Document:

Exhibit 4.2

 

 

 

NOVA BIOSOURCE FUELS, INC.,

 

THE GUARANTORS LISTED HEREIN,

 

NOVA HOLDING SENECA LLC,

 

AND

 

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

 

as Trustee

 

 

INDENTURE

 

Dated as of September 28,
2007

 

 

10% CONVERTIBLE SENIOR SECURED NOTES DUE 2012

 

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1.
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Other
  Definitions

  	
  23

  
	
  Section 1.03.

  	
  Incorporation
  by Reference of Trust Indenture Act

  	
  26

  
	
  Section 1.04.

  	
  Rules of
  Construction

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2.
  THE NOTES

  	
  27

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Title,
  Terms, Form and Dating

  	
  27

  
	
  Section 2.02.

  	
  Execution
  and Authentication

  	
  27

  
	
  Section 2.03.

  	
  Registrar,
  Paying Agent and Conversion Agent

  	
  28

  
	
  Section 2.04.

  	
  Paying
  Agent to Hold Money in Trust

  	
  28

  
	
  Section 2.05.

  	
  Holder
  Lists

  	
  28

  
	
  Section 2.06.

  	
  Transfer
  and Exchange

  	
  29

  
	
  Section 2.07.

  	
  Replacement
  Notes

  	
  30

  
	
  Section 2.08.

  	
  Outstanding
  Notes

  	
  30

  
	
  Section 2.09.

  	
  Treasury
  Notes

  	
  31

  
	
  Section 2.10.

  	
  Temporary
  Notes

  	
  31

  
	
  Section 2.11.

  	
  Cancellation

  	
  31

  
	
  Section 2.12.

  	
  Defaulted
  Interest

  	
  31

  
	
  Section 2.13.

  	
  Legend; Additional Transfer and Exchange Requirements

  	
  32

  
	
  Section 2.14.

  	
  CUSIP Numbers

  	
  33

  
	
  Section 2.15.

  	
  Book-Entry
  Provisions for Global Notes

  	
  33

  
	
  Section 2.16.

  	
  Transfers
  to QIBs

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3.
  REDEMPTION AND PREPAYMENT

  	
  35

  
	
   

  	
   

  
	
  Section 3.01.

  	
  Notices
  to Trustee

  	
  35

  
	
  Section 3.02.

  	
  Selection of Notes To Be Redeemed

  	
  35

  
	
  Section 3.03.

  	
  Notice
  of Redemption

  	
  36

  
	
  Section 3.04.

  	
  Effect of Notice of Redemption

  	
  37

  
	
  Section 3.05.

  	
  Deposit of Redemption Price

  	
  37

  
	
  Section 3.06.

  	
  Notes Redeemed in Part

  	
  37

  
	
  Section 3.07.

  	
  Optional Redemption by the Company

  	
  37

  

 

i

 

	
   

  	
   

  	
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  Section 3.08.

  	
  Offer
  to Purchase by Application of Excess Proceeds

  	
  38

  
	
  Section 3.09.

  	
  Offer
  to Repurchase Upon Election of Holder

  	
  40

  
	
  Section 3.10.

  	
  Failure
  of Company to Pay the Applicable Redemption Price

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4.
  CONVERSION

  	
  42

  
	
   

  	
   

  
	
  Section 4.01.

  	
  Conversion
  Privilege

  	
  42

  
	
  Section 4.02.

  	
  Conversion
  Procedure

  	
  44

  
	
  Section 4.03.

  	
  Taxes on Conversion

  	
  45

  
	
  Section 4.04.

  	
  Company
  to Reserve Stock; Related Covenants

  	
  46

  
	
  Section 4.05.

  	
  Adjustment
  of Conversion Price

  	
  47

  
	
  Section 4.06.

  	
  Adjustment
  of Conversion Price Upon a Non-Stock Change of Control

  	
  55

  
	
  Section 4.07.

  	
  Conversion After a Public Acquirer Change of
  Control

  	
  57

  
	
  Section 4.08.

  	
  Adjustment
  for Tax Purposes

  	
  58

  
	
  Section 4.09.

  	
  No
  Adjustment

  	
  59

  
	
  Section 4.10.

  	
  Conversion Price Reset

  	
  59

  
	
  Section 4.11.

  	
  Notice
  of Conversion Price Adjustment & Election

  	
  59

  
	
  Section 4.12.

  	
  Effect
  of Reclassification, Consolidation, Merger or Sale on Conversion Privilege

  	
  60

  
	
  Section 4.13.

  	
  Trustee’s Disclaimer

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.
  COVENANTS

  	
  61

  
	
   

  	
   

  
	
  Section 5.01.

  	
  Payment
  of Notes

  	
  61

  
	
  Section 5.02.

  	
  Maintenance
  of Office or Agency

  	
  61

  
	
  Section 5.03.

  	
  Reports

  	
  62

  
	
  Section 5.04.

  	
  Compliance
  Certificate

  	
  63

  
	
  Section 5.05.

  	
  Taxes

  	
  64

  
	
  Section 5.06.

  	
  Stay,
  Extension and Usury Laws

  	
  64

  
	
  Section 5.07.

  	
  Restricted
  Payments

  	
  64

  
	
  Section 5.08.

  	
  Dividend
  and Other Payment Restrictions Affecting Subsidiaries

  	
  67

  
	
  Section 5.09.

  	
  Incurrence
  of Indebtedness and Issuance of Preferred Stock

  	
  68

  
	
  Section 5.10.

  	
  Asset
  Sales and Events of Loss

  	
  71

  
	
  Section 5.11.

  	
  Transactions
  with Affiliates

  	
  73

  
	
  Section 5.12.

  	
  Liens

  	
  75

  

 

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  Section 5.13.

  	
  Line
  of Business

  	
  75

  
	
  Section 5.14.

  	
  Corporate
  Existence

  	
  75

  
	
  Section 5.15.

  	
  Offer
  to Repurchase Upon Change of Control

  	
  75

  
	
  Section 5.16.

  	
  Maintenance
  of Properties and Insurance

  	
  78

  
	
  Section 5.17.

  	
  Payments
  for Consent

  	
  78

  
	
  Section 5.18.

  	
  Additional
  Guarantors

  	
  78

  
	
  Section 5.19.

  	
  Designation of Restricted and Unrestricted Subsidiaries

  	
  79

  
	
  Section 5.20.

  	
  Issuance
  or Sale of Subsidiary Stock

  	
  80

  
	
  Section 5.21.

  	
  Real Estate Mortgages and Filings

  	
  80

  
	
  Section 5.22.

  	
  Leasehold Mortgage and Filings

  	
  81

  
	
  Section 5.23.

  	
  Seneca Negative Pledge and Plant Lien

  	
  81

  
	
  Section 5.24.

  	
  Impairment of Security Interest

  	
  82

  
	
  Section 5.25.

  	
  Additional
  Interest; Special Interest

  	
  82

  
	
  Section 5.26.

  	
  Requirement
  to Seek Stockholder Approval

  	
  83

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6.
  SUCCESSORS

  	
  83

  
	
   

  	
   

  
	
  Section 6.01.

  	
  Merger,
  Consolidation, or Sale of Assets

  	
  83

  
	
  Section 6.02.

  	
  Successor
  Corporation Substituted

  	
  85

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7.
  DEFAULTS AND REMEDIES

  	
  85

  
	
   

  	
   

  
	
  Section 7.01.

  	
  Events
  of Default

  	
  85

  
	
  Section 7.02.

  	
  Acceleration

  	
  87

  
	
  Section 7.03.

  	
  Other
  Remedies

  	
  88

  
	
  Section 7.04.

  	
  Waiver
  of Past Defaults

  	
  88

  
	
  Section 7.05.

  	
  Control by Majority

  	
  89

  
	
  Section 7.06.

  	
  Limitation on Suits

  	
  89

  
	
  Section 7.07.

  	
  Unconditional
  Rights of Holders of Notes to Receive Payment

  	
  89

  
	
  Section 7.08.

  	
  Collection
  Suit by Trustee

  	
  90

  
	
  Section 7.09.

  	
  Trustee
  May File Proofs of Claim

  	
  90

  
	
  Section 7.10.

  	
  Priorities

  	
  90

  
	
  Section 7.11.

  	
  Undertaking
  for Costs

  	
  91

  
	
  Section 7.12.

  	
  Waiver
  of Stay or Extension of Laws

  	
  91

  

 

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  ARTICLE 8.
  TRUSTEE

  	
  91

  
	
   

  	
   

  
	
  Section 8.01.

  	
  Duties
  of Trustee

  	
  91

  
	
  Section 8.02.

  	
  Rights
  of Trustee

  	
  93

  
	
  Section 8.03.

  	
  Individual
  Rights of Trustee

  	
  94

  
	
  Section 8.04.

  	
  Trustee’s
  Disclaimer

  	
  94

  
	
  Section 8.05.

  	
  Notice
  of Defaults

  	
  94

  
	
  Section 8.06.

  	
  Reports
  by Trustee to Holders of the Notes

  	
  94

  
	
  Section 8.07.

  	
  Compensation
  and Indemnity

  	
  94

  
	
  Section 8.08.

  	
  Replacement of Trustee

  	
  95

  
	
  Section 8.09.

  	
  Successor
  Trustee by Merger, etc.

  	
  96

  
	
  Section 8.10.

  	
  Eligibility; Disqualification

  	
  96

  
	
  Section 8.11.

  	
  Preferential
  Collection of Claims Against Company

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9.
  COVENANT DEFEASANCE

  	
  97

  
	
   

  	
   

  
	
  Section 9.01.

  	
  Option
  to Effect Covenant Defeasance

  	
  97

  
	
  Section 9.02.

  	
  Covenant
  Defeasance

  	
  97

  
	
  Section 9.03.

  	
  Conditions
  to Covenant Defeasance

  	
  97

  
	
  Section 9.04.

  	
  Deposited
  Money and Government Securities to be Held in Trust; Other Miscellaneous
  Provisions

  	
  98

  
	
  Section 9.05.

  	
  Repayment
  to Company

  	
  99

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10.
  AMENDMENT, SUPPLEMENT AND WAIVER

  	
  99

  
	
   

  	
   

  
	
  Section 10.01.

  	
  Without
  Consent of Holders of Notes

  	
  99

  
	
  Section 10.02.

  	
  With
  Consent of Holders of Notes

  	
  100

  
	
  Section 10.03.

  	
  Compliance with Trust Indenture Act

  	
  102

  
	
  Section 10.04.

  	
  Revocation
  and Effect of Consents

  	
  103

  
	
  Section 10.05.

  	
  Notation
  on or Exchange of Notes

  	
  103

  
	
  Section 10.06.

  	
  Trustee
  to Sign Amendments, etc.

  	
  103

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11.
  COLLATERAL AND SECURITY

  	
  103

  
	
   

  	
   

  
	
  Section 11.01.

  	
  Collateral
  Documents

  	
  103

  
	
  Section 11.02.

  	
  Recording
  and Opinions

  	
  104

  
	
  Section 11.03.

  	
  Release of Collateral

  	
  105

  
	
  Section 11.04.

  	
  Certificates
  of the Company

  	
  106

  

 

iv

 

	
   

  	
   

  	
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  Section 11.05.

  	
  Certificates
  of the Trustee

  	
  106

  
	
  Section 11.06.

  	
  Authorization
  of Actions to Be Taken by the Trustee Under the Collateral Documents

  	
  106

  
	
  Section 11.07.

  	
  Authorization
  of Receipt of Funds by the Trustee Under the Pledge Agreement

  	
  106

  
	
  Section 11.08.

  	
  Termination
  of Security Interest

  	
  106

  
	
  Section 11.09.

  	
  Collateral
  Agent

  	
  107

  
	
  Section 11.10.

  	
  Successor
  Collateral Agent

  	
  107

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12.
  NOTE GUARANTEES

  	
  108

  
	
   

  	
   

  
	
  Section 12.01.

  	
  Guarantee

  	
  108

  
	
  Section 12.02.

  	
  Limitation
  on Guarantor Liability

  	
  109

  
	
  Section 12.03.

  	
  Continuing
  Guarantee

  	
  109

  
	
  Section 12.04.

  	
  Releases
  Following Sale of Assets

  	
  109

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13.
  SATISFACTION AND DISCHARGE

  	
  110

  
	
   

  	
   

  
	
  Section 13.01.

  	
  Satisfaction
  and Discharge

  	
  110

  
	
  Section 13.02.

  	
  Application
  of Trust Money

  	
  111

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14.
  MATURITY DATE, INTEREST, INTEREST RATE AND LATE CHARGES

  	
  111

  
	
   

  	
   

  
	
  Section 14.01.

  	
  Maturity

  	
  111

  
	
  Section 14.02.

  	
  Interest
  and Interest Rate

  	
  111

  
	
  Section 14.03.

  	
  Late
  Charges

  	
  113

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15.
  MISCELLANEOUS

  	
  113

  
	
   

  	
   

  
	
  Section 15.01.

  	
  Trust
  Indenture Act Controls

  	
  113

  
	
  Section 15.02.

  	
  Notices

  	
  113

  
	
  Section 15.03.

  	
  Communication
  by Holders of Notes with Other Holders of Notes

  	
  114

  
	
  Section 15.04.

  	
  Certificate
  and Opinion as to Conditions Precedent

  	
  114

  
	
  Section 15.05.

  	
  Statements
  Required in Certificate or Opinion

  	
  114

  
	
  Section 15.06.

  	
  Rules by
  Trustee and Agents

  	
  115

  
	
  Section 15.07.

  	
  Indenture, Note Guarantees and Notes Solely Corporate Obligations

  	
  115

  
	
  Section 15.08.

  	
  Governing
  Law

  	
  115

  
	
  Section 15.09.

  	
  No
  Adverse Interpretation of Other Agreements

  	
  115

  

 

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  Section 15.10.

  	
  Successors

  	
  116

  
	
  Section 15.11.

  	
  Severability

  	
  116

  
	
  Section 15.12.

  	
  Counterpart Originals

  	
  116

  
	
  Section 15.13.

  	
  Table
  of Contents, Headings, etc.

  	
  116

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16.
  LETTER OF CREDIT

  	
  116

  
	
   

  	
   

  
	
  Section 16.01.

  	
  Letter
  of Credit

  	
  116

  
	
   

  	
   

  	
   

  
	
  Exhibit A – FORM OF NOTE

  	
   

  
	
   

  	
   

  
	
  Exhibit B – FORM OF CERTIFICATE
  OF TRANSFER

  	
   

  

 

vi

 

INDENTURE
dated as of September 28, 2007 between Nova
Biosource Fuels, Inc., a Nevada corporation (including any successors or
assigns, the “Company”), the
Guarantors (as defined below), Nova Holding Seneca LLC, a Delaware limited
liability company (“Seneca”), and
The Bank of New York Trust Company, N.A., a national banking association, as
trustee (the “Trustee”).

 

The Company,
the Guarantors, Seneca (solely for purposes of the covenant contained in Section 5.23)
and the Trustee agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the 10% Convertible Senior Secured
Notes due 2012 (including all 10% Convertible Senior Secured Notes issued in
exchange, transfer or replacement hereof, the “Notes”):

 

ARTICLE 1.

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.                                                 Definitions.

 

“Acquired Debt”  means, with respect to any specified Person, (i) Indebtedness
of any other Person existing at the time such other Person is merged with or
into or became a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any real property or fixed assets acquired by
such specified Person.

 

“Additional Interest”  means all liquidated
damages then owing pursuant to Section 2(c) of the Registration
Rights Agreement and all other interest owing on the Notes pursuant to this
Indenture, including, but not limited to, pursuant to Section 2.12 of this
Indenture and paragraph 1. “Interest” of the Form of Note attached as Exhibit A
hereto (the “Form of Note”). References
in this Indenture and in the Notes to the “interest” accrued or payable on the
Notes shall be deemed to include any Additional Interest and Special Interest
that may become accrued or payable thereon pursuant to the terms of this
Indenture, the Notes and the Transaction Documents unless the context otherwise
requires.

 

“Affiliate” of any specified Person means
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For purposes of
this Indenture, “control” (including, with correlative meanings, the terms “controlling”,
“controlled by” and “under common control with”), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided, that, solely for the purposes of this definition of “Affiliate,”
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control. Notwithstanding the foregoing, no Holder shall be deemed,
for purposes of this Indenture, to be an Affiliate of the Company or any of its
Subsidiaries solely by reason of holding the Notes.

 

“After-Acquired Property”  means all assets and
property acquired by the Company or any Guarantor after the date of this
Indenture.

 

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

 

1

 

“Bankruptcy Law”
means Title 11, U.S. Code or any similar federal or state law for the relief of
debtors.

 

“Beneficial Owner”  has the meaning assigned to
such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that in calculating the beneficial ownership of any particular “person” (as
that term is used in Section 13(d)(3) of the Exchange Act), such “person”
will be deemed to have beneficial ownership of all securities that such “person”
has the right to acquire by conversion or exercise of other securities, whether
such right is currently exercisable or is exercisable only after the passage of
time. For purposes of this definition, “Beneficially Owns” and “Beneficially
Owned” shall have a correlative meaning.

 

“Board of Directors”  means:

 

(i)                                     with
respect to a corporation, the board of directors of the corporation or any
committee thereof duly authorized to act on behalf of such board;

 

(ii)                                  with
respect to a partnership, the Board of Directors of the general partner of the
partnership;

 

(iii)                               with
respect to a limited liability company, the managing member or members, the
manager or any controlling committee or board of managers or managing members
thereof; and

 

(iv) with
respect to any other Person, the board or committee of such Person serving a
similar function.

 

“Business Day”  means any day other than a Legal Holiday.

 

“Capital Lease Obligation”  means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be required to be capitalized on a
balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be prepaid by
the lessee without payment of a penalty.

 

“Capital Stock”  means:

 

(i)                                     in
the case of a corporation, corporate stock;

 

(ii)                                  in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;

 

(iii)                               in
the case of a partnership or limited liability company, partnership interests
(whether general or limited) or membership interests; and

 

(iv)                              any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person, but excluding from all of the foregoing any debt securities convertible
into Capital Stock, whether or not such debt securities include any right of
participation with Capital Stock.

 

2

 

“Capitalized Interest”
means interest due on the Notes pursuant to Section 14.02(a) that has
been capitalized by adding it to the outstanding Principal Amount of the Notes
at the Company’s election pursuant to Section 14.02(c) of this
Indenture.

 

“Cash Equivalents”  means:

 

(i)                                     United
States dollars,

 

(ii)                                  securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality of the United States government (provided,
that the full faith and credit of the United States is
pledged in support of those securities) having maturities of not more than six
months from the date of acquisition;

 

(iii)                               certificates
of deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers’ acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500,000,000 and a
Thompson Bank Watch Rating of “B” or better;

 

(iv)                              repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause (iii) above;

 

(v)                                 commercial
paper having the highest rating obtainable from either Moody’s or Standard &
Poor’s, in each case, maturing within six months after the date of acquisition;

 

(vi)                              AAA-rated
taxable securities having maturities of not more than six months including, but
not limited to, auction rate securities and variable rate demand notes (for
securities where the interest rate resets via a “dutch auction” or “put”
mechanism, the auction date or put date will be used to determine the maturity
date);

 

(vii)                           U.S.
corporate bonds or notes with maturities of not more than six months and having
a minimum long-term credit rating of “A2” by Moody’s and “A” by Standard &
Poor’s; and

 

(viii)                        money
market funds at least 95% of the assets of which constitute Cash Equivalents of
the kinds described in clauses (i) through (vii) of this definition.

 

“Change of Control” means
the occurrence of any of the following after the Closing Date:

 

(a)                                  any “person”
becomes the “beneficial owner” (as these terms are defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the Company’s Capital Stock that is at the time entitled to vote by
the holder thereof in the election of the Board of Directors (or comparable
body); or

 

(b)                                 the first day
on which a majority of the members of the Board of Directors are not Continuing
Directors; or

 

3

 

(c)                                  the adoption of
a plan relating to the liquidation or dissolution of the Company; or

 

(d)                                 the
consolidation or merger of the Company with or into any other Person, or the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the Company’s assets and
those of its subsidiaries taken as a whole to any “person” (as this term is
used in Section 13(d)(3) of the Exchange Act), other than:

 

(i)                                     any
transaction pursuant to which the holders of 50% or more of the total voting
power of all shares of the Company’s Capital Stock entitled to vote generally
in elections of directors of the Company immediately prior to such transaction
have the right to exercise, directly or indirectly, 50% or more of the total
voting power of all shares of the Company’s Capital Stock entitled to vote
generally in elections of directors of the continuing or surviving Person (or
any parent thereof) immediately after giving effect to such transaction; or

 

(ii)                                  any
merger primarily for the purpose of changing the Company’s jurisdiction of
incorporation and resulting in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock of the
surviving entity; or

 

(e)                                  the termination
of trading of the Common Stock, which will be deemed to have occurred if the
Common Stock or other common equity interests into which the Notes are
convertible is neither listed for trading on a United States national securities
exchange nor approved for listing on any United States system of automated
dissemination of quotations of securities prices.

 

However, a
Change of Control will be deemed not to have occurred if more than 90% of the
consideration in the transaction or transactions (other than cash payments for
fractional shares and cash payments made in respect of dissenters’ appraisal
rights) which otherwise would constitute a Change of Control under clauses (a) or
(d) above consists of shares of common stock, depositary receipts or other
certificates representing common equity interests traded or to be traded
immediately following such transaction on an Eligible Market, and, as a result
of the transaction or transactions, the obligations of the Company under the Notes
are expressly assumed by the person issuing such consideration in such
transaction or transactions and the Notes become convertible into such common
stock, depositary receipts or other certificates representing common equity
interests.

 

“Closing Sale Price” of any share of Common
Stock or any other security on the Trading Day means the last closing trade
price for such security on the principal United States securities market on
which such security is traded (which is currently the American Stock Exchange
in respect of the Common Stock) as reported by Bloomberg Financial Markets (or
any successor thereto, “Bloomberg”),
or, if such exchange begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the case may be,
then the last bid price or last trade price, respectively, of such exchange
prior to 4:00:00 p.m. (New York City time) as reported by

 

4

 

Bloomberg, or,
if such exchange is not the principal securities exchange or trading market for
such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded
as reported by Bloomberg, or if the foregoing do not apply, the last trade
price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no last trade
price is reported for such security by Bloomberg, the average of the highest
bid prices and the lowest ask prices of any market makers for such security in
the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
If the Closing Price cannot be calculated for a security on a particular date
on any of the foregoing bases, the Closing Price of such security on such date
shall be the fair market value as determined by the Company and the Majority
Holders.

 

“Collateral”  shall have the same meaning
as Pledged Collateral.

 

“Collateral Agent”  shall have the meaning set
forth in the Security Agreement.

 

“Collateral Documents”  means the Security Agreement and the
other agreements, documents, or instruments, including any financing
statements, and any amendments or supplements thereto, creating, perfecting, or
evidencing any Liens securing the Notes, the Note Guarantees and any other
Obligation under this Indenture or the Collateral Documents.

 

“Common Stock”  means the Common Stock of
the Company, par value $0.001 per share, 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 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 the
Notes 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 Nova Biosource Fuels, Inc., a
Nevada corporation, and any and all successors thereto in accordance with this
Indenture, and thereafter “Company” shall mean such successor Company.

 

“Consolidated Cash Flow” means, with respect to any specified
Person for any period, the Consolidated Net Income of such Person for such
period plus or minus,
as applicable, without duplication:

 

(1)                                  an amount equal
to any extraordinary loss plus any net loss realized by such Person or any of
its Restricted Subsidiaries in connection with an Asset Sale, to the extent
such losses were deducted in computing such Consolidated Net Income; plus

 

(2)                                  provision for
taxes based on income or profits of such Person and its Restricted Subsidiaries
for such period, to the extent that such provision for taxes was deducted in
computing such Consolidated Net Income; plus

 

(3)                                  the Fixed
Charges of such Person and its Restricted Subsidiaries for such period, to the
extent that such Fixed Charges were deducted in computing such Consolidated Net
Income; plus

 

5

 

(4)                                  depreciation,
amortization (including amortization of intangibles but excluding amortization
of prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus

 

(5)                                  non-cash items
increasing such Consolidated Net Income for such period, other than the accrual
of revenue in the ordinary course of business,

 

in each case,
on a consolidated basis and determined in accordance with GAAP.

 

Notwithstanding
the preceding, the provision for taxes based on the income or profits of, and
the depreciation, amortization and other non-cash expenses of, a Restricted
Subsidiary of the Company will be added to Consolidated Net Income to compute
Consolidated Cash Flow of the Company only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended or
distributed to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.

 

“Consolidated Net Income” means, with
respect to any specified Person for any period, the aggregate of the Net Income
of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP; provided that:

 

(1)                                  the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting will be included only to the extent of the amount
of dividends or similar distributions paid in cash to the specified Person or a
Restricted Subsidiary of the Person;

 

(2)                                  the Net Income
of any Restricted Subsidiary will be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders;

 

(3)                                  the cumulative
effect of a change in accounting principles will be excluded;

 

(4)                                  the Net Income
of any Person acquired during the specified period for any period prior to the
date of acquisition will be excluded; and

 

(5)                                  notwithstanding
clause (1) above, the Net Income of any Unrestricted Subsidiary will be
excluded, whether or not distributed to the specified Person or one of its
Subsidiaries.

 

6

 

“Continuing Directors” means, as of any
date of determination, any member of the Board of Directors who (i) was a
member of the Board of Directors on the date hereof; or (ii) was nominated
for election or elected to the Board of Directors with the approval of a
majority of the Continuing Directors who were members of the Board of Directors
at the time of such new director’s nomination or election.

 

“Corporate Trust Office of the
Trustee”  shall
be 601 Travis Street, 18th Floor, Houston, Texas 77002, attention:
Corporate Trust Services, or such other address as to which the Trustee may give
notice to the Company.

 

“Credit Facilities” means, one or more debt facilities or
commercial paper facilities, in each case, with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such receivables)
or letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced (whether upon or after termination or otherwise) or
refinanced (including by means of sales of debt securities to institutional
investors) in whole or in part from time to time.

 

“Credit Parties” means collectively, the Company, each
Guarantor and Seneca.

 

“Default” or “default”
means any event that is, or with the passage of time or the giving of notice or
both would be, an Event of Default.

 

“Depositary” means The
Depository Trust Company until a successor Depositary shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter “Depositary”
shall mean such successor Depositary.

 

“Disqualified Stock”  means any Capital Stock
that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in each case, at the option of the
holder of the Capital Stock), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding
the preceding sentence, any Capital Stock that would constitute Disqualified
Stock solely because the holders of the Capital Stock have the right to require
the Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem
any such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 5.07 of this Indenture. The amount of
Disqualified Stock deemed to be outstanding at any time for purposes of hereof
shall be the maximum amount that the Company and its Subsidiaries may become
obligated to pay upon the maturity of, or pursuant to any mandatory redemption
provisions of, such Disqualified Stock, exclusive of accrued dividends.

 

“Eligible Market” means
The New York Stock Exchange, Inc., the American Stock Exchange, The NASDAQ
Global Market, The NASDAQ Global Select Market or The NASDAQ Capital Market.

 

7

 

“Equity Conditions”
means each of the following conditions:  (i) on
each day during the period beginning ninety (90) days prior to the applicable
date of determination and ending on and including the applicable date of
determination (the “Equity
Conditions Measuring Period”), the Common Stock is designated for
quotation on an Eligible Market and shall not have been suspended from trading
on such exchange or market (other than suspensions of not more than two (2) days
and occurring prior to the applicable date of determination due to business
announcements by the Company) nor shall delisting or suspension by such
exchange or market been threatened or pending either (A) in writing by
such Eligible Market or (B) by falling below the then effective minimum
listing maintenance requirements of such exchange or market; (ii) during
the Equity Conditions Measuring Period, the Notes and all shares of Common
Stock issuable upon conversion of the Notes shall be eligible for sale without
restriction pursuant to an effective registration statement under the
Registration Rights Agreement, other than any restrictions on sale imposed on
any Holder by virtue of such Holder being an affiliate of the Company; (iii) during
the Equity Conditions Measuring Period, the Company shall have delivered shares
of Common Stock upon conversion of the Notes to the Holders on a timely basis
on the applicable Share Delivery Due Date; and (iv) during the Equity
Conditions Measuring Period, there shall not have occurred either (A) the
public announcement of a pending, proposed or intended Fundamental Transaction
which has not been abandoned, terminated or consummated, or (B) a Default
or Event of Default.

