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Exhibit 4.5  

REGISTRATION RIGHTS AGREEMENT 

Dated as of April 5, 2002

By and Between

GENCORP INC.,

as Issuer,

and

DEUTSCHE BANK SECURITIES INC.

and

ABN AMRO ROTHSCHILD LLC

and

BANC ONE CAPITAL MARKETS, INC.

as Initial Purchasers

53/4% Convertible Subordinated Notes Due 2007  

 
 

TABLE OF CONTENTS    
  

	1.	 	Definitions	 	1
	

2.	
 	

Shelf Registration	
 	

3
	

3.	
 	

Liquidated Damages	
 	

6
	

4.	
 	

Registration Procedures	
 	

7
	

5.	
 	

Registration Expenses	
 	

13
	

6.	
 	

Indemnification	
 	

14
	

7.	
 	

Rules 144 and 144A	
 	

17
	

8.	
 	

Underwritten Registrations	
 	

17
	

9.	
 	

Miscellaneous	
 	

17

 
 

REGISTRATION RIGHTS AGREEMENT    
  

        This Registration Rights Agreement (this "Agreement") is dated as of April 5, 2002, by and among GENCORP INC., an Ohio corporation (the "Company"),
Deutsche Bank Securities Inc. ("DBSI"), ABN AMRO Rothschild LLC ("ABN") and Banc One Capital Markets, Inc. ("Banc One") (DBSI, ABN and Banc One, individually, an "Initial Purchaser" and
together, the "Initial Purchasers"). 

        This
Agreement is entered into in connection with the Purchase Agreement, dated as of April 2, 2002 (the "Purchase Agreement"), by and between the Company and DBSI, as
Representative of the Initial Purchasers (in such capacity, the "Representative"), which provides for the sale by the Company to the Initial Purchasers of $125,000,000 aggregate principal amount of
the Company's 53/4% Convertible Subordinated Notes Due 2007 (the "Firm Notes"), which are convertible into Common Stock of the Company, par value $.10 per share (the "Underlying
Shares"), plus up to an additional $25,000,000 aggregate principal amount of the same which DBSI may subsequently elect to purchase pursuant to the terms of the Purchase Agreement (the "Additional
Notes" and, together with the Firm Notes, the "Convertible Notes"). The Convertible Notes are being issued pursuant to an Indenture dated as of April 5, 2002 (the "Indenture"), between the
Company and The Bank of New York, as trustee (as amended or supplemented from time to time, the "Indenture"). 

        In
order to induce the Representative, on behalf of the Initial Purchasers, to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in
this Agreement for the benefit of the Initial Purchasers and any subsequent holder or holders of the Convertible Notes or Underlying Shares as provided herein. The execution and delivery of this
Agreement is a condition to the obligation of the Initial Purchasers to purchase the Firm Notes under the Purchase Agreement. Terms not otherwise defined herein shall have the meanings set forth in
the Purchase Agreement. 

        The
parties hereby agree as follows: 

1.    Definitions.    As used in this Agreement, the following terms shall have the following meanings: 

        Additional Notes:    See the second introductory paragraph hereto. 

        Agreement:    See the first introductory paragraph hereto. 

        Amount of Registrable Securities:    (a) With respect to Convertible Notes constituting Registrable Securities, the aggregate
principal amount of all such Convertible Notes outstanding, (b) with respect to Underlying Shares constituting Registrable Securities, the aggregate number of such Underlying Shares outstanding
multiplied by the Conversion Price (as defined in the Indenture relating to the Convertible Notes upon the conversion of which such Underlying Shares were issued) in effect at the time of computing
the Amount of Registrable Securities or, if no such Convertible Notes are then outstanding, the last Conversion Price that was in effect 

 

under
such Indenture when any such Convertible Notes were last outstanding, and (c) with respect to combinations thereof, the sum of (a) and (b) for the relevant Registrable
Securities. 

        Business Day:    Any day that is not a Saturday, Sunday or a day on which banking institutions in New York or California are
authorized or required by law to be closed. 

        Closing Date:    April 5, 2002. 

        Company:    See the first introductory paragraph hereto. 

        Convertible Notes:    See the second introductory paragraph hereto. 

        Damages Payment Date:    See Section 3(c) hereof. 

        Depositary:    The Depository Trust Company until a successor is appointed by the Company. 

        Effectiveness Date:    The 180th day after the later of the Closing Date and the last Option Closing Date, if any. 

        Effectiveness Period:    See Section 2(a) hereof. 

        Exchange Act:    The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated
thereunder. 

        Filing Date:    The 60th day after the later of the Closing Date and the last Option Closing Date, if any. 

        Firm Notes:    See the second introductory paragraph hereto. 

        Holder:    Any holder of Registrable Securities. 

        Indemnified Holder:    See Section 6 hereof. 

        Indemnified Person:    See Section 6 hereof. 

        Indemnifying Person:    See Section 6 hereof. 

        Indenture:    See the second introductory paragraph hereto. 

        Initial Purchaser:    See the first introductory paragraph hereto. 

        Initial Shelf Registration:    See Section 2(a) hereof. 

        Inspectors:    See Section 4(m) hereof. 

        Liquidated Damages:    See Section 3(a) hereof. 

        Notice and Questionnaire:    See Section 2(a) hereof. 

2

 

        Notice Holder:    See Section 2(a) hereof. 

        Person:    An individual, partnership, corporation, limited liability company, unincorporated association, trust, joint venture
or similar entity, or a governmental agency or political subdivision thereof. 

        Prospectus:    The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to such prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in such prospectus. 

        Purchase Agreement:    See the second introductory paragraph hereto. 

        Records:    See Section 4(m) hereof. 

        Registrable Securities:    All Convertible Notes and all Underlying Shares upon original issuance thereof and at all times
subsequent thereto until the earliest to occur of (i) a Registration Statement covering such Convertible Notes and Underlying Shares having been declared effective by the SEC and such
Convertible Notes and Underlying Shares having been disposed of in accordance with such effective Registration Statement, (ii) such Convertible Notes and Underlying Shares having been sold in
compliance with Rule 144 or being eligible for resale (except with respect to affiliates of the Company within the meaning of the Securities Act) in compliance with Rule 144(k), or
(iii) such Convertible Notes and any Underlying Shares ceasing to be outstanding. 

        Registration Default:    See Section 3(a) hereof. 

        Registration Statement:    Any registration statement of the Company filed with the SEC pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement. 

        Rule 144:    Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any
similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act. 

        Rule 144A:    Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or
any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC. 

        Rule 415:    Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC. 

3

 

        SEC:    The Securities and Exchange Commission. 

        Securities Act:    The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. 

        Shelf Registration:    See Section 2(b) hereof. 

        Shelf Registration Statement:    See Section 2(b) hereof. 

        Subsequent Shelf Registration:    See Section 2(b) hereof. 

        TIA:    The Trust Indenture Act of 1939, as amended, and the rules and regulations of the SEC promulgated thereunder. 

        Trustee:    The Trustee under the Indenture. 

        Underlying Shares:    See the second introductory paragraph hereto. 

2.    Shelf Registration.    

        (a)  Shelf Registration. The Company shall use its reasonable best efforts to file with the SEC a Registration Statement for
an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Securities (the "Initial Shelf Registration") on or prior to the Filing Date. 

        The
Initial Shelf Registration shall be on Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by Holders in the
manner or manners set forth in such Registration Statement and in Rule 415. The Company shall not permit any securities other than the Registrable Securities to be included in the Initial Shelf
Registration or any Subsequent Shelf Registration (as defined below). 

        The
Company shall use its reasonable best efforts to cause the Initial Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to
keep such Initial Shelf Registration continuously effective under the Securities Act until the date that is two years from the later of the Closing Date and the last Option Closing Date (as it may be
shortened pursuant to clause (i), (ii) or (iii) immediately following, the "Effectiveness Period"), or such shorter period ending when (i) all the Registrable Securities
covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration, (ii) the date on which all the Registrable Securities
(x) held by Persons who are not affiliates of the Company may be resold pursuant to Rule 144(k) under the Securities Act or (y) cease to be outstanding, or (iii) a
Subsequent Shelf Registration covering all of the Registrable Securities has been declared effective under the Securities Act. 

