Document:

<PAGE>
                                                                    EXHIBIT 10.2

                         EMPLOYMENT AGREEMENT AMENDMENT

                               Amendment Number 3

      This Amendment Number 3 to the Employment Agreement, made as of September
1, 2002 and amended by Amendment Number 1 thereto made as of September 1, 2002
and Amendment Number 2 thereto made as of June 23, 2003 (as so amended, the
"Employment Agreement"), between Hanover Direct, Inc., a Delaware corporation
(the "Company"), and Thomas C. Shull ("Shull"), shall be effective as of August
3, 2003.

                              W I T N E S S E T H :

      WHEREAS, the Company and Shull entered into the Employment Agreement; and

      WHEREAS, the Company and Shull now desire to amend the Employment
Agreement in certain respects.

      NOW, THEREFORE, it is agreed by and between the parties hereto to the
following amendments to the Employment Agreement:

      1. Section 3 of the Employment Agreement is hereby amended to read as
follows:

            "Term. Subject to paragraph 6, the term of this Agreement (the
            "Agreement Term") and the term for the services of Shull shall
            commence as of September 1, 2002 and shall terminate on March 31,
            2006."

      2. The first sentence of paragraph 4(a) of the Employment Agreement is
hereby amended to read as follows:

            "In consideration for providing his services as President/CEO,
            during the Agreement Term, Shull shall receive, in addition to the
            other consideration provided in this Agreement, compensation at the
            rate of $71,250 per month or $855,000 per annum (the "Base
            Compensation"), payable in accordance with the Company's normal
            payroll policies; provided, however, that for purposes of the 2002
            Management Incentive Plan referred to in Exhibit 1, and the 2003
            Management Incentive Plan, if any, Shull's annual Base Compensation
            shall be deemed to be $600,000 through March 31, 2003; and,
            provided, further, however,
<PAGE>
            that solely for purposes of (1) Sections 2.9(ii) and 5.1(i) of the
            Hanover Direct, Inc. Eighteen Month Key Executive Compensation
            Continuation Plan effective as of April 25, 2001, as amended, (2)
            clause (ii) of the definition of "For Good Reason" contained in
            Section 5 of this Agreement, and (3) the Transaction Bonus Agreement
            between the Company and Shull dated May 14, 2001 as amended
            September 1, 2002, Shull's Base Compensation (therein referred to as
            annualized base salary or base pay) shall be equal to the higher of
            Shull's Base Compensation (or annualized base salary or base pay) at
            the time of the Change of Control and Shull's Base Compensation on
            August 2, 2003 (which was $900,000)."

      3. The last sentence of the first paragraph of Section 5 of the
Employment Agreement is hereby amended to read as follows:

            "The 2000 Option is fully vested and exercisable until March 31,
             2006."

     4. The definition of "For Good Reason" contained in Section 5 of the
Employment Agreement is hereby amended to read as follows:

            ""For Good Reason" shall mean the voluntary termination by Shull of
            his employment with the Company on account of any of the following
            actions: (i) a substantial and material diminution of Shull's duties
            or responsibilities for the Company, (ii) a material and substantial
            diminution of Shull's base salary or any long-term incentive
            opportunity (each as in effect as of the first day of the Agreement
            Term), (iii) the Company's requiring Shull to regularly report to
            work at a facility that is more than 30 miles from the facility at
            which Shull regularly reported as of the first day of the Agreement
            Term, (iv) decisions or actions by the Board of Directors,
            committees or individual members of the Board (including designees
            of the holder of the Series B Participating Preferred Stock of the
            Company if any) that materially impede Shull's ability to take
            actions to increase value for all shareholders of the Company, (v)
            the failure of the Company to provide Shull with the number of paid
            vacation days to which he would otherwise be entitled in accordance
            with the vacation policy of the Company, or (vi) any action by the
            Company that adversely affects in a material way Shull's
            participation in or materially reduces Shull's benefits under any
            such of the Company's employee benefit or compensation plans;
            provided, however, that in all cases, in order to terminate his
            employment with the Company For Good Reason, Shull must notify the
            Company in writing that Good Reason exists within 30 Business days
            of his knowledge of the event or events constituting Good Reason.
            The Company shall thereafter have 15 Business days within which to
            cure Shull's otherwise Good Reason ("The Cure Period").  Unless
            Shull's Good Reason is cured during the Cure Period, his termination
            For Good Reason shall become effective on the first business day
            following the conclusion of the Cure Period."

<PAGE>

           5.  Except as hereunder provided, the Employment Agreement shall
remain in full force and effect without furhter modification.

           IN WITNESS WHEREOF, the Company and Shull have executed this
Amendment Number 3 as of August 6, 2003.

                                       HANOVER DIRECT, INC.

                                      By:  /s/ Brian C. Harriss
                                        -----------------------
                                         Name: Brian C. Harriss
                                        Title: Executive Vice President,
                                               Human Resources & Legal

                                        /s/  Thomas C. Shull
                                        -----------------------
                                       THOMAS C. SHULLexv4w03

 

EXECUTION COPY

Exhibit 4.03

INDENTURE

between

Guilford Pharmaceuticals Inc.

and

Wachovia Bank, National Association

as Trustee

$60,000,000

5% Convertible Subordinated Notes due 2008*

Dated as of June 17, 2003

	 	*	 	Plus an option to purchase up to $20,000,000 principal amount of 5%
Convertible Subordinated Notes due 2008.

 

 

TABLE OF CONTENTS

	 	 	 
	 	 	Page
	 	 	

	ARTICLE I.	 	 
	Definitions	 	 
	SECTION 1.01. Definitions	 	
  1
	SECTION 1.02. Certain Other Definitions	 	
  8
	SECTION 1.03. Incorporation by Reference of Trust Indenture Act	 	
  8
	SECTION 1.04. Rules of Construction	 	
  9
	ARTICLE II.	 	 
	The Convertible Notes	 	 
	SECTION 2.01. Form and Dating	 	
  9
	SECTION 2.02. Execution and Authentication	 	
10
	SECTION 2.03. Registrar, Paying Agent and Conversion Agent	 	
11
	SECTION 2.04. Paying Agent To Hold Money in Trust	 	
12
	SECTION 2.05. Holder Lists	 	
12
	SECTION 2.06. Transfer and Exchange	 	
12
	SECTION 2.07. Replacement Convertible Notes	 	
14
	SECTION 2.08. Outstanding Convertible Notes	 	
15
	SECTION 2.09. When Treasury Convertible Notes Disregarded	 	
15
	SECTION 2.10. Temporary Convertible Notes	 	
15
	SECTION 2.11. Cancellation	 	
16
	SECTION 2.12. Defaulted Interest	 	
16
	SECTION 2.13. CUSIP Numbers	 	
17
	SECTION 2.14. Regulation S	 	
17
	ARTICLE III.	 	 
	Redemption	 	 
	SECTION 3.01. Optional Redemption	 	
17
	SECTION 3.02. Notices to Trustee	 	
17
	SECTION 3.03. Selection of Convertible Notes To Be Redeemed	 	
17
	SECTION 3.04. Notice of Redemption	 	
18
	SECTION 3.05. Effect of Notice of Redemption	 	
19
	SECTION 3.06. Deposit of Redemption Price	 	
19
	SECTION 3.07. Convertible Notes Redeemed in Part	 	
20
	SECTION 3.08. Conversion Arrangement on Call for Redemption	 	
20

 

 

	 	 	 
	 	 	Page
	 	 	

	ARTICLE IV.	 	 
	Covenants	 	 
	SECTION 4.01. Payment of Convertible Notes	 	
21
	SECTION 4.02. Commission Reports	 	
21
	SECTION 4.03. Compliance Certificate	 	
21
	SECTION 4.04. Maintenance of Office or Agency	 	
22
	SECTION 4.05. Continued Existence	 	
22
	SECTION 4.06. Repurchase Upon Designated Event	 	
22
	SECTION 4.07. Appointments to Fill Vacancies in Trustee’s Office	 	
24
	SECTION 4.08. Stay, Extension and Usury Laws	 	
24
	SECTION 4.09. Taxes	 	
25
	SECTION 4.10. Investment Company Act	 	
25
	ARTICLE V.	 	 
	Successors	 	 
	SECTION 5.01. When the Company
May Merge, Etc.	 	
25
	SECTION 5.02. Successor Corporation Substituted	 	
26
	SECTION 5.03. Purchase Option on Change of Control	 	
26
	ARTICLE VI.	 	 
	Defaults and Remedies	 	 
	SECTION 6.01. Events of Default	 	
26
	SECTION 6.02. Acceleration	 	
28
	SECTION 6.03. Other Remedies	 	
29
	SECTION 6.04. Waiver of Past Defaults	 	
29
	SECTION 6.05. Control by Majority	 	
30
	SECTION 6.06. Limitation on Suits	 	
30
	SECTION 6.07. Rights of Holders To Receive Payment	 	
30
	SECTION 6.08. Collection Suit by Trustee	 	
31
	SECTION 6.09. Trustee May File Proofs of Claim	 	
31
	SECTION 6.10. Priorities	 	
31
	SECTION 6.11. Undertaking for Costs	 	
31
	ARTICLE VII.	 	 
	The Trustee	 	 
	SECTION 7.01. Duties of the Trustee	 	
32
	SECTION 7.02. Rights of the Trustee	 	
33
	SECTION 7.03. Individual Rights of the Trustee	 	
34
	SECTION 7.04. Trustee’s Disclaimer	 	
34

iii

 

 

	 	 	 
	 	 	Page
	 	 	

	SECTION 7.05. Notice of Defaults	 	
34
	SECTION 7.06. Reports by the Trustee to Holders	 	
35
	SECTION 7.07. Compensation and Indemnity	 	
35
	SECTION 7.08. Replacement of the Trustee	 	
36
	SECTION 7.09. Successor Trustee
by Merger, etc.	 	
37
	SECTION 7.10. Eligibility, Disqualification	 	
37
	SECTION 7.11. Preferential Collection of Claims Against Company	 	
37
	ARTICLE VIII.	 	 
	Satisfaction and Discharge of Indenture	 	 
	SECTION 8.01. Discharge of Indenture	 	
37
	SECTION 8.02. Deposited Moneys to be Held in Trust by Trustee	 	
38
	SECTION 8.03. Paying Agent to Repay Moneys Held	 	
38
	SECTION 8.04. Return of Unclaimed Moneys	 	
38
	SECTION 8.05. Reinstatement	 	
39
	ARTICLE IX.	 	 
	Amendments	 	 
	SECTION 9.01. Without the Consent of Holders	 	
39
	SECTION 9.02. With the Consent of Holders	 	
40
	SECTION 9.03. Compliance with the Trust Indenture Act	 	
41
	SECTION 9.04. Revocation and Effect of Consents	 	
41
	SECTION 9.05. Notation on or Exchange of Convertible Notes	 	
42
	SECTION 9.06. Trustee Protected	 	
42
	ARTICLE X.	 	 
	General Provisions	 	 
	SECTION 10.01. Trust Indenture Act Controls	 	
42
	SECTION 10.02. Notices	 	
42
	SECTION 10.03. Communication by Holders with Other Holders	 	
43
	SECTION 10.04. Certificate and Opinion as to Conditions Precedent	 	
43
	SECTION 10.05. Statements Required in Certificate or Opinion	 	
43
	SECTION 10.06. Rules by Trustee and Agents	 	
44
	SECTION 10.07. Legal Holidays	 	
44
	SECTION 10.08. No Recourse Against Others	 	
45
	SECTION 10.09. Counterparts	 	
45
	SECTION 10.10. Other Provisions	 	
45
	SECTION 10.11. Governing Law	 	
45
	SECTION 10.12. No Adverse Interpretation of Other Agreements	 	
45
	SECTION 10.13. Successors	 	
46
	SECTION 10.14. Severability	 	
46

iv

 

 

	 	 	 
	 	 	Page
	 	 	

	SECTION 10.15. Table of Contents,
Headings, etc.	 	
46
	ARTICLE XI.	 	 
	Subordination	 	 
	SECTION 11.01. Agreement to Subordinate	 	
46
	SECTION 11.02. Liquidation; Dissolution; Bankruptcy	 	
46
	SECTION 11.03. Default on Senior Debt or Designated Senior Debt	 	
46
	SECTION 11.04. Acceleration of Convertible Notes	 	
47
	SECTION 11.05. When Distribution Must Be Paid Over	 	
48
	SECTION 11.06. Notice by Company	 	
48
	SECTION 11.07. Subrogation	 	
48
	SECTION 11.08. Relative Rights	 	
48
	SECTION 11.09. Subordination May Not Be Impaired by Company	 	
49
	SECTION 11.10. Distribution or Notice to Representative	 	
49
	SECTION 11.11. Rights of Trustee and Paying Agent	 	
49
	SECTION 11.12. Authorization to Effect Subordination	 	
50
	SECTION 11.13. Article Applicable to Paying Agents	 	
50
	SECTION 11.14. Senior Debt Entitled to Rely	 	
50
	SECTION 11.15. Permitted Payments	 	
50
	ARTICLE XII.	 	 
	Conversion of Convertible Notes	 	 
	SECTION 12.01. Right To Convert	 	
50
	SECTION 12.02. Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends
	 	
51
	SECTION 12.03. Cash Payments in Lieu of Fractional Shares	 	
52
	SECTION 12.04. Conversion Price	 	
53
	SECTION 12.05. Adjustment of Conversion Price	 	
53
	SECTION 12.06. Effect of Reclassification, Consolidation, Merger or Sale	 	
60
	SECTION 12.07. Taxes on Shares Issued	 	
62
	SECTION 12.08. Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock	 	
62
	SECTION 12.09. Responsibility of Trustee	 	
62
	SECTION 12.10. Notice to Holders Prior to Certain Actions	 	
63
	SECTION 12.11. Restriction on Common Stock Issuable Upon Conversion	 	
64

v

 

 

Cross-Reference Table*

	 	 	 	 	 	 	 
	Trust Indenture	 	Indenture
	Act Section	 	Section
	
	 	

	310
	(a)(1)	 	 	7.10	 
	 
	(a)(2)	 	 	7.10, 10.10	 
	 
	(a)(3)	 	 	n/a	 
	 
	(a)(4)	 	 	n/a	 
	 
	(a)(5)	 	 	n/a	 
	 
	(b)	 	 	7.08, 7.10, 10.02	 
	 
	(c)	 	 	n/a	 
	311
	(a)	 	 	7.11	 
	 
	(b)	 	 	7.11	 
	 
	(c)	 	 	n/a	 
	312
	(a)	 	 	2.05	 
	 
	(b)	 	 	10.03	 
	 
	(c)	 	 	10.03	 
	313
	(a)	 	 	7.06	 
	 
	(b)(1)	 	 	n/a	 
	 
	(b)(2)	 	 	7.06	 
	 
	(c)	 	 	7.06, 10.02	 
	 
	(d)	 	 	7.06	 
	314
	(a)	 	 	4.02, 10.02	 
	 
	(b)	 	 	n/a	 
	 
	(c)(1)	 	 	10.04	 
	 
	(c)(2)	 	 	10.04	 
	 
	(c)(3)	 	 	n/a	 
	 
	(d)	 	 	n/a	 
	 
	(e)	 	 	10.05	 
	 
	(f)	 	 	n/a	 
	315
	(a)	 	 	7.01 	(b)
	 
	(b)	 	 	7.05, 10.02	 
	 
	(c)	 	 	7.01	(a)
	 
	(d)	 	 	7.01	(c)
	 
	(e)	 	 	6.11	 
	316
	(a)(last sentence)	 	 	2.09	 
	 
	(a)(1)(A)	 	 	6.05	 

vi

 

 

	 	 	 	 	 	 	 
	Trust Indenture	 	Indenture
	Act Section	 	Section
	
	 	

	 
	(a)(1)(B)	 	 	6.04	 
	 
	(a)(2)	 	 	n/a	 
	 
	(b)	 	 	6.02	 
	 
	(c)	 	 	9.04	 
	317
	(a)(1)	 	 	6.08	 
	 
	(a)(2)	 	 	6.09	 
	 
	(b)	 	 	2.04	 
	318
	(a)	 	 	10.01	 
	 
	(b)	 	 	n/a	 
	 
	(c)	 	 	10.01	 

“n/a” means not applicable.

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

vii

 

 

		
	 	          THIS INDENTURE, dated as of June 17, 2003, is between Guilford
Pharmaceuticals Inc., a Delaware corporation (the “Company”), and
Wachovia Bank, National Association, a national banking
association, as trustee (the “Trustee”). The Company has duly
authorized the creation of its 5% Convertible Subordinated Notes
due 2008 (the “Convertible Notes”), and to provide therefor the
Company and the Trustee have duly authorized the execution and
delivery of this Indenture. Each party agrees as follows for the
benefit of the other party and for the equal and ratable benefit of
the holders from time to time of the Convertible Notes:

ARTICLE I.

Definitions

     SECTION 1.01. Definitions.

     “Affiliate” means, when used with reference to any person, any other
person directly or indirectly controlling, controlled by, or under direct or
indirect common control of, the referent 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 management or policies of the
referent person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise. The terms “controlling” and
“controlled” have meanings correlative of the foregoing.

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

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

     “Capital Stock” of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.

     “Change of Control” means the occurrence of one or more of the following
events: (a) any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more
than 50% of the combined voting power of the then outstanding Voting Stock of
the Company, (b) the Company consolidates with or merges into any other
corporation, any other corporation merges into the Company, or the Company
effects a share exchange, and, in the case of any such transaction, the
outstanding Common Stock of the Company is reclassified into or exchanged for
any other property or securities, unless the shareholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power of
the then outstanding Voting Stock of the corporation resulting from such
transaction in substantially the same respective

 

2

proportions as their ownership of the Voting Stock of the Company
immediately before such transaction, (c) the Company, or the Company and its
subsidiaries taken as a whole, sells, assigns, conveys, transfers or leases all
or substantially all assets of the Company, or of the Company and its
subsidiaries taken as a whole, as applicable (other than to one or more
wholly-owned subsidiaries of the Company), (d) any time the Continuing
Directors do not constitute a majority of the Board of Directors (or, if
applicable, a successor corporation to the Company), or (e) the Company
undertakes a liquidation, dissolution or winding up; provided, however, that a
Change of Control under (a), (b) and (c) above shall not be deemed to have
occurred if either (y) the Daily Market Price per share of Common Stock for any
five Trading Days within the period of ten consecutive Trading Days ending
immediately after the later of the Change of Control or the public announcement
of the Change of Control (in the case of a Change of Control under clause (a)
above) or the period of ten consecutive trading days ending immediately before
the Change of Control (in the case of a Change of Control under clause (b) or
(c) above) shall equal or exceed 105% of the Conversion Price in effect on the
date of such Change of Control or the public announcement of such Change of
Control, as applicable (provided that for purposes of the foregoing, the
Conversion Price shall be determined without regard to temporary reductions
thereof pursuant to Section 12.05(h)) or (z) all of the consideration
(excluding cash payments for fractional shares) in the transaction or
transactions constituting the Change of Control consists of shares of common
stock that are, or upon issuance will be, traded on the New York Stock
Exchange, the American Stock Exchange or quoted on the Nasdaq National Market
and as a result of such transaction or transactions the notes become
convertible solely into such common stock.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock” means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the
provisions of Section 12.06, however, shares issuable on conversion of
Convertible Notes shall include only shares of the class designated as Common
Stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided,
however, that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

     “Company” means the party named as such above until a successor replaces
it in accordance with Article V and thereafter means the successor. References
to the Company shall not include any Subsidiary.

     “Continuing Directors” means, as of any date of determination, any member
of the Board of Directors who (a) was a member of such Board of Directors on
the date of

 

3

this Indenture or (b) was nominated for election or elected to such Board
of Directors with the approval of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election.

     “Convertible Notes” means the 5% Convertible Subordinated Notes due 2008
issued, authenticated and delivered under this Indenture.

     “Conversion Price” means the initial conversion price specified in the
form of Convertible Note in Paragraph 16 of such form, as adjusted in
accordance with the provisions of Article XII.

     “Corporate Trust Office” means the corporate trust office of the Trustee
at which at any particular time the trust created by this Indenture shall
principally be administered; as of the date hereof, the Corporate Trust Office
is located at 1021 East Cary Street, 3rd Floor, Richmond, Virginia 23219,
Attention: Corporate Trust Administration-VA 9646.