 

“Equity Conditions Failure”
means that (i) on any day during the period commencing ten (10) Trading
Days prior to the applicable Interest Notice Date through the applicable
Interest Payment Date, or (ii) on any day during the period commencing ten
(10) Trading Days prior to the applicable Optional Redemption Notice
through the applicable Optional Redemption Date, the Equity Conditions have not
been satisfied (or waived in writing by each Holder).

 

“Equity Interests”  means
Capital Stock and all warrants, options or other rights to acquire Capital
Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).

 

“Event of Loss”  means any loss of,
destruction of or damage to, or any condemnation or other governmental taking
of any property of the Company or any of its Subsidiaries in any single
occurrence or series of related occurrences that involves assets having a
Fair Market Value of at least $1.0 million in the aggregate.

 

“Exchange Act”  means the Securities
Exchange Act of 1934, as amended.

 

“Excluded Securities” means (i) equity
or equity-linked securities issued to employees, officers or directors of the
Company pursuant to any stock, option or incentive compensation plan approved
and adopted by the Board of Directors of the Company, (ii) shares of
Capital Stock issued upon conversion or exercise of equity-linked securities
outstanding on the Issue Date and as in effect on the Issue Date or issued
under clause (i) above, provided that the terms of such equity or equity-linked securities are
not amended, modified or changed on or after the Issue Date, and (iii) shares
of Common Stock issuable upon conversion of the Notes.

 

8

 

“Existing Indebtedness” means Indebtedness of the Company and
its Subsidiaries in existence on the date of this Indenture and set forth on Schedule 3.1
(gg) of the Securities Purchase Agreement, until such amounts are repaid.

 

“Fair Market Value”  means the value that would be paid by a
willing buyer to an unaffiliated willing seller in a transaction not involving
distress or necessity of either party, determined in good faith by the Board of
Directors of the Company (unless otherwise provided in this Indenture).

 

“Fixed Charge Coverage Ratio” means with respect to any
specified Person for any period, the ratio of the Consolidated Cash Flow of
such Person for such period to the Fixed Charges of such Person for such period.
In the event that the specified Person or any of its Restricted Subsidiaries
incurs, assumes, guarantees, repays, repurchases, redeems, defeases or
otherwise discharges any Indebtedness (other than ordinary working capital
borrowings) or issues, repurchases or redeems preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the “calculation date”), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase, redemption, defeasance or other
discharge of Indebtedness, or such issuance, repurchase or redemption of
preferred stock, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable four-quarter reference period.

 

In addition,
for purposes of calculating the Fixed Charge Coverage Ratio:

 

(1)                                  acquisitions that have been made by the
specified Person or any of its Restricted Subsidiaries, including through
mergers or consolidations, or any Person or any of its Restricted Subsidiaries
acquired by the specified Person or any of its Restricted Subsidiaries, and
including any related financing transactions and including increases in
ownership of Restricted Subsidiaries, during the four-quarter reference period
or subsequent to such reference period and on or prior to the calculation date
will be given pro forma effect as if they had occurred on the first day of the
four-quarter reference period;

 

(2)                                  the Consolidated Cash Flow attributable
to discontinued operations, as determined in accordance with GAAP, and
operations or businesses (and ownership interests therein) disposed of prior to
the calculation date, will be excluded;

 

(3)                                  the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses (and ownership interests therein) disposed of prior to the
calculation date, will be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the specified
Person or any of its Restricted Subsidiaries following the calculation date;

 

(4)                                  any Person that is a Restricted
Subsidiary on the calculation date will be deemed to have been a Restricted
Subsidiary at all times during such four-quarter period;

 

9

 

(5)                                  any Person that is not a Restricted
Subsidiary on the calculation date will be deemed not to have been a Restricted
Subsidiary at any time during such four-quarter period; and

 

(6)                                  if any Indebtedness bears a floating rate
of interest, the interest expense on such Indebtedness will be calculated as if
the rate in effect on the calculation date had been the applicable rate for the
entire period (taking into account any Hedging Obligation applicable to such
Indebtedness if such Hedging Obligation has a remaining term as at the
calculation date in excess of 12 months).

 

“Fixed Charges” means, with respect to any
specified Person for any period, the sum, without duplication, of:

 

(1)                                  the
consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued, including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers’ acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations in
respect of interests rates; plus

 

(2)                                  the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus

 

(3)                                  any interest on
Indebtedness of another Person that is guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is called
upon; plus

 

(4)                                  the product of (a) all
dividends, whether paid or accrued and whether or not in cash, on any series of
preferred stock of such Person or any of its Restricted Subsidiaries, other
than dividends on Equity Interests payable solely in Equity Interests of the
Company (other than Disqualified Stock) or to the Company or a Restricted
Subsidiary of the Company, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, determined on a consolidated
basis in accordance with GAAP.

 

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

 

10

 

“Global Notes” means
one or more Notes in global form registered in the register in the name of
a Depositary or a nominee thereof.

 

“Government Securities”  means securities that are direct
obligations of, or obligations guaranteed by, the United States of America, and
the payment for which the United States pledges its full faith and credit.

 

“Guarantee”  means a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner (including, without
limitation, by way of a pledge of assets or through letters of credit or
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities, or services, to
take or pay or to maintain financial statement conditions or otherwise).

 

“Guarantors”  means each of Nova Holding
Clinton County, LLC and Nova Biofuels Clinton County, LLC, and any other
Subsidiary of the Company that executes a Note Guarantee in accordance with the
provisions of this Indenture, in each case, together with their respective
successors and assigns, unless and until the Note Guarantee of such Person has
been released in accordance with the provisions of this Indenture.

 

“Hedging Obligations”  means, with respect to any
specified Person, the obligations of such Person under (i) interest rate
swap agreements (whether from fixed to floating or from floating to fixed),
interest rate cap agreements and interest rate collar agreements, (ii) other
agreements or arrangements designed to manage interest rates or interest rate
risk, and (iii) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange rates or commodity prices.

 

“Holder”  means a Person in whose
name a Note is registered.

 

“Indebtedness” means with respect to any
specified Person, any indebtedness of such Person (excluding accrued expenses
and trade payables that are not yet overdue by 30 days), whether or not
contingent:

 

(i)                                     in
respect of borrowed money;

 

(ii)                                  evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof);

 

(iii)                               in
respect of banker’s acceptances;

 

(iv)                              representing
Capital Lease Obligations;

 

(v)                                 representing
the balance deferred and unpaid of the purchase price of any property or
services due more than six months after such property is acquired or such
services are completed;

 

(vi)                              representing
any Hedging Obligations; if and to the extent any of the preceding items (other
than letters of credit and Hedging Obligations) would appear as a

 

11

 

liability upon a balance sheet of the specified Person prepared in
accordance with GAAP; or

 

(vii)                           all
Disqualified Stock.

 

In addition, the term “Indebtedness” includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by or other contingent obligation of the specified
Person of any Indebtedness of or relating to or arising from any other Person.

 

“Indenture”  means this Indenture, as
amended or supplemented from time to time in accordance with its terms.

 

“Interest” means, when used with reference to the Notes, the
sum of (i) any interest accrued and unpaid at the Interest Rate pursuant
to Section 14.02(a) hereof, (ii) accrued and unpaid Additional
Interest, if any, payable under the terms of the Registration Rights Agreement,
(iii) accrued and unpaid Special Interest, if any, pursuant to Section 7.03
hereof, and (iv) accrued and unpaid Late Charges, if any.

 

“Interest Make-Whole” means with respect to each $1,000
principal amount of Notes, an amount in cash equal to (i) with respect to
any conversion prior to the fourth semi-annual Interest Payment Date, the
amount of any interest pursuant to Section 14.02(a) that would have
accrued with respect to the Principal Amount being converted under this
Indenture at the Interest Rate for the period from the applicable Conversion
Date through September 30, 2009, and (ii) the amount of any interest
pursuant to Section 14.02(a) that, but for the Optional Redemption
pursuant to Section 3.07, would have accrued with respect to the
Conversion Amount being redeemed under this Indenture at the Interest Rate for
the period from the applicable Optional Redemption Date through September 30,
2010.

 

“Interest Payment Date” means March 31 and September 30
of each year until the Stated Maturity with the first Interest Payment Date
being March 31, 2008.

 

“Interest Rate” means a rate per annum equal
to either (i) 10%, for any portion of the Interest that is paid in cash
with respect to the applicable interest period paid on the applicable Interest
Payment Date or (ii) 12%, for any portion of the Interest that is added as
Capitalized Interest pursuant to Section 14.02(c) with respect to the
applicable interest period paid on the applicable Interest Payment Date.

 

“Investments”  means, with respect to any
Person, all direct or indirect investments by such Person in other Persons
(including Affiliates) in the forms of loans (including Guarantees or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition

 

12

 

in such
Subsidiary. The acquisition by the Company or any Subsidiary of the Company of
a Person that holds an Investment in a third Person shall be deemed to be an
Investment by the Company or such Subsidiary in such third Person.

 

“Issue Date” means the date of the first
issuance of Notes under this Indenture.

 

“Late Charge”  means a late charge being
incurred and payable by the Company in an amount equal to interest at a rate
per annum equal to the sum of 2% and the applicable Interest Rate.

 

“LC Agent” means, The Bank of New York Trust Company, N.A.,
until a successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.

 

“LC Amount” means an amount in cash equal to the aggregate
amount sufficient for the Company to fully pay the initial four interest
payments on the Notes, with the first such Interest Payment Date being March 31,
2008.

 

“LC Bank” means the issuer of the Letter of Credit who shall
initially be Sterling Bancshares, Inc..

 

“Legal Holiday”  means a Saturday, a Sunday
or a day on which banking institutions in The City of New York, the State of
Texas or at a place of payment under this Indenture are authorized by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday at a place of payment under this Indenture, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue on such payment for the intervening period. If a record
date is a Legal Holiday, the record date shall not be affected.

 

“Letter of Credit” means the irrevocable letter of credit in
an amount not less than the LC Amount issued on or before the Issue Date by the
LC Bank in favor of the LC Agent for the benefit of the Holders, with an
expiration date (the “LC Expiration Date”)
no earlier than 91 days after September 30, 2009.

 

“Lien”  means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).

 

“Majority Holders” means the Holders of a majority in
aggregate Principal Amount of the Notes at the time outstanding.

 

“Moody’s”  means
Moody’s Investors Services, Inc.

 

“Net Income” means, with respect to any specified Person, the
Net Income (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding, however:

 

13

 

(1)           any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with
(a) any Asset Sale or (b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and

 

(2)           any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not loss).

 

“Net Proceeds”  means the aggregate cash proceeds
received by the Company or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale) or any
Event of Loss (including, without limitation, any insurance proceeds in respect
thereof), net of

 

(i)            the direct costs
relating to such Asset Sale or Event of Loss, including, without limitation,
legal, accounting and investment banking fees, sales commissions, relocation
expenses incurred as a result of the Asset Sale or Event of Loss, and taxes
paid or payable as a result of the Asset Sale or Event of Loss after taking
into account any available tax credits or deductions and any tax sharing
arrangements,

 

(ii)           amounts required to be
applied to the repayment of Indebtedness, secured by a Lien on the asset or
assets of higher priority than the Lien securing the Notes or the Note
Guarantees that were the subject of such Asset Sale or Event of Loss, and

 

(iii)          any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.

 

“Non-Recourse Debt”
means Indebtedness:

 

(1)           as to which neither the Company nor any of
its Restricted Subsidiaries (a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;

 

(2)           no default with respect to which (including any
rights that the holders of the Indebtedness may have to take enforcement action
against an Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment of the Indebtedness to be accelerated or payable prior to its
Stated Maturity; and

 

(3)           as to which the lenders have been notified
in writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.

 

“Non-Stock
Change of Control” means a transaction described under clause
(a) or clause (d) in the definition of Change of Control pursuant to
which 10% or more of the consideration for Common Stock (other than cash
payments for fractional shares, if applicable, and cash payments made in
respect of dissenters’ appraisal rights) in such transaction consists of cash
or securities (or other property) that are not shares of common stock, depositary
receipts or other

 

14

 

certificates
representing common equity interests traded or scheduled to be traded
immediately following such transaction on an Eligible Market and into which the
Notes are convertible pursuant to the assumption of the obligations under the
Notes by the person issuing such consideration in such transaction.

 

“Note Guarantee”  means the Guarantee by each Guarantor of
the Company’s payment obligations under this Indenture.

 

“Notes”  has the meaning assigned to it in the
preamble to this Indenture.

 

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

 

“Offering”
means the offering of the Notes by the Company.

 

“Officer”
means, with respect to any Person, the Chair of the
Board, the Vice Chair of the Board, the Chief Executive Officer, the President,
the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer, the Controller, the Secretary or any Vice-President of
such Person.

 

“Officers’
Certificate”  means
a certificate signed on behalf of the Company by two Officers of the Company,
one of whom must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of the Company, that
meets the requirements of Sections 15.04 and 15.05 hereof.

 

“Opinion of Counsel”  means an opinion from legal
counsel who is reasonably acceptable to the Trustee, that meets the
requirements of Sections 15.04 and 15.05 hereof. The counsel may be internal or
external counsel to the Company or counsel to the Trustee.

 

“Permitted Business”  means (i) the
research, development, design, engineering, procurement, construction,
ownership, operation and maintenance of biodiesel and related feedstock,
co-product and derived products production technology, equipment, refineries,
storage, transfer, loading, unloading, blending and transportation facilities,
(ii) the production, refining, purification, blending, storage, transfer,
handing, transportation, purchasing, marketing and sale of biodiesel, biodiesel
feedstocks, related co-products and derived products, (iii) the ownership,
cultivation, production, extraction, processing, purification, blending,
storage, transfer, handling, transportation, purchasing, marketing and sale of
biodiesel and other renewable energy feedstocks and consumables, (iv) the
purchase, sale, investment and ownership of commodities, futures, forwards,
contracts, swaps, derivatives, credits, securities and other instruments
related to biodiesel, petroleum, refined energy products, energy, feedstocks,
comsumables, biodiesel co-products and derived products, and facilities and equipment
construction, procurement and fabrication, (v) the provision of consulting,
management, research, development, design, engineering, procurement and
construction services with respect to biodiesel and other renewable or
alternative energy sources and related feedstocks, co-products and derived
products, and (vi) any reasonable extensions and complementary businesses
thereto.

 

15

 

“Permitted Investments”  means:

 

(i)            any Investment in the
Company or in a Restricted Subsidiary of the Company;

 

(ii)           any Investment in Cash
Equivalents;

 

(iii)          any Investment by the
Company or any Subsidiary of the Company in a Person, if as a result of such
Investment: (a) such Person becomes a Restricted Subsidiary of the Company; or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company;

 

(iv)          any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was
made pursuant to and in compliance with Section 5.10 hereof;

 

(v)           any acquisition of
assets or Capital Stock solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company;

 

(vi)          any Investments received
in compromise or resolution of litigation, arbitration or other disputes;

 

(vii)         Investments represented
by Hedging Obligations;

 

(viii)        Guarantees by the Company
of Permitted Project Debt during the construction phase prior to final
acceptance (as determined by the Project lender in accordance with the credit
agreement governing such Permitted Project Debt) of the applicable Project or
Projects, as the case may be in an aggregate amount at any time outstanding not
to exceed the lesser of (i) 80% of the amount equal to $1.50 (or such higher
amount as proportionately adjusted by increases in Chemical Engineering’s CE
Plant Cost Index from and after the Issue Date) per gallon per year of
nameplate biodiesel production capacity with respect to each such Project under
construction and (ii) $162.0 million;

 

(ix)           Investments by the
Company in Seneca made with the net proceeds of the offering of the Notes
pursuant to the Securities Purchase Agreement; and

 

(x)            repurchases of the
Notes, including the related Note Guarantees in accordance with the terms of
this Indenture.

 

“Permitted Liens”  means:

 

(i)            Liens on feedstock,
inventory, supplies, consumables and other assets securing Indebtedness
permitted to be incurred pursuant to clause (i) of the definition of “Permitted
Debt”;

 

(ii)           Liens securing Existing
Indebtedness permitted to be incurred pursuant to clause (ii) of the definition
of “Permitted Debt”;

 

16

 

(iii)          Liens securing or to
secure in the future Indebtedness and other Obligations under this Indenture,
the Notes and the Note Guarantees, permitted to be incurred pursuant to clause
(iii) of the definition of “Permitted Debt”;

 

(iv)          Liens on property, plant
or equipment securing Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations permitted to be incurred
pursuant to clause (v) of the definition of “Permitted Debt”;

 

(v)           Liens contemplated and
permitted by Section 5.23;

 

(vi)          Liens in favor of the
Company or any Guarantor;

 

(vii)         Liens to secure the
performance of statutory obligations, performance bonds or other obligations of
a like nature incurred in the ordinary course of business;

 

(viii)        Liens for taxes, assessments
or charges, claims or other obligations owed to governmental or
quasi-governmental authorities that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that
any reserve or other appropriate provision as is required in conformity with
GAAP has been made therefor;

 

(ix)           Liens imposed by law,
such as carriers’, warehousemen’s, materialmans’, landlord’s and mechanics’
Liens, in each case, incurred in the ordinary course of business and securing
obligations that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as if required in
conformity with GAAP has been made therefor; and

 

(x)            survey exceptions,
easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real property that
were not incurred in connection with and do not secure Indebtedness and that do
not, individually or in the aggregate, materially adversely affect the value of
said properties or materially impair their use in the operation of the business
of such Person.

 

“Permitted
Project Debt” means any Indebtedness (which is not exchangeable into
Common Stock or involve in any manner the issuance of any security convertible
into or exchangeable or exercisable for Common Stock) of one or more
Unrestricted Subsidiaries (including at all times Seneca and the Seneca Project
Entity) issued or incurred with one or more commercial banks or other financial
institutions to finance or facilitate the purchase, acquisition, engineering,
procurement, construction, commissioning, operation, expansion and improvement
and related capital expenditures and working capital funding of one or more
Projects that are in Permitted Businesses and that is secured by, or subject to
a lease of, in whole or in part, the assets or property owned or used by one or
more Unrestricted Subsidiaries owning, leasing or operating such Project or
Projects.

 

“Permitted
Refinancing Indebtedness” means any Indebtedness of the Company or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to renew,

 

17

 

refund,
refinance, replace, defease or discharge other Permitted Indebtedness of the
Company or any of its Restricted Subsidiaries (other than intercompany
Indebtedness); provided that

 

(i)            the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness
renewed, refunded, refinanced, replaced, defeased or discharged (plus all
accrued interest on the Indebtedness and the amount of all fees and expenses,
including premiums, incurred in connection therewith);

 

(ii)           such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
renewed, refunded, refinanced, replaced, defeased or discharged;

 

(iii)          if the Indebtedness
being renewed, refunded, refinanced, replaced, defeased or discharged is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders as those contained in the documentation governing the
Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged; and

 

(iv)          such Indebtedness is
incurred either by the Company or by the Subsidiary who is the obligor on the
Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged.

 

“Person”  means any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, limited liability company, or government or other
entity.

 

“Physical
Note” means permanent certificated Note in registered form issued in
denomination of $1,000 principal amount and integral multiples thereof.

 

“Pledged Collateral”  means any assets of the
Company or any Guarantor or any other Person defined as “Pledged Collateral” or
“Collateral” in any Collateral Document.

 

“Principal”
or “Principal
Amount” means, when referring to the principal or principal amounts
of any Note, as set forth on the face of the Note as such amount may be (i)
reduced by any conversions, redemptions or otherwise pursuant hereto and (ii)
increased by the amount of any Capitalized Interest thereon pursuant to the
terms of this Indenture.

 

“Pro Rata Amount”  means, with respect to any Holder, a
fraction, the numerator of which is the aggregate principal amount of Notes
held by such Holder and the denominator of which is the aggregate principal
amount of Notes outstanding.

 

“Projects”
means one or more refineries, facilities, plants or
other assets or property, other than the assets of Clinton County Bio Energy
L.L.C., an Iowa limited liability company, that is in a Permitted Business.

 

18

 

“Public
Acquirer Change of Control” means a Non-Stock Change of Control in
which the (a) acquirer has a class of common stock (or depositary receipts or
shares in respect thereof) traded on an Eligible Market or that shall be so
traded or quoted when issued or exchanged in connection with such Non-Stock
Change of Control (the “Public Acquirer
Common Stock”), (b) the Public Acquirer Common Stock that the Notes
are convertible into are registered under the Exchange Act; and (c) the Public
Acquirer Common Stock that the Notes are convertible into are registered or
exempt from registration under the Securities Act and are freely tradeable
without restrictions under the Securities Act and any necessary qualification
or registration under applicable state securities laws have been made (subject
to the availability of any exemption from such qualification and registration
requirements). If an acquirer does not itself have a class of common stock (or
depositary receipts or shares in respect thereof) satisfying the foregoing
requirement, it shall be deemed to have Public Acquirer Common Stock (or
depositary receipts or shares in respect thereof) if a corporation that
directly or indirectly owns at least a majority of the acquirer has a class of
common stock (or depositary receipts or shares in respect thereof) satisfying
the foregoing requirement, provided that
such majority-owning corporation fully and unconditionally guarantees the
Notes, in which case all references to Public Acquirer Common Stock shall refer
to such class of common stock (and the Note shall be convertible into such
class of common stock). Majority owned for these purposes means having “beneficial
ownership” (as defined in Rule 13d-3 under the Exchange Act) of more than
50% of the total voting power of all shares of the respective entity’s capital
stock that are entitled to vote generally in the election of directors.

 

“Public
Acquirer Common Stock” has the meaning specified in the definition
of Public Acquirer Change of Control.

 

“Qualified Institutional
Buyer” or “QIB”
shall have the meaning specified in Rule 144A.

 

“Redemption
Dates” means, collectively, the Event of Default Redemption Date,
Change of Control Redemption Date, the Excess Proceeds Redemption Date, the
Holder Optional Redemption Date and the Optional Redemption Date, each of the
foregoing, individually, a Redemption Date.

 

“Redemption
Prices” means, collectively, the Event of Default Redemption Price,
Change of Control Redemption Price, the Excess Proceeds Redemption Price,
Holder Optional Redemption Price and the Optional Redemption Price, each of the
foregoing, individually, a Redemption Price.

 

“Registration Rights Agreement”  means the Registration
Rights Agreement dated as of the date of this Indenture among the Company and
the purchasers of the Notes identified therein, as such agreements may be
amended, modified or supplemented from time to time in accordance with their
terms.

 

“Regulation S”  means Regulation S promulgated under the
Securities Act (or any successor provision promulgated by the SEC).

 

“Responsible Officer”,  when used with respect to the Trustee,
means any vice president, assistant vice president, assistant treasurer, trust
officer or any other officer within the Corporate

 

19

 

Trust
Administration of the Trustee (or any successor group of the Trustee) or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.

 

“Restricted Investment”  means any Investment other
than a Permitted Investment.

 

“Restricted Subsidiary”
means any Subsidiary of the Company which at the time of determination
is not an Unrestricted Subsidiary. Initially, the Restricted Subsidiaries of
the Company shall be the Guarantors.

 

“Rule 144”
means Rule 144 promulgated under the Securities Act
(or any successor provision promulgated by the SEC).

 

“Rule 144A”  means Rule 144A promulgated under the
Securities Act (or any successor provision promulgated by the SEC).

 

“SEC”  means
the Securities and Exchange Commission.

 

“Secured Indebtedness”  means any Permitted
Indebtedness secured by assets of the Company other than the Collateral.

 

“Securities
Act”  means the Securities Act of 1933,
as amended.

 

“Securities
Purchase Agreement”  means the Securities Purchase
Agreement dated as of the date of this Indenture among the Company and the
purchasers of the Notes identified therein, as such agreements may be amended,
modified or supplemented from time to time in accordance with their terms.

 

“Security Agreement”  means the Security Agreement
dated as of the date of this Indenture by and among the Company, the
Guarantors, the Trustee and the Collateral Agent, as such agreement may be
amended, modified or supplemented from time to time in accordance with its
terms and with this Indenture.

 

“Seneca Plant” means the
biodiesel refinery under construction at the Shipyard Industrial Park, Village
of Seneca, State of Illinois, which is designed to produce approximately sixty
(60) million gallons-per-year of biodiesel, and all auxiliary and other
facilities constructed or to be constructed by or on behalf of the Seneca
Project Entity, together with all fixtures and improvements thereto, and all
other real property, easements and rights-of-way held by or on behalf of the
Seneca Project Entity and all rights to use easements and rights-of-way of
others.

 

“Significant Subsidiary”  means any Subsidiary that would be a “significant
subsidiary” as defined in Article I, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Indenture.

 

“Standard & Poor’s”  means
Standard & Poor’s Corporation.

 

20

 

“Stated Maturity”  when used in respect of any Note, means
the date specified in such Note as the fixed date on which an amount equal to
the Principal of such Note together with accrued and unpaid Interest, and any
other amounts accrued and unpaid hereunder if any, is due and payable.

 

“Subsidiary”  means, with respect to any specified
Person:

 

(i)            any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency and after giving effect to any voting agreement or stockholders’
agreement that effectively transfers voting power) to vote in the election of
directors, managers or trustees of the corporation, association or other
business entity is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and

 

(ii)           any partnership (a) the
sole general partner or the managing general partner of which is such Person or
a Subsidiary of such Person or (b) the only general partners of which are that
Person or one or more Subsidiaries of that Person (or any combination thereof).

 

“TIA”  means the Trust Indenture Act of 1939 (15
U.S.C. §§ 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.

 

“Trading Day”  means:

 

(i)            if the Common Stock is listed or admitted
for trading on any national or regional securities exchange, days on which such
national or regional securities exchange is open for business; or

 

(ii)           if the Common Stock is quoted on any system
of automated dissemination of quotations of securities prices, days on which
trades may be effected through such system; and

 

(iii)          if the Common Stock is not listed on a
national or regional securities exchange or quoted on any system of automated
dissemination of quotation of securities prices, days on which the Common Stock
is traded regular way in the over-the-counter market and for which a closing
bid and a closing asked price for the Common Stock are available.

 

“Transaction Documents”  means this Indenture, the Notes,
the Note Guarantees, the Collateral Documents, the Securities Purchase
Agreement and the Registration Rights Agreement.

 

“Trustee”
means The Bank of New York Trust Company, N.A., until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.

 

“UCC”  means the Uniform Commercial Code as in
effect in the State of New York or any other applicable jurisdiction.

 

21

 

“Unrestricted
Subsidiary” means any Subsidiary of the Company that is designated
by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant
to a resolution of the Board of Directors, but only to the extent that such
Subsidiary on the date of designation:

 

(1)           has no Indebtedness other than Non-Recourse
Debt;

 

(2)           except as permitted by the covenant Section
5.11, is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Company;

 

(3)           is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (a) to subscribe for additional Equity Interests or (b) to maintain
or preserve such Person’s financial condition or to cause such Person to
achieve any specified levels of operating results; and

 

(4)           has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any
of its Restricted Subsidiaries.

 

Initially, notwithstanding the foregoing, the
Unrestricted Subsidiaries of the Company shall be all of the Subsidiaries of
the Company (and their respective Subsidiaries) other than the Restricted
Subsidiaries (or their future Subsidiaries) as of the Issue Date.

 

The Board of Directors may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any other Subsidiary
of the Company that is not a Subsidiary of the Subsidiary to be so designated,
provided that:

 

(i)            the Company certifies
to the Trustee that such designation complies with Sections 5.07 and 5.19; and

 

(ii)           each Subsidiary to be
so designated and each of its Subsidiaries has not at the time of designation,
and does not thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any of the assets of the Company or any of
its Restricted Subsidiaries.