        Each
Holder wishing to include its Registrable Securities in the Initial Shelf Registration Statement prior to the time it is declared effective agrees to deliver a written notice,
substantially in the form of Annex A to the Offering Memorandum dated April 2, 2002 used in connection with the offer of the Convertible Notes (a "Notice and Questionnaire"), to the Company not
later than 15 days after the last date of original issuance of the Convertible Notes or, if later, five 

4

 

Business
Days prior to the effective date of the Shelf Registration Statement (each Holder delivering a Notice and Questionnaire, a "Notice Holder"). From and after the date the Shelf Registration
Statement is declared effective, the Company shall, as promptly as reasonably practicable after the date of receipt of a Notice and Questionnaire (and, in any event, within 15 Business Days)
(i) if required by applicable law, file with the SEC a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file a
supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other document required under the Securities Act so that the Holder
delivering such Notice and Questionnaire is named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of the Registrable Securities in accordance with applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration
Statement, use reasonable best efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is practicable, but in any event not later
than 60 Business Days after the date such post-effective amendment is required by this clause to be filed; (ii) provide such Holder copies of any documents filed pursuant to
subheading (i) of this paragraph; and (iii) notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment
filed pursuant to subheading (i) of this paragraph; provided that if such Notice and Questionnaire is delivered during a period pursuant to Section 3(b), the Company shall so inform the
Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i), (ii) and (iii) above upon expiration of any period referenced in Section 3(b)
of this Agreement. Any Holder who, subsequent to the date the Registration Statement is declared effective, provides a Notice and Questionnaire required by this paragraph pursuant to the provisions of
this Section (whether or not such Holder has supplied the Notice and Questionnaire at the time the Shelf Registration Statement was declared effective) shall be named as a selling securityholder in
the Shelf Registration Statement and related Prospectus in accordance with the requirements of this paragraph. 

        No
Holder of Registrable Securities may include any of its Registrable Securities in any Shelf Registration pursuant to this Agreement unless and until such Holder furnishes to the
Company a completed and executed Notice and Questionnaire. Each Holder of Registrable Securities as to which any Shelf Registration Statement is being effected agrees to furnish, in accordance with
the previous paragraph, to the Company all information required to be disclosed so that the information previously furnished to the Company by such Holder is not materially misleading and does not
omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading in the light of the circumstances under which they were made and, if
such Holder fails to do so, the Company shall be under no obligation to include such Holder's Registrable Securities in any Shelf Registration Statement. 

        (b)  Subsequent Shelf Registrations. If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Company shall use its reasonable best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend the Initial Shelf Registration
in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement 

5

 

pursuant
to Rule 415 covering all of the Registrable Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed, the Company shall use its reasonable best
efforts to cause the Subsequent Shelf Registration to be declared effective under the Securities Act as soon as practicable after such filing and to keep such Registration Statement continuously
effective for a period equal to the number of days in the Effectiveness Period less the aggregate number of days during which the Initial Shelf Registration and any Subsequent Shelf Registration were
previously continuously effective. As used herein the term "Shelf Registration" means the Initial Shelf Registration and any Subsequent Shelf Registration and the term "Shelf Registration Statement"
means any Registration Statement filed in connection with a Shelf Registration. 

        (c)  Supplements and Amendments. The Company shall promptly supplement and amend the Shelf Registration if required by
applicable law or if reasonably requested by the Holders of the majority in Amount of Registrable Securities covered by such Registration Statement or by any underwriter of such Registrable
Securities. 

3.    Liquidated Damages.    

        (a)  The
Company and the Initial Purchasers agree that the Holders of Registrable Securities will suffer damages if the Company fails to fulfill its obligations under
Section 2 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company agrees to pay liquidated damages on the Registrable
Securities ("Liquidated Damages") under the circumstances and to the extent set forth below, each of which shall be given independent effect (each a "Registration Default"): 

        (i)    if
the Initial Shelf Registration is not filed with the SEC on or prior to the Filing Date, then commencing on the day after the Filing Date, Liquidated Damages shall
accrue on the Registrable Securities at a rate of 0.50% per annum on the Amount of Registrable Securities; 

        (ii)  if
the Initial Shelf Registration or a Subsequent Shelf Registration is not declared effective by the SEC on or prior to the Effectiveness Date, then commencing one day
after the Effectiveness Date, Liquidated Damages shall accrue on the Registrable Securities at a rate of 0.50% per annum on the Amount of Registrable Securities; 

        (iii)  if
a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective or the Prospectus therein fails to be available for use at any
time during the Effectiveness Period (other than as permitted under Section 3(b)), then Liquidated Damages shall accrue on the Registrable Securities at a rate of 0.50% per annum on the Amount
of Registrable Securities; and 

        (iv)  if
the Company fails with respect to a Notice Holder to amend or supplement the Shelf Registration Statement in a timely manner in accordance with Section 2 in
order to name such Notice Holder as a selling securityholder, then Liquidated Damages shall accrue on the Registrable Securities held by such Notice Holder at a rate of 0.50% per annum on the Amount
of Registrable Securities held by such Notice Holder. 

6

   
provided, however, that Liquidated Damages on Registrable Securities held by any Holder may not accrue under more than one of the foregoing clauses (i), (ii), (iii) or (iv) at any one
time; provided, further, however, that (1) upon the filing of the Shelf Registration as required hereunder (in the case of clause (a)(i) of this Section 3), (2) upon
the effectiveness of the Shelf Registration as required hereunder (in the case of clause (a)(ii) of this Section 3), (3) upon the effectiveness or availability of a Shelf
Registration or Prospectus which had ceased to remain effective or available (in the case of (a)(iii) of this Section 3) or (4) upon inclusion of such Notice Holder in a Shelf
Registration Statement (in the case of (a)(iv) of this Section 3), Liquidated Damages on the Registrable Securities as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue. It is understood and agreed that, notwithstanding any provision to the contrary, so long as any Registrable Security is then covered by an effective Shelf
Registration Statement containing a usable Prospectus, no Liquidated Damages shall accrue on such Registrable Security. 

        (b)  Notwithstanding
paragraph (a) of this Section 3, if the Board of Directors of the Company determines that it is in the best interest of the Company not to
disclose the existence of or facts surrounding any proposed or pending material corporate transaction or development involving the Company or its subsidiaries, the Company may suspend the filing or
effectiveness of a Shelf Registration or the use of any related Prospectus for up to 30 consecutive days in any 90-day period for a total of not more than 90 days in any calendar
year, without paying Liquidated Damages, and, upon notice thereof to each Holder, such Holder shall suspend the use of the Shelf Registration Statement and the related Prospectus until such time as
the Company shall have notified such Holder that the Shelf Registration Statement and the related Prospectus are again available for use. 

        (c)  So
long as Convertible Notes remain outstanding, the Company shall notify the Trustee promptly after each and every date on which an event occurs in respect of which
Liquidated Damages is required to be paid. Any amounts of Liquidated Damages due pursuant to (a)(i), (a)(ii), (a)(iii) or (a)(iv) of this Section 3 will be payable in cash
semi-annually on each April 15 and October 15 (each a "Damages Payment Date"), commencing with the first such date occurring after any such Liquidated Damages commences to
accrue, to Holders to whom regular interest is payable on such Damages Payment Date with respect to Convertible Notes that are Registrable Securities and to Persons that are registered Holders
15 days prior to such Damages Payment Date with respect to Underlying Shares that are Registrable Securities. The amount of Liquidated Damages for Registrable Securities will be determined by
multiplying the applicable rate of Liquidated Damages by the Amount of Registrable Securities outstanding on the Damages Payment Date following such Registration Default in the case of the first such
payment of Liquidated Damages with respect to a Registration Default (and thereafter at the next succeeding Damages Payment Date until the cure of such Registration Default), multiplied by a fraction,
the numerator of which is the number of days such Liquidated Damages rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve
30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360. 