     “Daily Market Price” means the price of a share of Common Stock on the
relevant date, determined on the basis of the last reported sale price regular
way of the Common Stock as quoted on the Nasdaq National Market, or if the
Common Stock is not then quoted on the Nasdaq National Market, as reported on
the principal national securities exchange upon which the Common Stock is
listed.

     “Default” means any event that 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 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 Event” means the occurrence of a Change of Control or a
Termination of Trading.

     “Designated Senior Debt” means (a) the Senior Bank Credit Facility and (b)
any particular Senior Debt which has at the time of the giving of a Payment
Blockage Notice an aggregate outstanding principal amount in excess of
$5,000,000, if 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 “Designated
Senior Debt” for purposes of this Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right
of such Senior Debt to exercise the rights of Designated Senior Debt).

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

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

 

4

     “GAAP” means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.

     “Global Securities Legend” means the legend labeled as such and that is
set forth in Exhibit A hereto.

     “Indebtedness” means, with respect to any person, all obligations, whether
or not contingent, of such person:

		
		   (i) (a) for borrowed money (including, but not limited to, any
indebtedness secured by a security interest, mortgage or other lien on
the assets of such person that is (1) given to secure all or part of the
purchase price of property subject thereto, whether given to the vendor
of such property or to another, or (2) existing on property at the time
of acquisition thereof),

		
	 	     (b) evidenced by a note, debenture, bond or other similar
written instrument,
	 
	 	     (c) under a lease required to be capitalized on the balance
sheet of the lessee under GAAP, or under any lease or related
document (including a purchase agreement) that provides that such
person is contractually obligated to purchase or cause a third
party to purchase and thereby guarantee a minimum residual value of
the lease property to the lessor and such person’s obligations
under such lease or related document to purchase or to cause a
third party to purchase such leased property,
	 
	 	     (d) in respect of letters of credit, bank guarantees or
bankers’ acceptances (including reimbursement obligations with
respect to any of the foregoing),
	 
	 	     (e) Obligations secured by a mortgage, pledge, lien, charge,
or similar encumbrance to which the property or assets of such
person are subject, whether or not the obligation secured thereby
shall have been assumed by or shall otherwise be such person’s
legal liability,
	 
	 	     (f) in respect of the balance of deferred and unpaid purchase
price of any property or assets, and
	 
	 	     (g) under interest rate or currency swap agreements, cap,
floor and collar agreements, spot and forward contracts and similar
agreements and arrangements;

		
	 	   (ii) with respect to any obligation of others of the type described
in the preceding clause (i) or under clause (iii) below assumed by or
guaranteed in any

 

5

		
	 	manner by such person (including, without limitation, through “take
or pay” and similar arrangements), contingent or otherwise (and the
obligations of such person under any such assumptions, guarantees or
other such arrangements); and
	 
	 	     (iii) any and all deferrals, renewals, extensions, refinancings and
refundings of, or amendments, modifications or supplements to, any of the
foregoing.

     “Indenture” means this Indenture as amended or supplemented from time to
time.

     “Initial Purchasers” means Citigroup Global Markets Inc. and CIBC World
Markets Corp.

     “Interest Payment Date” means January 1 and July 1 of each year,
commencing with January 1, 2004.

     “Issue Date” means the date on which Convertible Notes are first issued
and authenticated under this Indenture.

     “Liquidated Damages” has the meaning specified in paragraph 17 of the form
of Convertible Note which is attached as Exhibit A hereto.

     “Material Subsidiary” means any Subsidiary of the Company which at the
date of determination is a “significant subsidiary” as defined in Rule 1-02(w)
of Regulation S-X under the Securities Act and the Exchange Act.

     “Maturity Date” means July 1, 2008.

     “Note Custodian” means Wachovia Bank, National Association, as custodian
with respect to any Global Security, or any successor entity thereto.

     “Obligations” means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

     “Offering Memorandum” means the final offering memorandum dated June 11,
2003, relating to the Convertible Notes, including all amendments thereto.

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

     “Officers’ Certificate” means a certificate, in form and substance
reasonably satisfactory to the Trustee, signed by two Officers, one of whom is
the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, the Treasurer or the Controller of the Company.

 

6

     “Opinion of Counsel” means a written opinion, in form and substance
reasonably satisfactory to the Trustee, from legal counsel who may be an
employee of or counsel to the Company or the Trustee except to the extent
otherwise indicated in this Indenture.

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

     “Redemption Date” when used with respect to any of the Convertible Notes
to be redeemed, means the date fixed by the Company for such redemption
pursuant to Article III of this Indenture and the Convertible Notes.

     “Redemption Price” when used with respect to any of the Convertible Notes
to be redeemed, means the price fixed for such redemption pursuant to Article
III of this Indenture and the Convertible Notes.

     “Registration Rights Agreement” means the Registration Rights Agreement
relating to the Convertible Notes and Common Stock issuable upon conversion of
such Convertible Notes dated June 17, 2003, between the Company and the Initial
Purchasers, as such agreement may be amended, modified or supplemented from
time to time.

     “Regular Record Date” means the June 15 or December 15 immediately
preceding each Interest Payment Date.

     “Representative” means (a) the indenture trustee or other trustee, agent
or representative for any Senior Debt or (b) with respect to any Senior Debt
that does not have any such trustee, agent or other representative, (i) in the
case of such Senior Debt issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Debt, any holder or
owner of such Senior Debt acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Debt and (ii) in the
case of all other such Senior Debt, the holder or owner of such Senior Debt.

     “Restricted Common Stock Legend” means the legend labeled as such and that
is set forth in Exhibit B hereto.

     “Restricted Securities Legend” means the legend labeled as such and that
is set forth in Exhibit A hereto.

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

     “Senior Bank Credit Facility” means the Loan and Security Agreement, dated
as of May 7, 2003, between the Company and Wachovia Bank, National Association,
as the lender, including any deferrals, renewals, extensions, replacements,
refinancings or refundings thereof, or amendments, modifications or supplements
thereto and any agreement providing therefor whether by or with the same or any
other lender, creditor, group of

 

7

lenders or group of creditors and including the related notes, guarantee
agreements and other instruments and agreements executed in connection
therewith.

     “Senior Debt” means the principal of, premium, if any, and interest on,
rent under, and any other amounts payable on or in or in respect of any
Indebtedness of the Company (including, without limitation, any Obligations in
respect of such Indebtedness and any interest accruing after the filing of a
petition by or against the Company under any Bankruptcy Law, whether or not
allowed as a claim after such filing in any proceeding under such Bankruptcy
Law), whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions, refinancings or refundings of, or
amendments, modifications or supplements to the foregoing); provided, however,
that Senior Debt does not include (i) Indebtedness evidenced by the Convertible
Notes, (ii) any liability for Federal, state, local or other taxes owed or
owing by the Company, (iii) Indebtedness of the Company to any Subsidiary of
the Company, (iv) trade payables for goods, services or materials purchased in
the ordinary course of business and (v) any particular Indebtedness in which
the instrument creating or evidencing the same expressly provides that such
Indebtedness shall not be senior in right of payment to, or is pari passu with,
or is subordinated or junior to, the Convertible Notes.

     “Shelf Registration Statement” shall have the meaning set forth in the
Registration Rights Agreement.

     “Subsidiary” means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
managing general partner of which is such person or a Subsidiary of such person
or (b) the only general partners of which are such person or of one or more
subsidiaries of such person (or any combination thereof).

     “Termination of Trading” will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Notes are then
convertible) is neither listed for trading on a U.S. national securities
exchange nor approved for trading on the Nasdaq National Market.

     “TIA” means the Trust Indenture Act of 1939 as in effect on the date of
execution of this Indenture, except as provided in Sections 9.03 and 12.06.

     “Trustee” means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.

     “Trust Officer” means an officer in the Corporate Trust Office of the
Trustee and having direct responsibility for the administration of this
Indenture.

 

8

     “Voting Stock” of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.

     SECTION 1.02. Certain Other Definitions.

	 	 	 	 	 
	 	 	Defined
	 	 	in Section
	 	 	

	“Agent Member”
	 	 	2.01	 
	“Bankruptcy Law”
	 	 	6.01	 
	“Business Day”
	 	 	10.07	 
	“Closing Price”
	 	 	12.05	 
	“Conversion Agent”
	 	 	2.03	 
	“Current Market Price”
	 	 	12.05	 
	“Custodian”
	 	 	6.01	 
	“Designated Event Date”
	 	 	4.06	 
	“Designated Event Offer”
	 	 	4.06	 
	“Designated Event Offer Termination Date”
	 	 	4.06	 
	“Designated Event Payment”
	 	 	4.06	 
	“Designated Event Payment Date”
	 	 	4.06	 
	“Event of Default”
	 	 	6.01	 
	“Expiration Time”
	 	 	12.05	 
	“Fair Market Value”
	 	 	12.05	 
	“Global Security”
	 	 	2.01	 
	“Legal Holiday”
	 	 	10.07	 
	“Non-electing Share”
	 	 	12.06	 
	“Paying Agent”
	 	 	2.03	 
	“Payment Blockage Notice”
	 	 	11.03	 
	“Purchased Shares”
	 	 	12.05	 
	“Record Date”
	 	 	12.05	 
	“Registrar”
	 	 	2.03	 
	“Securities”
	 	 	12.05	 
	“Trading Day”
	 	 	12.05	 
	“Trigger Event”
	 	 	12.05	 

     SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following
meanings:

     “Commission” means the Commission;

     “indenture securities” means the Convertible Notes;

     “indenture security holder” means a holder of a Convertible Note;

     “indenture to be qualified” means this Indenture;

 

 

9

     “indenture trustee” or “institutional trustee” means the Trustee; and

     “obligor” on the Convertible Notes means the Company or any other obligor
on the Convertible Notes.

     All other terms in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.

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

		
	 	     (1) a term has the meaning assigned to it;
	 
	 	     (2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
	 
	 	     (3) “or” is not exclusive;
	 
	 	     (4) words in the singular include the plural, and in the
plural include the singular; and
	 
	 	     (5) the male, female and neuter genders include one another.

ARTICLE II.

The Convertible Notes

     SECTION 2.01. Form and Dating. (a) Global Securities. The Convertible
Notes are being offered and sold by the Company pursuant to a Purchase
Agreement relating to the Convertible Notes, dated June 11, 2003, among the
Company and the Initial Purchaser (the “Purchase Agreement”).

     The Convertible Notes are being offered and sold (i) in reliance on
Regulation S under the Securities Act (“Regulation S”) or (ii) to “qualified
institutional buyers” as defined in Rule 144A (“QIBs”) in reliance on Rule 144A
under the Securities Act (“Rule 144A”), each as provided in the Purchase
Agreement, and shall be issued in the form of one or more permanent global
securities in definitive, fully registered form without interest coupons with
the Global Securities Legend and Restricted Securities Legend set forth in
Exhibit A hereto (each, a “Global Security”). Any Global Security shall be
deposited on behalf of the purchasers of the Convertible Notes represented
thereby with the Trustee, as custodian for the Depositary, and registered in
the name of the Depositary or a nominee of the Depositary for the accounts of
participants in the Depositary (and, in the case of Convertible Notes held in
accordance with Regulation S, registered with the Depositary for the accounts
of designated agents holding on behalf of the Euroclear System (“Euroclear”) or
Clearstream Banking, societe anonyme (“Clearstream”)), duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of a Global Security may from time to time be
increased or decreased by

 

 

10

adjustments made on the records of the Trustee and
the Depositary or its nominee as hereinafter provided.

     (b)  Book-Entry Provisions. This Section 2.01(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.

     The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b) and the written order of the Company, authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the
name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary’s
instructions or held by the Trustee as custodian for the Depositary pursuant to
a FAST Balance Certificate Agreement between the Depositary and the Trustee.

     Members of, or participants in, the Depositary (“Agent Members”) shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of such Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Security.

     The provisions of the “Operating Procedures of the Euroclear System” and
“Terms and Conditions Governing Use of Euroclear” and the “Management
Regulations and Instructions to Participants” of Clearstream shall be
applicable to interests in any Global Securities that are held by participants
through Euroclear or Clearstream. The Trustee shall have no obligation to
notify holders of any such procedures or to monitor or enforce compliance with
the same.

     (c)  Definitive Securities. Except as provided in Section 2.10, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Convertible Notes in definitive form. If
applicable, certificated Convertible Notes in definitive form will bear the
Restricted Securities Legend set forth on Exhibit A unless removed in
accordance with Section 2.06(c).

     SECTION 2.02. Execution and Authentication. One Officer shall sign the
Convertible Notes for the Company by manual or facsimile signature.

     If an Officer whose signature is on a Convertible Note no longer holds
that office at the time the Convertible Note is authenticated, the Convertible
Note shall nevertheless be valid.

 

 

11

     A Convertible Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Convertible Note has been authenticated under this Indenture.

     Upon a written order of the Company signed by an Officer of the Company,
the Trustee shall authenticate Convertible Notes for original issue up to an
aggregate principal amount of $60,000,000 (plus up to $20,000,000 aggregate
principal amount of Convertible Notes that may be sold by the Company pursuant
to the option granted pursuant to the Purchase Agreement) to the Initial
Purchasers. The aggregate principal amount of Convertible Notes outstanding at
any time may not exceed that amount except as provided in Section 2.07.

     The Convertible Notes shall be issuable only in registered form without
coupons and only in denominations of $1,000 or any integral multiple thereof.

     The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Convertible Notes. An authenticating agent may authenticate
Convertible Notes whenever the Trustee may do so.

     Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same right as an
Agent to deal with the Company or an Affiliate of the Company.

     SECTION 2.03. Registrar, Paying Agent and Conversion Agent. The Company
shall maintain or cause to be maintained in the City of New
York, New York, an office, agency or drop facility: (i)
where securities may be presented for registration of
transfer or for exchange (“Registrar”); (ii) where
Convertible Notes may be presented for payment (“Paying
Agent”); (iii) where Convertible Notes may be presented for
conversion (the “Conversion Agent”); and (iv) where notices
and demands to or upon the Company in respect of Convertible
Notes and this Indenture may be served by the holders of the
Convertible Notes. The Registrar shall keep a Register
(“Register”) of the Convertible Notes and of their transfer
and exchange. The Company may appoint 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, and the term
“Conversion Agent” includes any additional conversion agent.
The Company may change any such additional Agent with 30
days prior written notice to the Trustee. The Company shall
notify the Trustee of the name and address of any Agent not
a party to this Indenture and shall enter into an
appropriate agency agreement with any Agent not a party to
this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The
Company or any of its subsidiaries may act as Agent, except
that for purposes of Articles III and VIII and Section 4.06,
neither the Company nor any of its subsidiaries shall act as
Paying Agent. If the Company fails to appoint or maintain
another entity as Registrar, or Paying Agent or Conversion
Agent, the Trustee shall act as such, and the Trustee shall
initially act as such at the following drop facility:
Wachovia Bank, National Association, 40 Broad Street, 5th
Floor, New York, New York 10004.

 

 

12

     SECTION 2.04. Paying Agent To Hold Money in Trust. The Company shall
require each Paying Agent (other than the Trustee, who
hereby so agrees), to agree in writing that the Paying Agent
will hold in trust for the benefit of holders of the
Convertible Notes or the Trustee all money held by the
Paying Agent for the payment of principal, interest or
Liquidated Damages on the Convertible Notes, and will notify
the Trustee of any default by the Company in respect of
making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other
than the Company or a Subsidiary of the Company)
shall have no further liability for the money. If the Company or a Subsidiary
of the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the holders of the Convertible Notes all money
held by it as Paying Agent.

     SECTION 2.05. 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 of Convertible Notes and shall
otherwise comply with TIA § 312(a). If the Trustee
is not the Registrar, the Company shall furnish to
the Trustee at least seven Business Days before each
Interest Payment Date, and as the Trustee may request
in writing within 15 days after receipt by the
Company of any such request (or such lesser time as
the Trustee may reasonably request in order to enable
it to timely provide any notice to be provided by it
hereunder), a list in such form and as of such date
as the Trustee may reasonably require of the names
and addresses of holders of Convertible Notes.

     SECTION 2.06. Transfer and Exchange. (a) When Convertible Notes
are presented to the Registrar or a co-registrar with
a request to register a transfer or to exchange them
for an equal principal amount of Convertible Notes of
other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for
such transactions are met. To permit registrations
of transfers and exchanges, the Company shall issue
and the Trustee shall authenticate Convertible Notes
at the Registrar’s request, bearing registration
numbers not contemporaneously outstanding. No
service charge shall be made to a holder for any
registration of transfer or exchange (except as
otherwise expressly permitted herein), but the
Company and the Registrar may require payment of a
sum sufficient to cover any transfer tax or other
governmental charge payable upon exchanges pursuant
to Sections 2.10, 3.07, 4.06, 9.05 or 12.02.

     The Company or the Registrar shall not be required (i) to issue, register
the transfer of or exchange Convertible Notes during a period beginning at the
opening of business 15 days before the day of any selection of Convertible
Notes for redemption under Section 3.03 and ending at the close of business on
the day of selection, (ii) to register the transfer or exchange of any
Convertible Note so selected for redemption in whole or in part, except the
unredeemed portion of any Convertible Note being redeemed in part, (iii) to
register the transfer of any Convertible Notes surrendered for repurchase
pursuant to Section 4.06 or (iv) to register the transfer of any Convertible
Notes surrendered for conversion.

     All Convertible Notes issued upon any transfer or exchange of Convertible
Notes in accordance with this Indenture shall be the valid obligations of the
Company,

 

 

13

evidencing the same debt, and entitled to the same benefits under this
Indenture as the Convertible Notes surrendered upon such registration of
transfer or exchange.

     (b)  Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Sections
2.01(b) and 2.10; provided, however, that beneficial interests in a Global
Security may only be transferred to persons who take delivery thereof in the
form of a beneficial interest in the Global Security in accordance with the
transfer restrictions set forth under the heading “Notice to Investors” in the
Offering Memorandum and, if applicable, in the Restricted Securities Legend.

     Except for transfers or exchanges made in accordance with Section 2.10,
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor’s nominee.

     In the event that a Global Security is exchanged for Convertible Notes in
definitive form pursuant to Section 2.10 prior to the effectiveness of a Shelf
Registration Statement with respect to such Convertible Notes, such exchange
may occur, and such Convertible Notes may be further exchanged or transferred,
only upon receipt by the Registrar of (1) such Global Security or such
Convertible Notes in definitive form, duly endorsed as provided herein, as
applicable, (2) instructions from the holder directing the Trustee to
authenticate and deliver one or more Convertible Notes in definitive form of
the same aggregate principal amount as the Global Security or the Convertible
Notes in definitive form (or portion thereof), as applicable, to be
transferred, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Convertible Notes in definitive form to be so issued and appropriate delivery
instructions, and (3) such certifications or other information and, in the case
of transfers pursuant to Rule 144 under the Securities Act, legal opinions as
the Company may reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act (including the certification
requirements intended to ensure that such transfers comply with Rule 144A or
Regulation S under the Securities Act, as the case may be), and upon compliance
with such other procedures as may from time to time be adopted by the Company
and the Registrar.

     (c)  Except in connection with a Shelf Registration Statement contemplated
by and in accordance with the terms of the Registration Rights Agreement, if
Convertible Notes are issued upon the registration of transfer, exchange or
replacement of Convertible Notes bearing a Restricted Securities Legend, or if
a request is made to remove such a Restrictive Securities Legend on Convertible
Notes, the Convertible Notes so issued shall bear the Restricted Securities
Legend, or a Restricted Securities Legend shall not be removed, as the case may
be, unless there is delivered to the Company such satisfactory evidence, which,
in the case of a transfer made pursuant to Rule 144 under the Securities Act,
may include an opinion of counsel given in accordance with the laws in the
State of New York, as may be reasonably required by the Company, that neither
the legend nor the 

 

 

14

restrictions on transfer set forth therein are required to
ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144
or Regulation S under the Securities Act or that such Convertible Notes are not
“restricted” within the meaning of Rule 144 under the Securities Act. Upon
provision to the Company of such satisfactory evidence, the Trustee, at the
written direction of the Company, shall authenticate and deliver Convertible
Notes that do not bear the legend. The Company shall not otherwise be entitled
to require the delivery of a legal opinion in connection with any transfer or
exchange of Securities.

     (d)  Neither the Trustee nor any Agent shall have any responsibility for
any actions taken or not taken by the Depositary.