 

The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only if:

 

(i)            immediately after
giving effect to such designation, the Company is able to incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) in compliance
with Section 5.09; and

 

(ii)           immediately before and
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing.

 

22

 

Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the board resolution giving effect to such designation and an
Officers’ Certificate certifying that such designation complied with the
foregoing provisions.

 

“Voting
Stock”  of any
specified Person as of any date means the Capital Stock of such Person that is
at the time entitled to vote in the election of the Board of Directors of such
Person.

 

“Weighted Average Life to Maturity”  means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:  (a) the sum of the products obtained by
multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect of the Indebtedness, by (y) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (b) the then outstanding principal amount of
such Indebtedness.

 

“Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the principal market or
exchange on which such security is traded during the period beginning at
9:30:01 a.m., New York City time (or such other time as such principal market
or exchange publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York City time (or such other time as such principal market
or exchange publicly announces is the official close of trading) as reported by
Bloomberg through its “Volume at Price” functions, or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York City time (or such other
time as such market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York City time (or such other time as such market
publicly announces is the official close of trading) as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated for
a security on a particular date on any of the foregoing bases, the Weighted
Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Majority Holders. All such
determinations are to be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during the applicable
calculation period. For the avoidance of doubt in no event shall the Trustee or
Conversion Agent have any responsibility to either obtain or monitor such
prices.

 

Section 1.02.                Other
Definitions.

 

	
  Term

  	
   

  	
  Defined
  in Section

  
	
  Additional Shares

  	
   

  	
  4.06

  
	
  Affiliate
  Transaction

  	
   

  	
  5.11

  
	
  Agent Members

  	
   

  	
  2.15

  
	
  Asset
  Sale

  	
   

  	
  5.10

  

 

23

 

	
  Authentication
  Order

  	
   

  	
  2.02

  
	
  Authorized Share Allocation

  	
   

  	
  4.04

  
	
  Authorized Share Failure

  	
   

  	
  4.04

  
	
  Buy-In

  	
   

  	
  4.04

  
	
  Buy-In
  Price

  	
   

  	
  4.04

  
	
  Cash Interest

  	
   

  	
  14.02

  
	
  Change of Control Conversion/Repurchase Period

  	
   

  	
  5.15

  
	
  Change of Control Notice

  	
   

  	
  5.15

  
	
  Change
  of Control Offer

  	
   

  	
  5.15

  
	
  Change of Control Redemption Date

  	
   

  	
  5.15

  
	
  Change of Control Redemption Notice

  	
   

  	
  5.15

  
	
  Change of Control Redemption Price

  	
   

  	
  5.15

  
	
  Closing
  Price

  	
   

  	
  4.05

  
	
  Consolidated Cash Flow Test

  	
   

  	
  14.02

  
	
  Conversion
  Agent

  	
   

  	
  2.03

  
	
  Conversion Amount

  	
   

  	
  4.01

  
	
  Conversion Date

  	
   

  	
  4.02

  
	
  Conversion Limitation

  	
   

  	
  4.02

  
	
  Conversion Price

  	
   

  	
  4.01

  
	
  Conversion Rate

  	
   

  	
  4.01

  
	
  Conversion
  Securities

  	
   

  	
  4.12

  
	
  Covenant Defeasance

  	
   

  	
  9.02

  
	
  Current
  Market Price

  	
   

  	
  4.05

  
	
  Determination
  Date

  	
   

  	
  4.05

  
	
  Equity Conditions Measuring Period

  	
   

  	
  1.01

  
	
  Event
  of Default

  	
   

  	
  7.01

  
	
  Event of Default Redemption Price

  	
   

  	
  7.03

  
	
  Excess
  Proceeds

  	
   

  	
  5.10

  
	
  Excess
  Proceeds Notice

  	
   

  	
  3.08

  
	
  Excess
  Proceeds Offer

  	
   

  	
  3.08

  
	
  Excess
  Proceeds Redemption

  	
   

  	
  3.08

  
	
  Excess Proceeds Redemption Price

  	
   

  	
  5.10

  
	
  Expiration
  Date

  	
   

  	
  4.05

  
	
  Expiration
  Time

  	
   

  	
  4.05

  
	
  Form of Note

  	
   

  	
  2.01

  
	
  Holder

  	
   

  	
  1.03

  

 

24

 

	
  Holder Optional Redemption

  	
   

  	
  3.09

  
	
  Holder Optional Redemption Date

  	
   

  	
  3.09

  
	
  Holder Optional Redemption Notice

  	
   

  	
  3.09

  
	
  Holder Optional Redemption Price

  	
   

  	
  3.09

  
	
  incur

  	
   

  	
  5.09

  
	
  indenture
  securities

  	
   

  	
  1.03

  
	
  indenture
  to be qualified

  	
   

  	
  1.03

  
	
  indenture
  trustee

  	
   

  	
  1.03

  
	
  institutional trustee

  	
   

  	
  1.03

  
	
  Interest Election Notice

  	
   

  	
  14.01

  
	
  Interest Notice Date

  	
   

  	
  14.02

  
	
  Lease

  	
   

  	
  5.22

  
	
  Leased Premises

  	
   

  	
  5.22

  
	
  Leases

  	
   

  	
  5.22

  
	
  Legend

  	
   

  	
  2.13

  
	
  Make-Whole Premium Table

  	
   

  	
  4.06

  
	
  obligor

  	
   

  	
  1.03

  
	
  Offer
  Amount

  	
   

  	
  3.08

  
	
  Offer
  Period

  	
   

  	
  3.08

  
	
  Optional Redemption Notice

  	
   

  	
  3.03

  
	
  Optional Redemption Price

  	
   

  	
  3.07

  
	
  Paying
  Agent

  	
   

  	
  2.03

  
	
  Payment
  Default

  	
   

  	
  7.01

  
	
  Permitted Asset Sale

  	
   

  	
  5.10

  
	
  Permitted
  Debt

  	
   

  	
  5.09

  
	
  Premises

  	
   

  	
  5.21

  
	
  Pricing Condition

  	
   

  	
  3.07

  
	
  Public Acquirer Change of Control

  	
   

  	
  4.07

  
	
  Purchased
  Shares

  	
   

  	
  4.05

  
	
  record date

  	
   

  	
  4.05

  
	
  Registrar

  	
   

  	
  2.03

  
	
  Repurchase Notice

  	
   

  	
  3.09

  
	
  Required Reserve Amount

  	
   

  	
  4.04

  
	
  Reset
  Trading Average

  	
   

  	
  4.10

  
	
  Rights

  	
   

  	
  4.05

  
	
  Rights
  Plan

  	
   

  	
  4.05

  

 

25

 

	
  Seneca Project Entity

  	
   

  	
  5.23

  
	
  Share Delivery Due Date

  	
   

  	
  4.02

  
	
  Special Interest

  	
   

  	
  7.03

  
	
  Spinoff
  Valuation Period

  	
   

  	
  4.05

  
	
  Stock Price

  	
   

  	
  4.06

  
	
  Stock Price Cap

  	
   

  	
  4.06

  
	
  Stock Price Threshold

  	
   

  	
  4.06

  
	
  Stockholder Approval

  	
   

  	
  5.26

  
	
  Surviving Entity

  	
   

  	
  6.01

  
	
  transfer

  	
   

  	
  2.13

  
	
  Trigger
  Event

  	
   

  	
  4.05

  
	
  Triggering
  Distribution

  	
   

  	
  4.05

  
	
  Withdrawal Event

  	
   

  	
  16.01

  

 

Section
1.03.        Incorporation
by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision
of the TIA, the provision is incorporated by reference in and made a part of
this Indenture.

 

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

 

“indenture securities” means
the Notes and the Note Guarantees;

 

“indenture
security Holder” means a Holder of a Note;

 

“indenture
to be qualified” means this Indenture;

 

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

 

“obligor” on the Notes and
the Note Guarantees means the Company and the Guarantors, respectively, and any
successor obligor upon the Notes and the Note Guarantees, respectively.

 

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

 

Section 1.04.                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;

 

26

 

(c)           “or” is not exclusive;

 

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

 

(e)           provisions apply to
successive events and transactions; and

 

(f)            references to sections of or
rules under the TIA, the Securities Act or the Exchange Act shall be deemed to
include substitute, replacement of successor sections or rules adopted by the
SEC from time to time.

 

ARTICLE
2.

THE NOTES

 

Section 2.01.                Title,
Terms, Form and Dating.

 

The Notes shall be known and designated as
the “10% Convertible Senior Secured Notes Due 2012” of the Company. The
Principal Amount shall be payable on the Stated Maturity or on an applicable
Redemption Date or as otherwise provided under this Indenture.

 

The Notes and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A hereto (the “Form of Note”). The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.

 

The terms and provisions contained in the
Notes shall constitute, and are hereby expressly made, a part of this Indenture
and the Company, the Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby. However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.

 

Section 2.02.                Execution
and Authentication.

 

Two Officers shall sign the Notes for the
Company by manual or facsimile signature.

 

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

 

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

 

The Trustee shall, upon a written order of
the Company signed by two Officers (an “Authentication
Order”)  accompanied by an Officers’
Certificate, authenticate Notes for original issue up to the aggregate
principal amount of $55.0 million plus any Capitalized Interest permitted to be
issued in lieu of cash interest payments on the Notes as permitted by Section
14.02(c) hereof and paragraph “1. Interest” in the Form of Note.

 

27

 

The Trustee may appoint an authenticating
agent acceptable to the Company to authenticate Notes. An authenticating agent
may authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.

 

Section 2.03.                Registrar,
Paying Agent and Conversion Agent.

 

The Company shall maintain an office or
agency in The City of New York where Notes may be presented for registration of
transfer or for exchange (“Registrar”), an office or agency where Notes may be presented
for payment (“Paying Agent”) and an office or agency where the
Notes may be presented for conversion (“Conversion Agent”). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents and
conversion agents. The term “Registrar” includes any co-registrar, the term “Paying
Agent” includes any additional paying agent, and the term “Conversion Agent”
includes any additional conversion agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.

 

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

 

Section 2.04.                Paying
Agent to Hold Money in Trust.

 

The Company shall require each Paying Agent
other than the Trustee to agree in writing that the Paying Agent will hold in
trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of Principal, premium, if any, Interest or any other
amounts due on the Notes, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
the Company or a Subsidiary) shall have no further liability for the money. If
the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

 

Section
2.05.        Holder
Lists.

 

The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders and shall otherwise comply with TIA § 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at least seven Business Days before each Interest Payment Date and 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 

 

28

 

reasonably
require of the names and addresses of the Holders of Notes and the Company
shall otherwise comply with TIA § 312(a).

 

Section
2.06.        Transfer
and Exchange.

 

(a)           Subject to compliance with
any applicable additional requirements contained in Section 2.13, when a Note
is presented to a Registrar with a request to register a transfer thereof or to
exchange such Note for an equal Principal Amount of Notes of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested; provided, however, that
every Note presented or surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by an assignment form and, if applicable,
an appropriately completed certificate of transfer in the form attached as
Exhibit B hereto, 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 Note for
registration of transfer or exchange at an office or agency maintained pursuant
to Section 2.03, the Company shall execute and the Trustee shall authenticate
Notes of a like aggregate Principal Amount at the Registrar’s request. Any
exchange or transfer shall be without charge, except that the Company or the
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto other than any tax
or other governmental charge payable upon any exchange or transfer pursuant to
Sections 2.10, 2.13(a), 3.07, 3.08, 3.09, 5.10, 5.15 and 10.05.

 

(b)           The Company shall not be
required (A) to issue, to register the transfer of or to exchange any Notes
during a period beginning at the opening of business 15 days before the day of
any selection of Notes for repurchase under Sections 3.07, 3.08 and 3.09 hereof
and ending at the close of business on the day of selection, (B) to register
the transfer of or to exchange any Note so selected for repurchase in whole or
in part, except the unpurchased portion of any Note being redeemed in part or
(C) to register the transfer of or to exchange a Note between a record date and
the next succeeding Interest Payment Date set forth on the face of such Note.

 

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

 

(d)           Any Registrar appointed
pursuant to Section 2.03 hereof shall provide to the Trustee such information
as the Trustee may reasonably require in connection with the delivery by such
Registrar of Notes upon transfer or exchange of Notes.

 

(e)           The Trustee shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under applicable law
with respect to any transfer of any interest in any Note 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.

 

(f)            Prior to due presentment for
the registration of a transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any Note is

 

29

 

registered as the absolute
owner of such Note for the purpose of receiving payment of Principal of and
Interest and any other amounts due on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by notice
to the contrary.

 

(g)           All certifications,
certificates and Opinions of Counsel required to be submitted to the Registrar
pursuant to this Section 2.06 to effect a registration of transfer or exchange
may be submitted by facsimile.

 

Section
2.07.        Replacement
Notes.

 

If any
mutilated Note is surrendered to the Trustee or the Company and the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee’s
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.

 

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

 

Section
2.08.        Outstanding
Notes.

 

The Notes outstanding at any time are all the
Notes authenticated by the Trustee, except for those canceled by it, those
converted pursuant to Article 4, those delivered to it for cancellation, and
those described in this Section as not outstanding. Except as set forth in
Section 2.09 hereof, a Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note.

 

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

 

If the entire Principal, accrued and unpaid
Interest on such Principal, accrued and unpaid Late Charges on such Principal
and Interest and any other amounts due on any Note is considered paid under
Section 5.01 hereof, such Note ceases to be outstanding and Interest on it
ceases to accrue.

 

If the Paying Agent (other than the Company,
a Subsidiary or an Affiliate of any thereof) holds, on a Redemption Date or
Stated Maturity, money sufficient to pay all Notes payable on that date, then
on and after that date such Notes shall be deemed to be no longer outstanding
and shall cease to accrue Interest.

 

30

 

Section
2.09.        Treasury
Notes.

 

In determining whether the Holders of the
required Principal Amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that the Trustee knows are so
owned shall be so disregarded.

 

Section
2.10.        Temporary
Notes.

 

Until certificates representing Notes are
ready for delivery, the Company may prepare and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of certificated Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes without charge to the Holders.

 

Holders of temporary Notes shall be entitled
to all of the benefits of this Indenture as physical Notes.

 

Section
2.11.        Cancellation.

 

The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent
shall forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement, cancellation or conversion and shall dispose of canceled Notes
(subject to the record retention requirement of the Exchange Act). Except as
otherwise provided in this Indenture, the Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation, or that any Holder has converted pursuant to Article 4 hereof.

 

Section
2.12.        Defaulted
Interest.

 

If the Company defaults in a payment of
Interest or any other amounts due on the Notes, Late Charges shall apply and
the Company shall pay the Late Charges in any lawful manner plus, to the extent
lawful, Late Charges payable, to the Persons who are Holders on a subsequent
special record date. The Company shall notify the Trustee in writing of the
amount of Late Charges proposed to be paid on each Note and the date of the
proposed payment. The Company shall fix or cause to be fixed each such special
record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such Late Charges. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such Interest to be paid.

 

31

 

Section 2.13.                Legend;
Additional Transfer and Exchange Requirements.

 

(a)           If Notes are issued upon the
transfer, exchange or replacement of Notes subject to restrictions on transfer
and bearing the legends set forth on the Form of Note (collectively, the “Legend“), or if a request
is made to remove the Legend on a Note, (i) the Notes so issued shall bear the
Legend, or (ii) the Legend shall not be removed, as the case may be, unless in
the case of clause (ii) there is delivered to the Company and the Registrar
such satisfactory evidence, which shall include an Opinion of Counsel if
requested by the Company or such Registrar, as may be reasonably required by
the Company and the Registrar, that neither the Legend nor the restrictions on
transfer set forth therein are required to ensure that transfers thereof comply
with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities
Act or that such Notes are not “restricted” within the meaning of Rule 144
under the Securities Act; provided that
no such evidence need be supplied in connection with the sale of such Note
pursuant to a registration statement that is effective at the time of such sale.
Upon (1) provision of such satisfactory evidence if requested, or (2)
notification by the Company to the Trustee and Registrar of the sale of such
Note pursuant to a registration statement that is effective at the time of such
sale, the Trustee, at the written direction of the Company, shall authenticate
and deliver a Note that does not bear the Legend. If the Legend is removed from
the face of a Note and the Note is subsequently held by an Affiliate of the
Company, the Legend shall be reinstated.

 

(b)           No transfer of a Note to any
Person shall be effective under this Indenture or the Notes unless and until such
Note has been registered in the name of such Person.

 

(c)           Subject to the succeeding
paragraph, every Note shall be subject to the restrictions on transfer provided
in the Legend. Whenever any restricted Note is presented or surrendered for
registration of transfer or for exchange for a Note registered in a name other
than that of the Holder, such Note must be accompanied by a certificate of
transfer in the form attached as Exhibit B hereto, dated the date of such
surrender and signed by the Holder of such Note, as to compliance with any
applicable restrictions on transfer. The Registrar shall not be required to
accept for such registration of transfer or exchange any Note not so
accompanied by a properly completed certificate.

 

(d)           The restrictions imposed by
the Legend upon the transferability of any Note shall cease and terminate when
such Note has been sold pursuant to an effective registration statement under
the Securities Act or transferred in compliance with Rule 144 under the
Securities Act (or any successor provision thereto) or, if earlier, upon the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision). Any Note as to which
such restrictions on transfer shall have expired in accordance with their terms
or shall have terminated may, upon a surrender of such Note for exchange to the
Registrar in accordance with the provisions of this Section 2.13 (accompanied,
in the event that such restrictions on transfer have terminated by reason of a
transfer in compliance with Rule 144 or any successor provision, by, if
requested by the Company or the Registrar, an Opinion of Counsel reasonably
acceptable to the Company and addressed to the Company in form acceptable to
the Company, to the effect that the transfer of such Note has been made in
compliance with Rule 144 or such successor provision), be exchanged for a new
Note, of like tenor and aggregate Principal Amount, which shall not bear the
restrictive Legend. The Company shall inform the Trustee of the effective date
of any registration statement registering

 

32

 

the Notes under the
Securities Act. The Trustee shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the aforementioned opinion
of counsel or registration statement.

 

As used in the preceding Subsections 2.13(c)
and (d), the term “transfer” encompasses any sale, transfer or other
disposition of any Note.

 

Section 2.14.                CUSIP
Numbers.

 

The Company in issuing the Notes may use one
or more “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 Notes 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 Notes,
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.

 

Section 2.15.                Book-Entry
Provisions for Global Notes.

 

(a)           The Global Note initially
shall (i) be registered in the name of the Depositary or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for the Depositary
and (iii) bear legends as set forth on the face of the Form of Note.

 

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

 

(c)           Transfers of the Global Note
shall be limited to transfers in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Note may be transferred or exchanged, in whole or in part, for Physical
Notes in accordance with the rules and procedures of the Depositary and the
provisions of Section 2.13. In addition, Physical Notes shall be transferred to
all Beneficial Owners in exchange for their beneficial interests in the Global
Note if (A) such Depositary has notified the Company (or the Company becomes
aware) that the Depositary (i) is unwilling or unable to continue as Depositary
for such Global Note or (ii) has ceased to be a clearing agency registered
under the Exchange Act when the Depositary is required to be so registered to
act as such Depositary and, in either such case, no successor Depositary shall
have been appointed within 90 days of such notification or of the Company
becoming aware of such event; or (B) there shall have occurred and be
continuing an Event of Default in respect of such Global Note and the
outstanding Notes shall have become due and payable pursuant to Section 7.02
and the Trustee requests that

 

33

 

Physical Note be issued;
provided that Holders of Physical Note offered and sold in reliance on Rule
144A shall have the right, subject to applicable law, to request that such
Notes be exchanged for interests in the applicable Global Note.

 

(d)           In connection with any
transfer or exchange of a portion of the beneficial interest in the Global Note
to Beneficial Owners pursuant to clause (c) of this Section 2.15, the Registrar
shall (if one or more Physical Notes are to be issued) reflect on its books and
records the date and a decrease in the Principal Amount of the Global Note in
an amount equal to the Principal Amount of the beneficial interest in the
Global Note to be transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Physical Notes of like tenor and
amount.

 

(e)           In connection with the
transfer of the entire Global Note to Beneficial Owners pursuant to clause (c)
of this Section 2.15, the Global Note shall be deemed to be surrendered to the
Trustee for cancellation, and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depositary
in exchange for its beneficial interest in the Global Note, an equal aggregate
Principal Amount of Physical Notes of authorized denominations and the same
tenor.

 

(f)            Any Physical Note bearing a
restrictive Legend delivered in exchange for an interest in the Global Note
pursuant to clause (c) or (d) of this Section 2.15 shall bear the legend
regarding transfer restrictions applicable to the Physical Notes set forth on
the face of the form of Note in Exhibit A hereto.

 

(g)           The Holder of the Global
Note may grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the Notes.

 

(h)           The Trustee shall have no
responsibility or obligation to any Beneficial Owner of a Global Note, a member
or, or a participant in the Depositary or other Person in respect of the
accuracy of the books or records, or the acts or omissions, of the Depositary
or its nominee or of any participant or member thereof, in respect of any
ownership interest in the Notes or in respect of the delivery to any
participant, member, Beneficial Owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the payment
of any amount, under or in respect of such Notes. All notices and
communications to be given to the Holders and all payment to be made to Holders
under the Notes shall be given or made only to or upon the order of the
registered Holders (which shall be the Depositary or its nominee in the case of
a Global Note). The rights of beneficial owners in any Global Note shall be
exercised only through the Depositary subject to the applicable procedures of
the Depositary. The Trustee may rely on information furnished by the Depositary
in respect of its Agent Members and any Beneficial Owners.

 

Section 2.16.                Transfers
to QIBs.

 

The following provisions shall apply in
respect of the registration of any proposed transfer of a Note constituting a
Note bearing a restrictive Legend to a QIB:

 

34

 

(a)           the Registrar shall register
the transfer if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has signed
the certification provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing the
Note for its own account or an account in respect of which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

(b)           if the proposed transferee
is an Agent Member, and the Notes to be transferred consist of Physical Notes
which after transfer are to be evidenced by an interest in the Global Note,
upon receipt by the Registrar of instructions given in accordance with the
Depositary’s and the Registrar’s procedures, the Registrar shall reflect on its
books and records the date and an increase in the Principal Amount of the
Global Note in an amount equal to the Principal Amount of the Physical Notes to
be transferred, and the Trustee shall cancel the Physical Notes so transferred.

 

ARTICLE
3.

REDEMPTION AND PREPAYMENT

 

Section 3.01.                Notices
to Trustee.

 

If the Company elects to exercise the
Optional Redemption Right pursuant to Section 3.07 hereof, it shall notify the
Trustee in writing of the Optional Redemption Date and the Principal Amount of
the Notes to be redeemed, together with an Officers’ Certificate that all
conditions precedent with respect to such redemption contained in Section 3.01
have been satisfied.

 

The Company shall give each notice to the
Trustee and the Registrar provided for in this Section 3.01 at least 35 days
prior to any Optional Redemption Date unless the Trustee consents to a shorter
period. Such notice shall be accompanied by an Officer’s Certificate to the
effect that such redemption will comply with the conditions herein, including
but not limited to Section 3.07 herein. If fewer than all the Notes are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given to the Trustee, which record
date shall be not less than 15 days after the date of such notice.

 

Section
3.02.                Selection
of Notes To Be Redeemed.

 

In the case of any partial redemption, selection
of the Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not listed, then by lot or at random.
Notes and portions of them the Trustee selects shall be in amounts of $1,000 or
a whole multiple of $1,000. Provisions of this Indenture that apply to Notes
called for redemption also apply to

 

35

 

portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be redeemed. The Trustee may rely upon
information provided by the Registrar for purposes of this Section 3.02.

 

If any Note selected for partial redemption
is converted in part before termination of the conversion right in respect of
the portion of the Note so selected, the converted portion of such Note shall
be deemed (so far as may be) to be the portion selected for redemption such
that the amount designated for partial redemption shall be reduced by the
amount so converted. Notes which have been converted during a selection of
Notes to be redeemed may be treated by the Trustee as outstanding for the
purpose of such selection.

 

Section 3.03.                Notice
of Redemption

 

At least 30 days but not more than 60 days
before an Optional Redemption Date, the Company shall deliver a notice of
redemption (an “Optional  Redemption
Notice“) (with a copy to the Trustee) to each Holder of Notes to be
redeemed at such Holder’s registered address.

 

The Optional Redemption Notice shall identify
the Notes to be redeemed and shall state:

 

(i)            each date when, pursuant to
the provisions of Section 3.07 hereof, the Company elects to redeem the Notes
in whole or in part (the “Optional Redemption Date”);

 

(ii)           the Optional Redemption Price;

 

(iii)          the Conversion Price;

 

(iv)          the name and address of the
Paying Agent where Notes are to be surrendered;

 

(v)           that Notes called for
redemption may be converted at any time before the close of business on the
Business Day immediately preceding the Optional Redemption Date;

 

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

 

(vii)         if fewer than all the
outstanding Notes are to be redeemed, the identification and Principal Amounts
of the particular Notes to be redeemed;

 

(viii)        that, unless the Company
defaults in making such redemption payment, Interest on Notes (or portion
thereof) called for redemption ceases to accrue on and after the Optional Redemption Date; and

 

(ix)           the CUSIP number or ISIN
number, if any, printed on the Notes being redeemed.

 

At the Company’s request, the Trustee shall
give the Optional Redemption Notice in the Company’s name and at the Company’s
expense. In such event, the Company shall provide the Trustee with the
information required by this Section 3.03.

 

36

 

Section
3.04.                Effect
of Notice of Redemption.

 

Once an Optional Redemption Notice is
delivered to the Holders, the Notes (or portions thereof) called for redemption
shall become irrevocably due and payable on the Optional Redemption Date and at
the Optional Redemption Price stated in the Optional Redemption Notice. An
Optional Redemption Notice may not be conditional and shall be irrevocable. Upon
surrender to the Paying Agent, such Notes shall be paid at the Optional
Redemption Price stated in the Optional Redemption Notice; provided that if the Optional Redemption
Date is on or after a regular record date and on or prior to the Interest
Payment Date, the accrued and unpaid Interest shall be payable to the Holder of
the redeemed Notes registered on the relevant record date. Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.

 

Section
3.05.                Deposit
of Redemption Price.

 

No later than 11:00 a.m. (New York City time)
on the Business Day prior to the date on which any Redemption Price on any Note
is due and payable, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the Redemption Price on all Notes to be redeemed on the
applicable Redemption Date other than Notes or portions of Notes called for
redemption which are owned by the Company or a Subsidiary and have been
delivered by the Company or such Subsidiary to the Trustee for cancellation. If
the Company complies with the provisions of this Section, then on and after the
applicable Redemption Date, Interest will cease to accrue on the Notes (or
portions of the Notes) called for redemption.

 

Section
3.06.                Notes
Redeemed in Part.

 

Upon cancellation of a Note that is redeemed
in part, the Company shall issue and the Trustee shall authenticate for the
Holder (at the Company’s expense) a new Note equal in Principal Amount to the
unredeemed portion of the Note surrendered. The Trustee shall notify the
Registrar of the issuance of such new Note.

 

Section
3.07.                Optional
Redemption by the Company.