        4.    Registration Procedures. In connection with the filing of any Registration Statement pursuant to Section 2 hereof,
the Company shall effect such registrations to permit the sale of the securities covered thereby in accordance with the intended method or methods of disposition 

7

 

thereof,
and pursuant thereto and in connection with any Registration Statement filed by the Company hereunder the Company shall: 

        (a)  Prepare
and file with the SEC on or prior to the Filing Date, a Registration Statement or Registration Statements as prescribed by Section 2 hereof, and use its
commercially reasonable efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided, however, that before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company shall furnish to and afford each Holder of the Registrable Securities covered by such Registration Statement and the managing
underwriters, if any, upon their request, a reasonable opportunity to review copies of all such documents proposed to be filed, other than documents filed with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act that are deemed incorporated by reference in such Registration Statement or Prospectus (in each case, where possible, at least five Business Days prior to such
filing, or such later date as is reasonable under the circumstances). The Company shall not file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders of a
majority in Amount of Registrable Securities covered by such Registration Statement shall reasonably object. 

        (b)  Prepare
and file with the SEC such amendments and post-effective amendments to each Shelf Registration, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented. Subject to Section 3(b), the Company shall
be deemed not to have used its reasonable best efforts to keep a Registration Statement effective during the Effectiveness Period if it voluntarily takes any action that would result in selling
Holders of the Registrable Securities covered thereby not being able to sell such Registrable Securities during that period unless such action is required by applicable law or unless the Company
complies with this Agreement, including without limitation the provisions of Section 4(k) hereof. 

        (c)  Notify
the selling Holders of Registrable Securities and the managing underwriters, if any, promptly (but in any event within five Business Days), (i) when a
Prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same
has become effective under the Securities Act (including in
such notice a written statement that any Holder may, upon written request, obtain, at the sole expense of the Company, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any Prospectus or the initiation of any proceedings for that purpose, (iii) of the
happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of 

8

 

any
changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in each case, it will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (iv) of the
Company's determination that a post-effective amendment to a Registration Statement would be appropriate. 

        (d)  Use
its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending
the use of a Prospectus and, if any such order is issued, to use its commercially reasonable efforts to obtain the withdrawal of any such order at the earliest possible moment. 

        (e)  If
requested by the managing underwriter or underwriters (if any) or the Holders of the majority in Amount of Registrable Securities being sold in connection with an
underwritten offering (i) promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters (if any), or such
Holders reasonably determine is necessary to be included therein, provided, however, that the Company shall not be required to include any such information upon the request of a Holder or any
underwriter if the inclusion of such information would, in the good faith judgment of the Company, violate applicable law, (ii) make all required filings of such prospectus supplement or such
post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment and (iii) supplement or make amendments to such Registration Statement. 

        (f)    Furnish
to each selling Holder of Registrable Securities and a single counsel to all such Holders (chosen in accordance with Section 5(b)) and each managing
underwriter, if any, at the sole expense of the Company, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including
financial statements and schedules, and all documents incorporated or deemed to be incorporated therein by reference and all exhibits. 

        (g)  Furnish
to each selling Holder of Registrable Securities and a single counsel to all such Holders (chosen in accordance with Section 5(b)) and the underwriters,
if any, at the sole expense of the Company, as many copies of the Prospectus (including each form of preliminary prospectus) and each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject to the last paragraph of this Section 4, the Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Securities and the underwriters or agents, if any, and dealers (if any), in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto in the manner contemplated by such Prospectus. 

        (h)  Prior
to any public offering of Registrable Securities, to use its reasonable best efforts to register or qualify, to the extent required by applicable law, and to
cooperate with the selling Holders of Registrable Securities and the managing underwriter or underwriters, if any, in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities or offer and sale under the securities or Blue Sky 

9

 

laws
of such jurisdictions within the United States as any selling Holder, or the managing underwriter or underwriters, if any, reasonably requests; keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the applicable Registration Statement; provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not
then so subject or (C) subject itself to taxation in any such jurisdiction where it is not then so subject. 

        (i)    Cooperate
with the selling Holders of Registrable Securities and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with Depository; and enable such
shares of Registrable Securities to be in such denominations and registered in such names as the Holders may reasonably request. 

        (j)    Use
its reasonable best efforts to cause the Registrable Securities covered by any Shelf Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be reasonably necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities, except as may be required solely as a consequence of the nature of such selling Holder's business, in which case the Company will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals. 

        (k)  Upon
the occurrence of any event contemplated by paragraph 4(c)(ii), 4(c)(iii) or 4(c)(iv) hereof, as promptly as practicable give notice to suspend
the availability of the Registration Statement as contemplated by Section 3(b) and, subject to Section 3(b), prepare and (subject to Section 4(a) hereof) file with the SEC, at the
sole expense of the Company, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, any such Prospectus will
not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading. 

        (l)    In
connection with any underwritten offering of Registrable Securities pursuant to a Shelf Registration, enter into an underwriting agreement on customary terms and
conditions for underwritten offerings of securities similar to the Registrable Securities and take all such other actions as are reasonably requested by the managing underwriter in order to expedite
or facilitate the registration or the disposition of such Registrable Securities and, in such connection, (i) make such representations and warranties to, and covenants with, the underwriters
with respect to the business of the Company and its subsidiaries (including any acquired business, properties or entity, if applicable) and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each 

10

 

case,
as are customarily made by issuers to underwriters in underwritten offerings of securities similar to the Registrable Securities and confirm the same in writing if and when requested;
(ii) upon the request of the managing underwriter, use all reasonable efforts to obtain the written opinion of counsel to the Company and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters, addressed to the underwriters covering the matters customarily covered in opinions requested in underwritten offerings of
securities similar to the Registrable Securities and such other matters as may be reasonably requested by the managing underwriter or underwriters; (iii) upon the request of the managing
underwriter, use all reasonable efforts to obtain "cold comfort" letters and updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the
Company for which financia1 statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings of securities similar to the Registrable
Securities and such other matters as are reasonably requested by the managing underwriter or underwriters as permitted by the Statement on Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable to the sellers and underwriters, if any, than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to Holders of a majority in Amount of Registrable Securities covered by such Registration Statement and the managing
underwriter or underwriters or agents, if any). The above shall be done as and to the extent required by such underwriting agreement. 

        (m)  Make
available for inspection by any selling Holder of Registrable Securities being sold, any underwriter participating in any such disposition of Registrable
Securities, if any, and any attorney, accountant or other agent retained by any such selling Holder, or underwriter (collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours at such time or times as shall be mutually convenient for the Company and the Inspectors as a group, all financial and other records, pertinent corporate documents and
instruments of the Company and its subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable the Inspectors to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Company and its subsidiaries to supply all information in their possession that has been reasonably requested by any such Inspector in connection
with such Registration Statement; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of such Holders by one firm of counsel, which firm shall be
Winston & Strawn until another firm shall be designated pursuant to Section 5(b). Records that the Company determines, in good faith, to be confidential and any Records that it notifies
the Inspectors are confidential shall not be disclosed by any Inspector unless (i) the disclosure of such Records is necessary to avoid or correct a material misstatement or material omission
in such Registration Statement if such Registration Statement is then available and such Records are not the subject of an applicable legal privilege, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) disclosure of such information is, in the opinion of counsel for any Inspector, necessary in
connection with any action, claim, suit or proceeding, directly involving or potentially involving such Inspector and arising out of, based upon, relating to, or involving 

11

   
this Agreement or any transactions contemplated hereby or arising hereunder or (iv) the information in such Records has been made generally available to the public other than through the acts
of such Inspector; provided, however, that prior notice shall be provided as soon as practicable to the Company of the potential disclosure of any information by such Inspector pursuant to clauses
(i), (ii) or (iii) of this sentence to permit the Company to obtain a protective order (or waive the provisions of this paragraph (m)). Each Inspector shall take such actions as
are reasonably necessary to protect the confidentiality of such information to the extent such actions are otherwise not inconsistent with, an impairment of or in derogation of the rights and
interests of the Holder or any Inspector, unless and until such information in such Records has been made generally available to the public other than as a result of a breach of this Agreement. 