     (e)  The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Convertible Notes (including any transfers between or among the
Depositary’s participants or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation as is 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 2.07. Replacement Convertible Notes. If the holder of a
Convertible Note claims that its Convertible Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Convertible Note if the Trustee’s and the Company’s requirements
are met. If required by the Trustee or the Company as a condition of receiving
a replacement Convertible Note, the holder of a Convertible Note must provide a
certificate of loss and an indemnity or an indemnity bond sufficient, in the
judgment of both the Company and the Trustee, to fully protect the Company, the
Trustee, any Agent and any authenticating agent from any loss, liability, cost
or expense which any of them may suffer or incur if the Convertible Note is
replaced. The Company and the Trustee may charge the relevant holder for their
expenses in replacing any Convertible Note.

     The Trustee or any authenticating agent may authenticate any such
substituted Convertible Note, and deliver the same upon the receipt of such
security or indemnity as the Trustee, the Company and, if applicable, such
authenticating agent may require. Upon the issuance of any substituted
Convertible Note, the Company and the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses connected therewith. In case any
Convertible Note which has matured or is about to mature, or has been called
for redemption pursuant to Article III, submitted for repurchase pursuant to
Section 4.06 or is about to be converted into Common Stock pursuant to Article
XII, shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Convertible Note, pay or authorize the payment
of or convert or authorize the conversion of the same (without surrender
thereof except in the case of a mutilated Convertible Note), as the case may
be, if the applicant for such payment or conversion shall furnish to the
Company, to the Trustee and, if applicable, to the authenticating agent such
security or indemnity as may be required by them to hold each of them harmless
for any loss, liability, cost or expense

 

 

15

caused by or connected with such
substitution, and, in case of destruction, loss or theft, evidence satisfactory
to the Company, the Trustee and, if applicable, any paying agent or conversion
agent of the destruction, loss or theft of such Convertible Note and of the
ownership thereof.

     Every replacement Convertible Note is an additional obligation of the
Company and shall be entitled to all the benefits provided under this Indenture
equally and proportionately with all other Convertible Notes duly issued,
authenticated and delivered hereunder.

     SECTION 2.08. Outstanding Convertible Notes. The Convertible Notes
outstanding at any time are all the Convertible Notes properly authenticated by
the Trustee except for those canceled by the Trustee, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.

     If a Convertible Note is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Convertible Note is held by a bona fide purchaser.

     If Convertible Notes are considered paid under Section 4.01 or converted
under Article XII, they cease to be outstanding, and interest and Liquidated
Damages, if any, on them ceases to accrue.

     Subject to Section 2.09 hereof, a Convertible Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Convertible Note.

     SECTION 2.09. When Treasury Convertible Notes Disregarded. In determining
whether the holders of the required principal amount of
Convertible Notes have concurred in any direction, waiver or
consent, Convertible Notes owned by the Company or an
Affiliate of the Company shall be considered as though they
are not outstanding except that for the purposes of
determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only
Convertible Notes which a Trust Officer of the Trustee
actually knows are so owned shall be so disregarded.

     SECTION 2.10. Temporary Convertible Notes. (a) Until definitive
Convertible Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary
Convertible Notes. Temporary Convertible Notes shall be
substantially in the form of definitive Convertible Notes
but may have variations that the Company considers
appropriate for temporary Convertible Notes and shall be
reasonably acceptable to the Trustee. Without unreasonable
delay, the Company shall prepare and the Trustee shall
authenticate definitive Convertible Notes in exchange for
temporary Convertible Notes.

     (b)  A Global Security deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Convertible Notes in
definitive form only if such transfer complies with Section 2.06 and (i) the
Depositary notifies the Company that it is

 

 

16

unwilling or unable to continue as
Depositary for such Global Security, (ii) if at any time such Depositary ceases
to be a “clearing agency” registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days of such notice, (iii)
the Depositary is closed for business for 14 continuous days, (iv) the
Depositary announces an intention to cease business permanently or in fact
does so, (v) the Company, in its sole discretion, determines that such Global
Security shall be exchangeable for certificated Convertible Notes or (vi) an
Event of Default has occurred and is continuing.

     (c)  Any Global Security or interest thereon that is transferable to the
beneficial owners thereof in the form of certificated Convertible Notes in
definitive form shall, if held by the Depositary, be surrendered by the
Depositary to the Trustee, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Convertible Notes of authorized
denominations in the form of certificated Convertible Notes in definitive form.
Any portion of a Global Security transferred pursuant to this Section 2.10
shall be executed, authenticated and delivered only in denominations of $1,000
and any integral multiple thereof and registered in such names as the
Depositary shall direct. Any Convertible Notes
in the form of certificated Convertible Notes in definitive form delivered
in exchange for an interest in the Global Security shall, except as otherwise
provided by Section 2.06(c), bear the Restricted Securities Legend set forth in
Exhibit A hereto.

     (d)  Prior to any transfer pursuant to Section 2.10(b), the registered
holder of a Global Security may grant proxies and otherwise authorize any
person, including Agent Members and persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Convertible Notes.

     SECTION 2.11. Cancellation. The Company at any time may deliver
Convertible Notes to the Trustee for cancellation. The
Registrar and Paying Agent shall forward to the Trustee any
Convertible Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else
may cancel Convertible Notes surrendered for registration of
transfer, exchange, payment, replacement, conversion,
redemption, repurchase or cancellation. Upon written
instructions of the Company, the Trustee shall destroy and
dispose of canceled Convertible Notes as the Company directs
and, after such destruction, shall deliver a certificate of
destruction to the Company. The Company may not issue new
Convertible Notes to replace Convertible Notes that it has
paid, redeemed or repurchased or that have been delivered to
the Trustee for cancellation or that any holder has (i)
converted pursuant to Article XII hereof, (ii) submitted for
redemption pursuant to Article III hereof or (iii) submitted
for repurchase pursuant to Section 4.06 hereof (unless
revoked).

     SECTION 2.12. Defaulted Interest. If the Company fails to make a payment
of interest on the Convertible Notes, it shall pay such
defaulted interest plus, to the extent lawful, any interest
payable on the defaulted interest. It may pay such
defaulted interest, plus any such interest payable on it, to
the persons who are holders of Convertible Notes on a
subsequent special Record Date. The Company shall fix any
such Record Date and payment date. At least 15 days before
any such Record Date, the Company shall mail to

 

 

17

holders of
the Convertible Notes a notice that states the Record Date,
payment date and amount of such interest to be paid.

     SECTION 2.13. CUSIP Numbers. The Company in issuing the Convertible Notes
may use “CUSIP” numbers, and if so, such CUSIP numbers shall

be included in notices of redemption, repurchase or exchange
as a convenience to holders of Convertible Notes; provided,
however, that any such notice may state that no
representation is made as to the correctness or accuracy of
the CUSIP numbers printed in the notice or on the
Convertible Notes and that reliance may be placed only on
the other identification numbers printed on the Convertible
Notes. The Company will promptly notify the Trustee of any
change in any CUSIP number.

     SECTION 2.14. Regulation S. The Company agrees that it will refuse to
register any transfer of Convertible Notes or any shares of
Common Stock issued upon conversion of Convertible Notes
that is not made in accordance with the provisions of
Regulation S under the Securities Act, pursuant to a
registration statement which has been declared effective
under the Securities Act or pursuant to an available
exemption from the registration requirements of the
Securities Act; provided, however, that the provisions of
this Section 2.14 shall not be applicable to any Convertible
Notes which do not bear a Restricted Securities Legend or to
any shares of Common Stock evidenced by certificates which
do not bear a Restricted Common Stock Legend.

ARTICLE III.

Redemption

     SECTION 3.01. Optional Redemption. The Company may redeem all or any
portion of the Convertible Notes upon the terms and at the
Redemption Prices set forth in each of the Convertible
Notes. Any redemption shall be made pursuant to Paragraph 5
of the Convertible Notes and this Article III.

     SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Convertible Notes pursuant to the optional redemption
provisions of paragraph 5 of the Convertible Notes, it shall
furnish to the Trustee, at least 45 days but not more than
60 days before a Redemption Date (unless a shorter period
shall be satisfactory to the Trustee), an Officers’
Certificate setting forth (i) the Section of this Indenture
pursuant to which the redemption shall occur, (ii) the
Redemption Date, (iii) the principal amount of Convertible
Notes (if less than all) to be redeemed, (iv) the Redemption
Price and (v) the CUSIP number of the Convertible Notes
being redeemed.

     SECTION 3.03. Selection of Convertible Notes To Be Redeemed. If less than
all the Convertible Notes are to be redeemed, the Trustee
shall select the Convertible Notes to be redeemed by a
method that complies with the requirements of the principal
national securities exchange, if any, on which the
Convertible Notes are listed or quoted or, if the
Convertible Notes are not so listed, on a pro rata basis by
lot or by any other method that the Trustee considers fair
and appropriate. The Trustee shall make the selection not
more than 60 days and not less than 30 days before the
Redemption Date from Convertible

 

 

18

Notes outstanding and not
previously called for redemption. The Trustee may select
for redemption a portion of the principal of any Convertible
Notes that has a denomination larger than $1,000.
Convertible Notes and portions thereof will be redeemed in
the amount of $1,000 or integral multiples of $1,000.

     Provisions of this Indenture that apply to Convertible Notes called for
redemption also apply to portions of Convertible Notes called for redemption.
The Trustee shall notify the Company promptly of the Convertible Notes or
portions of Convertible Notes to be called for redemption.

     If any Convertible Note selected for partial redemption is converted in
part after such selection, the converted portion of such Convertible Note shall
be deemed (so far as possible) to be the portion to be selected for redemption.
The Convertible Notes (or portion thereof) so selected shall be deemed duly
selected for redemption for all purposes hereof, notwithstanding that any such
Convertible Note is converted in whole or in part before the mailing of the
notice of redemption. Upon any redemption of less than all the Convertible
Notes, the Company and the Trustee may treat as outstanding any Convertible
Notes surrendered for conversion during the period of 15 days next preceding
the mailing of a notice of redemption and need not treat as outstanding any
Convertible Note authenticated and delivered during such period in exchange for
the unconverted portion of any Convertible Note converted in part during such
period.

     SECTION 3.04. Notice of Redemption. At least 30 days but not more than 60
days before a Redemption Date, the Company shall mail by first class mail a
notice of redemption to each holder whose Convertible Notes are to be redeemed,
at such holder’s registered address.

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

		
	 	     (1) the Redemption Date;
	 
	 	     (2) the Redemption Price;
	 
	 	     (3) if any Convertible Note is being redeemed in part, the
portion of the principal amount of such Convertible Note to be
redeemed and that, after the Redemption Date, upon surrender of
such Convertible Note, a new Convertible Note or Convertible Notes
in principal amount equal to the unredeemed portion will be issued
in the name of the holder thereof;
	 
	 	     (4) that Convertible Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
	 
	 	     (5) that interest and Liquidated Damages, if any, on
Convertible Notes called for redemption and for which funds have
been set apart for payment, ceases to accrue on and after the
Redemption Date (unless the Company defaults in the payment of the
Redemption Price or the Paying Agent is prohibited from making such
payment pursuant to the terms of this 

 

 

19

		
	 	 Indenture);
	 
	 	     (6) the paragraph of the Convertible Notes pursuant to which
the Convertible Notes called for redemption are being redeemed;
	 
	 	     (7) the aggregate principal amount of Convertible Notes (if
less than all) that are being redeemed;
	 
	 	     (8) the CUSIP number of the Convertible Notes (provided that
the disclaimer permitted by Section 2.13 may be made);
	 
	 	     (9) the name and address of the Paying Agent;
	 
	 	     (10) that Convertible Notes called for redemption may be
converted at any time prior to the close of business on the last
Trading Day immediately preceding the Redemption Date and if not
converted prior to the close of business on such date, the right of
conversion will be lost; and
	 
	 	     (11) that in the case of Convertible Notes or portions thereof
called for redemption on a date that is also an Interest Payment
Date, the interest and Liquidated Damages, if any, due on such date
shall be paid to the person in whose name the Convertible Note is
registered at the close of business on the relevant Regular Record
Date.

       The notice, if mailed in the manner herein provided, shall be conclusively
presumed to have been given, whether or not the holder receives such notice.
In any case, failure to give such notice by mail or any defect in the notice to
the holder of any
Convertible Note designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any Convertible
Note.

       At the Company’s request, the Trustee shall give notice of redemption in
the Company’s name and at the Company’s expense.

       SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption
is mailed, Convertible Notes called for redemption become
due and payable on the Redemption Date at the Redemption
Price set forth in the Convertible Note.

       SECTION 3.06. Deposit of Redemption Price. On or before the Redemption
Date, the Company shall deposit with the Trustee or with the
Paying Agent money in immediately available funds sufficient
to pay the Redemption Price of and accrued interest
(together with Liquidated Damages, if any) on all
Convertible Notes to be redeemed on that date. The Trustee
or the Paying Agent shall return to the Company any money
not required for that purpose.

       On and after the Redemption Date, unless the Company shall default in the
payment of the Redemption Price, interest and Liquidated Damages, if any, will
cease to accrue on the principal amount of the Convertible
Notes or portions
thereof called for redemption and for which funds have been set apart for
payment, and such Convertible

 

20

Notes, or portions thereof, shall cease after the
close of business on the Business Day immediately preceding the Redemption Date
to be convertible into Common Stock and, except as provided in this Section
3.06 and Section 8.04, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such
Convertible Notes, or portions thereof, except the right to receive the
Redemption Price thereof and unpaid interest and Liquidated Damages, if any, to
(but excluding) the Redemption Date. In the case of Convertible Notes or
portions thereof redeemed on a Redemption Date which is also an Interest
Payment Date, the interest and Liquidated Damages, if any, due on such date
shall be paid to the person in whose name the Convertible Note is registered at
the close of business on the relevant Regular Record Date.

     SECTION 3.07. Convertible Notes Redeemed in Part. Upon surrender of a
Convertible Note that is redeemed in part only, the Company
shall issue and the Trustee shall authenticate and deliver
to the holder of a Convertible Note a new Convertible Note
equal in principal amount to the unredeemed portion of the
Convertible Note surrendered, at the expense of the Company,
except as specified in Section 2.06.

     SECTION 3.08. Conversion Arrangement on Call for Redemption. In
connection with any redemption of Convertible Notes, the
Company may arrange for the purchase and conversion of any
Convertible Notes by an arrangement with one or more
investment bankers or other purchasers to purchase such
Convertible Notes by paying to the Trustee in trust for the
holders, on or before the date fixed for redemption, an
amount not less than the applicable Redemption Price,
together with interest and Liquidated Damages, if any,
accrued to the date fixed for redemption, of such
Convertible Notes. Notwithstanding anything to the contrary
contained in this Article III, the obligation of the Company
to pay the Redemption Price of such Convertible Notes,
together with interest and Liquidated Damages, if any,
accrued to the date fixed for redemption, shall be deemed to
be satisfied and discharged to the extent such amount is so
paid by the purchasers. If such an agreement is entered
into, a copy shall be filed with the Trustee prior to the
date
fixed for redemption. Any Convertible Notes not duly surrendered for
conversion by the holders thereof may, at the option of the Company, be deemed,
to the fullest extent permitted by law, acquired by such purchasers from such
holders and (notwithstanding anything to the contrary contained in Article XII)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the date fixed for redemption (and the right to
convert any such Convertible Notes shall be deemed to have been extended
through such time), subject to payment of the above amount as aforesaid. At
the direction of the Company, the Trustee shall hold and dispose of any such
amount paid to it in the same manner as it would moneys deposited with it by
the Company for the redemption of Convertible Notes. Without the Trustee’s
prior written consent, no arrangement between the Company and such purchasers
for the purchase and conversion of any Convertible Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and defend and hold it harmless against, any loss, liability
or expense arising out of or in connection with any such arrangement for the
purchase and conversion of any Convertible Notes between the Company and such
purchasers to which the Trustee has not consented in writing, including the
costs and expenses incurred by the Trustee in the defense of any claim or
liability arising

 

 

21

out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this
Indenture.

ARTICLE IV.

Covenants

     SECTION 4.01. Payment of Convertible Notes. The Company shall pay the
principal of and interest and Liquidated Damages, if any, on the Convertible
Notes on the dates and in the manner provided in the Convertible Notes.
Principal, interest, Liquidated Damages, the Redemption Price and the
Designated Event Payment shall be considered paid on the date due if the
Trustee or Paying Agent (other than the Company or a Subsidiary of the Company)
holds as of 10:00 a.m., New York City time, on that date immediately available
funds designated for and sufficient to pay all principal, interest and
Liquidated Damages, if any, the Redemption Price or the Designated Event
Payment then due; provided, however, that money held by the Agent for the
benefit of holders of Senior Debt pursuant to the provisions of Article XI or
the payment of which to the holders of the Convertible Notes is prohibited by
Article XI shall not be considered to be designated for the payment of any
principal of or interest or Liquidated Damages, if any, on the Convertible
Notes within the meaning of this Section 4.01.

     To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by Convertible Notes, compounded
semiannually; and (ii) overdue installments of interest (without regard to any
applicable grace period) at the same rate, compounded semiannually.

     SECTION 4.02. Commission Reports. The Company shall comply with Section
314(a) of the TIA.

     SECTION 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of
the Company, an Officers’ Certificate stating that a review
of the activities of the Company and its subsidiaries during
the preceding fiscal year has been made under the
supervision of the signing Officers with a view to
determining whether the Company has fully performed
its obligations under this Indenture and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge, the
Company is not in default in the performance or observance of any of the terms
and conditions hereof (or, if any Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge) and, that to the best of his or her knowledge, no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest or Liquidated Damages, if any, on the Convertible
Notes are prohibited.

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

 

 

22

     SECTION 4.04. Maintenance of Office or Agency. The Company shall maintain
or cause to be maintained the office or agency required under Section 2.03.

The Company shall give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency not maintained by the
Trustee. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
presentations, surrenders, notices and demands with respect to the Convertible
Notes may be made or served at the Corporate Trust Office of the Trustee.

     The Company may also from time to time designate one or more other offices
or agencies where the Convertible Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designation.

     SECTION 4.05. Continued Existence. Subject to Article V, the Company
shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence.

     SECTION 4.06. Repurchase Upon Designated Event. Following a Designated
Event (the date of each such occurrence being the
“Designated Event Date”), the Company shall notify the
holders of Convertible Notes in writing of such occurrence
and shall make an offer (the “Designated Event Offer”) to
repurchase all Convertible Notes then outstanding at a
repurchase price in cash (the “Designated Event Payment”)
equal to 100% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, to, but
excluding, the Designated Event Payment Date (as defined
below).

     Notice of a Designated Event shall be mailed by or at the direction of the
Company to the holders of Convertible Notes as shown on the Register of such
holders maintained by the Registrar not more than 20 days after the applicable
Designated Event Date at the addresses as shown on the Register of holders
maintained by the Registrar, with a copy to the Trustee and the Paying Agent.
The Designated Event Offer shall remain open until a specified date (the
“Designated Event Offer Termination Date”) which is at least 20 Business Days
from the date such notice is mailed. During the period specified in such
notice, holders of Convertible Notes may elect to tender their Convertible
Notes in whole or in part in integral multiples of $1,000 in exchange for cash.
Payment shall be made by the Company in respect of Convertible Notes properly
tendered pursuant to this Section 4.06 on a specified Business Day (the
“Designated Event Payment Date”) which shall be no later than 60 days after the
applicable Designated Event.

     The notice, which shall govern the terms of the Designated Event Offer,
shall include such disclosures as are required by law and shall state:

     (a)  that a Designated Event Offer is being made pursuant to this Section
4.06 and that all Convertible Notes will be accepted for payment;

     (b)  the event, transaction or transactions that constitute the Designated
Event;

 

 

23

     (c)  the Designated Event Payment for each Convertible Note, the Designated
Event Offer Termination Date and the Designated Event Payment Date;

     (d)  that any Convertible Note not accepted for payment will continue to
accrue interest and Liquidated Damages, if any, in accordance with the terms
thereof;

     (e)  that, unless the Company defaults on making the Designated Event
Payment, any Convertible Note accepted for payment pursuant to the Designated
Event Offer shall cease to accrue interest and Liquidated Damages, if any, on
the Designated Event Payment Date and no further interest or Liquidated Damages
shall accrue on or after such date;

     (f)  that holders electing to have Convertible Notes repurchased pursuant
to a Designated Event Offer will be required to surrender their Convertible
Notes to the Paying Agent at the address specified in the notice prior to 5:00
p.m., New York City time, on the Designated Event Offer Termination Date and
must complete any form letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;

     (g)  that holders of Convertible Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York City
time, on the Designated Event Offer Termination Date, a facsimile transmission
or letter setting forth the name of the holder, the principal amount of
Convertible Notes the holder delivered for purchase, the Convertible Note
certificate number (if any) and a statement that such holder is withdrawing his
election to have such Convertible Notes purchased;

     (h)  that holders whose Convertible Notes are repurchased only in part will
be issued Convertible Notes equal in principal amount to the unpurchased
portion of the Convertible Notes surrendered;

     (i)  the instructions that holders must follow in order to tender their
Convertible Notes; and

     (j)  that in the case of a Designated Event Payment Date that is also an
Interest Payment Date, the interest and Liquidated Damages, if any, due on such
date shall be paid to the person in whose name the Convertible Note is
registered at the close of business on the relevant Designated Event Offer
Termination Date.