 

The Notes may not be redeemed at the option
of the Company pursuant to this Indenture at any time prior to September 30,
2009. If, at any time and from time to time on or after September 30, 2009
there is not an Equity Conditions Failure, then the Company shall have the
right to redeem (the “Optional Redemption Right”)
all or any portion of the Notes at a redemption price (the “Optional Redemption Price”) equal to (i) if the Optional
Redemption Date is prior to September 30, 2010 and the Closing Sale Price of
the Common Stock is greater than $6.00 (subject to adjustment for any stock
dividend, stock split, stock combination, reclassification or other
transactions after the Issue Date as set forth in Section 4.05) for each of 20
of any 30 consecutive Trading Days preceding the applicable Optional Redemption
Notice (“Pricing Condition”) , then 100% of the
Principal Amount plus accrued and unpaid Interest on such Principal, Late
Charges on such Principal and Interest, and Interest Make-Whole, if any, (ii)
if the Optional Redemption Date is on or after September 30, 2010 and prior to
September 30, 2011, then if the Pricing Condition is satisfied, 100%,
otherwise, 105%, of the Principal Amount

 

37

 

as designated
in the Optional Redemption Notice plus accrued and unpaid Interest on such
Principal, and Late Charges on such Principal and Interest, if any, and (iii)
if the Optional Redemption Date is on or after September 30, 2011 and prior to
September 30, 2012, then if the Pricing Condition is satisfied, 100%,
otherwise, 102.5% of the Principal Amount as designated in the Optional
Redemption Notice, plus accrued and unpaid Interest on such Principal, and Late
Charges on such Principal and Interest, if any, subject to the right of Holders
of record on the relevant regular record date to receive Interest due on an
Interest Payment Date that is on or prior to the Optional Redemption Date.

 

Section 3.08.                Offer
to Purchase by Application of Excess Proceeds.

 

In the event that, pursuant to Section 5.10
hereof, the Company shall be required to commence an offer to all Holders of
Notes to purchase the maximum Principal Amount of Notes that may be purchased
out of the Excess Proceeds (an “Excess
Proceeds Offer”), it shall follow the procedures
specified below.

 

The Excess Proceeds Offer shall remain open
for a period of at least 20 Business Days following its commencement and no
longer, except to the extent that a longer period is required by applicable law
(the “Offer Period”). As
promptly as practicable and no later than three Business Days after the
termination of the Offer Period (the “Excess
Proceeds Redemption Date“), the Company shall purchase the
Principal Amount of Notes required to be purchased pursuant to Section 5.10
hereof (the “Offer Amount”)  or,
if less than the Offer Amount has been tendered, all Notes tendered in response
to the Excess Proceeds Offer. Payment for any Notes so purchased shall be made
in the same manner as Interest payments are made and shall be paid on the
Excess Proceeds Redemption Date.

 

If the Excess Proceeds Redemption Date is on
or after an interest record date and on or before the related Interest Payment
Date, any accrued and unpaid Interest shall be paid to the Person in whose name
a Note is registered at the close of business on such record date.

 

Upon the commencement of an Excess Proceeds
Offer, the Company shall send, by first class mail, a notice to each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Excess Proceeds Offer. The Excess Proceeds Offer shall be made to all Holders. The
notice which shall govern the terms of the Excess Proceeds Offer (the “Excess
Proceeds Notice”) shall state:

 

(a)           that the Excess Proceeds
Offer is being made pursuant to this Section 3.08 and Section 5.10 hereof and
the length of time the Excess Proceeds Offer shall remain open;

 

(b)           the Offer Amount, the Excess
Proceeds Redemption Price and the Excess Proceeds Redemption Date;

 

(c)           that any Note not tendered
or accepted for payment shall continue to accrue Interest;

 

38

 

(d)           that, unless the Company
defaults in making such payment, any Note accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrue Interest after the Excess Proceeds
Redemption Date;

 

(e)           that Holders electing to
have a Note purchased pursuant to an Excess Proceeds Offer may elect to have
Notes purchased in integral multiples of $1,000 only;

 

(f)            that Holders electing to
have a Note purchased pursuant to any Excess Proceeds Offer shall be required
to surrender the Note, with the form entitled “Option of Holder to Elect
Purchase” on the reverse of the Note completed, or transfer by book-entry
transfer, to the Company, a depositary, if appointed by the Company, or a
Paying Agent at the address specified in the notice no later than the
expiration of the Offer Period prior to the Excess Proceeds Redemption Date;

 

(g)           that Holders shall be
entitled to withdraw their election if the Company, the depositary or the
Paying Agent, as the case may be, receives, not later than the expiration of
the Offer Period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the Principal Amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Note purchased;

 

(h)           that, if the aggregate
Principal Amount of Notes surrendered by Holders exceeds the Offer Amount, the
Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and

 

(i)            that Holders whose Notes
were purchased only in part shall be issued new Notes equal in Principal Amount
to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer).

 

On or before the Excess Proceeds Redemption
Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Excess
Proceeds Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers’ Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.08. If the aggregate Principal
Amount of Notes tendered into such Excess Proceeds Offer exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on pro rata basis. The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than three Business Days after the Excess Proceeds Redemption
Date) mail or deliver to each tendering Holder an amount equal to the Excess
Proceeds Redemption Price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a Principal Amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Excess Proceeds Offer on the Excess
Proceeds Redemption Date.

 

39

 

The Company shall comply with the
requirements of Rule 14e-l under the Exchange Act, and any other securities
laws and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to any
Excess Proceeds Offer.

 

Section 3.09.                Offer
to Repurchase Upon Election of Holder.

 

(a)           Subject to receipt of the Repurchase Notice (as
defined in Section 3.09(c) hereof), all or any portion of the Notes of any
Holder equal to $1,000 or an integral multiple of $1,000 shall be repurchased
by the Company, at the option of such Holder, on September 30, 2010  (the “Holder
Optional Redemption Date”) at a purchase price in cash equal to 100% of the
Principal Amount of the Notes to be repurchased together with Interest and Late
Charges, if any, accrued and unpaid to, but excluding, the Holder Optional
Redemption Date (the “Holder Optional Redemption
Price”); provided,
however, if the Holder Optional Redemption Date falls after a regular record
date but on or before the related Interest Payment Date, then the Interest on
the Notes payable on such date shall be payable to the Holders in whose name
the Notes were registered at the close of business on such regular record date.

 

(b)           Not more than 60 days and not less than 30 days prior
to the Holder Optional Redemption Date, the Company, or, at the written request
and expense of the Company, the Trustee, shall mail a written notice of the
Holder Optional Redemption Date (the “Holder
Optional Redemption Notice”) to the Trustee (if the Trustee does not mail such
notice) and to each Holder. The Holder Optional Redemption Notice shall include
the form of a repurchase notice to be completed by the Holder and shall state:

 

(i)            the date by which a Repurchase Notice pursuant to this
Section 3.09 must be given;

 

(ii)           the Holder Optional Redemption Date;

 

(iii)          the Holder Optional Redemption Price;

 

(iv)          the Holder’s right to require the Company to
repurchase the Notes;

 

(v)           briefly, the conversion rights of the Notes;

 

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

 

(vii)         the Conversion Price (including any adjustments
thereto);

 

(viii)        that, the Notes as to which a Holder Optional
Redemption Notice has been given may be converted into Cash and Common Stock
(if any) pursuant to Article 4 of this Indenture only to the extent that the
Holder Optional Redemption Notice has been withdrawn in accordance with the
terms of this Indenture;

 

(ix)           that, unless the Company defaults in making the payment
of the Redemption Price, interest on Notes called for repurchase shall cease to
accrue on and after the Redemption Date and the only remaining right of the
Holder shall be to receive payment of the

 

40

 

Redemption Price payable to such Holder upon
presentation and surrender to a Paying Agent of the Notes;

 

(x)            the procedures that the Holder must follow to exercise
rights under this Section 3.09;

 

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

 

(xii)          that the Holder must satisfy the requirements set
forth in the Notes and Article 4 hereof in order to convert the Notes; and

 

(xiii)         the CUSIP and/or ICIN numbers of the Notes.

 

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

 

(c)           A Holder may exercise its rights specified in this
Section 3.09 (a “Holder Optional Redemption”) 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 Notes, may
be delivered electronically or by other means in accordance with the Depositary’s
customary procedures) of the exercise of such rights (a “Repurchase Notice”) to
any Paying Agent at any time prior to the close of business on the second
Trading Day next preceding the Holder Optional Redemption Date.

 

(i)            The delivery of such Note 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 Holder Optional
Redemption Price therefor.

 

(ii)           The Company shall only be obliged to repurchase,
pursuant to this Section 3.09, a portion of a Note if the Principal Amount
of such portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the repurchase of all of a Note also apply to the
repurchase of such portion of such Note.

 

(iii)          Notwithstanding anything herein to the contrary, any
Holder delivering to a Paying Agent the Repurchase Notice contemplated by
Section 3.09(c) shall have the right to withdraw such Repurchase 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 5:00 p.m., New York City time,
on the second Trading Day next preceding the Holder Optional Redemption Date by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.11.

 

(iv)          A Paying Agent shall promptly notify the Company of
the receipt by it of any Repurchase Notice or written withdrawal thereof.

 

(v)           Anything herein to the contrary notwithstanding, in
the case of Global Notes, any Repurchase Notice may be delivered or withdrawn and
such Notes may be

 

41

 

surrendered or delivered for repurchase in accordance
with the applicable procedures as in effect from time to time.

 

(d)           The Company shall deliver
the applicable Holder Optional Redemption Price to the Holder on the Holder
Optional Redemption Date. In the event of a redemption of less than all of the
Principal Amount of any Note, the Company shall promptly cause to be issued and
delivered to the Holder a new Note representing the outstanding Principal
Amount which has not been redeemed.

 

Section 3.10.                Failure
of Company to Pay the Applicable Redemption Price.

 

In
the event that the Company does not pay the applicable Redemption Price to the
Holder within the time period required, at any time thereafter and until the
Company pays such unpaid Redemption Price in full, the Holder shall have the
option, in lieu of redemption, to require the Company to promptly return to the
Holder all or any portion of this Note representing the Principal Amount that
was submitted for redemption and for which the applicable Redemption Price (together
with any Late Charges thereon) has not been paid. Upon the Company’s receipt of
such notice, (x) the applicable Redemption Notice shall be null and void with
respect to such Principal Amount, (y) the Company shall immediately return the
Note, or issue a new Note (which shall be authenticated by the Trustee) to the
Holder representing such Conversion Amount to be redeemed and (z) subject to
Section 4.05(2)(c) hereof, the Conversion Price of the Note or such new Notes
shall be adjusted in accordance with written instructions of the Company to the
lesser of (A) the Conversion Price as in effect on the date on which the
applicable Redemption Notice is voided and (B) the lowest Closing Sale Price of
the Common Stock during the period beginning on and including the date on which
the applicable Redemption Notice is delivered to the Company and ending on and
including the date on which the applicable Redemption Notice is voided. The
Holder’s delivery of a notice voiding a Redemption Notice and exercise of its
rights following such notice shall not affect the Company’s obligations to make
any payments of Late Charges which have accrued prior to the date of such
notice with respect to the Principal Amount subject to such notice.

 

ARTICLE
4.

CONVERSION

 

Section 4.01.                Conversion
Privilege.

 

(a)           Conversion
at the Option of the Holder. Subject to the further
provisions of this Article 4 and paragraph 8 in the Form of Note, at any time
or times after the Issue Date and until the Stated Maturity, a Holder of a Note
may convert the Conversion Amount of such Note (or any portion thereof equal to
$1,000 or any integral multiple of $1,000 in excess thereof) into such number
(rounded to the nearest whole number) of validly issued, fully paid and
nonassessable shares of Common Stock of the Company as is set forth in Section
4.01(b); provided, however, that
if such Note is to be redeemed pursuant to Section 3.07 or presented for
purchase pursuant to Section 3.08 or Section 5.15, such conversion right shall
terminate at the date such Note is redeemed or purchased pursuant to an Excess
Proceeds Offer or a Change of Control Offer, 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 paying the applicable

 

42

 

Redemption Price 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) subject to
paragraph (c) below.

 

(b)           The number of shares of
Common Stock issuable upon conversion of any Conversion Amount pursuant to this
Section 4.01 shall be determined by dividing (x) such Conversion Amount by (y)
the Conversion Price (the “Conversion Rate”).

 

“Conversion Amount”
means the sum of (A) the portion of the Principal Amount to be converted,
redeemed or otherwise with respect to which this determination is being made,
(B) accrued and unpaid Interest with respect to such Principal Amount, (C)
accrued and unpaid Late Charges, if any, and (D) the Interest Make-Whole, if
applicable.

 

“Conversion Price”
means, as of any Conversion Date (as defined below) or other date of
determination, initially $3.66 as of the date of this Indenture, subject to
adjustment from time to time pursuant to this Article 4.

 

(c)           The provisions of this
Indenture that apply to the conversion of all of a Note also apply to the
conversion of a portion of a Note.

 

(d)           A Note in respect of which a
Holder has delivered an “Option of Holder to Elect Purchase” form exercising
the option of such Holder to require the Company to purchase such Note pursuant
to an Excess Proceeds Offer, a Change of Control Offer or a Redemption pursuant
to Section 3.09 hereof may be converted only if such form is withdrawn by a
written notice of withdrawal delivered to a Paying Agent no later than the
expiration of the offer period in accordance with Section 3.08, or Section
5.15, or at any time
prior to 5:00 p.m., New York City time, on the second Trading Day immediately
preceding the applicable Redemption Date, as the case may be, specifying the
Principal Amount of the Note 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, as applicable.

 

(e)           For any Interest Payment Date occurring after the
fourth semi-annual Interest Payment Date due on September 30, 2009, if a Note
is converted on or after a record date for an interest payment but prior to the
corresponding Interest Payment Date, the Holder will be required to pay the
Company, at the time it surrenders such Note for conversion, the amount of
Interest on such Notes it will receive on the Interest Payment Date
corresponding to the period commencing on such conversion date and ending on
such Interest Payment Date. Notwithstanding the foregoing and the provisions of
Section 4.01(b) hereof, if a Note is converted prior to payment of the fourth
semi-annual interest payment due on September 30, 2009, and (i) if the Holder
indicates on the applicable Conversion Notice that the applicable Conversion
Amount shall not include any Interest Make-Whole, then such Holder shall
receive, in addition to the Company’s Common Stock (or other securities or
assets as provided for in this Section 4.01) issuable upon such conversion, the
LC Amount applicable to such Note or portion of such Note released and
delivered by the LC Agent, and (ii) if the Holder indicates on the applicable
Conversion Notice that the applicable Conversion Amount shall include the
Interest Make-Whole, then the Letter of Credit shall be reduced by the LC
Amount applicable to such

 

43

 

Note or portion of such Note; provided, however, that
if the conversion is in connection with a Change of Control in which Additional
Shares are required to be paid by the Company, then the Letter of Credit shall
be reduced by the LC Amount applicable to such Note or portion of such Note.

 

(f)            A Holder of Notes is not
entitled to any rights of a holder of Common Stock until such Holder has
converted its Notes to Common Stock in compliance with the procedures set forth
in this Article 4, and only to the extent such Notes are deemed to have been
converted into Common Stock pursuant to this Article 4.

 

Section 4.02.                Conversion
Procedure.

 

To convert a Note (or portion thereof) into
shares of Common Stock on any date (the “Conversion Date”),
a Holder must (a) complete and manually sign the conversion notice on the back
of the Note and transmit by facsimile (or otherwise deliver) such notice to a
Conversion Agent and the Conversion Agent shall have received such notice, on
or prior to 5:00 p.m., New York City time, on such date, (b) surrender the
Notes to be converted to the Conversion Agent as soon as practicable on or
following such date (or an indemnification undertaking with respect to any such
Notes in the case of its loss, theft or destruction), (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. As soon as practicable after the
Conversion Date, but in no event later than three Trading Days following
delivery of a Conversion Notice (the “Share Delivery Due Date”)
the Company shall deliver to the Holder through a Conversion Agent a
certificate for the number of whole shares of Common Stock (or Conversion
Securities, if applicable) issuable upon the conversion and shall, (x) provided
the Company’s transfer agent is participating in The DTC’s Fast Automated Securities Transfer Program, cause its
transfer agent to credit such aggregate number of shares of Common Stock to
which each such Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission system
or (y) if such transfer agent is not participating in DTC’s Fast Automated
Securities Transfer Program, execute, and shall deliver, to the address as
specified in the Conversion Notice, a certificate, registered in the name of
the converting holder or its designee, for the number of shares of Common Stock
to which such holder shall be entitled.

 

The Person or Persons entitled to receive
such Common Stock upon such conversion shall be treated for all purposes as the
holder or holders of such Common Stock, as of the close of business on the
applicable Conversion Date; provided, however, that no surrender of a Note 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 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
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 in full of a Note, such Person shall no longer be a
Holder of such Note.

 

44

 

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

 

The Company shall not effect any conversion
of a Note, and no Holder shall have the right to convert any portion of such
Note, to the extent that after giving effect to such conversion, such Holder
(together with such Holder’s affiliates) would beneficially own in excess of 4.99%
of the number of shares of Common Stock outstanding immediately after giving
effect to such conversion (the “Conversion Limitation”).
For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by such Holder and its affiliates shall include the number
of shares of Common Stock issuable upon conversion of a Note with respect to
which the determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A) conversion of
the remaining, nonconverted portion of any Note beneficially owned by such
Holder or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by such Holder or any of its affiliates. Except
as set forth in the preceding sentence, for purposes of this Section,
beneficial ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act. For purposes of this Section 4.02, in determining the number
of outstanding shares of Common Stock, such Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most
recent annual, quarterly or current report on Form 10-KSB, 10-QSB or Form 8-K,
respectively, as the case may be; (y) a more recent public announcement by the
Company or (z) any other notice by the Company setting forth the number of
shares of Common Stock outstanding. For any reason at any time, upon the
written or oral request of a Holder, the Company shall within two Business Days
confirm orally and in writing to such Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including any Note, by such Holder or its affiliates
since the date as of which such number of outstanding shares of Common Stock
was reported. By written notice to the Company, any Holder may increase or
decrease the Conversion Limitation to any other percentage not in excess of
9.99% specified in such notice; provided that (i) any such increase will not be
effective until the 61st day after such notice is delivered to the Company, and
(ii) any such increase or decrease will apply only to the Holder sending such
notice and not to any other Holder of Notes. Notwithstanding the foregoing, the
Conversion Limitation shall not be applicable (i) on any of the ten Trading
Days up to and including the Stated Maturity, or (ii) on any of the ten Trading
Days up to and including the effective date of such Change of Control or (iii)
during the period between the date that the Change of Control notice is sent
and the Change of Control Redemption Date.

 

Section 4.03.                Taxes
on Conversion.

 

If a Holder converts a Note, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock (or Conversion Securities, as applicable) upon
such conversion. However, the Holder shall pay any such tax which is due
because the Holder requests the securities to be issued in a name other than
the Holder’s name.

 

45

 

Section 4.04.                Company
to Reserve Stock; Related Covenants.

 

(a)           Reservation
of Shares. The Company initially shall reserve out of its
authorized and unissued Common Stock a number of shares of Common Stock for
each Note not less than 120% of the Conversion Rate with respect to the
Conversion Amount of each such Note as of the Issue Date. So long as any Notes
are outstanding, the Company shall take all action necessary to reserve and
keep available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Notes, 120% of the number of shares
of Common Stock as shall from time to time be necessary to effect the
conversion of all of the outstanding Notes (without regard to any limitations
on conversions) (the “Required
Reserve Amount”). The initial number of shares of Common Stock
reserved for conversions of the Notes and each increase in the number of shares
so reserved shall be allocated pro rata among the Holders based on the
Principal Amount of the Notes held by each Holder on the Issue Date or increase
in the number of reserved shares, as the case may be (the “Authorized Share Allocation”). In the event that a Holder
shall sell or otherwise transfer any of such Holder’s interests in any Notes,
each transferee shall be allocated a pro rata portion of such Holder’s
Authorized Share Allocation.

 

(b)           Insufficient
Authorized Shares. If at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Notes at least a number of shares of Common
Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately
take all action necessary to increase the Company’s authorized shares of Common
Stock to an amount sufficient to allow the Company to reserve the Required
Reserve Amount for the outstanding Notes. Without limiting the generality of
the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than 60 days after the
occurrence of such Authorized Share Failure, the Company shall call a meeting
of its shareholders for the approval of an increase in the number of authorized
shares of Common Stock. In connection with such meeting, the Company shall
provide each shareholder with a proxy statement and shall use its reasonable
best efforts to solicit its shareholders’ approval of such increase in
authorized shares of Common Stock and to cause its Board of Directors to
recommend to the shareholders that they approve such proposal.

 

(c)           Validity. All shares of
Common Stock (or Conversion Securities, as applicable) delivered upon conversion
of the Notes 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.

 

(d)           Compliance
with Applicable Laws; Additional Listing Application. The Company
will comply with all federal and state securities laws regulating the offer and
delivery of shares of Common Stock (or Conversion Securities, as applicable)
upon conversion of Notes, if any, and will list or cause to have quoted such shares
of Common Stock (or Conversion Securities, as applicable) on each national
securities exchange or on over-the-counter market or such other market on which
the Common Stock (or Conversion Securities, as applicable) is then listed or
quoted.

 

46

 

(e)           Conversion Delay. The Company understands that a delay in
the delivery of the certificates representing the Common Stock issuable upon
conversion of the Notes could result in economic loss to the Holder. In addition
to any other rights of Holders, as compensation to the Holder for such late
delivery of Common Stock upon conversion of this Note the amount of $50 per
Business Day for each $10,000 of Common Stock (measured by the relevant
Conversion Price as of the Conversion Date and prorated for amounts other than
$10,000) after the Share Delivery Due Date and continuing until the date on
which the certificate representing such Common Stock is delivered to the Holder
(or its designee) or the obligation to deliver such certificate is terminated
as set forth below. The Company shall pay any payments incurred under this
paragraph in immediately available funds upon demand.

 

In addition, if, on or after the Share
Delivery Due Date (i) the certificate for such shares of Common Stock has not
been delivered by the Company to the Holder and (ii) the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within
three (3) Business Days after the Holder’s written request (which request shall
include evidence of the purchase and a breakdown of the purchase price) and in
such Holder’s discretion, either (x) pay cash to such Holder in an amount equal
to such Holder’s total purchase price (including brokerage commissions and
other out-of-pocket expenses, if any) for the shares of Common Stock so
purchased (the “Buy-In Price”),
at which point the Company’s obligation to deliver such certificate (and to
issue such shares of Common Stock) shall terminate, or (y) promptly honor its
obligation to deliver to such Holder a certificate or certificates representing
such Common Stock and pay cash to such Holder in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of shares of
Common Stock, times (B) the Closing Sale Price on the Conversion Date.

 

Section 4.05.                Adjustment
of Conversion Price.

 

The Conversion Price shall be adjusted from
time to time by the Company as follows other than as a result of, or in
connection with, the issuance of Excluded Securities:

 

(1)           Dividends;
Distributions; Subdivisions; Combinations. In case the Company shall
(A) pay a dividend on its Common Stock in shares of Common Stock, (B) make a
distribution on its Common Stock in shares of Common Stock, (C) subdivide its
outstanding Common Stock into a greater number of shares, or (D) 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 Note
thereafter surrendered for conversion shall be entitled to receive that number
of shares of Common Stock which it would have owned had such Note been
converted immediately prior to the happening of such event. An adjustment made
pursuant to this subsection (1) 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.

 

(2)           Issuances
Below Issue Date Closing Sale Price; Issuances Below Conversion Price.

 

47

 

(a)           In case the Company shall
issue or sell, or is deemed to have issued or sold, equity or equity-linked
securities for a consideration per share of Common Stock (or securities
convertible into or exercisable or exchangeable for Common Stock):

 

(i)            at a price per share (or
having a conversion, exercise or exchange price per share) less than $2.70 (subject to adjustment for
stock splits, combinations, dividends and other customary adjustments), or

 

(ii)           following September 30,
2009, at a price per share (or having a conversion, exercise or exchange price
per share) less than the lesser of (A) the then current Conversion Price and
(B) $2.70 (subject to
adjustment for stock splits, combinations, dividends and other customary
adjustments),

 

(treating the conversion, exercise or
exchange price per share of the securities convertible into or exercisable or
exchangeable for Common Stock as equal to (x) the sum of (i) the price for a
unit of the security convertible into or exercisable or exchangeable for Common
Stock and (ii) any additional consideration payable upon the conversion of such
security into or exercise or exchange of such security for Common Stock divided
by (y) the number of shares of Common Stock underlying such security), 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:

 

(A)          the numerator shall be the
number of shares of Common Stock outstanding on the close of business on the
relevant record date (or if no record date is fixed, the date immediately prior
to the date of announcement of such issuance), 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, exercise or exchange price of the
securities so offered, which shall be determined by multiplying the number of
shares of Common Stock issuable upon conversion, exercise or exchange of such
securities by the applicable conversion, exercise or exchange price per share
of Common Stock pursuant to the terms of such securities) would purchase at the
Conversion Price per share of Common Stock on such record date; and

 

(B)           the denominator
shall be the number of shares of Common Stock outstanding on the close of
business on such record date with respect to such issuance (or if no record
date is fixed, the date immediately prior to the date of announcement of such
issuance), plus the number of additional shares of Common Stock offered (or
into which the securities so offered are convertible, exchangeable or
exercisable).

 

(b)          Change in
Exercise/Conversion Price or Rate of Conversion. If the purchase
price provided for in any equity-linked securities, the additional
consideration, if any, payable upon the issue, conversion, exchange or exercise
of any equity-linked securities, or the rate at which any equity-linked
securities are convertible into or exchangeable or exercisable for Common Stock
changes at any time, the Conversion Price in effect at the time of such change
shall be adjusted to the Conversion Price which would have been in effect at
such time had such equity-linked securities provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold. For

 

48

 

purposes of
this Section 4.05(2)(b), if the terms of any equity-linked security that was
outstanding as of the Issue Date are changed in the manner described in the
immediately preceding sentence, then such equity-linked security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change.

 

(c)           Limitations &
Interpretations.

 

Notwithstanding
anything to the contrary in this Indenture (including, without limitation,
Section 3.10, this Section 4.05(2), Section 4.06 and Section 4.10), unless the
Company shall have received Stockholder Approval, the Conversion
Price or Conversion Rate shall not be adjusted beyond the amount that the total number of shares issuable upon
conversion of the Notes would exceed 22,008,800 shares (as adjusted for
stock splits, reverse stock splits, stock combinations, reclassifications and
reorganizations) which represents
19.99% of the Company’s Common Stock outstanding as of the close of the Trading
Day immediately preceding the date of the Indenture without shareholder
approval or as otherwise required pursuant to the listing requirements of the
American Stock Exchange or such other national securities exchange on which the
Common Stock is then listed.

 

For
purposes of this subsection 4.05(2), if the consideration of such additional
shares of Common Stock, other Capital Stock or equity-linked
securities consists in whole or
in part of property other than cash, the portion of the non-cash consideration
shall be computed as the Fair Market Value of such property, as determined in
good faith by the Board of Directors of the Company.

 

For the
avoidance of doubt, any adjustment to be made pursuant to this
Section 4.05(2) shall be made on a weighted average basis to give effect
to the size and price of the capital stock issued that gives or is to give rise
to the antidilution protection intended by this Section, rather than on a
so-called “full ratchet basis” or by attributing no consideration to the
applicable proceeds raised.

 

Any
adjustment required by this Section 4.05(2) shall be made
successively whenever any such equity or equity-linked security are issued, and
shall become effective immediately after such record date. If at the end of the
period during which such equity-linked security are exercisable not all such
securities 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).

 

Notwithstanding the foregoing, if the
application of this Section 4.05(2) shall result in an increase in the
Conversion Price, no adjustment shall be made for such issuances of equity or
equity-linked securities.

 

(3)           Distributions
of Capital Stock, Indebtedness or Other Non-Cash Assets. (i) 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

 

49

 

but excluding (A) dividends
or distributions paid exclusively in cash or (B) dividends or distributions
referred to in subsection (1) of this Section 4.05), 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 (2) of this Section 4.05) and also excluding
the distribution of rights to all holders of Common Stock pursuant to a Rights
Plan (as defined below) adopted before the date of this Indenture), 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:

 

(A)          the numerator shall be
Current Market Price per share 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 in good faith, 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, options 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

 

(B)           the denominator shall be the
Current Market Price per share 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 stockholders entitled to receive such distribution.