        (n)  Provide
(i) the Holders of the Registrable Securities to be included in such Registration Statement and not more than one counsel for all the Holders of such
Registrable Securities chosen in accordance with Section 5(b), (ii) the underwriters (which term, for purposes of this Agreement, shall include a Person deemed to be an underwriter
within the meaning of Section 2(11) of the Securities Act), if any, thereof, (iii) the sales or placement agent, if any, thereof, and (iv) one counsel for such underwriters or
agents, reasonable opportunity to participate in the preparation of such Registration Statement, each Prospectus included therein or filed with the SEC, and each amendment or supplement thereto. 

        (o)  Comply
with all applicable rules and regulations of the SEC and make generally available to its securityholders earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day
of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods. 

                (p)  Cooperate
with each seller of Registrable Securities covered by any Registration Statement and each underwriter, if any, participating in the disposition
of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"), including,
if the Conduct Rules of the NASD or any successor thereto as amended from time to time so require, engaging, at the underwriters' (or Holders') expense, a "qualified independent underwriter" ("QIU")
as contemplated therein and making Records available to such QIU as though it were a participating underwriter for the purposes of Section 4(m) and otherwise applying the provisions of this
Agreement to such QIU (including indemnification) as though it were a participating underwriter. 

                (q)  Cause
the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the Trustee and the Holders of the Registrable Securities to effect such changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use its reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all
other 

12

 

forms
and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner. 

                (r)  Use
its reasonable best efforts to take all other steps necessary or advisable to effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby. 

        The
Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company the Notice and Questionnaire attached to the
Offering Memorandum dated April 2, 2002 used in connection with the offer of the Convertible Notes and such other information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request to the extent necessary or advisable to comply with the Securities Act. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to be disclosed so that the information previously furnished to the Company by such seller is not materially misleading and
does not omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made. 

        Each
Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon actual receipt of any notice from the Company of the happening of any event of the
kind described in Section 4(c)(ii), 4(c)(iii) or 4(c)(iv) hereof, or upon the suspension of the availability of the Registration Statement or any Prospectus pursuant to
Section 3(b), such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 4(k) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. 

5.    Registration Expenses.    

                (a)  All
fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company, including, without
limitation, (i) all registration and filing fees (including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with any underwritten
offering and (B) fees and expenses of compliance with state securities or Blue Sky laws (including, without limitation, reasonable fees and disbursements of counsel in connection with Blue Sky
qualifications of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as provided in Section 4(h)
hereof), (ii) printing expenses, including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with Depository and of printing
Prospectuses, (iii) fees and disbursements of counsel for the Company and reasonable fees and disbursements of one special counsel for the sellers of Registrable Securities (subject to the
provisions of Section 5(b) hereof), (iv) fees and disbursements of all independent certified public accountants referred to in Section 4(l)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters required by or incident to such performance), (v) Securities Act liability insurance, if the Company desires such
insurance, (vi) fees and expenses of all other Persons 

13

 

retained
by the Company, (vii) internal expenses of the Company (including, without limitation, all salaries and expenses of officers and employees of the Company performing legal or accounting
duties), (viii) the expense of any annual audit, (ix) the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange, if
applicable, and (x) the expenses relating to printing, word processing and distributing all Registration Statements, underwriting agreements, securities sales agreements and any other documents
necessary in order to comply with this Agreement. Notwithstanding anything in this Agreement to the contrary, each Holder shall pay all underwriting discounts and brokerage commissions with respect to
any Registrable Securities sold by it. 

                (b)  The
Company shall reimburse the Holders of the Registrable Securities being registered in a Shelf Registration for the reasonable fees and disbursements of
not more than one counsel chosen by the Holders of a majority in Amount of Registrable Securities to be included in such Registration Statement, which counsel shall be Winston & Strawn until
another firm shall be designated pursuant to this Section 5(b). 

6.    Indemnification.    The Company agrees to indemnify and hold harmless (i) each Initial Purchaser, (ii) each
Holder, (iii) each Person, if any, who controls (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the foregoing (any of the
Persons referred to in this clause (iii) being hereinafter referred to as a "controlling person"), (iv) the respective officers, directors, partners, employees, representatives and
agents of the Initial Purchasers, the Holders (including predecessor Holders) or any controlling person (any person referred to in clause (i), (ii), (iii) or (iv) may hereinafter
be referred to as an "Indemnified Holder"), from and against any and all losses, claims, damages, liabilities and judgments (including, without limitation, reasonable legal fees and other expenses
reasonably incurred in connection with any suit, action or proceeding or any claim asserted) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus, or any amendment or supplement thereto or any related preliminary Prospectus, or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Holder furnished to the Company in writing by such Holder expressly for use in therein;
provided, however, that the Company shall not be liable to any Indemnified Holder under the indemnity agreement of this paragraph with respect to any preliminary Prospectus to the extent that any such
loss, claim, damage, liability, judgment or expense of such Indemnified Holder results from the fact that such Indemnified Holder sold Registrable Securities under a Registration Statement to a Person
as to whom it shall be established that there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Prospectus (or of the preliminary Prospectus as then amended or
supplemented if the Company shall have furnished such Indemnified Holder with such amendment or supplement thereto on a timely basis), in any case where such delivery is required by applicable law and
the loss, claim, damage, liability or expense of such Indemnified Holder results from an untrue statement or omission of a material fact contained in the preliminary Prospectus which was corrected in
the Prospectus (or in the preliminary Prospectus as then amended or supplemented if the Company shall have furnished such Indemnified Holder with such amendment or supplement thereto, as the case may
be, on a timely basis). The Company shall notify each Indemnified Holder promptly of the institution, 

14

 

threat
or assertion of any claim, proceeding (including any governmental investigation) or litigation in connection with the matters addressed by this Agreement which involves the Company or such
Indemnified Holder. 

        Each
Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, officers and each Person who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to each Holder, but only with reference to such losses,
claims, damages or liabilities which are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to a
Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement or Prospectus, or any amendment or supplement thereto or any related preliminary Prospectus. 

        If
any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity
may be sought pursuant to either of the two preceding paragraphs, such Person (the "Indemnified Person") shall promptly notify the Person or Persons against whom such indemnity may be sought (each an
"Indemnifying Person") in writing of the commencement thereof. However, the failure so to notify the Indemnifying Person (i) will not relieve it from liability hereunder unless and to the
extent it did not otherwise learn of such action and such failure results in the forfeiture by the Indemnifying Person of substantial rights and defenses and (ii) will not, in any event,
relieve the Indemnifying Person from any obligations to any Indemnified Person other than the indemnifcation obligation provided hereunder. The Indemnifying Person shall be entitled to participate in
such action and, to the extent that it shall wish, jointly with any other Indemnifying Person similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to the Indemnified Person (in which case the Indemnifying Person shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the
Indemnified Person or Persons except as set forth below). Notwithstanding the Indemnifying Person's election to assume the defense and employ counsel in an action, an Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Indemnifying Person shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the Indemnifying Person to represent the Indemnified Person would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person and the Indemnifying Person and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it and/or other
Indemnified Persons which are different from or additional to those available to the Indemnifying Person, (iii) the Indemnifying Person shall have failed to assume the defense and employ
counsel reasonably satisfactory to the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Indemnifying Person shall authorize the Indemnified
Person to employ separate counsel at the expense of the Indemnifying Person. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff, such Indemnifying Person agrees to indemnify any Indemnified Person from and against any loss or liability by reason of
such settlement or judgment. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of
which any 

15

 

Indemnified
Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such proceeding. 

        If
the indemnification provided for in the first and second paragraphs of this Section 6 is unavailable to an Indemnified Person or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Person on the one hand and the Indemnified Person on the other hand pursuant to the Purchase Agreement or from the offering of Convertible Notes or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Indemnifying Person on the one hand and the Indemnified Person on the other in connection with the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and any Indemnified Holder on the other shall be deemed to be in the
same proportion as the total net proceeds from the initial offering and sale of Convertible Notes (before deducting expenses) received by the Company bear to the total net proceeds received by such
Indemnified Holder from sales of Registrable Securities giving rise to such obligations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or such Indemnified Holder and the parties'
relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 

        Each
of the Company and the Initial Purchasers agrees that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation or
by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as
a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, in no event shall any
Holder be required to contribute any amount in excess of the amount by which the net proceeds received by such Holder from the sale of the Registrable Securities pursuant to a Shelf Registration
Statement exceeds the amount of damages which such Holder would have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. 

