distribution consists of shares of capital
stock of, or similar equity interests in, one or more of the Company's
Subsidiaries (a "SPIN-OFF"), the Fair Market Value of the securities to be
distributed shall equal the average of the Closing Sale Prices of such
securities on the principal securities market on which such securities are
traded for the five consecutive Trading Days commencing on and including the
sixth Trading Day of those securities after the effectiveness of the Spin-Off,
and the Current Market Price shall be measured for the same period. In the
event, however, that an underwritten initial public offering of the securities
in the Spin-Off occurs simultaneously with the Spin-Off, Fair Market Value of
the securities distributed in the Spin-Off shall mean the initial public
offering price of such securities and the Current Market Price shall mean the
Closing Sale Price for the Common Stock on the same Trading Day.

            (D) Rights or warrants distributed by the Company to all holders of
the outstanding shares of Common Stock entitling them to subscribe for or
purchase Equity Interests of the Company (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("TRIGGER EVENT"), (x) are deemed to be transferred with such
shares of Common Stock, (y) are not exercisable and (z) are also issued in
respect of

                                       68
<PAGE>

future issuances of shares of Common Stock shall be deemed not to have been
distributed for purposes of this Section 12.3(d) (and no adjustment to the
Conversion Rate under this Section 12.3(d) shall be required) until the
occurrence of the earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant shall
become exercisable to purchase different distributed assets, evidences of
indebtedness or other assets, or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be deemed
to be the date of issuance and Record Date with respect to a new right or
warrant (and a termination or expiration of the existing right or warrant
without exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto, that resulted in an adjustment to the Conversion Rate under
this Section 12.3(d):

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

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

            To the extent that the Company has a rights plan in effect upon the
conversion of the Notes into Common Stock only or a combination of cash and
Common Stock, with respect to the conversion consideration payable in Common
Stock, a Holder will receive in addition to the Common Stock, the rights under
the rights plan, unless the rights have separated from the Common Stock prior to
the time of conversion, in which case the Conversion Rate will be adjusted at
the time of separation as if the Company made a distribution referred to in this
Section 12.3(d). To the extent that the Company has a rights plan in effect upon
conversion of the Notes into cash, with respect to the conversion consideration
payable in cash, a Holder will not receive any rights under the Rights Plan or
other consideration in respect thereof.

            (E) For purposes of this Section 12.3(d) and Section 12.3(a),
Section 12.3(b) and Section 12.3(c), any dividend or distribution to which this
Section 12.3(d) is applicable that also includes (x) shares of Common Stock, (y)
a subdivision, split or combination of shares of Common Stock to which Section
12.3(b) applies or (z) rights or warrants to subscribe for or purchase shares of
Common Stock to which Section 12.3(c) applies (or any combination thereof),
shall be deemed instead to be:

            (i) a dividend or distribution of the evidences of indebtedness,
      assets, shares of capital stock, rights or warrants, other than such
      shares of Common Stock, such subdivision, split or combination or such
      rights or warrants to which Section 12.3(a),

                                       69
<PAGE>

      Section 12.3(b) and Section 12.3(c) apply, respectively (and any
      Conversion Rate adjustment required by this Section 12.3(d) with respect
      to such dividend or distribution shall then be made), immediately followed
      by

            (ii) a dividend or distribution of such shares of Common Stock, such
      subdivision, split or combination or such rights or warrants (and any
      further Conversion Rate increase required by Section 12.3(a), Section
      12.3(b) and Section 12.3(c) with respect to such dividend or distribution
      shall then be made), except:

                        (1) the Record Date of such dividend or distribution
                  shall be substituted as (i) "the date fixed for the
                  determination of stockholders entitled to receive such
                  dividend or other distribution," "Record Date fixed for such
                  determinations" and "Record Date" within the meaning of
                  Section 12.3(a), (ii) "the day upon which such subdivision or
                  split becomes effective" or "the day upon which such
                  combination becomes effective" (as applicable) within the
                  meaning of Section 12.3(b), and (iii) as "the Record Date
                  fixed for the determination of the stockholders entitled to
                  receive such rights or warrants" and such "Record Date" within
                  the meaning of Section 12.3(c); and

                        (2) any reduction or increase in the number of shares of
                  Common Stock resulting from such subdivision, split or
                  combination (as applicable) shall be disregarded in connection
                  with such dividend or distribution.

            (e) In case the Company shall, at any time or from time to time
after the initial Issue Date while any of the Notes are outstanding, by dividend
or otherwise, distribute to all or substantially all holders of its outstanding
shares of Common Stock, cash (including any quarterly cash dividends) then, and
in each case, immediately after the close of business on such date, the
Conversion Rate shall be increased by multiplying the Conversion Rate in effect
immediately prior to the close of business on such Record Date by a fraction:

                  (A) the numerator of which shall be equal to the Current
            Market Price on such date; and

                  (B) the denominator of which shall be equal to the Current
            Market Price on the Record Date, less an amount equal to the
            quotient of (x) the aggregate amount of such cash distribution and
            (y) the number of shares of Common Stock outstanding on the Record
            Date.

            Such increase shall become effective immediately prior to the
opening of business on the day following the Record Date for such distribution.
In the event that such distribution is not so made, the Conversion Rate shall
again be adjusted to be the Conversion Rate which would then be in effect if
such distribution had not been declared.

            (f) In case a tender offer or exchange offer (other than as part of
a stock option exchange offer) made by the Company or any of its Subsidiaries
for all or any portion of the Common Stock shall expire, then and in each such
case, immediately prior to the opening of

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<PAGE>

business on the day after the date of the last time (the "EXPIRATION TIME")
tenders or exchanges could have been made pursuant to such tender offer or
exchange offer, the Conversion Rate shall be increased so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the date of the Expiration Time by
a fraction:

                  (A) the numerator of which shall be the sum of (x) the product
            of (i) the number of shares of Common Stock outstanding (excluding
            any tendered or exchanged shares) at the Expiration Time and (ii)
            the Current Market Price of the Common Stock at the Expiration Time,
            and (y) the Fair Market Value of the aggregate consideration payable
            to stockholders based on acceptance (up to any maximum specified in
            the terms of the tender offer or exchange offer) of all shares
            validly tendered and not withdrawn as of the Expiration Time; and

                  (B) the denominator of which shall be the product of the
            number of shares of Common Stock outstanding (including any tendered
            or exchanged shares) at the Expiration Time and the Current Market
            Price of the Common Stock at the Expiration Time.

            Such increase (if any) shall become effective immediately prior to
the opening of business on the day following the Expiration Time. In the event
that the Company is obligated to purchase shares 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 or a portion of such purchases are
rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such (or such portion of the) tender offer or
exchange offer had not been made. If the application of this Section 12.3(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 12.3(e).

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

            "CURRENT MARKET PRICE" on any date means the average of the daily
Closing Sale Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to such date; provided, however, that if:

            (i) the "ex" date (as hereinafter defined) for any event (other than
      the issuance or distribution requiring such computation) that requires an
      adjustment to the Conversion Rate pursuant to Section 12.3(a), Section
      12.3(b), Section 12.3(c), Section 12.3(d), Section 12.3(e) or Section
      12.3(f) occurs during such ten consecutive Trading Days, the Closing Sale
      Price for each Trading Day prior to the "ex" date for such other event
      shall be adjusted by multiplying such Closing Sale Price by the same
      fraction by which the Conversion Rate is so required to be adjusted as a
      result of such other event;

            (ii) the "ex" date for any event (other than the issuance or
      distribution requiring such computation) that requires an adjustment to
      the Conversion Rate pursuant to Section 12.3(a), Section 12.3(b), Section
      12.3(c), Section 12.3(d), Section 12.3(e) or

                                       71
<PAGE>

      Section 12.3(f) occurs on or after the "ex" date for the issuance or
      distribution requiring such computation and prior to the day in question,
      the Closing Sale Price for each Trading Day on and after the "ex" date for
      such other event shall be adjusted by multiplying such Closing Sale Price
      by the reciprocal of the fraction by which the Conversion Rate is so
      required to be adjusted as a result of such other event; and

            (iii) the "ex" date for the issuance or distribution requiring such
      computation is prior to the day in question, after taking into account any
      adjustment required pursuant to clause (i) or (ii) of this proviso, the
      Closing Sale Price for each Trading Day on or after such "ex" date shall
      be adjusted by adding thereto the amount of any cash and the Fair Market
      Value (as determined by the Board of Directors in a manner consistent with
      any determination of such value for purposes of Section 12.3(d), Section
      12.3(e) or Section 12.3(f)) of the evidences of Indebtedness, shares of
      capital stock or assets being distributed applicable to one share of
      Common Stock as of the close of business on the day before such "ex" date.

For purposes of any computation under Section 12.3(e), if the "ex" date for any
event (other than the tender offer requiring such computation) that requires an
adjustment to the Conversion Rate pursuant to Section 12.3(a), Section 12.3(b),
Section 12.3(c), Section 12.3(d), Section 12.3(e) or Section 12.3(f) occurs on
or after the Expiration Time for the tender or exchange offer requiring such
computation and prior to the day in question, the Closing Sale Price for each
Trading Day on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Sale Price by the reciprocal of the fraction by which
the Conversion Rate is so required to be adjusted as a result of such other
event. For purposes of this paragraph, the term "ex" date, when used:

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

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

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

Notwithstanding the foregoing, whenever successive adjustments to the Conversion
Rate are called for pursuant to this Section 12.3, such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 12.3 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.

            "FAIR MARKET VALUE" means the amount which a willing buyer would pay
a willing seller in an arm's length transaction (as determined by the Board of
Directors, whose

                                       72
<PAGE>

determination shall be made in good faith and, absent manifest error, shall be
final and binding on Holders of the Notes).

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

            (h) The Company shall be entitled to make such additional increases
in the Conversion Rate, in addition to those required by Section 12.3(a),
Section 12.3(b), Section 12.3(c), Section 12.3(d), Section 12.3(e) or Section
12.3(f), if the Board of Directors determines that it is advisable, subject to
compliance with Nasdaq Marketplace Rule 4350(i), in order that any dividend or
distribution of Common Stock, any subdivision, reclassification or combination
of Common Stock or any issuance of rights or warrants referred to above, or any
event treated as such for United States federal income tax purposes, shall not
be taxable to the holders of Common Stock for United States federal income tax
purposes or to diminish any such tax.

            (i) To the extent permitted by law and applicable Nasdaq rules, the
Company may, from time to time, increase the Conversion Rate by any amount for
any period of time if such period is at least 20 calendar days, the increase is
irrevocable during the period and the Board of Directors, in good faith and
absent manifest error, determines that such increase would be in the best
interest of the Company, subject to compliance with Nasdaq Marketplace Rule
4350(i). Any such determination by the Company's Board of Directors shall be
conclusive. Whenever the Conversion Rate is increased pursuant to the preceding
sentence or clause (h) above, the Company shall mail to the Trustee and each
Holder at the address of such Holder as it appears in the register of the Notes
maintained by the Registrar (and make a Public Notice), at least 15 Business
Days prior to the date the increased Conversion Rate takes effect, a notice of
the increase stating the increased Conversion Rate and the period during which
it shall be in effect.

            (j) In any case in which this Section 12.3 shall require that any
adjustment be made effective as of or retroactively immediately following a
Record Date, the Company may elect to defer (but only for five Trading Days
following the filing of the notice referred to in Section 12.5) issuing to the
Holder of any Notes converted after such Record Date the Common Stock issuable
upon such conversion over and above the Common Stock issuable upon such
conversion on the basis of the Conversion Rate prior to adjustment; provided,
however, that the Company shall deliver to such Holder a due bill or other
appropriate instrument evidencing such Holder's right to receive such additional
Common Stock upon the occurrence of the event requiring such adjustment.

            (k) All calculations under this Section 12.3 shall be made to the
nearest cent or one-hundredth of a share, with one-half cent and 0.005 of a
share, respectively, being rounded upward. Notwithstanding any other provision
of this Section 12.3, the Company shall not be required to make any adjustment
of the Conversion Rate unless such adjustment would require an increase or
decrease of at least 1% in the Conversion Rate as last adjusted. Any lesser

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<PAGE>

adjustment shall be carried forward and shall be made at the earlier of (i) the
time of and together with the next subsequent adjustment which, together with
any adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least 1% in the Conversion Rate as last adjusted or (ii) in
connection with any conversion of the Notes following a call for redemption or
at Stated Maturity, as applicable. Any adjustments under this Section 12.3 shall
be made successively whenever an event requiring such an adjustment occurs.

            (l) In the event that at any time, as a result of an adjustment made
pursuant to this Section 12.3, the Holder of any Notes thereafter surrendered
for conversion shall become entitled to receive any shares of Applicable Stock
of the Company other than Common Stock into which the Notes originally were
convertible, the Conversion Rate of such other shares so receivable upon
conversion of any such Note 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 subparagraphs (a) through (k) of this
Section 12.3, and the provision of Section 12.1, Section 12.2 and Section 12.4
through Section 12.9 with respect to the Common Stock shall apply on like or
similar terms to any such other shares (including, without limitation, the
determination of whether the conditions to conversion provided in Section 12.1
have been satisfied). In the event that the Conversion Rate is required to be
adjusted pursuant to this Section 12.3 during any period referred to in Section
12.1(a)(i) or any Cash Settlement Averaging Period, the Closing Sale Price for
each Trading Day during such period shall, to the extent necessary, be adjusted
to reflect the effects of such adjustment to this Section 12.3.

            (m) No adjustment shall be made pursuant to this Section 12.3 if the
effect thereof would be to reduce the Conversion Price below the par value (if
any) of the Common Stock.

      Section 12.4. Consolidation or Merger of the Company.

            If any of the following events occurs, namely:

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

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

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

the Company or the successor or purchasing Person, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture, if such supplemental indenture is then required to so comply)
providing that such Notes shall be convertible into the kind and amount

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of shares of stock and other securities or property or assets (including cash)
which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance had such Notes been converted into Common Stock
immediately prior to such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale or conveyance (provided, that if
the kind or amount of securities, cash or other property receivable upon such
merger, consolidation, statutory share exchange, sale or conveyance is not the
same for each share of Common Stock in respect of which such rights of election
shall not have been exercised ("NON-ELECTING SHARE"), then for the purposes of
this Section 12.4, the kind and amount of securities, cash or other property
receivable upon such merger, consolidation, statutory share exchange, sale or
conveyance for each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-Electing Shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this ARTICLE
XII and, to the extent applicable, reflect the other types of adjustments
provided for in Section 12.3(l). If, in the case of any such reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of Common Stock includes shares of stock or other securities and assets
of a Person other than the successor or purchasing Person, as the case may be,
in such reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance, then such supplemental indenture
shall also be executed by such other Person and shall contain such additional
provisions to protect the interests of the Holders of the Notes as the Board of
Directors shall reasonably consider necessary by reason of the foregoing
including the provisions providing for the repurchase rights set forth in
ARTICLE IV and ARTICLE V.

            The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at the address of such Holder as it
appears on the register of the Notes maintained by the Registrar, within 20 days
after execution thereof. Failure to deliver such notice shall not affect the
legality or validity of such supplemental indenture.

            The above provisions of this Section 12.4 shall similarly apply to
successive reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.

            If this Section 12.4 applies to any event or occurrence, Section
12.3 shall not apply. Notwithstanding this Section 12.4, if a Public Acquirer
Change of Control occurs and the Company elects to adjust the Conversion Rate
and its conversion obligation pursuant to Section 12.13, the provisions of
Section 12.13 shall apply to the conversion instead of this Section 12.4.

            Any Additional Shares which a Holder is entitled to receive upon
conversion pursuant to Section 12.2(e), if applicable, shall not be payable in
shares of Common Stock, but will represent a right to receive the aggregate
amount of cash, securities or other property into which the Additional Shares
would convert as a result of such recapitalization, consolidation, merger, share
transfer, acquisition or share exchange.

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      Section 12.5. Notice of Adjustment.

            Whenever an adjustment in the Conversion Rate with respect to the
Notes is required:

            (a) the Company shall forthwith place on file with the Trustee and
any Conversion Agent for such securities a certificate of the Chief Financial
Officer of the Company, stating the adjusted Conversion Rate determined as
provided herein and setting forth in reasonable detail such facts as shall be
necessary to show the reason for and the manner of computing such adjustment;
and

            (b) a notice stating that the Conversion Rate has been adjusted and
setting forth the adjusted Conversion Rate shall forthwith be given by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company, to each Holder in the manner provided in Section 14.2.
Any notice so given shall be conclusively presumed to have been duly given,
whether or not the Holder receives such notice.

      Section 12.6. Notice in Certain Events.

