Document:

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                                                                    EXHIBIT 10.2

                             STOCKHOLDERS AGREEMENT

        STOCKHOLDERS AGREEMENT, dated as of May 16, 2001, by and between ESB
Financial Corporation ("ESB"), a Pennsylvania corporation headquartered in
Ellwood City, Pennsylvania, and certain stockholders of WSB Holding Company
("WSB"), a Pennsylvania corporation headquartered in Pittsburgh, Pennsylvania,
named on Schedule I hereto (collectively the "Stockholders").

        WHEREAS, ESB and WSB have entered into an Agreement and Plan of
Reorganization, dated as of the date hereof ("Agreement"), which is being
executed simultaneously with the execution of this Stockholders Agreement
("Stockholders Agreement") and provides for, among other things, ESB's
acquisition of WSB ("Agreement"), by means of a merger of WSB with and into ESB
("Merger") pursuant to an Agreement of Merger which is attached as Exhibit C to
the Agreement; and

        WHEREAS, in order to induce ESB to enter into the Agreement, each of the
Stockholders agrees, among other things, to vote in favor of the Agreement in
his or her capacity as a stockholder of WSB.

        NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1.      OWNERSHIP OF WSB COMMON STOCK. Each Stockholder represents and warrants
that he or she has or shares the right to vote and dispose of the number of
shares of common stock of WSB, par value $.10 per share ("WSB Common Stock"),
set forth opposite such Stockholder's name on Schedule I hereto.

2.      AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and agrees
that:

                (a)     such Stockholder shall, at any meeting of WSB's
        stockholders called for the purpose ("WSB Stockholder Meeting"), vote,
        or cause to be voted, all shares of WSB Common Stock in which such
        stockholder has the right to vote (whether owned as of the date hereof
        or hereafter acquired) in favor of the Agreement and the related
        Agreement of Merger and against any plan or proposal pursuant to which
        WSB or any subsidiary thereof is to be acquired by or merged with, or
        pursuant to which WSB or any subsidiary thereof proposes to sell all or
        substantially all of its assets and liabilities to, any person, entity
        or group (other than ESB or any affiliate thereof);

                (b)     such Stockholder shall, at a WSB Stockholder Meeting,
        use his or her best efforts to have each member of his or her immediate
        family who owns WSB Common Stock vote, or cause to be voted, all shares
        of WSB Common Stock in which such immediate

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        family member has the right to vote (whether owned as of the date hereof
        or hereinafter acquired) in favor of the Agreement and related Agreement
        of Merger and against any plan or proposal pursuant to which WSB or any
        subsidiary thereof is to be acquired or merged with, or pursuant to
        which WSB or any subsidiary thereof proposes to sell all or
        substantially all of its assets and liabilities to any person, entity or
        group (other than ESB or any affiliate thereof);

                (c)     such Stockholder shall not, prior to the final voting
        record date established in connection with the WSB Stockholder Meeting,
        sell, pledge, transfer or otherwise dispose of his shares of WSB Common
        Stock;

                (d)     such Stockholder shall use his best efforts to cause WSB
        to comply with the covenants made by WSB in the Agreement, to consummate
        the Merger and the other transactions contemplated by the Agreement and
        the related Agreement of Merger;

                (e)     such Stockholder shall not in his capacity as a
        stockholder of WSB directly or indirectly encourage or solicit or hold
        discussions or negotiations with, or provide any information to, any
        person, entity or group (other than ESB or an affiliate thereof)
        concerning any merger, sale of substantial assets or liabilities not in
        the ordinary course of business, sale of shares of capital stock or
        similar transactions involving WSB or any subsidiary thereof (provided
        that nothing herein shall be deemed to affect the ability of any
        Stockholder to fulfill his duties as a director or officer of WSB); and

                (f)     such Stockholder shall use his best efforts to take or
        cause to be taken all action, and to do or cause to be done all things
        necessary, proper or advisable under applicable laws and regulations to
        consummate and make effective the agreements contemplated by this
        Stockholders Agreement.

3.      CERTAIN TRANSFERS. In the event of any transfer of shares of WSB Common
Stock by operation of law, this Stockholders Agreement shall be binding upon and
inure to the benefit of the transferee. Any transfer or other disposition of
shares of WSB Common Stock in violation of Section 2 hereof shall be null and
void.

4.      TERMINATION. The parties agree and intend that this Stockholders
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholders Agreement are inadequate. This Stockholders Agreement may be
terminated at any time prior to the consummation of the Merger by mutual written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms.

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5.      NOTICES. Notices may be provided to ESB and the Stockholders in the
manner specified in Section 7.03 of the Agreement, with all notices to the
Stockholders being provided to them at WSB in the manner specified in such
section.

6.      GOVERNING LAW. This Stockholders Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania, without giving effect to the principles of
conflicts of laws thereof.

7.      COUNTERPARTS. This Stockholders Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same and each of
which shall be deemed an original.

8.      HEADINGS AND GENDER. The Section headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Stockholders Agreement. Use of the masculine gender
herein shall be considered to represent the masculine, feminine or neuter gender
whenever appropriate.

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        IN WITNESS WHEREOF, ESB, by a duly authorized officer, and each of the
Stockholders have caused this Stockholders Agreement to be executed as of the
day and year first above written.

                                          ESB  FINANCIAL CORPORATION

                                    By:   /s/ Charlotte A. Zuschlag
                                          -------------------------------------
                                          Charlotte A. Zuschlag
                                          President and Chief Executive Officer

                                          STOCKHOLDERS:

                                          /s/ Robert D. Neudorfer
                                          -------------------------------------
                                          Robert D. Neudorfer

                                          /s/ Ronald W. Moreschi
                                          -------------------------------------
                                          Ronald W. Moreschi

                                          /s/ Joseph J. Manfred
                                          -------------------------------------
                                          Joseph J. Manfred

                                          /s/ John P. Mueller
                                          -------------------------------------
                                          John P. Mueller

                                          /s/ Stanford H. Rosenberg
                                          -------------------------------------
                                          Stanford H. Rosenberg

                                          /s/ Johanna C. Guehl
                                          -------------------------------------
                                          Johanna C. Guehl

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                                   SCHEDULE I

<TABLE>
<CAPTION>
                                     Number of Shares of WSB Common
      Name of Stockholder               Stock Beneficially Owned
-------------------------------    ----------------------------------
<S>                                <C>
Robert D. Neudorfer                               14,141

Ronald W. Moreschi                                 4,907

Joseph J. Manfred                                  7,793

John P. Mueller                                   12,793

Stanford H. Rosenberg                              9,788

Johanna C. Guehl                                   5,318
</TABLE>

                                       5<PAGE>   1

EXHIBIT 4.7
                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                             <C>

                                                                                                PAGE
                                                                                                ----

ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1

        SECTION 1.1.      DEFINITIONS............................................................1
        SECTION 1.2.      OTHER DEFINITIONS......................................................6
        SECTION 1.3.      TRUST INDENTURE ACT PROVISIONS.........................................7
        SECTION 1.4.      RULES OF CONSTRUCTION..................................................7

ARTICLE 2 THE SECURITIES.........................................................................8

        SECTION 2.1.      FORM AND DATING........................................................8
        SECTION 2.2.      EXECUTION AND AUTHENTICATION...........................................9
        SECTION 2.3.      REGISTRAR, PAYING AGENT AND CONVERSION AGENT...........................9
        SECTION 2.4.      PAYING AGENT TO HOLD MONEY IN TRUST...................................10
        SECTION 2.5.      SECURITYHOLDER LISTS..................................................10
        SECTION 2.6.      TRANSFER AND EXCHANGE.................................................10
        SECTION 2.7.      REPLACEMENT SECURITIES................................................11
        SECTION 2.8.      OUTSTANDING SECURITIES................................................12
        SECTION 2.9.      TREASURY SECURITIES...................................................12
        SECTION 2.10.     TEMPORARY SECURITIES..................................................12
        SECTION 2.11.     CANCELLATION..........................................................13
        SECTION 2.12.     ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.........................13
        SECTION 2.13.     CUSIP NUMBERS.........................................................18

ARTICLE 3 REDEMPTION AND PURCHASES..............................................................18

        SECTION 3.1.      RIGHT TO REDEEM; NOTICE TO TRUSTEE....................................18
        SECTION 3.2.      SELECTION OF SECURITIES TO BE REDEEMED................................20
        SECTION 3.3.      NOTICE OF REDEMPTION..................................................21
        SECTION 3.4.      EFFECT OF NOTICE OF REDEMPTION........................................21
        SECTION 3.5.      DEPOSIT OF REDEMPTION PRICE...........................................22
        SECTION 3.6.      SECURITIES REDEEMED IN PART...........................................22
        SECTION 3.7.      CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.........................23
        SECTION 3.8.      PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE
                          IN CONTROL............................................................23
        SECTION 3.9.      EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE...........................26
        SECTION 3.10.     DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE...........................26
        SECTION 3.11.     SECURITIES PURCHASED IN PART..........................................27
        SECTION 3.12.     COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES...........27
        SECTION 3.13.     REPAYMENT TO THE COMPANY..............................................27

ARTICLE 4 CONVERSION............................................................................27

        SECTION 4.1.      CONVERSION PRIVILEGE; ADDITIONAL PAYMENTS UPON CONVERSION DURING A
                          CONVERSION BONUS PERIOD...............................................27
        SECTION 4.2.      CONVERSION PROCEDURE..................................................30
        SECTION 4.3.      FRACTIONAL SHARES.....................................................31
        SECTION 4.4.      TAXES ON CONVERSION...................................................31
        SECTION 4.5.      COMPANY TO PROVIDE STOCK..............................................31
</TABLE>

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                              TABLE OF CONTENTS
                                 (CONTINUED)

<TABLE>
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<S>                                                                                            <C>
        SECTION 4.6.      ADJUSTMENT OF CONVERSION PRICE........................................32
        SECTION 4.7.      NO ADJUSTMENT.........................................................35
        SECTION 4.8.      ADJUSTMENT FOR TAX PURPOSES...........................................35
        SECTION 4.9.      NOTICE OF ADJUSTMENT..................................................36
        SECTION 4.10.     NOTICE OF CERTAIN TRANSACTIONS........................................36
        SECTION 4.11.     EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
                          ON CONVERSION PRIVILEGE...............................................36
        SECTION 4.12.     TRUSTEE'S DISCLAIMER..................................................37
        SECTION 4.13.     VOLUNTARY REDUCTION...................................................37

ARTICLE 5 SUBORDINATION.........................................................................38

        SECTION 5.1.      AGREEMENT OF SUBORDINATION............................................38
        SECTION 5.2.      PAYMENTS TO HOLDERS...................................................38
        SECTION 5.3.      SUBROGATION OF SECURITIES.............................................40
        SECTION 5.4.      AUTHORIZATION TO EFFECT SUBORDINATION.................................41
        SECTION 5.5.      NOTICE TO TRUSTEE.....................................................41
        SECTION 5.6.      TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.............................42
        SECTION 5.7.      NO IMPAIRMENT OF SUBORDINATION........................................42
        SECTION 5.8.      CERTAIN CONVERSIONS DEEMED PAYMENT....................................43
        SECTION 5.9.      ARTICLE APPLICABLE TO PAYING AGENTS...................................43
        SECTION 5.10.     SENIOR INDEBTEDNESS ENTITLED TO RELY..................................43

ARTICLE 6 COVENANTS.............................................................................43

        SECTION 6.1.      PAYMENT OF SECURITIES.................................................43
        SECTION 6.2.      SEC REPORTS...........................................................44
        SECTION 6.3.      COMPLIANCE CERTIFICATES...............................................44
        SECTION 6.4.      FURTHER INSTRUMENTS AND ACTS..........................................44
        SECTION 6.5.      MAINTENANCE OF CORPORATE EXISTENCE....................................44
        SECTION 6.6.      RULE 144A INFORMATION REQUIREMENT.....................................44
        SECTION 6.7.      STAY, EXTENSION AND USURY LAWS........................................45
        SECTION 6.8.      PAYMENT OF ADDITIONAL INTEREST........................................45
        SECTION 6.9.      DELIVERY OF CERTAIN INFORMATION.......................................45

ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..................................46

        SECTION 7.1.      COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS...................46
        SECTION 7.2.      SUCCESSOR SUBSTITUTED.................................................46

ARTICLE 8 DEFAULT AND REMEDIES..................................................................47

        SECTION 8.1.      EVENTS OF DEFAULT.....................................................47
        SECTION 8.2.      ACCELERATION..........................................................48
        SECTION 8.3.      OTHER REMEDIES........................................................49
        SECTION 8.4.      WAIVER OF DEFAULTS AND EVENTS OF DEFAULT..............................49
        SECTION 8.5.      CONTROL BY MAJORITY...................................................49
</TABLE>

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                              TABLE OF CONTENTS
                                 (CONTINUED)

<TABLE>
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                                                                                               ----
<S>                                                                                            <C>
        SECTION 8.6.      LIMITATIONS ON SUITS..................................................49
        SECTION 8.7.      RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT...................50
        SECTION 8.8.      COLLECTION SUIT BY TRUSTEE............................................50
        SECTION 8.9.      TRUSTEE MAY FILE PROOFS OF CLAIM......................................50
        SECTION 8.10.     PRIORITIES............................................................51
        SECTION 8.11.     UNDERTAKING FOR COSTS.................................................51

ARTICLE 9 TRUSTEE...............................................................................51

        SECTION 9.1.      DUTIES OF TRUSTEE.....................................................51
        SECTION 9.2.      RIGHTS OF TRUSTEE.....................................................52
        SECTION 9.3.      INDIVIDUAL RIGHTS OF TRUSTEE..........................................53
        SECTION 9.4.      TRUSTEE'S DISCLAIMER..................................................53
        SECTION 9.5.      NOTICE OF DEFAULT OR EVENTS OF DEFAULT................................53
        SECTION 9.6.      REPORTS BY TRUSTEE TO HOLDERS.........................................53
        SECTION 9.7.      COMPENSATION AND INDEMNITY............................................54
        SECTION 9.8.      REPLACEMENT OF TRUSTEE................................................54
        SECTION 9.9.      SUCCESSOR TRUSTEE BY MERGER, ETC......................................55
        SECTION 9.10.     ELIGIBILITY; DISQUALIFICATION.........................................55
        SECTION 9.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.....................56

ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE..............................................56

        SECTION 10.1.     SATISFACTION AND DISCHARGE OF INDENTURE...............................56
        SECTION 10.2.     APPLICATION OF TRUST MONEY............................................57
        SECTION 10.3.     REPAYMENT TO COMPANY..................................................57
        SECTION 10.4.     REINSTATEMENT.........................................................57

ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS..................................................58

        SECTION 11.1.     WITHOUT CONSENT OF HOLDERS............................................58
        SECTION 11.2.     WITH CONSENT OF HOLDERS...............................................58
        SECTION 11.3.     COMPLIANCE WITH TRUST INDENTURE ACT...................................59
        SECTION 11.4.     REVOCATION AND EFFECT OF CONSENTS.....................................59
        SECTION 11.5.     NOTATION ON OR EXCHANGE OF SECURITIES.................................59
        SECTION 11.6.     TRUSTEE TO SIGN AMENDMENTS, ETC.......................................60

ARTICLE 12 MISCELLANEOUS........................................................................60

        SECTION 12.1.     TRUST INDENTURE ACT CONTROLS..........................................60
        SECTION 12.2.     NOTICES...............................................................60
        SECTION 12.3.     COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS..........................61
        SECTION 12.4.     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT....................61
        SECTION 12.5.     RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS....................61
        SECTION 12.6.     RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT........62
</TABLE>

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                              TABLE OF CONTENTS
                                 (CONTINUED)

<TABLE>
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                                                                                               ----
<S>                                                                                            <C>
        SECTION 12.7.     LEGAL HOLIDAYS........................................................62
        SECTION 12.8.     GOVERNING LAW.........................................................62
        SECTION 12.9.     NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.........................62
        SECTION 12.10.    NO RECOURSE AGAINST OTHERS............................................62
        SECTION 12.11.    SUCCESSORS............................................................62
        SECTION 12.12.    MULTIPLE COUNTERPARTS.................................................62
        SECTION 12.13.    SEPARABILITY..........................................................62
        SECTION 12.14.    TABLE OF CONTENTS, HEADINGS, ETC......................................63

ARTICLE 13 REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER IF NO
        COMPLYING PUBLIC EQUITY OFFERING........................................................63

        SECTION 13.1.     RIGHT TO REQUIRE REPURCHASE...........................................63
        SECTION 13.2.     NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC...................63

ARTICLE 14 MEETINGS OF HOLDERS..................................................................65

        SECTION 14.1.     PURPOSE OF MEETINGS...................................................65
        SECTION 14.2.     CALL OF MEETINGS BY TRUSTEE...........................................65
        SECTION 14.3.     CALL OF MEETINGS BY COMPANY OR HOLDERS................................65
        SECTION 14.4.     QUALIFICATIONS FOR VOTING.............................................65
        SECTION 14.5.     REGULATIONS...........................................................66
        SECTION 14.6.     VOTING................................................................66
        SECTION 14.7.     NO DELAY OF RIGHTS BY MEETING.........................................67
</TABLE>
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==============================================================================

                             CYRAS SYSTEMS, INC.

          4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 15, 2005

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

                                  INDENTURE
                         DATED AS OF AUGUST 18, 2000

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

           STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
                                  AS TRUSTEE

==============================================================================

<PAGE>   6

        THIS INDENTURE dated as of August 18, 2000 is between Cyras Systems,
Inc., a California corporation (the "Company"), and State Street Bank and
Trust Company of California, N.A., a national banking association organized
and existing under the laws of the United States, as Trustee (the "Trustee").

        In consideration of the premises and the purchase of the Securities by
the Holders thereof, both parties agree as follows for the benefit of the
other and for the equal and ratable benefit of the registered Holders of the
Company's 4 1/2% Convertible Subordinated Notes due August 15, 2005.

                                  ARTICLE 1
                  DEFINITIONS AND INCORPORATION BY REFERENCE

        SECTION 1.1.DEFINITIONS.

        "Additional Interest" has the meaning specified in Section 2(e) of the
Registration Rights Agreement. All references herein to interest accrued or
payable as of any date shall include any Additional Interest accrued or
payable as of such date as provided in the Registration Rights Agreement.

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

        "Agent" means any Registrar, Paying Agent or Conversion Agent.

        "Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the Depositary that are applicable to such transfer or exchange.

        "Board of Directors" means the board of directors of the Company or
any authorized committee of the Board of Directors.

        "Business Day" means each day that is not a Legal Holiday.

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

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

        "Certificated Security" means a Security that is in substantially the
form attached hereto as Exhibit A and that does not include the information or
the schedule called for by footnotes 1, 3 and 4 thereof.

        "Common Stock" means the common stock of the Company, no par value, as
it exists on the date of this Indenture and any shares of any class or classes
of capital stock of the Company resulting from any

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reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which
are not subject to redemption by the Company; provided, however, that if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable on conversion of Securities shall be substantially
in the proportion which the total number of shares of such class resulting
from all such reclassifications bears to the total number of shares of all
such classes resulting from all such reclassifications.

        "Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means the
successor.

        "Complying Public Equity Offering" means the closing of a firm
commitment underwritten public offering of the Company's Common Stock in which
the Company shall have raised at least $50,000,000 in gross proceeds from a
registered offering under the Securities Act, and following which the Common
Stock is traded on a U.S. national securities exchange or quoted on the Nasdaq
National Market.

        "Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered which office at the date of the execution of this Indenture is
located at 633 West 5th Street, Los Angeles, California 90071, Attention:
Corporate Trust Administration (Cyras Systems, Inc. - 4 1/2% Convertible
Subordinated Notes due August 15, 2005) or at any other time at such other
address as the Trustee may designate from time to time by notice to the
Company.

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

        "Designated Senior Indebtedness" means any particular Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents to which
the Company is a party) expressly provides that such Indebtedness shall be
"Designated Senior Indebtedness" for purposes of this Indenture (provided that
such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness). If any payment made to any holder of any
Designated Senior Indebtedness or its Representative with respect to such
Designated Senior Indebtedness is rescinded or must otherwise be returned by
such holder or Representative upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the reinstated Indebtedness of the
Company arising as a result of such rescission or return shall constitute
Designated Senior Indebtedness effective as of the date of such rescission or
return.

        "Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as in effect
from time to time.

        "Final Maturity Date" means August 15, 2005.

        "GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of this Indenture, including
those set forth in (1) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants,
(2) the statements and pronouncements of the Financial Accounting Standards
Board, (3) such other statements by such other entity as approved by a
significant segment of the accounting profession and (4) the rules and
regulations of the SEC governing the inclusion of financial statements
(including pro forma financial statements) in registration statements filed
under the Securities Act and periodic reports required to be filed pursuant to
Section 13 of the

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Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.