        The
remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any indemnified party at law or in
equity. 

16

   
        The indemnity and contribution agreements contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Holder or any Person controlling any Holder or by or on behalf of the Company, its officers or directors or any other Person
controlling any of the Company and (iii) acceptance of and payment for any of the Registrable Securities. 

7.    Rules 144 and 144A.    The Company covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder in a timely manner in accordance with the requirements of the Securities Act and the Exchange Act and,
for so long as any Registrable Securities remain outstanding, if at any time the Company is not required to file such reports, it will, upon the request of any Holder or beneficial owner of
Registrable Securities, make available such information necessary to permit sales pursuant to Rule 144A under the Securities Act. The Company further covenants that, for so long as any
Registrable Securities remain outstanding, it will use its reasonable best efforts to take such further action as any Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by
(a) Rule 144(k) and Rule 144A under the Securities Act, as such rules may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 

8.    Underwritten Registrations.    

        If
any of the Registrable Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of the majority in Amount of Registrable Securities to be included in such offering and be reasonably acceptable to the Company. 

        No
Holder of Registrable Securities may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the
basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 

9.    Miscellaneous.    

        (a)  No Inconsistent Agreements. The Company has not, as of the date hereof, and the Company shall not, after the date of this
Agreement, enter into any agreement with respect to any of its securities that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued
and outstanding securities under any such agreements. The Company has not entered and will not enter into any agreement 

17

 

with
respect to any of its securities that will grant to any Person registration rights with respect to a Registration Statement. 

        (b)  Adjustments Affecting Registrable Securities. The Company shall not, directly or indirectly, take any action with respect
to the Registrable Securities as a class that would adversely affect the ability of the Holders of Registrable Securities to include such Registrable Securities in a Shelf Registration undertaken
pursuant to this Agreement. 

        (c)  Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, otherwise than with the prior written consent of the Company and the Holders of not less than a majority in Amount of Registrable
Securities; provided, however, that Section 6 and this Section 9(c) may not be amended, modified or supplemented without the prior written consent of the Company and each Holder
(including, in the case of an amendment, modification or supplement of Section 6, any Person who was a Holder of Registrable Securities disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Securities may be
given by Holders of at least a majority in Amount of Registrable Securities being sold by such Holders pursuant to such Registration Statement. Each Holder of Registrable Securities outstanding at the
time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this
Section 9(c), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such
Holder. Each Holder may waive compliance with respect to any obligation of the Company under this Agreement as it may apply or be enforced by such particular Holder. 

        (d)  Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or facsimile: 

        (1)  if
to a Holder of the Registrable Securities, at the most current address of such Holder set forth on the records of the security registrar under the Indenture, in the
case of Holders of Convertible Notes, and in the stock ledger of the Company, in the case of Holders of common stock of the Company. 

(2)    if
to the Initial Purchasers: 

Deutsche
Bank Securities Inc.

One South Street

Baltimore, Maryland 21202

Facsimile No.: 410-895-3619

Attention: General Counsel 

        with
copies to: 

18

 

Winston &
Strawn

200 Park Avenue

New York, New York 10166

Facsimile No.: (212) 294-4700

Attention: Daniel A. Ninivaggi, Esq. 

(3)    if
to the Company, at the addresses as follows: 

GenCorp Inc.

P.O. Box 537012

Sacramento, California 95853-7012

Attention: Terry L. Hall

Facsimile No.: 916-351-8668 

        with
copies to: 

Jones,
Day, Reavis & Pogue

North Point

901 Lakeside Avenue

Cleveland, Ohio 44114

Attention: Christopher Kelly

Facsimile: 216-579-0212 

        All
such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; one Business Day after being timely delivered to a next-day air courier; and when the addressor receives facsimile confirmation, if sent by facsimile. 

        (e)  Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto, including the Holders; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and except to
the extent such successor or assign holds Registrable Securities. 

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

        (g)  Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof. 

        (h)  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION 

19

 

OF
THE FEDERAL AND NEW YORK STATE COURTS SITTING IN MANHATTAN, NEW YORK CITY, THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. 

        (i)    Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 

        (j)    Securities Held by the Company or Its Affiliates. Whenever the consent or approval of Holders of a specified percentage
in Amount of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) shall not
be counted in determining whether such consent or approval was given by the Holders of such required percentage. 

        (k)  Third-Party Beneficiaries. Holders of Registrable Securities are intended third party beneficiaries of this Agreement and
this Agreement may be enforced by such Persons. 

        (l)    Entire Agreement. This Agreement, together with the Purchase Agreement and the Indenture, is intended by the parties as a
final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements,
representations, or warranties, contracts, understandings, correspondence, conversations and memoranda between the Initial Purchasers on the one hand and the Company on the other, or between or among
any agents, representatives, parents, subsidiaries, affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced
hereby. 

[Signature page immediately follows]

20

   
        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

	 	 	GENCORP INC.
	

 	
 	
By:	

/s/  YASMIN R. SEYAL      
 Name: Yasmin R. Seyal

Title: Senior Vice President, Financing

          Treasurer, and acting Chief

          Financial Officer
	

 	
 	
DEUTSCHE BANK SECURITIES INC.
	

 	
 	
By:	

/s/  JEFFREY A. BAKER      
 Name: Jeffrey A. Baker

Title: Director
	

 	
 	
ABN AMRO ROTHSCHILD LLC
	

 	
 	
By:	

/s/  NEIL COLLINGRIDGE      
 Name: Neil Collingridge

Title: Senior Vice President

          ABN AMRO Inc.
	

 	
 	
BANC ONE CAPITAL MARKETS, INC.
	

 	
 	
By:	

/s/  THOMAS J. MCGRATH      
 Name: Thomas J. McGrath

Title: Managing Director

S-1

QuickLinks

TABLE OF CONTENTS

REGISTRATION RIGHTS AGREEMENTEXHIBIT 4.1

                           CARRINGTON LABORATORIES, INC.

                            1995 STOCK OPTION PLAN

              As Amended and Restated Effective January 15, 1998
                   And Further Amended Through May 16, 2002

                                  ARTICLE I

                                   General

      Section 1.01.  Purpose.  It is the purpose  of the Plan to promote  the
 interests of the Company and its  shareholders by attracting, retaining  and
 stimulating the performance of selected Employees, Directors and Consultants
 by giving  such  Employees, Directors  and  Consultants the  opportunity  to
 acquire a  proprietary interest  in the  Company and  an increased  personal
 interest in its continued success and progress.

      Section 1.02.  Definitions.  As  used herein the  following terms  have
 the following meanings:

           (a)  "Affiliate" means any parent or subsidiary corporation of the
      Company within the meaning of Section 424(e) and (f) of the Code.

           (b)  "Board" means the Board of Directors of the Company.

           (c)  "Code" means the Internal Revenue Code of 1986, as amended.

           (d)  "Committee" means  the Stock  Option Committee  described  in
      Article II hereof.

           (e)  "Common Stock" means the $0.01 par value Common Stock of  the
      Company.

           (f)  "Company"  means  Carrington  Laboratories,  Inc.,  a   Texas
      corporation.

           (g)  "Consultant" means any consultant  or advisor of the  Company
      or an Affiliate who is not an Employee or Director, provided that  bona
      fide services  are  rendered by  the  consultant or  advisor  and  such
      services are not in connection with the offer or sale of securities  in
      a capital-raising transaction.

           (h)  "Director" means a member of the Board.

           (i)  "Employee" means any employee of the Company or an Affiliate.

           (j)  "Employee-Director" means an Employee who is a Director.