            In case of:

            (a) a consolidation or merger to which the Company is a party and
for which approval of any holders of Common Stock of the Company is required, or
of the sale or conveyance to another Person or entity or group of Persons or
entities acting in concert as a partnership, limited partnership, syndicate or
other group (within the meaning of Rule 13d-3 under the Exchange Act) of all or
substantially all of the property and assets of the Company; or

            (b) the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or

            (c) any action triggering an adjustment of the Conversion Rate
referred to in clauses (x) or (y) below;

            then, in each case, the Company shall cause to be filed with the
Trustee and the Conversion Agent, and shall cause to be given, to the Holders of
the Notes in the manner provided in Section 14.2, at least 15 days prior to the
applicable date hereinafter specified, a notice stating:

            (x) the date on which a record is to be taken for the purpose of any
      distribution or grant of rights or warrants triggering an adjustment to
      the Conversion Rate pursuant to this ARTICLE XII, or, if a record is not
      to be taken, the date as of which the holders of record of Common Stock
      entitled to such distribution, rights or warrants are to be determined; or

            (y) the date on which any reclassification, consolidation, merger,
      sale, conveyance, dissolution, liquidation or winding up triggering an
      adjustment to the Conversion Rate pursuant to this ARTICLE XII is expected
      to become effective, and the date as of which it is expected that holders
      of Common Stock of record shall be entitled

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<PAGE>

      to exchange their shares of Common Stock for securities or other property
      deliverable upon such reclassification, consolidation, merger, sale,
      conveyance, dissolution, liquidation or winding up.

            Failure to give such notice or any defect therein shall not affect
the legality or validity of the proceedings described in Section 12.6(a),
Section 12.6(b) or Section 12.6(c).

      Section 12.7. Company To Reserve Stock: Registration; Listing.

            (a) The Company shall, prior to issuance of any Notes hereunder, and
from time to time as may be necessary, reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Notes, such number of its duly
authorized Common Stock as shall from time to time be sufficient to effect the
conversion of all Notes then outstanding into such Common Stock at any time
(assuming that, at the time of the computation of such number of Common Stock,
all such Notes would be held by a single Holder). The Company covenants that all
Common Stock which may be issued upon conversion of Notes shall upon issue be
fully paid and nonassessable and free from all liens and charges and, except as
provided in Section 12.8, taxes with respect to the issue thereof.

            (b) Except with respect to shares issued upon conversion of a
Transfer Restricted Security prior to the second anniversary of the initial
Issue Date, if any shares of Applicable Stock which would be issuable upon
conversion of Notes hereunder (including, without limitation, in connection with
any transaction referred to in Section 12.4) require registration with or
approval of any governmental authority before such shares may be issued upon
such conversion, the Company shall use its reasonable best efforts to cause such
shares to be duly registered or approved, as the case may be, or to cause such
shares not to be Transfer Restricted Securities. In addition, in connection with
any transaction referred to in Section 12.4, the Company and any parent company
of the Company required to issue Applicable Stock upon conversion of a Note
shall take such actions as are required to entitle the Company or such parent
company, as the case may be, to rely on Section 3(a)(9) of the Securities Act in
connection with conversion of the Notes without extending any holding periods
under Rule 144 or otherwise permit such Applicable Stock issued upon conversion
of the Notes to be resold without requiring registration thereof under the
Securities Act.

            (c) The Company further covenants that, if at any time the Common
Stock shall be listed on the New York Stock Exchange or any other national
securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market or any other automated quotation system, the Company will, if permitted
by the rules of such exchange or automated quotation system, list and keep
listed or quoted, so long as the Common Stock shall be so listed or quoted on
such exchange or automated quotation system, all Common Stock issuable upon
conversion of the Notes; provided that so long as no delay in listing or
quotation will occur upon conversion of the Notes into Common Stock, if the
rules of such exchange or automated quotation system permit the Company to defer
the listing or quotation of such Common Stock until the first conversion of the
Notes into Common Stock in accordance with the provisions of this Indenture, the
Company covenants to obtain the listing or quotation of such Common Stock
issuable upon

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conversion of the Notes in accordance with the requirements of such exchange or
automated quotation system at such time.

      Section 12.8. Taxes on Conversion.

            The issue of stock certificates on conversion of Notes shall be made
without charge to the converting Holder for any documentary, stamp or similar
issue or transfer taxes in respect of the issue thereof, and the Company shall
pay any and all documentary, stamp or similar issue or transfer taxes that may
be payable in respect of the issue or delivery of Common Stock on conversion of
Notes pursuant hereto. The Company shall not, however, be required to pay any
such tax which may be payable in respect of any transfer involved in the issue
or delivery of Common Stock or the portion, if any, of the Notes which are not
so converted in a name other than that in which the Notes so converted were
registered, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Company the amount of such tax or
has established to the satisfaction of the Company that such tax has been paid.

      Section 12.9. Conversion After Regular Record Date.

            Except as provided in the succeeding paragraph, upon conversion, the
Holder of Notes shall not be entitled to receive any accrued and unpaid interest
(including Additional Interest, if any) other than overdue interest, if any.

            If any Notes are surrendered for conversion subsequent to the close
of business on any Regular Record Date but prior to the opening of business on
the corresponding Interest Payment Date, the Holder of such Notes at the close
of business on such Regular Record Date shall receive the interest and
Additional Interest, if any, payable on such Notes on such Interest Payment Date
notwithstanding the conversion thereof. Notes surrendered for conversion during
the period from the close of business on any Regular Record Date to the opening
of business on the corresponding Interest Payment Date shall (except in the case
of Notes which have been called for redemption on a Redemption Date within such
period or Notes surrendered for conversion after acceleration of the Notes) be
accompanied by payment by the Holder, for the account of the Company, in New
York Clearing House funds or other funds acceptable to the Company of an amount
equal to the accrued and unpaid interest and Additional Interest (other than
overdue interest), if any, payable on such Interest Payment Date on the Notes
being surrendered for conversion.

            Except as described in Section 12.2(a) and this Section 12.9, the
Company will not make any payment in cash or Common Stock or other adjustment
for accrued and unpaid interest or Additional interest on any Notes when they
are converted.

      Section 12.10. Company Determination Final.

            Excepts as otherwise provided herein or the Note, the Company or its
agents shall be responsible for making all calculations required under the terms
of this ARTICLE XII. Any determination that the Company or the Board of
Directors must make pursuant to this ARTICLE XII shall be set forth in a Board
Resolution, shall be made in good faith and, absent manifest

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error, shall be final and binding on holders of the Notes. The Company or its
agents shall be required to deliver to the Trustee a schedule of its
calculations and the Trustee shall be entitled to conclusively rely upon the
accuracy of such calculations without independent verification.

      Section 12.11. Responsibility of Trustee for Conversion Provisions.

            The Trustee has no duty to determine when an adjustment under this
ARTICLE XII should be made, how it should be made or what it should be. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Notes. The Trustee shall not be responsible for
any failure of the Company to comply with this ARTICLE XII. Each Conversion
Agent other than the Company shall have the same protection under this Section
12.11 as the Trustee.

            The rights, privileges, protections, immunities and benefits given
to the Trustee under this Indenture including, without limitation, its rights to
be indemnified, are extended to, and shall be enforceable by, other than the
Company, the Trustee in each of its capacities hereunder, and each Paying Agent
or Conversion Agent, other than the Company, acting hereunder.

      Section 12.12. Option to Satisfy Conversion Obligation with Cash, Common
Stock or Combination Thereof.

            (a) At any time after the Issue Date, the Company may make an
election at its sole and absolute discretion (the "PRINCIPAL CONVERSION
SETTLEMENT ELECTION") (in which case it will notify the Holders in writing and
make a Public Notice) that the Company will satisfy the Conversion Obligation
applicable to the principal amount of all Notes thereafter converted by paying
100% of the principal amount of such Notes in cash. Once the Company has
notified the Holders thereof, the Principal Conversion Settlement Election is
irrevocable. Unless the Company makes a Principal Conversion Settlement
Election, the Company shall not be required to notify Holders of its method for
settling its Conversion Obligation until the Company receives a Conversion
Notice and is required to do so as a result of such receipt as provided in this
Section 12.12(a).

            (b) If the Company receives any Holder's Conversion Notice on or
prior to the day that is 31 Trading Days prior to the Stated Maturity (the
"FINAL NOTICE DATE"), then the Company shall notify the Holder through the
Trustee, at any time on or before the date that is three Trading Days following
receipt of the Conversion Notice (such period, the "SETTLEMENT NOTICE PERIOD")
of the method the Company chooses to settle (x) the Conversion Obligation
relating to the principal amount of the Notes surrendered for conversion (each
such Note a "SURRENDERED SECURITY"), if the Company has not made a Principal
Conversion Settlement Election prior to such time, and (y) the value, if any, of
the Conversion Obligation applicable to the Surrendered Security in excess of
the principal amount of the Surrendered Security (the "EXCESS CONVERSION
OBLIGATION"). If the Company elects to settle its Conversion Obligation in a
combination of cash and Common Stock, the Company shall specify the percentage
of the principal amount of the Notes surrendered for conversion and the Excess
Conversion Obligation, if any, relating to the Surrendered Security that it will
pay in cash, provided that if a Principal Conversion Settlement Election has
been made, such amount shall not be less than the principal

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amount of the Surrendered Security. The remainder of its Conversion Obligation
will be settled in shares of Common Stock (except that cash will be paid in lieu
of issuing any fractional shares). If the Company fails to give notice during
the Settlement Notice Period as provided in this Section 12.12(a), then the
Company shall be obligated to settle the entire Conversion Obligation (or if the
Company has delivered a Principal Conversion Settlement Election, the entire
Excess Conversion Obligation) by delivering shares of Common Stock (plus cash
paid in lieu of issuing any fractional shares). The Company shall treat all
Holders converting on the same Trading Day in the same manner and the Company
shall not have any obligation, except to the extent the Company has made a
Principal Conversion Settlement Election, to settle Conversion Obligations
arising on different Trading Days in the same manner.

            If the Company timely elects to pay cash for any portion of the
Conversion Obligation, the Holder may retract the Conversion Notice at any time
during the two Trading Day period beginning on the Trading Day after the final
day of the Settlement Notice Period (the "CONVERSION RETRACTION PERIOD");
provided, that no such retraction can be made (and a Conversion Notice shall be
irrevocable) if the Company does not elect to deliver cash, or a combination of
cash and shares, in lieu of shares (other than cash in lieu of fractional
shares) or is not required to deliver cash as a result of having made a
Principal Conversion Settlement Election. Settlement in Common Stock only will
be made in accordance with Section 12.2(a). If the Conversion Notice has not
been retracted or a Principal Conversion Settlement Election has been made, then
settlement of any portion of the Company's Conversion Obligation to be made in
cash or in a combination of cash and Common Stock will, subject to Section
12.12(c), be made on the third Trading Day following the final Trading Day of
the 20 Trading Day period, which period shall begin on the Trading Day following
the final Trading Day of the Conversion Retraction Period or, if no Conversion
Retraction Period is applicable, the Trading Day following the final Trading Day
of the Settlement Notice Period (the "CASH SETTLEMENT AVERAGING PERIOD"),
assuming all of the other requirements have been satisfied by such Holder.

            Settlement amounts will be computed as follows (subject to the
provisions of the fifth paragraph of Section 12.1(a) in connection with
conversions during a Registration Default Period):

            (i) if the entire Conversion Obligation (including the principal
      amount of the Surrendered Security and the Excess Conversion Obligation)
      is to be settled in Common Stock (other than with respect to fractional
      shares), the Company shall deliver to such Holder, for each $1,000
      principal amount of Notes, a number of shares of Common Stock equal to the
      Conversion Rate (plus any cash paid for fractional shares);

            (ii) if the entire Conversion Obligation (including principal amount
      of the Surrendered Security and Excess Conversion Obligation) is to be
      settled in cash, the Company shall deliver to such Holder, for each $1,000
      principal amount of Notes, cash in an amount equal to the product of:

                  (1) the Conversion Rate, multiplied by

                  (2) the arithmetic average of the Closing Sale Prices of
            Common Stock during the Cash Settlement Averaging Period; and

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<PAGE>

            (iii) if a portion of the Conversion Obligation is to be settled in
      cash (the "CASH AMOUNT") (excluding any cash paid for fractional shares)
      and a portion of the Conversion Obligation is to be settled in Common
      Stock, the Company shall deliver to such Holder, for each $1,000 principal
      amount of Notes:

                  (1) a Cash Amount equal to the sum of:

                  -     the product of (x) $1,000 multiplied by (y) the
                        percentage of the principal amount of the Surrendered
                        Security to be satisfied in cash; plus

                  -     if greater than zero, the product of (x) the amount of
                        cash that would be paid pursuant to clause (ii) above
                        minus $1,000, multiplied by (y) the percentage of the
                        Excess Conversion Obligation to be satisfied in cash;

            and

                  (2) a number of shares of Common Stock equal to the difference
            between:

                  -     the number of shares that would be issued pursuant to
                        clause (i) above; minus

                  -     the number of shares of Common Stock equal to the
                        quotient of (A) the Cash Amount divided by (B) the
                        arithmetic average of the Closing Sale Prices of the
                        Common Stock during the Cash Settlement Averaging
                        Period.

            (c) If the Company receives any Holder's Conversion Notice after the
Final Notice Date, the Company shall notify the Holder through the Trustee, at
any time during the Settlement Notice Period, of the method the Company chooses
to settle (x) the Conversion Obligation relating to the principal amount of the
Notes surrendered for conversion if the Company has not made a Principal
Conversion Settlement Election prior to such time, and (y) the Excess Conversion
Obligation. If the Company elects to settle any Conversion Obligations arising
after the Final Notice Date in a combination of cash (including pursuant to a
Principal Conversion Settlement Election) and Common Stock, the Company shall
specify the percentage of the principal amount of the Notes surrendered for
conversion and the Excess Conversion Obligation relating to the Notes
surrendered for conversion that it will pay in cash. The remainder of any
Conversion Obligation arising after the Final Notice Date shall be settled in
shares of Common Stock (except that cash will be paid in lieu of issuing any
fractional shares). If the Company fails to give notice during the Settlement
Notice Period as provided in this Section 12.12(b), then the Company shall be
obligated to settle the entire Conversion Obligation (or if the Company has
delivered a Principal Conversion Settlement Election, the entire Excess
Conversion Obligation) by delivering shares of Common Stock (plus cash paid in
lieu of issuing any fractional shares). The Company shall settle all of its
Conversion Obligations arising after

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<PAGE>

the Final Notice Date in the same manner. All Conversion Notices received after
the Final Notice Date shall be irrevocable.

            Settlement of Conversion Obligations arising after the Final Notice
Date in Common Stock only shall be made in accordance with Section 12.2(a).
Settlement of Conversion Obligations arising after the Final Notice Date to be
made in cash or in a combination of cash and Common Stock shall be made on the
third Trading Day following the final Trading Day of the Cash Settlement
Averaging Period described in the following sentence. The settlement amount of
Common Stock, cash or combination of cash and Common Stock in satisfaction of
Conversion Obligations arising after the Final Notice Date shall be computed in
the same manner as set forth in Section 12.12(a), except that the "Cash
Settlement Averaging Period" shall be the 20 Trading Day period beginning on the
date that is the 23rd Trading Day prior to the Stated Maturity.

            (d) If any Trading Day during a Cash Settlement Averaging Period is
not an Undisrupted Trading Day, then determination of the price for that day
will be delayed until the next Undisrupted Trading Day on which a pricing is not
otherwise observed and such day will not count as one of the 20 Trading Days
that constitute the Cash Settlement Averaging Period. If this results in a price
being observed later than the eighth Trading Day after the last of the original
20 Trading Days in the Cash Settlement Averaging Period, then the Company's
Board of Directors will determine all prices for all delayed and undetermined
prices on that eighth Trading Day based on its good faith estimate of the value
of the Common Stock on that date. In the event that any Trading Day during the
Cash Settlement Averaging Period beginning on the date that is the 23rd Trading
Day prior to the Stated Maturity is not an Undisrupted Trading Day, settlement
will occur after the Stated Maturity.

      Section 12.13. Conversion After a Public Acquirer Change of Control.

            (a) In the event of a Public Acquirer Change of Control, the Company
may, in lieu of issuing the Additional Shares pursuant to Section 12.2(e), elect
to adjust the Conversion Rate and the related Conversion Obligation such that
from and after the Effective Date of such Public Acquirer Change of Control,
Holders of the Notes will be entitled to convert their Notes, in accordance with
Section 12.2 hereof, into a number of shares of Public Acquirer Common Stock by
adjusting the Conversion Rate in effect immediately before the Public Acquirer
Change of Control by multiplying it by a fraction:

            (1) the numerator of which will be (A) in the case of a share
      exchange, consolidation, merger or binding share exchange, pursuant to
      which the Common Stock is converted into cash, securities or other
      property, the value of all cash and any other consideration (as determined
      by the Board of Directors) paid or payable per share of Common Stock or
      (B) in the case of any other Public Acquirer Change of Control, the
      average of the Closing Sale Price of the Common Stock for the five
      consecutive Trading Days prior to but excluding the Effective Date of such
      Public Acquirer Change of Control, and

            (2) the denominator of which will be the average of the Closing Sale
      Prices of the Public Acquirer Common Stock for the five consecutive
      Trading Days commencing

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<PAGE>

      on the Trading Day next succeeding the effective date of such Public
      Acquirer Change of Control.