        "Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by footnotes 1, 3 and 4 thereof and which
is deposited with the Depositary or its custodian and registered in the name
of the Depositary or its nominee.

        "Holder" or "Securityholder" means the person in whose name a Security
is registered on the Primary Registrar's books.

        "Indebtedness" means, with respect to any Person, without duplication,
(a) all indebtedness, obligations and other liabilities (contingent or
otherwise) of such Person for borrowed money (including obligations of such
Person in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances
from banks, whether or not evidenced by notes or similar instruments) or
evidenced by credit or loan agreements, bonds, debentures, notes or similar
instruments (whether or not the recourse of the lender is to the whole of the
assets of such Person or to only a portion thereof) (other than any account
payable or other accrued current liability or obligation incurred in the
ordinary course of business in connection with the obtaining of materials or
services), (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank
guarantees or bankers' acceptances, (c) all obligations and liabilities
(contingent or otherwise) of such Person (i) in respect of leases of such
Person required, in conformity with generally accepted accounting principles,
to be accounted for as capitalized lease obligations on the balance sheet of
such Person, (ii) as lessee under other leases for facilities equipment (and
related assets leased together therewith), whether or not capitalized, entered
into or leased for financing purposes (as determined by such Person and
reflected in writing at the time of execution of the lease or the time of any
amendment thereto) or (iii) under any lease or related document (including a
purchase agreement) in connection with the lease of real property which
provides that such Person is contractually obligated to purchase or cause a
third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and the obligations of
such Person under such lease or related document to purchase or to cause a
third party to purchase such leased property, (d) all obligations (contingent
or otherwise) of such Person with respect to any interest rate, currency or
other swap, cap, floor or collar agreement, hedge agreement, forward contract,
or other similar instrument or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all obligations of the type referred to
in clauses (a) through (d) above of another Person and all dividends of
another Person, the payment of which, in either case, such Person has assumed
or guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise is
secured by a lien on the property of such Person, and (f) any and all
deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (e) above.

        "Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture.

        "Initial Public Offering Price" means the "price to public" of the
Company's Common Stock as set forth on the cover page of the final prospectus
for a Complying Public Equity Offering.

        "Issue Date" means August 18, 2000.

                                      3
<PAGE>   9

        "Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Secretary or any
Assistant Secretary of the Company.

        "Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Sections 4.11 and 6.3, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company and
by one other Officer.

        "Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.

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

        "Principal" or "principal" of a debt security, including the
Securities, means the principal of the security plus, when appropriate, the
premium, if any, on the security.

        "Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.

        "Redemption Price," when used with respect to any Security to be
redeemed, means the Optional Redemption Price, in the event of an Optional
Redemption, or the Provisional Redemption Price, in the event of a Provisional
Redemption, as the case may be.

        "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 18, 2000, among the Company and Credit Suisse
First Boston Corporation, as initial purchaser.

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

        "Restricted Certificated Security" means a Certificated Security which
is a Transfer Restricted Security.

        "Restricted Global Security" means a Global Security that is a
Transfer Restricted Security.

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

        "Rule 144" means Rule 144 under the Securities Act or any successor to
such Rule.

        "Rule 144A" means Rule 144A under the Securities Act or any successor
to such Rule.

        "SEC" means the Securities and Exchange Commission.

                                      4

<PAGE>   10

        "Securities" means the 4 1/2% Convertible Subordinated Notes due
August 15, 2005 or any of them (each, a "Security"), as amended or
supplemented from time to time, that are issued under this Indenture.

        "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.

        "Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor thereto.

        "Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of
any bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on
or in connection with, and all fees, costs, expenses and other amounts accrued
or due on or in connection with, Indebtedness of the Company, whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions or refundings of, or amendments, modifications
or supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption
or guarantee thereof expressly provides that such Indebtedness shall not be
senior in right of payment to the Securities or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Securities. Notwithstanding
the foregoing, the term Senior Indebtedness shall not include any Indebtedness
of the Company to any Subsidiary of the Company. If any payment made to any
holder of any Senior Indebtedness or its Representative with respect to such
Senior Indebtedness is rescinded or must otherwise be returned by such holder
or Representative upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, the reinstated Indebtedness of the Company arising as a
result of such rescission or return shall constitute Senior Indebtedness
effective as of the date of such rescission or return.

        "Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers, general
partners or trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries
of such Person; or (iii) one or more Subsidiaries of such Person.

        "TIA" means the Trust Indenture Act of 1939, as amended, as in effect
on the date of this Indenture, except as provided in Section 11.3, and except
to the extent any amendment to the Trust Indenture Act expressly provides for
application of the Trust Indenture Act as in effect on another date.

        "Trading Day" means, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not generally traded on the principal exchange or market in
which such security is traded.

        "Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means the successor.

        "Trust Officer" means, with respect to the Trustee, any officer
assigned to the Corporate Trust Office, and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

                                      5
<PAGE>   11

        "Unrestricted Certificated Security" means a Certificated Security
that is not a Transfer Restricted Security.

        "Unrestricted Global Security" means a Global Security that is not a
Transfer Restricted Security.

        "Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding
and normally entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof.

        SECTION 1.2.OTHER DEFINITIONS.

<TABLE>
<CAPTION>

                                   TERM                                       DEFINED IN SECTION
-----------------------------------------------------------------------       ------------------
<S>                                                                           <C>
"Acceleration Amount"..................................................                5.1
"Agent Members"........................................................                2.1
"Bankruptcy Law".......................................................                8.1
"Bonus Conversion Period"..............................................                4.1(b)
"Bonus Payment"........................................................                4.1(b)
"Change in Control"....................................................                3.8
"Change in Control Purchase Date"......................................                3.8
"Change in Control Purchase Notice"....................................                3.8
"Change in Control Purchase Price".....................................                3.8
"Closing Price"........................................................                4.6(d)
"Company Order"........................................................                2.2
"Conversion Agent".....................................................                2.3
"Conversion Date"......................................................                4.2
"Conversion Make-Whole Payment.........................................                4.2(b)
"Conversion Price".....................................................                4.6
"Current Market Price".................................................                4.6(d)
"Custodian"............................................................                8.1
"DTC"..................................................................                2.1
"Depositary"...........................................................                2.1
"Determination Date"...................................................                4.6(c)
"Event of Default".....................................................                8.1
"Expiration Date"......................................................                4.6(c)
"Expiration Time"......................................................                4.6(c)
"Legal Holiday"........................................................               12.7
"NNM"..................................................................                4.6(d)
"Notice Date"..........................................................                3.1
"Optional Redemption"..................................................                3.1
"Optional Redemption Price"............................................                3.1
"Paying Agent".........................................................                2.3
"Payment Blockage Notice"..............................................                5.2
"Primary Registrar"....................................................                2.3
"Provisional Redemption"...............................................                3.1
"Provisional Redemption Date...........................................                3.1
"Provisional Redemption Price".........................................                3.1

</TABLE>

                                      6
<PAGE>   12

<TABLE>
<CAPTION>

                                   TERM                                       DEFINED IN SECTION
-----------------------------------------------------------------------       ------------------
<S>                                                                           <C>
"Purchase Agreement"...................................................                2.1
"Purchased Shares".....................................................                4.6(c)
"QIB"..................................................................                2.1
"Registrar"............................................................                2.3
"Repurchase Date"......................................................               13.1
"Repurchase Offer".....................................................               13.1
"Repurchase Price".....................................................               13.1
"Repurchase Trigger Date"..............................................               13.1
"Transfer Certificate".................................................                2.12
"Transfer Restricted Security".........................................                2.12
"Triggering Distribution"..............................................                4.6(c)
</TABLE>

        SECTION 1.3. TRUST INDENTURE ACT PROVISIONS.

        Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture.
The Indenture shall also include those provisions of the TIA required to be
included herein by the provisions of the Trust Indenture Reform Act of 1990.
The following TIA terms used in this Indenture have the following meanings:

        "indenture securities" means the Securities;

        "indenture security holder" means a Securityholder;

        "indenture to be qualified" means this Indenture; and

        "indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other obligor
on the Securities.

        All other terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by any SEC rule and not
otherwise defined herein have the meanings assigned to them therein.

        SECTION 1.4. RULES OF CONSTRUCTION.

        Unless the context otherwise requires:

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

               (B) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;

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

               (D) provisions apply to successive events and transactions;

               (E) the term "merger" includes a statutory share exchange and
the term "merged" has a correlating meaning;

                                      7
<PAGE>   13

               (F) the masculine gender includes the feminine and the neuter;

               (G) references to agreements and other instruments include
subsequent amendments thereto; and

               (H) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision.

                                  ARTICLE 2
                                THE SECURITIES

        SECTION 2.1. FORM AND DATING.

        The Securities and the Trustee's certificate of authentication shall
be substantially in the respective forms set forth in Exhibit A, which Exhibit
is incorporated in and made part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication. The
Securities are being offered and sold by the Company pursuant to a Purchase
Agreement, dated August 15, 2000 (the "Purchase Agreement"), between the
Company and Credit Suisse First Boston Corporation in transactions exempt
from, or not subject to, the registration requirements of the Securities Act.

        (a)    Restricted Global Securities. All of the Securities are
initially being offered and sold to qualified institutional buyers as defined
in Rule 144A (collectively, "QIBs" or individually, each a "QIB") in reliance
on Rule 144A under the Securities Act and shall be issued initially in the
form of one or more Restricted Global Securities, which shall be deposited on
behalf of the purchasers of the Securities represented thereby with the
Trustee, at its Corporate Trust Office, as custodian for the depositary, The
Depository Trust Company ("DTC") (such depositary, or any successor thereto,
being hereinafter referred to as the "Depositary"), and registered in the name
of its nominee, Cede & Co., duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Restricted Global Security may from time to time be increased or decreased by
adjustments made on the records of the Securities Custodian as hereinafter
provided, subject in each case to compliance with the Applicable Procedures.

        (b)    Global Securities In General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions, purchases or
conversions of such Securities. Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Securities Custodian in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian.

        Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held
on their behalf by the Depositary or under the Global Security, and the
Depositary (including, for this purpose, its nominee) may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner and Holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (A) prevent the

                                      8
<PAGE>   14

Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or (B) impair, as between the Depositary and its Agent Members,
the operation of customary practices governing the exercise of the rights of a
Holder of any Security.

        (c)    Certificated Securities.  Certificated Securities shall be
issued only under the limited circumstances provided in Section 2.12(a)(1)
hereof.

        SECTION 2.2. EXECUTION AND AUTHENTICATION.

        An Officer shall sign the Securities for the Company by manual or
facsimile signature attested by the manual or facsimile signature of the
Secretary or an Assistant Secretary of the Company. Typographic and other
minor errors or defects in any such facsimile signature shall not affect the
validity or enforceability of any Security which has been authenticated and
delivered by the Trustee.

        If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.

        A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.

        The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$150,000,000 upon receipt of a written order or orders of the Company signed
by two Officers of the Company (a "Company Order"). The Company Order shall
specify the amount of Securities to be authenticated, shall provide that all
such Securities will be represented by a Restricted Global Security and the
date on which each original issue of Securities is to be authenticated. The
aggregate principal amount of Securities outstanding at any time may not
exceed $150,000,000, except as provided in Section 2.7.

        The Trustee shall act as the initial authenticating agent. Thereafter,
the Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.

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

        SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

        The Company shall maintain one or more offices or agencies where
Securities may be presented for registration of transfer or for exchange
(each, a "Registrar"), one or more offices or agencies where Securities may be
presented for payment (each, a "Paying Agent"), one or more offices or
agencies where Securities may be presented for conversion (each, a "Conversion
Agent") and one or more offices or agencies where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be
served. The Company will at all times maintain a Paying Agent, Conversion
Agent, Registrar and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be

                                      9
<PAGE>   15

served in the Borough of Manhattan, the City of New York. One of the
Registrars (the "Primary Registrar") shall keep a register of the Securities
and of their transfer and exchange.

        The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Company fails to maintain a Registrar, Paying Agent,
Conversion Agent or agent for service of notices and demands in any place
required by this Indenture, or fails to give the foregoing notice, the Trustee
shall act as such. The Company or any Affiliate of the Company may act as
Paying Agent (except for the purposes of Section 6.1 and Article 10).

        The Company hereby initially appoints the Trustee as Paying Agent,
Registrar, Custodian and Conversion Agent, and each of the Corporate Trust
Office of the Trustee and the office of the Trustee in the Borough of
Manhattan, the City of New York (which shall initially be State Street Bank
and Trust Company, N.A., an Affiliate of the Trustee, as agent of the Trustee
located at 61 Broadway, 15th Floor, New York, New York, 10006, Attention:
Corporate Trust Administration (Cyras Systems, Inc. 4 1/2% Convertible
Subordinated Notes due August 15, 2005)), one such office or agency of the
Company for each of the aforesaid purposes.

        SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.

        Prior to 11:00 a.m., New York City time, on each due date of the
principal of or interest, if any, on any Securities, the Company shall deposit
with a Paying Agent a sum sufficient to pay such principal or interest, if
any, so becoming due. A Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest, if any, on the Securities, and shall
notify the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time,
on each due date of the principal of or interest on any Securities, segregate
the money and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee, and the
Trustee may at any time during the continuance of any default, upon written
request to a Paying Agent, require such Paying Agent to forthwith pay to the
Trustee all sums so held in trust by such Paying Agent. Upon doing so, the
Paying Agent (other than the Company) shall have no further liability for the
money.

        SECTION 2.5. SECURITYHOLDER LISTS.

        The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Primary Registrar, the Company
shall furnish to the Trustee on or before each semiannual interest payment
date and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders.

        SECTION 2.6. TRANSFER AND EXCHANGE.

        (a)    Subject to compliance with any applicable additional
requirements contained in Section 2.12, when a Security is presented to a
Registrar with a request to register a transfer thereof or to exchange such
Security for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested; provided, however, that every Security presented or surrendered
for registration of transfer or exchange shall be duly endorsed or accompanied
by an assignment

                                      10
<PAGE>   16

form and, if applicable, a transfer certificate each in the form included in
Exhibit A, and in form satisfactory to the Registrar duly executed by the
Holder thereof or its attorney duly authorized in writing. To permit
registration of transfers and exchanges, upon surrender of any Security for
registration of transfer or exchange at an office or agency maintained
pursuant to Section 2.3, the Company shall execute and the Trustee shall
authenticate Securities of a like aggregate principal amount at the
Registrar's request. No service charge shall be made to a Holder for any
registration of transfer or exchange of Securities, but the Company or the
Register may require payment of a sum sufficient from the Holder to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 2.7, 2.10, 2.11, 3.6, 4.2 (last paragraph) or 11.5 not
involving any transfer.

        Neither the Company, any Registrar nor the Trustee shall be required
to exchange or register a transfer of (a) any Securities for a period of 15
days next preceding any mailing of a notice of Securities to be redeemed, (b)
any Securities or portions thereof selected or called for redemption (except,
in the case of redemption of a Security in part, the portion not to be
redeemed) or (c) any Securities or portions thereof in respect of which a
Change in Control Purchase Notice has been delivered and not withdrawn by the
Holder thereof (except, in the case of the purchase of a Security in part, the
portion not to be purchased).

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

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

        (c)    Each Holder of a Security agrees to indemnify the Company and
the Trustee against any liability that may result from the transfer, exchange
or assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.

        The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or
other beneficial owners of interests in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.

        SECTION 2.7. REPLACEMENT SECURITIES.

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

                                      11
<PAGE>   17

        In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be redeemed or
purchased by the Company pursuant to Article 3, the Company in its discretion
may, instead of issuing a new Security, pay, redeem or purchase such Security,
as the case may be.

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

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

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

        SECTION 2.8. OUTSTANDING SECURITIES.

        Securities outstanding at any time are all Securities authenticated by
the Trustee, except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.8 as not outstanding.

        If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

        If a Paying Agent (other than the Company or an Affiliate of the
Company) holds on a Redemption Date, a Change in Control Purchase Date or the
Final Maturity Date money sufficient to pay the principal of (including
premium, if any) and accrued interest on Securities (or portions thereof)
payable on that date, then on and after that date such Securities (or portions
thereof, as the case may be) cease to be outstanding and interest on them
ceases to accrue.

        Subject to the restrictions contained in Section 2.9, a Security does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.

        SECTION 2.9. TREASURY SECURITIES.

        In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by
any Affiliate of the Company or of such other obligor shall be disregarded,
except that, for purposes of determining whether the Trustee shall be
protected in relying on any such notice, direction, waiver or consent, only
Securities which a Trust Officer of the Trustee actually knows are so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith shall not be disregarded if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to the Securities
and that the pledgee is not the Company or any other obligor on the Securities
or any Affiliate of the Company or of such other obligor.

        SECTION 2.10. TEMPORARY SECURITIES.

                                      12
<PAGE>   18

        Until definitive Securities are ready for delivery, the Company may
prepare and execute, and, upon receipt of a Company Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations
that the Company with the consent of the Trustee considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities.

        SECTION 2.11. CANCELLATION.

        The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, redemption, payment, conversion or cancellation and
shall deliver the canceled Securities to the Company. All Securities which are
redeemed, purchased or otherwise acquired by the Company or any of its
Subsidiaries prior to the Final Maturity Date shall be delivered to the
Trustee for cancellation and the Company may not hold or resell such
Securities or issue any new Securities to replace any such Securities or any
Securities that any Holder has converted pursuant to Article 4. Without
limitation to the foregoing, any Securities acquired by any investment bankers
or other purchasers pursuant to Section 3.7 shall be surrendered for
conversion and thereafter cancelled, and may not be reoffered, sold or
otherwise transferred.

        SECTION 2.12. ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.

        (a)    Transfer And Exchange Of Global Securities.

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

               (2)    Notwithstanding any other provisions of this Indenture
other than the provisions set forth in Section 2.12(a)(1), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

                                      13
<PAGE>   19

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

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

               (y)    to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized denominations,
such Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Securities presented or surrendered
for register of transfer or exchange:

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

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

                      (A)    if such Restricted Certificated Security is being
delivered to the Registrar by a Holder for registration in the name of such
Holder, without transfer, or such Restricted Certificated Security is being
transferred to the Company or a Subsidiary of the Company, a certification to
that effect from such Holder (in substantially the form set forth in the
Transfer Certificate);
                      (B)    if such Restricted Certificated Security is being
transferred to a person the Holder reasonably believes is a QIB in accordance
with Rule 144A or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such Holder (in
substantially the form set forth in the Transfer Certificate); or

                      (C)    if such Restricted Certificated Security is being
transferred (i) pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 or (ii) pursuant to an
exemption from the registration requirements of the Securities Act (other than
pursuant to Rule 144A or Rule 144) and as a result of which, in the case of a
Security transferred pursuant to this clause (ii), such Security shall cease
to be a "restricted security" within the meaning of Rule 144, a certification
to that effect from the Holder (in substantially the form set forth in the
Transfer Certificate) and, if the Company or such Registrar so requests, a
customary opinion of counsel, certificates and other information reasonably
acceptable to the Company and such Registrar to the effect that such transfer
is in compliance with the Securities Act.

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

                                      14
<PAGE>   20

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

               (2)    if such beneficial interest is being transferred (i)
pursuant to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 or (ii) pursuant to an exemption from the
registration requirements of the Securities Act (other than pursuant to Rule
144A or Rule 144) and as a result of which, in the case of a Security
transferred pursuant to this clause (ii), such Security shall cease to be a
"restricted security" within the meaning of Rule 144, a certification to that
effect from the transferor (in substantially the form set forth in the
Transfer Certificate) and, if the Company or the Trustee so requests, a
customary opinion of counsel, certificates and other information reasonably
acceptable to the Company and the Trustee to the effect that such transfer is
in compliance with the Securities Act, the Trustee, as a Registrar and
Securities Custodian, shall reduce or cause to be reduced the aggregate
principal amount of the Restricted Global Security by the appropriate
principal amount and shall increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Security by a like principal
amount. Such transfer shall otherwise be effected in accordance with the
Applicable Procedures. If no Unrestricted Global Security is then outstanding,
the Company shall execute and the Trustee shall, upon receipt of a Company
Order (which the Company agrees to deliver promptly), authenticate and deliver
an Unrestricted Global Security.