           (k)  "Fair Market Value" means (A) the closing sales price of  the
      Common Stock on the date in question (or, if there is no reported  sale
      on such date, then on the last preceding date on which a reported  sale
      occurred), as reported  on the NASDAQ  National Market  (if the  Common
      Stock is not listed on a national securities exchange and sales of  the
      Common Stock are regularly reported on such market), or as reported  on
      a national  securities exchange  (if the  Common  Stock is  listed  for
      trading on such  exchange), or  (B) the mean  between the  bid and  ask
      prices of the Common Stock on the date in question (or, if there is  no
      report of such prices on such date, then on the last preceding date  on
      which  such  prices  were  reported),  as  reported  by  the   National
      Association of Securities Dealers, Inc.

           (l)  "Option" means any option to purchase shares of Common  Stock
      granted pursuant to the provisions of the Plan.

           (m)  "Optionee" means an Employee, Outside Director or  Consultant
      who has been granted an Option under the Plan.

           (n)  "Outside Director" means a Director who is not an Employee.

           (o)  "Plan" means this  Carrington Laboratories,  Inc. 1995  Stock
      Option Plan, as amended and restated effective January 15, 1998.

      Section 1.03.  Number of Shares.  Options may be granted by the Company
 from time  to time  under the  Plan to  purchase an  aggregate of  2,250,000
 shares of the authorized Common Stock.  If any Option expires or  terminates
 for any reason without having been exercised in full, the unpurchased shares
 subject to such expired or terminated Option shall be available for purposes
 of the Plan.

                                  ARTICLE II

                                Administration

      The Plan shall be administered by a Stock Option Committee which  shall
 consist of  two  or  more  Outside  Directors,  each  of  whom  shall  be  a
 disinterested person within the meaning of  Rule 16b-3 under the  Securities
 Exchange Act of  1934, as  amended ("Rule 16b-3"),  or any  similar rule  or
 regulation promulgated thereunder.   Each member of  the Committee shall  be
 appointed by and shall serve at the pleasure of the Board.  The Board  shall
 have the sole continuing authority to appoint members of the Committee  both
 in substitution  for  members previously  appointed  and to  fill  vacancies
 however caused.  The following provisions shall apply to the  administration
 of the Plan:

           (a)  The Committee shall designate one of its members as  Chairman
      and  shall  hold meetings at such times and places as it may determine.
      Each member of the Committee shall  be notified in writing of the  time
      and place of any meeting  of the Committee at  least two days prior  to
      such meeting, provided that  such notice may be  waived by a  Committee
      member.  A majority of the members of the Committee shall constitute  a
      quorum, and  any action  taken by  a  majority of  the members  of  the
      Committee present  at any  duly called  meeting at  which a  quorum  is
      present (as well as any action  unanimously approved in writing)  shall
      constitute action by the Committee.

           (b)  The Committee  may appoint  a Secretary  (who need  not be  a
      member of the Committee) who shall  keep minutes of its meetings.   The
      Committee may make such  rules and regulations for  the conduct of  its
      business as it may determine.

           (c)  The Committee  shall  have  full authority,  subject  to  the
      express provisions  of the  Plan, to  interpret the  Plan, to  provide,
      modify and rescind rules and regulations relating thereto, to determine
      the terms and  provisions of each  Option and the  form of each  option
      agreement evidencing an Option granted under  the Plan and to make  all
      other determinations and  perform such actions  as the Committee  deems
      necessary or  advisable  to administer  the  Plan.   In  addition,  the
      Committee shall have full authority, subject to the express  provisions
      of  the  Plan,  to  determine  the  Employees,  Outside  Directors  and
      Consultants to whom Options shall be granted, the time or date of grant
      of each such  Option, the  number of  shares subject  thereto, and  the
      price  at  which  such  shares  may  be  purchased.    In  making  such
      determinations, the Committee may take into  account the nature of  the
      services rendered by the Employee, Outside Director or Consultant,  his
      present and potential  contributions to  the success  of the  Company's
      business and such other facts as the Committee in its discretion  shall
      deem appropriate to carry out the purposes of the Plan.

           (d)  Notwithstanding  the  authority   hereby  delegated  to   the
      Committee to grant Options  under the Plan, the  Board also shall  have
      full authority, subject to the express provisions of the Plan, to grant
      Options under the Plan, to interpret  the Plan, to provide, modify  and
      rescind rules and regulations  relating to it,  to determine the  terms
      and provisions of Options granted under the Plan and to make all  other
      determinations and perform such actions as the Board deems necessary or
      advisable to administer the Plan.

           (e)  No member of the Committee or  the Board shall be liable  for
      any action taken or  determination made in good  faith with respect  to
      the Plan or any Option granted hereunder.

                                 ARTICLE III

                    Grants of Options to Outside Directors

      Section 3.01.  Grants of Options.  At any time and from time to time on
 or after January 15, 1998, during  the term of the  Plan and subject to  the
 express provisions hereof, Options  may be granted by  the Committee to  any
 Outside Director for such number of shares of Common Stock as the  Committee
 in its discretion shall deem to be in  the best interest of the Company  and
 which will serve to further the purposes  of the Plan.  The Options  granted
 under this Article III  shall not be incentive  stock options under  Section
 422 of the Code.

      Section 3.02.  Price.  The  purchase price  per share  of Common  Stock
 under each Option granted under this Article III shall be determined by  the
 Committee but in no event shall be less  than 100% of the Fair Market  Value
 per share of Common Stock on the date of grant of such Option.

      Section 3.03.  Option Period and Terms of Exercise of Options.   Except
 as otherwise provided for herein, each Option granted to an Outside Director
 under the Plan shall be exercisable in  whole or in part during such  period
 as the Committee shall determine, which period shall not be longer than  ten
 years from the  date of  grant of such  Option.   Any Option  granted to  an
 Outside Director shall remain effective during its entire term regardless of
 whether the Optionee continues  to serve as  a Director; provided,  however,
 that the otherwise unexpired portion of  any Option granted hereunder to  an
 Outside Director shall expire and become null and void immediately upon  the
 termination of  such Outside  Director's Board  membership if  such  Outside
 Director ceases to serve on the  Board by reason of such Outside  Director's
 (a)  fraud   or   intentional  misrepresentation,   or   (b)   embezzlement,
 misappropriation or conversion of assets or opportunities of the Company  or
 any Affiliate.  Nothing in the Plan or in any option agreement evidencing an
 Option granted under the Plan to an Outside Director shall confer upon  such
 Director any right to continue as a Director of the Company.

                                  ARTICLE IV

                        Grants of Options to Employees

      Section 4.01.  Grants of Options.   At any time and  from time to  time
 during the term of  the Plan and subject  to the express provisions  hereof,
 Options may be granted by the Committee  to any Employee for such number  of
 shares of Common Stock as the Committee  in its discretion shall deem to  be
 in the best  interest of the  Company and which  will serve  to further  the
 purposes of the Plan.  The  Committee, in its discretion, may designate  any
 Option granted  to an  Employee as  an incentive  stock option  intended  to
 qualify under Section 422 of the Code; provided, however, that the aggregate
 Fair Market Value of the Common Stock with respect to which incentive  stock
 options granted  to  an  Employee under  the  Plan  (including  all  options
 qualifying as incentive stock  options pursuant to  Section 422 of the  Code
 granted to  such  Employee  under any  other  plan  of the  Company  or  any
 Affiliate) are exercisable for  the first time by  such Employee during  any
 calendar year  shall not  exceed $100,000,  determined as  of the  date  the
 incentive stock option is granted.  If an  Option that is intended to be  an
 incentive stock option shall be granted and such Option does not comply with
 the proviso of the immediately preceding sentence, such Option shall not  be
 void but shall be deemed to  be an incentive stock  option to the extent  it
 does not exceed the limit established by such proviso and shall be deemed  a
 nonqualified stock option to the extent it exceeds that limit.

      The aggregate number of shares of  Common Stock for which any  Employee
 may be granted Options under the Plan during any one calendar year shall not
 exceed 75,000.