            (b) (b) The Company will notify Holders of its election by providing
notice as set forth in Section 12.5(b).

                                  ARTICLE XIII

                                  SUBORDINATION

      Section 13.1. Agreement to Subordinate.

            The Company agrees, and each holder of Notes by accepting a Note
agrees, that the Indebtedness evidenced by the Note is subordinated in right of
payment, to the extent and in the manner provided in this ARTICLE XIII, to the
prior payment in full in cash or other consideration satisfactory to holders of
all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.

      Section 13.2. Liquidation, Dissolution, Bankruptcy.

      Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:

            (i) holders of Senior Debt shall be entitled to receive payment in
      full of all obligations due in respect of such Senior Debt (including
      interest after the commencement of any such proceeding at the rate
      specified in the applicable Senior Debt, whether or not a claim for such
      interest would be allowed) in cash or other consideration satisfactory to
      the holders of the Senior Debt before holders of Notes shall be entitled
      to receive any payment with respect to the Notes; and

            (ii) until all Senior Debt is paid in full in cash or other
      consideration satisfactory to the holders of the Senior Debt, any
      distribution to which holders of Notes would be entitled but for this
      ARTICLE XIII shall be made to holders of Senior Debt, as their interests
      may appear.

      Section 13.3. Default on Senior Debt and/or Designated Senior Debt.

            (a) In the event of any default in payment of the principal of or
premium, if any, or interest on, or any other payment obligation under any
Senior Debt beyond any applicable grace period with respect thereto (a "PAYMENT
DEFAULT"), then, until all such payments due in respect of such Senior Debt have
been paid in full in cash or other consideration satisfactory to holders of
Senior Debt or such default shall have been cured or waived, no payment shall be
made by the Company with respect to the principal of, or interest (including
Additional Interest,

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<PAGE>

if any) on the Notes or to acquire any of the Notes (including any purchase
pursuant to the purchase right of a Holder upon a Fundamental Change).

            (b) In addition, if the Trustee shall receive written notice from
one or more holders of Designated Senior Debt or one or more representatives of
such holder or holders that there has occurred and is continuing under such
Designated Senior Debt, or any agreement pursuant to which such Designated
Senior Debt is issued, any default (other than a Payment Default), which default
shall not have been cured or waived, giving the holders of such Designated
Senior Debt the right to declare such Designated Senior Debt immediately due and
payable (a "PAYMENT BLOCKAGE NOTICE"), then, anything contained in this
Indenture to the contrary notwithstanding, no payment on account of the
principal of or interest (including Additional Interest, if any) on the Notes,
and no repurchase or other acquisition of the Notes, shall be made by or on
behalf of the Company during the period (the "PAYMENT BLOCKAGE PERIOD")
commencing on the date of receipt of the Payment Blockage Notice and ending on
the earlier of 179 calendar days thereafter or the date on which such
non-Payment Default is cured or waived.

            Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in Section 13.1 and
the first sentence of this Section 13.3), unless the holder(s) of such
Designated Senior Debt or the representative(s) of such holder(s) shall have
accelerated the maturity of such Designated Senior Debt, the Company may resume
payments on the Notes after the end of such Payment Blockage Period. No new
Payment Blockage Period may be commenced unless 360 calendar days have elapsed
since the effectiveness of the prior Payment Blockage Notice. No default under
Designated Senior Debt that is not a Payment Default that existed or was
continuing on the date of delivery of any Payment Blockage Notice delivered to
the Trustee shall be, or be made, the basis of a subsequent Payment Blockage
Notice unless such default has been cured or waived and a period of at least 90
days has elapsed since such cure or waiver.

      Section 13.4. Acceleration of Notes.

            If payment of the Notes is to be accelerated because of an Event of
Default (other than an Event of Default with respect to the Company specified in
Section 8.1(j) or (k)), the Company shall promptly notify holders of Designated
Senior Debt or trustee(s) of such Designated Senior Debt before the
acceleration. In the event of the acceleration of the Notes because of an Event
of Default, the Company may not make any payment or distribution to the Trustee
or any Holder of Notes in respect of obligations with respect to the Notes until
10 days after holders of Designated Senior Debt or trustee(s) of such Designated
Senior Debt receive notice of such acceleration pursuant to the immediately
preceding sentence and thereafter only to the extent such payment or
distribution is not otherwise prohibited by the terms of this Article XIII.

      Section 13.5. When Distribution Must Be Paid Over.

            In the event that the Trustee, any holder of Notes or any other
person receives any payment or distribution of assets of the Company of any kind
with respect to the Notes in contravention of any terms contained in this
Indenture, whether in cash, property or securities,

                                       84
<PAGE>

including, without limitation, by way of set-off or otherwise, then such payment
or distribution shall be held by the recipient in trust for the benefit of
holders of Senior Debt, and shall be immediately paid over and delivered to the
holders of Senior Debt or their representative(s), to the extent necessary to
make payment in full in cash or other consideration satisfactory to such holders
of all Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution or provision therefor, to or for the holders of Senior
Debt; provided, that the foregoing shall apply to the Trustee only if a
Responsible Officer of the Trustee has actual knowledge (as determined in
accordance with Section 13.11) that such payment or distribution is prohibited
by this Indenture.

            With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this ARTICLE XIII, 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 shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of holders of Notes or the
Company or any other person money or assets to which any holders of Senior Debt
shall be entitled by virtue of this ARTICLE XIII, except if such payment or
distribution is made as a result of the willful misconduct or negligence of the
Trustee.

      Section 13.6. Notice by Company.

            The Company shall promptly notify the Trustee of any facts known to
the Company that would cause a payment of any obligations with respect to the
Notes or the purchase of any Notes by the Company to violate this ARTICLE XIII,
but failure to give such notice shall not affect the subordination of the Notes
to the Senior Debt as provided in this ARTICLE XIII.

      Section 13.7. Subrogation.

            After all Senior Debt is paid in full and until the Notes are paid
in full, holders of Notes shall be subrogated (equally and ratably with all
other indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this ARTICLE XIII to holders
of Senior Debt that otherwise would have been made to holders of Notes is not,
as between the Company and holders of Notes, a payment by the Company on the
Notes.

      Section 13.8. Relative Rights.

            This ARTICLE XIII defines the relative rights of holders of Notes
and holders of Senior Debt. Nothing contained in this Indenture shall otherwise:

            (1) impair, as between the Company and holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of or premium, if any, and interest (including Additional Interest, if any) on
the Notes in accordance with their terms;

                                       85
<PAGE>

            (2) affect the relative rights of holders of Notes and creditors
(other than with respect to Senior Debt) of the Company, other than their rights
in relation to holders of Senior Debt; or

            (3) prevent the Trustee or any holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the notice
requirements of Section 8.2 and to the rights of holders and owners of Senior
Debt to receive distributions and payments otherwise payable to holders of
Notes.

            If the Company fails because of this ARTICLE XIII to pay principal
of, premium, if any, or interest (including Additional Interest, if any) on a
Note on the due date, the failure is still a Default or Event of Default.

      Section 13.9. Subordination May Not Be Impaired by Company.

            No right of any holder of Senior Debt to enforce the subordination
of the indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any holder of Notes or by the failure of the
Company or any such holder to comply with this Indenture.

      Section 13.10. Distribution or Notice to Representative.

            Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
representative(s).

            Upon any payment or distribution of assets of the Company referred
to in this ARTICLE XIII, the Trustee and the holders of Notes shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other person making any distribution to the Trustee or to the holders
of Notes 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, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this ARTICLE
XIII.

      Section 13.11. Rights of Trustee and Paying Agent.

            The Company shall give prompt written notice to the Trustee of any
fact known to the Company that would prohibit the making of any payment to or by
the Trustee in respect of the Notes. Notwithstanding the provisions of this
ARTICLE XIII 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 or distribution by the Trustee (other than pursuant to
Section 13.4), and the Trustee may continue to make payments on the Notes,
unless a Responsible Officer shall have received at least two Business Days
prior to the date of such payment or distribution written notice of facts that
would cause such payment or distribution with respect to the Notes to violate
this ARTICLE XIII. Only the Company or the holder or representative of any class
of Senior Debt may give such notice.

                                       86
<PAGE>

            Notwithstanding anything to the contrary contained in this Article
XIII, nothing contained in this ARTICLE XIII shall apply to or impair the claims
of, or payments to, the Trustee under or pursuant to Section 9.7.

            The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

      Section 13.12. Authorization to Effect Subordination.

            Each Holder of a Note by such 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 XIII, and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 8.9 at least 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
Notes.

      Section 13.13. Article Applicable to Paying Agents.

            In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee.

      Section 13.14. Senior Debt Entitled to Rely.

            Each Holder by accepting a Note acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of Senior Debt, whether such Senior Debt was
created or acquired before or after the issuance of the Notes, to acquire and
continue to hold, or to continue to hold, such Senior Debt and such holder of
Senior Debt shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Debt.

      Section 13.15. Permitted Payments.

            Notwithstanding anything to the contrary contained in this ARTICLE
XIII, the Holders of Notes may receive and retain at any time on or prior to the
Stated Maturity (i) securities that are subordinated to at least the same extent
as the Notes to (a) Senior Debt and (b) any securities issued in exchange for
Senior Debt and (ii) payments and other distributions made from any trust
created pursuant to Section 10.2.

      Section 13.16. No Waiver of Subordination Provisions.

            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

                                       87
<PAGE>

act or failure to act on the part of the Company, or by any non-compliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.

            Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Trustee or the holders of the Notes,
without incurring responsibility to the holders of the Notes and without
impairing or releasing the subordination provided in this ARTICLE XIII or the
obligations hereunder of the holders of the Notes to the holders of Senior Debt,
do any one or more of the following, subject to any rights of the Company in
respect thereof: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Debt, or otherwise amend or
supplement in any manner Senior Debt or any instrument evidencing the same or
any agreement under which Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any person liable in any manner for the
collection of Senior Debt; and (iv) exercise or refrain from exercising any
rights against the Company and any other person.

                                   ARTICLE XIV

                                  MISCELLANEOUS

      Section 14.1. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with the duties imposed by Section
318(c) of the TIA, such section of the TIA shall control. If any provision of
this Indenture expressly modifies or excludes any provision of the TIA that may
be so modified or excluded under the TIA, the Indenture provision so modifying
or excluding such provision of the TIA shall be deemed to apply.

      Section 14.2. Notices. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in person (including
by commercial courier services) or mailed by first-class mail, postage prepaid,
addressed as follows or transmitted by facsimile transmission (confirmed by
guaranteed overnight courier) to the following facsimile numbers:

      if to the Company:

      Cray Inc.
      411 First Avenue South, Suite 600
      Seattle, Washington 98104-2860
      Attention:  Chief Financial Officer
      Facsimile No.: (206) 701-2500

      with a copy to:

      Stoel Rives LLP
      600 University Street
      Suite 3600
      Seattle, Washington  98101

                                       88
<PAGE>

      Attention:  L. John Stevenson, Jr.
      Facsimile No.: (206) 386-7500

      if to the Trustee:

      The Bank of New York Trust Company, N.A.
      700 South Flower Street, Suite 500
      Los Angeles, California  90017
      Attention:  Corporate Trust Administration
      Facsimile No.: (213) 630-6298

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

            Any notice or communication given to a Holder shall be mailed to the
Holder, by first-class mail, postage prepaid, at the Holder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.

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

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

            Notice to the Trustee shall be effective only upon receipt.

      Section 14.3. Communication by Holders with Other Holders.

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

      Section 14.4. 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 14.5. Statements Required in Certificate or Opinion.

                                       89
<PAGE>

            Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:

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

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

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

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

            In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.

      Section 14.6. Separability Clause.

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

      Section 14.7. Rules by Trustee, Paying Agent, Conversion Agent, Registrar.

            The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar, the Conversion Agent and the Paying Agent may make
reasonable rules for their functions.

      Section 14.8. Legal Holidays.

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

      Section 14.9. Governing Law; Submission to Jurisdiction; Service of
Process.

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

            The Company submits to the non-exclusive jurisdiction of the courts
of the State of New York and the courts of the United States of America, in each
case located in the Borough of Manhattan, New York, New York over any suit,
action or proceeding arising under or in connection with this Indenture or the
transactions contemplated hereby or the Notes. The

                                       90
<PAGE>

Company waives any objection that it may have to the venue of any suit, action
or proceeding arising under or in connection with this Indenture or the
transactions contemplated hereby or the Notes in the courts of the State of New
York or the courts of the United States of America, in each case located in the
Borough of Manhattan, New York, New York, or that such suit, action or
proceeding brought in the courts of the State of New York or the courts of the
United States of America, in each case located in the Borough of Manhattan, New
York, New York, was brought in an inconvenient court and agrees not to plead or
claim the same.

            The Company agrees to irrevocably appoint CT Corporation System or
another similar Person in New York, New York as its authorized agent for service
of process in accordance with the provisions of this paragraph.

      Section 14.10. No Recourse Against Others.

            No recourse under or upon any obligation, covenant or agreement
contained in this Indenture, or in any Note, or because of any indebtedness
evidenced thereby, shall be had against any incorporator, as such, or against
any past, present or future stockholder, officer or director, as such, of the
Company or of any successor, either directly or through the Company or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Notes by the Holders and as part of the consideration for the
issue of the Notes.

      Section 14.11. Successors.

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

      Section 14.12. Multiple Originals.

            The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. One signed copy is enough to prove this Indenture.

                            (Signature page follows)

                                       91
<PAGE>

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

                                          CRAY INC., as Issuer

                                          By: /s/ Kenneth W. Johnson
                                              ---------------------------------
                                          Name: Kenneth W. Johnson
                                          Title: Senior Vice President, General
                                          Counsel, Chief Financial Officer and
                                          Corporate Secretary

                                          THE BANK OF NEW YORK TRUST COMPANY,
                                          N.A., as Trustee

                                          By: /s/ Sandee Parks
                                              ---------------------------------
                                          Name: Sandee Parks
                                          Title: Vice President

                          SIGNATUTRE PAGE TO INDENTURE

<PAGE>

                                    EXHIBIT A

                             [FORM OF FACE OF NOTE]

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

            [THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT OF 1933") OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER:

            (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS
      DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933 OR (B) IT IS AN
      INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3)
      or (7) UNDER THE SECURITIES ACT OF 1933 (AN "INSTITUTIONAL ACCREDITED
      INVESTOR") THAT IS PURCHASING AT LEAST $100,000 IN AGGREGATE PRINCIPAL
      AMOUNT OF THE SECURITY EVIDENCED HEREBY;

            (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
      SECURITY EVIDENCED HEREBY OR THE SHARES OF COMMON STOCK ISSUABLE UPON
      CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE

------------------------
(1) This legend should be included only if the Note is a Global Security.

                                      A-1
<PAGE>

      COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER
      AS DEFINED IN, AND IN COMPLIANCE WITH, RULE 144A UNDER THE SECURITIES ACT
      OF 1933, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
      144 UNDER THE SECURITIES ACT OF 1933 (IF AVAILABLE), (D) PURSUANT TO AN
      EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933
      TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
      FURNISHES TO The Bank of New York Trust Company, N.A., AS TRUSTEE (OR ANY
      SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS AND OPINION OF
      COUNSEL REQUIRED BY THE COMPANY OR THE TRUSTEE OR (E) PURSUANT TO A
      REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
      SECURITIES ACT OF 1933 AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
      SUCH TRANSFER; AND

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

            [THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.](2)

------------------------
(2) This legend should be included only if the Note is a Transfer Restricted
Security.

                                      A-2
<PAGE>

                                    CRAY INC.

               3.0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2024

                                                                     $__________

No. ___                                                       CUSIP: 225223 AA 4

      CRAY INC., a Washington corporation (the "COMPANY" ), which term shall
include any successor Person under the Indenture referred to on the reverse
hereof), for value received, promises to pay to _____________________, or
registered assigns, on December 1, 2024, the principal amount of
________________ Dollars[, or such lesser or greater principal amount at Stated
Maturity as is indicated in the records of the Trustee and the Depositary in
accordance with the Indenture].(3)

      In addition, for value received, the Company hereby promises to pay to the
Holder of this Note, or registered assigns, from December 6, 2004, or from the
most recent Interest Payment Date to which interest has been paid or provided
for, to, but not including, December 1, 2024, interest at an annual rate of 3.0%
of the principal amount of this Note. Interest on this Note is payable
semi-annually in arrears on June 1 and December 1 in each year (each, an
"INTEREST PAYMENT DATE"), with the first Interest Payment Date being June 1,
2005. Each payment of cash interest on this Note will include interest accrued
through the day before the applicable Interest Payment Date.