        (d)    Transfer of a Beneficial Interest in an Unrestricted Global
Security for a Beneficial Interest In a Restricted Global Security. Any person
having a beneficial interest in an Unrestricted Global Security may upon
request, subject to the Applicable Procedures, transfer such beneficial
interest to a person who is required or permitted to take delivery thereof in
the form of a Restricted Global Security (it being understood that only QIBs
may own beneficial interests in Restricted Global Securities). Upon receipt by
the Trustee of written instructions or such other form of instructions as is
customary for the Depositary, from the Depositary or its nominee, on behalf of
any person having a beneficial interest in an Unrestricted Global Security
and, in such form as is customary for the Depositary, from the Depositary or
its nominee on behalf of the person having such beneficial interest in the
Unrestricted Global Security (all of which may be submitted by facsimile or
electronically) a certification from the transferor (in substantially the form
set forth in the Transfer Certificate) to the effect that such beneficial
interest is being transferred to a person that the transferor reasonably
believes is a QIB in accordance with Rule 144A. The Trustee, as a Registrar
and Securities Custodian, shall reduce or cause to be reduced the aggregate
principal amount of the Unrestricted Global Security by the appropriate
principal amount and shall increase or cause to be increased the aggregate
principal amount of the Restricted Global Security by a like principal amount.
Such transfer shall otherwise be effected in accordance with the Applicable
Procedures. If no Restricted Global Security is then outstanding, the Company
shall execute and the Trustee shall, upon receipt of a Company Order (which
the Company agrees to deliver promptly), authenticate and deliver a Restricted
Global Security.

        (e)    Transfers of Certificated Securities for Beneficial Interest in
Global Securities. In the event that Certificated Securities are issued in
exchange for beneficial interests in Global Securities and, thereafter, the
events or conditions specified in Section 2.12(a)(1) which required such
exchange shall cease to exist, the Company shall mail notice to the Trustee
and to the Holders stating that Holders may exchange Certificated Securities
for interests in Global Securities by complying with the procedures set forth
in this Indenture and briefly describing such procedures and the events or
circumstances requiring that such notice be given. Thereafter, if Certificated
Securities are presented by a Holder to a Registrar with a request:

                                      15
<PAGE>   21

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

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

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

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

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

                      (B)    if such Restricted Certificated Security is being
transferred pursuant to (i) an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 or (ii) pursuant to an
exemption from the registration requirements of the Securities Act (other than
pursuant to Rule 144A or Rule 144) and as a result of which, in the case of a
Security transferred pursuant to this clause (ii), such Security shall cease
to be a "restricted security" within the meaning of Rule 144, a certification
to that effect from such Holder (in substantially the form set forth in the
Transfer Certificate), and, if the Company or the Registrar so requests, a
customary opinion of counsel, certificates and other information reasonably
acceptable to the Company and the Trustee to the effect that such transfer is
in compliance with the Securities Act;

               (3)    in the case of a Restricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such
Holder (in substantially the form set forth in the Transfer Certificate) to
the effect that such Restricted Certificated Security is being transferred to
a person the Holder reasonably believes is a QIB (which, in the case of an
exchange, shall be such Holder) in accordance with Rule 144A;

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

               (5)    in the case of an Unrestricted Certificated Security to
be transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from

                                      16
<PAGE>   22

such Holder (in substantially the form set forth in the Transfer Certificate)
to the effect that such Unrestricted Certificated Security is being
transferred to a person the Holder reasonably believes is a QIB (which, in the
case of an exchange, shall be such Holder) in accordance with Rule 144A.

        (f)    Legends.

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

               (2)    Upon any sale or transfer of a Transfer Restricted
Security (w) after the expiration of the holding period applicable to sales of
the Securities under Rule 144(k) of the Securities Act, (x) pursuant to Rule
144, (y) pursuant to an effective registration statement under the Securities
Act or (z) pursuant to any other available exemption (other than Rule 144A)
from the registration requirements of the Securities Act and as a result of
which, in the case of a Security transferred pursuant to this clause (z), such
Security shall cease to be a "restricted security" within the meaning of Rule
144:

                      (A)    in the case of any Restricted Certificated
Security, any Registrar shall permit the Holder thereof to exchange such
Restricted Certificated Security for an Unrestricted Certificated Security, or
(under the circumstances described in Section 2.12(e)) to transfer such
Restricted Certificated Security to a transferee who shall take such Security
in the form of a beneficial interest in an Unrestricted Global Security, and
in each case shall rescind any restriction on the transfer of such Security;
provided, however, that the Holder of such Restricted Certificated Security
shall, in connection with such exchange or transfer, comply with the other
applicable provisions of this Section 2.12; and

                      (B)    in the case of any beneficial interest in a
Restricted Global Security, the Trustee shall permit the beneficial owner
thereof to transfer such beneficial interest to a transferee who shall take
such interest in the form of a beneficial interest in an Unrestricted Global
Security and shall rescind any restriction on transfer of such beneficial
interest; provided, that such Unrestricted Global Security shall continue to
be subject to the provisions of Section 2.12(a)(2); and provided, further,
that the owner of such beneficial interest shall, in connection with such
transfer, comply with the other applicable provisions of this Section 2.12.

               (3)    Upon the exchange, registration of transfer or
replacement of Securities not bearing the legend described in paragraph (1)
above, the Company shall execute, and the Trustee shall authenticate and
deliver Securities that do not bear such legend and that do not have a
Transfer Certificate attached thereto.

               (4)    After the expiration of the holding period pursuant to
Rule 144(k) of the Securities Act, the Company may with the consent of the
Holder of a Restricted Global Security or Restricted Certificated Security,
remove any restriction of transfer on such Security, and the Company shall
execute, and the Trustee shall authenticate and deliver Securities that do not
bear such legend and that do not have a Transfer Certificate attached thereto.

        (g)    Transfers to the Company. Nothing in this Indenture or in the
Securities shall prohibit the sale or other transfer of any Securities
(including beneficial interests in Global Securities) to the Company or

                                      17
<PAGE>   23

any of its Subsidiaries, which Securities shall thereupon be cancelled in
accordance with the penultimate sentence of Section 2.11.

        SECTION 2.13. CUSIP NUMBERS.

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

                                  ARTICLE 3.
                           REDEMPTION AND PURCHASES

        SECTION 3.1. RIGHT TO REDEEM; NOTICE TO TRUSTEE.

        (a)    The Securities may be redeemed at the election of the Company,
as a whole or in part from time to time, at any time after the 95th day
following a Complying Public Equity Offering and prior to the second
anniversary of a Complying Public Equity Offering (a "Provisional
Redemption"), upon notice as set forth in Section 3.3, at a Redemption Price
equal to $1,000 per $1,000 principal amount of the Securities redeemed plus
accrued and unpaid interest (including Additional Interest), if any (such
amount, together with the Make-Whole Payment described below, the "Provisional
Redemption Price"), to, but excluding, the date of redemption (the
"Provisional Redemption Date") if (i) the Closing Price of the Common Stock
has exceeded 150% of the Conversion Price then in effect for at least 20
Trading Days within a period of 30 consecutive Trading Days ending on the
Trading Day prior to the date of mailing of the provisional notice of
redemption pursuant to Section 3.3 (the "Notice Date"), and (ii) a
registration statement covering resales of the Securities and the Common Stock
issuable upon conversion thereof is effective and available for use and is
expected to remain effective for the 30 days following the Provisional
Redemption Date unless registration is no longer required.

        Upon any such Provisional Redemption, the Company shall calculate and
make an additional payment in cash or Common Stock (the "Make-Whole Payment")
with respect to the Securities called for redemption to holders on the Notice
Date in an amount equal to the amount of accrued interest per $1,000 principal
amount of a Security from the Issue Date to the second anniversary of a
Complying Public Equity Offering, less the amount of any interest actually
paid (including accrued and unpaid interest that is to be paid as part of the
Provisional Redemption Price) on such Security on or prior to the Provisional
Redemption Date. The Company shall make the Make-Whole Payment on all
Securities called for Provisional Redemption, including those Securities
converted into Common Stock between the Notice Date and the Provisional
Redemption Date. The Company may elect, at its option, to pay the Make-Whole
Payment in Common Stock instead of cash, subject to the provisions of this
Section 3.1. The Company will specify the type of consideration for the
Make-Whole Payment in the redemption notice.

        The Company may elect to pay the Make-Whole Payment by delivery of
shares of Common Stock pursuant to this Section if and only if the following
four conditions shall have been satisfied and certified to the Trustee by the
Company:

                                      18
<PAGE>   24

               (1)    The shares of Common Stock deliverable in payment of the
Make-Whole Payment shall have a fair market value as of the Provisional
Redemption Date of not less than the Make-Whole Payment. For purposes of this
Section, the fair market value of shares of Common Stock shall be determined
by the Company and shall be equal to 95% of the average of the Closing Prices
for the five consecutive Trading Days immediately preceding the Trading Day
prior to the Provisional Redemption Date;

               (2)    Payment of the Make-Whole Payment may not be made in
Common Stock unless such stock is, or shall have been, approved for quotation
on the Nasdaq National Market or listed on a national securities exchange, in
either case, prior to the Provisional Redemption Date;

               (3)    All shares of Common Stock deliverable in payment of the
Make-Whole Payment will be issued out of the Company's authorized but unissued
Common Stock and, will upon issue, be duly and validly issued and fully paid
and non-assessable and free of any preemptive rights; and

               (4)    The Make-Whole Payment shall be paid only in cash in the
event any shares of Common Stock to be issued in connection with the
Make-Whole Payment hereunder (i) require registration under any federal
securities law before such shares may be freely transferable without being
subject to any transfer restrictions under the Securities Act and if such
registration is not completed or does not become effective prior to the
Provisional Redemption Date, and/or (ii) require registration with or approval
of any governmental authority under any state law or any other federal law
before such shares may be validly issued or delivered and if such registration
is not completed or does not become effective or such approval is not obtained
prior to the Provisional Redemption Date.

        If all of the conditions set forth in this Section are not satisfied
in accordance with the terms thereof, the Make-Whole Payment shall be paid by
the Company only in cash.

        Any issuance of shares of Common Stock in respect of any Make-Whole
Payment shall be deemed to have been effected immediately prior to the close
of business on the Provisional Redemption Date and the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such Make-Whole Payment shall be deemed to have become
on the Provisional Redemption Date the holder or holders of record of the
shares represented thereby; provided, however, that any surrender on a date
when the stock transfer books of the Company shall be closed shall constitute
the Person or Persons in whose name or names the certificate or certificates
for such shares are to be issued as the record holder or holders thereof for
all purposes at the opening of business on the next succeeding day on which
such stock transfer books are open. No payment or adjustment shall be made for
dividends or distributions on any Common Stock issued prior to the Provisional
Redemption Date.

        No fractions of shares shall be issued in the event the Company issues
Common Stock instead of cash for the Make-Whole Payment. If more than one
Security shall be redeemed from the same Holder and the Make-Whole Payment
shall be payable in shares of Common Stock, the number of full shares which
shall be issuable in connection with the Make-Whole Payment shall be computed
on the basis of the aggregate principal amount of the Make-Whole Payment to be
paid for all the Securities held by such Holder. Instead of issuing any
fractional share of Common Stock which would otherwise be issuable in
connection with any Make-Whole Payment, the Company will deliver to the
applicable Holder a check for the current market value ("Current Market
Value") of such fractional share. The Current Market Value of a fraction of a
share is determined by the Company by multiplying the current price of a full
share by the fraction, and rounding the result to the nearest cent. For
purposes of this Section 3.1 and 4.1(b), the current price of a share of
Common

                                      19
<PAGE>   25

Stock is the Closing Price of the Common Stock on the Trading Day immediately
preceding the Provisional Redemption Date (or, in the case of Section 4.1(b),
the Conversion Date).

        Any issuance and delivery of certificates for shares of Common Stock
shall be made without charge to the Holder for such certificates or for any
tax or duty in respect of the issuance or delivery of such certificates or the
securities represented thereby; provided, however, that the Company shall not
be required to pay any tax or duty which may be payable in respect of (i)
income of the Holder or (ii) any transfer involved in the issuance or delivery
of certificates for shares of Common Stock in a name other than that of the
Holder, and no such issuance or delivery shall be made unless and until the
Person requesting such issuance or delivery has paid to the Company the amount
of any such tax or duty or has established, to the satisfaction of the
Company, that such tax or duty has been paid.

        (b)    On or after the second anniversary of a Complying Public Equity
Offering, the Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time prior to maturity (an
"Optional Redemption"), upon notice as set forth in Section 3.3, at the
following optional Redemption Prices (expressed as percentages of the
principal amount), together in each case with accrued and unpaid interest
(including Additional Interest), if any, to, but excluding the date fixed for
redemption (the "Optional Redemption Price"), if redeemed during the periods
beginning August 15 of the years indicated:

<TABLE>
<CAPTION>
            PERIOD                                 REDEMPTION PRICE
            ------                                 ----------------
<S>                                               <C>
            2002...............................            102.250%
            2003...............................            101.125%
</TABLE>

and 100% of the principal amount on August 15, 2004, and at all times
thereafter.

        If the Company elects to redeem Securities (whether a Provisional
Redemption or Optional Redemption) pursuant to this Section 3.1 and paragraph
5 of the Securities, it shall notify the Trustee at least 30 days prior to the
Redemption Date as fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee) of the Redemption Date and the principal amount
of Securities to be redeemed. If fewer than all of the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and given to the Trustee, which record date shall not be less than ten
days after the date of notice to the Trustee.

        SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED.

        If less than all of the Securities are to be redeemed, the Trustee
shall, not more than 45 days prior to the Redemption Date, select the
Securities to be redeemed. The Trustee shall make the selection from the
Securities outstanding and not previously called for redemption, by lot, or in
its discretion, on a pro rata basis. Securities in denominations of $1,000 may
only be redeemed in whole. The Trustee may select for redemption portions
(equal to $1,000 or any multiple thereof) of the principal of Securities that
have denominations larger than $1,000. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities
called for redemption.

        If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
to be the portion selected for redemption. Securities which have been
converted during a

                                      20
<PAGE>   26

selection of Securities to be redeemed shall be treated by the Trustee as
outstanding for the purpose of such selection.

        SECTION 3.3. NOTICE OF REDEMPTION.

        At least 20 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption to each
Holder of Securities to be redeemed at such Holder's address as it appears on
the Primary Registrar's books.

        The notice shall identify the Securities (including CUSIP numbers) to
be redeemed and shall state:

               (1)    the Redemption Date;

               (2)    the Redemption Price;

               (3)    the Conversion Price in effect as of the date of the
notice and the Make-Whole Payment, if any, and whether any such Make-Whole
Payment is to be paid in cash or delivery of shares of Common Stock;

               (4)    the name and address of each Paying Agent and Conversion
Agent;

               (5)    that Securities called for redemption must be presented
and surrendered to a Paying Agent to collect the Redemption Price;

               (6)    that Holders who wish to convert Securities must
surrender such Securities for conversion no later than the close of business
on the Business Day immediately preceding the Redemption Date and must satisfy
the other requirements in paragraph 8 of the Securities; and

               (7)    that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption shall cease
accruing on and after the Redemption Date and the only remaining right of the
Holder shall be to receive payment of the Redemption Price, if any upon
presentation and surrender to a Paying Agent of the Securities; and

               (8)    if any Security is being redeemed in part, the portion
of the principal amount of such Security to be redeemed and that, after the
Redemption Date, upon presentation and surrender of such Security, a new
Security or Securities in aggregate principal amount equal to the unredeemed
portion thereof will be issued.

        If any of the Securities to be redeemed is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions. At the
Company's written request, which request shall (i) be irrevocable once given
and (ii) set forth all relevant information required by clauses (1) through
(8) of the preceding paragraph, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.

        SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.

        Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the Redemption Price
stated in the notice, except for Securities that are converted in accordance
with the provisions of Article 4. Upon presentation and surrender to a Paying
Agent, Securities

                                      21
<PAGE>   27

called for redemption shall be paid at the Redemption Price, plus accrued
interest up to but not including the Redemption Date; provided if the
Redemption Date is an interest payment date, interest will be payable to the
Holders in whose names the Securities are registered at the close of business
on the relevant record dates for payment of such interest; provided that with
respect to a Provisional Redemption, the holder of any Securities converted
into Common Stock pursuant to the terms hereof after the Notice Date and prior
to the Provisional Redemption Date shall have the right to the Make-Whole
Payment regardless of the conversion of the Securities.

        SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.

        Prior to 11:00 a.m. New York City time, on the Redemption Date, the
Company shall deposit with a Paying Agent (or, if the Company acts as Paying
Agent, shall segregate and hold in trust) money (or Common Stock if the
Company elects to pay the Make-Whole Payment upon a Provisional Redemption in
Common Stock instead of cash (along with cash for any fractional shares))
sufficient to pay the Redemption Price on all Securities to be redeemed on
that date, other than Securities or portions thereof called for redemption on
that date which have been delivered by the Company to the Trustee for
cancellation or have been converted. The Paying Agent shall return to the
Company any money not required for that purpose.

        SECTION 3.6. SECURITIES REDEEMED IN PART.

        Upon presentation and surrender of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate and deliver
to the Holder a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.

        SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.

        In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities called for
redemption by an agreement with one or more investment bankers or other
purchasers to purchase such Securities by paying to a Paying Agent (other than
the Company or any of its Affiliates) in trust for the Holders, on or before
11:00 a.m. New York City time on the Redemption Date, an amount that, together
with any amounts deposited with such Paying Agent by the Company for the
redemption of such Securities, is not less than the Redemption Price, of such
Securities. Notwithstanding anything to the contrary contained in this Article
3, the obligation of the Company to pay the Redemption Price of such
Securities, shall be deemed to be satisfied and discharged to the extent such
amount is so paid by such purchasers; provided, however, that nothing in this
Section 3.7 shall relieve the Company of its obligation to pay the Redemption
Price on Securities called for redemption. If such an agreement with one or
more investment banks or other purchasers is entered into, any Securities
called for redemption and not surrendered for conversion by the Holders
thereof prior to the relevant Redemption Date may, at the option of the
Company upon written notice to the Trustee, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article 4) surrendered
by such purchasers for conversion, all as of 11:00 a.m. New York City time on
the Redemption Date, subject to payment of the above amount as aforesaid
(including the Make-Whole Payment, if any, with respect to all Securities
called for Provisional Redemption). The Paying Agent shall hold and pay to the
Holders whose Securities are selected for redemption any such amount paid to
it for purchase in the same manner as it would money deposited with it by the
Company for the redemption of Securities. Without the Paying Agent's prior
written consent, no arrangement between the Company and such purchasers for
the purchase and conversion of any Securities shall increase or otherwise
affect any of the powers, duties, responsibilities or obligations of the
Paying Agent as set forth in this Indenture, and the Company agrees to

                                      22
<PAGE>   28

indemnify the Paying Agent from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purchase and conversion of any Securities between the Company and such
purchasers, including the costs and expenses incurred by the Paying Agent in
the defense of any claim or liability arising out of or in connection with the
exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.

        SECTION 3.8. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON
CHANGE IN CONTROL.

        (a)    If at any time that Securities remain outstanding there shall
occur a Change in Control, Securities shall be purchased by the Company at the
option of the Holders thereof as of the date that is 30 Business Days after
the occurrence of the Change in Control (the "Change in Control Purchase
Date") at a Change in Control Purchase Price (as defined below), subject to
satisfaction by or on behalf of any Holder of the requirements set forth in
subsection (c) of this Section 3.8.

        The "Change of Control Purchase Price" shall be calculated by the
Company and shall be (i) on or after the 90th day following a Complying Public
Equity Offering, equal to 100% of the principal amount of such Security, or
the portion thereof submitted for repurchase by the Holder, plus accrued and
unpaid interest on such Security, or the portion thereof submitted for
repurchase by the Holder, to, but excluding, the Change of Control Purchase
Date and (ii) at any time prior to the 90th Day following a Complying Public
Equity Offering, an amount calculated to provide, when taken together with all
prior interest payments, a 15% compounded annual yield calculated on an
approximate bond basis as follows:

                                  [EQUATION]

Where: "CCPP" is the Change of Control Purchase Price; "P" is the amount of
the principal outstanding; "n" is the number of interest payment dates elapsed
since the Issue Date, "t" is the interest payment date number; "It" is the
interest paid on the "t"th interest payment date; "(DELTA)c" is the total
number days between the Issue Date and the Change of Control Purchase Date;
and "(DELTA)it" is the total number of days between the "t"th interest payment
date and the Change of Control Purchase Date.

        Whenever in this Indenture there is a reference, in any context, to
the principal of any Security as of any time, such reference shall be deemed
to include reference to the Change of Control Purchase Price payable in
respect of such Security to the extent that such Change of Control Purchase
Price is, was or would be so payable at such time, and express mention of the
Change of Control Purchase Price in any provision of this Indenture shall not
be construed as excluding the Change of Control Purchase Price in those
provisions of this Indenture when such express mention is not made.