     On the Designated Event Offer Termination Date, the Company shall (i)
accept for payment all Convertible Notes or portions thereof properly tendered
pursuant to
the Designated Event Offer, (ii) deposit with the Paying Agent money
sufficient to pay the Designated Event Payment with respect to all Convertible
Notes or portions thereof so tendered and accepted and (iii) deliver or cause
to be delivered to the Trustee the Convertible Notes so accepted together with
an Officers’ Certificate setting forth the aggregate principal amount of
Convertible Notes or portions thereof tendered to and accepted for payment by
the Company. On the Designated Event Payment Date, the Paying Agent shall mail
or deliver the Designated Event Payment to the holders of Convertible Notes so
accepted and the Trustee shall promptly authenticate and mail or cause to be
transferred by book entry to such holders a new Convertible Note equal in
principal amount

 

 

24

to any unpurchased portion of the Convertible Note
surrendered, if any; provided, however, that such new Convertible Notes will be
in a principal amount of $1,000 or an integral multiple thereof. Any
Convertible Notes not so accepted shall be promptly mailed or delivered by the
Company to the holder thereof.

     In the case of any reclassification, change, consolidation, merger, share
exchange, combination or sale or conveyance to which Section 12.06 applies in
which the Common Stock of the Company is changed or exchanged as a result into
the right to receive stock, securities or other property or assets (including
cash) which includes shares of common stock of the Company or another person
that are, or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate Fair Market Value of such stock, securities other property and assets
(including cash) (as determined by the Company, which determination shall be
conclusive and binding), then the person formed by such consolidation or
resulting from such merger or share exchange or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture (which shall comply with the TIA as in force at the date of execution
of such supplemental indenture) modifying the provisions of this Indenture
relating to the right of holders of Convertible Notes to cause the Company to
repurchase Convertible Notes following a Designated Event, including the
applicable provisions of this Section 4.06 and the definitions of Designated
Event, Change of Control and Termination of Trading, as appropriate, as
determined in good faith by the Company (which determination shall be
conclusive and binding), to make such provision apply to such common stock and
the issuer thereof if different from the Company and Common Stock of the
Company (in lieu of the Company and the Common Stock of the Company).

     The Designated Event Offer shall be made by the Company in compliance with
all applicable provisions of the Exchange Act, and all applicable tender offer
rules promulgated thereunder, to the extent such laws and regulations are then
applicable and shall include all instructions and materials that the Company
shall reasonably deem necessary to enable such holders of Convertible Notes to
tender their Convertible Notes.

     SECTION 4.07. Appointments to Fill Vacancies in Trustee’s Office. The
Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided
in Section 7.08, a Trustee, so that there shall at all times
be a Trustee hereunder.

     SECTION 4.08. Stay, Extension and Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at
any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time
hereafter enforced, that may affect the Company’s obligation
to pay the Convertible Notes, and the Company (to the extent
that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law insofar as such law
applies to the Convertible Notes and covenants that it shall
not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the

 

 

25

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

      SECTION 4.09. Taxes. The Company shall, and shall cause each of its
subsidiaries to, pay prior to delinquency all taxes,
assessments and government levies; provided, however, that
the Company shall not be required to pay or cause to be paid
any such tax, assessment or levy (i) if the failure to do so
will not, in the aggregate, have a material adverse impact
on the Company and its subsidiaries taken as a whole or (ii)
if the amount, applicability or validity is being contested
in good faith by appropriate proceedings.

      SECTION 4.10. Investment Company Act. As long as any Convertible Notes
are outstanding, the Company will conduct its business and
operations so as not to become an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), and will take all
steps required in order for it to continue not to be an
“investment company” and not to be required to be registered
under the Investment Company Act, including, if necessary,
redeployment of the assets of the Company.

ARTICLE V.

Successors

      SECTION 5.01. When the Company May Merge, Etc. The Company may not, in a
single transaction or series of related transactions, consolidate or merge with
or into or effect a share exchange with (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets to, any person
as an entirety or substantially as an entirety unless:

(a)    either

(i)     the
Company shall be the surviving or continuing corporation,
or

(ii)    the person formed by or surviving any such consolidation,
merger or share exchange (if other than the Company) or the person which
acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company substantially as an
entirety

     (1) shall be a corporation 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 supplemental indenture in form
reasonably satisfactory to the Trustee, executed and delivered to
the Trustee, the due and punctual payment of the principal of, and
premium, if any, and interest and
Liquidated Damages, if any, on all of the Convertible Notes
and the performance of every covenant of the Convertible Notes and
this Indenture and the Registration Rights Agreement on the part of
the Company to be performed or observed, including, without
limitation, modifications to rights of holders to cause the
repurchase of Convertible Notes upon a Designated

 

 

26
		
	 	Event in
accordance with the penultimate paragraph of Section 4.06 and
conversion rights in accordance with Section 12.06 to the extent
required by such Sections;

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

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

     For purposes of this Section 5.01, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more subsidiaries of
the Company, the capital stock of which individually or in the aggregate
constitutes 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.

     SECTION 5.02. Successor Corporation Substituted. Upon any such
consolidation, merger, share exchange, sale, assignment,
conveyance, lease, transfer or other disposition in
accordance with Section 5.01, the successor person formed by
such consolidation or share exchange or into which the
Company is merged or to which such sale, assignment,
conveyance, lease, transfer or other disposition is made
will 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
sale, assignment, transfer, lease, conveyance or other
disposition) the predecessor corporation will be relieved of
all further obligations and covenants under this Indenture
and the Convertible Notes.

     SECTION 5.03. Purchase Option on Change of Control. This Article V does
not affect the obligations of the Company (including without
limitation any successor to the Company) under Section 4.06.

ARTICLE VI.

Defaults and Remedies

     SECTION 6.01. Events of Default. An “Event of Default” with respect to
any Convertible Notes occurs if:

     (a)  the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article XI of this
Indenture) of principal of, or premium, if any, on the Convertible Notes when
due at maturity, upon repurchase, upon acceleration or otherwise, including,
without limitation, failure of the

 

27

Company to make any optional redemption
payment when required pursuant to Article III; or

     (b)  the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article XI of this
Indenture) of any installment of interest or Liquidated Damages on the
Convertible Notes when due (including any interest or Liquidated Damages
payable in connection with a repurchase pursuant to Section 4.06 or in
connection with any optional redemption payment pursuant to Article III) and
continuance of such default for 30 days or more; or

     (c)  the Company defaults in the payment (whether or not such payment is
prohibited by the subordination provisions set forth in Article XI of this
Indenture) of the Designated Event Payment in respect of the Convertible Notes
on the date therefor; or

     (d)  the Company fails to provide timely notice of any Designated Event in
accordance with Section 4.06; or

     (e)  the Company defaults (other than a default set forth in clauses (a),
(b), (c) or (d) above) in the performance of, or breaches, any other covenant
or warranty of the Company set forth in this Indenture or the Convertible Notes
and fails to remedy such default or breach within a period of 60 days after the
receipt of written notice from the Trustee or the holders of at least 25% in
aggregate principal amount of the then outstanding Convertible Notes; or

     (f)  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 for money borrowed by the Company or any Subsidiary
of the Company (or the payment of which is guaranteed or secured by the Company
or any of its subsidiaries), whether such Indebtedness or guarantee exists on
the date of this Indenture or is created thereafter, which default (i) is
caused by a failure to pay when due any principal of such Indebtedness within
the grace period provided for in such Indebtedness, which failure continues
beyond any applicable grace period (a “Payment Default”), or (ii) results in
the acceleration of such Indebtedness prior to its express maturity (without
such acceleration being rescinded or annulled) and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $5,000,000 or more and such Payment
Default is not cured or such acceleration is not annulled within 10 days after
receipt of written notice by the Company from the Trustee or by the Company and
the Trustee from any holder of Convertible Notes; or

     (g)  failure to pay a final, nonappealable judgment or final, nonappealable
judgments (other than any judgment as to which a reputable insurance company
has accepted full liability) for the payment of money entered by a court or
courts of competent
jurisdiction against the Company or any Material Subsidiaries of the
Company, which judgments remain unstayed, unbonded or undischarged for a period
of 60 days, provided that the aggregate amount of all such judgments exceeds
$5,000,000; or

 

 

28

     (h)   the Company or any Material Subsidiary, pursuant to or within the
meaning of any Bankruptcy Law:

     (i)    commences
a voluntary case,

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

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

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

     (v)   makes the admission in writing that it generally is unable to
pay its debts as the same become due; or

     (i)    a court of competent jurisdiction enters a judgment, order or decree
under any Bankruptcy Law that:

     (i)    is for relief against the Company or any Material Subsidiary in
an involuntary case, and the order or decree remains unstayed and in
effect for 90 days,

     (ii)   appoints a Custodian of the Company or any Material Subsidiary,
and the order or decree remains unstayed and in effect for 90 days, or

     (iii)  orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 90
days.

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

     SECTION 6.02. Acceleration. If an Event of Default (other than an Event
of Default with respect to the Company specified in clauses (h) and (i) of
Section 6.01) occurs and is continuing, then and in every such case the
Trustee, by written notice to the Company, or the holders of at least 25% in
aggregate principal amount of the then outstanding Convertible Notes, by
written notice to the Company and the Trustee, may declare the unpaid principal
of, premium, if any, and accrued and unpaid interest and Liquidated Damages, if
any, on all the Convertible Notes to be due and payable. Upon such
declaration, such principal amount, premium, if any, and accrued and unpaid
interest and Liquidated Damages, if any, shall become immediately due and
payable, notwithstanding anything contained in this Indenture or the
Convertible Notes to the contrary, but subject to the provisions of Article XI.
If any Event of Default with respect to the Company specified in clauses (h)
or (i) of Section 6.01 occurs, all unpaid principal of, and premium, if any,
and accrued and unpaid interest and Liquidated Damages, if any, on the
Convertible Notes
then outstanding shall become automatically due and payable subject to the
provisions of Article XI, without any declaration or other act on the part of
the Trustee or any holder of Convertible Notes.

 

 

29

     The holders of a majority in aggregate principal amount of the then
outstanding Convertible Notes by notice to the Trustee may rescind an
acceleration of the Convertible Notes and its consequences if all existing
Events of Default (other than nonpayment of principal of, premium, if any, and
interest and Liquidated Damages, if any, on the Convertible Notes which has
become due solely by virtue of such acceleration) have been cured or waived and
if the rescission would not conflict with any judgment or decree of any court
of competent jurisdiction. No such rescission shall affect any subsequent
Default or Event of Default or impair any right consequent thereto.

     In the case of any Event of Default, pursuant to the provisions of this
Section 6.02, occurring by reason of any wilful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium which the Company would have had to pay if the Company
then had elected to redeem the Convertible Notes pursuant to Paragraph 5 of the
Convertible Notes, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law, upon the acceleration of the
Convertible Notes notwithstanding anything contained in this Indenture or in
the Convertible Notes to the contrary.

     If an Event of Default occurs on any date on which the Company is
prohibited from redeeming the Convertible Notes, pursuant to Paragraph 5 of the
Convertible Notes, by reason of any wilful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Convertible Notes on such date, then the
maximum redemption premium specified in this Indenture shall also become
immediately due and payable to the extent permitted by law upon the
acceleration of the Convertible Notes.

     SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of
principal of or interest or Liquidated Damages, if any, on
the Convertible Notes or to enforce the performance of any
provision of the Convertible Notes or this Indenture. The
Trustee may maintain a proceeding even if it does not
possess any of the Convertible Notes or does not produce any
of them in the proceeding. A delay or omission by the
Trustee or any holder of a Convertible Note in exercising
any right or remedy occurring upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

     SECTION 6.04. Waiver of Past Defaults. The holders of a majority in
aggregate principal amount of the Convertible Notes then
outstanding may, on behalf of the holders of all the
Convertible Notes, waive an existing Default or Event of
Default and its consequences, except a Default or Event of
Default in the payment of the principal of, and premium, if
any, or interest or Liquidated Damages, if any, on the
Convertible Notes (other than the non-payment of principal
of, and premium, if any, and interest and Liquidated
Damages, if any, on the Convertible Notes which has become
due solely by virtue of an acceleration which has been duly
rescinded as provided above), or in respect of a covenant or
provision of this Indenture which cannot be modified or
amended without the consent of all holders of Convertible
Notes; provided, however, that in order to waive any
provisions of

 

 

30

Article XI, holders of at least 75% in
aggregate principal amount of Convertible Notes then outstanding must consent
to such waiver if such waiver would adversely affect the rights of holders of
Convertible Notes. When a Default or Event of Default is waived, it is cured
and stops continuing. No waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.

     SECTION 6.05. Control by Majority. The holders of a majority in
aggregate principal amount of the then outstanding
Convertible Notes may direct the time, method and
place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with
law or this Indenture that the Trustee determines may
be unduly prejudicial to the rights of other holders
of Convertible Notes or that may involve the Trustee
in personal liability; provided, however, that the
Trustee shall have no duty or obligation (subject to
Section 7.01) to ascertain whether or not such
actions or forbearances are unduly prejudicial to
such holders; provided further, however that the
Trustee may take any other action the Trustee deems
proper that is not inconsistent with such directions.

     SECTION 6.06. Limitation on Suits. A holder of a Convertible Note
may not pursue any remedy with respect to this
Indenture or the Convertible Notes unless:

     (a)  the holder gives to the Trustee notice of a continuing Event of
Default;

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

     (c)  such holder or holders offer and, if requested, provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or expense;

     (d)  the Trustee does not comply with the request within 30 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

     (e)  during such 30-day period the holders of a majority in aggregate
principal amount of the then outstanding Convertible Notes do not give the
Trustee a direction inconsistent with the request.

     A holder of a Convertible Note may not use this Indenture to prejudice the
rights of another holder or to obtain a preference or priority over another
holder.

     SECTION 6.07. Rights of Holders To Receive Payment. Subject to the
provisions of Article XI hereof, notwithstanding any other
provision of this Indenture, the right of any holder of a
Convertible Note to receive payment of principal, premium,
if any, and interest and Liquidated Damages, if any, on the
Convertible Note, on or after the respective due dates
expressed in the Convertible Note, or to bring suit for the
enforcement of any such payment on or after such respective
dates, or to bring suit for the enforcement of the right to
convert the Convertible Note shall not be impaired or
affected without the consent of the holder of a Convertible
Note.

 

 

31

     SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a), (b) or (c) occurs and is
continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for
the whole amount of principal, premium, if any, and interest
and Liquidated Damages, if any, remaining unpaid on the
Convertible Notes and interest on
overdue principal, premium, if any, and interest and Liquidated Damages, if
any, and such further amount as shall be sufficient to cover the costs and, to
the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

     SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or
documents as may be necessary or advisable in order
to have the claims of the Trustee and the holders of
Convertible Notes allowed in any judicial proceedings
relative to the Company, its creditors or its
property. Nothing contained herein shall be deemed
to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any holder of a
Convertible Note any plan of reorganization,
arrangement, adjustment or composition affecting the
Convertible Notes or the rights of any holder
thereof, or to authorize the Trustee to vote in
respect of the claim of any holder in any such
proceeding.

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

First: to the Trustee for amounts due under Section 7.07, including
payment of all compensation, expenses and liabilities incurred, and all
advances made, by the Trustee, and the costs and expenses of collection;

Second: to holders of Senior Debt to the extent required by Article
XI;

Third: to holders of Convertible Notes for amounts due and unpaid on
the Convertible Notes for principal, premium, if any, and interest and
Liquidated Damages, if any, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Convertible
Notes for principal, premium, if any, and interest and Liquidated
Damages, if any, respectively; and

Fourth: to the Company.

     Except as otherwise provided in Section 2.12, the Trustee may fix a Record
Date and payment date for any payment to holders of Convertible Notes.

     SECTION
6.11. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit, other than the Trustee,
of an undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys fees, 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 does not apply
to a suit by the Trustee, a suit by a holder pursuant to Section 6.07 or a suit
by holders of more than 10% in principal amount of the then outstanding
Convertible Notes.

 

 

32

ARTICLE VII.

The Trustee

     The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed. Whether or not
herein 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 Article VII.

     SECTION 7.01. Duties of the Trustee. (a) If an Event of Default known to
a Trust Officer of the Trustee has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.

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

		
	 	     (1) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture, and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
	 
	 	     (2) 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 any statements,
certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the form required by this Indenture.

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

		
	 	     (1) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
	 
	 	     (2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
	 
	 	     (3) 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 6.05.

 

 

33

     (d)  Whether or not therein expressly so provided, every provision of this
Indenture that is in any way related to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.01.

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

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

     SECTION
7.02. Rights of the Trustee. (a) The Trustee may rely on and
shall be protected in acting or refraining from acting upon any resolution,
Officers’ Certificate, or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, security or other document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter contained therein.

     (b)  Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers’ Certificate (unless
other evidence in respect thereof is herein specifically prescribed). In
addition, before the Trustee acts or refrains from acting, it may require an
Officers’ Certificate, an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

     (c)  The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through its attorneys and
agents and other persons not regularly in its employ and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care.

     (d)  The Trustee shall not be liable for any action it takes or omits to
take in good faith without negligence or willful misconduct which it believes
to be authorized or within its discretion, rights or powers.

     (e)  Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.

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

 

 

34

     (g)  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 discretion of
any of the holders of Convertible Notes pursuant to the provisions of this
Indenture, unless such holders have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which
might be incurred therein or thereby.

     (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, consent, order, security or other document,
provided that if the Trustee determines in its discretion to make any such
investigation, then it shall be entitled, upon reasonable prior notice and
during normal business hours, to examine the books and records and the premises
of the Company, personally or by agent or attorney, and the reasonable expenses
of                      every such examination shall be paid by the Company or, if paid by the
Trustee or any predecessor Trustee, shall be reimbursed by the Company upon
demand.

     (i)  The permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct.

     (j)  The Trustee shall not be responsible for the computation of any
adjustment to the Conversion Price or for any determination as to whether an
adjustment is required and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received the notice from the Company
contemplated by Section 12.05(j).

     (k)  The Trustee shall have no duty to inquire as to the performance of the
Company’s covenants herein.

     SECTION 7.03. Individual Rights of the Trustee. Subject to Sections 7.10
and 7.11, the Trustee in its individual or any other
capacity may become the owner or pledgee of Convertible
Notes with the same rights it would have if it were not the
Trustee and may otherwise deal with the Company or an
Affiliate of the Company and receive, collect, hold and
retain collections from the Company with the same rights it
would have if it were not Trustee. Any Agent may do the
same with like rights.

     SECTION 7.04. Trustee’s Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or
adequacy of this Indenture or the Convertible Notes. It
shall not be accountable for the Company’s use of the
proceeds from the Convertible Notes or any money paid to the
Company or upon the Company’s direction under any provision
of this Indenture. It shall not be responsible for the use
or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for
any statement or recital herein or any statement in the
Convertible Notes or any other document in connection with
the sale of the Convertible Notes or pursuant to this
Indenture other than its certificate of authentication.

     SECTION 7.05. Notice of Defaults. If a Default or Event of Default occurs
and is continuing and if it is known to a Trust Officer of
the Trustee, the Trustee shall mail to each holder of a
Convertible Note a notice of the Default or Event of Default
within 60

 

 

35

days after it occurs. A Default or an Event of
Default shall not be considered known to a Trust Officer of
the Trustee unless it is a Default or Event of Default in
the payment of principal, premium, if any, or interest or
Liquidated Damages, if any, when due under Section 6.01(a),
(b) or (c) or a Trust Officer of the Trustee shall have
received notice thereof, in accordance with this Indenture,
from the Company or from the holders of a majority in
principal amount of the outstanding Convertible Notes.
Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest or
Liquidated Damages, if any, on any Convertible Note, the
Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines
that withholding the notice is in the interest of the
holders of the Convertible Notes.