      The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date shall, except as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the regular record date for such interest, which
shall be the May 15 or November 15 (whether or not a Business Day), as the case
may be, next preceding the corresponding Interest Payment Date (a "REGULAR
RECORD DATE"). Any such interest (including Additional Interest, if any) not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may be paid (a) to the Person in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on a special record date for the payment of such defaulted interest to
be fixed by the Trustee (a "SPECIAL RECORD DATE"), notice whereof shall be given
to Holders not less than 10 calendar days prior to such Special Record Date, or
(b) at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture.

      Reference is hereby made to the further provisions of this Note set forth
on the reverse side of this Note, which further provisions shall for all
purposes have the same effect as if set forth at this place.

------------------------
(3) This phrase should be included only if the Note is a Global Security.

                                      A-3
<PAGE>

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

Dated:                                    CRAY INC.

                                          By:  _________________________________
                                          Name: ________________________________
                                          Title: _______________________________

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

Dated:                                    THE BANK OF NEW YORK TRUST COMPANY,
                                          N.A.,
                                          as Trustee

                                          By: __________________________________

                                      A-4
<PAGE>

                            [FORM OF REVERSE OF NOTE]

               3.0% Convertible Senior Subordinated Notes due 2024

            This Note is one of a duly authorized issue of 3.0% Convertible
Senior Subordinated Notes due 2024 (the "NOTES") of CRAY INC., a Washington
corporation (including any successor corporation under the Indenture hereinafter
referred to, the "COMPANY"), issued under an Indenture, dated as of December 6,
2004 (the "INDENTURE"), between the Company and The Bank of New York Trust
Company, N.A., as Trustee (the "TRUSTEE"). The terms of the Note include those
stated in the Indenture, those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended ("TIA"), and those set forth in this
Note. This Note is subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of all such terms. To the extent permitted
by applicable law, in the event of any inconsistency between the terms of this
Note and the terms of the Indenture, the terms of the Indenture shall control.
Capitalized terms used but not defined herein have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

1.    Interest.

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

            If this Note is redeemed pursuant to Section 5 of this Note or the
Holder elects to require the Company to purchase this Note pursuant to Section 6
of this Note, on a date that is after the Regular Record Date and on or before
the corresponding Interest Payment Date, interest (including Additional
Interest, if any) accrued and unpaid hereon to, but excluding, the applicable
Redemption Date, Purchase Date or Fundamental Change Purchase Date shall be paid
to the same Holder to whom the Company pays the principal of this Note. Interest
(including Additional Interest, if any) accrued and unpaid hereon at the Stated
Maturity also shall be paid to the same Holder to whom the Company pays the
principal of this Note.

            Interest (including Additional Interest, if any) on Notes converted
after the close of business on a Regular Record Date but prior to the opening of
business on the corresponding Interest Payment Date shall be paid to the Holder
of the Notes on the Regular Record Date but, upon conversion, the Holder must
pay the Company an amount equal to the interest (including Additional Interest,
if any) which has accrued and shall be paid on such Interest Payment Date. No
such payment need be made with respect to Notes converted after a Regular Record
Date and prior to the corresponding Interest Payment Date after being called for
redemption or upon acceleration.

            All references herein to interest accrued or payable as of any date
shall, without duplication, be deemed to include Additional Interest, if any,
payable pursuant to the Registration Rights Agreement.

2.    Method of Payment.

                                      A-5
<PAGE>

            Payment of the principal of and interest on the Notes shall be in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts. The Holder must
surrender the Notes to the Paying Agent to collect payment of principal. Payment
of interest (including Additional Interest, if any) on Certificated Securities
in the aggregate principal amount of $5,000,000 or less shall be made by check
mailed to the address of the Person entitled thereto as such address appears in
the Register, and payment of interest (including Additional Interest, if any) on
Certificated Securities in aggregate principal amount in excess of $5,000,000
shall be made by wire transfer in immediately available funds if requested in
writing by the Holder, otherwise by check mailed to the address of the Holder.
Notwithstanding the foregoing, so long as the Notes are registered in the name
of a Depositary or its nominee, all payments with respect to the Notes shall be
made by wire transfer of immediately available funds to the account of the
Depositary or its nominee. At the Stated Maturity, interest (including
Additional Interest, if any) on Certificated Securities will be payable at the
office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent
described in the Indenture.

3.    Paying Agent, Registrar, Conversion Agent.

            Initially, The Bank of New York Trust Company, N.A., shall act as
Paying Agent, Registrar and Conversion Agent. The Company may appoint and change
any Paying Agent, Registrar and Conversion Agent without notice, other than
notice to the Trustee; provided that the Company shall at all times maintain a
Registrar, Paying Agent, Conversion Agent and an office or agency where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served in the Borough of Manhattan, New York City, which shall initially
be an office or agency of the Trustee.

4.    Indenture.

            The Notes are unsecured senior subordinated obligations of the
Company limited to up to $65,000,000 (or up to $80,000,000 if the Initial
Purchaser's option to purchase additional Notes set forth in the Purchase
Agreement is exercised in full) aggregate principal amount. The Indenture does
not limit other indebtedness of the Company, secured or unsecured.

5.    Redemption of the Notes by the Company.

            Subject to the terms and conditions of the Indenture, the Company
may, at its option, redeem for cash all or a portion of the Notes at any time on
or after December 1, 2009 at a Redemption Price equal to 100% of the principal
amount of the Notes to be redeemed plus accrued and unpaid interest (including
Additional Interest, if any) to, but not including, the Redemption Date.
Additionally, in circumstances described in the Indenture, the Company may, at
its option, redeem for cash all or a portion of the Notes at any time on or
after December 1, 2007 and before December 1, 2009 at a redemption price equal
to 100% of the principal amount of the Notes to be redeemed, plus accrued and
unpaid interest (including Additional Interest, if any) to, but not including,
the Redemption Date, plus a make whole premium as described in the Indenture.

                                      A-6
<PAGE>

            At least 30 calendar days but not more than 60 calendar days before
a Redemption Date, the Company shall mail a notice of redemption by first-class
mail, postage prepaid, to each Holder of Notes to be redeemed. Once notice of
redemption is given, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price, except for Notes which are
converted in accordance with the terms of this Indenture. Upon surrender to the
Paying Agent, such Notes shall be paid at the Redemption Price. If the Paying
Agent holds, in accordance with the terms hereof, at 10:00 a.m., New York City
time, on the applicable Redemption Date, cash sufficient to pay the Redemption
Price of any Notes for which notice of redemption is given, then, on such
Redemption Date, such Notes shall cease to be outstanding and interest
(including Additional Interest, if any) on such Notes shall cease to accrue,
whether or not such Notes are delivered to the Paying Agent, and the rights of
the Holders in respect thereof shall terminate (other than the right to receive
the Redemption Price upon delivery of such Notes).

6.    Purchase by the Company at the Option of the Holder on Specific Dates;
Purchase at the Option of the Holder Upon a Fundamental Change.

            Each Holder shall have the right, at the Holder's option, but
subject to the provisions of the Indenture, to require the Company to purchase
all of such Holder's Notes not theretofore called for redemption, or any portion
of the principal amount thereof that is equal to $1,000 or an integral multiple
thereof, on each of December 1, 2009, December 1, 2014 and December 1, 2019. The
Company shall be required to purchase such Notes at a purchase price in cash
equal to 100% of the principal amount of the Notes plus accrued and unpaid
interest (including Additional Interest, if any) to, but not including, the
Purchase Date. To exercise such right, a Holder shall deliver a Purchase Notice
to the Paying Agent at any time from the opening of business on the date that is
22 Business Days prior to the relevant Purchase Date until the close of business
on the second Business Day prior to such Purchase Date.

            In the event that a Fundamental Change shall occur at any time prior
to the Stated Maturity, each Holder shall have the right, at the Holder's
option, but subject to the provisions of the Indenture, to require the Company
to purchase all of such Holder's Notes not theretofore called for redemption, or
any portion of the principal amount thereof that is equal to $1,000 or an
integral multiple thereof. The Company shall be required to purchase such Notes
at a purchase price in cash equal to 100% of the principal amount plus any
accrued and unpaid interest (including Additional Interest, if any) to, but
excluding, the Fundamental Change Purchase Date. To exercise such right, a
Holder shall deliver a Fundamental Change Purchase Notice to the Paying Agent at
any time on or before the 20th Business Day after the date of the Company's
notice of the Fundamental Change (subject to extension to comply with applicable
law).

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

            If the Paying Agent holds, in accordance with the terms hereof, at
10:00 a.m., New York City time, on the applicable Purchase Date or Fundamental
Change Purchase Date, cash sufficient to irrevocably pay the Purchase Price or
Fundamental Change Purchase Price, as the case may be, of any Notes for which a
Purchase Price or Fundamental Change Purchase

                                      A-7
<PAGE>

Notice, as the case may be, has been tendered and not withdrawn pursuant to the
Indenture, then, on such Purchase Date or Fundamental Change Purchase Date, as
the case may be, such Notes shall cease to be outstanding and interest
(including Additional Interest, if any) on such Notes shall cease to accrue,
whether or not such Notes are delivered to the Paying Agent, and the rights of
the Holders in respect thereof shall terminate (other than the right to receive
the Purchase Price or Fundamental Change Purchase Price, as the case may be,
upon delivery of such Notes).

7.    Conversion.

            Subject to and in compliance with the provisions of the Indenture
(including, without limitation, the conditions to conversion of this Note set
forth in Section 12.1 thereof), a Holder is entitled, at such Holder's option,
to convert the Holder's Note (or any portion of the principal amount thereof
that is $1,000 or an integral multiple thereof), into fully paid and
non-assessable shares of Common Stock at the Conversion Rate in effect on the
date of conversion. The number of shares of Common Stock issuable upon
conversion of each $1,000 of principal amount of Notes is initially 207.2002
shares of Common Stock, and is subject to adjustment in certain events as set
forth in the Indenture.

            Upon conversion, the Company shall have the right to deliver, in
lieu of shares of Common Stock, cash or a combination of cash and shares of
Common Stock as provided in the Indenture. The Company, or the Conversion Agent
on the Company's behalf, shall notify Holders of any event triggering the right
to convert the Notes as specified in the Indenture in accordance with the
Indenture.

            With respect to any conversion of a Note during a Registration
Default Period following satisfaction of any of the conditions to conversion
described in the Indenture (and during the prescribed time periods in respect
thereof), a Holder shall be entitled, subject to the Indenture, to 103% of the
number of shares of Common Stock, if any, that the Holder would have otherwise
been entitled to upon conversion.

            A Note in respect of which a Holder has delivered a Purchase Notice
or Fundamental Change Purchase Notice, as the case may be, exercising the right
of such Holder to require the Company to repurchase such Note may be converted
only if such Purchase Notice or Fundamental Change Purchase Notice is withdrawn
in accordance with the terms of the Indenture.

            Except as described in the Indenture, the Company will not make any
payment in cash or Common Stock or other adjustment for accrued and unpaid
interest (including Additional Interest, if any) on any Notes when they are
converted. The Company's delivery to the Holder of the full number of shares of
Common Stock into which the Note is convertible (or, at the Company's option,
cash, or a combination of cash and Common Stock, in lieu thereof as provided in
the Indenture), together with any cash payment for such Holder's fractional
shares, shall be deemed to satisfy the Company's obligation to pay the principal
amount of the Note and to satisfy its obligation to pay accrued and unpaid
interest (including Additional Interest, if any) through the conversion date. As
a result, accrued interest (including Additional Interest, if any) are deemed
paid in full rather than cancelled, extinguished or forfeited. Notwithstanding
the foregoing, accrued interest (including Additional Interest, if any) will be
payable upon any

                                      A-8

<PAGE>

conversion of Notes made concurrently with or after acceleration of the Notes
following an Event of Default.

            Before any Holder shall be entitled to convert any Notes into Common
Stock, such Holder shall, in the case of Global Securities, comply with the
Applicable Procedures of the Depositary in effect at that time, and in the case
of Certificated Securities, surrender such Notes, duly endorsed to the Company
or in blank, at the office of the Conversion Agent, and shall give written
notice to the Company at said office or place in the form of the Conversion
Notice attached to the Note that such Holder elects to convert the same and
shall state in writing therein the principal amount of Notes to be converted (in
whole or in part so long as the principal amount to be converted is in multiples
of $1,000) and the name or names (with addresses) in which such Holder wishes
the certificate or certificates for Common Stock to be issued. Before any such
conversion, a Holder also shall pay all funds required, if any, relating to
interest (including Additional Interest, if any) on the Notes, as provided in
the Indenture, and all taxes or duties, if any, as provided in the Indenture.

            If the Company (i) reclassifies the Common Stock, (ii) is a party to
a consolidation, merger or binding share exchange or (iii) conveys, transfers or
leases all or substantially all of its properties and assets to any Person, the
right to convert a Note into shares of Common Stock may be changed into a right
to convert it into securities, cash or other assets of the Company or such other
Person, in each case in accordance with the Indenture.

            If and only to the extent a holder elects to convert Notes in
connection with a Fundamental Change to the extent set forth in the Indenture
that occurs on or prior to December 1, 2009 pursuant to which 10% or more of the
consideration for the Common Stock (other than cash payments for fractional
shares and cash payments made in respect of dissenters' appraisal rights) in
such Fundamental Change transaction consists of cash or securities (or other
property) that are not traded or scheduled to be traded immediately following
such transaction on a U.S. national securities exchange or the Nasdaq National
Market or the Nasdaq SmallCap Market, such holder will be entitled to receive,
in addition to a number of shares of Common Stock equal to the Conversion Rate
per $1,000 principal amount of Notes, an additional number of shares of Common
Stock as described in the Indenture.

8.    Denominations; Transfer; Exchange.

            The Notes shall be issued in fully registered form, without coupons,
in denominations of $1,000 of the principal amount and integral multiples
thereof. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. Neither the Company, the
Registrar nor the Trustee shall be required to exchange or register a transfer
of (i) any Notes selected for redemption (except, in the case of Notes to be
redeemed in part, the portion thereof not to be redeemed), or (ii) any Notes in
respect of which a Purchase Notice or a Fundamental Change Purchase Notice has
been given and not withdrawn by the Holder thereof in accordance with the terms
of this Indenture (except, in the case of Notes to be repurchased in part, the
portion thereof not to be repurchased), or (iii) any Notes surrendered for
conversion (except, in the case of Notes to be converted in part, the portion
thereof not to be converted).

                                      A-9

<PAGE>

9.    Persons Deemed Owners.

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

10.   Unclaimed Money or Securities.

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

11.   Subordination.

            The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Debt of the Company, as
defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney-in-fact for such purpose.

12.   Amendment; Waiver.

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

            The Company and the Trustee may amend the Indenture or the Notes
without the consent of any Holder to (a) add to the covenants of the Company for
the benefit of the Holders of Notes; (b) surrender any right or power herein
conferred upon the Company; (c) provide for conversion rights of Holders of
Notes if any reclassification or change of the Common Stock or any
consolidation, merger or sale of all or substantially all of the Company's
assets occurs; (d) provide for the assumption of the Company's obligations to
the Holders of Notes in the case of a merger, consolidation, conveyance,
transfer, sale, lease or other disposition pursuant to Article VII of the
Indenture; (e) increase the Conversion Rate; provided, however, that such
increase in the Conversion Rate shall not adversely affect the interests of the
Holders of Notes (after taking into account tax and other consequences of such
increase); (f) require the Company to settle its Conversion Obligation in cash
with respect to the principal amount of Notes surrendered for conversion if a
Principal Conversion Settlement Election has been made; (g) comply with the
requirements of the SEC in order to effect or maintain the qualification of this
Indenture under the TIA; (h) make any changes or modifications necessary in
connection with the registration of the Notes under the Securities Act as
contemplated in the Registration Rights Agreement;

                                      A-10

<PAGE>

provided, however, that such action pursuant to this clause (h) does not, in the
good faith opinion of the Board of Directors (as evidenced by a Board
Resolution), adversely affect the interests of the Holders of Notes in any
material respect; (i) to evidence and provide the acceptance of the appointment
of a successor trustee hereunder; (j) add guarantees with respect to the Notes
or secure the Notes; (k) cure any ambiguity, correct or supplement any provision
in the Indenture which may be inconsistent with any other provision therein or
which is otherwise defective, or to make any other provisions with respect to
matters or questions arising under the Indenture which the Company may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Indenture; provided, however, that such action pursuant to this clause
(k) does not, in the good faith opinion of the Board of Directors (as evidenced
by a Board Resolution), adversely affect the interests of the Holders of Notes
in any material respect; (l) to evidence the succession of another Person to the
Company or any other obligor upon the Notes, and the assumption by any such
successor of the covenants of the Company or such obligor herein and in the
Notes, in each case in compliance with the provisions of this Indenture; or (m)
add or modify any other provisions herein with respect to matters or questions
arising hereunder which the Company and the Trustee may deem necessary or
desirable and which shall not adversely affect the interests of the Holders of
Notes.