        A "Change in Control" shall be deemed to have occurred if any of the
following occurs after the date hereof:

               (1)    any "person" or "group" (as such terms are defined
below) is or becomes the "beneficial owner" (as defined below), directly or
indirectly, of shares of Voting Stock of the Company representing 50% or more
of the total voting power of all outstanding classes of Voting Stock of the
Company or has the power, directly or indirectly, to elect a majority of the
members of the Board of Directors of the Company; or

                                      23
<PAGE>   29

               (2)    the Company consolidates with, or merges with or into,
another Person or the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of the assets of the Company as
an entirety or substantially as an entirety, or any Person consolidates with,
or merges with or into, the Company, in any such event other than pursuant to
a transaction in which the Persons that "beneficially owned" (as defined
below), directly or indirectly, shares of Voting Stock of the Company
immediately prior to such transaction "beneficially own" (as defined below),
directly or indirectly, shares of Voting Stock of the Company representing at
least a majority of the total voting power of all outstanding classes of
Voting Stock of the surviving or transferee Person; or

               (3)    there shall occur the liquidation or dissolution of the
Company.

For the purpose of the definition of "Change in Control", (i) "person" and
"group" have the meanings given such terms under Section 13(d) and 14(d) of
the Exchange Act or any successor provision to either of the foregoing, and
the term "group" includes any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act (or any successor provision thereto), (ii) a
"beneficial owner" shall be determined in accordance with Rule 13d-3 under the
Exchange Act, as in effect on the date of this Indenture, except that the
number of shares of Voting Stock of the Company shall be deemed to include, in
addition to all outstanding shares of Voting Stock of the Company and Unissued
Shares deemed to be held by the "person" or "group" (as such terms are defined
above) or other Person with respect to which the Change in Control
determination is being made, all Unissued Shares deemed to be held by all
other Persons, and (iii) the terms "beneficially owned" and "beneficially own"
shall have meanings correlative to that of "beneficial owner". The term
"Unissued Shares" means shares of Voting Stock not outstanding that are
subject to options, warrants, rights to purchase or conversion privileges
exercisable within 60 days of the date of determination of a Change in
Control.

        Notwithstanding anything to the contrary set forth in this Section
3.8, a Change in Control will not be deemed to have occurred if either:

               (1)    on or after the 90th day following a Complying Public
Equity Offering, the average Closing Price of the Common Stock for the five
consecutive Trading Days ending immediately after the later of the Change in
Control or the public announcement of the Change in Control, in the case of a
Change in Control relating to an acquisition of capital stock, or immediately
before the Change in Control, in the case of change in control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of the Conversion
Price of the Securities in effect on each of those Trading Days; or

               (2)    in the case of a merger or consolidation, at least 80%
of the consideration, excluding cash payments for fractional shares, in the
merger or consolidation constituting the Change in Control consists of common
stock traded on a United States national securities exchange or quoted on the
Nasdaq National Market (or which will be so traded or quoted when issued or
exchanged in connection with such Change In Control) and as a result of such
transaction or transactions the Securities become convertible solely into such
common stock.

        Notwithstanding anything to the contrary set forth in this Indenture,
the reincorporation, standing alone, of the Company from a California
corporation to a Delaware corporation in contemplation of a Complying Public
Equity Offering will not constitute a Change in Control under this Indenture.

        (b)    Within 10 Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of the Change in Control to
the Trustee and to each Holder (and to beneficial owners as

                                      24
<PAGE>   30

required by applicable law). The notice shall include the form of a Change in
Control Purchase Notice to be completed by the Holder and shall state:

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

               (2)    the date by which the Change in Control Purchase Notice
pursuant to this Section 3.8 must be given;

               (3)    the Change in Control Purchase Date;

               (4)    the Change in Control Purchase Price;

               (5)    briefly, the conversion rights of the Securities;

               (6)    the name and address of each Paying Agent and Conversion
Agent;

               (7)    the Conversion Price and any adjustments thereto;

               (8)    that Securities as to which a Change in Control Purchase
Notice has been given may be converted into Common Stock pursuant to Article 4
of this Indenture only to the extent that the Change in Control Purchase
Notice has been withdrawn in accordance with the terms of this Indenture;

               (9)    the procedures that the Holder must follow to exercise
rights under this Section 3.8;

               (10)   the procedures for withdrawing a Change in Control
Purchase Notice, including a form of notice of withdrawal; and

               (11)   that the Holder must satisfy the requirements set forth
in the Securities in order to convert the Securities.

        If any of the Securities is in the form of a Global Security, then the
Company shall modify such notice to the extent necessary to accord with the
procedures of the Depositary applicable to the repurchase of Global
Securities.

        (c)    A Holder may exercise its rights specified in subsection (a) of
this Section 3.8 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto and which may be delivered
by letter, overnight courier, hand delivery, facsimile transmission or in any
other written form and, in the case of Global Securities, may be delivered
electronically or by other means in accordance with the Depositary's customary
procedures) of the exercise of such rights (a "Change in Control Purchase
Notice") to any Paying Agent at any time prior to the close of business on the
Business Day next preceding the Change in Control Purchase Date.

        The delivery of such Security to any Paying Agent (together with all
necessary endorsements) at the office of such Paying Agent shall be a
condition to the receipt by the Holder of the Change in Control Purchase Price
therefor.

        The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the principal amount of such portion
is $1,000 or an integral multiple of $1,000. Provisions of the

                                      25
<PAGE>   31

Indenture that apply to the purchase of all of a Security pursuant to Sections
3.8 through 3.13 also apply to the purchase of such portion of such Security.

        Notwithstanding anything herein to the contrary, any Holder delivering
to a Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall have the right to withdraw such Change in Control
Purchase Notice in whole or in a portion thereof that is a principal amount of
$1,000 or in an integral multiple thereof at any time prior to the close of
business on the Business Day next preceding the Change in Control Purchase
Date by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 3.9.

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

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

        SECTION 3.9. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE.

        Upon receipt by any Paying Agent of the Change in Control Purchase
Notice specified in Section 3.8(c), the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall (unless such
Change in Control Purchase Notice is withdrawn as specified below) thereafter
be entitled to receive the Change in Control Purchase Price with respect to
such Security. Such Change in Control Purchase Price shall be paid to such
Holder promptly following the later of (a) the Change in Control Purchase Date
with respect to such Security (provided the conditions in Section 3.8(c) have
been satisfied) and (b) the time of delivery of such Security to a Paying
Agent by the Holder thereof in the manner required by Section 3.8(c).
Securities in respect of which a Change in Control Purchase Notice has been
given by the Holder thereof may not be converted into shares of Common Stock
on or after the date of the delivery of such Change in Control Purchase Notice
unless such Change in Control Purchase Notice has first been validly
withdrawn.

        A Change in Control Purchase Notice may be withdrawn by means of a
written notice (which may be delivered by letter, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered electronically or by other means in
accordance with the Depositary's customary procedures) of withdrawal delivered
by the Holder to a Paying Agent at any time prior to the close of business on
the Business Day immediately preceding the Change in Control Purchase Date,
specifying the principal amount of the Security or portion thereof (which must
be a principal amount of $1,000 or an integral multiple of $1,000 in excess
thereof) with respect to which such notice of withdrawal is being submitted.

        SECTION 3.10. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE.

        On or before 11:00 a.m. New York City time on the Change in Control
Purchase Date, the Company shall deposit with the Trustee or with a Paying
Agent (other than the Company or an Affiliate of the Company) an amount of
money (in immediately available funds if deposited on such Business Day)
sufficient to pay the aggregate Change in Control Purchase Price of all the
Securities or portions thereof that are to be purchased as of such Change in
Control Purchase Date. The manner in which the deposit required by this
Section 3.10 is made by the Company shall be at the option of the Company,
provided that such deposit shall

                                      26
<PAGE>   32

be made in a manner such that the Trustee or a Paying Agent shall have
immediately available funds on the Change in Control Purchase Date.

        If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Purchase Price of any Security for
which a Change in Control Purchase Notice has been tendered and not withdrawn
in accordance with this Indenture then, on the Change in Control Purchase
Date, such Security will cease to be outstanding and the rights of the Holder
in respect thereof shall terminate (other than the right to receive the Change
in Control Purchase Price as aforesaid). The Company shall publicly announce
the principal amount of Securities purchased as a result of such Change in
Control on or as soon as practicable after the Change in Control Purchase
Date.

        SECTION 3.11. SECURITIES PURCHASED IN PART.

        Any Security that is to be purchased only in part shall be surrendered
at the office of a Paying Agent and promptly after the Change in Control
Purchase Date the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, a new Security
or Securities, of such authorized denomination or denominations as may be
requested by such Holder, in aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased.

        SECTION 3.12. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF
SECURITIES.

        In connection with any offer to purchase or purchase of Securities
under Section 3.8, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1
(or any successor to either such Rule), if applicable, under the Exchange Act,
(b) file the related Schedule TO (or any successor or similar schedule, form
or report) if required under the Exchange Act, and (c) otherwise comply with
all federal and state securities laws in connection with such offer to
purchase or purchase of Securities, all so as to permit the rights of the
Holders and obligations of the Company under Sections 3.8 through 3.11 to be
exercised in the time and in the manner specified therein.

        SECTION 3.13. REPAYMENT TO THE COMPANY.

        To the extent that the aggregate amount of cash deposited by the
Company pursuant to Section 3.10 exceeds the aggregate Change in Control
Purchase Price together with interest, if any, thereon of the Securities or
portions thereof that the Company is obligated to purchase, then promptly
after the Change in Control Purchase Date the Trustee or a Paying Agent, as
the case may be, shall return any such excess cash to the Company.

                                  ARTICLE 4
                                  CONVERSION

        SECTION 4.1. CONVERSION PRIVILEGE; ADDITIONAL PAYMENTS UPON CONVERSION
DURING A CONVERSION BONUS PERIOD.

        (a)    Except as otherwise set forth herein, the Securities will not
be convertible prior to the 90th day following our Complying Public Equity
Offering. On or after the 90th day following our Complying Public Equity
Offering, subject to the further provisions of this Section 4.1, a Holder of a
Security may convert the

                                      27
<PAGE>   33

principal amount of such Security (or any portion thereof equal to $1,000 or
any integral multiple of $1,000 in excess thereof) into Common Stock at any
time prior to the close of business on the Final Maturity Date, at the
Conversion Price then in effect; provided, however, that, if such Security is
called for redemption or presented for purchase pursuant to Article 3, such
conversion right shall terminate at the close of business on the Business Day
immediately preceding the Redemption Date or Change in Control Purchase Date,
as the case may be, for such Security or such earlier date as the Holder
presents such Security for redemption or for purchase (unless the Company
shall default in making the redemption payment or Change in Control Purchase
Price payment when due, in which case the conversion right shall terminate at
the close of business on the date such default is cured and such Security is
redeemed or purchased, as the case may be). The number of shares of Common
Stock issuable upon conversion of a Security shall be determined by dividing
the principal amount of the Security or portion thereof surrendered for
conversion by the Conversion Price in effect on the Conversion Date. The
initial Conversion Price is set forth in paragraph 8 of the Securities and is
subject to adjustment as provided in this Article 4.

        Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.

        A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 3.8(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Change in Control Purchase Notice is withdrawn by a written
notice of withdrawal delivered to a Paying Agent prior to the close of
business on the Business Day immediately preceding the Change in Control
Purchase Date in accordance with Section 3.9.

        A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted its Securities to Common Stock,
and only to the extent such Securities are deemed to have been converted into
Common Stock pursuant to this Article 4.

        (b)    During the period beginning on the 90th day following a
Complying Public Equity Offering and prior to the second anniversary of a
Complying Public Equity Offering (the "Bonus Conversion Period"), any Holder
that elects to convert his Securities will be entitled to receive, along with
the shares of Common Stock otherwise issuable upon conversion, a payment (the
"Bonus Payment") calculated by the Company and equal to the amount of accrued
interest per $1,000 Security from the Issue Date of the Securities to the
second anniversary date of a Complying Public Equity Offering, less the amount
of interest actually paid and interest accrued and unpaid that will be paid in
respect of the Securities being converted on the next interest payment date if
the conversion date falls after a record date for the payment of interest and
prior to an interest payment date; provided that the Bonus Payment will only
be payable if:

               (i)    the Holder converts his Securities on the fifth Trading
Day of a calendar month during the Bonus Conversion Period; and

               (ii)   the average of the Closing Prices of Common Stock during
the last five Trading Days of the calendar month immediately preceding that
Conversion Date has exceeded the Initial Public Offering Price.

        The Company may elect to make the Bonus Payment in cash or shares of
Common Stock. Payments made in Common Stock will be valued at 95% of the
average of the Closing Prices of Common Stock during the period referenced in
(ii) above. The Company will provide a notice to Holders of Securities at
least 15 days prior to the date that a Bonus Payment might become due in the
subsequent calendar month, stating

                                      28
<PAGE>   34

whether the Bonus Payment, if payable, would be in cash or Common Stock and
stating that any Holder that elects to convert their Securities of the fifth
Trading Day of a calendar month during the Bonus Conversion Period must
provide the Company written notice of such election to convert their
Securities at least one Trading Day prior to the fifth Trading Day.

        The Company may elect to pay the Bonus Payment by delivery of shares
of Common Stock pursuant to this Section if and only if the following three
conditions are met and are certified to the Trustee by the Company:

        (1)    The shares of Common Stock deliverable in payment of the Bonus
Payment shall have a fair market value as of the Conversion Date of not less
than the Bonus Payment. For purposes of this Section, the fair market value of
the shares of Common Stock shall be determined by the Company and shall be
equal to 95% of the average of the Closing Prices for the five consecutive
Trading Days immediately preceding the Trading Day prior to the Conversion
Date;

        (2)    Payment of the Bonus Payment may not be made in Common Stock
unless such stock is, or shall have been, approved for trading on the Nasdaq
National Market or listed on a national securities exchange, in either case,
prior to the Conversion Date.

        (3)    All shares of Common Stock which may be issued upon payment of
the Bonus Payment will be issued out of the Company's authorized but unissued
Common Stock and will, upon issuance, be duly and validly issued and fully
paid and non-assessable and free of any preemptive rights.

        If all the conditions set forth in (1), (2) and (3) above are not
satisfied in accordance with the terms thereof, the Bonus Payment shall be
paid by the Company only in cash.

        If a Bonus Payment is made upon the conversion of a Security, no
Make-Whole Payment will be made with respect to the conversion of such
Security in connection with any Provisional Redemption in accordance with the
provisions of Article 3.

        Any issuance of shares of Common Stock in respect of any Bonus Payment
shall be deemed to have been effected immediately prior to the close of
business on the Conversion Date and the Person or Persons in whose names or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such Bonus Payment shall be deemed to have become on the
Conversion Date the holder or holders of record of the shares represented
thereby; provided, however, that any surrender on a date when the stock
transfer books of the Company shall be closed shall constitute the Person or
Persons in whole name or names the certificate or certificates for such shares
are to be issued as the record holder or holders thereof for all purposes at
the opening of business on the next succeeding day on which such stock
transfer books are open.

        No fractions of shares of Common Stock shall be issued in the event
the Company issues Common Stock instead of cash for the Bonus Payment. If more
than one Security shall be converted from the same Holder and the Bonus
Payment shall be payable in shares of Common Stock, the number of full shares
which shall be issuable in connection with the Bonus Payment shall be computed
by the Company on the basis of the aggregate principal amount of the Bonus
Payment to be paid for all the Securities being submitted for conversion by
such Holder. Instead of issuing any fractional share which would otherwise be
issuable in connection with the Bonus Payment, the Company will deliver to the
applicable Holder a check for the Current Market Value of such share of Common
Stock.

                                      29
<PAGE>   35

        Any issuance and delivery of certificates for shares of Common Stock
shall be made without charge to the Holder for such certificates or for any
tax or duty in respect of the issuance or delivery of such certificates or the
securities represented thereby; provided, however, that the Company shall not
be required to pay any tax or duty which may be payable in respect of (i)
income of any Holder or (ii) any transfer involved in the issuance or delivery
of the certificates for shares of Common Stock in a name other that the
Holder, and no such issuance or delivery shall be made unless and until the
Person requesting such issuance or delivery has paid to the Company the amount
of any tax or duty or has established, to the satisfaction of the Company,
that such tax or duty has been paid.

        SECTION 4.2. CONVERSION PROCEDURE.

        To convert a Security, a Holder must (a) complete and manually sign
the conversion notice on the back of the Security and deliver such notice to a
Conversion Agent, (b) surrender the Security to a Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by a
Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if
required. The date on which the Holder satisfies all of those requirements is
the "Conversion Date." As soon as practicable after the Conversion Date, the
Company shall deliver to the Holder through a Conversion Agent a certificate
for the number of whole shares of Common Stock issuable upon the conversion
and cash in lieu of any fractional shares pursuant to Section 4.3. Anything
herein to the contrary notwithstanding, in the case of Global Securities,
conversion notices may be delivered and such Securities may be surrendered for
conversion in accordance with the Applicable Procedures as in effect from time
to time.

        The person in whose name the Common Stock certificate is registered
shall be deemed to be a shareholder of record on the Conversion Date;
provided, however, that no surrender of a Security on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person or persons entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of Common Stock on
such date, but such surrender shall be effective to constitute the person or
persons entitled to receive such shares of Common Stock as the record holder
or holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open; provided, further,
that such conversion shall be at the Conversion Price in effect on the
Conversion Date as if the stock transfer books of the Company had not been
closed. Upon conversion of a Security, such person shall no longer be a Holder
of such Security. No payment or adjustment will be made for dividends or
distributions on shares of Common Stock issued upon conversion of a Security.

        Securities so surrendered for conversion (in whole or in part) during
the period from the close of business on any regular record date to the
opening of business on the next succeeding interest payment date (excluding
Securities or portions thereof converted on the fifth Trading Day of any month
in the Bonus Conversion Period and Securities or portions thereof called for
redemption or presented for purchase upon a Change in Control on a Redemption
Date or Change in Control Purchase Date, as the case may be, during the period
beginning at the close of business on a regular record date and ending at the
opening of business on the first Business Day after the next succeeding
interest payment date, or if such interest payment date is not a Business Day,
the second such Business Day) shall also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
interest payment date on the principal amount of such Security then being
converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Security, subject to the provisions of
this Indenture relating to the payment of defaulted interest by the Company.
Except as otherwise provided in this Section 4.2, no payment or adjustment
will be made for accrued interest on a converted Security. If the Company
defaults in the

                                     30
<PAGE>   36

payment of interest payable on such interest payment date, the Company shall
promptly repay such funds to such Holder.

        Nothing in this Section shall affect the right of a Holder in whose
name any Security is registered at the close of business on a record date to
receive the interest payable on such Security on the related interest payment
date in accordance with the terms of this Indenture and the Securities. If a
Holder converts more than one Security at the same time, the number of shares
of Common Stock issuable upon the conversion shall be based on the aggregate
principal amount of Securities converted.

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

        SECTION 4.3. FRACTIONAL SHARES.

        The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash based upon the Current Market Price of the Common Stock on the Trading
Day immediately prior to the Conversion Date.

        SECTION 4.4. TAXES ON CONVERSION.

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

        SECTION 4.5. COMPANY TO PROVIDE STOCK.

        The Company shall promptly after the determination of the Conversion
Price after the 20th Trading Day following a Complying Public Equity Offering
in accordance with paragraph 8 of the Securities (but in no event later than
the 90th day following a Complying Public Equity Offering) and from time to
time as may be necessary thereafter, reserve, out of its authorized but
unissued Common Stock, a sufficient number of shares of Common Stock to permit
the conversion of all outstanding Securities into shares of Common Stock.

        All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares, shall be duly authorized, validly issued, fully
paid and nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim.

        The Company will endeavor promptly to comply with all federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or on
the Nasdaq National Market or other over-the-counter market or such other
market on which the Common Stock is then listed or quoted; provided, however,
that if rules of such automated quotation system or exchange permit the
Company to defer the listing of such Common Stock until the first conversion
of the Notes into Common Stock in accordance with the provisions of this
Indenture, the Company covenants to list such Common Stock issuable

                                      31
<PAGE>   37

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

        SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE.

        The conversion price as stated in paragraph 8 of the Securities (the
"Conversion Price") shall be adjusted from time to time by the Company as
follows:

        (a)    In case the Company shall (i) pay a dividend on its Common
Stock in shares of Common Stock, (ii) make a distribution on its Common Stock
in shares of Common Stock, (iii) subdivide its outstanding Common Stock into a
greater number of shares, or (iv) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive that number of shares
of Common Stock which it would have owned had such Security been converted
immediately prior to the happening of such event. An adjustment made pursuant
to this subsection (a) shall become effective immediately after the record
date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of subdivision or
combination.