     SECTION 7.06. Reports by the Trustee to Holders. Within 60 days after the
reporting date stated in Section 10.10, the Trustee shall
mail to holders of Convertible Notes a brief report dated as
of such reporting date that complies with TIA § 313(a) (but
if no event described in TIA § 313(a) has occurred within
twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall
comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA § 313(c).

     A copy of each report at the time of its mailing to holders of Convertible
Notes shall be filed, at the expense of the Company, by the Trustee with the
Commission and each stock exchange or securities market, if any, on which the
Convertible Notes are listed. The Company shall timely notify the Trustee when
the Convertible Notes are listed or quoted on any stock exchange or securities
market.

     SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation for its acceptance of this Indenture and its services hereunder.
The Trustee’s compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by or on behalf of it in addition to the compensation for its services.
Such expenses may include the reasonable compensation, disbursements and
expenses of the Trustee’s agents, counsel and other persons not regularly in
its employ.

     The Company shall indemnify the Trustee against, and defend and hold the
Trustee harmless from, any loss, liability or expense incurred by it arising
out of or in connection with the acceptance or administration of its duties
under this Indenture and the trusts hereunder, including the costs and expenses
of defending itself against or investigating any claim of liability in the
premises, except as set forth in the next paragraph. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim with counsel
designated by the Company, who may be outside counsel to the Company but shall
in all events be reasonably satisfactory to the Trustee, and the Trustee shall
cooperate in the defense. In addition, the Trustee may retain one separate
counsel and, if deemed advisable by such counsel, local counsel, and the
Company shall pay the reasonable fees and expenses of such separate counsel and
local counsel. The indemnification herein extends to any settlement; provided,

 

 

36

however, that the Company will not be liable for any settlement made without
its consent; provided further, however, that such consent will not be
unreasonably withheld.

     The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through its own negligence or willful
misconduct.

     The Trustee shall have a lien prior to the Convertible Notes on all money
or property held or collected by the Trustee to secure the Company’s payment
obligations in this Section 7.07, except that held in trust to pay principal,
premium, if any, and interest and Liquidated Damages, if any, on Convertible
Notes. Such liens and the Company’s obligations under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.

     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

     SECTION 7.08. Replacement of the Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee’s acceptance of appointment as provided in this Section
7.08.

     The Trustee may resign at any time and be discharged from the trust hereby
created by so notifying the Company. The holders of a majority in principal
amount of the then outstanding Convertible Notes may remove the Trustee by so
notifying the Trustee and the Company in writing and may appoint a successor
Trustee. The Company may remove the Trustee if:

     (a)  the Trustee fails to comply with Section 7.10;

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

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

     (d)  the Trustee becomes incapable of acting.

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

     If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the holders of at least 10% in principal amount of the then outstanding
Convertible Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

 

 

37

     If the Trustee, after written request by any holder of a Convertible Note
who has been a holder for at least six months, fails to comply with Section
7.10, such holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. 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 of Convertible Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the retiring Trustee hereunder have been paid and subject to the lien
provided for in Section 7.07. Notwithstanding the replacement of the Trustee
pursuant to this Section 7.08, the Company’s obligations under Section 7.07
shall continue for the benefit of the retiring Trustee with respect to expenses
and liabilities incurred by it prior to such replacement.

     Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.

     SECTION 7.09. Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business
(including the trust created by this Indenture) to, another
corporation or national banking association, the resulting,
surviving or transferee corporation or national banking
association without any further act shall be the successor
Trustee with the same effect as if the successor Trustee had
been named as the Trustee herein.

     SECTION 7.10. Eligibility, Disqualification. This Indenture shall always
have a Trustee who satisfies the requirements of TIA § 310
(a) (1). The Trustee shall always have a combined capital
and surplus as stated in Section 10.10. The Trustee is
subject to TIA § 310(b) regarding the disqualification of a
trustee upon acquiring a conflicting interest.

     SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA § 311(a), excluding any
creditor relationship set forth in TIA § 311(b). A Trustee
who has resigned or been removed shall be subject to TIA §
311(a) to the extent indicated therein.

ARTICLE VIII.

Satisfaction and Discharge of Indenture

     SECTION 8.01. Discharge of Indenture. When (a) the Company
delivers to the Trustee for cancellation all
Convertible Notes theretofore authenticated (other
than any Convertible Notes which have been destroyed,
lost or stolen and in lieu of or in substitution for
which other Convertible Notes have been authenticated
and delivered) and not

 

 

38

theretofore canceled, or (b)
all the Convertible Notes not theretofore canceled or
delivered to the Trustee for cancellation have become
due and payable, or by their terms will become due
and payable within one year or are to be called for
redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice
of redemption, or are delivered to the Trustee for
conversion in accordance with this Indenture, and the
Company deposits with the Trustee, in trust, amounts
sufficient to pay at maturity or upon redemption of
all of the Convertible Notes (other than any
Convertible Notes which have been mutilated,
destroyed, lost or stolen and in lieu of or in
substitution for which other Convertible Notes have
been authenticated and delivered) not theretofore
canceled or delivered to the Trustee for
cancellation, including principal and premium, if
any, and interest and Liquidated Damages, if any, due
or to become due to such date of maturity or
Redemption Date, as the case may be, and if in either
case the Company also pays, or causes to be paid, all
other sums payable hereunder by the Company, then
this Indenture shall cease to be of further effect
(except as to (i) rights of registration of transfer,
substitution, replacement and exchange and conversion
of Convertible Notes, (ii) rights hereunder of
holders of Convertible Notes to receive payments of
principal of and premium, if any, and interest and
Liquidated Damages, if any, on the Convertible Notes,
(iii) the obligations under Sections 2.03 and 8.05
hereof and (iv) the rights, obligations and
immunities of the Trustee hereunder), and the
Trustee, on demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel as
required by Section 10.04 and at the Company’s cost
and expense, shall execute proper instruments
acknowledging satisfaction of and discharging this
Indenture; the Company, however, hereby agrees to
reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the
Trustee and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Convertible
Notes.

     SECTION 8.02. Deposited Moneys to be Held in Trust by Trustee.
Subject to Section 8.04, all moneys deposited with
the Trustee pursuant to Section 8.01 shall be held in
trust and applied by it to the payment,
notwithstanding the provisions of Article XI, either
directly or through the Paying Agent, to the holders
of the particular Convertible Notes for the payment
or redemption of which such moneys have been
deposited with the Trustee, of all sums due and to
become due thereon for principal and interest and
Liquidated Damages, if any, and premium, if any.

     SECTION 8.03. Paying Agent to Repay Moneys Held. Upon the
satisfaction and discharge of this Indenture, all
moneys then held by any Paying Agent (other than the
Trustee) shall, upon the Company’s demand, be repaid
to it or paid to the Trustee, and thereupon such
Paying Agent shall be released from all further
liability with respect to such moneys.

     SECTION 8.04. Return of Unclaimed Moneys. Subject to the
requirements of applicable law, any moneys deposited
with or paid to the Trustee for payment of the
principal of, premium, if any, or interest or
Liquidated Damages, if any, on Convertible Notes and
not applied but remaining unclaimed by the holders
thereof for two years after the date upon which the
principal of, premium, if any, or interest or
Liquidated Damages, if any, on such Convertible
Notes, as the case may be, have become due and
payable, shall be repaid to the Company by the
Trustee on demand; provided, however, that the
Company, or

 

 

39

the Trustee at the request of the
Company, shall have first caused notice of such
payment to the Company to be mailed to each holder of
a Convertible Note entitled thereto no less than 30
days prior to such payment and all liability of the
Trustee shall thereupon cease with respect to such
moneys, and the holder of any of the Convertible
Notes shall thereafter look only to the Company for
any payment which such holder may be entitled to
collect unless an applicable abandoned property law
designates another person.

     SECTION 8.05. Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section
8.02 by reason of any order or judgment of any court
or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s
obligations under this Indenture and the Convertible
Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until
such time as the Trustee or the Paying Agent is
permitted to apply all such money in accordance with
Section 8.02; provided, however, that if the Company
makes any payment of interest, Liquidated Damages, if
any, on or principal or premium, if any, of any
Convertible Note following the reinstatement of its
obligations, the Company shall be subrogated to the
rights of the holders thereof to receive such payment
from the money held by the Trustee or Paying Agent.

ARTICLE IX.

Amendments

     SECTION
9.01. Without the Consent of Holders. The Company and the Trustee
may amend this Indenture or the Convertible Notes without notice to or the
consent of any holder of a Convertible Note for the purposes of:

     (a)  curing any ambiguity or correcting or supplementing any defective or
inconsistent provision contained in this Indenture or making any other changes
in the provisions of this Indenture which the Company and the Trustee may deem
necessary or desirable, provided such amendment does not adversely affect the
legal rights under this Indenture of the holders of Convertible Notes;

     (b)  providing for uncertificated Convertible Notes in addition to or in
place of certificated Convertible Notes or to provide for bearer Convertible
Notes;

     (c)  evidencing the succession of another person to the Company and
providing for the assumption by such successor of the covenants and obligations
of the Company thereunder and in the Convertible Notes as permitted by Section
5.01;

     (d)  providing for conversion rights or repurchase rights of holders of
Convertible Notes in the event of consolidation, merger, share exchange or sale
of all or substantially all of the assets of the Company as required to comply
with Sections 5.01 or 12.06;

     (e)  reducing the Conversion Price;

 

 

40

     (f)  evidencing and providing for the acceptance of appointment under this
Indenture of a successor Trustee;

     (g)  making any changes that would provide the holders of the Convertible
Notes with any additional rights or benefits or that do not adversely affect
the legal rights under this Indenture of any such holder;

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

     (i)  securing the Convertible Notes.

     SECTION 9.02. With the Consent of Holders. Subject to Section 6.07, the
Company and the Trustee may amend this Indenture or the Convertible Notes with
the written consent of the holders of at least a majority in aggregate
principal amount of the then outstanding Convertible Notes (including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes).

     Subject to Sections 6.04 and 6.07, the holders of a majority in aggregate
principal amount of the Convertible Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Convertible
Notes) may also waive compliance in a particular instance by the Company with
any provision of this Indenture or the Convertible Notes.

     However, without the consent of each holder of a Convertible Note
affected, an amendment or waiver under this Section may not (with respect to
any Convertible Notes held by a non-consenting holder):

     (a)  reduce the principal amount of Convertible Notes whose holders must
consent to an amendment, supplement or waiver;

     (b)  reduce the principal of or premium on or change the fixed maturity of
any Convertible Note or alter the redemption or mandatory repurchase provisions
with respect thereto;

     (c)  reduce the rate of, or change the time for payment of, interest,
including defaulted interest, or Liquidated Damages on any Convertible Note;

     (d)  waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest or Liquidated Damages, if any, on the Convertible
Notes (except a rescission of acceleration of the Convertible Notes by the
holders of at least a majority in aggregate principal amount of the Convertible
Notes then outstanding and a waiver of the payment default that resulted from
such acceleration);

     (e)  change the coin or currency of payment of principal of, or premium, if
any, or interest or Liquidated Damages, if any, on any Convertible Note;

 

 

41

     (f)  make any change in the provisions of this Indenture relating to
waivers of past Defaults or Events of Default or the rights of holders of
Convertible Notes to receive payments of principal of, premium, if any, or
interest or Liquidated Damages on the Convertible Notes;

     (g)  waive a redemption or mandatory repurchase payment with respect to any
Convertible Notes;

     (h)  except as permitted herein (including Section 9.01(a)), increase the
Conversion Price or modify the provisions contained herein relating to
conversion of the Convertible Notes in a manner adverse to the holders thereof;
or

     (i)  make any adverse change to the abilities of holders of Convertible
Notes to enforce their rights under this Indenture.

     To secure a consent of the holders of Convertible Notes under this Section
9.02, it shall not be necessary for such holders to approve the particular form
of any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.

     After an amendment or waiver under this Section 9.02 becomes effective,
the Company shall mail to holders of Convertible Notes a notice briefly
describing the amendment or waiver.

     In order to amend any provisions of Article XI, (i) holders of at least
75% in aggregate principal amount of Convertible Notes then outstanding must
consent to such amendment if such amendment would adversely affect the rights
of holders of Convertible Notes and (ii) each holder of Senior Debt must
consent to such amendment if such amendment would adversely affect the rights
of such holder of Senior Debt.

     SECTION 9.03. Compliance with the Trust Indenture Act. Every amendment to
this Indenture or the Convertible Notes shall be set forth in a supplemental
indenture that complies with the TIA as then in effect.

     SECTION 9.04. Revocation and Effect of Consents. Until an amendment or
waiver becomes effective, a consent to it by a holder of a Convertible Note is
a continuing consent by the holder and every subsequent holder of a Convertible
Note or portion of a Convertible Note that evidences the same debt as the
consenting holder’s Convertible Note, even if notation of the consent is not
made on any Convertible Note. However, any such holder or subsequent holder
may revoke the consent as to his or her Convertible Note or portion of a
Convertible Note if the Trustee receives the notice of revocation before the
date on which the Trustee receives an Officers’ Certificate certifying that the
holders of the requisite principal amount of Convertible Notes have consented
to the amendment or waiver.

     The Company may, but shall not be obligated to, fix a Record Date for the
purpose of determining the holders of Convertible Notes entitled to consent to
any amendment or waiver. If a Record Date is fixed, then notwithstanding the
provisions of the

 

 

42

immediately preceding paragraph, those persons who were holders of
Convertible Notes at such Record Date (or their duly designated proxies), and
only those persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such persons continue to
be holders after such Record Date.

     After an amendment or waiver becomes effective it shall bind every holder
of a Convertible Note, unless it is of the type described in clauses (a)
through (i) of Section 9.02. In such case, the amendment or waiver shall bind
each holder of a Convertible Note who has consented to it and every subsequent
holder of a Convertible Note or portion of a Convertible Note that evidences
the same debt as the consenting holder’s Convertible Note.

     SECTION 9.05. Notation on or Exchange of Convertible Notes. Convertible
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and shall if required by the
Trustee, bear a notation in the form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Convertible Notes so modified as to conform, in the opinion of
the Company and the Trustee, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for outstanding Convertible Notes without charge to the holders of the
Convertible Notes, except as specified in Section 2.06.

     SECTION 9.06. Trustee Protected. The Trustee shall sign any amendment or
supplemental indenture authorized pursuant to this Article IX if such amendment
or supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee.

     If such amendment or supplemental indenture does adversely affect the
rights, duties, liabilities or immunities of the Trustee, the Trustee may, but
need not, sign it. In signing such amendment or supplemental indenture, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Officers’ Certificate and an Opinion of Counsel as conclusive evidence
that such amendment or supplemental indenture is authorized or permitted by
this Indenture, that it is not inconsistent herewith, and that it will be valid
and binding upon the Company in accordance with its terms.

ARTICLE X.

General Provisions

     SECTION 10.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by TIA §
318(c), such duties imposed by 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, the Indenture provision so modifying
or excluding such provision of the TIA shall be deemed to apply.

     SECTION 10.02. Notices. Any notice or communication by the Company or the
Trustee to the other is duly given if in writing and delivered in person or
mailed by first-

 

 

43

class mail, with postage prepaid (registered or certified, return receipt
requested), or sent by facsimile or overnight air couriers guaranteeing next
day delivery, to the other’s address as stated in Section 10.10. The Company
or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

     All notices and communications (other than those sent to holders of
Convertible Notes) shall be deemed to have been duly given at the time
delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when transmission is
confirmed, if transmitted by facsimile; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery. Notwithstanding the foregoing, all notices to the Trustee shall be
effective only upon receipt by a Trust Officer.

     Any notice or communication to a holder of a Convertible Note shall be
mailed by first-class mail, with postage prepaid, to his or her address shown
on the Register kept by the Registrar. 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 to a holder of a Convertible Note is sent in
the manner provided above within the time prescribed, it is duly given, whether
or not the addressee receives it.

     If the Company sends a notice or communication to holders of Convertible
Notes, it shall send a copy to the Trustee and each Agent at the same time.

     All notices or communications shall be in writing.

     SECTION 10.03. Communication by Holders with Other Holders. Holders may
communicate pursuant to TIA § 312(b) with other holders with respect to their
rights under this Indenture or the Convertible Notes. The Company, the
Trustee, the Registrar and the Paying Agent shall have the protection of TIA §
312(c).

     SECTION 10.04. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:

     (a)  an Officers’ Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 10.05)
stating that, in the opinion of such person, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been complied with; and

     (b)  an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 10.05)
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been complied with.

     SECTION 10.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for

 

 

44

in this Indenture (other than a certificate provided pursuant to TIA §
314(a)(4)) shall include:

     (a)  a statement that the person making such certificate or opinion 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
certificate or opinion are based;

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

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

     Any Officers’ Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless such Officer knows that the opinion
with respect to the matters upon which his or her certificate may be based as
aforesaid is erroneous. Any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon certificates, statements or opinions of, or
representations by an officer or officers of the Company, or other persons or
firms deemed appropriate by such counsel, unless such counsel knows that the
certificates, statements or opinions or representations with respect to the
matters upon which his or her opinion may be based as aforesaid are erroneous.

     Any Officers’ Certificate, statement or Opinion of Counsel may be based,
insofar as it relates to accounting matters, upon a certificate or opinion of
or representation by an accountant (who may be an employee of the Company), or
firm of accountants, unless such Officer or counsel, as the case may be, knows
that the certificate or opinion or representation with respect to the
accounting matters upon which his or her certificate, statement or opinion may
be based as aforesaid is erroneous.

     SECTION 10.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by, or a meeting of, holders of Convertible Notes.
The Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.

     SECTION 10.07. Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday
or a day on which banking institutions in the City of New York are not required
to be open, and a “Business Day” is any day that is not a Legal Holiday. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If any date specified in
this Indenture, including, without limitation, a Redemption Date under
Paragraph 5 of the Convertible Notes, is a Legal Holiday, then such date shall
be the next succeeding Business Day.

 

 

45

     SECTION 10.08. No Recourse Against Others. No director, officer, employee,
shareholder or Affiliate, as such, of the Company from time to time shall have
any liability for any obligations of the Company under the Convertible Notes or
this Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each holder by accepting a Convertible Note
waives and releases all such liability. This waiver and release are part of
the consideration for the Convertible Notes. Each of such directors, officers,
employees, shareholders and Affiliates of the Company is a third party
beneficiary of this Section 10.08.

     SECTION 10.09. Counterparts. This Indenture may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     SECTION 10.10. Other Provisions. The Company initially appoints the
Trustee as Paying Agent, Registrar and authenticating agent.

     The reporting date for Section 7.06 is May 15 of each year. The first
reporting date is the May 15 following the issuance of Convertible Notes
hereunder.

     The Trustee shall always have, or shall be a Subsidiary of a bank or bank
holding company which has, a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.

     The Company’s address is:

	Guilford Pharmaceuticals Inc.

6611 Tributary Street    

Baltimore, MD 21224

Attention: Secretary

Facsimile: (410) 631-6338

Telephone: (410) 631-6300

     The Trustee’s address is:

	Wachovia Bank, National Association

1021 East Cary Street, 3rd Floor

Richmond, VA 23219

Attention: Corporate Trust Administration-VA 9646

Facsimile: (804) 697-7140

Telephone: (804) 697-7142

     SECTION 10.11. Governing Law. The internal laws of the State of New York
shall govern this Indenture and the Convertible Notes, without regard to the
conflict of laws provisions thereof.

     SECTION 10.12. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt
agreement of the

 

 

46

Company or a Subsidiary. Any such other indenture, loan or debt agreement
may not be used to interpret this Indenture.

     SECTION 10.13. Successors. All agreements of the Company in this Indenture
and the Convertible Notes shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.

     SECTION 10.14. Severability. In case any provision in this Indenture or in
the Convertible 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 10.15. Table of Contents, Headings, etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.

ARTICLE XI.