13.   Defaults and Remedies.

            If any Event of Default, other than as a result of certain events of
bankruptcy, insolvency or reorganization of the Company as specified in the
Indenture, occurs and is continuing, the principal amount of all the Notes may
be declared due and payable in the manner and with the effect provided in the
Indenture. If an Event of Default occurs as a result of certain events of
bankruptcy, insolvency or reorganization of the Company as provided in the
Indenture, the principal amount of all the Notes shall become due and payable
immediately without any declaration or other act on the part of the Trustee or
any Holder, all as and to the extent provided in the Indenture.

14.   Trustee Dealings with the Company.

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

15.   Calculations in Respect of Notes.

            The Company or its agents shall be responsible for making all
calculations called for under ARTICLE XII of the Indenture, including, but not
limited to, determination of the Closing Sale Price of Applicable Stock, the
Note Price, the number of shares of Common Stock or other Applicable Stock
and/or the amount of cash issuable or payable upon conversion and the amounts of
interest (including Additional Interest, if any) on the Notes. Any calculations
made in good faith and without manifest error shall be final and binding on
Holders of the Notes. The Company or its agents shall be required to deliver to
the Trustee a schedule of its calculations

                                      A-11

<PAGE>

and the Trustee shall be entitled to conclusively rely upon the accuracy of such
calculations without independent verification.

16.   No Recourse Against Others.

            No recourse under or upon any obligation, covenant or agreement
contained in this Indenture, or in any Note, or because of any indebtedness
evidenced thereby, shall be had against any incorporator, as such, or against
any past, present or future stockholder, officer or director, as such, of the
Company or of any successor, either directly or through the Company or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Notes by the Holders and as part of the consideration for the
issue of the Notes.

17.   Authentication.

            This Note shall not be valid or obligatory for any purpose until an
authorized signatory of the Trustee (or a duly authorized authentication agent)
signs, manually or by facsimile, the Trustee's Certificate of Authentication on
the other side of this Note.

18.   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
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

19.   INDENTURE TO CONTROL; GOVERNING LAW.

            IN THE CASE OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS NOTE AND
THE INDENTURE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PROVISIONS OF THE
INDENTURE SHALL CONTROL. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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

                  CRAY INC.

                  411 First Avenue South, Suite 600
                  Seattle, Washington 98104-2860
                  Attention:  Chief Financial Officer
                  Facsimile No.: (206) 701-2500

20.   Registration Rights.

                                      A-12

<PAGE>

            The Holders of the Notes may be entitled to the benefits of a
Registration Rights Agreement, dated as of December 6, 2004, between the Company
and Bear, Stearns & Co. Inc., as amended, modified or supplemented in accordance
therewith, including the receipt of Additional Interest upon a Registration
Default (as defined in such agreement).

                                      A-13

<PAGE>

                                 ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

________________________________________________________________________________
                   (Insert assignee's soc. sec. or tax ID no.)

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

and irrevocably appoint _______________________________ agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.

                                   Your Signature(s):

Date:  _______________________     __________________________________________
                                   (Sign exactly as your name(s) appears on the
                                   other side of this Note)

Signature Guaranteed

______________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

By: ________________________________
         Authorized Signatory

                       A-14

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

If you wish to have this Note purchased by the Company pursuant to ARTICLE IV
(Purchase at the Option of Holders on Specific Dates) or ARTICLE V (Purchase at
the Option of Holders Upon a Fundamental Change) of the Indenture, check the
box: ARTICLE IV [ ] ARTICLE V [ ].

If this Note is to be purchased by the Company pursuant to ARTICLE IV of the
Indenture, check the box for the applicable Purchase Date: December 1, 2009 [ ]
December 1, 2014 [ ] December 1, 2019 [ ].

If you wish to have a portion of this Note purchased by the Company pursuant to
ARTICLE IV or ARTICLE V of the Indenture, as applicable, state the amount (in
principal amount): $ ______________.

If certificated, the certificate numbers of the Notes to be delivered for
purchase are:

__________________.

      Any purchase of Notes pursuant hereto shall be pursuant to the terms and
conditions specified in the Indenture.

                                 Your Signature(s):

Date:  _______________________   ____________________________________________
                                 (Sign exactly as your name(s) appears on the
                                 other side of this Note)

Signature Guaranteed

__________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

By: _________________________
Authorized Signatory

                                      A-15

<PAGE>

                                CONVERSION NOTICE

To convert this Note into Common Stock of the Company (or cash or a combination
of Common Stock and cash, if the Company so elects), check the box .

To convert only part of this Note, state the principal amount to be converted
(which must be $1,000 or an integral multiple thereof):_______________________.

If you want the stock certificate made out in another person's name fill in the
form below:

________________________________________________________________________________
               (Insert the other person's soc. sec. or tax ID no.)

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
          (Print or type the other person's name, address and zip code)

                                    Your Signature(s):

Date:  _______________________      __________________________________________
                                    (Sign exactly as your name(s) appears on the
                                    other side of this Note)

Signature Guaranteed

_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

By: ____________________________________
         Authorized Signatory

                                      A-16

<PAGE>

                              TRANSFER CERTIFICATE(4)

             Re: 3.0% Convertible Senior Subordinated Notes due 2024
                   (the "NOTES") of Cray Inc. (the "COMPANY")

            This certificate relates to $_______ principal amount of Notes owned
in (check applicable box)

            [ ] book-entry [ ] definitive form by ______________ (the
"TRANSFEROR").

            The Transferor has requested a Registrar or the Trustee to exchange
or register the transfer of such Notes.

            In connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.6 and Section 2.12
of the Indenture dated as of December 6, 2004 between the Company and The Bank
of New York Trust Company, N.A., as Trustee (the "INDENTURE"), and the transfer
of such Note is being made pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "SECURITIES ACT") (check applicable
box) or the transfer or exchange, as the case may be, of such Note does not
require registration under the Securities Act because (check applicable box):

            [ ]   Such Note is being acquired for the Transferor's own account,
                  without transfer; or

            [ ]   Such Note is being transferred to the Company or a Subsidiary;
                  or

            [ ]   Such Note is being transferred to a person that the Transferor
                  reasonably believes is a "qualified institutional buyer," as
                  defined in, and in compliance with, Rule 144A under the
                  Securities Act; or

            [ ]   Such Note is being transferred pursuant to the exemption from
                  the registration requirements of the Securities Act under Rule
                  144 (or any successor thereto) ("RULE 144") under the
                  Securities Act; or

            [ ]   Such Note is being transferred pursuant to an effective
                  registration statement under the Securities Act; or

            [ ]   Such Note is being transferred pursuant to an exemption from
                  the registration requirements of the Securities Act to an
                  institutional investor that is an "accredited investor" (as
                  defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
                  under the Securities Act) that, prior to the transfer,

----------
(4) This certificate should only be included if this Security is a Transfer
Restricted Security.

                                      A-17
<PAGE>

                  furnishes to the Trustee such certifications and opinion of
                  counsel required by the Company or the Trustee.

            The Transferor acknowledges and agrees that, if the transferee will
hold any such Notes in the form of beneficial interests in a global Note that is
a "restricted security" within the meaning of Rule 144 under the Securities Act,
then such transfer can be made only pursuant to Rule 144A under the Securities
Act and such transferee must be a "qualified institutional buyer," as defined in
Rule 144A, or an institutional investor that is an "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act).

                                _______________________________________________
            Date:                         Signature(s) of Transferor

(If the registered owner is a corporation, partnership or fiduciary, the title
of the person signing on behalf of such registered owner must be stated.)

Signature Guaranteed

_____________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

By: _______________________________
         Authorized Signatory

                                      A-18

<PAGE>

                                    EXHIBIT B

                     [FORM OF CERTIFICATE TO BE DELIVERED BY
                     TRANSFEREE IN CONNECTION WITH TRANSFERS
                     TO INSTITUTIONAL ACCREDITED INVESTORS]

                                     [Date]

The Bank of New York Trust Company, N.A., as Trustee
101 Barclay Street, 7 East
New York, New York 10286
Attention:  Corporate Trust Administration

              Re:  Cray Inc.

Ladies and Gentlemen:

            In connection with the undersigned's proposed purchase of
$____________ aggregate principal amount of 3.0% Convertible Senior Subordinated
Notes due 2024 (the "NOTES") of Cray Inc. (the "COMPANY") or _____________
shares of Common Stock of the Company issued upon conversion of the Notes (the
"COMMON STOCK," and together with the Notes, the "SECURITIES"), the undersigned
confirms, represents and warrants that:

                  (1) The undersigned is an institutional "accredited investor"
            within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
            Securities Act of 1933, as amended (the "SECURITIES ACT") (an
            "INSTITUTIONAL ACCREDITED INVESTOR").

                  (2) (A) Any purchase of the Securities by the undersigned will
            be for the undersigned's own account or for the account of one or
            more other Institutional Accredited Investors or as fiduciary for
            the account of one or more trusts, each of which is an "accredited
            investor" within the meaning of Rule 501(a)(7) under the Securities
            Act and for each of which the undersigned exercises sole investment
            discretion or (B) the undersigned is a "bank" within the meaning of
            Section 3(a)(2) of the Securities Act or a "savings and loan
            association" or other institution described in Section 3(a)(5)(A) of
            the Securities Act that is acquiring the Securities as fiduciary for
            the account of one or more institutions for which the undersigned
            exercises sole investment discretion.

                  (3) The undersigned has such knowledge and experience in
            financial and business matters that the undersigned is capable of
            evaluating the merits and risks of its investment in the Securities,
            and the undersigned and any accounts for which it is acting is each
            able to bear the economic risk of its or their investment.

                  (4) The undersigned has been given an opportunity to ask
            questions and receive answers concerning the terms and conditions of
            the Securities and to obtain any additional information which the
            Company possesses or can acquire without reasonable effort or
            expense that is necessary to verify the accuracy of the information
            furnished.

                                      B-1

<PAGE>

                  (5) The undersigned is not acquiring the Securities with a
            view to distribution thereof or with any present intention of
            offering or selling any Securities, except as permitted below;
            provided that the disposition of the undersigned's property and the
            property of any accounts for which the undersigned is acting as
            fiduciary will remain at all times within the undersigned's control.

                  (6) The undersigned understands that the Securities have not
            been registered under the Securities Act or any applicable state
            securities laws.

                  (7) The undersigned agrees, on its own behalf and on behalf of
            each account for which the undersigned acquires any Securities, that
            if in the future the undersigned decides to resell or otherwise
            transfer such Securities within two years after the original
            issuance of the Notes, such Securities may be resold or otherwise
            transferred only:

                  (A) to the Company or any subsidiary thereof;

                  (B) with respect to Notes only, to a person which is a
            "qualified institutional buyer" (as defined in Rule 144A under the
            Securities Act) and otherwise in compliance with Rule 144A under the
            Securities Act;

                  (C) pursuant to the exemption from registration provided by
            Rule 144 under the Securities Act (if available);

                  (D) pursuant to an exemption from the registration
            requirements under the Securities Act to a person whom the purchaser
            reasonably believes is an Institutional Accredited Investor that
            prior to such transfer, furnishes to you (and the Trustee or the
            Transfer Agent, as the case may be) a signed letter substantially in
            the form of this letter, a transfer certificate substantially in the
            form provided in the Indenture and an opinion of counsel; or

                  (E) pursuant to a registration statement which has been
            declared effective under the Securities Act and continues to be
            effective at the time of such transfer.

The undersigned further agrees to provide to any person purchasing any of the
Securities from us a written notice advising such purchaser that resales of the
Securities are restricted as stated herein.

                  (8) The undersigned understands that, on any proposed resale
            of any Securities, the undersigned shall be required to furnish to
            the Trustee or the Transfer Agent, as the case may be, and the
            Company such certifications, legal opinions and other information as
            you and the Company may reasonably require to confirm that the
            proposed sale complies with the foregoing restrictions. The
            undersigned further understands that the Securities purchased by the
            undersigned will bear a legend to the foregoing effect.

                                      B-2

<PAGE>

            Each of the Company, the Trustee or the Transfer Agent, as the case
may be, and the initial purchaser of the Securities is entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.

                                Very truly yours,

                                By: __________________________________________
                                    Name:
                                    Title:
                                    Address:

                                      B-3

<PAGE>

                                    EXHIBIT C

                         [FORM OF RESTRICTIVE LEGEND FOR
                     COMMON STOCK ISSUED UPON CONVERSION](5)

            THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT OF 1933"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER:

                  (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
      BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933 OR (B) IT
      IS AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED INVESTOR" AS DEFINED
      IN RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT (AN
      "INSTITUTIONAL ACCREDITED INVESTOR");

                  (2) AGREES THAT IT SHALL NOT, WITHIN TWO YEARS AFTER THE
      ORIGINAL ISSUANCE OF THE SECURITY UPON THE CONVERSION OF WHICH THE SHARES
      OF COMMON STOCK EVIDENCED HEREBY WERE ISSUED, RESELL OR OTHERWISE TRANSFER
      THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO CRAY INC. OR ANY SUBSIDIARY
      THEREOF, (B) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
      OF THE SECURITIES ACT OF 1933 PROVIDED BY RULE 144 UNDER THE SECURITIES
      ACT (IF AVAILABLE), (C) TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO A
      QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN, AND IN COMPLIANCE WITH, RULE
      144A UNDER THE SECURITIES ACT OF 1933, (D) PURSUANT TO AN EXEMPTION FROM
      THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 (IF AVAILABLE)
      TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT PRIOR TO SUCH TRANSFER,
      FURNISHES TO MELLON INVESTOR SERVICES LLC, AS TRANSFER AGENT (OR ANY
      SUCCESSOR TRANSFER AGENT, AS APPLICABLE), CERTIFICATIONS AND OPINION OF
      COUNSEL REQUIRED BY THE COMPANY OR TRANSFER AGENT OR (E) PURSUANT TO A
      REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
      SECURITIES ACT OF 1933 AND THAT CONTINUES TO BE EFFECTIVE AT THE TIME OF
      SUCH TRANSFER; AND

                  (3) AGREES THAT IT SHALL DELIVER TO EACH PERSON TO WHOM THE
      SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT
      TO CLAUSE 2(A), 2(B) OR 2(E) ABOVE), A NOTICE SUBSTANTIALLY TO THE EFFECT
      OF THIS LEGEND.

----------
      (1) This legend should be included only if the Security is a Transfer
Restricted Security for purposes of Rule 144A.

                                      C-1

<PAGE>

      THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION
      RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON
      THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
      AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.

                                      C-2

<PAGE>

                                                                      SCHEDULE I

      The following table sets forth the Stock Prices and number of Additional
Shares to be issuable per $1,000 principal amount of Notes:

<TABLE>
<CAPTION>
                                                                           STOCK PRICE
    EFFECTIVE      ----------------------------------------------------------------------------------------------------------
      DATE          $3.51  $4.00  $4.50  $5.00  $5.50  $6.00  $6.50  $7.00  $7.50  $8.00  $8.50  $9.00  $9.50  $10.00  $10.50
----------------   ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------- -------
<S>                <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>     <C>
December 1, 2004   77.700 62.261 50.752 42.113 35.465 30.241 26.061 22.665 19.868 17.537 15.572 13.902 12.468  11.228  10.148
December 1, 2005   77.700 62.660 50.296 41.140 34.195 28.820 24.585 21.198 18.451 16.196 14.324 12.755 11.426  10.291   9.314
December 1, 2006   77.700 61.822 48.355 38.548 31.261 25.753 21.527 18.242 15.655 13.595 11.936 10.585  9.475   8.550   7.774
December 1, 2007   77.700 60.072 45.005 34.174 26.089 19.897 15.229 11.717  9.128  7.709  7.075  6.663  6.310   5.994   5.708
December 1, 2008   77.700 55.575 39.126 27.774 19.804 14.114  9.975  6.951  4.879  3.931  3.536  3.329  3.153   2.995   2.852
December 1, 2009    0.000  0.000  0.000  0.000  0.000  0.000  0.000  0.000  0.000  0.000  0.000  0.000  0.000   0.000   0.000
</TABLE><PAGE>

                                                                    Exhibit 10.1

                                   CRAY INC.

              3.0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2024

                         REGISTRATION RIGHTS AGREEMENT

                                                          December 6, 2004

Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179

Ladies and Gentlemen:

      Cray Inc., a Washington corporation (the "Company"), proposes to issue and
sell to the initial purchaser named in the purchase agreement (the "Initial
Purchaser"), upon the terms set forth in such purchase agreement dated December
1, 2004 (the "Purchase Agreement"), its 3.0% Convertible Senior Subordinated
Notes due 2024 (the "Securities"). As an inducement to the Initial Purchaser to
enter into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Initial Purchaser thereunder, the Company agrees with the
Initial Purchaser for the benefit of Holders (as defined herein) from time to
time of the Registrable Securities (as defined herein) as follows:

      1. Definitions.

      (a) Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement. As used in this Agreement,
the following defined terms shall have the following meanings:

      "Additional Interest" has the meaning assigned thereto in Section 7(a)
hereof.