        (b)    In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
commencing no earlier than the record date described below and expiring not
more than 60 days after such record date) to subscribe for or purchase shares
of Common Stock (or securities convertible into Common Stock) at a price per
share (or having a conversion price per share) less than the current market
price per share of Common Stock (as determined in accordance with subsection
(d) of this Section 4.6) on the record date for the determination of
shareholders entitled to receive such rights or warrants, the Conversion Price
in effect immediately prior thereto shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares which the aggregate offering price of the total
number of shares of Common Stock so offered (or the aggregate conversion price
of the convertible securities so offered, which shall be determined by
multiplying the number of shares of Common Stock issuable upon conversion of
such convertible securities by the conversion price per share of Common Stock
pursuant to the terms of such convertible securities) would purchase at the
current market price per share (as defined in subsection (d) of this Section
4.6) of Common Stock on such record date, and of which the denominator shall
be the number of shares of Common Stock outstanding on such record date plus
the number of additional shares of Common Stock offered (or into which the
convertible securities so offered are convertible). Such adjustment shall be
made successively whenever any such rights or warrants are issued, and shall
become effective immediately after such record date. If at the end of the
period during which such rights or warrants are exercisable not all rights or
warrants shall have been exercised, the adjusted Conversion Price shall be
immediately readjusted to what it would have been based upon the number of
additional shares of Common Stock actually issued (or the number of shares of
Common Stock issuable upon conversion of convertible securities actually
issued).

        (c)    In case the Company shall distribute to all or substantially
all holders of its Common Stock any shares of capital stock of the Company
(other than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any person other than the Company but excluding (1)
dividends on distributions paid exclusively in cash or (2) dividends or
distributions referred to in subsection (a) of this Section 4.6, or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
rights and warrants referred to in subsection (b) of this Section 4.6 and also
excluding the distribution of rights to all holders of Common Stock

                                      32
<PAGE>   38

pursuant to the adoption of a shareholders rights plan or the detachment of
such rights under the terms of such shareholder rights plan), then in each
such case the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the current Conversion Price by a fraction
of which the numerator shall be the current market price per share (as defined
in subsection (d) of this Section 4.6) of the Common Stock on the record date
mentioned below less the fair market value on such record date (as determined
by the Board of Directors, whose determination shall be conclusive evidence of
such fair market value and which shall be evidenced by an Officers'
Certificate delivered to the Trustee) of the portion of the capital stock,
evidences of indebtedness or other non-cash assets so distributed or of such
rights or warrants applicable to one share of Common Stock (determined on the
basis of the number of shares of Common Stock outstanding on the record date),
and of which the denominator shall be the current market price per share (as
defined in subsection (d) of this Section 4.6) of the Common Stock on such
record date. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such
distribution.

               (1)    In case the Company shall, by dividend or otherwise, at
any time distribute (a "Triggering Distribution") to all or substantially all
holders of its Common Stock cash in an aggregate amount that, together with
the aggregate amount of (A) any cash and the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive evidence
thereof and which shall be evidenced by an Officers' Certificate delivered to
the Trustee) of any other consideration payable in respect of any tender offer
by the Company or a Subsidiary of the Company for Common Stock consummated
within the 12 months preceding the date of payment of the Triggering
Distribution and in respect of which no Conversion Price adjustment pursuant
to this Section 4.6 has been made and (B) all other cash distributions to all
or substantially all holders of its Common Stock made within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been
made, exceeds an amount equal to 10.0% of the product of the current market
price per share of Common Stock (as determined in accordance with subsection
(d) of this Section 4.6) on the Business Day (the "Determination Date")
immediately preceding the day on which such Triggering Distribution is
declared by the Company multiplied by the number of shares of Common Stock
outstanding on the Determination Date (excluding shares held in the treasury
of the Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the
numerator shall be the current market price per share of the Common Stock (as
determined in accordance with subsection (d) of this Section 4.6) on the
Determination Date less the sum of the aggregate amount of cash and the
aggregate fair market value (determined as aforesaid in this Section
4.6(c)(1)) of any such other consideration so distributed, paid or payable
within such 12 months (including, without limitation, the Triggering
Distribution) applicable to one share of Common Stock (determined on the basis
of the number of shares of Common Stock outstanding on the Determination Date)
and the denominator shall be such current market price per share of the Common
Stock (as determined in accordance with subsection (d) of this Section 4.6) on
the Determination Date, such reduction to become effective immediately prior
to the opening of business on the day following the date on which the
Triggering Distribution is paid.

               (2)    In case any tender offer made by the Company or any of
its Subsidiaries for Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate amount of
cash consideration and the aggregate fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee
thereof) of any other consideration) that, together with the aggregate amount of
(A) any cash and the fair market value (as determined by the Board of Directors,
whose determination shall be

                                      33
<PAGE>   39

conclusive evidence thereof and which shall be evidenced by an Officers'
Certificate delivered to the Trustee) of any other consideration payable in
respect of any other tender offers by the Company or any Subsidiary of the
Company for Common Stock consummated within the 12 months preceding the date
of the Expiration Date (as defined below) and in respect of which no
Conversion Price adjustment pursuant to this Section 4.6 has been made and (B)
all cash distributions to all or substantially all holders of its Common Stock
made within the 12 months preceding the Expiration Date and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been
made, exceeds an amount equal to 10.0% of the product of the current market
price per share of Common Stock (as determined in accordance with subsection
(d) of this Section 4.6) as of the last date (the "Expiration Date") tenders
could have been made pursuant to such tender offer (as it may be amended) (the
last time at which such tenders could have been made on the Expiration Date is
hereinafter sometimes called the "Expiration Time") multiplied by the number
of shares of Common Stock outstanding (including tendered shares but excluding
any shares held in the treasury of the Company) at the Expiration Time, then,
immediately prior to the opening of business on the day after the Expiration
Date, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to close of business on the Expiration Date by a fraction of which the
numerator shall be the product of the number of shares of Common Stock
outstanding (including tendered shares but excluding any shares held in the
treasury of the Company) at the Expiration Time multiplied by the current
market price per share of the Common Stock (as determined in accordance with
subsection (d) of this Section 4.6) on the Trading Day next succeeding the
Expiration Date and the denominator shall be the sum of (x) the aggregate
consideration (determined as aforesaid) payable to shareholders based on the
acceptance (up to any maximum specified in the terms of the tender offer) of
all shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares and excluding any shares held in
the treasury of the Company) at the Expiration Time and the current market
price per share of Common Stock (as determined in accordance with subsection
(d) of this Section 4.6) on the Trading Day next succeeding the Expiration
Date, such reduction to become effective immediately prior to the opening of
business on the day following the Expiration Date. In the event that the
Company is obligated to purchase shares pursuant to any such tender offer, but
the Company is permanently prevented by applicable law from effecting any or
all such purchases or any or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would have been
in effect based upon the number of shares actually purchased. If the
application of this Section 4.6(c)(2) to any tender offer would result in an
increase in the Conversion Price, no adjustment shall be made for such tender
offer under this Section 4.6(c)(2).

               (3)    For purposes of this Section 4.6(c), the term "tender
offer" shall mean and include both tender offers and exchange offers, all
references to "purchases" of shares in tender offers (and all similar
references) shall mean and include both the purchase of shares in tender
offers and the acquisition of shares pursuant to exchange offers, and all
references to "tendered shares" (and all similar references) shall mean and
include shares tendered in both tender offers and exchange offers.

        (d)    For the purpose of any computation under subsections (a), (b)
and (c) of this Section 4.6, the current market price per share of Common
Stock ("Current Market Price") on any date shall be deemed to be the average
of the daily Closing Prices for the 30 consecutive Trading Days commencing 45
Trading Days before (i) the Determination Date or the Expiration Date, as the
case may be, with respect to distributions or tender offers under subsection
(d) of this Section 4.6 or (ii) the record date with respect to distributions,
issuances or other events requiring such computation under subsection (a) or
(b) of this Section 4.6. The Closing Price ("Closing Price") for each day
shall be the last reported sales price or, in case no such reported sale takes
place on such date, the average of the reported closing bid and asked prices
in either case on the

                                      34
<PAGE>   40

Nasdaq National Market (the "NNM") or, if the Common Stock is not listed or
admitted to trading on the NNM, on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if not listed
or admitted to trading on the NNM or any national securities exchange, the
last reported sales price of the Common Stock as quoted on NASDAQ or, in case
no reported sales takes place, the average of the closing bid and asked prices
as quoted on NASDAQ or any comparable system or, if the Common Stock is not
quoted on NASDAQ or any comparable system, the closing sales price or, in case
no reported sale takes place, the average of the closing bid and asked prices,
as furnished by any two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Company for that purpose. If
no such prices are available, the Current Market Price per share shall be the
fair value of a share of Common Stock as determined in good faith by the Board
of Directors (which shall be evidenced by an Officers' Certificate delivered
to the Trustee).

        (e)    In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date or
Expiration Date, as the case may be, established for purposes of this Section
4.6, the Company may elect to defer (but only until five Business Days
following the filing by the Company with the Trustee of the certificate
described in Section 4.9) issuing to the Holder of any Security converted
after such record date or Determination Date or Expiration Date the shares of
Common Stock and other capital stock of the Company issuable upon such
conversion over and above the shares of Common Stock and other capital stock
of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance
of which is so deferred, the Company shall issue or cause its transfer agents
to issue due bills or other appropriate evidence prepared by the Company of
the right to receive such shares. If any distribution in respect of which an
adjustment to the Conversion Price is required to be made as of the record
date or Determination Date or Expiration Date therefor is not thereafter made
or paid by the Company for any reason, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect if such
record date had not been fixed or such effective date or Determination Date or
Expiration Date had not occurred.

        SECTION 4.7. NO ADJUSTMENT.

        No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments
which by reason of this Section 4.7 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article 4 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.

        No adjustment need be made for issuances of Common Stock pursuant to a
Company plan for reinvestment of dividends or interest or for a change in the
par value or a change to no par value of the Common Stock.

        To the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.

        SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES.

        The Company shall be entitled to make such reductions in the Conversion
Price, in addition to those required by Section 4.6, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivisions
of shares, distributions of rights to purchase stock or securities or
distributions of securities

                                      35
<PAGE>   41

convertible into or exchangeable for stock hereafter made by the Company to
its shareholders shall not be taxable.

        SECTION 4.9. NOTICE OF ADJUSTMENT.

        When the Conversion Price is established in accordance with the
provisions of paragraph 8 of the Securities, and whenever the Conversion Price
or conversion privilege is thereafter adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment and file with the Trustee
an Officers' Certificate briefly stating the facts requiring the adjustment
and the manner of computing it. Unless and until the Trustee shall receive an
Officers' Certificate setting forth an adjustment of the Conversion Price, the
Trustee may assume without inquiry that the Conversion Price has not been
adjusted and that the last Conversion Price of which it has knowledge remains
in effect.

        SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS.

        In the event that:

               (1)    the Company takes any action which would require an
adjustment in the Conversion Price;

               (2)    the Company consolidates or merges with, or transfers
all or substantially all of its property and assets to, another corporation
and shareholders of the Company must approve the transaction (other than with
respect to a reincorporation of the Company from the State of California to
the State of Delaware in contemplation of a Complying Public Equity Offering);
or

               (3)    there is a dissolution or liquidation of the Company;

the Company shall mail to Holders and file with the Trustee a notice stating
the proposed record or effective date, as the case may be. The Company shall
mail the notice at least ten days before such date. Failure to mail such
notice or any defect therein shall not affect the validity of any transaction
referred to in clause (1), (2) or (3) of this Section 4.10.

        SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE ON CONVERSION PRIVILEGE.

        If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination, or
any other change for which an adjustment is provided in Section 4.6); (b) any
consolidation or merger or combination to which the Company is a party other
than a merger in which the Company is the continuing corporation and which
does not result in any reclassification of, or change (other than in par
value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination) in, outstanding shares of
Common Stock; or (c) any sale or conveyance as an entirety or substantially as
an entirety of the property and assets of the Company, directly or indirectly,
to any person, then the Company, or such successor, purchasing or transferee
corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, combination, consolidation, merger, sale or
conveyance, execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding shall have the
right to convert such Security, even though the Security would not otherwise
have become convertible, into the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
reclassification,

                                      36
<PAGE>   42

change, combination, consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, combination,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article 4. If, in the case of any such consolidation,
merger, combination, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of Common Stock
include shares of stock or other securities and property of a person other
than the successor, purchasing or transferee corporation, as the case may be,
in such consolidation, merger, combination, sale or conveyance, then such
supplemental indenture shall also be executed by such other person and shall
contain such additional provisions to protect the interests of the Holders of
the Securities as the Board of Directors shall reasonably consider necessary
by reason of the foregoing. The provisions of this Section 4.11 shall
similarly apply to successive reclassifications, changes, combinations,
consolidations, mergers, sales or conveyances. In the event of any such
consolidation, merger, combination, sale or conveyance prior to the 21st
Trading Day following a Complying Public Equity Offering, holders will be
entitled to convert their Securities, even if the Securities would not
otherwise have become convertible pursuant to Article 4, at a Conversion Price
of $55.40, subject to adjustment, if any, pursuant to Section 4.6. On or after
the 21st Trading Day following a Complying Public Equity Offering, the
Conversion Price will be the Conversion Price then in effect.

        In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.11, the Company shall promptly file with the
Trustee (x) an Officers' Certificate briefly stating the reasons therefor, the
kind or amount of shares of stock or other securities or property (including
cash) receivable by Holders of the Securities upon the conversion of their
Securities after any such reclassification, change, combination,
consolidation, merger, sale or conveyance, any adjustment to be made with
respect thereto and that all conditions precedent have been complied with and
(y) an Opinion of Counsel that all conditions precedent have been complied
with, and the Trustee shall promptly mail notice thereof to all Holders.

        SECTION 4.12. TRUSTEE'S DISCLAIMER.

        The Trustee shall have no duty to determine when an adjustment under
this Article 4 should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of that fact or the
correctness of any such adjustment, and shall be protected in relying upon, an
Officers' Certificate including the Officers' Certificate with respect thereto
which the Company is obligated to file with the Trustee pursuant to Section
4.9. The Trustee makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities, and the Trustee
shall not be responsible for the Company's failure to comply with any
provisions of this Article 4.

        The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the
Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 4.11.

        SECTION 4.13. VOLUNTARY REDUCTION.

        The Company from time to time may reduce the Conversion Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period if our Board of Directors
determines that such reduction would be in the best interest of the Company
and the Company provides at least 15 days' prior notice of any reduction in
the Conversion Price; provided, however, that in no

                                      37
<PAGE>   43

event may the Company reduce the Conversion Price to be less than the par
value of a share of Common Stock.

                                  ARTICLE 5
                                SUBORDINATION

        SECTION 5.1. AGREEMENT OF SUBORDINATION.

        The Company covenants and agrees, and each Holder of Securities issued
hereunder by its acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article 5; and
each Person holding any Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees to be bound by
such provisions.

        The payment of the principal of, premium, if any, and interest
(including Additional Interest, if any) on all Securities (including, but not
limited to, the Redemption Price with respect to the Securities called for
redemption or the Change in Control Purchase Price with respect to the
Securities subject to purchase in accordance with Article 3 as provided in
this Indenture) issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full in cash or payment satisfactory to the holders of Senior
Indebtedness of all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred.

        No provision of this Article 5 shall prevent the occurrence of any
default or Event of Default hereunder.

        SECTION 5.2. PAYMENTS TO HOLDERS.

        No payment shall be made with respect to the principal of, or premium,
if any, or interest (including Additional Interest, if any) on the Securities
(including, but not limited to, the Redemption Price with respect to the
Securities to be called for redemption or the Change in Control Purchase Price
with respect to the Securities subject to purchase in accordance with Article
3 as provided in this Indenture), except payments and distributions made by
the Trustee as permitted by the first or second paragraph of Section 5.5, if:

        (i)    a default in the payment of principal, premium, interest, rent
or other obligations due on any Designated Senior Indebtedness occurs and is
continuing (or, in the case of Designated Senior Indebtedness for which there
is a period of grace, in the event of such a default that continues beyond the
period of grace, if any, specified in the instrument or lease evidencing such
Designated Senior Indebtedness), unless and until such default shall have been
cured or waived or shall have ceased to exist; or

        (ii)   a default, other than a payment default, on a Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Representative or holder of Designated Senior Indebtedness or the Company.

        Subject to the provisions of Section 5.5, if the Trustee receives any
Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and
until at least 365 days shall have elapsed since the initial effectiveness of
the immediately prior Payment Blockage Notice. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee (unless such default was waived, cured or otherwise

                                      38
<PAGE>   44

ceased to exist and thereafter subsequently reoccurred) shall be, or be made,
the basis for a subsequent Payment Blockage Notice.

        The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of:

        (a) the date upon which the default is cured or waived or ceases to
exist, or

        (b) in the case of a default referred to in clause (ii) above, 179 days
pass after a Payment Blockage Notice is received, unless this Article 5
otherwise prohibits the payment or distribution at the time of such payment or
distribution.

        Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company (whether voluntary or involuntary) or in bankruptcy,
insolvency, receivership or similar proceedings, all amounts due or to become
due upon all Senior Indebtedness shall first be paid in full in cash, or other
payments satisfactory to the holders of Senior Indebtedness before any payment
is made on account of the principal of, premium, if any, or interest
(including Additional Interest, if any) on the Securities (except payments
made pursuant to Article 10 from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution, winding-up,
liquidation or reorganization); and upon any such dissolution or winding-up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, any payment by the Company, or distribution
of assets of the Company of any kind or character, whether in cash, property
or securities, to which the Holders of the Securities or the Trustee would be
entitled, except for the provision of this Article 5, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts
of Senior Indebtedness held by such holders, or as otherwise required by law
or a court order) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness
in full in cash, or other payment satisfactory to the holders of Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any payment or distribution
is made to the Holders of the Securities or to the Trustee.

        For purposes of this Article 5, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article 5 with respect to the Securities to the payment of all Senior
Indebtedness which may at the time be outstanding; provided that (i) the
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any reorganization or readjustment, and (ii) the rights of the holders of
Senior Indebtedness (other than leases which are not assumed by the Company or
the new corporation, as the case may be) are not, without the consent of such
Holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or
the liquidation or dissolution of the Company following the conveyance or
transfer of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article 7
shall not be deemed a dissolution, winding-up, liquidation or reorganization
for the

                                      39
<PAGE>   45

purposes of this Section 5.2 if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article 7.

        In the event of the acceleration of the Securities because of an Event
of Default, no payment or distribution shall be made to the Trustee or any
Holder of Securities in respect of the principal of, premium, if any, or
interest (including Additional Interest, if any) on the Securities (including,
but not limited to, the Redemption Price with respect to the Securities called
for redemption or the Change in Control Purchase Price with respect to the
Securities subject to purchase in accordance with Article 3 as provided in
this Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 5.5, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to
the holders of Senior Indebtedness or such acceleration is rescinded in
accordance with the terms of this Indenture. If payment of the Securities is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of such acceleration.

        In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Securities before all Senior Indebtedness is
paid in full, in cash or other payment satisfactory to the holders of Senior
Indebtedness, or provision is made for such payment thereof in accordance with
its terms in cash or other payment satisfactory to the holders of Senior
Indebtedness, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, as calculated by the Company, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full, in cash or other payment satisfactory to the holders of
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.

        Nothing in this Section 5.2 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 9.7. This Section 5.2 shall be
subject to the further provisions of Section 5.5.

        SECTION 5.3. SUBROGATION OF SECURITIES.

        Subject to the payment in full, in cash or other payment satisfactory
to the holders of Senior Indebtedness, of all Senior Indebtedness, the rights
of the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article 5 (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any,
and interest (including Additional Interest, if any) on the Securities shall
be paid in full in cash or other payment satisfactory to the holders of Senior
Indebtedness; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article 5, and no payment over
pursuant to the provisions of this Article 5, to or for the benefit of the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than holders of Senior

                                      40
<PAGE>   46

Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness; and no payments or
distributions of cash, property or securities to or for the benefit of the
Holders of the Securities pursuant to the subrogation provisions of this
Article 5, which would otherwise have been paid to the holders of Senior
Indebtedness shall be deemed to be a payment by the Company to or for the
account of the Securities. It is understood that the provisions of this
Article 5 are and are intended solely for the purposes of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.

        Nothing contained in this Article 5 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of
the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness,
nor shall anything herein or therein prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article 5 of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.

        Upon any payment or distribution of assets of the Company referred to
in this Article 5, the Trustee, subject to the provisions of Section 9.1, and
the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, delivered
to the Trustee or to the Holders of the Securities, for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon and all other facts pertinent thereto or to
this Article 5.

        SECTION 5.4. AUTHORIZATION TO EFFECT SUBORDINATION.

        Each Holder of a Security by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 5 and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 5.3 hereof at least 30 days before the expiration of
the time to file such claim, the holders of any Senior Indebtedness or their
representatives are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Securities.

        SECTION 5.5. NOTICE TO TRUSTEE.