      Section 4.02.  Price.  The  purchase price  per share  of Common  Stock
 under each Option granted under this  Article IV shall be determined by  the
 Committee but in no event shall be less  than 100% of the Fair Market  Value
 per share  of Common  Stock at  the time  the Option  is granted;  provided,
 however, that  the  purchase price  per  share  of Common  Stock  under  any
 incentive stock  option  granted  to  an Optionee  who,  at  the  time  such
 incentive stock option is  granted, owns stock possessing  more than 10%  of
 the total combined voting power  of all classes of  stock of the Company  or
 any Affiliate shall be at least 110% of  the Fair Market Value per share  of
 Common Stock at the date of grant.

      Section 4.03.  Option Period and Terms of Exercise of Employee Options.
 Except  as otherwise provided for herein, each Option granted to an Employee
 under the Plan  shall be  exercisable during  such period  as the  Committee
 shall determine; provided, however, that the otherwise unexpired portion  of
 any Option granted to an Employee shall  expire and become null and void  no
 later than upon the first to occur  of (i) the expiration of ten years  from
 the date such Option  was granted, (ii) the expiration  of 30 days from  the
 date of termination  of the  Optionee's employment  with the  Company or  an
 Affiliate for any  reason other than  his retirement,  death or  disability,
 (iii) the expiration  of  one year  from  the  date of  termination  of  the
 Optionee's employment with  the Company  or an  Affiliate by  reason of  his
 death or disability,  (iv) the expiration  of three years  from the date  of
 termination of such Optionee's employment with  the Company or an  Affiliate
 by reason of  his retirement, or  (v) the expiration of  two years from  the
 date of such Optionee's  death following the  termination of his  employment
 with the Company or an Affiliate by reason of his retirement.

           Anything herein  to the  contrary notwithstanding,  the  otherwise
 unexpired portion  of any  Option granted  to  an Employee  hereunder  shall
 expire and become  null and void  immediately upon the  termination of  such
 Employee's employment with  the Company or  an Affiliate by  reason of  such
 Employee's fraud, dishonesty or performance of other acts detrimental to the
 Company or an Affiliate, or if, following the termination of the  Employee's
 employment with the  Company or an  Affiliate, the  Company determines  that
 there is good cause to cancel such Option.

           Any incentive stock option granted to an Optionee who, at the time
 such incentive stock option is granted, owns stock possessing more than  10%
 of the total combined voting power of all classes of stock of the Company or
 any Affiliate shall not  be exercisable after the  expiration of five  years
 from the date of its grant.

           Under the provisions of any option agreement evidencing an  Option
 granted to  an  Employee, the  Committee  may  limit the  number  of  shares
 purchasable thereunder in  any period or  periods of time  during which  the
 Option is exercisable and  may impose such other  terms and conditions  upon
 the exercise of  an Option as  are not inconsistent  with the  terms of  the
 Plan;  provided,  however,  that  the  Committee,  in  its  discretion,  may
 accelerate the exercise date of any such Option.

      Section 4.04.  Termination of  Employment.   A transfer  of  employment
 among the Company and any of its Affiliates shall not be considered to be  a
 termination of employment for the purposes of the Plan.  Nothing in the Plan
 or in any option agreement evidencing an Option granted under the Plan to an
 Employee, including an Employee-Director, shall confer upon any Optionee any
 right to continue in the employ  of the Company or  any Affiliate or in  any
 way interfere with the  right of the Company  or any Affiliate to  terminate
 the employment of the Optionee at any time, with or without cause.

                                  ARTICLE V

                       Grant of Options to Consultants

      Section 5.01.  Grant of Options.   At any  time and from  time to  time
 during the term of  the Plan and subject  to the express provisions  hereof,
 Options may be granted by the Committee to any Consultant for such number of
 shares of Common Stock as the Committee  in its discretion shall deem to  be
 in the best  interest of the  Company and which  will serve  to further  the
 purposes of the Plan.  The Options granted under this Article V shall not be
 incentive stock options under Section 422 of the Code.

      Section 5.02.  Price.  The  purchase price  per share  of Common  Stock
 under each Option granted  under this Article V  shall be determined by  the
 Committee but in no event shall be less  than 100% of the Fair Market  Value
 per share of Common Stock at the time the Option is granted.

      Section 5.03.  Option  Period  and  Terms  of  Exercise  of  Consultant
 Options.  Except as otherwise provided for herein, each Option granted to  a
 Consultant under the  Plan shall be  exercisable during such  period as  the
 Committee shall determine; provided,  however, that the otherwise  unexpired
 portion of any Option granted to  a Consultant shall expire and become  null
 and void no later than upon the first to occur of (i) the expiration of  ten
 years from the date such  Option was granted or  (ii) the expiration of  one
 year from  the date  of the  Consultant's  death.   Anything herein  to  the
 contrary notwithstanding,  the otherwise  unexpired  portion of  any  Option
 granted to a  Consultant hereunder  shall expire  and become  null and  void
 immediately upon the termination of the Consultant's services to the Company
 or  an  Affiliate  by  reason  of  the  Consultant's  fraud,  dishonesty  or
 performance of other acts detrimental to the Company or an Affiliate, or if,
 at any time during or after the performance of the Consultant's services  to
 the Company or an Affiliate, the Company determines that there is good cause
 to cancel such Option.

           Under the provisions of any option agreement evidencing an  Option
 granted to  a Consultant,  the  Committee may  limit  the number  of  shares
 purchasable thereunder in  any period or  periods of time  during which  the
 Option is exercisable and  may impose such other  terms and conditions  upon
 the exercise of  an Option as  are not inconsistent  with the  terms of  the
 Plan;  provided,  however,  that  the  Committee,  in  its  discretion,  may
 accelerate the exercise date of any such Option.

      Section 5.04.  Termination of Consulting Services.  Nothing in the Plan
 or in any option agreement evidencing an Option granted under the Plan to  a
 Consultant shall  confer upon  any Consultant  any right  to continue  as  a
 consultant or  advisor  of  the Company  or  any  Affiliate or  in  any  way
 interfere with the right  of the Company or  any Affiliate to terminate  the
 services of the Consultant at any time, with or without cause.

                                  ARTICLE VI

                                Miscellaneous

      Section 6.01.  Adjustments Upon Changes in Common Stock.  In the  event
 the Company shall effect a split of  the Common Stock or a dividend  payable
 in Common  Stock, or  in the  event the  outstanding Common  Stock shall  be
 combined into a smaller number of shares, the maximum number of shares as to
 which Options may be granted under the Plan shall be decreased or  increased
 proportionately.  In the event that,  before delivery by the Company of  all
 of the shares of Common  Stock for which any  Option has been granted  under
 the Plan,  the  Company  shall  have effected  such  a  split,  dividend  or
 combination, the shares still subject to  such Option shall be increased  or
 decreased  proportionately  and  the  purchase  price  per  share  shall  be
 decreased or increased proportionately so that the aggregate purchase  price
 for all of the shares then subject to  such Option shall remain the same  as
 immediately prior to such split, dividend or combination.

           In the event of a reclassification of Common Stock not covered  by
 the foregoing, or in the event of a liquidation or reorganization (including
 a merger, consolidation or sale of  assets) of the Company, the Board  shall
 make such adjustments,  if any, as  it may deem  appropriate in the  number,
 purchase price and  kind of shares  covered by the  unexercised portions  of
 Options theretofore granted under the Plan.  The provisions of this  Section
 shall only be applicable  if, and only to  the extent that, the  application
 thereof does not conflict with any valid governmental statute, regulation or
 rule.

           Subject  to   Article  VI,   Section  6.02   of  the   Plan,   and
 notwithstanding any indication to the  contrary in the preceding  paragraphs
 of this  Section 6.01,  upon the  occurrence of  a "Change  in Control"  (as
 hereinafter defined)  of  the Company,  the  maturity of  all  Options  then
 outstanding under  the Plan  (other than  Options  granted under  Article  V
 hereof) shall be accelerated automatically, so  that all such Options  shall
 become exercisable in full with respect to all shares as to which they shall
 not have previously been exercised or become exercisable; provided, however,
 that no  such acceleration  shall  occur with  respect  to Options  held  by
 optionees whose  employment with  the Company  or  an Affiliate  shall  have
 terminated prior to the occurrence of such Change in Control.