      "Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such specified person. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

      "Applicable Amount" means, (i) with respect to the Securities, the
principal amount of the Securities and (ii) with respect to shares of Common
Stock issued upon conversion of the Securities pursuant to the Indenture, the
principal amount of Securities that would then be convertible into such number
of shares.

<PAGE>

      "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.

      "Commission" means the United States Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.

      "Common Stock" means the Company's common stock, par value $0.01 per
share.

      "DTC" means The Depository Trust Company.

      "Effectiveness Period" has the meaning assigned thereto in Section 2(b)(i)
hereof.

      "Effective Time" means the time at which the Commission declares any Shelf
Registration Statement effective or at which any Shelf Registration Statement
otherwise becomes effective.

      "Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.

      "Holder" means any person that is the record owner of Registrable
Securities (and includes any person that has a beneficial interest in any
Registrable Security in book-entry form).

      "Indenture" means the Indenture, dated as of December 6, 2004, between the
Company and Trustee, pursuant to which the Securities are to be issued, and as
amended and supplemented from time to time in accordance with its terms.

      "Issue Date" means the first date of original issuance of the Securities.

      "Majority of Holders" means Holders holding over 50% of the aggregate
principal amount of Registrable Securities outstanding; provided, that, for
purpose of this definition, a Holder of shares of Common Stock that constitute
Registrable Securities shall be deemed to hold an aggregate principal amount of
Securities (in addition to the principal amount of Securities held by such
Holder, if any) equal to the product of (x) the number of such shares of Common
Stock that constitute Registrable Securities held by such Holder and (y) the
Conversion Price in effect at the time of such calculation as determined in
accordance with the Indenture.

      "Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Appendix A
hereto.

      "Notice Holder" has the meaning assigned thereto in Section 3(a)(iii)
hereof.

      The term "person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

      "Prospectus" means the prospectus included in any Shelf Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Shelf Registration Statement and by

                                       2
<PAGE>

all other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.

      "Registrable Securities" means all or any portion of the Securities issued
from time to time under the Indenture in registered form and the shares of
Common Stock issuable upon conversion of such Securities until earlier of: (x)
the date on which such security has been registered under the Securities Act and
disposed of pursuant to an effective registration statement, (y) the date that
is two years after the later of (1) the last date of original issuance of the
Securities and (2) the last date that the Company or any of its Affiliates was
the owner of such Securities (or any predecessor thereto), or such shorter
period of time as permitted by Rule 144(k) under the Securities Act or any
successor provisions thereunder or (z) its sale to the public pursuant to Rule
144 under the Securities Act.

      "Registration Default" has the meaning assigned thereto in Section 7(a)
hereof.

      "Registration Default Period" has the meaning assigned thereto in Section
7(a) hereof.

      "Securities Act" means the United States Securities Act of 1933, as
amended.

      "Shelf Registration" means a registration effected pursuant to Section 2
hereof.

      "Shelf Registration Statement" means a "shelf" registration statement
filed under the Securities Act providing for the registration of, and the sale
on a continuous or delayed basis by the Holders of, all of the Registrable
Securities pursuant to Rule 415 under the Securities Act and/or any similar rule
that may be adopted by the Commission, filed by the Company pursuant to the
provisions of Section 2 of this Agreement, including the Prospectus contained
therein, any amendments and supplements to such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement, and any additional
"shelf" registration statements filed under the Securities Act to permit the
registration and sale of Registrable Securities pursuant to Section 3(a)(ii)
hereof.

      "Suspension Period" has the meaning assigned thereto in Section 2(c)
hereof.

      "Trust Indenture Act" means the Trust Indenture Act of 1939, or any
successor thereto, and the rules, regulations and forms promulgated thereunder,
as the same shall be amended from time to time.

      "Trustee" means The Bank of New York Trust Company, N.A., a national
banking association.

      The term "underwriter" means any underwriter, or any person deemed to be
an underwriter pursuant to the Securities Act and Exchange Act and the
respective rules and regulations thereunder, as in effect at any relevant time,
of Registrable Securities in connection with an offering thereof under a Shelf
Registration Statement.

      (b) Wherever there is a reference in this Agreement to a percentage of the
"principal amount" of Registrable Securities or to a percentage of Registrable
Securities, each share of

                                       3
<PAGE>

Common Stock issued upon conversion of the Securities shall represent a
principal amount or percentage of Registrable Securities determined based on a
quotient, (i) the numerator of which shall be equal to the aggregate principal
amount of Securities issued, less the aggregate principal amount of Securities
outstanding as of the date of determination, and (ii) the denominator of which
shall be equal to the aggregate number of shares of Common Stock issued upon
conversion of the Securities as of the date of determination.

      2. Shelf Registration.

      (a) The Company shall, no later than 90 calendar days following the Issue
Date, file with the Commission a Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and,
thereafter, shall use its reasonable best efforts to cause such initial Shelf
Registration Statement to be declared effective under the Securities Act no
later than 210 calendar days following the Issue Date; provided, however, that
no Holder shall be entitled to be named as a selling securityholder in any Shelf
Registration Statement as of the date it is declared effective or to use the
Prospectus forming a part thereof for offers and resales of Registrable
Securities unless such Holder is a Notice Holder.

      (b) The Company shall use its reasonable best efforts:

            (i) to keep any Shelf Registration Statement effective, supplemented
      and amended as required by the provisions of Section 3(j) hereof, in order
      to permit the Prospectus forming a part thereof to be usable by Holders
      until the earlier of two years from the last date of original issuance of
      any Registrable Securities or such shorter period ending on the date that
      all Registrable Securities have ceased to be Registrable Securities (such
      period being referred to herein as the "Effectiveness Period"); and

            (ii) after the Effective Time of the initial Shelf Registration
      Statement, (x) as promptly as is practicable after the date a completed
      and signed Notice and Questionnaire is delivered to the Company, and in
      any event within 5 Business Days after such date, or (y) if the Company is
      required by applicable law to file with the Commission a post-effective
      amendment to the Shelf Registration Statement or an additional Shelf
      Registration Statement, as soon as reasonably practicable after the end of
      such fiscal quarter of the Company during which the completed and signed
      Notice and Questionnaire is delivered, and in any event within 10 Business
      Days after such date, take any action reasonably necessary to enable such
      Holder to use the Prospectus forming a part thereof for resales of
      Registrable Securities, including, without limitation, any action
      necessary to identify such Holder as a selling securityholder in a Shelf
      Registration Statement; provided, however, that nothing in this
      subparagraph shall relieve such Holder of the obligation to return a
      completed and signed Notice and Questionnaire to the Company in accordance
      with Section 3(a)(ii) hereof.

The Company shall be deemed not to have used its reasonable best efforts to keep
any Shelf Registration Statement effective during the Effectiveness Period if
the Company voluntarily takes any action that would result in Holders of
Registrable Securities covered thereby not being able to offer and sell any of
such Registrable Securities during that period, unless such action is

                                       4
<PAGE>

(A) required by applicable law and the Company thereafter promptly complies with
the requirements of paragraph 3(j) below or (B) permitted pursuant to Section
2(c) below.

      (c) The Company may suspend the use of any Prospectus for a period not to
exceed 45 days in any 90-day period, and not to exceed an aggregate of 120 days
in any 12-month period, during the period beginning on the last date of original
issuance and ending on the second anniversary of the last issue date of any
Securities (each, a "Suspension Period") if:

            (i) the Prospectus, in the judgment of the Board of Directors of the
      Company, contains an untrue statement of a material fact or omits to state
      a material fact required to be stated therein or necessary to make the
      statements therein (in the light of the circumstances under which they
      were made) not misleading as a result of the happening of any event that
      has occurred or the existence of any state of facts that requires the
      making of any changes in any Shelf Registration Statement or the
      Prospectus; and

            (ii) the Board of Directors of the Company shall have determined in
      good faith (and not for the purpose of avoiding the Company's obligations
      hereunder) that the disclosure of material non-public information,
      including the acquisition or divestiture of assets, a pending material
      business transaction or similar events, would have a material adverse
      effect on the Company and its subsidiaries taken as a whole; provided,
      further, that the Company may extend the Suspension Period from 45
      calendar days to 60 calendar days in connection with an acquisition or
      divestiture of assets, a pending material business transaction or similar
      events, if the disclosure of such material non-public information would
      impede the Company's ability to consummate such transaction; provided,
      however, that prior to suspending such use the Company provides the
      Holders with written notice of such suspension, which notice need not
      specify the nature of the event nor the material non-public information
      giving rise to such suspension.

      3. Registration Procedures. In connection with the Shelf Registration
Statements, the following provisions shall apply:

      (a) (i) Not less than 30 calendar days prior to the intended Effective
      Time of the initial Shelf Registration Statement, the Company shall
      distribute the Notice and Questionnaire to the Holders of Registrable
      Securities. The Company shall take action to name each Holder (that is a
      Notice Holder as of the Effective Time and has returned a completed and
      signed Notice and Questionnaire within 20 calendar days of receipt
      thereof) as a selling securityholder in the initial Shelf Registration
      Statement at the time of its effectiveness so that such Holder is
      permitted to deliver the Prospectus forming a part thereof as of such time
      to purchasers of such Holder's Registrable Securities in accordance with
      applicable law. The Company shall not be required to take any action to
      name any Holder as a selling securityholder in the initial Shelf
      Registration Statement or to enable any Holder to use the Prospectus
      forming a part thereof for resales of Registrable Securities until such
      Holder has returned a completed and signed Notice and Questionnaire to the
      Company.

            (ii) From and after the Effective Time of the initial Shelf
      Registration Statement, the Company shall, upon the request of any Holder
      of Registrable Securities

                                       5
<PAGE>

      that is not then a Notice Holder, promptly send a Notice and Questionnaire
      to such Holder. From and after the Effective Time of the initial Shelf
      Registration Statement, the Company shall use its reasonable best efforts
      to (A) as promptly as is practicable after the date a completed and signed
      Notice and Questionnaire is delivered to the Company, and (x) in any event
      within 5 Business Days after such date, prepare and file with the
      Commission a supplement to the Prospectus or (y) if the Company is
      required by applicable law to file with the Commission a post-effective
      amendment to the Shelf Registration Statement or an additional Shelf
      Registration Statement, as soon as reasonably practicable after the end of
      each fiscal quarter of the Company, and in any event within 10 Business
      Days after such date, and (z) any other document required by applicable
      law, so that the Holder delivering such Notice and Questionnaire is named
      as a selling securityholder in a Shelf Registration Statement and is
      permitted to deliver the Prospectus to purchasers of such Holder's
      Registrable Securities in accordance with applicable law, and (B) if the
      Company shall file a post-effective amendment to the Shelf Registration
      Statement, or an additional Shelf Registration Statement, use its
      reasonable best efforts to cause such post-effective amendment or such
      additional Shelf Registration Statement to become effective under the
      Securities Act as promptly as is practicable, but in any event by the date
      that is 45 calendar days after the date such additional Shelf Registration
      Statement is required to be filed; provided, however, that if a Notice and
      Questionnaire is delivered to the Company during a Suspension Period, the
      Company shall not be obligated to take the actions set forth in this
      clause (ii) until the termination of such Suspension Period.
      Notwithstanding the foregoing, the Company shall not be required to file
      more than one post-effective amendment to the Shelf Registration Statement
      in any one fiscal quarter.

            (iii) The term "Notice Holder" shall mean any Holder of Registrable
      Securities that has returned a completed and signed Notice and
      Questionnaire to the Company in accordance with Section 3(a)(i) or
      3(a)(ii) hereof.

      (b) Before filing any Shelf Registration Statement or Prospectus or any
amendments or supplements (other than supplements solely for the purpose of
naming one or more Notice Holders as selling securityholders) thereto with the
Commission, the Company shall furnish to the Initial Purchaser copies of all
such documents proposed to be filed and use reasonable best efforts to reflect
in each such document when so filed with the Commission such comments as the
Initial Purchaser reasonably shall propose within three (3) Business Days of the
delivery of such copies to the Initial Purchaser.

      (c) The Company shall promptly take such action as may be necessary so
that (i) each of the Shelf Registration Statements and any amendment thereto and
the Prospectus forming a part thereof and any amendment or supplement thereto
(and each report or other document incorporated therein by reference in each
case) complies in all material respects with the Securities Act and the Exchange
Act and the respective rules and regulations thereunder, as in effect at any
relevant time, (ii) each of the Shelf Registration Statements and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) each of the
Prospectus forming a part of any Shelf Registration Statement, and any amendment
or supplement to such Prospectus, in the form delivered to

                                       6
<PAGE>

purchasers of the Registrable Securities during the Effectiveness Period does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

      (d) The Company shall promptly advise each Notice Holder (and in the case
of clause (i) below with a copy to the Initial Purchaser), and shall confirm
such advice in writing if so requested by any such Notice Holder:

            (i) when the initial Shelf Registration Statement has been filed
      with the Commission and when the initial Shelf Registration Statement has
      become effective, in each case making a public announcement thereof by
      release made to Dow Jones & Company, Inc. or Bloomberg Business News or
      other similarly broad public medium that is customary for such releases;

            (ii) when any Prospectus supplement, Shelf Registration Statement or
      post-effective amendment to a Shelf Registration has been filed with the
      Commission and, with respect to a Shelf Registration Statement or any
      post-effective amendment, when the same has been declared effective by the
      Commission;

            (iii) of any request by the Commission for amendments or supplements
      to any Shelf Registration Statement or the Prospectus included therein or
      for additional information;

            (iv) of the issuance by the Commission of any stop order suspending
      the effectiveness of any Shelf Registration Statement or the initiation of
      any proceedings for such purpose;

            (v) of the receipt by the Company of any notification with respect
      to the suspension of the qualification of the securities included in any
      Shelf Registration Statement for sale in any jurisdiction or the
      initiation of any proceeding for such purpose; and

            (vi) of the happening of any event or the existence of any state of
      facts that requires the making of any changes in any Shelf Registration
      Statement or the Prospectus included therein so that, as of such date,
      such Shelf Registration Statement and Prospectus do not contain an untrue
      statement of a material fact and do not omit to state a material fact
      required to be stated therein or necessary to make the statements therein
      (in the case of the Prospectus, in the light of the circumstances under
      which they were made) not misleading (which advice shall be accompanied by
      an instruction to such Holders to suspend the use of the Prospectus until
      the requisite changes have been made, which notice need not specify the
      nature of the event giving rise to such suspension).

      (e) The Company shall use its reasonable best efforts to prevent the
issuance, and if issued to obtain the withdrawal at the earliest possible time,
of any order suspending the effectiveness of any Shelf Registration Statement.

                                       7
<PAGE>

      (f) As promptly as reasonably practicable furnish to the Initial Purchaser
and to each Notice Holder and the Initial Purchaser, upon their request and
without charge, at least one (1) conformed copy of the Registration Statement
and any post-effective amendment thereto, including financial statements but
excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits (unless requested in writing to the
Company by such Notice Holder or the Initial Purchaser, as the case may be).

      (g) The Company shall, during the Effectiveness Period, deliver to each
Notice Holder, without charge, as many copies of each Prospectus in which the
Notice Holder is listed as a selling securityholder included in the applicable
Shelf Registration Statement and any amendment or supplement thereto as such
Notice Holder may reasonably request; and the Company consents (except during a
Suspension Period or during the continuance of any event described in Section
3(d) (iii) through (vi) above) to the use of the Prospectus and any amendment or
supplement thereto by each of the Notice Holders in connection with the offering
and sale of the Registrable Securities covered by the Prospectus and any
amendment or supplement thereto during the Effectiveness Period.

      (h) Prior to any offering of Registrable Securities pursuant to a Shelf
Registration Statement, the Company shall (i) register or qualify or cooperate
with the Notice Holders and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or "blue sky" laws of such jurisdictions within the United
States as any Notice Holder may reasonably request, (ii) keep such registrations
or qualifications in effect and comply with such laws so as to permit the
continuance of offers and sales in such jurisdictions for so long as may be
necessary to enable any Notice Holder or underwriter, if any, to complete its
distribution of Registrable Securities pursuant to such Shelf Registration
Statement, and (iii) take any and all other actions necessary or advisable to
enable the disposition in such jurisdictions of such Registrable Securities;
provided, however, that in no event shall the Company be obligated to (A)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(h) or (B) subject itself to general or unlimited service of process or
to taxation in any such jurisdiction if they are not now so subject.

      (i) Unless any Registrable Securities shall be in book-entry only form,
the Company shall cooperate with the Notice Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Shelf Registration Statement, which certificates, if so
required by any securities market or exchange upon which any Registrable
Securities are quoted or listed, shall be penned, lithographed or engraved, or
produced by any combination of such methods, on steel engraved borders, and
which certificates shall be free of any restrictive legends and in such
permitted denominations and registered in such names as Notice Holders may
request in connection with the sale of Registrable Securities pursuant to such
Shelf Registration Statement.