Subordination

     SECTION 11.01. Agreement to Subordinate. The Company agrees, and each
holder of Convertible Notes by accepting a Convertible Note agrees, that the
Indebtedness evidenced by the Convertible Note is subordinated in right of
payment, to the extent and in the manner provided in this Article XI, to the
prior payment in full in cash or payment satisfactory to holders of Senior Debt
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 11.02. 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:

     (a)  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) in cash or other payment satisfactory to the holders of the Senior
Debt before holders of Convertible Notes shall be entitled to receive any
payment with respect to the Convertible Notes; and

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

     SECTION 11.03. Default on Senior Debt or Designated Senior Debt. Anything
in this Indenture to the contrary notwithstanding, no payment on account of

 

 

47

principal of or premium, if any, interest or Liquidated Damages, if any,
on or other amounts due on the Convertible Notes (including without limitation
the making of a deposit pursuant to Section 3.06 or 4.06), and no redemption,
repurchase, or other acquisition of the Convertible Notes shall be made by or
on behalf of the Company unless:

     (a)  full payment of all amounts then due for principal of and interest on,
and of all other amounts then due on, all Senior Debt has been made or duly
provided for pursuant to the terms of the instrument governing such Senior
Debt; and

     (b)  at the time for, and immediately after giving effect to, any such
payment, redemption, repurchase or other acquisition, there shall not exist
under any Senior Debt or any agreement pursuant to which any Senior Debt is
issued any default which shall not have been cured or waived and which default
shall have resulted in the full amount of such Senior Debt being declared due
and payable.

     In addition, if the Trustee shall receive written notice from the holders
of Designated Senior Debt or their Representative (a “Payment Blockage Notice”)
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
non-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, then, anything in this Indenture to
the contrary notwithstanding, no payment on account of the principal of or
premium, if any, interest or Liquidated Damages, if any, on or any other
amounts due on the Convertible Notes (including without limitation the making
of a deposit pursuant to Section 3.06 or 4.06), and no redemption, repurchase
or other acquisition of the Convertible 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 earliest of
(i) the date on which such default shall have been cured or waived, (ii) 179
days from the receipt of the Payment Blockage Notice and (iii) the date the
Payment Blockage Notice is withdrawn by the holders of such Designated Senior
Debt. Notwithstanding the provisions described in the immediately preceding
sentence, unless the holders of such Designated Senior Debt or the
Representative of such holders shall have accelerated the maturity of such
Designated Senior Debt, the Company may resume payments on the Convertible
Notes after the end of such Payment Blockage Period. Not more than one Payment
Blockage Notice may be given in any consecutive 365-day period, irrespective of
the number of defaults with respect to one or more issues of Designated Senior
Debt during such period.

     SECTION 11.04. Acceleration of Convertible Notes. In the event of the
acceleration of the Convertible Notes because of an Event of Default, the
Company may not make any payment or distribution to the Trustee or any holder
of Convertible Notes in respect of Obligations with respect to Convertible
Notes and may not acquire or purchase from the Trustee or any holder of
Convertible Notes any Convertible Notes until all Senior Debt has been paid in
full in cash or other payment satisfactory to the holders of Senior Debt or
such acceleration is rescinded in accordance with the terms of this Indenture.

 

 

48

     If payment of the Convertible Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt or trustees
of such Senior Debt of the acceleration.

     SECTION 11.05. When Distribution Must Be Paid Over. In the event that the
Trustee, any holder of Convertible Notes or any other person receives any
payment or distributions of assets of the Company of any kind with respect to
the Convertible Notes in contravention of any subordination terms contained in
this Indenture, whether in cash, property or securities, including, without
limitation, by way of set-off or otherwise, then such payment 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, to the extent necessary to make payment in full 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, however, that the foregoing shall apply to the Trustee only if a
Trust Officer of the Trustee has actual knowledge (as determined in accordance
with Section 11.11) 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 XI, 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 Convertible
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 XI, except if such
payment is made as a result of the willful misconduct or gross negligence of
the Trustee.

     SECTION 11.06. 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 Convertible Notes or the purchase of any
Convertible Notes by the Company to violate this Article XI, but failure to
give such notice shall not affect the subordination of the Convertible Notes to
the Senior Debt as provided in this Article XI.

     SECTION 11.07. Subrogation. After all Senior Debt is paid in full and
until the Convertible Notes are paid in full, holders of Convertible Notes
shall be subrogated (equally and ratably with all other indebtedness pari passu
with the Convertible 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 Convertible Notes have been applied to the
payment of Senior Debt. A distribution made under this Article XI to holders
of Senior Debt that otherwise would have been made to holders of Convertible
Notes is not, as between the Company and holders of Convertible Notes, a
payment by the Company on the Convertible Notes.

     SECTION 11.08. Relative Rights. This Article XI defines the relative
rights of holders of Convertible Notes and holders of Senior Debt. Nothing in
this Indenture shall:

 

 

49

     (a)  impair, as between the Company and holders of Convertible Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest and Liquidated Damages, if any, on
the Convertible Notes in accordance with their terms;

     (b)  affect the relative rights of holders of Convertible 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

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

     If the Company fails because of this Article XI to pay principal of,
premium, if any, or interest or Liquidated Damages, if any, on a Convertible
Note on the due date, the failure is still a Default or Event of Default.

     SECTION 11.09. 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 Convertible Notes shall be impaired by any act or failure to
act by the Company or any holder of Convertible Notes or by the failure of the
Company or any such holder to comply with this Indenture.

     SECTION 11.10. 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.

     Upon any payment or distribution of assets of the Company referred to in
this Article XI, the Trustee and the holders of Convertible 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 Convertible 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 XI.

     SECTION 11.11. Rights of Trustee and Paying Agent. Notwithstanding the
provisions of this Article XI 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, and
the Trustee may continue to make payments on the Convertible Notes, unless a
Trust 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 Convertible Notes to violate this
Article XI. Only the Company or a Representative may give the notice.

 

 

50

     Nothing in this Article XI shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.

     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 11.12. Authorization to Effect Subordination. Each holder of a
Convertible Note by the holder’s acceptance thereof authorizes and directs the
Trustee on the holder’s behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article XI 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 6.09
hereof 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
Convertible Notes.

     SECTION 11.13. 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 XI 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 XI in addition to or in place of the Trustee; provided, however, that
the second and third paragraphs of Section 11.11 shall not apply to the Company
or any Subsidiary of the Company if it or such Subsidiary acts as Paying Agent.

     SECTION 11.14. Senior Debt Entitled to Rely. The holders of Senior Debt
shall have the right to rely upon this Article XI, and no amendment or
modification of the provisions contained herein shall diminish the rights of
such holders unless the holders affected thereby shall have agreed in writing
thereto.

     SECTION 11.15. Permitted Payments. Notwithstanding anything to the
contrary in this Article XI, the holders of Convertible Notes may receive and
retain at any time on or prior to the Maturity Date (i) securities that are
subordinated to at least the same extent as the Convertible 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 8.01.

ARTICLE XII.

Conversion of Convertible Notes

     SECTION 12.01. Right To Convert. Subject to and upon compliance with the
provisions of this Indenture, each holder of Convertible Notes shall have the
right, at his or her option, at any time on or before the close of business on
the last Trading Day prior to the Maturity Date (except that, (a) with respect
to any Convertible Note or portion thereof which is called for redemption prior
to such date, such right shall terminate, except as

 

51

provided in the fourth paragraph of Section 12.02, at the close of business on the
last Trading Day preceding the date fixed for redemption (unless the Company
defaults in payment of the Redemption Price in which case the conversion right
will terminate at the close of business on the date such default is cured) and
(b) with respect to any Convertible Note or portion thereof subject to a duly
completed election for repurchase, such right shall terminate at the close of
business on the Designated Event Offer Termination Date (unless the Company
defaults in the payment due upon repurchase or such holder elects to withdraw
the submission of such election to repurchase in accordance with section 4.06))
to convert the principal amount of any Convertible Note held by such holder, or
any portion of such principal amount which is $1,000 or an integral multiple
thereof, into that number of fully paid and non-assessable shares of Common
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Convertible Note or portion thereof to be converted by
the Conversion Price in effect at such time, by surrender of the Convertible
Note so to be converted in whole or in part in the manner provided in Section
12.02. A holder of Convertible Notes is not entitled to any rights of a holder
of Common Stock until such holder of Convertible Notes has converted his or her
Convertible Notes to Common Stock, and then only to the extent such Convertible
Notes are deemed to have been converted to Common Stock under this Article XII.

     SECTION 12.02. Exercise of Conversion Privilege; Issuance of Common Stock
on Conversion; No Adjustment for Interest or Dividends. To exercise, in whole
or in part, the conversion privilege with respect to any Convertible Note, the
holder of such Convertible Note shall surrender such Convertible Note, duly
endorsed, at an office or agency maintained by the Company pursuant to Section
4.04, accompanied by the funds, if any, required by the last paragraph of this
Section 12.02, and shall give written notice of conversion in the form provided
on the Convertible Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder of Convertible Notes elects to
convert such Convertible Note or such portion thereof specified in said notice.
Such notice shall also state the name or names (with address or addresses) in
which the certificate or certificates for shares of Common Stock which are
issuable on such conversion shall be issued, and shall be accompanied by
transfer taxes, if required pursuant to Section 12.07. Each such Convertible
Note surrendered for conversion shall, unless the shares issuable on conversion
are to be issued in the same name as the registration of such Convertible Note,
be duly endorsed by, or be accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder of Convertible Notes
or his or her duly authorized attorney. The holder of such Convertible Notes
will not be required to pay any tax or duty which may be payable in respect of
the issue or delivery of Common Stock on conversion, but will be required to
pay any tax or duty which may be payable in respect of any transfer involved in
the issue or delivery of Common Stock in a name other than the same name as the
registration of such Convertible Note.

     As promptly as practicable after satisfaction of the requirements for
conversion set forth above, the Company shall issue and shall deliver to such
holder at the office or agency maintained by the Company for such purpose
pursuant to Section 4.04, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Convertible Note or
portion thereof in accordance with the provisions of this Article XII and a
check or cash in respect of any fractional interest in respect of a share

 

52

of Common Stock arising upon such conversion, as provided in Section 12.03
(which payment, if any, shall be paid no later than five Business Days after
satisfaction of the requirements for conversion set forth above). Certificates
representing shares of Common Stock will not be issued or delivered unless all
taxes and duties, if any, payable by the holder have been paid. In case any
Convertible Note of a denomination of an integral multiple greater than $1,000
is surrendered for partial conversion, and subject to Section 2.02, the Company
shall execute, and the Trustee shall authenticate and deliver to the holder of
the Convertible Note so surrendered, without charge to him or her, a new
Convertible Note or Convertible Notes in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Convertible Note.

     Each conversion shall be deemed to have been effected as to any such
Convertible Note (or portion thereof) on the date on which the requirements set
forth above in this Section 12.02 have been satisfied as to such Convertible
Note (or portion thereof), and the person in whose name any certificate or
certificates for shares of Common Stock are issuable upon such conversion shall
be deemed to have become on said date the holder of record of the shares
represented thereby; provided, however, that any such surrender on any date
when the Company’s stock transfer books are closed shall constitute the person
in whose name the certificates are to be issued as the record holder thereof
for all purposes on the next succeeding day on which such stock transfer books
are open, but such conversion shall be at the Conversion Price in effect on the
date upon which such Convertible Note is surrendered.

     Any Convertible Note or portion thereof surrendered for conversion during
the period from the close of business on the Record Date for any interest
payment through the close of business on the last Trading Day immediately
preceding such Interest Payment Date shall (unless such Convertible Note or
portion thereof being converted has been called for redemption on a date during
the period from the close of business on such Record Date to the close of
business on the last Trading Day immediately preceding the corresponding
Interest Payment Date pursuant to a notice of redemption mailed by the Company
to the holders in accordance with the provisions of Section 3.04) be
accompanied by payment, in funds acceptable to the Company, of an amount equal
to the interest and Liquidated Damages, if any, otherwise payable on such
Interest Payment Date on the principal amount being converted; provided,
however, that such payment may be reduced by the amount of any existing payment
default in respect of such Convertible Notes. An amount equal to such payment
shall be paid by the Company on such Interest Payment Date to the holder of
such Convertible Note at the close of business on such Record Date. Except as
provided above in this Section 12.02, no adjustment shall be made for interest
and Liquidated Damages, if any, accrued on any Convertible Note converted or
for dividends on any shares issued upon the conversion of such Convertible Note
as provided in this Article XII. If any Convertible Note is converted after a
Record Date for the payment of interest and prior to the next succeeding
Interest Payment Date, interest payable on such Interest Payment Date shall be
payable notwithstanding such conversion, and such interest shall be paid to the
holder of such Convertible Note on the applicable Record Date.

     SECTION 12.03. Cash Payments in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon

 

 

53

conversion of Convertible Notes. If more than one Convertible Note shall
be surrendered for conversion at one time by the same holder, the number of
full shares which shall be issuable upon conversion shall be computed on the
basis of the aggregate principal amount of the Convertible Notes (or specified
portions thereof to the extent permitted hereby) so surrendered for conversion.
If any fractional share of stock otherwise would be issuable upon the
conversion of any Convertible Note or Convertible Notes, the Company shall make
an adjustment therefor in cash based upon the Current Market Price of the
Common Stock on the last Trading Day prior to the date of conversion.

     SECTION 12.04. Conversion Price. The conversion price shall be as
specified in the form of Convertible Note attached as Exhibit A hereto, subject
to adjustment as provided in this Article XII.

     SECTION 12.05. Adjustment of Conversion Price. The Conversion Price shall
be adjusted from time to time by the Company as follows:

     (a)  If the Company shall hereafter pay a dividend or make a distribution
to all holders of the outstanding Common Stock in shares of Common Stock, the
Conversion Price in effect at the opening of business on the date following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the Record Date (as
defined in Section 12.05(g)) fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
Record Date. If any dividend or distribution of the type described in this
Section 12.05(a) is declared but not so paid or made, the Conversion Price
shall again be adjusted to the Conversion Price which would then be in effect
if such dividend or distribution had not been declared.

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

     (c)  If the Company shall issue rights, options or warrants to all or
substantially all holders of its outstanding shares of Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price (as defined in Section 12.05(g)) on the
Record Date fixed for the determination of shareholders entitled to receive
such rights or warrants, the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion

 

54

Price in effect at the opening of business on the date after such Record
Date by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the Record Date plus the
number of shares which the aggregate offering price of the total number of
shares so offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
close of business on the Record Date plus the total number of additional shares
of Common Stock so offered for subscription or purchase. Such adjustment shall
become effective immediately after the opening of business on the day following
the Record Date fixed for determination of shareholders entitled to receive
such rights or warrants. To the extent that 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 Price shall be readjusted
to be the Conversion Price which would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made on the basis of
delivery of only the number of shares of Common Stock actually delivered. If
such rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of shareholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received for such rights or warrants, with the value of such
consideration, if other than cash, to be determined by the Board of Directors.

     (d) If the Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which
Section 12.05(a) applies) or evidences of its indebtedness, cash or other
assets (including securities, but excluding (i) any rights, options or warrants
of a type referred to in Section 12.05(c) and (ii) dividends and distributions
paid exclusively in cash) (the foregoing hereinafter in this Section 12.05(d)
called the “Securities”), then, in each such case, the Conversion Price shall
be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the Record Date with respect to such distribution by a fraction of
which the numerator shall be the Current Market Price on such date less the
Fair Market Value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors) on
such date of the portion of the Securities so distributed applicable to one
share of Common Stock and the denominator shall be such Current Market Price,
such reduction to become effective immediately prior to the opening of business
on the day following the Record Date. If such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared. If the Board of Directors determines the Fair Market
Value of any distribution for purposes of this Section 12.05(d) by reference to
the actual or when issued trading market for any securities comprising all or
part of such distribution, it must in doing so consider the prices in such
market over the same period used in computing the Current Market Price pursuant
to Section 12.05(g) to the extent possible.

 

 

55

     Rights, options or warrants distributed by the Company to all or
substantially all holders of Common Stock entitling the holders thereof to
subscribe for or purchase shares of the Company’s capital stock (either
initially or under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events (“Trigger Event”): (i) are deemed to
be transferred with such shares of Common Stock; (ii) are not exercisable; and
(iii) are also issued in respect of future issuances of Common Stock, shall be
deemed not to have been distributed for purposes of this Section 12.05(d) (and
no adjustment to the Conversion Price under this Section 12.05(d) shall be
required) until the occurrence of the earliest Trigger Event, whereupon such
rights and warrants shall be deemed to have been distributed and an appropriate
adjustment to the Conversion Price under this Section 12.05(d) shall be made.
If any such rights or warrants, including any such existing rights or warrants
distributed prior to the date of this Indenture, are subject to subsequent
events, upon the occurrence of each of which such rights or warrants shall
become exercisable to purchase different securities, evidences of Indebtedness
or other assets, then the occurrence of each such event shall be deemed to be
such date of issuance and Record Date with respect to new rights or warrants
(and a termination or expiration of the existing rights or warrants 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 with
respect thereto, that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section
12.05(d) was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case
may be, as though it were a cash distribution, equal to the per share
redemption or repurchase price received by a holder or holders of Common Stock
with respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants which
shall have expired or been terminated without exercise by any holders thereof,
the Conversion Price shall be readjusted as if such rights and warrants had not
been issued.

     For purposes of this Section 12.05(d) and Sections 12.05(a) and (c), any
dividend or distribution to which this Section 12.05(d) is applicable that also
includes shares of Common Stock to which Section 12.05(a) applies, or rights or
warrants to subscribe for or purchase shares of Common Stock to which Section
12.05(c) applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets, shares of capital stock,
rights or warrants other than such shares of Common Stock or rights or warrants
to which Section 12.05(a) or (c) applies (and any Conversion Price reduction
required by this Section 12.05(d) with respect to such dividend or distribution
shall then be made) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (and any further
Conversion Price reduction required by Sections 12.05(a) and (c) with respect
to such dividend or distribution shall then be made, except that (A) the Record
Date of such dividend or distribution shall be substituted as “the date fixed
for the determination of shareholders entitled to receive such dividend or
other distribution”, “Record Date fixed for such determination” and “Record
Date” within the meaning of Section 12.05(a) and as “such date fixed for the
determination of shareholders entitled to receive such rights or warrants”,
“the Record Date fixed for the determination of the shareholders entitled to
receive such rights or warrants” and “Record Date” within the

 

 

56

meaning of Section 12.05(c) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed “outstanding at the close of
business on the date fixed for such determination” within the meaning of
Section 12.05(a)).

     (e)  If the Company shall, by dividend or otherwise, distribute cash to all
holders of its Common Stock (excluding any cash that is distributed upon a
merger, share exchange or consolidation to which Section 12.06 applies or as
part of a distribution referred to in Section 12.05(d)) in an aggregate amount
that, combined together with (1) the aggregate amount of any other such all
cash distributions to all holders of its Common Stock within the 12 months
preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to this Section 12.05(e) has been made, and (2) the
aggregate of any cash plus the Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) of consideration payable in respect of
any tender offer by the Company or any of its subsidiaries for all or any
portion of the Common Stock concluded within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment pursuant
to Section 12.05(f) has been made, exceeds 10% of the product of the Current
Market Price on the Record Date with respect to such distribution times the
number of shares of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on such Record Date by a fraction (i) the numerator of which shall be
equal to the Current Market Price on the Record Date less an amount equal to
the quotient of (x) the excess of such combined amount over such 10% and (y)
the number of shares of Common Stock outstanding on the Record Date and (ii)
the denominator of which shall be equal to the Current Market Price on such
Record Date; provided, however, that if the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price of the Common Stock on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of Convertible
Notes shall have the right to receive upon conversion of a Convertible Note (or
any portion thereof) the Common Stock issuable upon such conversion and the
amount of cash such holder would have received had such holder converted such
Convertible Note (or portion thereof) immediately prior to such Record Date.
If such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared.

     (f)  If a tender offer made by the Company or any of its subsidiaries for
all or any portion of the Common Stock expires and such tender offer (as
amended upon the expiration thereof) requires the payment to shareholders
(based on the acceptance (up to any maximum specified in the terms of the
tender offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) that, combined together with (1) the
aggregate of the cash plus the Fair Market Value (determined as aforesaid), as
of the expiration of such tender offer, of consideration payable in respect of
any other tender offers, by the Company or any of its subsidiaries for all or
any portion of the Common Stock, expiring within the 12 months

 

 

57

preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this Section 12.05(f) has been made and (2) the
aggregate amount of any all-cash distributions to all holders of the Common
Stock within the 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to Section 12.05(e) has been made,
exceeds 10% of the product of the Current Market Price as of the last time (the
“Expiration Time”) tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to close of business on the date of the Expiration Time by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time multiplied
by the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of (x) the
amount of cash plus the Fair Market Value (determined as aforesaid) of the
aggregate consideration payable to shareholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the “Purchased Shares”)
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) on the Expiration Time and the Current Market Price of
the Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. If the Company is obligated
to purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such tender offer
had not been made. If the application of this Section 12.05(f) to any tender
offer would result in an increase in the Conversion Price, no adjustment shall
be made for such tender offer under this Section 12.05(f).