           For purposes of  the Plan, a  "Change in Control"  of the  Company
 shall be deemed to have occurred if:

           (a)  the shareholders of the Company shall approve:

                (i)  any  merger,  consolidation  or  reorganization  of  the
           Company (a "Transaction") in which the shareholders of the Company
           immediately prior to the Transaction would not, immediately  after
           the Transaction, beneficially own, directly or indirectly,  shares
           representing in the aggregate more than 50% of all votes to  which
           all shareholders of the corporation issuing cash or securities  in
           the Transaction (or  of its ultimate  parent corporation, if  any)
           would be entitled under ordinary circumstances in the election  of
           directors,  or  in  which  the  members  of  the  Company's  Board
           immediately prior to the Transaction would not, immediately  after
           the Transaction, constitute a majority  of the board of  directors
           of the corporation issuing cash  or securities in the  Transaction
           (or of its ultimate parent corporation, if any),

                (ii) any sale,  lease, exchange  or  other transfer  (in  one
           transaction or a  series of related  transactions contemplated  or
           arranged by any party  as a single plan)  of all or  substantially
           all of the Company's assets, or

                (iii)     any  plan  or  proposal  for  the  liquidation   or
           dissolution of the Company;

           (b)  individuals who constitute the Company's Board as of April 1,
      1995 (the "Incumbent Directors") cease for any reason to constitute  at
      least a majority of the Board; provided, however, that for purposes  of
      this subparagraph (b),  any individual who  becomes a  Director of  the
      Company subsequent to April 1, 1995, and whose election, or  nomination
      for election by the Company's shareholders, is approved by a vote of at
      least a majority of  the Incumbent Directors who  are Directors at  the
      time of such vote, shall be considered an Incumbent Director; or

           (c)  any "person," as that term is  defined in Section 3(a)(9)  of
      the Securities Exchange Act  of 1934, as  amended (the "Exchange  Act")
      (other than the Company, any of its subsidiaries, any employee  benefit
      plan of  the  Company  or  any  of  its  subsidiaries,  or  any  entity
      organized, appointed or established by the  Company for or pursuant  to
      the  terms  of   such  plan),  together   with  all  "affiliates"   and
      "associates" (as  such  terms  are defined  in  Rule  12b-2  under  the
      Exchange Act) of such  person, shall become  the "beneficial owner"  or
      "beneficial owners"  (as defined  in Rules  13d-3 and  13d-5 under  the
      Exchange Act), directly  or indirectly,  of securities  of the  Company
      representing in  the aggregate  20%  or more  of  either (i)  the  then
      outstanding shares of Common Stock or (ii) the combined voting power of
      all then outstanding securities of the  Company having the right  under
      ordinary circumstances to vote  in an election  of the Company's  Board
      ("Voting Securities"), in either  such case other than  as a result  of
      acquisitions of such securities directly from the Company.

           Notwithstanding the  foregoing,  a  "Change  in  Control"  of  the
 Company shall not be  deemed to have occurred  for purposes of  subparagraph
 (c) of  this  Section  6.01  solely  as the  result  of  an  acquisition  of
 securities by the Company which, by reducing the number of shares of  Common
 Stock  or   other  Voting   Securities   outstanding,  increases   (i)   the
 proportionate number of  shares of Common  Stock beneficially  owned by  any
 person to 20% or more of the shares of Common Stock then outstanding or (ii)
 the  proportionate  voting  power  represented  by  the  Voting   Securities
 beneficially owned by any person to 20% or more of the combined voting power
 of all then outstanding  Voting Securities; provided,  however, that if  any
 person referred to in clause (i)  or (ii) of this sentence shall  thereafter
 become the beneficial  owner of  any additional  shares of  Common Stock  or
 other Voting Securities  (other than  as a result  of a  stock split,  stock
 dividend or similar transaction), then a "Change in Control" of the  Company
 shall be deemed to  have occurred for purposes  of subparagraph (c) of  this
 Section 6.01.

      Section 6.02.  Amendment and Termination of the  Plan.  Subject to  the
 right of  the Board  to terminate  the Plan  prior thereto,  the Plan  shall
 terminate at the expiration of ten years from April 1, 1995.  No Options may
 be granted  after termination  of the  Plan.   The  Board  may at  any  time
 suspend, terminate, amend  or modify the  Plan; provided,  however, that  no
 amendment or modification  of the Plan  shall become  effective without  the
 approval of  such  amendment or  modification  by the  shareholders  of  the
 Company if  the Company,  on the  advice of  counsel, determines  that  such
 shareholder approval is  necessary or desirable.   Upon  termination of  the
 Plan, the  terms and  provisions of  the  Plan shall,  notwithstanding  such
 termination, continue to apply to Options granted prior to such termination.
  No suspension, termination,   amendment or modification  of the Plan  shall
 adversely affect the rights of an Optionee under an Option, except with  the
 consent of such Optionee.

      Section 6.03.  Payment of Purchase Price;  Application of Funds.   Upon
 exercise of an Option, the purchase price shall  be paid in full in cash  or
 by check; provided. however, that at the  request of an Optionee and to  the
 extent permitted by  applicable law,  the Company  shall approve  reasonable
 arrangements with Optionees who are Outside  Directors and may, in its  sole
 and absolute discretion,  approve reasonable arrangements  with one or  more
 Optionees who are  Employees or Consultants  and their respective  brokerage
 firms, under which such an Optionee may exercise his Option by delivering to
 the Company  an irrevocable  notice of  exercise, together  with such  other
 documents as the Company shall require, and the Company shall, upon  receipt
 of full payment  in cash or  by check of  the purchase price  and any  other
 amounts due  in  respect  of  such  exercise,  deliver  to  such  Optionee's
 brokerage firm one or  more certificates representing  the shares of  Common
 Stock issued in  respect of  such exercise.   The  proceeds of  any sale  of
 Common Stock  covered  by Options  shall  constitute general  funds  of  the
 Company.  Upon exercise of an Option,  the Optionee will be required to  pay
 to the Company the amount of any  federal, state or local taxes required  by
 law to be withheld in connection with such exercise.

      Section 6.04.  Requirements of Law.   The granting  of Options and  the
 issuance of Common Stock upon the exercise of an Option shall be subject  to
 all  applicable  laws,  rules  and  regulations  and  to  such  approval  by
 governmental agencies as may be required.

      Section 6.05.  Nontransferability of Options.  An Option granted  under
 the Plan shall not be transferable by the Optionee except by will or by  the
 laws of  descent  and  distribution and  shall  be  exercisable  during  the
 lifetime of the Optionee only by the Optionee.

      Section 6.06.  Investment Letter.  The Company's obligation to  deliver
 Common Stock with respect to an Option shall be conditioned upon its receipt
 from the  Optionee to  whom such  Common  Stock is  to  be delivered  of  an
 executed investment letter containing such representations and agreements as
 the Committee may determine to be necessary or advisable in order to  enable
 the Company  to issue  and deliver  such Common  Stock to  such Optionee  in
 compliance with the  Securities Act of  1933 and  other applicable  federal,
 state or local securities laws or regulations.

      Section 6.07.  Date of Adoption and  Effective Date of  the Plan.   The
 original Carrington Laboratories, Inc. 1995 Stock Option Plan (the "Original
 Plan")  became  effective  on  April  1,  1995.   The  first  amendment  and
 restatement of the Original Plan became  effective on March 27, 1996.   This
 second amendment and restatement  of the Original Plan  was approved by  the
 Board on January 15,  1998 and shall  be deemed effective  as of that  date,
 provided it is duly approved by the holders  of a majority of the shares  of
 Common Stock present or represented and entitled to vote at the 1998  annual
 meeting of shareholders  of the Company.   If not  so approved, this  second
 amendment and restatement of the Original  Plan shall be null and void,  any
 Options granted hereunder to Outside Directors on or after January 15,  1998
 and prior to  the date of  the 1998 annual  meeting of  shareholders of  the
 Company shall be null and void,  and the first amendment and restatement  of
 the Original Plan shall remain in  full force and effect in accordance  with
 its terms.

      Section 6.08.  Gender.  Words of any gender  used in the Plan shall  be
 construed  to  include  any  other  gender,  unless  the  context   requires
 otherwise.

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