        The Company shall give prompt written notice in the form of an
Officers' Certificate to a Trust Officer of the Trustee and to any Paying
Agent of any fact known to the Company which would prohibit the making of any
payment of monies to or by the Trustee or any Paying Agent in respect of the
Securities pursuant to the provisions of this Article 5. Notwithstanding the
provisions of this Article 5 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment of monies to or by the Trustee
in respect of the Securities pursuant to the provisions of this Article 5,
unless and until a Trust Officer of the Trustee shall have received written
notice thereof at the Corporate Trust Office from the Company (in the form of
an Officers' Certificate) or a Representative or a Holder or Holders of Senior
Indebtedness or from any trustee thereof; and

                                      41
<PAGE>   47

before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 9.1, shall be entitled in all respects to assume that no
such facts exist; provided that if on a date not fewer than one Business Day
prior to the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the payment of the
principal of, or premium, if any, or interest on any Security) the Trustee
shall not have received, with respect to such monies, the notice provided for
in this Section 5.5, then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received
by it on or after such prior date. Notwithstanding anything in this Article 5
to the contrary, nothing shall prevent any payment by the Trustee to the
Holders of monies deposited with it pursuant to Article 10, and any such
payment shall not be subject to the provisions of Article 5.

        The Trustee, subject to the provisions of Section 9.1, shall be
entitled to rely on the delivery to it of a written notice by a Representative
or a person representing himself to be a holder of Senior Indebtedness (or a
trustee on behalf of such holder) to establish that such notice has been given
by a Representative or a holder of Senior Indebtedness or a trustee on behalf
of any such holder or holders. In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any
person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 5, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article 5, and
if such evidence is not furnished the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to
receive such payment.

        SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.

        The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article 5 in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in Section 9.11 or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.

        With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 5, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness and, subject to
the provisions of Section 9.1, the Trustee shall not be liable to any holder
of Senior Indebtedness if it shall pay over or deliver to Holders of
Securities, the Company or any other person money or assets to which any
holder of Senior Indebtedness shall be entitled by virtue of this Article 5 or
otherwise.

        SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION.

        No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.

                                      42
<PAGE>   48

        SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT.

        For the purposes of this Article 5 only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
4 or in connection with a Make-Whole Payment in accordance with Section 3.1 or
a Bonus Payment in accordance with Section 4.1(b) shall not be deemed to
constitute a payment or distribution on account of the principal of (or
premium, if any) or interest on Securities or on account of the purchase or
other acquisition of Securities, and (2) the payment, issuance or delivery of
cash (except in satisfaction of fractional shares pursuant to Section 3.1,
4.1(b) or 4.3), property or securities (other than junior securities) upon
conversion of a Security or in connection with a Make-whole payment in
accordance with Section 3.1 or a Bonus Payment in accordance with 4.1(b) shall
be deemed to constitute payment on account of the principal of such Security.
For the purposes of this Section 5.8, the term "junior securities" means (a)
shares of any stock of any class of the Company, or (b) securities of the
Company which are subordinated in right of payment to all Senior Indebtedness
which may be outstanding at the time of issuance or delivery of such
securities to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. Nothing
contained in this Article 5 or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders, the right, which is
absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article 4.

        SECTION 5.9. ARTICLE APPLICABLE TO PAYING AGENTS.

        If at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in
this Article in addition to or in place of the Trustee; provided, however,
that the first paragraph of Section 5.5 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.

        SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY.

        The holders of Senior Indebtedness (including, without limitation,
Designated Senior Indebtedness) shall have the right to rely upon this Article
5, and no amendment or modification of the provisions contained herein shall
diminish the rights of such holders unless such holders shall have agreed in
writing thereto.

                                  ARTICLE 6
                                  COVENANTS

        SECTION 6.1. PAYMENT OF SECURITIES.

        The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal (and premium, if any, including any
Bonus Payment or Make-Whole Payment) or interest or Additional Interest, if
any, shall be considered paid on the date it is due if the Paying Agent (other
than the Company) holds by 11:00 a.m., New York City time, on that date money,
deposited by the Company or an Affiliate thereof, sufficient to pay the
installment. The Company shall, to the fullest extent permitted by law, pay
interest on overdue principal (including premium, if any) and overdue
installments of interest at the rate borne by the Securities per annum.

                                      43
<PAGE>   49

        Payment of the principal of (and premium, if any) and any interest on
the Securities shall be made at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City of New York (which
shall initially be State Street Bank and Trust Company, N.A., an Affiliate of
the Trustee, as agent of the Trustee) or at the Corporate Trust Office of the
Trustee in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company, payment of interest may
be made by check mailed to the address of the Person entitled thereto as such
address appears in the Register; provided further that a Holder with an
aggregate principal amount of $2,000,000 or more may be paid by wire transfer
in immediately available funds at the election of such Holder.

        SECTION 6.2. SEC REPORTS.

        The Company shall file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act, and within 15 days after it files them with the SEC, the
Company shall deliver copies of all such reports, information and other
documents to the Trustee.

        Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

        SECTION 6.3. COMPLIANCE CERTIFICATES.

        The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company (beginning with the fiscal year ending
December 31, 2000), an Officers' Certificate as to the signer's knowledge of
the Company's compliance with all conditions and covenants on its part
contained in this Indenture and stating whether or not the signer knows of any
default or Event of Default. If such signer knows of such a default or Event
of Default, the Officers' Certificate shall describe the default or Event of
Default and the Company's efforts to remedy the same. For the purposes of this
Section 6.3, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.

        SECTION 6.4. FURTHER INSTRUMENTS AND ACTS.

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

        SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE.

        Subject to Article 7, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.

        SECTION 6.6. RULE 144A INFORMATION REQUIREMENT.

        Within the period prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), the Company covenants and agrees that it shall, during
any period in which it is not subject to Section 13 or 15(d) under the
Exchange Act, make

                                      44
<PAGE>   50

available to any Holder or beneficial holder of Securities or any Common Stock
issued upon conversion thereof which continue to be Restricted Securities in
connection with any sale thereof and any prospective purchaser of Securities
or such Common Stock designated by such Holder or beneficial holder, the
information required pursuant to Rule 144A(d)(4) under the Securities Act upon
the request of any Holder or beneficial holder of the Securities or such
Common Stock and it will take such further action as any Holder or beneficial
holder of such Securities or such Common Stock may reasonably request, all to
the extent required from time to time to enable such Holder or beneficial
holder to sell its Securities or Common Stock without registration under the
Securities Act within the limitation of the exemption provided by Rule 144A,
as such Rule may be amended from time to time. Upon the request of any Holder
or any beneficial holder of the Securities or such Common Stock, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.

        SECTION 6.7. STAY, EXTENSION AND USURY LAWS.

        The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest (including Additional
Interest, Bonus Payment and Make-Whole Payment, if any) on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

        SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST.

        If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable and (ii) the date on which such Additional Interest is
payable. Unless and until a Trust Officer of the Trustee receives such a
certificate, the Trustee may assume without inquiry that no such Additional
Interest is payable. If the Company has paid Additional Interest directly to
the Persons entitled to it, the Company shall deliver to the Trustee a
certificate setting forth at the particulars of such payment.

        SECTION 6.9. DELIVERY OF CERTAIN INFORMATION.

        Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall prepare
the annual and quarterly reports which the Company would have been required to
file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto (including, until such time as the Company is
required to file reports with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act, the condensed, combining financial data in the form
and scope set forth in the condensed, consolidated financial statements
described above) on or prior to the respective dates (the "Required Filing
Dates") by which the Company would have been required so to file such
documents. The Company shall also in any event within 15 days of each Required
Filing Date (i) unless the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, transmit by mail to all Holders, as their names and addresses
appear in the Register, without cost to such Holders, and (ii) deliver to the
Trustee, copies of such annual and quarterly reports.

                                      45
<PAGE>   51

                                  ARTICLE 7
              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

        SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.

        The Company shall not consolidate with or merge into any other Person
(in a transaction in which the Company is not the surviving corporation) or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless:

               (1)    in case the Company shall consolidate with or merge into
another Person (in a transaction in which the Company is not the surviving
corporation) or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation, limited liability
company, partnership or trust, shall be organized and validly existing under
the laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the principal of and any premium and interest
on all the Securities and the performance or observance of every covenant of
this Indenture on the part of the Company to be performed or observed and the
conversion rights shall be provided for in accordance with Article 4, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by the Person (if other than the Company) formed by
such consolidation or into which the Company shall have been merged or by the
Person which shall have acquired the Company's assets;

               (2)    immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing; and

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

        SECTION 7.2. SUCCESSOR SUBSTITUTED.

        Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 7.1, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.

                                      46
<PAGE>   52
                                  ARTICLE 8
                             DEFAULT AND REMEDIES

        SECTION 8.1. EVENTS OF DEFAULT.

        An "Event of Default" shall occur if:

               (1)    the Company defaults in the payment of any interest (or
Additional Interest, if any, payable to all holders of Registrable Securities
(as defined in the Registration Rights Agreement)) on any Security when the
same becomes due and payable and the default continues for a period of 30
days, whether or not such payment shall be prohibited by the provisions of
Article 5 hereof;

               (2)    the Company defaults in the payment of any principal of
(including, without limitation, any premium, if any, on (including any Bonus
Payment and Make-Whole Payment) any Security when the same becomes due and
payable (whether at maturity, upon redemption, on a Change of Control Purchase
Date or otherwise), whether or not such payment shall be prohibited by the
provisions of Article 5 hereof;

               (3)    the Company fails to comply with any of its other
agreements contained in the Securities or this Indenture and the default
continues for the period and after the notice specified below;

               (4)    the Company pursuant to or within the meaning of any
Bankruptcy Law:

                      (A)    commences a voluntary case or proceeding;

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

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

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

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

                      (A)    is for relief against the Company in an
                             involuntary case or proceeding;

                      (B)    appoints a Custodian of the Company or for all or
                             substantially all of the property of the Company;
                             or

                      (C)    orders the liquidation of the Company;

and in each case the order or decree remains unstayed and in effect for 60
days.

        The term "Bankruptcy Law" means Title 11 of the United States Code (or
any successor thereto) or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.

                                      47
<PAGE>   53

        A default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities then outstanding notify the Company and the
Trustee, of the default, and the Company does not cure the default within 60
days after receipt of such notice. The notice given pursuant to this Section
8.1 must specify the default, demand that it be remedied and state that the
notice is a "Notice of Default." When any default under this Section 8.1 is
cured, it ceases.

        The Trustee shall not be charged with knowledge of any Event of
Default unless written notice thereof shall have been given to a Trust Officer
at the Corporate Trust Office of the Trustee by the Company, a Paying Agent,
any Holder or any agent of any Holder.

        SECTION 8.2. ACCELERATION.

        If an Event of Default (other than an Event of Default specified in
clause (4) or (5) of Section 8.1) occurs and is continuing, the Trustee may,
by notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities then outstanding may, by notice to the
Company and the Trustee, declare all unpaid principal to the date of
acceleration equal to the Acceleration Amount on the Securities then
outstanding (if not then due and payable) to be due and payable upon any such
declaration, and the same shall become and be immediately due and payable. If
an Event of Default specified in clause (4) or (5) of Section 8.1 occurs, all
unpaid principal of the Securities then outstanding shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.

        The amount that shall come due following the acceleration of a
Security shall be the Acceleration Amount. The "Acceleration Amount" shall be
(i) following a Complying Public Equity Offering, equal to 100% of the
principal amount thereof plus accrued and unpaid interest and premium, if any,
to, but excluding, the Acceleration Date; and (ii) at all other times, an
amount calculated by the Company to provide, when taken together with all
prior interest payments, a 15% compounded annual yield, to but excluding, the
acceleration date calculated on an approximate bond basis as follows:

                              [EQUATION]

Where: "AA" is the Acceleration Amount; "P" is the amount of the principal
outstanding; "n" is the number of interest payment dates elapsed since the
Issue Date, "t" is the interest payment date number; "It" is the interest paid
on the "t"th interest payment date; "(DELTA)c" is the total number days
between the Issue Date and the date the Securities are accelerated; and
"(DELTA)it" is the total number of days between the "t"th interest payment
date and the date the Securities are accelerated.

        Whenever in this Indenture there is a reference, in any context, to
the principal of any Security as of any time, such reference shall be deemed
to include reference to the Acceleration Amount payable in respect of such
Security to the extent that such Acceleration Amount is, was or would be so
payable at such time, and express mention of the Acceleration Amount in any
provision of this Indenture shall not be construed as excluding the
Acceleration Amount in those provisions of this Indenture when such express
mention is not made.

                                      48
<PAGE>   54

        The Holders of a majority in aggregate principal amount of the
Securities then outstanding by notice to the Trustee and the Company may
rescind an acceleration and its consequences if (a) all existing Events of
Default, other than the nonpayment of the principal of the Securities which
has become due solely by such declaration of acceleration, have been cured or
waived; (b) to the extent the payment of such interest is lawful, interest
(calculated at the rate per annum borne by the Securities) on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid; (c) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and (d) all payments due to the Trustee and any predecessor
Trustee under Section 9.7 have been made. No such rescission shall affect any
subsequent default or impair any right consequent thereto.

        SECTION 8.3. OTHER REMEDIES.

        If an Event of Default occurs and is continuing, the Trustee may, but
shall not be obligated to, pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.

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

        SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.

        Subject to Sections 8.7 and 11.2, the Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee
may waive an existing default or Event of Default and its consequence, except
a default or Event of Default in the payment of the principal of or premium,
if any, or Bonus Payment and Make-Whole Payment, if any, on, or interest on
any Security, a failure by the Company to convert any Securities into Common
Stock or any default or Event of Default in respect of any provision of this
Indenture or the Securities which, under Section 11.2, cannot be modified or
amended without the consent of the Holder of each Security affected. When a
default or Event of Default is waived, it is cured and ceases.

        SECTION 8.5. CONTROL BY MAJORITY.

        The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of another Holder or the Trustee, or that may
involve the Trustee in personal liability unless the Trustee is offered
indemnity satisfactory to it; provided, however, that the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.

        SECTION 8.6. LIMITATIONS ON SUITS.

        A Holder may not pursue any remedy with respect to this Indenture or
the Securities (except actions for payment of overdue principal, premium or
interest or for the conversion of the Securities pursuant to Article 4)
unless:

               (1)    the Holder gives to the Trustee written notice of a
continuing Event of Default;

                                      49
<PAGE>   55

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

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

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

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

        A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.

        SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.

        Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of the principal of or any
premium, if any, or interest on the Security, on or after the respective due
dates expressed in the Security and this Indenture, to convert such Security
in accordance with Article 4 and to bring suit for the enforcement of any such
payment on or after such respective dates or the right to convert, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.

        SECTION 8.8. COLLECTION SUIT BY TRUSTEE.

        If an Event of Default in the payment of principal, premium, if any,
or interest specified in clause (1) or (2) of Section 8.1 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or another obligor on the Securities for
the whole amount of principal, premium, if any, and accrued interest remaining
unpaid, together with, to the extent that payment of such interest is lawful,
interest on overdue principal and on overdue installments of interest, in each
case at the rate per annum borne by the Securities and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.

        SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM.

        The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor on the Securities), its creditors or its property and shall be
entitled and empowered to collect and receive any money or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 9.7, and to the extent that such
payment of the reasonable compensation, expenses, disbursements and advances
in any such proceedings shall be denied for any reason, payment of the same
shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other property which the
Holders may be entitled to receive in

                                      50
<PAGE>   56

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

        SECTION 8.10. PRIORITIES.

        If the Trustee collects any money pursuant to this Article 8, it shall
pay out the money in the following order:

        First, to the Trustee for amounts due under Section 9.7;

        Second, to the holders of Senior Indebtedness to the extent required
by Article 5;

        Third, to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal,
premium, if any, (including Bonus Payment and Make-Whole Payment, if any) and
interest, respectively; and

        Fourth, to the Company.

        The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 8.10.

        SECTION 8.11. UNDERTAKING FOR COSTS.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section 8.11 does not apply to a suit made by the
Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holders of
more than 10% in principal amount of the Securities then outstanding.

                                  ARTICLE 9
                                   TRUSTEE

        SECTION 9.1. DUTIES OF TRUSTEE.

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

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

               (1)    the Trustee need perform only those duties as are
specifically set forth in this Indenture and no others; and

                                      51
<PAGE>   57

               (2)    in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine any certificates and opinions which by any provision
hereof are specifically required to be delivered to the Trustee to determine
whether or not they conform to the requirements of this Indenture.

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

               (1)    this paragraph does not limit the effect of subsection
(b) of this Section 9.1;

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

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

        (d)    No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers unless the Trustee shall have received adequate indemnity in
its reasonable opinion against potential costs and liabilities incurred by it
relating thereto.

        (e)    Every provision of this Indenture that in any way relates to
the Trustee is subject to subsections (a), (b), (c) and (d) of this Section
9.1.

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

        SECTION 9.2. RIGHTS OF TRUSTEE.

        Subject to Section 9.1:

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

        (b)    Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 12.4(b). The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Certificate or Opinion.

        (c)    The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.

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

        (e)    The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection in respect of any such

                                      52
<PAGE>   58

action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.

        (f)    The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.

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

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

        (i)    The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.

        SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE.

        The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 9.10 and 9.11.

        SECTION 9.4. TRUSTEE'S DISCLAIMER.

        The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities. The Trustee shall not be accountable for the
Company's use of the proceeds from the Securities, nor shall it be responsible
for any statement in the Securities other than its certificate of
authentication.

        SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT.

        If a default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice
of the default or Event of Default within 90 days after it occurs. However,
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interests
of Securityholders, except in the case of a default or an Event of Default in
payment of the principal of or interest on any Security.

        SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS.

                                      53

<PAGE>   59

        If such report is required by TIA Section 313 if the TIA were
applicable, within 60 days after each May 15, beginning with the May 15
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b)(2) and
(c).

        A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed. The Company shall notify the
Trustee whenever the Securities become listed on any stock exchange or listed
or admitted to trading on any quotation system and any changes in the stock
exchanges or quotation systems on which the Securities are listed or admitted
to trading and of any delisting thereof.

        SECTION 9.7. COMPENSATION AND INDEMNITY.

        The Company shall pay to the Trustee from time to time such
compensation (as agreed to from time to time by the Company and the Trustee in
writing) for its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses may include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.

        The Company shall indemnify the Trustee or any predecessor Trustee
(which for purposes of this Section 9.7 shall include its officers, directors,
employees and agents) for, and hold it harmless against, any and all loss,
liability or expense including taxes (other than taxes based upon, measured by
or determined by the income of the Trustee), (including reasonable legal fees
and expenses) incurred by it in connection with the acceptance or
administration of its duties under this Indenture or any action or failure to
act as authorized or within the discretion or rights or powers conferred upon
the Trustee hereunder including the reasonable costs and expenses of the
Trustee and its counsel in defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Company need not pay
for any settlement without its written consent, which shall not be
unreasonably withheld.

        The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it resulting from the
Trustee's gross negligence or bad faith.

        To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim, to which the Securities are hereby made
subordinate, on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the principal of and interest on
the Securities. The obligations of the Company under this Section 9.7 shall
survive the satisfaction and discharge of this Indenture or the resignation or
removal of the Trustee.

        When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (4) or (5) of Section 8.1 occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law. The provisions of this Section shall
survive the termination of this Indenture.

        SECTION 9.8. REPLACEMENT OF TRUSTEE.

                                      54

<PAGE>   60

        The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and the Company and may, with the
Company's written consent, appoint a successor Trustee. The Company may remove
the Trustee if:

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

               (2)    the Trustee is adjudged a bankrupt or an insolvent;

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

               (4)    the Trustee becomes incapable of acting.

        If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. The resignation or removal of a Trustee shall not be
effective until a successor Trustee shall have delivered the written
acceptance of its appointment as described below.

        If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a
successor Trustee at the expense of the Company.

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

        A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee and be released from its obligations (exclusive of
any liabilities that the retiring Trustee may have incurred while acting as
Trustee) hereunder, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.

        A retiring Trustee shall not be liable for the acts or omissions of
any successor Trustee after its succession.

        Notwithstanding replacement of the Trustee pursuant to this Section
9.8, the Company's obligations under Section 9.7 shall continue for the
benefit of the retiring Trustee.

        SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC.

        If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets (including
the administration of this Indenture) to, another corporation, the resulting,
surviving or transferee corporation, without any further act, shall be the
successor Trustee, provided such transferee corporation shall qualify and be
eligible under Section 9.10. Such successor Trustee shall promptly mail notice
of its succession to the Company and each Holder.

        SECTION 9.10. ELIGIBILITY; DISQUALIFICATION.