      (j) Upon the occurrence of any fact or event contemplated by paragraphs
3(d)(iii) through (vi), above, subject to Section 2(c) hereof, the Company shall
promptly, but in any event within 5 Business Days following such occurrence,
prepare and file, a post-effective amendment to any Shelf Registration Statement
(and thereafter use its reasonable best efforts to cause such amendment to be
declared effective) or an amendment or supplement to the related Prospectus

                                       8
<PAGE>

included therein or file any other document with the Commission so that, as
thereafter delivered to purchasers of the Registrable Securities, the Prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the Company
notifies the Notice Holders of the occurrence of any fact or event contemplated
by paragraphs 3(d)(iii) through (vi) above, the Notice Holder shall suspend the
use of the Prospectus until the requisite changes to the Prospectus have been
made.

      (k) Not later than the Effective Time of a Shelf Registration Statement,
the Company shall provide a CUSIP number for the debt securities to be sold
pursuant to a Shelf Registration Statement.

      (l) The Company shall comply with the Securities Act and the Exchange Act
and the respective rules and regulations thereunder, as in effect at any
relevant time, and make generally available to its securityholders earnings
statements (which need not be audited) satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year), or such shorter period as required by the Securities Act and
the Exchange Act and the rules and regulations thereunder, as in effect at any
relevant time, commencing on the first day of the first fiscal quarter of the
Company commencing after (i) the effective date of a Shelf Registration
Statement, (ii) the effective date of each post-effective amendment to such
Shelf Registration Statement, or (iii) the date of each filing by the Company
with the Commission of an Annual Report on Form 10-K that is incorporated by
reference in such Shelf Registration Statement, which statements shall cover
said 12-month periods.

      (m) Not later than the Effective Time of the initial Shelf Registration
Statement, the Company shall cause the Indenture to be qualified under the Trust
Indenture Act; in connection with such qualification, the Company shall
cooperate with the Trustee under the Indenture and the Holders (as defined in
the Indenture) to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the Trust
Indenture Act; and the Company shall execute, and shall use its reasonable best
efforts to cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner.
In the event that any such amendment or modification referred to in this Section
3(m) involves the appointment of a new trustee under the Indenture, the Company
shall appoint a new trustee thereunder pursuant to the applicable provisions of
the Indenture.

      (n) The Company shall enter into such customary agreements (including, in
connection with an underwritten offering as provided in Section 9, an
underwriting agreement) and take all such other actions in connection therewith
(including those actions reasonably requested by the holders of a majority of
the Registrable Securities being sold) in order to expedite or facilitate
disposition of such Registrable Securities, including, without limitation, in
connection with the effectiveness of the initial Shelf Registration Statement,
furnishing to:

            (i) each Holder identified in the Shelf Registration Statement, a
      certificate, dated the date of the Effective Time of the initial Shelf
      Registration Statement, signed by

                                       9
<PAGE>

      (x) the Chief Executive Officer or Executive Vice President and (y) the
      Chief Financial Officer of the Company confirming, as of the date thereof,
      such matters as such Holders may reasonably request in writing; and

            (ii) customary comfort letter(s), dated the date of the Effective
      Time of the initial Shelf Registration Statement, from the Company's
      independent accountants and from any other accountants whose report is
      contained or incorporated by reference in such Shelf Registration
      Statement, in the customary form and covering matters of the type
      customarily covered in comfort letters to underwriters in connection with
      primary underwritten offerings of securities.

      (o) If an underwriting agreement is entered into and the offering is an
underwritten offering, the Company shall:

            (i) upon request, furnish to each underwriter, in such substance and
      scope as they may reasonably request and as are customarily made by
      issuers to underwriters in primary underwritten offerings, upon the date
      of closing of any sale of Registrable Securities in an underwritten
      offering:

                  (A) a certificate, dated the date of such closing, signed by
            (x) the Chief Executive Officer or Executive Vice President and (y)
            the Chief Financial Officer of the Company confirming, as of the
            date thereof, such matters as such parties may reasonably request;

                  (B) opinions, each dated the date of such closing, of counsel
            to the Company covering such matters as are customarily covered in
            legal opinions to underwriters in connection with primary
            underwritten offerings of securities; and

                  (C) customary comfort letter(s), dated the date of such
            closing, from the Company's independent accountants and from any
            other accountants whose report is contained or incorporated by
            reference in the Shelf Registration Statement, in the customary form
            and covering matters of the type customarily covered in comfort
            letters to underwriters in connection with primary underwritten
            offerings of securities;

            (ii) set forth in full in the underwriting agreement, if any,
      customary indemnification provisions and procedures; and

            (iii) deliver such other documents and certificates as may be
      reasonably requested by such parties to evidence compliance with clause
      (i) above and with any customary conditions contained in the underwriting
      agreement or other agreement entered into by the Holders pursuant to this
      Section 3(o).

      (p) The Company shall (i) make reasonably available for inspection by one
or more representatives of the selling Holders, designated in writing by a
Majority of Holders whose Registrable Securities are included in a Shelf
Registration Statement, any underwriter participating in any disposition
pursuant to any Shelf Registration Statement, and any attorney, accountant or
other agent retained by such Notice Holders or any such underwriter all relevant

                                       10
<PAGE>

financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and (ii) cause the Company's officers, directors
and employees to supply all information reasonably requested by such Notice
Holders or any such underwriter, attorney, accountant or agent in connection
with such Shelf Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that such persons shall,
at the Company's request, first agree in writing with the Company that any
information that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information shall be
kept confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless such disclosure is made in
connection with a court proceeding or required by law, or such records,
information or documents become available to the public generally or through a
third party without an accompanying obligation of confidentiality; and provided
further that, if the foregoing inspection and information gathering would
otherwise disrupt the Company's conduct of its business, such inspection and
information gathering shall, to the greatest extent possible, be coordinated on
behalf of the Notice Holders and the other parties entitled thereto by one
counsel designated by such Majority of Holders and on behalf of the Notice
Holders and other parties.

      (q) The Company will use its reasonable best efforts to cause the Common
Stock issuable upon conversion of the Securities to be quoted or listed on the
Nasdaq National Market or other market or stock exchange on which the Common
Stock primarily trades on or prior to the Effective Time of each Shelf
Registration Statement hereunder.

      (r) The Company will cooperate and assist in any filings or by taking any
other actions required to be made or taken with or by National Association of
Securities Dealers, Inc.

      (s) The Company shall use its reasonable best efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by each Shelf Registration Statement contemplated hereby.

      4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance by the Company of its obligations
under Sections 2 and 3 of this Agreement whether or not any of the Shelf
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws to the extent such
filings or compliance are required pursuant to this Agreement (including,
without limitation, reasonable fees and disbursements of the counsel specified
in the next sentence in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the Notice
Holders of a majority of the Registrable Securities being sold pursuant to a
Shelf Registration Statement may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
in a form eligible for deposit with The Depository Trust Company), (iii)
duplication expenses relating to copies of any Shelf Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of
counsel for the Company in connection with the Shelf Registration Statement, and
(v) reasonable fees and disbursements of the Trustee and its counsel and of the
registrar and transfer agent for the Common Stock. In addition, the Company
shall bear or reimburse the Notice Holders for the reasonable fees and
disbursements

                                       11
<PAGE>

of one firm of legal counsel for the Holders, which shall initially be counsel
to the Initial Purchaser, but which may, upon the written consent of the Initial
Purchaser (which shall not be unreasonably withheld), be another nationally
recognized law firm experienced in securities law matters designated by the
Company. In addition, the Company shall pay the internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange on which similar securities of
the Company are then listed and the fees and expenses of any person, including
special experts, retained by the Company.

      5. Indemnification and Contribution.

      (a) Indemnification by the Company. The Company shall indemnify and hold
harmless each Notice Holder, the Initial Purchaser, and each person, if any, who
controls any such Notice Holder or Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, claim, damage, liability or expense whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commence or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as any such loss, claim, damage, liability or
expense (or action in respect thereof) arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact contained in the
Shelf Registration Statement or any amendment thereto or any related preliminary
prospectus or the Prospectus or any amendment thereto of supplement thereof, or
arises out of, or is based upon, the omission or alleged omission to state
therein any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company shall not
be liable to any such indemnified party in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of, or is based upon,
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such indemnified party
specifically for use therein; and provided further, however, that the Company
shall not be liable to any such indemnified party in any such case to the extent
that such loss, claim, damage, liability or expense arises from an offer or sale
by a Notice Holder of Registrable Securities during a Suspension Period, if such
indemnified party is a Notice Holder that received from the Company a notice of
the commencement of such Suspension Period prior to the making of such offer or
sale. The foregoing indemnity agreement is in addition to any liability that the
Company may otherwise have to any indemnified party.

      (b) Indemnification by the Notice Holders. Each Notice Holder, severally
and not jointly, shall indemnify and hold harmless the Company, the Initial
Purchaser, and each person, if any, who controls the Company or the Initial
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any loss, claim, damage, liability or
expense whatsoever as incurred (including but not limited to attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commence or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become

                                       12
<PAGE>

subject under the Securities Act, the Exchange Act or otherwise, insofar as any
such loss, claim, damage, liability or expense (or action in respect thereof)
arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement or
any amendment thereto or any related preliminary prospectus or the Prospectus or
any amendment thereto of supplement thereof, or arises out of, or is based upon,
the omission or alleged omission to state therein any material fact required to
be stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission made therein was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Notice Holder specifically for use therein. In
no event shall the liability of any selling Notice Holder hereunder be greater
in amount than the dollar amount of the proceeds received by such Holder upon
the sale of the Registrable Securities pursuant to the Shelf Registration
Statement giving rise to such indemnification obligation. The foregoing
indemnity agreement is in addition to any liability that any Notice Holder may
otherwise have to the Company, the Initial Purchaser and any such controlling
person.

      (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under this Section 5 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 5, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under this Section 5. If any such claim or action
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate, at its own expense in the defense of such action, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from the indemnified party, to assume the
defense thereof with counsel satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent
jointly the indemnified party and its respective directors, employees, officers
and controlling persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the indemnified party against the
indemnifying party under this Section 5 if (1) employment of such counsel has
been authorized in writing by the indemnifying party, or (2) such indemnifying
party shall not have employed counsel to have charge of the defense of such
proceeding within 30 days of the receipt of notice thereof, or (3) the
indemnifying party does not diligently defend such claim or action after
assumption of the defense or (4) such indemnified party shall have reasonably
concluded that the representation of such indemnified party and those directors,
employees, officers and controlling persons by the same counsel representing the
indemnifying party would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between them
or where there may be one or more defenses available to them that are different
from, additional to or in conflict with those available to the indemnifying
party, and in any such event ((1), (2), (3) or (4)) the fees and expenses of
such separate counsel shall be paid by the indemnifying party as incurred. It is
understood that the indemnifying party shall not be liable for the fees and
expenses of more than one separate firm (in addition to local counsel in each

                                       13
<PAGE>

jurisdiction) for all indemnified parties in connection with any proceeding or
related proceedings. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 5 (whether or not the indemnified party or parties are actual or
potential parties thereto) unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or failure
to act by or on behalf of any indemnified party, and (y) the indemnifying party
confirms in writing its indemnification obligations hereunder with respect to
such settlement, compromise or judgment.

      (d) Contribution. If the indemnification provided for in this Section 5 is
for any reason held to be unavailable or insufficient to hold harmless an
indemnified party under subsections (a) or (b) above, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of the aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, liabilities, claims,
damages and expenses suffered by the Company, any contribution received by the
Company from persons, other than the indemnifying party, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) in (i)
such proportion as is appropriate to reflect the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the registration of the Registrable Securities pursuant to the
Shelf Registration, or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other indemnified
party, as the case may be, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 5(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding any other provision of this Section 5(d), the Holders
of the Registrable Securities shall not be required to contribute any amount in
excess of the amount by which the gross proceeds received

                                       14
<PAGE>

by such Holders from the sale of the Registrable Securities pursuant to the
Shelf Registration Statement exceeds the amount of damages which such Holders
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), (A) each
person, if any, who controls such indemnified party within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such indemnified party and (B) the respective
officers, directors, partners, employees, representatives and agents of any
indemnified party or any controlling person shall have the same rights to
contribution as such indemnified party and (1) each person, if any, who controls
the Company within the meaning of the Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company and (2) the officers, directors, partners, employees, representatives
and agents of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) above. The Holders'
respective obligations to contribute pursuant to this Section 5 are several in
proportion to the respective amount of Registrable Securities they have sold
pursuant to a Registration Statement and not joint. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent, provided that such written consent was not unreasonably
withheld. The remedies provided for in this Section 5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.

      (e) The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchaser, any Holder or any person controlling such Initial
Purchaser or Holder, or by or on behalf of the Company, its officers or
directors or any person controlling the Company, and (iii) any sale of
Registrable Securities pursuant to the Shelf Registration Statement.

      6. Holder's Obligations. Each Holder agrees, by acquisition of the
Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Shelf
Registration Statement or to receive a Prospectus relating thereto, unless such
Holder has furnished the Company with a Notice and Questionnaire as required
pursuant to Section 3(a)(ii) hereof (including the information required to be
included in such Notice and Questionnaire) and the information set forth in the
next sentence. Each Notice Holder agrees promptly to furnish to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such Notice Holder not misleading and any other
information regarding such Notice Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
Any sale of any Registrable Securities by any Notice Holder shall constitute a
representation and warranty by such Notice Holder that the information relating
to such Notice Holder and its plan of distribution is as set forth in the
Prospectus delivered by such Notice Holder in connection with such disposition,
that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to or provided by such Notice Holder or
its plan of distribution and that such Prospectus does not as of the time of
such sale omit to state any material fact relating to or provided by such Notice
Holder or its plan of distribution

                                       15
<PAGE>

necessary in order to make the statements in such Prospectus, in the light of
the circumstances under which they were made, not misleading.

      7. Additional Interest.

      (a) Notwithstanding any postponement of the effectiveness pursuant to
Section 2(a) hereof, if (i) on or prior to the 90th day following the Issue
Date, a Shelf Registration Statement has not been filed with the Commission,
(ii) on or prior to the 210th day following the Issue Date, such initial Shelf
Registration Statement is not declared effective by the Commission, (iii) after
the effectiveness date of any Shelf Registration Statement, (x) such Shelf
Registration Statement ceases to be effective or usable for the offer and sale
of Registrable Securities (other than due to a Suspension Period), and the
Company fails to file within five Business Days, a post-effective amendment to
such Shelf Registration Statement or amendment or supplement to the Prospectus
contained therein or such other document with the Commission to make such Shelf
Registration Statement effective or such Prospectus usable, or (y) the
Suspension Periods exceed 45 days (or 60 days if extended pursuant to Section
2(c)(ii) above), whether or not consecutive, in any 90-day period, or more than
120 days, whether or not consecutive, during any 12-month period during the
Effectiveness Period, or (iv) the Company shall have failed to timely comply
with any of its obligations set forth in Section 3(a)(ii) hereof (each, a
"Registration Default"), the Company shall be required to pay additional
interest ("Additional Interest"), from and including the day following such
Registration Default to but excluding the day on which such Registration Default
is cured (the "Registration Default Period"), at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the Applicable Amount to and
including the 90th day following such Registration Default, and one-half of one
percent (0.5%) thereof from and after the 91st day following such Registration
Default.

      (b) In the case of a Registration Default described in Sections
7(a)(i)-(iii) above, Additional Interest, if any, shall be payable only to
Notice Holders and, in respect of a Registration Default described in Section
7(a)(iv) above, Additional Interest, if any, shall be payable only to Notice
Holders to whom such Registration Default relates.

      (c) Any amounts to be paid as Additional Interest pursuant to paragraph
(a) of this Section 7 shall be paid in cash semiannually in arrears, with the
first semiannual payment due on the first interest payment date following the
date on which such Additional Interest begin to accrue, to the Notice Holders in
whose name the Securities or Common Stock issued upon conversion of the
Securities are registered at the close of business on May 15 or November 15,
whether or not a Business Day, immediately preceding the relevant interest
payment date.

      (d) Except as provided in Section 10(a) hereof, the Additional Interest as
set forth in this Section 7 shall be the exclusive monetary remedy available to
the Holders of Registrable Securities for such Registration Default. In no event
shall the Company be required to pay Additional Interest in excess of the
applicable maximum amount of one-half of one percent (0.5%) set forth above,
regardless of whether one or multiple Registration Defaults exist. All
obligations of the Company set forth in this Section 7 that are outstanding with
respect to any Registrable Security at the time such security ceases to be a
Registrable Security shall survive until such time as all such obligations with
respect to such Registrable Security shall have been satisfied in full. Each
Registration Default will constitute a Registration Default whatever the

                                       16
<PAGE>

reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a result
of any action or inaction by the Commission.