     (g)  For purposes of this Section 12.05, the following terms shall have the
meanings indicated:

		
	 	     (1) “Closing Price” with respect to any securities on any day
means the closing price on such day or, if no closing price is
available, the average of the reported high and low prices on such
day, in each case on the Nasdaq National Market or New York Stock
Exchange, as applicable, or, if such security is not listed or
admitted to trading on such national market or exchange, on the
principal national securities exchange or quotation system on which
such security is quoted or listed or admitted to trading, or, if
not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the high
and low prices of such security on the over-the-counter market on
the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service,
or, if not so available, in such manner as furnished by any New
York Stock Exchange member firm selected from time to time by the

 

 

58

		
	 	Board of Directors for that purpose, or a price determined in
good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors.

		
	 	     (2) “Current Market Price” means the average of the daily
Closing Prices per share of Common Stock for the 10 consecutive
Trading Days immediately prior to the date in question; provided,
however, that (1) if the “ex” date (as hereinafter defined) for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Sections 12.05(a), (b), (c), (d), (e) or (f) occurs
during such 10 consecutive Trading Days, the Closing Price for each
Trading Day prior to the “ex” date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a
result of such other event, (2) if the “ex” date for any event
(other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 12.05(a), (b), (c), (d), (e) or (f) occurs on
or after the “ex” date for the issuance or distribution requiring
such computation and prior to the day in question, the Closing
Price for each Trading Day on and after the “ex” date for such
other event shall be adjusted by multiplying such Closing Price by
the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event, and (3) if
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 (1) or (2) of
this proviso, the Closing Price for each Trading Day on or after
such “ex” date shall be adjusted by adding thereto the amount of
any cash and the Fair Market Value (as determined by the Board of
Directors in a manner consistent with any determination of such
value for purposes of Sections 12.05(d) or (f), whose determination
shall be conclusive and described in a resolution of the Board of
Directors) 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 12.05(f), the
Current Market Price on any date shall be deemed to be the average
of the daily Closing Prices per share of Common Stock for such day
and the next two succeeding Trading Days; provided, however, that
if the “ex” date for any event (other than the tender offer
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 12.05(a), (b), (c), (d), (e)
or (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 Price for each Trading Day on and after the
“ex” date for such other event shall be adjusted by multiplying
such Closing Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term “ex” date,
(1) when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing
Price was

 

 

59

		
	 	obtained without the right to receive such issuance or distribution, (2) when used
with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (3)
when used with respect to any tender or exchange offer means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the Expiration Time of such offer.
Notwithstanding the foregoing, whenever successive adjustments to
the Conversion Price are called for pursuant to this Section 12.05,
such adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this
Section 12.05 and to avoid unjust or inequitable results as
determined in good faith by the Board of Directors.

		
	 	     (3) “Fair Market Value” shall mean the amount which a willing
buyer would pay a willing seller in an arm’s length transaction.

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

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

     (h)  The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 12.05(a), (b), (c), (d), (e) and (f), as
the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.

     The Company from time to time may, to the extent permitted by law, reduce
the Conversion Price by any amount for any period of at least 20 days, if the
Board of Directors has made a determination that such reduction would be in the
Company’s best interests, which determination shall be conclusive and described
in a resolution of the Board

 

60

of Directors. The reduction in Conversion Price shall be irrevocable
during this period. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to the holders of Convertible Notes
at his or her last address appearing on the Register of holders maintained for
that purpose a notice of the reduction at least 15 days prior to the date the
reduced Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.

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

     No adjustment need be made for a change in the par value or no par value
of the Common Stock.

     (j)  Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any Conversion Agent other
than the Trustee an Officers’ Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Promptly after delivery of such certificate, the
Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of Convertible Notes at his or her last
address appearing on the Register of holders maintained for that purpose within
20 days of the effective date of such adjustment. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.

     (k)  In any case in which this Section 12.05 provides that an adjustment
shall become effective immediately after a Record Date for an event, the
Company may defer until the occurrence of such event issuing to the holder of
any Convertible Note converted after such Record Date and before the occurrence
of such event the additional shares of Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and above
the Common Stock issuable upon such conversion before giving effect to such
adjustment.

     (l)  For purposes of this Section 12.05, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company shall not
pay any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

     SECTION 12.06. Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur: (i) 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), (ii) any consolidation, merger, share exchange
or combination of the Company with another

 

 

61

person or (iii) any sale or conveyance of the properties and assets of the
Company as an entirety or substantially as an entirety, in each case as a
result of which holders of Common Stock shall receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, then the Company or the successor or purchasing person, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the TIA as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so
comply) providing that the Convertible Notes shall be convertible into the kind
and amount of shares of stock and other securities or property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, share exchange, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of the Convertible Notes
(assuming, for such purposes, a sufficient number of authorized shares of
Common Stock available to convert all such Convertible Notes) immediately prior
to such reclassification, change, consolidation, merger, share exchange,
combination, sale or conveyance assuming such holder of Common Stock did not
exercise his or her rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance (provided that, if the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or conveyance is not the same for each share of Common
Stock in respect of which such rights of election have not been exercised
(“Non-electing Share”), then, for the purposes of this Section 12.06, the kind
and amount of securities, cash or other property receivable upon such
consolidation, merger, 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. If, in the
case of any such reclassification, change, consolidation, merger, share
exchange, combination, sale or conveyance, the stock or other securities and
assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a person other than the
successor or purchasing person, as the case may be, in such reclassification,
change, consolidation, merger, 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 Convertible Notes as the Board of Directors shall reasonably
consider necessary by reason of the foregoing.

     The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Convertible Notes at his or her
address appearing on the Register of holders for that purpose 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 12.06 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, share
exchanges, combinations, sales and conveyances.

     If this Section 12.06 applies to any event or occurrence, Section 12.05
shall not apply.

 

 

62

     SECTION 12.07. Taxes on Shares Issued. The issue of stock certificates on
conversions of Convertible Notes shall be made without charge to the converting
holder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than
that of the holder of any Convertible Note converted, and the Company shall not
be required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

     SECTION 12.08. Reservation of Shares; Shares to Be Fully Paid; Listing of
Common Stock. The Company shall provide, free from preemptive rights, out of
its authorized but unissued shares or shares held in treasury, sufficient
shares to provide for the conversion of the Convertible Notes from time to time
as such Convertible Notes are presented for conversion. Before taking any
action which would cause an adjustment reducing the Conversion Price below the
then par value, if any, of the shares of Common Stock issuable upon conversion
of the Convertible Notes, the Company shall take all corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue shares of such Common Stock at such adjusted
Conversion Price.

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

     The Company further covenants that as long as the Common Stock is quoted
on the Nasdaq National Market, or its successor, the Company shall cause all
Common Stock issuable upon conversion of the Convertible Notes to be eligible
for such quotation in accordance with, and at the times required under, the
requirements of such market, and if at any time the Common Stock becomes listed
on the New York Stock Exchange or any other national securities exchange, the
Company shall cause all Common Stock issuable upon conversion of the
Convertible Notes to be so listed and remain listed.

     SECTION 12.09. Responsibility of Trustee. The Trustee shall not at any
time be under any duty of responsibility to any holders of Convertible Notes to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same. The
Trustee shall not be accountable with respect to the validity or value (or the
kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Convertible Note, and the Trustee makes no representations with respect
thereto. Subject to the provisions of Section 7.01, the Trustee shall not be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Convertible Note for the purpose of conversion
or to comply with any of the duties, responsibilities or covenants of the
Company contained in this Article XII. Without limiting the generality of

 

 

63

the foregoing, the Trustee shall not have any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section 12.06 relating either to the kind or amount of
shares of stock or securities or property (including cash) receivable by
holders of Convertible Notes upon the conversion of their Convertible Notes
after any event referred to in such Section 12.06 or to any adjustment to be
made with respect thereto, but, subject to the provisions of Section 7.01, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers’ Certificate and Opinion of
Counsel (which the Company shall be obligated to file with the Trustee prior to
the execution of any such supplemental indenture) with respect thereto.

     SECTION
12.10. Notice to Holders Prior to Certain Actions. If:

     (a)  the Company declares a dividend (or any other distribution) on its
Common Stock (other than in cash out of retained earnings);

     (b)  the Company authorizes the granting to the holders of its Common Stock
of rights or warrants to subscribe for or purchase any share of any class of
Common Stock or any other rights or warrants (other than rights or warrants
referred to in the second paragraph of Section 12.05(d));

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

     (d)  there is any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;

then the Company shall cause to be filed with the Trustee and to be mailed to
each holder of Convertible Notes at his or her address appearing on the
register maintained for that purpose as promptly as possible but in any event
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 such
dividend or distribution of rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend or distribution are to be determined or (y) the date
on which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding-up is expected to become
effective or occur, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding-up. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding-up.

 

 

64

     SECTION 12.11. Restriction on Common Stock Issuable Upon Conversion.
Shares of Common Stock to be issued upon conversion of Convertible Notes prior
to the effectiveness of a Shelf Registration Statement shall be physically
delivered in certificated form to the holders converting such Securities, and
the certificate representing such shares of Common Stock shall bear the
Restricted Common Stock Legend unless removed in accordance with Section
12.11(c).

     (b)  If (i) shares of Common Stock to be issued upon conversion of a
Convertible Note prior to the effectiveness of a Shelf Registration Statement
are to be registered in a name other than that of the holder of such
Convertible Note or (ii) shares of Common Stock represented by a certificate
bearing the Restricted Common Stock Legend are transferred subsequently by such
holder, then, unless the Shelf Registration Statement has become effective and
such shares are being transferred pursuant to the Shelf Registration Statement,
the holder must deliver to the transfer agent for the Common Stock a
certificate in substantially the form of Exhibit C as to compliance with the
restrictions on transfer applicable to such shares of Common Stock, and neither
the transfer agent nor the registrar for the Common Stock shall be required to
register any transfer of such Common Stock not so accompanied by a properly
completed certificate.

     (c) Except in connection with a Shelf Registration Statement, if
certificates representing shares of Common Stock are issued upon the
registration of transfer, exchange or replacement of any other certificate
representing shares of Common Stock bearing the Restricted Common Stock Legend,
or if a request is made to remove such Restricted Common Stock Legend from
certificates representing shares of Common Stock, the certificates so issued
shall bear the Restricted Common Stock Legend, or the Restricted Common Stock
Legend shall not be removed, as the case may be, unless there is delivered to
the Company such satisfactory evidence, which, in the case of a transfer made
pursuant to Rule 144 under the Securities Act, may include an opinion of
counsel as may be reasonably required by the Company, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act or that such shares of Common Stock are
securities that are not “restricted” within the meaning of Rule 144 under the
Securities Act. Upon provision to the Company of such reasonably satisfactory
evidence, the Company shall cause the transfer agent for the Common Stock to
countersign and deliver certificates representing shares of Common Stock that
do not bear the legend.

 

 

     IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed and attested, all as of the date first above written, signifying their
agreements contained in this Indenture.

	 	 	 
	 	 	
GUILFORD PHARMACEUTICALS INC.,
	 
	 	 	
By /s/ Craig R. Smith, MD

	 	 	
     Name: Craig R. Smith, M.D.
	 	 	
     Title: Chairman, President and
	 	 	
               Chief Executive Officer
	 
	 	 	
WACHOVIA BANK, NATIONAL ASSOCIATION, as Trustee,
	 
	 	 	
By /s/ Monique Green
	 	 	

	 	 	
     Name: Monique Green
	 	 	
     Title: Vice President

 

 

EXHIBIT A
(Face of Security)

[Global Securities Legend]

     [The following legend shall appear on the face of each Global Security:
THIS CONVERTIBLE NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS CONVERTIBLE NOTE FOR ALL
PURPOSES.]

     [The following legend shall appear on the face of each Global Security for
which The Depository Trust Company is to be the Depositary:

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

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
CONVERTIBLE NOTES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES
REFERRED TO IN THE INDENTURE, THIS 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.]

[Restricted Securities Legend]

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN “AFFILIATE” (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF
THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH

A-1

 

TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT (“RULE 144A”), IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN
AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT)
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2)
NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k) (2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT
AS PERMITTED BY THE SECURITIES ACT.

A-2

 

 

	 	 	 
	No.	 	
CUSIP
	$ 	 	
Guilford Pharmaceuticals Inc.

5% CONVERTIBLE SUBORDINATED NOTE DUE 2008

promises to pay to
[       ] or registered assigns, the principal sum of
               Dollars on      

	Interest Payment Dates:

Regular Record Dates:	 	
January 1 and July 1, commencing January 1, 2004

December 15 and June 15

	 	 	 
	 	Guilford Pharmaceuticals Inc.,
	 
	 	By
	 
	 	 	

	 	 	Name:
	 	 	Title:

Certificate of Authentication

Dated:

This is one of the Convertible Subordinated Notes described in the within
mentioned Indenture.

	 	 	 
	 	Wachovia Bank, National Association,
as Trustee
	 
	 	By
	 
	 	 	

	 	 	           
Authorized Signatory

A-3

 

(Back of Security)

A-4

 

Guilford Pharmaceuticals Inc.

5% CONVERTIBLE SUBORDINATED NOTE DUE 2008

	1.	 	INTEREST. Guilford Pharmaceuticals Inc., a Delaware corporation (the
“Company”), promises to pay interest on the principal amount of this
Convertible Note at the rate per annum shown above. The Company will pay
interest semi-annually in arrears on January 1 and July 1 of each year,
beginning January 1, 2004. Interest on the Convertible Notes will accrue
from the most recent Interest Payment Date to which interest has been paid
or, if no interest has been paid, from June 17, 2003. Interest and
Liquidated Damages, if any, will be computed on the basis of a 360-day
year composed of twelve 30-day months.
	 
	2.	 	METHOD OF PAYMENT. The Company will pay interest and Liquidated Damages,
if any, on the Convertible Notes (except defaulted interest) to the person
in whose name each Convertible Note is registered at the close of business
on the December 15 or June 15 immediately preceding the relevant Interest
Payment Date (each a “Regular Record Date”) (other than with respect to a
Convertible Note or portion thereof called for redemption on a Redemption
Date, or repurchased in connection with a Designated Event on a repurchase
date, during the period from the close of business on a Regular Record
Date to (but excluding) the next succeeding Interest Payment Date, in
which case accrued interest and Liquidated Damages, if any, shall be
payable (unless such Convertible Note or portion thereof is converted) to
the holder of the Convertible Note or portion thereof redeemed or
repurchased in accordance with the applicable redemption or repurchase
provisions of the Indenture). The holder must surrender Convertible Notes
to a Paying Agent to collect principal payments. The Company will pay the
principal of, premium, if any, and interest and Liquidated Damages, if
any, on the Convertible Notes at the office or agency of the Company
maintained for such purpose, in money of the United States that at the
time of payment is legal tender for payment of public and private debts.
Until otherwise designated by the Company, the Company’s office or agency
maintained for such purpose will be the principal Corporate Trust Office
of the Trustee (as defined below). However, the Company may pay
principal, premium, if any, and interest and Liquidated Damages, if any,
by check payable in such money, and may mail such check to the holders of
the Convertible Notes their respective addresses as set forth in the
Register of holders of Convertible Notes.
	 
	3.	 	PAYING AGENT AND REGISTRAR. Wachovia Bank, National Association
(together with any successor Trustee under the Indenture referred to
below, the “Trustee”) will act as Paying Agent and Registrar. The Company
may change the Paying Agent, Registrar or co-registrar without prior
notice. Subject to certain limitations in the Indenture, the Company or
any of its subsidiaries may act in any such capacity.

A-5

 

	4.	 	INDENTURE. The Company issued the Convertible Notes under an Indenture
dated as of June 17, 2003 (the “Indenture”) between the Company and the
Trustee. The terms of the Convertible Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the “TIA”) as in effect on the date of the
Indenture. The Convertible Notes are subject to, and qualified by, all
such terms, certain of which are summarized hereon, and holders are
referred to the Indenture and the TIA for a statement of such terms. The
Convertible Notes are unsecured subordinated obligations of the Company
limited to (except as otherwise provided in the Indenture) up to
$60,000,000 in aggregate principal amount, unless an election has been
made as set forth in Article II of the Indenture to increase such
aggregate principal amount to an amount not to exceed $20,000,000.
Capitalized terms not defined below have the same meaning as is given to
them in the Indenture.
	 
	5.	 	OPTIONAL REDEMPTION. On or after July 6, 2006, the Company shall have
the option to redeem the Convertible Notes, in whole or from time to time
in part, at the following Redemption Prices (expressed as percentages of
principal amount), if redeemed during the twelve month period beginning
July 1 of each year indicated (July 6 with respect to 2006) plus accrued
and unpaid interest and Liquidated Damages, if any, to, but excluding, the
date fixed for redemption:
	 
	 	 	Redemption

	 	 	 	 	 
	Year	 	Redemption Price
	
	 	

	2006
	 	 	102.00	%
	2007
	 	 	101.00	%

		
	 	     Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the date fixed for redemption to
each holder of Convertible Notes to be redeemed at his or her registered
address. Convertible Notes in denominations larger than $1,000 may be
redeemed in part but only in integral multiples of $1,000. If less than
all the Convertible Notes are to be redeemed, the Trustee shall select
the Convertible Notes to be redeemed by a method that complies with the
requirements of the principal national securities exchange, if any, on
which the Convertible Notes are listed or quoted, or, if the Convertible
Notes are not so listed, on a pro rata basis by lot or by any other
method that the Trustee considers fair and appropriate. On and after the
Redemption Date, interest and Liquidated Damages, if any, ceases to
accrue on Convertible Notes or portions thereof called for redemption
(unless the Company defaults in the payment of the Redemption Price). If
this Convertible Note is redeemed on a date which is also an Interest
Payment Date, the interest and Liquidated Damages, if any, due on such
date will be paid to the person in whose name this Convertible Note is
registered at the close of business on the relevant Regular Record Date.

	6.	 	DESIGNATED EVENT. Upon the occurrence of a Designated Event, the Company
shall make a Designated Event Offer to repurchase all outstanding
Convertible Notes at a price equal to 100% of the aggregate principal
amount of the Convertible Notes,

A-6

 

	 	 	plus accrued and unpaid interest and Liquidated Damages, if any, to, but
excluding, the date of repurchase, such offer to be made as provided in
the Indenture. To accept the Designated Event Offer, the holder hereof
must comply with the terms thereof, including surrendering this
Convertible Note, with the “Option of Holder to Elect Repurchase” portion
hereof completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent, at the address specified in the notice of the
Designated Event Offer mailed to holders as provided in the Indenture,
prior to the Designated Event Offer Termination Date.
	 
	7.	 	SUBORDINATION. The Company’s payment of the principal of, premium, if
any, and interest and Liquidated Damages, if any, on the Convertible Notes
is subordinated to the prior payment in full of the Company’s Senior Debt
as set forth in the Indenture. Each holder of Convertible Notes by his or
her acceptance hereof covenants and agrees that all payments of the
principal of, premium, if any, and interest and Liquidated Damages, if
any, on the Convertible Notes by the Company shall be subordinated in
accordance with the provisions of Article XI of the Indenture, and each
holder of Convertible Notes accepts and agrees to be bound by such
provisions.
	 
	8.	 	DENOMINATIONS, TRANSFER, EXCHANGE. The Convertible Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Convertible Notes may be registered
and Convertible Notes may be exchanged as provided in the Indenture. As a
condition of transfer, the Registrar and the Trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer
documents, and the Company and the Registrar may require a holder to pay
any taxes and fees required by law or permitted by the Indenture. The
Company or the Registrar need not exchange or register the transfer of any
Convertible Note or portion of a Convertible Note selected for redemption
or submitted for repurchase or surrendered for conversion. Also, the
Company or the Registrar need not exchange or register the transfer of any
Convertible Note for a period of 15 days before a selection of Convertible
Notes to be redeemed.
	 
	9.	 	PERSONS DEEMED OWNERS. The registered holder of a Convertible Note shall
be treated as its owner for all purposes.
	 
	10.	 	AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture or
the Convertible Notes may be amended or supplemented with the consent of
the holders of at least a majority in principal amount of the then
outstanding Convertible Notes, and any existing default may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding Convertible Notes.