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<PAGE>   61

        The Trustee shall always satisfy the requirements of paragraphs (1),
(2) and (5) of TIA Section 310(a). The Trustee (or its parent holding company)
shall have a combined capital and surplus of at least $50,000,000. If at any
time the Trustee shall cease to satisfy any such requirements, it shall resign
immediately in the manner and with the effect specified in this Article 9. The
Trustee shall be subject to the provisions of TIA Section 310(b). Nothing
herein shall prevent the Trustee from filing with the SEC the application
referred to in the penultimate paragraph of TIA Section 310(b).

        SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

                                  ARTICLE 10
          SATISFACTION AND DISCHARGE OF INDENTURE

        SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE.

        This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when

        (1)    either

               (A)    all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.7 and (ii) Securities for
whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company as provided in Section 10.3) have been delivered to the
Trustee for cancellation; or

               (B)    all such Securities not theretofore delivered to the
Trustee for cancellation

                         (i) have become due and payable, or

                        (ii) will become due and payable at the Final Maturity
Date within one year, or

                       (iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of clause (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the Trustee
or a Paying Agent (other than the Company or any of its Affiliates) as trust
funds in trust for the purpose cash in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal and interest to the date of
such deposit (in the case of Securities which have become due and payable) or
to the Final Maturity Date or Redemption Date, as the case may be;

                                      56
<PAGE>   62

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

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

        Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 9.7 shall survive and,
if money shall have been deposited with the Trustee pursuant to subclause (B)
of clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6,
2.7, 2.12, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13 and 12.5, Article 4, the last
paragraph of Section 6.2 and this Article 10, shall survive until the
Securities have been paid in full.

        SECTION 10.2. APPLICATION OF TRUST MONEY.

        Subject to the provisions of Section 10.3, the Trustee or a Paying
Agent shall hold in trust, for the benefit of the Holders, all money deposited
with it pursuant to Section 10.1 and shall apply the deposited money in
accordance with this Indenture and the Securities to the payment of the
principal of and interest on the Securities. Money so held in trust shall not
be subject to the subordination provisions of Article 5.

        SECTION 10.3. REPAYMENT TO COMPANY.

        The Trustee and each Paying Agent shall promptly pay to the Company
upon request any excess money (i) deposited with them pursuant to Section 10.1
and (ii) held by them at any time.

        The Trustee and each Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after a right to such money has matured;
provided, however, that the Trustee or such Paying Agent, before being
required to make any such payment, may at the expense of the Company cause to
be mailed to each Holder entitled to such money notice that such money remains
unclaimed and that after a date specified therein, which shall be at least 30
days from the date of such mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company, Holders
entitled to money must look to the Company for payment as general creditors.

        SECTION 10.4. REINSTATEMENT.

        If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 10.2 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.1 until
such time as the Trustee or such Paying Agent is permitted to apply all such
money in accordance with Section 10.2; provided, however, that if the Company
has made any payment of the principal of or interest on any Securities because
of the reinstatement of its obligations, the Company shall be subrogated to
the rights of the Holders of such Securities to receive any such payment from
the money held by the Trustee or such Paying Agent.

                                      57
<PAGE>   63

                                  ARTICLE 11
                     AMENDMENTS, SUPPLEMENTS AND WAIVERS

        SECTION 11.1. WITHOUT CONSENT OF HOLDERS.

        The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Securityholder: (a) to comply
with Sections 4.11 and 7.1;

        (b)    to cure any ambiguity, defect or inconsistency;

        (c)    to make any other change that does not adversely effect the
rights of any Securityholder;

        (d)    to comply with the provisions of the TIA; or

        (e)    to appoint a successor Trustee.

        SECTION 11.2. WITH CONSENT OF HOLDERS.

        The Company and the Trustee may amend or supplement this Indenture or
the Securities with the written consent of the Holders of at least a majority
in aggregate principal amount of the Securities then outstanding. The Holders
of at least a majority in aggregate principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to Section
11.4, without the written consent of each Securityholder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section 8.4,
may not:

        (a)    change the stated maturity of the principal of, or interest on,
any Security;

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

        (c)    reduce the amount of principal payable upon acceleration of the
maturity of any Security;

        (d)    change in a manner adverse to Holders of Securities the
Company's obligation to purchase any Security upon a Change in Control;

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

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

        (g)    change in a manner adverse to Holders of Securities the
Company's obligation to purchase any Security pursuant to Article 13;

        (h)    modify the subordination provisions of Article 5 in a manner
materially adverse to the Holders of Securities;

                                      58

<PAGE>   64

        (i)    adversely affect the right of Holders to convert Securities (or
the terms upon which the Holders may do so) other than as provided in or under
Section 4 of this Indenture;

        (j)    reduce the percentage of the aggregate principal amount of the
outstanding Securities whose Holders must consent to a modification or
amendment;

        (k)    reduce the percentage of the aggregate principal amount of the
outstanding Securities necessary for the waiver of compliance with certain
provisions of this Indenture or the waiver of certain defaults under this
Indenture; and

        (l)    modify any of the provisions of this Section or Section 8.4,
except to increase any such percentage or to provide that certain provisions
of this Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Security affected thereby.

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

        After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver. An amendment or supplement under this Section 11.2 or under Section
11.1 may not make any change that adversely affects the rights under Article 5
of any holder of an issue of Senior Indebtedness unless the holders of that
issue, pursuant to its terms, consent to the change.

        SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT.

        Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as in effect at the date of such amendment or
supplement.

        SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS.

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

        After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of
clauses (a) through (l) of Section 11.2. In that case the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to
it and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security.

        SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES.

                                      59

<PAGE>   65

        If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.

        SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC.

        The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 11 if the amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, in its sole
discretion, but need not sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and, subject to Section 9.1, shall be fully protected in relying upon, an
Opinion of Counsel stating that such amendment or supplemental indenture is
authorized or permitted by this Indenture. The Company may not sign an
amendment or supplement indenture until the Board of Directors approves it.

                                  ARTICLE 12
                                MISCELLANEOUS

        SECTION 12.1. TRUST INDENTURE ACT CONTROLS.

        If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the TIA
through operation of Section 318(c) thereof, such imposed duties shall
control.

        SECTION 12.2. NOTICES.

        Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed
as follows: If to the Company:

               Cyras Systems, Inc.
               47100 Bayside Parkway
               Fremont, California 94538
               Attention:  General Counsel

               If to the Trustee:
               State Street Bank and Trust Company of California, N.A.
               633 West 5th Street
               12th Floor
               Los Angeles, California, 90071
               Attention:  Corporate Trust Department (Cyras Systems, Inc. -
               4 1/2% Convertible Subordinated Notes due August 15, 2005)

        Such notices or communications shall be effective when received.

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

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<PAGE>   66

        Any notice or communication mailed to a Securityholder shall be mailed
by first-class mail to it at its address shown on the register kept by the
Primary Registrar.

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

        SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.

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

        SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

        (a)    Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee at the request of the Trustee:

               (1)    an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent (including any covenants, compliance
with which constitutes a condition precedent), if any, provided for in this
Indenture relating to the proposed action have been complied with; and

               (2)    an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent (including any covenants,
compliance with which constitutes a condition precedent) have been complied
with.

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

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

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

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

               (4)    a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with; provided, however,
that with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.

        SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.

        The Company (or, in the event deposits have been made pursuant to
Section 10.1, the Trustee) may set a record date for purposes of determining
the identity of Holders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture, which record date shall
not be more than

                                      61
<PAGE>   67

thirty (30) days prior to the date of the commencement of solicitation of such
action. Notwithstanding the provisions of Section 11.4, if a record date is
fixed, those persons who were Holders of Securities at the close of business
on such record date (or their duly designated proxies), and only those
persons, shall be entitled to take such action by vote or consent or to revoke
any vote or consent previously given, whether or not such persons continue to
be Holders after such record date.

        SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION
AGENT.

        The Trustee may make reasonable rules (not inconsistent with the terms
of this Indenture) for action by or at a meeting of Holders. Any Registrar,
Paying Agent or Conversion Agent may make reasonable rules for its functions.

        SECTION 12.7. LEGAL HOLIDAYS.

        A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York and the state in
which the Corporate Trust Office is located are not required to be open. If a
payment date is a Legal Holiday, payment shall be made on the nextsucceeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period. If a regular record date is a Legal Holiday, the record date shall not
be affected.

        SECTION 12.8. GOVERNING LAW.

        This Indenture and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
principles of conflicts of laws.

        SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

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

        SECTION 12.10. NO RECOURSE AGAINST OTHERS.

        All liability described in paragraph 19 of the Securities of any
director, officer, employee or shareholder, as such, of the Company is waived
and released.

        SECTION 12.11. SUCCESSORS.

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

        SECTION 12.12. MULTIPLE COUNTERPARTS.

        The parties may sign multiple counterparts of this Indenture.  Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.

        SECTION 12.13. SEPARABILITY.

                                      62
<PAGE>   68

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

        SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC.

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

                                  ARTICLE 13
             REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER
                    IF NO COMPLYING PUBLIC EQUITY OFFERING

        SECTION 13.1. RIGHT TO REQUIRE REPURCHASE.

        If a Complying Public Equity Offering has not occurred on or prior to
March 31, 2002 (the "Repurchase Trigger Date"), the Company shall be obligated
to make an offer to purchase (a "Repurchase Offer") all of the outstanding
Securities at 118.942 % of the principal balance thereof (the "Repurchase
Price"), on April 30, 2002 (the "Repurchase Date") or if such date is not a
Business Day, the next succeeding Business Day.

        Whenever in this Indenture there is a reference, in any context, to
the principal of any Security as of any time, such reference shall be deemed
to include reference to the Repurchase Price payable in respect of such
Security to the extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase Price in any
provision of this Indenture shall not be construed as excluding the Repurchase
Price in those provisions of this Indenture when such express mention is not
made.

         SECTION 13.2. NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.

        (a)    If a Complying Public Equity Offering has not occurred on or
prior to the Repurchase Trigger Date, unless all of the outstanding Securities
have been converted, on or prior to the Repurchase Date, the Company or the
Trustee, at the request of the Company, shall give to all Holders of
Securities, in the manner provided in Section 12.2, notice of the failure of
the Company to consummate a Complying Public Equity Offering and of the
repurchase right set forth herein arising as a result thereof. The Company
shall also deliver a copy of such notice of a repurchase right to the Trustee,
and the Trustee, if so requested by the Company, shall give such notice to the
Holders.

        Each notice of a repurchase right shall state:

               (1)    the Repurchase Date,

               (2)    the Repurchase Price,

               (3)    a description of the procedure which a Holder must
follow to exercise a repurchase right, and the place or places where such
Securities are to be surrendered for payment of the Repurchase Price,

                                      63
<PAGE>   69

               (4)    that on the Repurchase Date the Repurchase Price will
become due and payable upon each such Security designated by the Holder to be
repurchased, and that interest thereon shall cease to accrue on and after such
Repurchase Date.

        No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or
affect the validity of the proceedings for the repurchase of Securities.

        If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.

        (b)    To exercise a repurchase right, a Holder shall deliver to the
Trustee or any Paying Agent on or prior to the close of business on the
Business Day prior to the Repurchase Date (i) written notice of the Holder's
exercise of such right, which notice shall set forth the name of the Holder,
the principal amount of the Securities to be repurchased (and, if any Security
is to be repurchased in part, the serial number thereof, the portion of the
principal amount thereof to be repurchased and the name of the Person in which
the portion thereof to remain outstanding after such repurchase is to be
registered) and a statement that an election to exercise the repurchase right
is being made thereby, and (ii) the Securities with respect to which the
repurchase right is being exercised. Such written notice shall be irrevocable.

        (c)    In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall, on or prior to the
Repurchase Date, pay or cause to be paid to the Trustee or the Paying Agent
the Repurchase Price in cash, as provided above, for payment to the Holder on
the Repurchase Date payable with respect to the Securities as to which their
purchase right has been exercised; provided, however, that installments of
interest that mature prior to the Repurchase Date shall be payable in cash, in
the case of Securities, to the Holders of such Securities registered as such
at the close of business on the relevant regular record date.

        (d)    If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal of such Security
(or portion thereof, as the case may be) shall, until paid, bear interest to
the extent permitted by applicable law from the Repurchase Date at the rate of
4 1/2% per annum together with any Additional Interest that the Company may be
required to pay, and each Security shall remain convertible into Common Stock
until the principal of such Security (or portion thereof, as the case may be)
shall have been paid or duly provided for.

        (e)    Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory
to the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.

        (f)    All Securities delivered for repurchase shall be delivered to
the Trustee, the Paying Agent or any other agents (as shall be set forth in
the Company Notice) to be canceled by or at the direction of the Trustee,
which shall dispose of the same as provided in Section 2.11.

                                      64
<PAGE>   70

                                  ARTICLE 14
                             MEETINGS OF HOLDERS

        SECTION 14.1. PURPOSE OF MEETINGS.

        A meeting of Holders may be, but need not be, called at any time and
from time to time pursuant to the provisions of this Article 14 for any of the
following purposes:

             (1)   to give any notice to the Company or to the Trustee or to
give any directions to the Trustee permitted under this Indenture, or to
consent to the waiving of any default or Event of Default hereunder and its
consequences;

             (2)   to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article 9;

             (3)   to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or

             (4)   to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of the
Securities under any other provision of this Indenture or under applicable law.

        SECTION 14.2. CALL OF MEETINGS BY TRUSTEE.

        Except as provided in Section 14.3 the Trustee may, but shall be under
no obligation to, at any time call a meeting of Holders to take any action
specified in Section 14.1, to be held at such time and at such place as the
Trustee shall determine. Notice of every meeting of the Holders, setting forth
the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
shall be mailed to holder of Securities at their addresses as they shall
appear on the register. Such notice shall also be mailed to the Company. Such
notices shall be mailed not less than twenty (20) nor more than ninety (90)
days prior to the date fixed for the meeting.

        Any meeting of Holders shall be valid without notice if the holders of
all Securities then outstanding are present in person or by proxy or if notice
is waived before or after the meeting by the holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.

        SECTION 14.3. CALL OF MEETINGS BY COMPANY OR HOLDERS.

        In case at any time the Company, pursuant to a resolution of its Board
of Directors, or the holders of at least ten percent (10%) in aggregate
principal amount of the Securities then outstanding, shall have requested the
Trustee to call a meeting of Holders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within twenty (20)
days after receipt of such request, then the Company or such Holders may
determine the time and the place for such meeting and may call such meeting to
take any action authorized in Section 14.1 by mailing notice thereof as
provided in Section 14.2.

        SECTION 14.4. QUALIFICATIONS FOR VOTING.

                                      65
<PAGE>   71

        To be entitled to vote at any meeting of Holders a person shall (a) be
a holder of one or more Securities on the record date pertaining to such
meeting or (b) be a person appointed by an instrument in writing as proxy by a
holder of one or more Securities on the record date pertaining to such
meeting. The only persons who shall be entitled to be present or to speak at
any meeting of Holders shall be the persons entitled to vote at such meeting
and their counsel and any representatives of the Trustee and its counsel and
any representatives of the Company and its counsel.

        SECTION 14.5. REGULATIONS.

        Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting
of Holders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.

        The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or Holders as provided in Section 14.3, in which case the Company or
the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary
of the meeting shall be elected by vote of the holders of a majority in
principal amount of the Securities represented at the meeting and entitled to
vote at the meeting.

        At any meeting each Holder or proxyholder shall be entitled to one
vote for each $1, 000 principal amount of Securities held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting
in respect of any Security challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the proxy to vote
on behalf of other Holders. Any meeting of Holders duly called pursuant to the
provisions of Section 14.2 or 14.3 may be adjourned from time to time by the
holders of a majority of the aggregate principal amount of Securities
represented at the meeting, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.

        SECTION 14.6. VOTING.

        The vote upon any resolution submitted to any meeting of Holders shall
be by written ballot on which shall be subscribed the signatures of the
holders of Securities or of their representatives by proxy and the outstanding
principal amount of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Holders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 14.2 or 14.3. The record shall show the principal amount of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary
of the meeting and one of the duplicates shall be delivered to the Company and
the other to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting.

                                      66
<PAGE>   72

        Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

        SECTION 14.7. NO DELAY OF RIGHTS BY MEETING

        Nothing contained in this Article 14 shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Holders under any of the provisions of this
Indenture or of the Securities.

                            SIGNATURE PAGE FOLLOWS

                                      67
<PAGE>   73

        IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the date and year first above written.

                         CYRAS SYSTEMS, INC.

                         By:            /s/ SHEKHAR MANDAL
                              ---------------------------------------------
                         Name:   Shekhar Mandal
                         Title:  Vice President for Finance and Administration,
                         and Chief Financial Officer

                         STATE STREET BANK AND TRUST COMPANY
                         OF CALIFORNIA, N.A., AS TRUSTEE

                         By:            /s/ STEPHEN RIVERO
                              ---------------------------------------------
                         Name:   Stephen Rivero
                         Title:  Vice President

<PAGE>   74

                                    EXHIBIT A
                          [FORM OF FACE OF SECURITY]

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

        [THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.](2)

        THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144

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

    (1) This paragraph should be included only if the Security is a global
        Security.

    (2) This paragraph to be included only if the Security is a Transfer
        Restricted Security.

                                     A-1

<PAGE>   75

THEREUNDER (IF AVAILABLE) OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.](2)

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

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

    (2) This paragraph to be included only if the Security is a Transfer
        Restricted Security.

                                     A-2

<PAGE>   76

                             CYRAS SYSTEMS, INC.

CUSIP:                                                              R-______

          4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 15, 2005

        Cyras Systems, Inc., a California corporation (the "Company"), which
terms shall include any successor corporation under the Indenture referred to
on the reverse hereof), promises to pay to Cede & Co., or registered assigns,
the principal sum of _____________________________ Dollars ($__________) on
August 15, 2005 [or such greater or lesser amount as is indicated on the
Schedule of Exchanges of Notes on the other side of this Note].3

Interest Payment Dates: February 15 and August 15

Record Dates: February 1 and August 1

        This Note is convertible as specified on the other side of this Note.
Additional provisions of this Note are set forth on the other side of this
Note.

                            SIGNATURE PAGE FOLLOWS

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

    (3) This phrase should be included only if the Security is a global
        Security.

                                     A-3
<PAGE>   77

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

                                     CYRAS SYSTEMS, INC.

                                     By:
                                          -----------------------------------
                                     Name:
                                     Title:

Attest:

----------------------------------
Name:
Title:

Dated:

Trustee's Certificate of Authentication:  This is one of the
Securities referred to in the within-mentioned Indenture.

STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee

----------------------------------
Authorized Signatory

By:

<PAGE>   78

                      [FORM OF REVERSE SIDE OF SECURITY]

                             CYRAS SYSTEMS, INC.
          4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 15, 2005

1.      INTEREST

        Cyras Systems, Inc., a California corporation (the "Company", which
terms shall include any successor corporation under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Note at
the rate of 4 1/2% per annum. The Company shall pay interest semiannually on
February 15 and August 15 of each year, commencing February 15, 2001. Interest
on the Notes shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from August 18, 2000; provided,
however, that if there is not an existing default in the payment of interest
and if this Note is authenticated between a record date referred to on the
face hereof and the next succeeding interest payment date, interest shall
accrue from such interest payment date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Any reference herein to interest
accrued or payable as of any date shall include any Additional Interest
accrued or payable on such date as provided in the Registration Rights
Agreement.

2.      METHOD OF PAYMENT

        The Company shall pay interest on this Note (except defaulted
interest) to the person who is the Holder of this Note at the close of
business on February 1 or August 1, as the case may be, next preceding the
related interest payment date. The Holder must surrender this Note to a Paying
Agent to collect payment of principal. The Company will pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company may, however, pay
principal and interest in respect of any Certificated Security by check or
wire payable in such money; provided, however, that a Holder with an aggregate
principal amount of $2,000,000 or more may be paid by wire transfer in
immediately available funds at the election of such Holder. The Company may
mail an interest check to the Holder's registered address. Notwithstanding the
foregoing, so long as this Note is registered in the name of a Depositary or
its nominee, all payments hereon shall be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.

3.      PAYING AGENT, REGISTRAR AND CONVERSION AGENT

        Initially, State Street Bank and Trust Company of California, N.A.
(the "Trustee", which term shall include any successor trustee under the
Indenture hereinafter referred to) will act as Paying Agent, Registrar and
Conversion Agent. The Company may change any Paying Agent, Registrar or
Conversion Agent without notice to the Holder. The Company or any of its
Subsidiaries may, subject to certain limitations set forth in the Indenture,
act as Paying Agent or Registrar.

4.      INDENTURE, LIMITATIONS

        This Note is one of a duly authorized issue of Securities of the
Company designated as its 4 1/2% Convertible Subordinated Notes due August 15,
2005 (the "Notes"), issued under an Indenture dated as of August 18, 2000
(together with any supplemental indentures thereto, the "Indenture"), between
the Company and the Trustee. The terms of this Note include those stated in
the Indenture and those required by or made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended, as in effect on the date of

                                     A-5
<PAGE>   79

the Indenture. This Note is subject to all such terms, and the Holder of this
Note is referred to the Indenture and said Act for a statement of them.