 

(ii)           In the event the then Fair Market Value 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 is equal to or
greater than the Current Market Price per share of the Common Stock on such
record date, in lieu of the foregoing adjustment, adequate provision shall be
made prior to the time the foregoing adjustment could otherwise be made in a
writing delivered to the Trustee and the Holders so that each Holder of a Note
shall have the right to receive upon conversion the amount of capital stock,
evidences of indebtedness or other non-cash assets so distributed or of such rights
or warrants such Holder would have received had such holder converted each Note
on such record date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the Fair Market Value of
any distribution for purposes of this Section 4.05(3) by reference to the
actual or when issued trading market for any securities, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.

 

Notwithstanding
the foregoing, if the securities distributed by the Company to all or
substantially all holders of its Common Stock consist of capital stock of, or
similar equity interests in, a Subsidiary or other business unit, the
Conversion Price shall be decreased so that the same shall be equal to the
price determined by multiplying the Conversion Price in effect on the record
date with respect to such distribution by a fraction:

 

50

 

(A)          the numerator of which shall
be the average Closing Price of one share of Common Stock over the Spinoff
Valuation Period (as defined below), such adjustment to become effective
immediately prior to the opening of business on the fifteenth Trading Day after
the date on which “ex-dividend trading” commences; and

 

(B)           the denominator of which
shall be the sum of (x) the average Closing Price of one share of Common Stock
over the ten consecutive Trading Day period (the “Spinoff Valuation Period“) commencing on and including the
fifth Trading Day after the date on which “ex-dividend trading” commences on
the Common Stock on the American Stock Exchange or such other national or
regional exchange or market on which the Common Stock is then listed or quoted
and (y) the average Closing Price over the Spinoff Valuation Period of the
portion of the securities so distributed applicable to one share of Common
Stock.

 

In lieu of the
foregoing, the Company may at the time of the public announcement of such
distribution elect in a writing provided to the Trustee and the Holders to
reserve the pro rata portion of
such Notes so that each Holder of securities shall have the right to receive
upon conversion the amount of such shares of capital stock or similar equity
interests of such Subsidiary or business unit that such Holder of Notes would
have received if such Holder of Notes had converted such Notes on the record
date with respect to such distribution.

 

(iii)          With respect to any rights (the “Rights”)  that
may be issued or distributed pursuant to any rights plan of the Company (any
Rights that may be issued pursuant to any rights plan being referred to as, a “Rights Plan”), upon conversion
of the Notes into Common Stock, to the extent that such Rights Plan is in
effect upon such conversion, the holders of Notes will receive, in addition to
the Common Stock, the Rights described therein (whether or not the Rights have
separated from the Common Stock at the time of conversion), subject to the
limitations set forth in any such Rights Plan. If the Rights Plan provides that
upon separation of rights under such plan from the Common Stock that the
Holders would not be entitled to receive any such rights in respect of the
Common Stock issuable upon conversion of the Notes, the Conversion Price will
be adjusted as provided in this Section 4.05 (with such separation deemed to be
the distribution of such rights), subject to readjustment in the event of the
expiration, termination or redemption of the rights. Any distribution of rights
or warrants pursuant to a Rights Plan complying with the requirements set forth
in the immediately preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants pursuant to this Section 4.05(3).

 

(iv)          Rights, options or warrants (other than rights issued pursuant to a
Rights Plan) distributed by the Company to all or substantially all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company’s Capital Stock (either initially or under certain
circumstances), which rights, options or warrants, until the occurrence of a
specified event or events (a “Trigger Event”):  (i) are deemed to be transferred with
such shares of Common Stock; (ii) are not exercisable; and (iii) are also
issued in respect of future issuances of Common Stock (including issuances of
Common Stock upon conversion of the Notes), shall be deemed not to have been
distributed for purposes of this Section 4.05 (and no adjustment to the
Conversion Price under this Section 4.05 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to have been

 

51

 

distributed
and an appropriate adjustment (if any is required) to the Conversion Price
shall be made under this Section 4.05(3). If any such right, option or warrant,
including any such existing rights, options or warrants distributed prior to
the date of this Indenture, are subject to events, upon the occurrence of which
such rights, options or warrants become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the date of the
occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights, options or
warrants without exercise by any of the holders thereof). In addition, in the
event of any distribution (or deemed distribution) of rights, options or
warrants, or any Trigger Event or other event (of the type described in the
preceding sentence) with respect thereto that was counted for purposes of
calculating a distribution amount for which an adjustment to the Conversion
Price under this Section 4.05 was made, (1) in the case of any such rights,
options or warrants which shall all have been redeemed, purchased by the
Company or repurchased without exercise by any holders thereof, the Conversion
Price shall be readjusted upon such final redemption, purchase by the Company
or repurchase to give effect to such distribution or Trigger Event, as the case
may be, as though it were a cash distribution, equal to the per share
redemption or repurchase price received by a holder or holders of Common Stock
with respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all or substantially all holders of Common Stock
as of the date of such redemption or repurchase, and (2) in the case of such
rights, options or warrants which shall have expired or been terminated without
exercise by any holders thereof, the Conversion Price shall be readjusted as if
such rights and warrants had not been issued.

 

(4)           Distributions
of Cash. 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, the Company may,
at its sole option, (x) make a payment in cash to each Holder equal to the
product of the amount of the Triggering Distribution per share of Common Stock
multiplied by result of dividing the aggregate Principal Amount of Notes held
by such Holder by the then applicable Conversion Price or (y) decrease the
Conversion Price so that the same shall equal the price determined by
multiplying such Conversion Price in effect immediately prior to the Business
Day immediately preceding the day on which such Triggering Distribution is
declared (a “Determination Date”)
by a fraction of which:

 

(A)          the numerator shall be the
Current Market Price per share of the Common Stock (as determined in accordance
with subsection (6) of this Section 4.05) on the Determination Date less the
sum of 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

 

(B)           the denominator shall be
such Current Market Price per share of the Common Stock (as determined in
accordance with subsection (6) of this Section 4.05) on the Determination Date.

 

Such decrease
to become effective immediately prior to the opening of business on the day
following the date on which the Triggering Distribution is paid.

 

52

 

(5)                                  Purchases
of Common Stock by Tender Offer. In case the Company or any
of its Subsidiaries shall purchase any shares of the Common Stock by means of
tender offer, then immediately prior to the opening of business on the day
after 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”), the Conversion Price shall be decreased
so that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the Expiration
Date by a fraction of which:

 

(A)                              the numerator
shall be the product of the number of shares of Common Stock outstanding
(including Purchased Shares but excluding any shares held in the treasury of
the Company) immediately prior to the Expiration Time multiplied by the Current
Market Price per share of the Common Stock (as determined in accordance with
subsection (6) of this Section 4.05) on the Trading Day next
succeeding the Expiration Date; and

 

(B)                                the denominator
shall be the sum of (x) the aggregate consideration (determined as aforesaid)
payable to stockholders 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) immediately prior to the Expiration Time and the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Date.

 

For purposes
of this Section 4.05(5), the aggregate consideration in any such tender
offer shall equal 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 and the Conversion Agent)
of any other consideration payable in such tender offer. Such decrease will
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 4.05(5)(B) 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 4.05(5)(B). For purposes of this Section 4.05(5),
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.

 

(6)                                  For the purpose
of any computation under this Indenture, the current market price (the “Current Market Price”) per share of Common
Stock on any date shall

 

53

 

be
deemed to be the average of the daily closing prices for the 10 consecutive
Trading Days commencing 11 Trading Days before (A) the Determination Date
or the Expiration Date, as the case may be, with respect to distributions
or tender offers or (B) the record date with respect to distributions,
issuances or other events requiring such computation under. The closing price
(the “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 American Stock Exchange or, if the Common Stock is
not listed or admitted to trading on the American Stock Exchange, 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 American
Stock Exchange or any national securities exchange, the average of the closing
bid and asked prices as quoted on the Nasdaq OTC Bulletin Board System or any
comparable system or, if the Common Stock is not quoted on the Nasdaq OTC
Bulletin Board System 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 reasonably determined by
the Board of Directors (which shall be evidenced by an Officers’ Certificate
delivered to the Trustee), in consultation with a financial advisor the Company
determines in good faith is reasonably proficient in valuing equity interests.

 

(7)                                  In any case in
which this Section 4.05 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 4.05, 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 4.05) issuing to
the Holder of any Note 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.

 

For purposes
of this Section 4.05, “record date” shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other property
or in which the Common Stock (or other applicable security) is exchanged or
converted into any combination of cash, securities or other property, the date
fixed for determination of stockholders entitled to receive such cash, security
or other property (whether or not such date is fixed by the Board of Directors
or by statute, contract or otherwise).

 

54

 

Section 4.06.                                                 Adjustment
of Conversion Price Upon a Non-Stock Change of Control

 

(a)                                  Subject to Section 4.12
hereof, if and only to the extent a Holder elects to convert Notes at any time
during the Change of Control Conversion/Repurchase Period (as defined below in Section 5.15),
the Company shall increase the Conversion Rate applicable to such converted
Notes by a number of additional shares of Common Stock (the “Additional Shares”) as set forth below. The number of
Additional Shares shall be determined by reference to the table below, based on
the effective date of the Non-Stock Change of Control and the price (the “Stock Price”) paid per share for the Common Stock in the
Non-Stock Change of Control. If holders of Common Stock receive only cash in
the Non-Stock Change of Control, the Stock Price shall be the cash amount paid
per share. Otherwise, the Stock Price shall be the arithmetic average of the
Closing Sale Prices of the Common Stock for the five Trading Days prior to but
not including the Effective Date of such Non-Stock Change of Control.

 

The numbers of Additional Shares set forth in the table below shall be
adjusted as of any date on which the Conversion Rate is adjusted in the same
manner in which the Conversion Rate is adjusted. The Stock Prices set forth in
the table below shall be adjusted, as of any date on which the Conversion Rate
is adjusted, to equal the Stock Price applicable immediately prior to such
adjustment multiplied by a fraction, of which

 

(i)                                     the numerator shall be the Conversion
Rate immediately prior to the adjustment, and

 

(ii)                                  the denominator shall be the Conversion
Rate as so adjusted.

 

The following table (the “Make-Whole Premium Table”)
sets forth the Stock Price and number of Additional Shares by which the
Conversion Rate shall be increased:

 

55

 

Additional Shares Required to be
Issued (per $1,000 principal amount of Notes)

 

	
  Effective

  	
   

  	
  Stock Price

  	
   

  
	
  Date

  	
   

  	
  $2.00

  	
   

  	
  $2.25

  	
   

  	
  $2.50

  	
   

  	
  $2.75

  	
   

  	
  $3.00

  	
   

  	
  $3.50

  	
   

  	
  $4.00

  	
   

  	
  $4.50

  	
   

  	
  $5.00

  	
   

  	
  $5.50

  	
   

  	
  $6.00

  	
   

  	
  $6.50

  	
   

  
	
  9/30/07

  	
   

  	
  236.779

  	
   

  	
  196.815

  	
   

  	
  166.416

  	
   

  	
  142.78

  	
   

  	
  124.062

  	
   

  	
  96.708

  	
   

  	
  78.069

  	
   

  	
  64.812

  	
   

  	
  55.035

  	
   

  	
  47.608

  	
   

  	
  41.811

  	
   

  	
  37.185

  	
   

  
	
  9/30/08

  	
   

  	
  226.493

  	
   

  	
  183.783

  	
   

  	
  151.575

  	
   

  	
  126.839

  	
   

  	
  107.546

  	
   

  	
  80.087

  	
   

  	
  62.13

  	
   

  	
  49.905

  	
   

  	
  41.275

  	
   

  	
  34.983

  	
   

  	
  30.256

  	
   

  	
  26.609

  	
   

  
	
  9/30/09

  	
   

  	
  217.939

  	
   

  	
  170.094

  	
   

  	
  134.045

  	
   

  	
  106.646

  	
   

  	
  85.695

  	
   

  	
  57.174

  	
   

  	
  40.029

  	
   

  	
  29.489

  	
   

  	
  22.821

  	
   

  	
  18.456

  	
   

  	
  15.485

  	
   

  	
  13.378

  	
   

  
	
  9/30/10

  	
   

  	
  226.65

  	
   

  	
  171.109

  	
   

  	
  126.675

  	
   

  	
  90.322

  	
   

  	
  60.132

  	
   

  	
  20.81

  	
   

  	
  4.643

  	
   

  	
  0.669

  	
   

  	
  0.067

  	
   

  	
  0.005

  	
   

  	
  0

  	
   

  	
  0

  	
   

  

 

56

 

If the Stock Price and Effective Date are not set forth on the table
above and the Stock Price is:

 

(i)                                     between two Stock
Prices on the table or the Effective Date is between two days on the table, the
number of Additional Shares shall be determined by straight-line interpolation
between the number of Additional Shares of Common Stock set forth for the
higher and lower Stock Price and the two Effective Dates, as applicable, based
on a 360-day year;

 

(ii)                                  in
excess of $6.50 per share (subject to adjustment in the same manner as and as
of any date on which the Stock Prices are adjusted in the table above) (the “Stock Price Threshold”), no Additional Shares of Common
Stock shall be issued upon conversion; or

 

(iii)                               less
than $2.00 per share (subject to adjustment in the same manner as and as of any
date on which the Stock Prices are adjusted in the table above) (the “Stock Price Cap”), no Additional Shares shall be issued upon
conversion.

 

(b)                                 Promptly after determination of the
Additional Shares to be issued, the Company shall publish a notice containing
this information in a newspaper published in the English language, customarily
published each Business Day and of general circulation in The City of New York
or publish such information on the Company’s web site or through such other
public medium as the Company may use at that time.

 

(c)                                  Whenever the Conversion Price shall be
adjusted from time to time by the Company pursuant to Section 4.05, the
Stock Price Threshold and the Stock Price Cap shall be adjusted and each of the
Stock Prices set forth in the Make-Whole Premium Table shall be adjusted. The
adjusted Stock Price Threshold, Stock Price Cap and Stock Prices set forth in
the Make-Whole Premium Table shall equal the Stock Price Threshold, the Stock
Price Cap and such Stock Prices, as the case may be, immediately prior to
such adjustment multiplied by a fraction, the numerator of which is the
Conversion Price as so adjusted and the denominator of which is the Conversion
Price immediately prior to the adjustment giving rise to such adjustment subject to the
limitations set forth in Sections 4.05(2)(c) hereof. Each of the share amounts set forth in
the body of the Make-Whole Premium Table shall also be adjusted in the same
manner and at the same time.

 

(d)                                 Notwithstanding
the foregoing, the adjustments to Conversion Price or Conversion Rate provided
in this Section 4.06 shall be subject to the limitations set forth in
Sections 4.05(2)(c) hereof.

 

Section 4.07.                                                 Conversion
After a Public Acquirer Change
of Control

 

(1)                                  In the event of
a Public Acquirer Change of Control, the Company may, in lieu of adjusting the
Conversion Rate pursuant to 4.12, elect to adjust its conversion obligation and
the Conversion Rate such that from and after the Effective Date of such Public
Acquirer Change of
Control, the Conversion Rate in effect immediately before the Public Acquirer
Change of Control shall be adjusted by multiplying it by a fraction:

 

57

 

(A)                              the numerator
of which shall be (A) in the case of a consolidation, merger or binding
share exchange, pursuant to which the Common Stock is converted solely into
cash, the value of such cash paid or payable per share of Common Stock or (B) in
the case of any other Public Acquirer Change of Control, the average of the
closing sale prices of the Common Stock for the five consecutive Trading Days
prior to but excluding the Effective Date of such Public Acquirer Change of
Control; and

 

(B)                                the denominator
of which shall be the arithmetic average of Weighted Average Price of the
Public Acquirer Common Stock for the five consecutive Trading Days commencing
on the Trading Day next succeeding the Effective Date of such Public Acquirer
Change of Control.

 

(2)                                  At least
thirty-five (35) Trading Days prior to the expected effective date of such Public Acquirer Change of Control
and not later than concurrently with the applicable notice of such Change of Control, the Company
shall provide a notice (a “Public Acquirer Change of
Control Notice”) to all the Holders, the Trustee and the Paying
Agent stating whether the Company elects (i) to adjust the Conversion Rate as set forth in this Section 4.07 or (ii) does not
elect to so adjust the Conversion Rate, in which case the Holders will have the
right to convert the Notes and, if applicable, receive
any Additional
Shares as set forth in Section 4.06. In addition, upon a Public
Acquirer Change of Control, in lieu of converting securities, the Holders can,
subject to certain conditions, require the Company to repurchase all of a
portion of the Notes pursuant to Section 5.15.

 

(3)                                  If the Company
elects to make the adjustment to the Conversion Rate described in Section 4.07(1) in
the event of a Public Acquirer Change of Control, (i)  Section 4.12
will not apply to such transaction; and (ii) the Company and the acquirer
or other issuer of Public Acquirer Common Stock shall execute with the Trustee
a supplemental indenture (which shall comply with the Trust Indenture Act as in
force at the date of execution of such supplemental indenture, if such
supplemental indenture is then required to so comply) providing that such Notes
shall, without the consent of any Holders of Notes, be convertible into shares
of Public Acquirer Common Stock at the adjusted Conversion Rate as specified
above (subject to the conditions relating to conversion of Debentures specified
herein. Such supplemental indenture shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for
in this Article 4, as determined in good faith by the Company or the
Public Acquirer.

 

Section 4.08.                                                 Adjustment
for Tax Purposes.

 

The Company
shall be entitled to make such decreases in the Conversion Price, in addition
to those required by Section 4.05, 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 convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.

 

58

 

Section 4.09.                                                 No
Adjustment.

 

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

 

Section 4.10.                                                 Conversion
Price Reset.

 

Effective as
of September 30, 2009, the Conversion Price shall be reset so as to equal
the lower of (A) the then current Conversion Price and (B) the
arithmetic average of the Weighted Average Price of the Common Stock for the 30
consecutive trading days preceding September 30, 2009 (the “Reset Trading Average”), provided that, in
no event, shall the Conversion Price be reset to a conversion price below $3.24
per share (subject to adjustment in the same manner and as of any date as Section 4.05
hereof), as adjusted to give effect to any adjustments to the Conversion Price
or Conversion Rate that would have been made prior to September 30, 2009
had Section 4.05(2)(a) been in effect prior to September 30,
2009.

 

For
the avoidance of doubt, in no event will the Conversion Price be adjusted
upwards pursuant to this Section 4.10.

 

Section 4.11.                                                 Notice
of Conversion Price Adjustment & Election.

 

In the event
that:

 

(1)                                  the Company
takes any action which would require, or there is otherwise required, an
adjustment in the Conversion Price or Conversion Rate;

 

(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; or

 

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

 

(4)                                  any election
contemplated by Section 4.07(b),

 

then
Company shall mail to Holders and file with the Trustee a notice stating (i) the
change or adjustment and (ii) the proposed record or effective date, as
the case may be, and deliver to the Trustee an Officers’ Certificate
briefly stating the facts requiring the adjustment or election and the manner
of computing it. The Company shall mail the notice at least ten Business Days
before such date. Failure to mail such notice or any defect therein shall not
affect the validity of any transaction referred to in this Section 4.12. Unless
and until the Trustee receives any such Officers’ Certificate, it may assume
without inquiry that the Conversion Price or Conversion Rate has not been adjusted
and that the last Conversion Price or Conversion Rate of which it has knowledge
remains in effect.

 

59

 

Section 4.12.                                                 Effect
of Reclassification, Consolidation, Merger or Sale on Conversion Privilege.

 

Subject to the
further provisions of this Article 4 and paragraph 9 in the terms of the Form of
Note, in the event the Company (i) reclassifies or changes its Common
Stock (other than changes resulting from a subdivision or combination) or (ii) consolidates
or combines with or merges into any Person or sells or conveys to another
Person all or substantially all of its property and assets, and the holders of
the Company’s Common Stock receive stock, other securities or other property or
assets (including cash or any combination thereof) with respect to or in
exchange for their Common Stock, the Holders will thereby have the continuing
right to convert their Notes into the consideration they would have received if
they had converted their Notes immediately prior to such re-classification,
change, consolidation, merger, sale or conveyance (the “Conversion Securities”).

 

If any of the
following shall occur, namely:  (a) any
reclassification or change of shares of Common Stock issuable upon conversion
of the Notes (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 4.05);
(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 Note then outstanding
shall have the right to convert such Note into the kind and amount of shares of
stock and other securities and property (including cash) receivable upon such
reclassification, change, combination, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Note 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 Notes as the Board of Directors shall
reasonably consider necessary by reason of the foregoing. The provisions of
this Section 4.12 shall similarly apply to successive reclassifications,
changes, combinations, consolidations, mergers, sales or conveyances.

 

In the event
the Company shall execute a supplemental indenture pursuant to this Section 4.12,
the Company shall promptly file with the Trustee (x) an Officers’ Certificate
briefly stating

 

60

 

the reasons
therefor, the kind or amount of shares of stock or other securities or property
(including cash) receivable by Holders of the Notes upon the conversion of
their Notes 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 shall promptly mail notice thereof to all Holders.

 

Section 4.13.                                                 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 4.12. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Notes, 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 4.12,
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 4.12.

 

ARTICLE 5.

COVENANTS

 

Section 5.01.                                                 Payment
of Notes.

 

The Company
shall pay or cause to be paid the Principal of, premium, if any, Redemption
Price, if applicable, Interest and any other amounts to be paid on the Notes on
the dates and in the manner provided in this Indenture and the Notes. Principal,
premium, if any, Redemption Price, if applicable, Interest and any other
amounts to be paid shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all Principal of,
premium, if any, Redemption Price, if applicable, Interest and any other
amounts to be paid then due.

 

The Company
shall pay Late Charges (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue Principal to the extent lawful; it shall
pay Late Charges (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of Interest (without regard to any applicable
grace period) at the same rate to the extent lawful.

 

Section 5.02.                                                 Maintenance
of Office or Agency.

 

The Company
shall maintain in the Borough of Manhattan, The City of New York, an office or
agency (which may be an office of the Trustee or an affiliate of the
Trustee, Registrar or

 

61

 

co-registrar)
where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee.

 

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

 

The Company
hereby designates the corporate trust office of the Trustee, presently located
at 101 Barclay Street, New York, NY 10286 as one such office or agency of the
Company in accordance with Section 2.03.

 

Section 5.03.                                                 Reports.

 

(a)                                  Whether or not
required by the rules and regulations of the SEC, so long as any Notes are
outstanding, the Company shall furnish to the Holders of Notes or cause the
Trustee to furnish to the Holders if not filed electronically with the SEC and
will post on the Company’s website for public availability, within the time
periods specified in the SEC’s then existing rules and regulations, all
quarterly and annual consolidated financial statements that would be required
to be filed with the SEC on Form 10-Q or Form 10-QSB and on Form 10-K
or Form 10-KSB and all information and/or financial statements on Form 8-K
if the Company were required to file such reports. All such financial
statements will be prepared in all material respects in accordance with SEC
Regulation S-X and will be accompanied by: 
(i) a “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in substantially the form that would be
required if filed with the SEC with a Form 10-Q or Form 10-QSB or Form 10-K
or Form 10-KSB, as the case may be; (ii) a certification by the
Company’s chief financial officer that no Default has occurred and is
continuing under this Indenture; and (iii) in the case of annual financial
statements, an audit report thereon by the Company’s independent public
accountants.

 

If the Company
has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the
quarterly and annual financial information required by the preceding paragraph
will include a reasonably detailed presentation, either on the face of the
financial statements or in the footnotes thereto, and in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” of
the financial condition and results of operations of the Company and its
Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company.

 

62

 

(b)                                 If, at any time
the Company is no longer subject to the periodic reporting requirements of the
Exchange Act for any reason, the Company will nevertheless continue filing the
reports specified in this Section 5.03 with the SEC within the time
periods specified above unless the SEC will not accept such a filing. The
Company will not take any action for the purpose of causing the SEC not to
accept any such filings.

 

(c)                                  For so long as
any Notes remain outstanding, the Company shall

 

(1)                                  subject to Section 5.03(d) below,
post on the Company’s website for public availability all material information
about the Company and its Subsidiaries that the Company has provided to any
Holder or beneficial holder of Notes or other securities of the Company after
the date of this Indenture (other than a Holder who after the date of this
Indenture has entered into a confidentiality or non-disclosure agreement with
the Company); and

 

(2)                                  furnish to the
Holders, beneficial holders of Notes and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.

 

(d)                                 Notwithstanding
this Section 5.03, the Company shall not be required to publicly disclose
any information to the extent that it is subject to a confidentiality,
non-disclosure or other similar agreement prohibiting such disclosure;
provided, however, that the Company shall use commercially reasonable efforts
not to enter into any such confidentiality agreements that would prevent its
compliance with the other provisions of this Section 5.03.

 

Section 5.04.                                                 Compliance
Certificate.

 

(a)                                  The Company and
each Guarantor (to the extent that such Guarantor is so required under the TIA)
shall deliver to the Trustee, within 90 days after the end of each fiscal year,
an Officers’ Certificate, one of the signatories of which is the Company’s
Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer,
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company and each
obligor under the Notes and this Indenture has kept, observed, performed and
fulfilled its obligations under this Indenture, the Note Guarantee, the Pledge
Agreement and the Collateral Documents, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge the
Company and each such obligor has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture, the Notes, the Note Guarantees,
the Pledge Agreement and the Collateral Documents and is not in default in the
performance or observance of any of the terms, provisions and conditions of
this Indenture, the Notes, the Note Guarantees, the Pledge Agreement and the
Collateral Documents (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company or such obligor is taking or proposes to
take with respect thereto) and that to the best of his or her knowledge no
event has occurred and remains in existence by reason of which payments on
account of the Principal of, Interest or any other amounts due, if any, on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Company or such obligor is taking or proposes to take with
respect thereto.

 

63

 

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

 

Section 5.05.                                                 Taxes.

 

The Company
shall pay, and shall cause each of its Subsidiaries to pay, prior to
delinquency, all material taxes, assessments, and governmental levies except
such as are contested in good faith and by appropriate proceedings or where the
failure to effect such payment is not adverse in any material respect to the
Holders of the Notes.

 

Section 5.06.                                                 Stay,
Extension and Usury Laws.

 

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

 

Section 5.07.                                                 Restricted
Payments.

 

The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly:

 

(i)                                     declare
or pay any dividend or make any other payment or distribution on account of its
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any Restricted Subsidiary
of the Company) or to the direct or indirect holders of its Equity Interests in
their capacity as such, other than dividends or distributions payable (a) in
Equity Interests (other than Disqualified Stock) of the Company) (b) to
the Company or any Subsidiary of the Company, or (c) in the case of
dividends or distributions payable by any Restricted Subsidiary of the Company,
pro rata to the holders of such Subsidiary’s Equity Interests;

 

(ii)                                  purchase,
redeem or otherwise acquire or retire for value (including without limitation,
in connection with any merger or consolidation involving the Company) any
Equity Interests of the Company or any direct or indirect parent of the
Company;

 

(iii)                               make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness of the Company or any of its
Subsidiaries that is contractually subordinated to the Notes or any Note
Guarantee (excluding any intercompany Indebtedness between or among the Company
and any of its Subsidiaries), except a payment of interest or principal at the
maturity date; or

 

64

 

(iv)                              make
any Restricted Investment,

 

all such payments and other actions set forth
in clauses (i) through (iv) above being collectively referred to as “Restricted  Payments”
unless, solely with respect to any payment or other action that would otherwise
constitute a Restricted Payment as set forth in clause (i), (ii) or (iv) above,
at the time of and after giving effect to such Restricted Payment:

 

(1)                                  no Default or Event of
Default has occurred and is continuing or would occur as a consequence of such
Restricted Payment;

 

(2)                                  the Company would, at the
time of such Restricted Payment and after giving pro forma effect thereto as if
such Restricted Payment had been made at the beginning of the applicable
four-quarter period, be in compliance with the Fixed Charge Coverage Ratio for
the four most recently ended full fiscal quarters for which internal financial
statements are available; and

 

(3)                                  such Restricted Payment,
together with the aggregate amount of all other Restricted Payments made by the
Company and its Restricted Subsidiaries since the date of the indenture
(excluding Restricted Payments permitted by clauses (ii) through and
including (vii)) of the next succeeding paragraph, is less than the sum,
without duplication, of:

 

(a)                                  50% of the
Consolidated Net Income of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing after the
date of the indenture to the end of the Company’s most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit); plus

 

(b)                                 100% of the
aggregate net cash proceeds received by the Company since the date of the
indenture as a contribution to its common equity capital or from the issue or
sale of Equity Interests of the Company (other than Disqualified Stock) or from
the issue or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Company that have been
converted into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of
the Company); plus

 

(c)                                  to the extent
that any Restricted Investment that was made after the date of the indenture is
sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the
cash return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (ii) the initial amount of such
Restricted Investment; plus

 

(d)                                 to the extent
that any Unrestricted Subsidiary of the Company designated as such after the
date of the indenture is redesignated as a Restricted Subsidiary after the date
of the indenture, the lesser of (i) the Fair Market Value of the Company’s
Investment in such Subsidiary as of the date of such redesignation or (ii) such
Fair Market Value as of the
date on which such Subsidiary was originally designated as an Unrestricted
Subsidiary after the date of the indenture; plus

 

65

 

(e)                                  50% of any
dividends received by the Company or a Restricted Subsidiary of the Company
after the date of the indenture from an Unrestricted Subsidiary of the Company,
to the extent that such dividends were not otherwise included in the
Consolidated Net Income of the Company for such period.