		
	 	     Without the consent of any holder, the Indenture or the Convertible
Notes may be amended to: (a) cure any ambiguity or correct or supplement
any defective or inconsistent provision contained in the Indenture, or
make any other changes in the provisions of the Indenture which the
Company and the Trustee may deem necessary or desirable provided such
amendment does not materially and adversely affect the

A-7

 

		
	 	legal rights under the Indenture of the holders of Convertible
Notes; (b) provide for uncertificated Convertible Notes in addition to or
in place of certificated Convertible Notes or to provide for bearer
Convertible Notes; (c) evidence the succession of another person to the
Company and provide for the assumption by such successor of the covenants
and obligations of the Company thereunder and in the Convertible Notes as
permitted by Section 5.01 of the Indenture; (d) provide for conversion
rights or repurchase rights of holders of Convertible Notes in the event
of consolidation, merger, share exchange or sale of all or substantially
all of the assets of the Company as required to comply with Sections 5.01
or 12.06 of the Indenture; (e) reduce the Conversion Price; (f) evidence
and provide for the acceptance of the appointment under the Indenture of
a successor Trustee; (g) make any change that would provide any
additional rights or benefits to the holders of Convertible Notes or that
does not adversely affect the legal rights under the Indenture of any
such holder; (h) comply with the requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the TIA;
or (i) secure the Convertible Notes.

		
	 	     Without the consent of each holder affected, an amendment or waiver
may not (with respect to any Convertible Notes held by a nonconsenting
holder): (a) reduce the principal amount of Convertible Notes whose
holders must consent to an amendment, supplement or waiver; (b) reduce
the principal of, or premium on, or change the fixed maturity of any
Convertible Note or alter the provisions with respect to the redemption
or mandatory repurchase of the Convertible Notes; (c) reduce the rate of,
or change the time for payment of, interest, including defaulted
interest, or Liquidated Damages, if any, on any Convertible Notes; (d)
waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest or Liquidated Damages, if any, on the
Convertible Notes (except a rescission of acceleration of the Convertible
Notes by the holders of at least a majority in aggregate principal amount
of the Convertible Notes then outstanding and a waiver of the payment
default that resulted from such acceleration); (e) make the principal of,
or premium, if any, or interest or Liquidated Damages, if any, on, any
Convertible Note payable in money other than as provided for in the
Indenture and in the Convertible Notes; (f) make any change in the
provisions of the Indenture relating to waivers of past Defaults or
Events of Default or the rights of holders of Convertible Notes to
receive payments of principal of, premium, if any, or interest or
Liquidated Damages, if any, on the Convertible Notes; (g) waive a
redemption or mandatory repurchase payment with respect to any
Convertible Note; (h) except as permitted by the Indenture (including
Section 9.01(a)), increase the Conversion Price or modify the provisions
of the Indenture relating to conversion of the Convertible Notes in a
manner adverse to the holders thereof or (i) make any adverse change to
the ability of holders of Convertible Notes to enforce their rights under
the Indenture. In addition, any amendment to the provisions of Article
XI of the Indenture (which relate to subordination) will require (1) the
consent of the holders of at least 75% in aggregate principal amount of
the Convertible Notes then outstanding if such amendment would adversely
affect the rights of holders of Convertible Notes and (2) the consent of
each holder of Senior Debt if such amendment would diminish the rights of
such holder of Senior Debt.

A-8

 

	11.	 	DEFAULTS AND REMEDIES. An Event of Default is: (a) default in payment of
the principal of, or premium, if any, on the Convertible Notes, when due
at maturity, upon repurchase, upon acceleration or otherwise, whether or
not such payment is prohibited by the subordination provisions of the
Indenture; (b) default for 30 days or more in payment of any installment
of interest or Liquidated Damages on the Convertible Notes, whether or not
such payment is prohibited by the subordination provisions of the
Indenture; (c) default in the payment of the Designated Event Payment in
respect of the Convertible Notes on the date therefor, whether or not such
payment is prohibited by the subordination provisions of the Indenture;
(d) failure to provide timely notice of a Designated Event; (e) default by
the Company (other than a default set forth in clauses (a), (b), (c) or
(d) above) for 60 days or more after notice in the observance or
performance of any other covenants in the Indenture; (f) 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
for money borrowed by the Company or any of its subsidiaries (or the
payment of which is guaranteed or secured by the Company or any of its
subsidiaries), whether such Indebtedness or guarantee exists on the date
of the Indenture or is created thereafter, which default (i) is caused by
a failure to pay when due any principal of such Indebtedness within the
grace period provided for in such Indebtedness, which failure continues
beyond any applicable grace period (a “Payment Default”), or (ii) results
in the acceleration of such Indebtedness prior to its express maturity
(without such acceleration being rescinded or annulled) and, in each case,
the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates
$5,000,000 or more and such Payment Default is not cured or such
acceleration is not annulled within 10 days after notice; or (g) failure
by the Company or any Material Subsidiary of the Company to pay final,
nonappealable judgments (other than any judgment as to which a reputable
insurance company has accepted full liability) aggregating in excess of
$5,000,000, which judgments are not stayed, bonded or discharged within 60
days after their entry; or (h) certain events involving bankruptcy,
insolvency or reorganization of the Company or any Material Subsidiary.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding
Convertible Notes may declare the unpaid principal of, premium, if any,
and accrued and unpaid interest and Liquidated Damages, if any, on all
Convertible Notes then outstanding to be due and payable immediately,
except that in the case of an Event of Default arising from certain events
of bankruptcy, insolvency, or reorganization with respect to the Company,
all outstanding Convertible Notes become due and payable without further
action or notice. Holders of Convertible Notes may not enforce the
Indenture or the Convertible Notes except as provided in the Indenture.
The Trustee may require an indemnity satisfactory to it before it enforces
the Indenture or the Convertible Notes. Subject to certain limitations,
holders of a majority in principal amount of the then outstanding
Convertible Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from holders notice of any continuing
default (except a default in payment of principal, prem
ium, if any, or
interest or Liquidated

A-9

 

	 	 	Damages, if any) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to
the Trustee.
	 
	12.	 	TRUSTEE DEALINGS WITH THE COMPANY. The Trustee or any of its Affiliates,
in their individual or any other capacities, may make or continue loans to
or guaranteed by, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not Trustee.
	 
	13.	 	NO RECOURSE AGAINST OTHERS. No director, officer, employee, shareholder
or Affiliate, as such, of the Company shall have any liability for any
obligations of the Company under the Convertible Notes or the Indenture or
for any claim based on, in respect of or by reason of such obligations or
their creation. Each holder by accepting a Convertible Note waives and
releases all such liability. The waiver and release are part of the
consideration for the Convertible Notes.
	 
	14.	 	AUTHENTICATION. This Convertible Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
	 
	15.	 	ABBREVIATIONS. Customary abbreviations may be used in the name of a
holder or an assignee, such as: TEN CO = 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 Gifts to Minors Act.
	 
	16.	 	CONVERSION. Subject to and upon compliance with the provisions of the
Indenture, the registered holder of this Convertible Note has the right at
any time on or before the close of business on the last Trading Day prior
to the Maturity Date (or in case this Convertible Note or any portion
hereof is (a) called for redemption prior to such date, before the close
of business on the last Trading Day preceding the date fixed for
redemption (unless the Company defaults in payment of the Redemption Price
in which case the conversion right will terminate at the close of business
on the date such default is cured) or (b) subject to a duly completed
election for repurchase, on or before the close of business on the
Designated Event Offer Termination Date (unless the Company defaults in
payment due upon repurchase or such holder elects to withdraw the
submission of such election to repurchase ) to convert the principal
amount hereof, or any portion of such principal amount which is $1,000 or
an integral multiple thereof, into that number of fully paid and
non-assessable shares of common stock of the Company (“Common Stock”)
obtained by dividing the principal amount of the Convertible Note or
portion thereof to be converted by the conversion price of $6.24 per
share, as adjusted from time to time as provided in the Indenture (the
“Conversion Price”), upon surrender of this Convertible Note to the
Company at the office or agency maintained for such purpose (and at such
other offices or agencies designated for such purpose by the Company),
accompanied by written notice of conversion duly executed (and if the
shares of Common Stock to be issued on conversion are to be issued in any
name other than that of the registered holder of this Convertible Note by
instruments of transfer, in form satisfactory to the Company, duly
executed by the registered holder or its duly authorized attorney)

A-10

 

	 	 	and, in case such surrender shall be made during the period from the
close of business on the Regular Record Date immediately preceding any
Interest Payment Date through the close of business on the last Trading
Day immediately preceding such Interest Payment Date (unless this
Convertible Note or the portion thereof being converted has been called
for redemption on a date in such period), also accompanied by payment, in
funds acceptable to the Company, of an amount equal to the interest and
Liquidated Damages, if any, otherwise payable on such Interest Payment
Date on the principal amount of this Convertible Note then being
converted. Subject to the aforesaid requirement for a payment in the
event of conversion after the close of business on a Regular Record Date
immediately preceding an Interest Payment Date, no adjustment shall be
made on conversion for interest or Liquidated Damages accrued hereon or
for dividends on Common Stock delivered on conversion. The right to
convert this Convertible Note is subject to the provisions of the
Indenture relating to conversion rights in the case of certain
consolidations, mergers, share exchanges or sales or transfers of
substantially all the Company’s assets.

		
	 	     The Company shall not issue fractional shares or scrip representing
fractions of shares of Common Stock upon any such conversion, but shall
make an adjustment therefor in cash based upon the current market price
of the Common Stock on the last Trading Day prior to the date of
conversion.

	17.	 	REGISTRATION RIGHTS AGREEMENT. The holder of this Convertible Note is
entitled to the benefits of a Registration Rights Agreement, dated June
17, 2003, between the Company and the Initial Purchasers (the
“Registration Rights Agreement”). Pursuant to the Registration Rights
Agreement the Company has agreed for the benefit of the holders of the
Convertible Notes and the Common Stock issued and issuable upon conversion
of the Convertible Notes, that (i) it will, at its cost, within 90 days
after the Issue Date, file a shelf registration statement (the “Shelf
Registration Statement”) with the Securities and Exchange Commission (the
“Commission”) with respect to resales of the Convertible Notes and the
Common Stock issuable upon conversion thereof, (ii) the Company will use
its reasonable best efforts to cause such Shelf Registration Statement to
be declared effective by the Commission under the Securities Act within
150 days after the Issue Date and (iii) the Company will use its
reasonable best efforts to keep such Shelf Registration Statement
continuously effective under the Securities Act until the earliest of (a)
the second anniversary of the Issue Date or, if later, the second
anniversary of the last date on which any Convertible Notes are issued
upon exercise of the Initial Purchasers’ option, (b) the date on which all
the Convertible Notes and the Common Stock issuable upon conversion
thereof may be sold to persons who are not “affiliates” (as defined in
Rule 144) of the Company pursuant to paragraph (k) of Rule 144 (or any
successor provision) promulgated by the Commission under the Securities
Act and (c) the date as of which all the Convertible Notes or the Common
Stock issuable upon conversion thereof have been transferred pursuant to
Rule 144 under the Securities Act (or any similar provision then in force)
or sold pursuant to such Shelf Registration Statement.

A-11

 

	 	 	     If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to 90 days, or has not been declared effective by
the Commission within 150 days, after the Issue Date or (ii) is filed and
declared effective but shall thereafter cease to be effective (without
being succeeded immediately by a replacement shelf registration statement
filed and declared effective) or cease to be usable for the offer and
sale of Transfer Restricted Securities (as defined below) for a period of
time (including any Suspension Period) which shall exceed 30 days in the
aggregate in any 90-day period or 60 days in the aggregate in any
12-month period during the period the Company is required to keep the
Shelf Registration Statement continuously effective (each such event
referred to in clauses (i) and (ii) being referred to herein as a
“Registration Default”), the Company will pay liquidated damages
(“Liquidated Damages”) to each holder of Transfer Restricted Securities
which has complied with its obligations under the Registration Rights
Agreement. The amount of Liquidated Damages payable during any period in
which a Registration Default shall have occurred and be continuing is
that amount which is equal to one-quarter of one percent (25 basis
points) per annum per $1,000 principal amount of Securities or $2.50 per
annum per 160.2564 shares of Common Stock (subject to adjustment from
time to time in the event of a stock split, stock recombination, stock
dividend and the like) constituting Transfer Restricted Securities for
the first 90 days during which a Registration Default has occurred and is
continuing and one-half of one percent (50 basis points) per annum per
$1,000 principal amount of Securities or $5.00 per annum per 160.2564
shares of Common Stock (subject to adjustment as set forth above)
constituting Transfer Restricted Securities for any additional days
during which such Registration Default has occurred and is continuing.
The Company will pay all accrued Liquidated Damages by wire transfer of
immediately available funds or by Federal funds check on each date
specified in the Registration Rights Agreement, and Liquidated Damages
will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Following the cure of a Registration Default, Liquidated
Damages will cease to accrue with respect to such Registration Default.
	 
	 	 	     “Transfer Restricted Securities” means each Convertible Note and
each share of Common Stock issued or issuable on conversion thereof until
the date on which such Convertible Note or share, as the case may be, (i)
has been transferred pursuant to the Shelf Registration Statement or
another registration statement covering such Convertible Note or share
which has been filed with the Commission pursuant to the Securities Act,
in either case after such registration statement has become and while
such registration statement is, effective under the Securities Act, (ii)
has been transferred pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (iii) may be sold or transferred
pursuant to Rule 144(k) under the Securities Act (or any similar
provision then in force); provided, however, that the term shall not
include any share of Common Stock issuable upon conversion of a
Convertible Note previously sold or transferred pursuant to any of
clauses (i) through (iii) above.
	 
	 	 	     Pursuant to the Registration Rights Agreement, the Company may
suspend the use of the prospectus which is a part of the Shelf
Registration Statement for not

A-12

 

	 	 	more than 30 days in any three-month period or for the three periods
not to exceed an aggregate of 60 days in any twelve-month period under
certain circumstances (a “Suspension Period”); provided, however, that
the existence of a Suspension Period will not prevent the occurrence of a
Registration Default or otherwise limit the obligation of the Company to
pay Liquidated Damages.

		
	 	     The above description of certain provisions of the Registration
Rights Agreement is qualified by reference to, and is subject in its
entirety to, the more complete description thereof contained in the
Registration Rights Agreement.
	 
	 	     The Company will furnish to any holder upon written request and
without charge a copy of the Indenture and the Registration Rights
Agreement. Requests may be made to: Guilford Pharmaceuticals Inc., 6611
Tributary Street, Baltimore, MD 21224, Attention: Secretary, or by
telephone to the Company Secretary at (410) 631-6300.

A-13

 

FORM OF CONVERSION NOTICE

To: Guilford Pharmaceuticals Inc.

     The undersigned owner of the Convertible Note hereby irrevocably exercises
the option to convert this Convertible Note, or portion hereof (which is $1,000
or an integral multiple thereof) below designated, into shares of Common Stock
of Guilford Pharmaceuticals Inc. in accordance with the terms of the Indenture
referred to in this Convertible Note, and directs that the shares issuable and
deliverable upon the conversion, together with any check in payment for
fractional shares and Convertible Notes representing any unconverted principal
amount hereof, be issued and delivered to the owner hereof unless a different
name has been indicated below. If shares or any portion of this Convertible
Note not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest, Liquidated Damages and taxes accompanies this Convertible Note.

	 	 	 
	Dated:	 	 
	Fill in for registration of
shares if to be delivered, and
Convertible Notes if to be
issued, other than to and in the
name of the owner
(Please Print):	 	

	 	 	Signature
	 
	

	 	
Principal amount to be converted (if less than all):
	
(Name)	 	

	 	 	
$     ,000
	

(Street Address)	 	    

Social Security or other Taxpayer Identification
Number
	 
	

(City, State and Zip Code)	 	 

Signature Guarantee:

Signatures must be guaranteed by an eligible Guarantor Institution (banks,
brokers, dealers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15 if shares are to be issued, or
Convertible Notes are to be delivered, other than to and in the name of the
registered holder.

A-14

 

ASSIGNMENT FORM

To assign this Convertible Note, fill in the form below:

(I) or (we) assign and transfer this Convertible Note to

(Insert assignee’s social security or tax I.D. no.)

 

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

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

	 	 	 
	Your Signature:  	 	

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

   

	 
	Medallion Signature
Guarantee: 	

[FOR INCLUSION ONLY IF THIS CONVERTIBLE NOTE BEARS A RESTRICTED SECURITIES
LEGEND] In connection with any transfer of any of the Convertible Notes
evidenced by this certificate which are “restricted securities” (as defined in
Rule 144 (or any successor thereto) under the Securities Act), the undersigned
confirms that such Convertible Notes are being transferred:

CHECK ONE BOX BELOW

	 	 	 
	 	 	

     (1) [  ] to the Company; or
	 
	 	 	
     (2) [  ] pursuant
to and in compliance with Rule 144A under the Securities Act of 1933; or
	 	 	

	 
	 	 	
     (3) [  ] pursuant
to and in compliance with Regulation S under the Securities Act of 1933; or
	 	 	

	 
	 	 	
     (4) [  ] pursuant
to an exemption from registration under the Securities Act of 1933 provided by Rule 144 thereunder.
	 	 	

Unless one of the boxes is checked, the Registrar will refuse to register any
of the Convertible Notes evidenced by this certificate in the name of any
person other than the

A-15

 

registered holder thereof; provided, however, that if box (3) or (4) is
checked, the Trustee may require, prior to registering any such transfer of the
Convertible Notes, such certifications and other information, and if box (4) is
checked such legal opinions, as the Company has reasonably requested in
writing, by delivery to the Trustee of a standing letter of instruction, to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933.

	 	 	 
	Your Signature:

         (Sign exactly as your name appears on the other side of this Convertible Note)

	Date:

	Medallion Signature Guarantee:

A-16

 

OPTION OF HOLDER TO ELECT REPURCHASE

     If you wish to have this Convertible Note repurchased by the Company
pursuant to Section 4.06 of the Indenture, check the Box:
[  ]

     If you wish to have a portion of this Convertible Note purchased by the
Company pursuant to Section 4.06 of the Indenture, state the amount (in
multiples of $1,000): $      .

	 	 	 
	Date: 

	 	
Your Signature: 

(Sign exactly as your name appears on the other side of this

Convertible Note)

	Medallion Signature Guarantee:

A-17

 

EXHIBIT B

FORM OF RESTRICTED COMMON STOCK LEGEND

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN “AFFILIATE” (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES
ACT) OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT (“RULE 144A”), IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN
AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT)
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2)
NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR
AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.”

B-1

 

EXHIBIT C

FORM OF TRANSFER CERTIFICATE FOR TRANSFER OF RESTRICTED COMMON STOCK

     (Transfers pursuant to Section 12.11(c) of the Indenture) [NAME AND
ADDRESS OF COMMON STOCK TRANSFER AGENT]

	 	 	Re: Guilford Pharmaceuticals Inc. 5% Convertible Subordinated Notes due 2008 (the “Convertible Notes”)

     Reference is hereby made to the Indenture dated as of June 17, 2003 (the
“Indenture”) between Guilford Pharmaceuticals Inc. and Wachovia Bank, National
Association, as Trustee. Capitalized terms used but not defined herein shall
have the meanings given them in the Indenture.

     This
letter relates to        shares of Common Stock represented by the
accompanying certificates that were issued upon conversion of Convertible Notes
and which are held in the name of [name of transferor] (the “Transferor”) to
effect the transfer of such Common Stock.

     In connection with the transfer of such shares of Common Stock, the
undersigned confirms that such shares of Common Stock are being transferred:

CHECK ONE BOX BELOW

	 
	     (1) [  ] to the Company; or
	 
	     (2)
[  ] pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
	 
	     (3)
[  ] pursuant to and in compliance with Regulation S under
the Securities Act of 1933; or
	 
	     (4)
[  ] pursuant to an exemption from registration under the
Securities Act of 1933 provided by Rule 144 thereunder.

     Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Common Stock evidenced by this certificate in the name of
any person other than the registered holder thereof; provided, however, that if
box (3) or (4) is checked, the transfer agent may require, prior to registering
any such transfer of the Common Stock such certifications and other
information, and if box (4) is checked such legal opinions, as the Company has
reasonably requested in writing, by delivery to the transfer agent of a
standing letter of instruction, to confirm that such transfer is being made
pursuant to an exemption

C-1

 

from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933.

	 	 	 
	 	 	
[Name of Transferor],
	 
	 	 	
By 

Name:

	 	 	
Title:

Dated:

C-2

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