      8. Rule 144A. In the event the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company hereby agrees with each Holder, for so
long as any Registrable Securities remain outstanding, to make available to any
Holder in connection with any sale thereof and any prospective purchaser of such
Registrable Securities from such Holder, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Securities pursuant to Rule 144A.

      9. Underwritten Offerings.

      (a) A Majority of Holders may, by written notice to the Company, request
to sell their Registrable Securities in an underwritten offering pursuant to any
Shelf Registration Statement; provided, that no underwritten offering shall
occur without the prior agreement of the Company.

      (b) No Holder may participate in any underwritten offering hereunder
unless such Holder:

            (i) agrees to sell such Holder's Registrable Securities on the basis
      provided in any underwriting arrangements approved by the majority of the
      Holders (calculated in the same manner as the Majority of Holders)
      participating in such underwritten offering (the "Participating
      Majority"); and

            (ii) completes and executes all reasonable questionnaires, powers of
      attorney, indemnities, underwriting agreements, lock-up letters and other
      documents required under the terms of such underwriting arrangements.

      (c) In any such underwritten offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Participating Majority to be included in such underwritten
offering; provided, that such investment bankers and managers must be reasonably
satisfactory to the Company.

      10. Miscellaneous.

      (a) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if the Company fails to perform any of its
obligations hereunder and that the Initial Purchaser and the Holders from time
to time may be irreparably harmed by any such failure, and accordingly agree
that the Initial Purchaser and such Holders, in addition to any other remedy to
which they may be entitled at law or in equity and without limiting the remedies
available to the Notice Holders under Section 7 hereof, shall be entitled to
compel specific performance of the obligations of the Company under this
Registration Rights Agreement in accordance with the terms and conditions of
this Registration Rights Agreement, in any court of the United States or any
State thereof having jurisdiction.

      (b) Amendments and Waivers. This Agreement, including this Section 10(b),
may be amended, and waivers or consents to departures from the provisions hereof
may be given, only

                                       17
<PAGE>

by a written instrument duly executed by the Company and a Majority of Holders.
Each Holder of Registrable Securities outstanding at the time of any such
amendment, waiver or consent or thereafter shall be bound by any amendment,
waiver or consent effected pursuant to this Section 10(b), whether or not any
notice, writing or marking indicating such amendment, waiver or consent appears
on the Registrable Securities or is delivered to such Holder.

      (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:

            (x) if to a Holder of Registrable Securities, at the most current
      address given by such Holder to the Company in a Notice and Questionnaire
      or any amendment thereto;

            (y) if to the Company, to:

            Cray Inc.
            411 First Avenue South, Suite 600
            Seattle, Washington 98104-2860
            Attention: Senior Vice President and General Counsel
            Telephone : (206) 701-2000
            Facsimile: (206) 701-2500

            With a copy to:

            Stoel Rives LLP
            600 University Street
            Suite 3600
            Seattle, Washington 98101
            Attn: L. John Stevenson, Jr.
            Facsimile: (206) 386-7500

            and

            (z) if to the Initial Purchaser, to:

            Bear, Stearns & Co. Inc.
            383 Madison Avenue
            New York, New York 10179
            Attention: Stephen Parish
            Facsimile: (212) 272-3485

            With a copy to:

            Latham & Watkins LLP
            135 Commonwealth Drive

                                       18
<PAGE>

            Menlo Park, California 94025
            Attn: Alan C. Mendelson
                  William Davisson
            Facsimile:  (650) 463-2600

      or to such other address as such person may have furnished to the other
persons identified in this Section 8(c) in writing in accordance herewith.

      (d) Parties in Interest. The parties to this Agreement intend that all
Holders of Registrable Securities shall be entitled to receive the benefits of
this Agreement and that any Notice Holder shall be bound by the terms and
provisions of this Agreement by reason of such election with respect to the
Registrable Securities which are included in a Shelf Registration Statement. All
the terms and provisions of this Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the respective successors and assigns
of the parties hereto and any Holder from time to time of the Registrable
Securities to the aforesaid extent. In the event that any transferee of any
Holder of Registrable Securities shall acquire Registrable Securities, in any
manner, whether by gift, bequest, purchase, operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be entitled
to receive the benefits of and, if a Notice Holder, be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement to the aforesaid extent.

      (e) Counterparts. This Agreement 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.

      (f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

      (g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

      (h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.

      (i) Survival. The respective indemnities, agreements, representations,
warranties and other provisions set forth in this Agreement or made pursuant
hereto shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of any Notice
Holder, any director, officer or partner of such Holder, any agent or
underwriter, any director, officer or partner of such agent or underwriter, or
any controlling person of any of the foregoing, and shall survive the transfer
and registration of the Registrable Securities of such Holder.

                                       19
<PAGE>

      (j) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its Affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.

      11. Submission to Jurisdiction; Appointment of Agent for Service

      The Company agrees that any suit, action or proceeding against the Company
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any State or Federal court in The City of New York,
New York, and waives any objection which it may now or hereafter have to the
laying of venue of any such proceeding, and irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or proceeding. The
Company expressly accepts the non-exclusive jurisdiction of any such court in
respect of any such suit, action or proceeding. The Company agrees that a final
judgment in any such proceeding brought in any such court shall be conclusive
and binding thereupon and may be enforced in any other court in the jurisdiction
to which the Company is or may be subject by suit upon such judgment.

               [Remainder of this Page Intentionally Left Blank]

                                       20
<PAGE>

      Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.

                                        Very truly yours,

                                        Cray Inc.,
                                        a Washington corporation

                                        /s/ Kenneth W. Johnson

                                        By:_______________________________
                                           Name: Kenneth W. Johnson
                                           Title: Senior Vice President, General
                                           Counsel, Chief Financial Officer and
                                           Corporate Secretary

Accepted as of the date hereof:

      BEAR, STEARNS & CO. INC.

      /s/ Stephen J. Parish

      By:________________________________
      Name: Stephen J. Parish
      Title: Senior Managing Director

                                       21
<PAGE>

                                                                    Exhibit 10.1

                                                                      APPENDIX A

                                   CRAY INC.

                  FORM OF NOTICE OF REGISTRATION STATEMENT AND
               SELLING SECURITYHOLDER ELECTION AND QUESTIONNAIRE
              3.0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2024

NOTICE

      Cray Inc. (the "Company") has filed, or intends shortly to file, with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-3 or such other Form as may be available (the "Shelf Registration Statement")
for the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the "Securities Act"), of the Company's 3.0% Convertible Senior
Subordinated Notes due 2024 (CUSIP No. 225223 AA4) (the "Notes"), and common
stock, $0.01 par value, issuable upon conversion thereof (the "Shares" and
together with the Notes, the "Transfer Restricted Securities") in accordance
with the terms of the Registration Rights Agreement, dated as of December 6,
2004 (the "Registration Rights Agreement") between the Company and Bear, Stearns
& Co. Inc. A copy of the Registration Rights Agreement is available from the
Company. All capitalized terms not otherwise defined herein have the meanings
ascribed thereto in the Registration Rights Agreement.

      To sell or otherwise dispose of any Transfer Restricted Securities
pursuant to the Shelf Registration Statement, a beneficial owner of Transfer
Restricted Securities generally will be required to be named as a Selling
Securityholder in the related Prospectus, deliver a Prospectus to purchasers of
Transfer Restricted Securities, be subject to certain civil liability provisions
of the Securities Act and be bound by those provisions of the Registration
Rights Agreement applicable to such beneficial owner (including certain
indemnification rights and obligations, as described below). To be included in
the Shelf Registration Statement, this Election and Questionnaire must be
completed, executed and delivered to the Company at the address set forth herein
for receipt PRIOR TO OR ON THE 20TH CALENDAR DAY FROM THE RECEIPT HEREOF (THE
"ELECTION AND QUESTIONNAIRE DEADLINE"). BENEFICIAL OWNERS THAT DO NOT COMPLETE
THIS ELECTION AND QUESTIONNAIRE AND DELIVER IT TO THE COMPANY PRIOR TO THE
ELECTION AND QUESTIONNAIRE DEADLINE AS PROVIDED BELOW WILL NOT BE NAMED AS
SELLING SECURITYHOLDERS IN THE SHELF REGISTRATION STATEMENT AT THE TIME IT IS
DECLARED EFFECTIVE AND, THEREFORE, WILL NOT BE PERMITTED TO SELL ANY TRANSFER
RESTRICTED SECURITIES PURSUANT TO THE SHELF REGISTRATION STATEMENT UNTIL WE
PREPARE AND FILE A PROSPECTUS SUPPLEMENT OR, IF REQUIRED, A POST-EFFECTIVE
AMENDMENT TO THE SHELF REGISTRATION STATEMENT.

      Certain legal consequences arise from being named as a Selling
Securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a Selling Securityholder in the Shelf
Registration Statement and the related Prospectus.

                                    ELECTION

      The undersigned holder (the "Selling Securityholder") of Transfer
Restricted Securities hereby elects to include in the Prospectus forming a part
of the Shelf Registration Statement the Transfer Restricted Securities
beneficially owned by it and listed below in Item III (unless otherwise
specified under Item III). The undersigned, by signing and returning this
Election and Questionnaire, understands that it will be bound with respect to
such Transfer Restricted

<PAGE>

Securities by the terms and conditions of this Election and Questionnaire and
the Registration Rights Agreement.

      Pursuant to the Registration Rights Agreement, the Selling Securityholder
has agreed to indemnify and hold harmless the initial purchaser, the Company,
and each person, if any, who controls any such parties within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and each of their respective
directors, officers, employees, representatives and agents, from and against
certain losses arising in connection with statements concerning the Selling
Securityholder made in the Shelf Registration Statement or the related
Prospectus, or any amendment or supplement thereto or any state securities or
"Blue Sky" applications in reliance upon the information provided in this
Election and Questionnaire.

      The Selling Securityholder hereby provides the following information to
the Company and represents and warrants that such information is accurate and
complete:

                                 QUESTIONNAIRE

I. Identification of Selling Securityholder:

      A. Full legal name of Selling Securityholder:

      B. Full legal name of registered holder (if not the same as (A) above)
         through which Transfer Restricted Securities listed in Item III are
         held:

      C. Is the Selling Securityholder an SEC-reporting company? If not, list
         below the individual or individuals who have sole or shared dispositive
         power with respect to the Transfer Restricted Securities, and the
         individual or individuals who have sole or shared voting power with
         respect to the Transfer Restricted Securities. Describe the
         relationship of such individuals to the Selling Securityholder,
         including their relationships with any intermediate entities, naming
         such entities.

      D. Full legal name of DTC participant (if applicable and if not the same
         as (B) above) through which Transfer Restricted Securities listed in
         Item III are held:

      E. Are you a broker-dealer registered pursuant to Section 15 of the
         Exchange Act? (Please answer "Yes" or "No.")

      F. If your response to (E) above is "No," are you an "affiliate" of a
         broker-dealer registered pursuant to Section 15 of the Exchange Act?
         (Please answer "Yes" or "No.") For the purposes of this item (F), an
         "affiliate" of a registered broker-dealer shall include any company
         that directly, or indirectly through one or more intermediaries,
         controls, or is controlled by, or is under common control with, such
         broker-dealer, and does not include

<PAGE>

         any of the individuals employed by such broker-dealer or its
         affiliates.

II. Address for notices to Selling Securityholders:

         Telephone:

         Fax:

         Contact Person:

III. Beneficial ownership of Transfer Restricted Securities:

      A. Type of Transfer Restricted Securities beneficially owned and principal
         amount of Notes or number of shares of Common Stock, as the case may
         be, beneficially owned:

      B. CUSIP No(s). of such Transfer Restricted Securities beneficially owned:

IV. Beneficial ownership of the Company's securities owned by the Selling
Securityholder:

         EXCEPT AS SET FORTH BELOW IN THIS ITEM IV, THE UNDERSIGNED IS NOT THE
         BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER
         THAN THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM III
         ("Other Securities").

      A. Type and amount of Other Securities beneficially owned by the Selling
         Securityholder:

      B. CUSIP No(s). of such Other Securities beneficially owned:

V. Relationship with the Company:

      A. Except as set forth below, neither the undersigned nor any of its
         affiliates, officers, directors or principal equity holders (5% or
         more) has held any position or office or has had any other material
         relationship with the Company (or their predecessors or affiliates)
         during the past three years.

         State any exceptions here:

      B. If the Selling Securityholder is a registered broker-dealer, except as
         set forth below, (i) neither the undersigned nor any of its affiliates
         has purchased the Transfer Restricted Securities other than in the
         ordinary course of business and (ii) at the time of the purchase of the
         Transfer Restricted Securities to be registered, there was no agreement
         or

<PAGE>

         understanding, written or otherwise, with any person to distribute any
         such Transfer Restricted Securities.

         State any exception here:

VI. Plan of Distribution:

      Except as set forth below, the undersigned (including its donees or
      pledgees) intends to distribute the Transfer Restricted Securities listed
      above in Item III pursuant to the Shelf Registration Statement only as
      follows (if at all). Such Transfer Restricted Securities may be sold from
      time to time directly by the undersigned or, alternatively, through
      underwriters, broker-dealers or agents. If the Transfer Restricted
      Securities are sold through underwriters, broker-dealers or agents, the
      Selling Securityholder will be responsible for underwriting discounts or
      commissions or agent's commissions. Such Transfer Restricted Securities
      may be sold in one or more transactions at fixed prices, at prevailing
      market prices at the time of sale, at varying prices determined at the
      time of sale or at negotiated prices. Such sales may be effected in
      transactions (which may involve crosses or block transactions):

            1. on any national securities exchange or quotation service on which
      the Transfer Restricted Securities may be listed or quoted at the time of
      sale;

            2. in the over-the-counter market;

            3. in transactions otherwise than on such exchanges or services or
      in the over-the-counter market; or

            4. through the writing of options.

      In connection with sales of the Transfer Restricted Securities or
      otherwise, the undersigned may enter into hedging transactions with
      broker-dealers, which may in turn engage in short sales of the Transfer
      Restricted Securities and deliver Transfer Restricted Securities to close
      out such short positions, or loan or pledge Transfer Restricted Securities
      to broker-dealers that in turn may sell such securities. State any
      exceptions here:

      Note: In no event will such method(s) of distribution take the form of an
      underwritten offering of the Transfer Restricted Securities without the
      prior agreement of the Company.

      We advise each Selling Securityholder of the following Interpretation A.65
of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:

            "An issuer filed a Form S-3 registration statement for a secondary
      offering of common stock which is not yet effective. One of the selling
      shareholders wanted to do a short sale of common stock "against the box"
      and cover the short sale with registered shares after the effective date.
      The issuer was advised that the short sale could not be made before the
      registration statement becomes effective, because the shares underlying
      the short sale are deemed to be sold at the time such sale is made. There
      would, therefore, be a violation of Section 5 if the shares were
      effectively sold prior to the effective date."

      By returning this Election and Questionnaire, the Selling Securityholder
will be deemed to be aware of the foregoing interpretation.

      By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees it will comply, with the
prospectus delivery requirements and other provisions of the Securities Act and
the Exchange Act and the respective rules and regulations

<PAGE>

promulgated thereunder, particularly Regulation M thereunder (or any successor
rules or regulations), in connection with any offering of Transfer Restricted
Securities pursuant to the Shelf Registration Statement.

      If the Selling Securityholder transfers all or any portion of the Transfer
Restricted Securities listed in Item III above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Election and Questionnaire and the Registration Rights
Agreement.

      By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items I through VI above and
the inclusion of such information in the Shelf Registration Statement, the
related Prospectus and any state securities or "Blue Sky" applications. The
Selling Securityholder understands that such information will be relied upon by
the Company in connection with the preparation or amendment of the Shelf
Registration Statement, the related Prospectus and any state securities or "Blue
Sky" applications.

      In accordance with the Selling Securityholder's obligation under the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Shelf Registration Statement remains effective. All
notices hereunder and pursuant to the Registration Rights Agreement shall be
made in writing at the address set forth below.

      Once this Election and Questionnaire is executed by the Selling
Securityholders and received by the Company, the terms of this Election and
Questionnaire and the representations and warranties contained herein shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives and assigns of the
Company and the Selling Securityholder with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
III above. This Election and Questionnaire shall be governed by, and construed
in accordance with, the laws of the State of New York.

      IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Election and Questionnaire to be executed and delivered either in person or
by its authorized agent.

Dated:

                                         Beneficial Owner

                                         By: ___________________________________

                                         Name: _________________________________

                                         Title: ________________________________

<PAGE>

      Please return the completed and executed Election and Questionnaire for
receipt PRIOR TO OR ON THE 20TH CALENDAR DAY FROM RECEIPT HEREOF to:

            Cray Inc.
            411 First Avenue South
            Suite 600
            Seattle, Washington 98104
            Attention: Kenneth W. Johnson,
            Senior Vice President and General Counsel

            with a copy to:

            Stoel Rives, LLP
            600 University Street
            Suite 3600
            Seattle, Washington 98101
            Attention: L. John Stevenson, Jr.

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