 

So long as no
Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof, the foregoing provisions shall not prohibit:

 

(i)                                     the payment of
any dividend or the consummation of any irrevocable redemption within 60 days
after the date of declaration of the dividend or giving of the redemption
notice, as the case may be, if at the date of declaration or notice, the
dividend or redemption payment would have complied with the provisions of this
Indenture;

 

(ii)                                  the making of
any Restricted Payment (other than a Restricted Payment as defined in clause (iii) of
the definition of Restricted Payment) in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company or a Guarantor) of, Equity Interests of the Company (other than
Disqualified Stock) or from the substantially concurrent contribution of common
equity capital to the Company;

 

(iii)                               the redemption,
repurchase, defeasance or other acquisition or retirement for value of
Indebtedness of the Company or its Subsidiaries that is contractually
subordinated or subordinated with respect to security interests to the Notes or
any Note Guarantee with the net cash proceeds from a substantially concurrent
incurrence of Permitted Refinancing Indebtedness;

 

(iv)                              the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Company or any Restricted Subsidiary of the Company held by any current
or former officer, director or employee of the Company or any of its Restricted
Subsidiaries in order to pay or satisfy such officer’s, director’s or employee’s
aggregate exercise price or withholding tax payment obligations pursuant to
awards granted under the Company’s equity incentive, stock option, restricted
stock or other long-term equity compensation plans; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not exceed
$2,000,000 in the aggregate; and

 

(v)                                 the repurchase
of Equity Interests of the Company deemed to occur upon the exercise of stock
options to the extent such Equity Interests represent a portion of the exercise
price of those stock options.

 

The amount of
all Restricted Payments (other than cash) shall be the Fair Market Value on the
date of the Restricted Payment of the asset(s) or securities proposed to be
transferred or issued by the Company or such Subsidiary, as the case may be,
pursuant to the Restricted Payment. The Fair Market Value of any non-cash
Restricted Payment shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee, such
determination to be based upon an opinion or appraisal issued by an accounting,
appraisal or investment banking firm of national standing if such Fair Market
Value exceeds $5.0 million. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers’ Certificate
stating that such Restricted Payment is permitted and setting

 

66

 

forth the
basis upon which the calculations required by this Section 5.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.

 

Section 5.08.                                                 Dividend
and Other Payment Restrictions Affecting Subsidiaries.

 

The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, create or otherwise permit, cause or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other
distributions on its Capital Stock to the Company or any of its Restricted
Subsidiaries or with respect to any other interest or participation in, or
measured by, its profits or (ii) pay any indebtedness owed to the Company
or any of its Restricted Subsidiaries, (b) make loans or advances to the
Company or any of its Restricted Subsidiaries or (c) sell, lease or
transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries,

 

except for
such encumbrances or restrictions existing under or by reasons of:

 

(i)                                     this
Indenture, the Notes and the Note Guarantees;

 

(ii)                                  agreements
governing Existing Indebtedness and Credit Facilities as in effect on the date
of this Indenture and any amendments, restatements, modifications, renewals,
supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, restatements, modifications,
renewals, supplements, refundings, replacements or refinancings are not
materially more restrictive with respect to such dividend and other payment
restrictions than those contained in those agreements on the date of the
indenture;

 

(iii)                               any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness or Capital Stock was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired; provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of
this Indenture;

 

(iv)                              purchase
money obligations for property acquired in the ordinary course of business and
Capital Lease Obligations that impose restrictions on the property purchased or
leased of the nature set forth in clause (c) of Section 5.08;

 

(v)                                 Permitted
Refinancing Indebtedness; provided that
the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced;

 

(vi)                              applicable
law rule, regulation or order;

 

(vii)                           customary
non-assignment provisions in contracts and licenses entered into in the
ordinary course of business;

 

67

 

(viii)                        any
agreement for the sale or other disposition of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending the sale or other
disposition;

 

(ix)                                Liens
permitted to be incurred under the provisions of Section 5.12 hereof that
limit the right of the debtor to dispose of the assets subject to such Liens;

 

(x)                                   provisions
limiting the disposition or distribution of assets or property in joint venture
agreements, asset sale agreements, sale-leaseback agreements, stock sale
agreements and other similar agreements entered into with the approval of the
Company’s Board of Directors, which limitation is applicable only to the assets
that are the subject of such agreements; and

 

(xi)                                restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business.

 

Section 5.09.                                                 Incurrence
of Indebtedness and Issuance of Preferred Stock.

 

The Company
shall not, and shall not permit any of its Restricted Subsidiaries  to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, “incur”)
any Indebtedness (including Acquired Debt), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries  to issue any shares of preferred stock.

 

The provisions
of the first paragraph of this Section 5.09 shall not prohibit the
incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

 

(i)                                     the incurrence
by the Company and its Restricted Subsidiaries of additional Indebtedness and
letters of credit under Credit Facilities to procure feedstock, inventory,
supplies, consumables and other assets, which would become Collateral, in an
aggregate principal amount at any one time outstanding under this clause (i) (with
letters of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries thereunder)
not to exceed $5.0 million, less the aggregate amount of all Net Proceeds of
Asset Sales applied by the Company or any of its Restricted Subsidiaries since
the date of this Indenture to repay any term Indebtedness under a Credit
Facility or to repay any revolving credit Indebtedness under a Credit Facility
and effect a corresponding commitment reduction thereunder pursuant to the
covenant described above under Section 5.10;

 

(ii)                                  the incurrence
by the Company and its Restricted
Subsidiaries of Existing Indebtedness;

 

(iii)                               the incurrence
by the Company, and the Guarantee thereof by the Guarantors, of (a) Indebtedness
represented by the Notes on the date of the Indenture, and (b) Permitted
Refinancing Indebtedness in respect of any of the foregoing clause (a);

 

(iv)                              the Guarantees
by the Company and its Restricted Subsidiaries of Permitted Project Debt during
the construction, commissioning, start-up, testing, completion and

 

68

 

acceptance
periods in aggregate principal amount not to exceed the lesser of (i) 80%
of the amount equal to $1.50 (or such higher amount as proportionately adjusted
by increases in Chemical Engineering’s CE Plant Cost Index from and after the
Issue Date) per gallon per year of nameplate biodiesel production capacity with
respect to any biodiesel refinery being financed or to be financed with such
Permitted Project Debt and (ii) $162.0 million, and Permitted Refinancing
Indebtedness in respect thereof;

 

(v)                                 the incurrence
by the Company or any of its Restricted Subsidiaries  of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or any part of
the purchase price or cost of design, construction, installation or improvement
of property, plant or equipment used in the Permitted Business of the Company
or any of its Restricted Subsidiaries, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to renew, refund,
refinance, replace, defease or discharge any Indebtedness incurred pursuant to
this clause (iv), not to exceed $5.0 million  in
the aggregate outstanding at any time outstanding;

 

(vi)                              the incurrence by
the Company or any of its Restricted Subsidiaries  of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used
to renew, refund, refinance, replace, defease or discharge any Indebtedness
(other than Indebtedness owed by one Credit Party to another Credit Party) that
was permitted by this Indenture to be incurred pursuant to clauses (i),(ii) or
(v) of this paragraph;

 

(vii)                           the incurrence
by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and any of its Restricted Subsidiaries not to exceed $10.0 million
in the aggregate at any time outstanding; provided,
however, that (a) such
Indebtedness is expressly subordinated to the prior payment in full in cash of
all Obligations with respect to this Indenture, the Notes and the Note
Guarantees, (b) such Indebtedness matures no less than 91 days following
the maturity of the Notes and (c)(A) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Subsidiary thereof or (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause
(vii);

 

(viii)                        the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness not to exceed in the aggregate at any time
outstanding the
greater of (a) $10.0 million or (b) the amount equal to 1.5
times Consolidated Cash Flow for the twelve calendar months for with financial
statements are available immediate preceding the date of incurrence of such
Indebtedness; provided, however, that (a) such Indebtedness
is expressly subordinated to the prior payment in full in cash of all
Obligations with respect to this Indenture, the Notes and the Note Guarantees, (b) such
Indebtedness matures no less than 91 days following the maturity of the Notes;

 

(ix)                                the incurrence
by the Company or any of its Restricted Subsidiaries of Hedging Obligations in
the ordinary course of business (other than for speculative purposes);

 

69

 

(x)                                   the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness in respect
of workers’ compensation claims, self-insurance obligations, bankers’
acceptances, performance and surety bonds in the ordinary course of business;
and

 

(xi)                                the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds, so long as
such Indebtedness is covered within five business days.

 

The Company
will not incur, and will not permit any Guarantor to incur, any Indebtedness
(including Permitted Debt) that is contractually subordinated in right of
payment to any other Indebtedness of the Company or such Guarantor unless such
Indebtedness is also contractually subordinated in right of payment to the
Notes and the Note Guarantees on substantially identical terms; provided, however, that no Indebtedness
will be deemed to be contractually subordinated in right of payment to any
other Indebtedness of the Company solely by virtue of being unsecured or by
virtue of being secured on a first or junior Lien basis.

 

For purposes
of determining compliance with this Section, in the event that an item of
proposed Indebtedness meets the criteria of more than one of the categories of
Permitted Debt set forth above, or is entitled to be incurred pursuant to the
first paragraph of this covenant, the Company will be permitted to classify
such item of Indebtedness on the date of its incurrence, or later reclassify
all or a portion of such item of Indebtedness, in any manner that complies with
this covenant. Indebtedness under Credit Facilities outstanding on the date on
which notes are first issued and authenticated under the indenture will
initially be deemed to have been incurred on such date in reliance on the
exception provided by clause (1) of the definition of Permitted Debt.

 

The accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, the reclassification of preferred
stock as Indebtedness due to a change in accounting principles, and the payment
of dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this
covenant; provided, in each such case, that the
amount of any such accrual, accretion or payment is included in Fixed Charges
of the Company as accrued. Notwithstanding any other provision of this
covenant, the maximum amount of Indebtedness that the Company or any Restricted
Subsidiary may incur pursuant to this covenant shall not be deemed to be
exceeded solely as a result of fluctuations in exchange rates or currency
values.

 

The amount of
any Indebtedness outstanding as of any date will be:

 

(i)                                     the
accreted value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount;

 

(ii)                                  the
principal amount of the Indebtedness, in the case of any other Indebtedness;
and

 

70

 

(iii)                               in
respect of Indebtedness of another Person secured by a Lien on the assets of
the specified Person, the lesser of:

 

(A)                              the Fair Market
Value of such assets at the date of determination; and

 

(B)                                the amount of
the Indebtedness of the other Person.

 

Section 5.10.                                                 Asset
Sales and Events of Loss.

 

(a)                                  The Company shall not, and shall not
permit any of its Restricted Subsidiaries to:

 

(i)                                     sell, lease,
convey or otherwise dispose of any assets or rights other than the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company and its Restricted Subsidiaries taken as a whole, which will be
governed by Section 5.15 and/or Section 6.01 and not by the
provisions of this Section 5.10; and

 

(ii)                                  issue Equity
Interests in any of the Restricted Subsidiaries or sell Equity Interests in any
of its Restricted Subsidiaries.

 

(each of the
foregoing, an “Asset Sale”),
unless such Asset Sale is a Permitted Asset Sale (as defined below):

 

(b)                                 A “Permitted Asset Sale”
shall mean an Asset Sale in which:

 

(i)                                     the Company (or the Restricted Subsidiary,
as the case may be) receives consideration at the time of such Asset Sale
at least equal to the Fair Market Value of the assets or Equity Interests
issued or sold or otherwise disposed of; and at least 75% of the consideration
received therefor by the Company or such Subsidiary is in the form of
cash; provided, however, that the amounts of the following
shall be deemed to be cash for purposes of this provision:

 

(A)                              any liabilities
(as shown on the Company’s most recent consolidated balance sheet or in the
notes thereto), of the Company or any Restricted Subsidiary (other than
contingent liabilities or liabilities that are by their terms subordinated in
right of payment or as to security interests to the Notes or any Note
Guarantee) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability,

 

(B)                                any securities,
notes or other obligations received by the Company or any such Subsidiary from such
transferee that are contemporaneously, subject to ordinary settlement periods,
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received in that conversion), and

 

(C)                                any stock or
assets received of the Company or any Restricted Subsidiary used to acquire (1) all
or substantially all of the assets of, or any Capital Stock of, another
Permitted Business if, after giving effect to any such acquisition of Capital
Stock, the Permitted Business is or becomes a Restricted Subsidiary of the Company
and

 

71

 

a Guarantor or (2) other
assets that are not classified as current assets under GAAP and that are used
or useful in a Permitted Business.

 

(ii)                                  any single
transaction or series of related transactions that involves assets having
a Fair Market Value of less than $1.0 million in the aggregate;

 

(iii)                               the sale or
lease of products, services or accounts receivable by the Company or any
Subsidiary in the ordinary course of business and any sale or other disposition
of damaged, worn-out, replaced or obsolete assets by the Company or any
Restricted Subsidiary in the ordinary course of business;

 

(iv)                              the sale or
other disposition by the Company or any Restricted Subsidiary  of cash or Cash Equivalents;

 

(v)                                 a transfer of
assets by the Company to a Restricted Subsidiary or by a Restricted Subsidiary
of the Company or to another Restricted Subsidiary;

 

(vi)                              an issuance of
Equity Interests by a Restricted Subsidiary to the Company or to another
Restricted Subsidiary of the Company; and

 

(vii)                           any Restricted
Payment or Permitted Investment that is permitted by Section 5.07 hereof.

 

(c)                                  Within 365 days after any Permitted Asset
Sale, the Company (or such Restricted Subsidiary) may apply the Net
Proceeds from such Asset Permitted Sale, at its option, either with respect to
the Company or the applicable Restricted Subsidiary.

 

(i)                                     to repay
Indebtedness and other Obligations under a Credit Facility, and if the
Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce
commitments with respect thereto,

 

(ii)                                  to repay
Indebtedness and to correspondingly permanently reduce commitments with respect
thereto;

 

(iii)                               to acquire all
or substantially all of the assets of, or any Capital Stock of, another
Permitted Business if, after giving effect to any such acquisition of Capital
Stock, the Permitted Business is or becomes a Restricted Subsidiary of the
Company and a Guarantor;

 

(iv)                              to make capital
expenditures in a Permitted Business of a Restricted Subsidiary; or

 

(v)                                 to acquire
other assets that are not classified as current assets under GAAP and that are
used or useful in a Permitted Business of a Restricted Subsidiary.

 

(d)                                 In addition, within 365 days after the
receipt of any Net Proceeds from an Event of Loss, the Company (or the
applicable Restricted Subsidiary, as the case may be) may apply such
Net Proceeds with respect to the Company or the applicable Restricted
Subsidiary:

 

72

 

(i)                                     to repay
Secured Indebtedness and to correspondingly reduce commitments with respect
thereto;

 

(ii)                                  to acquire all
or substantially all of the assets of, or any Capital Stock of, another
Permitted Business, if, after giving effect to any such acquisition of Capital
Stock, the Permitted Business is or becomes a Subsidiary of the Company and a
Guarantor;

 

(iii)                               to make capital
expenditures in a Permitted Business of a Restricted Subsidiary; or

 

(iv)                              to acquire
other assets that are not classified as current assets under GAAP and that are
used or useful in a Permitted Business. Notwithstanding the foregoing, the
Company or a Restricted Subsidiary shall be deemed to have applied Net Proceeds
from an Event of Loss within such 365-day period if, within such 365-day
period, it has entered into a binding commitment or agreement to invest such
Net Proceeds and continues to use all commercially reasonable efforts to so
apply such Net Proceeds as soon as practicable thereafter, and that upon any
abandonment or termination of such commitment or agreement after such 365-day
period, the Net Proceeds not applied will constitute Excess Proceeds of a
Restricted Subsidiary.

 

Pending the
final application of any Net Proceeds from an Asset Sale or Event of Loss, the Company
may temporarily invest such Net Proceeds in cash or Cash Equivalents.

 

Any Net
Proceeds from such Permitted Asset Sale or Event of Loss that are not applied
or invested as provided above in this Section 5.10 will be deemed to
constitute “Excess Proceeds”. Within
15 days of each date on which the aggregate amount of Excess Proceeds exceeds $5.0  million, the
Company shall commence an Excess Proceeds Offer pursuant to Section 3.08
hereof to all Holders, to purchase the maximum Principal Amount of Notes that may be
purchased out of the Excess Proceeds, at an offer price (except as provided in
the next succeeding paragraph) in cash in an amount (the “Excess
Proceeds Redemption Price”) equal to 100% of the Principal Amount
thereof plus (i) a pro rata portion of the LC Amount and (ii) accrued
and unpaid Interest thereon, if any, to the Excess Proceeds Redemption Date, in
accordance with the procedures set forth in Section 3.08 hereof. To the
extent that the aggregate Excess Proceeds Redemption Price of Notes tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds, the
Company (or such Restricted Subsidiary) may use such remaining Excess
Proceeds for any purpose not otherwise prohibited by this Indenture. If the
aggregate Principal Amount of Notes tendered into such Excess Proceeds Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon
completion of such Excess Proceeds Offer, the amount of Excess Proceeds will be
deemed to be reset at zero. Any Excess Proceeds Offer shall be made in
compliance with any applicable provisions of the Pledge Agreement.

 

Section 5.11.                                                 Transactions
with Affiliates.

 

The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any contract, agreement,

 

73

 

understanding,
loan, advance, transaction or guarantee with, or for the benefit of, any
Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”), unless;

 

(a)                                  such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person, and

 

(b)                                 the Company
delivers to the Trustee:

 

(1)                                  with respect to
any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of
the Board of Directors set forth in an Officers’ Certificate certifying that
such Affiliate Transaction complies with clause (a) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors of the Company;

 

(2)                                  with respect to
any Affiliate Transaction or series of related Affiliate Transactions, involving
aggregate consideration in excess of $5.0 million, an opinion as to the
fairness to the Company or such Restricted Subsidiary of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal
or investment banking firm of national standing; and

 

(3)                                  with respect to
any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $10.0 million, the consent of
the Majority Holders, which consent shall not be unreasonably withheld,
conditioned or delayed;

 

provided,
however, that the Company shall
not be required to comply with this Section 5.11 with respect to the
following:

 

(i)                                     any employment
agreement, employee benefit plan, officer or director indemnification agreement
or any similar arrangement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and payments made pursuant
thereto;

 

(ii)                                  transactions
between or among the Company and/or its Restricted Subsidiaries;

 

(iii)                               Restricted
Payments other than Permitted Investments that do not violate Section 5.07
of this Indenture;

 

(iv)                              transactions
with a Person that is an Affiliate of the Company solely because the Company
owns, directly or through a Subsidiary, an Equity Interest in, or controls,
such Person;

 

(v)                                 payment of
reasonable directors’ fees to Persons who are not otherwise Affiliates of the
Company;

 

(vi)                              loans or
advances to employees for expenses incurred or to be incurred in connection
with the Permitted Business and such employee’s employment in the ordinary
course

 

74

 

of
business not to exceed $500,000 in the aggregate, in each case shall not be
deemed Affiliate Transactions; or

 

(vii)                           transactions
between or among the Company and its Restricted Subsidiaries, on the one hand,
and Unrestricted Subsidiaries of the Company, on the other hand, provided that
either (A) Unrestricted Subsidiaries make Investments in the Company or
its Restricted Subsidiaries or (B) any such transactions on are no less
favorable to the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and are approved by the Board of
Directors as, among other things, fair from a financial view to Holders.

 

Section 5.12.                                                 Liens.

 

The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly create, incur, assume or suffer to exist any Lien of any kind on
any asset now owned or hereafter acquired, except Permitted Liens.

 

Section 5.13.                                                 Line of
Business.

 

The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to the Company and its Restricted Subsidiaries taken as a
whole.

 

Section 5.14.                                                 Corporate
Existence.

 

Subject to Article 6
hereof, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its corporate existence,
and the corporate, partnership or other existence of each of its Subsidiaries,
in accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company or any such Subsidiary and (ii) the
rights (charter and statutory), licenses and franchises of the Company and its
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Subsidiaries, taken as a whole, and that
the loss thereof is not adverse in any material respect to the Holders of the
Notes.

 

Section 5.15.                                                 Offer
to Repurchase Upon Change of Control.

 

(a)                                  If prior to the Stated Maturity there
shall have occurred a Change of Control, the Company shall make an offer (a “Change of Control Offer”) to each Holder
to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder’s Notes at a purchase price in cash (the “Change of Control Redemption Price”) equal to 102% of the
aggregate Principal Amount thereof plus a pro
rata portion of the LC Amount to the extent applicable, plus accrued
and unpaid Interest and Late Charges thereon, if any, to the Change of Control
Redemption Date, subject to the right of Holders on the relevant record date to
receive Interest due on the relevant Interest Payment Date.

 

75

 

 

(b)           Within 15 days after the
Company knows or reasonably should know of the occurrence of a Change of
Control, the Company shall mail a notice to each Holder (and to beneficial
owners as required by applicable law) with a copy to the Trustee (the “Change of Control Notice”) by overnight courier describing
the transaction or transactions that constitute the Change of Control and
stating:

 

(1)           that the Change of Control Offer is
being made pursuant to this Section 5.15 and that all Notes tendered will be
accepted for payment;

 

(2)           the last date of the Change of
Control Conversion/Repurchase Period by which a Holder must deliver a Change of
Control Notice to elect the repurchase option pursuant to this Section 5.15 or
deliver a Conversion Notice requesting conversion upon a Change of Control in
accordance with 4.02;

 

For purposes of this Indenture, the “Change of
Control Conversion/Repurchase Period” shall mean the period
beginning upon the date the Change of Control Notice is given and ending on the
date twenty (20) Trading Days after the effective date of the Change of
Control.

 

(3)           the Change of Control Redemption
Price

 

(4)           the date of payment of the Change of
Control Redemption Price (the “Change of Control
Redemption Date”) which shall be the date that is two (2) Business
Days following the delivery of the Change of Control Redemption Notice by the
applicable Holder;

 

(5)           the Conversion Price applicable on
the date of a Change of Control Notice;

 

(6)           that any Note not tendered will
continue to accrue Interest;

 

(7)           that, unless the Company defaults in
the payment of the Change of Control Redemption Price, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue Interest
after the Change of Control Redemption Date;

 

(8)           that Holders electing to have any
Notes purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled “Option of Holder to Elect Purchase”
on the reverse of the Notes completed, to the Paying Agent at the address
specified in the notice (“Change of Control
Redemption Notice”) prior to the close of business on the second
Business Day preceding the Change of Control Redemption Date;

 

(9)           that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the Business Day preceding the Change of Control Redemption
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the Principal Amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased;

 

(10)         that Holders whose Notes are being
purchased only in part will be issued new Notes equal in Principal Amount to
the unpurchased portion of the Notes surrendered; and

 

76

 

(11)         whether Additional Shares are required
to be paid by the Company upon conversion in connection with such Change of
Control.

 

The Company shall comply with the
requirements of Rule 14e-l under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes in connection with a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with any provisions of this Indenture, including this
Section 5.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached any obligations under this
Indenture, including this Section 5.15, by virtue of such compliance.

 

The Company shall, at least three (3)
Business Days prior to delivering the Change of Control Notice, deliver an
Officer’s Certificate to the Trustee specifying (A) the information required by
the Change of Control Notice pursuant to Section 5.15(b), and (B) whether the
Company desires the Trustee to give the Change of Control Notice required by
Section 5.15(b).

 

If the Company requests that the Trustee
shall give (at the Company’s expense) such Change of Control Notice in the
Company’s name, the Company shall, in all cases, prepare the text of such
Change of Control Company Notice. In connection with delivery of the Change of
Control Notice to the Holders, the Company shall publish a notice containing
substantially the same information that is required in the Change of Control
Notice in a newspaper published in the English language, customarily published
each Business Day and of general circulation in The City of New York, or
publish such information on the Company’s website or through such other public
medium as the Company may use at such time.

 

(c)           On the Change of Control Redemption
Date, the Company shall, to the extent lawful, (1) accept for payment all Notes
or portions thereof properly tendered pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of Control
Redemption Price in respect of all Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers’ Certificate stating the aggregate Principal Amount
of Notes or portions thereof being purchased by the Company. The Paying Agent
shall promptly mail to each Holder of Notes so tendered payment in an amount
equal to the Change of Control Redemption Price for the Notes, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in Principal Amount to any unpurchased portion
of the Notes surrendered by such Holder, if any; provided that each such new
Note shall be in a Principal Amount of $1,000 or an integral multiple thereof. The
Company shall publicly announce, and mail a notice to each Holder setting
forth, the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Redemption Date.

 

(d)           Notwithstanding anything to the
contrary in this Section 5.15, the Company shall not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Section 5.15 and Section 3.08 hereof
and all other provisions of this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.

 

77

 

(e)           The provisions of this Section 5.15
shall be applicable upon a Change of Control whether or not any other
provisions of the Indenture are applicable as well.

 

Section 5.16.                Maintenance of Properties and
Insurance.

 

(a)           The Company shall, and shall cause
each of its Restricted Subsidiaries to, maintain all material properties in
good working order and condition in all material respects (subject to ordinary
wear and tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business;  provided, however, that nothing in this Section 5.16 shall prevent the
Company or any of its Restricted Subsidiaries from discontinuing the operation
and maintenance of any of its properties if such discontinuance is, in the good
faith judgment of the Board of Directors or other governing body of the Company
or the Restricted Subsidiary concerned, as the case may be, desirable in the
conduct of its business and is not disadvantageous in any material respect to
the Holders.

 

(b)           The Company shall maintain insurance
(including appropriate self-insurance) against loss or damage of the kinds
that, in the good faith judgment of the holdings and the Company, are adequate
and appropriate for the conduct of the business of the Company and its
Subsidiaries in a prudent manner, with reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall
be customary, in the good faith judgment of the Company, for companies similarly
situated in the industry.

 

Section 5.17.                Payments for Consent.

 

Neither the Company nor any of its Restricted
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to or for the
benefit of any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
Notes unless such consideration is offered to be paid or is paid to all Holders
of the Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.

 

Section 5.18.                Additional Guarantors.

 

If at any
time, (a) any Person becomes directly or indirectly a Subsidiary of one of the
Guarantors, (b) any Person becomes directly or indirectly a parent of a
Guarantor (other than the Company), (c) if the Capital Stock of any Guarantor
is held by any Subsidiary of the Company that is not a Guarantor, or (d) any
Guarantor transfers or causes to be transferred, in one
transaction or a series of related transactions, any assets or property to any
Guarantor that, following such transaction or series of related transactions is
a Restricted Subsidiary but is not a Guarantor, then the Company and such Subsidiary, as soon as reasonably practical
and in any event within three Business Days after such event shall:

 

(a)           execute a supplemental indenture
hereto whereby such Subsidiary will become a Guarantor hereunder and comply
with the other applicable provisions of this Indenture including Sections 14.04 and 14.05.