        The Notes are subordinated unsecured obligations of the Company
limited to $150,000,000 aggregate principal amount, subject to Section 2.2 of
the Indenture. The Indenture does not limit other debt of the Company, secured
or unsecured, including Senior Indebtedness.

5.      OPTIONAL REDEMPTION

        The Notes may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time on or after the 95th day following a
Complying Public Equity Offering and prior to the second anniversary of a
Complying Public Equity Offering (a "Provisional Redemption"), at a Redemption
Price equal to $1,000 per $1,000 principal amount of the Securities plus
accrued and unpaid interest (including Additional Interest), if any, (such
amount, together with the Make-Whole Payment described below, the "Provisional
Redemption Price"), to, but excluding, the date of redemption (the
"Provisional Redemption Date") if (i) the Closing Price of the Company's
Common Stock has exceeded 150% of the Conversion Price then in effect for at
least 20 Trading Days in any period of 30 consecutive Trading Days ending on
the Trading Day prior to the date of mailing of the provisional notice of
redemption pursuant to Section 3.3 (the "Notice Date"), and (ii) a
registration statement covering resales of the Notes and Common Stock issuable
upon the conversion thereof is effective and available for use and is expected
to remain effective for the 30 days following the Provisional Redemption Date
unless registration is no longer required.

        Upon any such Provisional Redemption, the Company shall make an
additional payment (the "Make-Whole Payment") in cash or in Common Stock (as
determined in the Indenture), to holders of the Notes called for redemption,
including those Securities converted into Common Stock between the Notice Date
and the Provisional Redemption Date, in an amount equal to the interest per
$1,000 principal amount of a Note from the Issue Date to the second
anniversary of a Complying Public Equity Offering, less the amount of any
interest actually paid on the Notes, and interest accrued and unpaid that will
be paid in respect of the Notes, before the Provisional Redemption Date.

        At any time on or after the second anniversary of a Complying Public
Equity Offering, the Notes are subject to redemption at the option of the
Company upon not less than 20 days' nor more than 60 days' notice by mail, as
a whole or from time to time in part. The redemption prices (expressed as
percentages of the principal amount) shall be as set forth below for Notes
redeemed during the following periods beginning August 15 described below:

<TABLE>
<CAPTION>
Period                                             Redemption Price
---------------------------------------------      ----------------
<S>                                               <C>
2002.........................................             102.250%
2003.........................................             101.125
</TABLE>

and 100% of the principal amount on August 15, 2004, and at all times
thereafter, together, in the case of any such redemption, with accrued
interest to, but excluding, the Redemption Date (subject to the right of
holders of record on the regular record date to receive interest on the
related interest payment date). Any redemption of Notes must be in integral
multiples of $1,000.

        If fewer than all of the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed in principal amounts at maturity of $1,000 or
integral multiples thereof by lot, pro rata or by another method the Trustee
considers fair and appropriate. If a portion of a Holder's Notes is selected
for partial redemption and

                                     A-6
<PAGE>   80

that holder converts a portion of those Notes prior to the redemption, the
converted portion shall be deemed, solely for purposes of determining the
aggregate principal amount of the Notes to be redeemed by the Company, to be
of the portion selected for redemption.

6.      NOTICE OF REDEMPTION

        Notice of redemption will be mailed by first-class mail at least 20
days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at its registered address. Notes in denominations larger
than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On
and after the Redemption Date, subject to the deposit with the Paying Agent of
funds sufficient to pay the Redemption Price, interest shall cease to accrue
on Notes or portions of them called for redemption.

7.      PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL

        At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is
$1,000 or an integral multiple of $1,000 in excess thereof) of the Notes held
by such Holder on the date that is 30 Business Days after the occurrence of a
Change in Control in an amount equal to the Change in Control Purchase Price
(as defined in the Indenture). The Holder shall have the right to withdraw any
Change in Control Purchase Notice (in whole or in a portion thereof that is
$1,000 or an integral multiple of $1,000 in excess thereof) at any time prior
to the close of business on the Business Day next preceding the Change in
Control Purchase Date by delivering a written notice of withdrawal to the
Paying Agent in accordance with the terms of the Indenture.

8.      CONVERSION

        Except as set forth in the Indenture, the Notes will not be
convertible prior to the 90th day following a Complying Public Equity
Offering. On or after the 90th day following a Complying Public Equity
Offering, a Holder of a Note may convert the principal amount of such Note (or
any portion thereof equal to $1,000 or any integral multiple of $1,000 in
excess thereof) into shares of Common Stock at any time prior to maturity;
provided, however, that if the Note is called for redemption or subject to
purchase upon a Change in Control, the conversion right will terminate at the
close of business on the Business Day immediately preceding the Redemption
Date or the Change in Control Purchase Date, as the case may be, for such Note
or such earlier date as the Holder presents such Note for redemption or
purchase (unless the Company shall default in making the redemption payment or
Change in Control Purchase Price, as the case may be, when due, in which case
the conversion right shall terminate at the close of business on the date such
default is cured and such Note is redeemed or purchased).

        The initial Conversion Price per share will be determined as follows,
subject to adjustment under certain circumstances as set forth in Section 4.6 of
the Indenture.

               (i)    if the average of the Closing Prices for the Company's
Common Stock during the 20 Trading Day period commencing on the first Trading
Day following a Complying Public Equity Offering is less than or equal to 200%
of the Initial Public Offering Price, the Conversion Price will equal 110% of
the Initial Public Offering Price;

               (ii)   if the average of the Closing Prices for the Company's
Common Stock during the 20 Trading Day period commencing on the first Trading
Day following a Complying Public Equity

                                     A-7
<PAGE>   81

Offering is greater than 200% of the Initial Public Offering Price and less
than or equal to 300% of the Initial Public Offering Price, the Conversion
Price will equal 130% of the Initial Public Offering Price; and

        (iii) if the average of the Closing Prices for the Company's Common
Stock during the 20 Trading Day period commencing on the first Trading Day
following a Complying Public Equity Offering is greater than 300% of the Initial
Public Offering Price, the Conversion Price will equal 150% of the Initial
Public Offering Price.

        The number of shares of Common Stock issuable upon conversion of a
Note is determined by dividing the principal amount of the Note or portion
thereof converted by the Conversion Price in effect on the Conversion Date. No
fractional shares will be issued upon conversion; in lieu thereof, an amount
will be paid in cash in accordance with Section 4.3 of the Indenture.

        During the period beginning on the 90th day following a Complying
Public Equity Offering and prior to the second anniversary of a Complying
Public Equity Offering (the "Bonus Conversion Period"), any Holder that elects
to convert their Notes will be entitled to receive, along with the shares of
Common Stock otherwise issuable upon conversion, a payment ( the "Bonus
Payment") equal to the amount of accrued interest per $1,000 note from the
Issue Date of the Notes to the second anniversary date of a Complying Public
Equity Offering, less the amount of interest actually paid and interest
accrued and unpaid that will be paid in respect of the notes being converted
on the next interest payment date if the Conversion Date falls after a record
date for the payment of interest and prior to an interest payment date;
provided that the Bonus Payment will only be payable if:

        (i)    The Holder converts his other Notes on the fifth Trading Day of
a calendar month during the Bonus Conversion Period; and

        (ii)   The average of the Closing Prices of the Common Stock during
the last five Trading Days of the calendar month immediately preceding that
Conversion Date has exceeded the Initial Public Offering Price.

        The Company may elect to make the Bonus Payment in cash or shares of
Common Stock. Payments made in Common Stock will be valued at 95% of the
average of the Closing Prices of the Common Stock during the period referred
to in (ii) above. The Company will provide a notice to Holders of Securities
at least 15 days prior to the date that a Bonus Payment might become due in
the subsequent calendar month, stating whether the Bonus Payment, if payable,
would be in cash or Common Stock and stating that any Holder that elects to
convert their Notes on the fifth Trading Day of a calendar month during the
Bonus Conversion Period must provide the Company written notice of such
election to convert their Notes at least one Trading Day prior to the fifth
Trading Day.

        If a Bonus Payment is made upon the conversion of a Note, no
Make-Whole Payment will be made with respect to the conversion of such Note.

        To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to a Conversion
Agent, (b) surrender the Note to a Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or a Conversion
Agent, and (d) pay any transfer or similar tax, if required. Notes so
surrendered for conversion (in whole or in part) during the period from the
close of business on any regular record date to the opening of business on the
next succeeding interest payment date (excluding Notes converted in full on
the first Trading Day of any

                                     A-8
<PAGE>   82

month in the Bonus Conversion Period and Notes or portions thereof called for
redemption or subject to purchase upon a Change in Control on a Redemption
Date or Change in Control Purchase Date, as the case may be, during the period
beginning at the close of business on a regular record date and ending at the
opening of business on the first Business Day after the next succeeding
interest payment date, or if such interest payment date is not a Business Day,
the second such Business Day) shall also be accompanied by payment of an
amount equal to the interest payable on such interest payment date on the
principal amount of such Note then being converted, and such interest shall be
payable to such registered Holder notwithstanding the conversion of such Note,
subject to the provisions of this Indenture relating to the payment of
defaulted interest by the Company. If the Company defaults in the payment of
interest payable on such interest payment date, the Company shall promptly
repay such funds to such Holder. A Holder may convert a portion of a Note
equal to $1,000 or any integral multiple thereof.

        A Note in respect of which a Holder had delivered a Change in Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change in Control Purchase
Notice is withdrawn in accordance with the terms of the Indenture.

9.      CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION

        Any Notes called for redemption, unless surrendered for conversion
before the close of business on the Business Day immediately preceding the
Redemption Date, may be deemed to be purchased from the Holders of such Notes
at an amount not less than the Redemption Price by one or more investment
bankers or other purchasers who may agree with the Company to purchase such
Notes from the Holders, to convert them into Common Stock of the Company and
to make payment for such Notes to the Paying Agent in trust for such Holders.

10.     SUBORDINATION

        The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness of the Company. Any
Holder by accepting this Note agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect. In
addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of
any amendment, modification or waiver of any terms of any instrument relating
to the Senior Indebtedness or any extension or renewal of the Senior
Indebtedness.

11.     REPURCHASE OF NOTES AT THE OPTION OF A HOLDER IF A COMPLYING PUBLIC
EQUITY OFFERING HAS NOT OCCURRED ON OR BEFORE MARCH 31, 2002

        If a Complying Public Equity Offering has not occurred on or before
March 31, 2002, the Company will make an offer to the Holders to repurchase
the Notes at 118.942% of the principal balance thereof (the "Repurchase
Price") on April 30, 2002 (the "Repurchase Date"), or if such date is not a
Business Day, the next succeeding Business Day, in the manner and in
accordance with the provisions of Article 13 of the Indenture.

                                     A-9
<PAGE>   83

12.     DENOMINATIONS, TRANSFER, EXCHANGE

        The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer,
or exchange, of Notes in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed in relation thereto by law or permitted by the Indenture.

13.     PERSONS DEEMED OWNERS

        The Holder of a Note may be treated as the owner of it for all
purposes.

14.     UNCLAIMED MONEY

        If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its written request. After that, Holders entitled to money must
look to the Company for payment.

15.     AMENDMENT, SUPPLEMENT AND WAIVER

        Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and an existing default or
Event of Default and its consequence or compliance with any provision of the
Indenture or the Notes may be waived in a particular instance with the consent
of the Holders of a majority in principal amount of the Notes then
outstanding. Without the consent of or notice to any Holder, the Company and
the Trustee may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency or make any other change
that does not adversely affect the rights of any Holder.

16.     SUCCESSOR CORPORATION

        When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation will (except in
certain circumstances specified in the Indenture) be released from those
obligations.

17.     DEFAULTS AND REMEDIES

        Under the Indenture, an Event of Default includes: (i) default for 30
days in payment of any interest on any Notes; (ii) default in payment of any
principal (including, without limitation, any premium, if any) on the Notes
when due; (iii) failure by the Company for 60 days after notice to it to
comply with any of its other agreements contained in the Indenture or the
Notes; and (iv) certain events of bankruptcy, insolvency or reorganization of
the Company. If an Event of Default (other than as a result of certain events
of bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes then outstanding may declare all unpaid principal to the date of
acceleration on the Notes then outstanding to be due and payable immediately,
all as and to the extent provided in the Indenture. Any such declaration may
be rescinded by the Holders of a majority in aggregate principal amount of the
Notes then outstanding. If an Event of Default occurs as a result of certain
events of bankruptcy, insolvency or reorganization of the Company, unpaid
principal of the Notes then outstanding shall become due and payable
immediately without any declaration or other act on the part of the Trustee or
any Holder, all as and to the extent provided in the Indenture. Holders may
not enforce the Indenture or the

                                     A-10
<PAGE>   84

Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing default (except
a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of default.

18.     TRUSTEE DEALINGS WITH THE COMPANY

        State Street Bank and Trust Company of California, N.A., the Trustee
under the Indenture, in its individual or any other capacity, may make loans
to, accept deposits from and perform services for the Company or an Affiliate
of the Company, and may otherwise deal with the Company or an Affiliate of the
Company, as if it were not the Trustee.

19.     NO RECOURSE AGAINST OTHERS

        A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Notes or the Indenture nor for any claim based on, in respect of or by reason
of such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.

20.     AUTHENTICATION

        This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of
this Note.

21.     ABBREVIATIONS AND DEFINITIONS

        Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors
Act).

        All terms defined in the Indenture and used in this Note but not
specifically defined herein are defined in the Indenture and are used herein
as so defined.

22.     INDENTURE TO CONTROL; GOVERNING LAW

        In the case of any conflict between the provisions of this Note and
the Indenture, the provisions of the Indenture shall control. This Note shall
be governed by, and construed in accordance with, the laws of the State of New
York, without regard to principals of conflicts of law.

        The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture.  Requests may be made to: Cyras
Systems, Inc., 47100 Bayside Parkway, Fremont, California 94538, Attention:
General Counsel.

                                     A-11

<PAGE>   85

                               ASSIGNMENT FORM

        To assign this Note, fill in the form below:

        I or we assign and transfer this Note to

-------------------------------------------------------------------------------
                (Insert assignee's soc. sec. or tax I.D. no.)

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

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

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

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

and irrevocably appoint

-------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company.  The agent may
substitute another to act for him or her.

                                                   Your Signature:

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

*Signature guaranteed by:

By:
    ----------------------------------------

        *  The signature must be guaranteed by an institution which is a
           member of one of the following recognized signature guaranty
           programs: (i) the Securities Transfer Agent Medallion Program
           (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP);
           (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such
           other guaranty program acceptable to the Trustee.

                                     A-12
<PAGE>   86

                              CONVERSION NOTICE

        To convert this Note into Common Stock of the Company, check the box: []

        To convert only part of this Note, state the principal amount to be
converted (must be $1,000 or a multiple of $1,000): $____________.

        If you want the stock certificate made out in another person's name,
fill in the form below:

-------------------------------------------------------------------------------
                (Insert assignee's soc. sec. or tax I.D. no.)

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

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

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

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

                                                   Your Signature:

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

*Signature guaranteed by:

By:
      ---------------------------------------

        *  The signature must be guaranteed by an institution which is a
           member of one of the following recognized signature guaranty
           programs: (i) the Securities Transfer Agent Medallion Program
           (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP);
           (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such
           other guaranty program acceptable to the Trustee.

                                     A-13
<PAGE>   87

                          OPTION TO ELECT REPURCHASE
                           UPON A CHANGE OF CONTROL

To:     Cyras Systems, Inc.

        The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Cyras Systems, Inc. (the "Company") as
to the occurrence of a Change in Control with respect to the Company and
requests and instructs the Company to redeem the entire principal amount of
this Security, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Security at the Change in Control Purchase Price, together
with accrued interest to, but excluding, such date, to the registered Holder
hereof.

Dated:
       -----------                          ----------------------------------

                                            ----------------------------------
                                            Signature(s)

                                            Signature(s) must be guaranteed by
                                            a qualified guarantor institution
                                            with membership in an approved
                                            signature guarantee program
                                            pursuant to Rule 17Ad-15
                                            under the Securities Exchange Act
                                            of 1934.

                                            ----------------------------------
                                            Signature Guaranty

Principal amount to be redeemed
(in an integral multiple of $1,000, if less than all):

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

NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.

                                     A-14
<PAGE>   88

        ELECTION OF HOLDER TO REQUIRE REPURCHASE ON A REPURCHASE DATE

                   ELECTION OF HOLDER TO REQUIRE REPURCHASE

        1.     Pursuant to Article 13 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.

        2.     The undersigned hereby directs the Company to pay it or
_______________ the Repurchase Price on the Repurchase Date as provided in the
Indenture.

Dated:
       -----------------------------           -------------------------------

                                               -------------------------------
                                               Signature(s) must be guaranteed
                                               by a commercial bank or trust
                                               company or a member firm of a
                                               major stock exchange with
                                               membership in an approved
                                               signature guarantee medallion
                                               program pursuant to the
                                               Securities and Exchange
                                               Commission Rule 17Ad-15.

                                               -------------------------------
                                               Signature Guaranteed

Principal amount to be repurchased:
                                     --------------------

Remaining principal amount following such repurchase:
                                                      --------------

NOTICE: The signature to the foregoing Election must correspond to the name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.

                                     A-15

<PAGE>   89

                       SCHEDULE OF EXCHANGES OF NOTES(4)

        The following exchanges, redemptions, repurchases or conversions of a
part of this global Note have been made:

<TABLE>
<CAPTION>

      PRINCIPAL AMOUNT
    OF THIS GLOBAL NOTE            AUTHORIZED                                      AMOUNT OF
       FOLLOWING SUCH             SIGNATORY OF      AMOUNT OF DECREASE IN         INCREASE IN
       DECREASE DATE               SECURITIES          PRINCIPAL AMOUNT        PRINCIPAL AMOUNT
 OF EXCHANGE (OR INCREASE)         CUSTODIAN         OF THIS GLOBAL NOTE      OF THIS GLOBAL NOTE
--------------------------     -----------------    ----------------------   ---------------------
<S>                          <C>                  <C>                       <C>

</TABLE>

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

          (4) This certificate should only be included if this Security is a
Transfer Restricted Security.

                                     A-16
<PAGE>   90

          CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
                OF TRANSFER OF TRANSFER RESTRICTED SECURITIES(5)

Re:     4 1/2% Convertible Subordinated Notes due August 15, 2005 (the "Notes")
of Cyras Systems, Inc.

        This certificate relates to $_______ principal amount of Notes owned in
(check applicable box)

        [ ]    book-entry or   [ ] definitive form by ___________________ (the
"Transferor").

        The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.

        In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the
Indenture dated as of August 18, 2000 between Cyras Systems, Inc. and State
Street Bank and Trust Company of California, N.A. (the "Indenture"), and the
transfer of such Note is being made pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
(check applicable box) or the transfer or exchange, as the case may be, of
such Note does not require registration under the Securities Act because
(check applicable box):

        [ ]    Such Note is being transferred pursuant to an effective
               registration statement under the Securities Act.

        [ ]    Such Note is being acquired for the Transferor's own account,
               without transfer.

        [ ]    Such Note is being transferred to the Company or a Subsidiary
               (as defined in the Indenture) of the Company.

        [ ]    Such Note is being transferred to a person the Transferor
               reasonably believes is a "qualified institutional buyer" (as
               defined in Rule 144A or any successor provision thereto ("Rule
               144A") under the Securities Act) that is purchasing for its own
               account or for the account of a "qualified institutional
               buyer", in each case to whom notice has been given that the
               transfer is being made in reliance on such Rule 144A, and in
               each case in reliance on Rule 144A.

        [ ]    Such Note is being transferred pursuant to and in compliance
               with an exemption from the registration requirements under the
               Securities Act in accordance with Rule 144 (or any successor
               thereto) ("Rule 144") under the Securities Act.

        Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act (other than
an exemption referred to above) and as a result of which such

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

   (5) This schedule should be included only if the Security is a global
       Security.

                                     A-17
<PAGE>   91

Note will, upon such transfer, cease to be a "restricted security" within the
meaning of Rule 144 under the Securities Act.

        The Transferor acknowledges and agrees that, if the transferee will
hold any such Notes in the form of beneficial interests in a global Note which
is a "restricted security" within the meaning of Rule 144 under the Securities
Act, then such transfer can only be made pursuant to Rule 144A under the
Securities Act and such transferee must be a "qualified institutional buyer"
(as defined in Rule 144A).

Date:
       -------------------------------------       ----------------------------
                                                   (Insert Name of Transferor)

                                     A-18

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