 

78

 

(b)           execute and deliver to the Trustee a
Guarantee in the form of the Guarantee set forth in Exhibit A pursuant to which
such Subsidiary shall unconditionally guarantee on a senior secured basis of
all of the Company’s obligations under the Notes and this Indenture on the
terms set forth in this Indenture;

 

(c)           (i) execute and deliver to the
appropriate agent any amendments to any then existing intercreditor agreement
as such agent deems necessary or advisable in order to make such Subsidiary a
party to the such intercreditor agreement; (ii) execute and deliver to the
Collateral Agent and the Trustee such amendments to the Collateral Agreements
as the Collateral Agent deems necessary or advisable in order to grant to
Collateral Agent, for the benefit of the Holders and the Lenders, a perfected
security interest in the Capital Stock of such new Subsidiary and the debt
securities of such new Subsidiary subject only to the Permitted Liens, which
are owned by the Company or any Subsidiary and required to be pledged pursuant
to the Security Agreement and (iii) deliver to the Collateral Agent the
certificates representing such Capital Stock and debt securities, together with
(x) in the case of such Capital Stock, undated stock powers or instruments of
transfer, as applicable, endorsed in blank, and (y) in the case of such debt
securities, endorsed in blank, in each case executed and delivered by an
Officer of the Company or such Subsidiary, as the case may be;

 

(d)           take such actions necessary or
advisable to grant to the Collateral Agent for the benefit of the Holders and
the Trustee a perfected security interest in the assets of such new Subsidiary,
subject only to Permitted Liens, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Collateral Documents or by law or as may be reasonably requested by the
Collateral Agent; and

 

(e)           take such further action and execute
and deliver such other documents specified in this Indenture or otherwise
reasonably requested by the Trustee or the Collateral Agent to effectuate the
foregoing.

 

Thereafter,
such Subsidiary shall be a Guarantor for all purposes of this Indenture.

 

Section
5.19.                Designation of
Restricted and Unrestricted Subsidiaries

 

The Board of Directors of the Company may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that
designation would not cause a Default. If a Restricted Subsidiary is designated
as an Unrestricted Subsidiary, the aggregate Fair Market Value of all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an
Investment made as of the time of the designation and will reduce the amount
available for Restricted Payments pursuant to Section 5.07 or under one or
more clauses of the definition of Permitted Investments, as determined by the
Company. That designation will only be permitted if the Investment would be
permitted at that time and if the Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors of the Company
may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if
that redesignation would not cause a Default.

 

79

 

Any designation of a Subsidiary of the
Company as an Unrestricted Subsidiary will be evidenced to the Trustee by
filing with the Trustee a certified copy of a resolution of the Board of
Directors giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the preceding conditions and was
permitted pursuant to Section 5.07. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary will be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
and, if such Indebtedness is not permitted to be incurred as of such date
pursuant to Section 5.09, the Company will be in Default of Section 5.09. The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of the Company; provided that such designation will be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary, and
such designation will only be permitted if

 

(i)            such Indebtedness is permitted
pursuant to Section 5.09, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period;

 

(ii)           no Default or
Event of Default would be in existence following such designation; and

 

(iii)          the
Company delivers to the Trustee an Officers’ Certificate certifying that such
designation complies with the conditions described in (i) and (ii) above.

 

Section 5.20.                Issuance or Sale of Subsidiary
Stock.

 

The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, sell any Capital Stock of a Restricted
Subsidiary of the Company, except to the Company or to another wholly owned
Subsidiary of the Company, unless the Company and its Restricted Subsidiaries,
as the case may be, sell 100% of the Capital Stock of the subject Restricted
Subsidiary that they own in accordance with Section 5.10, Section 5.15
and/or Article 6 of this Indenture, as applicable. In addition, no
Subsidiary of the Company shall issue any Capital Stock, other than to the
Company or another Restricted Subsidiary of the Company.

 

Section 5.21.                Real
Estate Mortgages and Filings.

 

(a)           With respect to any real property,
other than a leasehold of the Guarantors (individually and collectively, the “Premises”), the Company shall deliver to the Collateral
Agent, no later than five Business Days after the date of this Indenture, as
mortgagee, fully-executed counterparts of mortgages, each dated as of the date
of acquisition of such property, duly executed by the Company or the applicable
Guarantor, together with evidence of the completion (or satisfactory agreements
for the completion), of all recordings and filings of such mortgage as may be
necessary to create a valid, perfected Lien, subject to Permitted Liens,
against the properties purported to be covered thereby.

 

80

 

(b)           With respect to any Premises, (i)
acquired in accordance with the terms of this Indenture after the date of this
Indenture with a purchase price or (ii) as of the date of this Indenture, with
a Fair Market Value, of greater than $1.0 million:

 

(i)            the Collateral Agent shall have
received mortgagee’s title insurance policies in favor of the Collateral Agent,
as mortgagee for the ratable benefit of the Collateral Agent, the Trustee and
the Holders, with respect to the property purported to be covered by such
mortgage, insuring that title to such property is marketable and that the
interests created by the mortgage constitute valid Liens thereon free and clear
of all liens, defects and encumbrances other than Permitted Liens, and such
policies shall also include, to the extent available, a revolving credit
endorsement and such other endorsements as the Collateral Agent shall
reasonably request and shall be accompanied by evidence of the payment in full
of all premiums thereon; and

 

(ii)           the Company shall deliver to the
Collateral Agent, with respect to each of the covered Premises, filings,
surveys, local counsel opinions and fixture filings, along with such other
documents, instruments, certificates and agreements as the Collateral Agent and
its counsel shall reasonably request;

 

(c)           The Company shall deliver, no later
than five Business Days after the date of this Indenture or the date of
acquisition as applicable, to the Collateral Agent an Officers’ Certificate to
the effect that all conditions contained in this Section 5.21 with respect to
the acquisition of each such Premises has been satisfied and an Opinion of
Counsel to the effect that a valid and perfected Lien has been created against
such Premises.

 

Section 5.22.                Leasehold
Mortgage and Filings.

 

The Company and each of the Guarantors shall
deliver Mortgages with respect to the Company’s or the Guarantor’s leasehold
interests in the premises (the “Leased Premises”)
occupied by the Company or the Guarantor pursuant to leases entered into in
accordance with the terms of this Indenture after the Issue Date (collectively,
the “Leases, and individually, a “Lease), other than renewals or leases existing on the date
of this Indenture.

 

Prior to the effective date of any Lease, the
Company and such Guarantors shall provide to the Trustee all of the items
described in clauses (b), (c) and (d) of Section 5.21 and in addition shall use
its reasonable commercial efforts to obtain an agreement executed by the lessor
of the Lease, whereby the lessor consents to the mortgage and waives or subordinates
its landlord Lien (whether granted by the instrument creating the leasehold
estate or by applicable law), if any, and which shall be entered into by the
Collateral Agent.

 

Section 5.23.                Seneca
Negative Pledge and Plant Lien.

 

(a)           The Company and Seneca agree not
to, directly or indirectly create, incur, assume or suffer to exist any Lien of
any kind on any assets or property of Seneca and Nova Biofuels Seneca LLC (“Seneca Project Entity”), other than Liens on the Seneca
Plant granted to secure the obligations of Seneca and the Seneca Project Entity
to lenders under Credit Facilities existing as of the date hereof and under any
Permitted Project Debt for or related to the Seneca Plant incurred after the
date hereof and Permitted Refinancing Debt of such Indebtedness.

 

81

 

(b)           The Company and Seneca will use their
commercially reasonable efforts to cause the proposed lender under Permitted
Project Debt to permit the Company, Seneca and the Seneca Project Entity (i)
contemporaneously with the closing of such Permitted Project Debt, (A)grant to
the Holders and the Collateral Agent a Lien on the Seneca Plant pursuant to the
Collateral Documents and this Indenture, and (B) enter into a customary
intercreditor agreement with any such lender or holder of debt that has or will
have a first priority Lien on the Seneca Plant as permitted by the terms of
this Indenture and (ii) immediately following the closing of such
Permitted Project Debt and from time to time thereafter, file any
such notice filings or other agreements or instruments and take further action
as reasonably necessary or desirable under applicable law to perfect the Liens
created by the Collateral Agreements at such places as the Collateral Agent or
the Trustee may reasonably request with respect to the Lien on the Seneca
Plant; provided that this Section shall not require the Company or any of its
Subsidiaries to amend any terms, conditions or other provisions of any future
Credit Facility to induce any lender thereunder to accept a lien junior to the
proposed Lien contemplated by this paragraph.

 

(c)           For
the avoidance of doubt, Seneca is a party to this Indenture solely to enter
into the covenant contained in this Section 5.23.

 

(d)           If
the Company grants the Holders and the Collateral Agent a Lien on the Seneca
Plant pursuant to the Collateral Documents and this Section 5.23, the Company
will deliver an Opinion of Counsel to the Trustee to the effect that a valid
Lien has been perfected on the Seneca Plant in favor of the Holders and the
Collateral Agent.

 

Section 5.24.                Impairment
of Security Interest.

 

Neither the Company nor any of the Guarantors
will take or omit to take any action which would adversely affect or impair the
Liens in favor of the Collateral Agent, on behalf of itself, the Trustee and
the holders of the Notes, with respect to the Collateral. Neither the Company
nor any of its Restricted Subsidiaries shall grant to any Person, or permit any
Person to retain (other than the Collateral Agent), any interest whatsoever in
the Collateral other than Permitted Liens. Neither the Company nor any of its
Restricted Subsidiaries will enter into any agreement that requires the
proceeds received from any sale of Collateral to be applied to repay, redeem,
defease or otherwise acquire or retire any Indebtedness of any Person, other
than as permitted or required by this Indenture, the Notes or the Collateral
Documents. The Company shall, and shall cause each Guarantor to, at their sole
cost and expense, execute and deliver all such agreements and instruments as
the Collateral Agent or the Trustee shall reasonably request to more fully or
accurately describe the property intended to be Collateral or the obligations
intended to be secured by the Collateral Documents. The Company shall, and
shall cause each Guarantor to, at its sole cost and expense, file any such
notice filings or other agreements or instruments as may be reasonably
necessary or desirable under applicable law to perfect the Liens created by the
Collateral Agreements at such times and at such places as the Collateral Agent
or the Trustee may reasonably request.

 

Section 5.25.                Additional Interest; Special
Interest.

 

If at any time Additional Interest becomes
payable by the Company pursuant to the Registration Rights Agreement or any
Special Interest becomes payable by the Company

 

82

 

pursuant to
Section 7.03 hereof, the Company shall promptly deliver to the Trustee a
certificate to that effect and stating (i) the amount of such applicable
Additional Interest or Special Interest that is payable and (ii) the date on
which such applicable Additional Interest is payable pursuant to the terms of
the Registration Rights Agreement or Special Interest is payable pursuant to
Section 7.03 hereof. Unless and until a Responsible Officer of the Trustee
receives such a certificate, the Trustee may assume without inquiry that no
Additional Interest or Special Interest is payable. If the Company has paid
Additional Interest or Special Interest directly to the Persons entitled to
such Additional Interest or Special Interest, the Company shall deliver to the
Trustee a certificate setting forth the particulars of such payment.

 

Section 5.26.                Requirement to Seek Stockholder
Approval.

 

At the next special or annual meeting of
stockholders of the Company with a record date after the Issue Date, the
Company shall take all action necessary to obtain the approval of its
stockholders providing for the Company’s issuance of all of the shares of
Common Stock issued and issuable pursuant to this Indenture (including, without
limitation, upon conversion of the Notes, upon failure to pay the applicable
Redemption Price as set forth in Section 3.10 hereof or payment of the Make-Whole
Premium), without reference to the limit thereon set forth in Section
4.05(2)(c), pursuant to the rules or regulations of American Stock Exchange
(including, without limitation, Section 713 of the Amex Company Guide) or the
rules and regulations of the Eligible Market upon which the Company’s Common
Stock is then-listed or quoted (the “Stockholder Approval”).
In connection with such action, the Company shall provide each stockholder with
a proxy statement and shall use its reasonable best efforts to solicit and
obtain the Stockholder Approval and to cause its Board of Directors to
recommend, to the extent possible consistent with its fiduciary duties under
applicable law, to the stockholders that they approve such proposals. If,
despite the Company’s reasonable best efforts, such Stockholder Approval is not
obtained at the first meeting at which it is presented for a vote, the Company
shall seek to obtain such Stockholder Approval at each subsequent general
meeting of stockholders to obtain Stockholder Approval to the extent permitted
under the rules and regulations of the Eligible Market on which the Common
Stock is then-listed. So long as the Company has complied with this Section
5.26, in no event shall the failure to obtain the Stockholder Approval constitute
a Default or Event of Default.

 

ARTICLE
6.

SUCCESSORS

 

Section 6.01.                Merger, Consolidation, or Sale
of Assets.

 

The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, consolidate or
merge with or into another Person (whether or not the Company or such
Restricted Subsidiary is the surviving corporation), or sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or
assets of the Company and its Restricted Subsidiaries taken as a whole in one
or more related transactions, to any other Person, unless:

 

(i)            either the Company or such
Restricted Subsidiary is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than

 

83

 

the Company or such
Subsidiary) (such
surviving Person, the “Surviving Entity”)
or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any State thereof or the District of Columbia;

 

(ii)           the Surviving Entity shall expressly
assume all the obligations of the Company (including, without limitation, the
right to convert into Capital Stock of the Surviving Entity that is listed on
an Eligible Market or, to the extent the Capital Stock of the Surviving Entity
is not listed on an Eligible Market, then the person whose Capital Stock is
listed on an Eligible Market shall unconditionally guarantee the Notes) or such
Restricted Subsidiary, if applicable, under this Indenture, the Notes or such
Subsidiary’s Note Guarantee, and any applicable Transaction Documents as the
case may be, and under the Collateral Documents pursuant to a supplemental indenture
executed and delivered in a form reasonably satisfactory to the Trustee;

 

(iii)          immediately after giving effect to
such transaction, no Default or Event of Default exists and no event which
after notice or lapse of time or both would become a Default or Event of
Default shall have occurred and be occurring;

 

(iv)          the Collateral contained in the
Surviving Entity:

 

(1)           continues to constitute Collateral
under this Indenture and the Pledge Agreement or other Collateral Documents;
and

 

(2)           is subject to a first-priority Lien,
subject to Permitted Liens, in favor of the Trustee for the benefit of the
Holders of the Notes;

 

(v)           the Surviving Entity would, on the
date of such transaction after giving pro forma effect thereto and any related
financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to Section 5.09 hereof;

 

(vi)          to the extent that the assets of the
Surviving Entity are assets of the type which would constitute Collateral under
this Indenture and the Pledge Agreement or other Collateral Documents, such
Surviving Entity shall have taken such action as may be reasonably necessary to
cause such property and assets to be made subject to the Lien of the Pledge
Agreement or other Collateral Documents in the manner and to the extent
required in this Indenture. In addition, the Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, lease all or substantially
all of the properties or assets, of the Company and its Subsidiaries taken as a
whole, in one or more related transactions, to any other Person;

 

(vii)         the Company delivers to the Trustee an
Officers’ Certificate to the effect that all the conditions for such
consolidation or merger or such sale, assignment, transfer, conveyance or other
disposition described in this Section 6.01 have been satisfied; and

 

(viii)        the Company delivers to the Trustee an
Opinion of Counsel to the effect that the conditions set forth in clauses (i),
(ii), (iv) (except as to priority of Liens) and (vi) of this Section 6.01 have
been satisfied.

 

84

 

Section 6.02.                Successor Corporation
Substituted

 

Upon any consolidation or merger, or any
sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company or any of its Restricted
Subsidiaries in accordance with Section 6.01 hereof, the successor Person
formed by such consolidation or into or with which the Company or such
Restricted Subsidiary is merged or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this Indenture
referring to the “Company,” or to a “Restricted Subsidiary” or “Guarantor”
shall refer instead to the successor corporation and not to the Company or such
Restricted Subsidiary or Guarantor, as the case may be), and may exercise every
right and power of the Company or such Restricted Subsidiary or Guarantor under
this Indenture with the same effect as if such successor Person had been named
as the Company or a Restricted Subsidiary or Guarantor herein; provided, however,
that the predecessor Person shall not be relieved from the obligation to pay
the Principal of, Interest and any other amounts due on the Notes, except in
the case of a sale of all or substantially all assets that meets the
requirements of Section 6.01 hereof.

 

ARTICLE
7.

DEFAULTS AND REMEDIES

 

Section 7.01.                Events of Default.

 

An “Event
of Default” means any of the following events:

 

(a)           the Company’s (i) failure to cure a
Conversion Failure by delivery of the required number of shares of Common Stock
within ten Business Days after the applicable Conversion Date or (ii) notice,
written or oral, to any Holder, including by way of public announcement or
through any of its agents, at any time, of its intention not to comply with a
request for conversion of any Notes into shares of Common Stock that is
tendered in accordance with the provisions of this Indenture;

 

(b)           the Common Stock is not listed on any Eligible Market;

 

(c)           the Company defaults in the payment
when due of Interest (whether payable in cash or as Capitalized Interest) on
the Notes and such default continues for a period of 30 days;

 

(d)           the Company defaults in the payment
when due of Principal of or premium, if any, on the Notes when the same becomes
due and payable at maturity, upon redemption (including in connection with an
offer to purchase) or otherwise;

 

(e)           the Company or any of its
Subsidiaries fails to comply with any of the provisions of Section 5.07, 5.09,
5.10, 5,12, 5.15, or 6.01 hereof;

 

(f)            the occurrence of a Withdrawal
Event;

 

85

 

(g)           failure by the Company to give the Change of Control
Notice pursuant to Section 5.15, the Excess Proceeds Offer pursuant to Section
3.08 or the Holder Optional Redemption Notice pursuant to Section 3.09;

 

(h)           the Company or any Guarantor fails to
observe or perform any other covenant, representation, warranty or other
agreement in this Indenture (other than a default specified in clauses (a)
through (g) above), the Notes, the Note Guarantees or the Collateral Documents
for 30 days after notice to the Company by the Trustee or the Holders of at
least 25% in aggregate Principal Amount of the Notes then outstanding voting as
a single class;

 

(i)            a default occurs under any mortgage,
indenture or instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Subsidiaries), whether such Indebtedness or Guarantee now exists,
or is created after the date of this Indenture, which default (i) is caused by
a failure to pay principal of, or interest or premium, if any, on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on
the date of such default (a “Payment Default”);
or (ii) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the Principal Amount of such Indebtedness, together
with the Principal Amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more;

 

(j)            a final judgment or final judgments
for the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any of its Subsidiaries and such judgment
or judgments remain undischarged, unpaid or unstayed for a period (during which
execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $5.0 million;

 

(k)           except as otherwise permitted by this
Indenture, any Note Guarantee is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force and
effect, or any Guarantor, or any Person acting on behalf of any Guarantor,
denies or disaffirms its obligations under its Note Guarantee;

 

(l)            except as otherwise permitted by
this Indenture, the Pledge Agreement, any Collateral Document is held in any
judicial proceeding to be unenforceable or invalid or ceases for any reason to
be in full force and effect; provided that it shall not be an Event of Default
under this clause (i) if the sole result is that any Lien purported to be
granted on any Collateral, individually or in the aggregate, having a Fair
Market Value of not more than $5.0 million, ceases to be an enforceable and
perfected first priority Lien, subject only to Permitted Liens;

 

(m)          except as otherwise permitted by this
Indenture, any Lien purported to be granted under the Pledge Agreement or any
Collateral Document on any Collateral having a Fair Market Value, individually
or in the aggregate, in excess of $5.0 million is held in any judicial proceeding
not to be an enforceable and perfected first priority Lien or ceases for any
reason to be in full force and effect, subject only to Permitted Liens;

 

86

 

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

 

(i)            commences a voluntary case,

 

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

 

(iii)          consents to the appointment of a
custodian, receiver, trustee, assignee, liquidator or similar official under
Bankruptcy Law of it or for all or substantially all of its property,

 

(iv)          makes a general assignment for the
benefit of its creditors, or (v) 
generally is not paying its debts as they become due; or

 

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

 

(i)            is for relief against the Company,
any of the Restricted Subsidiaries, any Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary,
in an involuntary case;

 

(ii)           appoints a custodian, receiver,
trustee, assignee, liquidator or similar official under Bankruptcy Law of the
Company, any of the Restricted Subsidiaries, any Significant Subsidiary or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, or for all or substantially all of the property of the Company, any
of the Restricted Subsidiaries, any Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary;
or

 

(iii)          orders the liquidation of the Company,
any of the Restricted Subsidiaries, any Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive days.

 

Section 7.02.                Acceleration.

 

If any Event of Default (other than an Event
of Default specified in clause (n) or (o) of Section 7.01 hereof with respect
to the Company, any of the Restricted Subsidiaries, any Significant Subsidiary
or any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, occurs and is continuing, the Trustee or the Holders of at least
25% in Principal Amount of the then outstanding Notes may declare all the Notes
plus any remaining LC Amount to be due and payable immediately (the “Event of
Default Redemption Price”). Upon any such declaration, the Notes plus any
remaining LC Amount shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (n) or (o) of Section
7.01 hereof occurs with respect to the Company, any of the Restricted
Subsidiaries, any Significant Subsidiary or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary, all outstanding
Notes plus any remaining LC Amount shall be due and payable immediately without
further action or notice.

 

87

 

The Majority Holders by written notice to the
Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of Principal, Interest
or premium that has become due solely because of the acceleration) have been
cured or waived.

 

Section 7.03.                Other Remedies.

 

If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of Principal, premium, if any, and Interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain a proceeding even if
it does not possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Note 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. All remedies are cumulative to the extent permitted by law.

 

Notwithstanding the foregoing, the sole
remedy for an Event of Default relating to the failure by the Company to comply
with the provisions of Section 5.03 shall, for the first 120 days after the
occurrence of such an Event of Default, consist exclusively of the right to
receive special interest (“Special Interest”) on the Notes at an annual rate
equal to 1.00% of the principal amount of the Notes. Such Special Interest
shall be paid semi-annually in arrears, with the first semi-annual payment due
of the first Interest Payment Date following the date on which such Special
Interest began to accrue on the Notes. Special Interest shall accrue on all
Outstanding Notes from and including the date on which an Event of Default
relating to a failure to comply with the provisions of Section 5.03 shall first
occur to but not including the 120th day thereafter (or such earlier
date on which such Event of Default shall have been cured or waived). On such
120th day (or earlier, if the Event of Default relating to the
failure to comply with Section 5.03 is cured or waived prior to such 120th
day), such Special Interest shall cease to accrue and, if the Event of Default
relating to the failure to comply with Section 5.03 shall not have been cured
or waived prior to such 120th day, the Notes shall be subject to
acceleration as provided in Section 7.02. The provisions of this paragraph
shall not affect the rights of holders in the event of the occurrence of any
other Event of Default. Upon the occurrence of an Event of Default giving rise
to the obligation to pay Special Interest, all references herein to interest
accrued or payable of any date shall include any Special Interest accrued or
payable as of such dates as provided in this Section 7.03.

 

Section 7.04.                Waiver of Past Defaults.

 

The Majority Holders by notice to the Trustee
may on behalf of the Holders of all of the Notes waive an existing Default and
its consequences hereunder, except (a) a Default or Event of Default described
in clauses (n) or (o) of Section 7.01 or (b) in respect of a covenant or
provision hereof which under Section 10.02 cannot be modified or amended without
the consent of the Holder of each outstanding Note affected. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every

 

88

 

purpose of
this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.

 

Section 7.05.                Control
by Majority.

 

Subject to Section 8.02(f), the Majority
Holders shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee, provided that:  (a) such direction shall not be in conflict
with any rule of law, this Indenture or the Pledge Agreement; (b) the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction; and (c) the Trustee may refuse to follow any
direction that conflicts with law or that the Trustee determines may involve
the Trustee in personal liability or may be prejudicial to the rights of the
Holders of Notes.

 

Section 7.06.                Limitation
on Suits.

 

No Holder shall have any right to institute
any proceeding, judicial or otherwise, in respect of this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder (other
than in the case of an Event of Default specified in clause (m) or (n) of
Section 7.01), unless:

 

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

 

(b)           the Holders of at least 25% in
Principal Amount of the then outstanding Notes make a written request to the
Trustee to pursue the remedy;

 

(c)           such Holder of a Note or Holders of
Notes offer and, if requested, provide to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense;

 

(d)           the Trustee does not comply with the
request within 60 days after receipt of the request and the offer and, if
requested, the provision of indemnity; and

 

(e)           during such 60-day period the
Majority Holders do not give the Trustee a direction inconsistent with the
request.

 

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

 

Section 7.07.                Unconditional Rights of Holders
of Notes to Receive Payment.

 

Notwithstanding any other provision of this
Indenture, the right of any Holder to receive payment of the Principal, the
Redemption Price, or Interest, in respect of the Notes held by such Holder, on
or after the respective due dates expressed in the Notes or any Redemption
Date, as applicable, and to convert the Notes in accordance with Article 6, or
to bring suit for the

 

89

 

enforcement of
any such payment on or after such respective dates or the right to convert,
shall not be impaired or affected adversely without the consent of such Holder.

 

Section 7.08.                Collection Suit by Trustee.

 

If an Event of Default specified in Section
7.01(c) or (d) occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the Company
and the Subsidiaries for the whole amount of Principal of, premium, if any,
Redemption Price, Interest and any other amounts remaining unpaid on the Notes
and interest on overdue principal and, to the extent lawful, interest 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 7.09.                Trustee May File Proofs of Claim.

 

The Trustee is authorized to 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 of the Notes allowed in any judicial proceedings relative
to the Company (or any other obligor upon the Notes and the Note Guarantees,
including the Guarantors), its creditors or its property and shall be entitled
and empowered to collect, receive and distribute any money or other property
payable or deliverable on any such claims 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 8.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 8.07 hereof
out of the estate in any such proceeding, 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 properties
that the Holders may be entitled to receive in such proceeding 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 accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

 

Section 7.10.                Priorities.

 

If the Trustee collects any money pursuant to
this Article 7, it shall pay out the money in the following order:

 

First: 
to the Trustee, its agents and attorneys for amounts due under Section
8.07 hereof, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;

 

90

 

Second: 
to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
Principal, premium, if any, Interest and any other amounts due, respectively;
and

 

Third: 
to the Company or to such party as a court of competent jurisdiction
shall direct.

 

The Trustee may fix a record date and payment
date for any payment to Holders of Notes pursuant to this Section 7.10.

 

Section 7.11.                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, in either case in respect of the
Notes, a court may require any party litigant in such suit to file an
undertaking to pay the costs of the suit, and the court may assess reasonable
costs, including reasonable attorney’s 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; but the provisions of this
Section 7.11 shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate Principal Amount
of the outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the Principal Amount or Interest, on any Note on
or after the Stated Maturity of such Note or applicable Redemption Price on or
after the applicable Redemption Date. This Section 7.11 shall be in lieu of
Section 315(e) of the Trust Indenture Act and such Section 315(e) is hereby
expressly excluded from this Indenture, as permitted by the Trust Indenture
Act.

 

Section 7.12.                Waiver of Stay or Extension of
Laws.

 

The Company covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay, or
extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not 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.

 

ARTICLE
8.

TRUSTEE

 

Section 8.01.                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 the Collateral Documents, 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 such person’s own affairs.

 

91

 

(b)           The duties and responsibilities of
the Trustee shall be as provided by the TIA. Except during the continuance of
an Event of Default:

 

(i)            the duties of the Trustee shall be
determined solely by the express provisions of this Indenture, the Pledge
Agreement and the Collateral Documents, and the Trustee need perform only those
duties that are specifically set forth in this Indenture, the Pledge Agreement
and the Collateral Documents, and no others, and no implied covenants or
obligations shall be read into this Indenture, the Pledge Agreement and the
Collateral Documents, against the Trustee; and

 

(ii)           in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture, the Pledge Agreement and the Collateral Documents. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture, the Pledge Agreement and
the Collateral Documents.

 

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

 

(i)            this paragraph does not limit the
effect of paragraph (b) of this Section 8.01(c);

 

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

 

(iii)          the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 7.05 hereof.

 

(d)           Whether or not therein expressly so
provided, every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), and (c) of this Section 8.01(c).

 

(e)           No provision of this Indenture shall
require the Trustee to expend or risk its own funds or incur any liability. The
Trustee shall be under no obligation to exercise any of its rights and powers
under this Indenture at the request of any Holder, unless such Holder shall
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.

 

(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.

 

92

 

Section 8.02.                Rights of Trustee.

 

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

 

(b)           Before the Trustee acts or refrains
from acting, it may require an Officers’ Certificate or an Opinion of Counsel
or both. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers’ Certificate or Opinion of
Counsel. The Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(c)           The Trustee may act through its
attorneys and 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 that it believes to be
authorized or within the rights or powers conferred upon it by this Indenture.

 

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

 

(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 discretion of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction.

 

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

 

(h)           The rights, privileges, 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 each agent, custodian and other person
employed to act hereunder.

 

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

 

93

 

Section 8.03.                Individual Rights of Trustee.

 

The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may otherwise deal with
the Company or any Affiliate of the Company with the same rights it would have
if it were not Trustee. However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue as trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 8.10
and 8.11 hereof.

 

Section 8.04.                Trustee’s Disclaimer.

 

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

 

Section 8.05.                Notice of Defaults.

 

If a Default or Event of Default occurs and
is continuing and if it is known to the Trustee, the Trustee shall mail to
Holders of Notes a notice of the Default or Event of Default within 90 days
after it knows of such Default or Event of Default. Except in the case of a
Default or Event of Default in payment of Principal of, premium, if any,
Interest or any other amounts due on any Note, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Notes.

 

Section 8.06.                Reports by Trustee to Holders of
the Notes.

 

Within 60 days after each July 15 beginning
with the July 15 following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA § 313(a) (but if
no event described in TIA § 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA § 313(c).

 

A copy of each report at the time of its
mailing to the Holders of Notes shall be mailed to the Company and filed with
the SEC and each stock exchange on which the Notes are listed in accordance
with TIA § 313 (d). The Company shall promptly notify the Trustee when the
Notes are listed on any stock exchange.

 

Section 8.07.                Compensation and Indemnity.

 

The Company shall pay to the Trustee from
time to time compensation for its acceptance of this Indenture and services
hereunder as shall be agreed in writing by the Company and the

 

94

 

Trustee. The
Trustee’s compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee’s agents and counsel.

 

The Company shall indemnify the Trustee
against any and all losses, liabilities, damages, claims or expenses incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture, including the costs and expenses of enforcing
this Indenture against the Company (including this Section 8.07) and defending
itself against any claim (whether asserted by the Company or any Holder or any
other person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent any such loss,
liability or expense may be attributable to its gross negligence, willful
misconduct or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.

 

The obligations of the Company under this
Section 8.07 shall survive the satisfaction and discharge of this Indenture and
the resignation or removal of the Trustee.

 

To secure the Company’s payment obligations
in this Section, the Trustee shall have a Lien prior to the Notes on all money
or property held or collected by the Trustee, except that held in trust to pay
Principal and Interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.

 

When the Trustee incurs expenses or renders
services after an Event of Default specified in Section 7.01 (n) or (o) hereof
occurs, the expenses and the compensation for the services (including the fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

 

The Trustee shall comply with the provisions
of TIA § 313(b)(2) to the extent applicable.

 

Section
8.08.                Replacement of
Trustee.

 

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

 

The Trustee may resign in writing at any time
and be discharged from the trust hereby created by so notifying the Company. The
Majority Holders may remove the Trustee by so notifying the Trustee and the
Company in writing. The Company may remove the Trustee if:

 

(a)           the Trustee fails to comply with
Section 8.10 hereof;

 

95

 

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

 

(c)           a custodian, receiver, trustee,
assignee, liquidator or similar official under Bankruptcy Law or public officer
takes charge of the Trustee or its property; or

 

(d)           the Trustee becomes incapable of
acting.

 

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

 

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

 

If the Trustee, after written request by any
Holder who has been a Holder for at least six months, fails to comply with
Section 8.10, such Holder may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company. Thereupon,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 8.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 8.08, the Company’s obligations under Section 8.07 hereof shall
continue for the benefit of the retiring Trustee.

 

Section 8.09.                Successor Trustee by Merger, etc.

 

If the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee; provided, that such successor corporation
shall otherwise be eligible and qualified under this Article 8.

 

Section 8.10.                Eligibility;
Disqualification.

 

There shall at all times be a Trustee
hereunder that is a corporation organized and doing business under the laws of
the United States of America or of any state thereof that is authorized under
such laws to exercise corporate trustee power, that is subject to supervision
or examination by federal or state authorities and that has a combined capital
and surplus of at least $ 100 million as set forth in its most recent published
annual report of condition.

 

96

 

This Indenture shall always have a Trustee
who satisfies the requirements of TIA § 310(a)(l), (2) and (5). The Trustee is
subject to TIA § 310(b).

 

Section 8.11.                Preferential Collection of
Claims Against Company.

 

The Trustee is subject to TIA § 311 (a),
excluding any creditor relationship listed in TIA § 311 (b). A Trustee who has
resigned or been removed shall be subject to TIA § 31I (a) to the extent
indicated therein.

 

ARTICLE
9.

COVENANT DEFEASANCE

 

Section 9.01.                Option to Effect Covenant
Defeasance.

 

The Company may, at the option of its Board
of Directors evidenced by a resolution set forth in an Officers’ Certificate,
at any time, elect to have Section 9.02 hereof be applied to all outstanding
Notes and all obligations of the Guarantors discharged with respect to the Note
Guarantees upon compliance with the conditions set forth below in this Article
9.

 

Section 9.02.                Covenant
Defeasance.

 

Upon the Company’s exercise under Section
9.01 hereof of the option applicable to this Section 9.02, the Company and the
Guarantors shall, subject to the satisfaction of the conditions set forth in
Section 9.03 hereof, be released from its obligations under the covenants
contained in Sections 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.15, 5.16,
5.17, 5.18, 5.19 and 5.20 hereof and Section 6.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section
9.03 are satisfied (hereinafter, “Covenant Defeasance”),
and the Notes shall thereafter be deemed not “outstanding” for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 7.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. In addition, upon the Company’s
exercise under Section 9.01 hereof of the option applicable to this Section
9.02 hereof, subject to the satisfaction of the conditions set forth in Section
9.03 hereof, Sections 7.01(c) through 7.01(j) hereof shall not constitute
Events of Default.

 

Section 9.03.                Conditions
to Covenant Defeasance.

 

The following shall be the conditions to the
application of Section 9.02 hereof to the outstanding Notes:

 

97

 

(a)           the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders, cash in United States dollars, non-callable Government Securities,
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized investment bank, appraisal firm or firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the outstanding Notes on the stated date for payment thereof;

 

(b)           the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;

 

(c)           no
Default or Event of Default shall have occurred and be continuing on the date
of such deposit (other than a Default or Event of Default resulting from the
incurrence of Indebtedness all or a portion of the proceeds of which will be
used to defease the Notes pursuant to this Article 9 concurrently with such
incurrence) or insofar as Sections 7.0l(k) or 7.01(1) hereof is concerned, at
any time in the period ending on the 91st day after the date of deposit;

 

(d)           such
Covenant Defeasance shall not result in a breach or violation of, or constitute
a default under, any material agreement or instrument (other than this
Indenture) to which the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound;

 

(e)           the
Company shall have delivered to the Trustee an Opinion of Counsel (which may be
subject to customary exceptions) to the effect that on the 91st day following
the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally;

 

(f)            the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company; and

 

(h)           the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for or
relating to the Covenant Defeasance have been complied with.

 

Section 9.04.                Deposited
Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.

 

Subject to Section 9.05 hereof, all money and
non-callable Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of
this Section 9.04, the “Trustee”)
pursuant to Section 9.03 hereof in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal,

 

98

 

premium, if
any, and interest, but such money need not be segregated from other funds
except to the extent required by law.

 

The Company and Guarantors shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or non-callable Government Securities deposited
pursuant to Section 9.03 hereof or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.

 

Anything in this Article 9 to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 9.03 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 9.03(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.

 

Section 9.05.                Repayment
to Company.

 

Any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment of the
principal of, premium, if any, or interest on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.

 

ARTICLE
10.

AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 10.01.              Without Consent of Holders of
Notes.

 

Notwithstanding Section 10.02 of this
Indenture, the Company, the Guarantors and the Trustee may amend or supplement
this Indenture, the Note Guarantees or the Notes without the consent of any
Holder of a Note:

 

(a)           to cure any ambiguity, defect or
inconsistency; provided, however, that such cure does not, in the good faith
option of the Board of Directors, adversely affect the interests of the Holders
in any material respect;

 

99

 

(b)           to provide for uncertificated Notes
in addition to or in place of certificated Notes or to alter the provisions of
Article 2 hereof (including the related definitions) in a manner that does not
materially adversely affect any Holder;

 

(c)           to provide for the assumption of the
Company’s or a Guarantor’s obligations to the Holders of the Notes under the
Indenture, the Notes and the Note Guarantee by a successor to the Company or a
Guarantor pursuant to Article 6 or Article 12 hereof;

 

(d)           to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder or under, the Notes, the Note
Guarantees, the Pledge Agreement and the Collateral Documents of any Holder of
the Note;

 

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

 

(f)            to allow any Guarantor to execute a
supplemental indenture and/or a Note Guarantee with respect to the Notes.

 

In determining whether the Holders of the
required Principal Amount of Notes have concurred in any direction, waiver or
consent under this Indenture, Notes owned by the Company, or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company, shall be considered as though not outstanding;
provided, however, that no Holder shall be deemed to be directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company solely by reason of ownership of such Notes. A change in a defined
term used in this Section shall be deemed to be a change to this Section.

 

Upon the request of the Company accompanied
by a resolution of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the Trustee of the
documents described in Section 8.02 hereof, the Trustee shall join with the
Company and the Guarantors in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.

 

Section 10.02.              With Consent of Holders of Notes.

 

Except as provided below in this Section
10.02, the Company and the Trustee may amend or supplement this Indenture
(including Sections 3.08, 5.10 and 5.15 hereof), the Note Guarantees, the
Notes, the Pledge Agreement and any Collateral Document with the consent of the
Majority Holders voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 7.04 and 7.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of
the Principal of, premium, if any, Interest or any other amounts due on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the Note
Guarantees, the Notes, the Pledge Agreement and

 

100

 

any Collateral
Document may be waived with the consent of the Majority Holders voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes).

 

After an amendment, supplement or waiver
under this Section becomes effective, the Company shall mail to the Holders of
Notes 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
amended or supplemental Indenture, Notes, Note Guarantees, Pledge Agreement or
Collateral Document or waiver. Subject to Sections 7.04 and 7.07 hereof, the
Majority Holders voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes, the
Note Guarantees, the Pledge Agreement or any Collateral Document. Notwithstanding
anything in this Indenture to the contrary, without the consent of each Holder
affected, an amendment or waiver under this Section 10.02 may not (with respect
to any Notes held by a non-consenting Holder):

 

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

 

(b)           reduce the Principal of, Redemption
Price of, Interest, premium, or any other amounts due hereunder or change the
fixed maturity of any Note or alter or waive any of the provisions with respect
to the redemption of the Notes except as provided above with respect to
Sections 3.08, 3.09, 5.10 and 5.15 hereof;

 

(c)           reduce the rate of or change the time
for payment of Interest, including Late Charges, on any Note;

 

(d)           waive a Default or Event of Default
in the payment of Principal of or premium, if any, Interest or any other
amounts due on the Notes (except a rescission of acceleration of the Notes by
the Majority Holders and a waiver of the payment default that resulted from
such acceleration);

 

(e)           make any Note payable in money or
currency other than that stated in the Notes;

 

(f)            make any change in the provisions of
this Indenture relating to waivers of past Defaults or the rights of Holders of
Notes to receive payments of Principal or Interest or premium, if any, or any
other amounts due on the Notes;

 

(g)           make any change in Section 7.04 or
7.07 hereof or in the foregoing amendment and waiver provisions of Section
10.01 or this Section 10.02;

 

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

 

(i)            modify the Company’s obligation to
purchase Notes at the option of Holders or the Company’s right to redeem the
Notes, in a manner adverse to the Holders;

 

101

 

(j)            make any change that adversely
affects the redemption option of Holders upon a Change of Control;

 

(k)           reduce the percentage in aggregate
Principal Amount of Notes outstanding necessary to modify or amend this
Indenture or to waive any past default;

 

(l)            modify the provisions in Section
3.01 in any manner adverse to Holders;

 

(m)          reduce the quorum or voting
requirements under this Indenture;

 

(n)           modify in any manner the calculation
of the Interest Make-Whole or Redemption Price; or

 

(o)           change the ranking of the Notes in a
manner adverse to the Holders;

 

(p)           release any Pledged Collateral from
the Liens of the Pledge Agreement and/or the Collateral Documents, except as
contemplated by the Pledge Agreement and/or the Collateral Documents;

 

(q)           adversely affect the conversion
rights of the Holders of the Notes set forth in Article 4 hereof; or

 

(r)            release any Guarantor from any of
its obligations under its Note Guarantee or this Indenture, except in
accordance with the terms of this Indenture.

 

Upon the request of the Company accompanied
by a resolution of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders holding the
applicable percentage of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 8.02 hereof, the Trustee shall join with the
Company in the execution of such amended or supplemental Indenture, the Notes,
Note Guarantees, Pledge Agreement or Collateral Document unless such amended or
supplemental Indenture directly affects the Trustee’s own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.

 

It shall not be necessary for the consent of
the Holders of Notes under this Section 10.02 to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.

 

Section 10.03.              Compliance
with Trust Indenture Act.

 

Every amendment or supplement to this
Indenture, the Notes, the Note Guarantees, the Pledge Agreement or any
Collateral Document shall be set forth in an amended or supplemental Indenture
that complies with the TIA as then in effect.

 

102

 

Section 10.04.              Revocation and Effect of Consents.

 

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

 

Section 10.05.              Notation on or Exchange of Notes.

 

The Trustee may place an appropriate notation
about an amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes (and accompanying Note
Guarantees) that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or
issue a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.

 

Section 10.06.              Trustee to Sign Amendments, etc.

 

The Trustee shall sign any amended or
supplemental Indenture, Note, Note Guarantee, Pledge Agreement or Collateral
Document authorized pursuant to this Article 10 if the amendment or supplement
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company and Guarantors may not sign an amendment or supplemental
Indenture until the Board of Directors or Guarantor, as applicable, approves it.
In executing any amended or supplemental indenture, the Trustee shall be
entitled to receive and (subject to Section 8.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
15.04 hereof, an Officer’s Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.

 

ARTICLE
11.

COLLATERAL AND SECURITY

 

Section 11.01.              Collateral Documents.

 

The due and punctual payment of the Principal
of and Interest, if any, on the Notes when and as the same shall be due and
payable, whether on an Interest Payment Date, at maturity, by acceleration,
repurchase, redemption or otherwise, Late Charges (to the extent permitted by
law), if any, and any other amounts due on the Notes and performance of all
other obligations of the Company to the Holders of Notes or the Trustee under
this Indenture and the Notes, according to the terms hereunder or thereunder,
shall be secured as provided herein and in the Collateral Documents. Each
Holder of Notes, by its acceptance thereof, consents and agrees to the terms of
the Collateral Documents (including, without limitation, the provisions
providing for foreclosure and release of Pledged Collateral) as the same may be
in effect or may be amended from time to

 

103

 

time in
accordance with its terms and authorizes and directs each of the Collateral
Agent and the Trustee, as the case may be, to enter into the Collateral
Documents and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Company shall deliver to the Trustee copies of all
documents delivered to the Collateral Agent pursuant to any Collateral
Document, and shall do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of any Collateral
Document, to assure and confirm to the Trustee and the Collateral Agent the security
interest in the Pledged Collateral contemplated hereby, by any Collateral
Document or any part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture, the Notes
and the Note Guarantees secured hereby, according to the intent and purposes
herein expressed. The Company shall take, or shall cause its Subsidiaries to
take, upon request of the Trustee or the Collateral Agent, any and all actions
reasonably required to cause the Collateral Documents to create and maintain,
as security for the Obligations of the Company hereunder, a valid and
enforceable perfected first priority Lien in and on all the Pledged Collateral,
in favor of the Collateral Agent and the Trustee, as the case may be, for the
benefit of the Holders of Notes and other Indebtedness subject to the Pledge
Agreement superior to and prior to the rights of all third Persons and subject
to no other Liens other than Permitted Liens.

 

The Company and the Guarantors shall pledge
as additional Collateral all After-Acquired Property, subject to Permitted
Liens. The Company and the Guarantors shall also use all commercially
reasonable efforts to ensure that any material contract or agreement relating
to After-Acquired Property will not contain provisions that would impair or
prevent the creation of a security interest therein or result in such contract
or After-Acquired Property being excluded from the Collateral.

 

Section 11.02.              Recording and Opinions.

 

(a)           The Company shall furnish to the
Collateral Agent and the Trustee contemporaneously with the execution and
delivery of this Indenture and promptly after the execution and delivery of any
other instrument of further assurance or amendment an Opinion of Counsel (i)
stating that in the opinion of such counsel the Collateral Documents are
effective to create a Lien in the collateral described therein to the extent
that the Company has rights in or the power to transfer such collateral and
creation of a Lien in such collateral is governed by Article 9 of the UCC; and
(ii) stating that in the opinion of such counsel, all action has been taken
with respect to the filing of financing statements as is necessary to perfect
the Lien in that portion of the collateral (x) in which the Company has rights
or the power to transfer, (y) the creation and perfection of a Lien which is
governed by Article 9 of the UCC and (z) in which a Lien can be perfected by
filing a financing statement under the UCC.

 

(b)           The Company shall furnish to the
Collateral Agent and the Trustee on October 31  of
each year beginning with October 31, 2007, an Opinion of Counsel, dated as of
such date, (i) stating that the Collateral Documents have not been terminated
or revoked by the Company, and remain in full force and effect; and (ii)
stating that all action has been taken with respect to the filing of financing
statements, continuation statements and other registrations and recordings as
is necessary for the Lien in that portion of the collateral subject to the
Collateral Documents (x) in which the Company has rights or the power to
transfer, (y) the creation and perfection of a

 

104

 

Lien which is governed by
Article 9 of the UCC, and (z) in which a Lien can be perfected by filing a
financing statement under the UCC, to continue to be perfected.

 

(c)           The Company shall otherwise comply
with the provisions of TIA §314(b).

 

Section 11.03.              Release of
Collateral.

 

(a)           Subject to subsections (b), (c) and
(d) of this Section 11.03 and Section 10.02, Pledged Collateral shall
automatically be released from the Lien and security interest created by the
Collateral Documents at any time or from time to time in accordance with the
provisions of the Collateral Documents or as provided hereby. In addition, upon
the request of the Company pursuant to an Officers’ Certificate certifying that
all conditions precedent hereunder have been met and stating whether or not
such release is in connection with an Asset Sale and (at the sole cost and
expense of the Company and without any recourse, representation or warranty),
the Trustee or the Collateral Agent, as the case may be, shall release Pledged
Collateral that is sold, conveyed or disposed of in compliance with the
provisions of this Indenture; provided,
that if such sale, conveyance or disposition constitutes an Asset Sale, the
Company shall comply with Section 5.10, including the provisions relating to
the application of any Net Proceeds in accordance with Section 5.10 hereof. Upon
receipt of such Officers’ Certificate the Collateral Agent shall, at the sole
cost and expense of the Company and without recourse, representation or
warranty, execute, deliver or acknowledge any necessary or proper instruments
of termination, satisfaction or release to evidence the release of any Pledged
Collateral permitted to be released pursuant to this Indenture or the
Collateral Documents.

 

(b)           No Pledged Collateral shall be
released from the Liens and security interest created by the Collateral
Documents pursuant to the provisions of the Collateral Documents unless there
shall have been delivered to the Collateral Agent the Officers’ Certificate
required by this Section 11.03.

 

(c)           At any time when a Default or Event
of Default shall have occurred and be continuing and the maturity of the Notes
shall have been accelerated (whether by declaration or otherwise), no release
of Pledged Collateral pursuant to the provisions of the Collateral Documents
shall be effective as against the Holders of Notes.

 

(d)           The release of any Pledged Collateral
from the terms of this Indenture and the Collateral Documents shall not be
deemed to impair the security under this Indenture in contravention of the
provisions hereof if and to the extent the Pledged Collateral is released pursuant
to the terms hereof. To the extent applicable, the Company shall cause TIA §
313(b), relating to reports, and TIA § 314(d), relating to the release of
property or securities from the Lien and security interest of the Collateral
Documents and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Collateral
Documents, to be complied with. Any certificate or opinion required by TIA §
314(d) may be made by an Officer of the Company except in cases where TIA §
314(d) requires that such certificate or opinion be made by an independent
Person, which Person shall be an independent engineer, appraiser or other
expert selected or approved by the Trustee and the Collateral Agent in the
exercise of reasonable care.

 

105

 

Section 11.04.              Certificates of the Company.

 

The Company shall furnish to the Trustee and
the Collateral Agent, prior to each proposed release of Pledged Collateral
pursuant to any Collateral Document, (i) all documents required by TIA §314(d)
and (ii) an Opinion of Counsel, which may be rendered by internal counsel to
the Company, to the effect that such accompanying documents constitute all
documents required by TIA §314(d). The Trustee may, to the extent permitted by
Sections 8.01 and 8.02 hereof, accept as conclusive evidence of compliance with
the foregoing provisions the appropriate statements contained in such documents
and such Opinion of Counsel.

 

Section 11.05.              Certificates of the Trustee.

 

In the event that the Company wishes to
release Pledged Collateral in accordance with the Collateral Documents and has
delivered the certificates and documents required by the Collateral Documents
and Sections 11.03 and 11.04 hereof, the Trustee shall determine whether it has
received all documentation required by TIA § 314(d) in connection with such
release and, based on such determination and the Opinion of Counsel delivered
pursuant to Section 11.04, shall deliver a certificate to the Collateral Agent
setting forth such determination.

 

Section 11.06.              Authorization of Actions to Be
Taken by the Trustee Under the Collateral Documents.

 

Subject to the provisions of Section 8.01 and
8.02 hereof, the Trustee may, in its sole discretion and without the consent of
the Holders of Notes, on behalf of the Holders of Notes, take, or direct the
Collateral Agent to take, all actions it deems necessary or appropriate in
order to (a) enforce any of the terms of the Collateral Documents and (b)
collect and receive any and all amounts payable in respect of the Obligations
of the Company hereunder. The Trustee and the Collateral Agent shall each have
power to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Pledged Collateral by any acts that
may be unlawful or in violation of the Collateral Documents or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of Notes in the Pledged
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or
order would impair the security interest hereunder or be prejudicial to the
interests of the Holders of Notes or of the Trustee).

 

Section 11.07.              Authorization of Receipt of Funds
by the Trustee Under the Pledge Agreement.

 

The Trustee is authorized to receive any
funds for the benefit of the Holders of Notes distributed under the Collateral
Documents, and to make further distributions of such funds to the Holders of
Notes according to the provisions of this Indenture.

 

Section 11.08.              Termination of Security Interest.

 

Upon the payment in full of all Obligations
of the Company under this Indenture and the Notes, the Trustee shall, at the
request and sole cost and expense of the Company, deliver a

 

106

 

certificate to
the Collateral Agent stating that such Obligations have been paid in full, and
instruct the Collateral Agent to release the Liens pursuant to this Indenture
and the Pledge Agreement.

 

Section 11.09.              Collateral Agent.

 

Each Holder of Notes, by its acceptance
thereof, hereby (a) appoints the Collateral Agent hereunder and under the other
Collateral Documents, and (b) authorizes the Collateral Agent (and its
officers, directors, employees and agents) to take such action on the Holder’s
behalf in accordance with the terms hereof and thereof. The Collateral Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the Majority
Holders, and such instructions shall be binding upon all Holders of Notes; provided,
however, that the Collateral Agent shall not be required to take any
action which, in the reasonable opinion of the Collateral Agent, exposes the
Collateral Agent to liability or which is contrary to this Indenture or any
other Transaction Document or applicable law. The Collateral Agent shall be
entitled to rely upon any written notices, statements, certificates, orders or
other documents or any telephone message believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person,
and with respect to all matters pertaining to this Indenture or any of the
other Transaction Documents and its duties hereunder or thereunder, upon advice
of counsel selected by it.

 

Section 11.10.              Successor Collateral Agent.

 

The Collateral Agent may resign from the
performance of all its functions and duties hereunder and under the other
Transaction Documents at any time by giving at least thirty (30) Business Days’
prior written notice to the Company and each holder of Securities. Such
resignation shall take effect upon the acceptance by a successor Collateral
Agent of appointment as otherwise provided below.

 

Upon any such notice of resignation, the
Majority Holders shall appoint a successor collateral agent. Upon the
acceptance of any appointment as collateral agent hereunder by a successor agent,
such successor collateral agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the collateral agent, and
the Collateral Agent shall be discharged from its duties and obligations under
this Indenture and the other Transaction Documents. After the Collateral Agent’s
resignation hereunder as the collateral agent, the provisions of this Section
11.10 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Collateral Agent under this Indenture and the other
Transaction Documents.

 

If a successor collateral agent shall not
have been so appointed within said 30 Business Day period, the Collateral Agent
shall then appoint a successor collateral agent who shall serve as the
collateral agent until such time, if any, as the Majority Holders appoint a
successor collateral agent as provided above.

 

107

 

ARTICLE
12.

NOTE GUARANTEES

 

Section 12.01.              Guarantee.

 

Subject to this Article 12, each of the
Guarantors hereby jointly and severally, unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes or the obligations of the Company hereunder or
thereunder, that:  (a) the Principal of
and Interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption, repurchase or otherwise, Late Charges
and any other amounts due on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately, whether or not such failure
to pay has become an Event of Default which could cause acceleration pursuant
to Article 7 hereof. Each Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.

 

The Guarantors hereby agree that their
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby waives and relinquishes diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever and
covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

 

If any Holder or the Trustee is required by
any court or otherwise to return to the Company, the Guarantors or any
custodian, trustee, liquidator or other similar official acting in relation to
either the Company or the Guarantors, any amount paid by either to the Trustee
or such Holder, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.

 

Each Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article 7 hereof for the purposes of this Note Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event

 

108

 

of any
declaration of acceleration of such obligations as provided in Article 7
hereof, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Guarantors for the purpose of this Note Guarantee.
The Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.

 

Section 12.02.              Limitation on Guarantor Liability.

 

Each Guarantor, and by its acceptance of
Notes, each Holder, hereby confirms that it is the intention of all such
parties that the Note Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Note Guarantee. To effectuate the
foregoing intention, the Trustee, the Holders and the Guarantors hereby
irrevocably agree that the obligations of such Guarantor will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
such Guarantor that are relevant under such laws, and after giving effect to
any collections from, rights to receive contribution from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 12, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 12.03.              Continuing Guarantee.

 

Each Guarantor hereby agrees that its Note
Guarantee set forth in Section 12.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.

 

If an Officer whose signature is on this
Indenture no longer holds that office at the time the Trustee authenticates the
Note, the Note Guarantee shall be valid nevertheless.

 

The delivery of any Note by the Trustee,
after the authentication thereof hereunder, shall constitute due delivery of
the Note Guarantee set forth in this Indenture on behalf of the Guarantors.

 

Section 12.04.              Releases Following Sale of Assets.

 

In the event of a sale or other disposition
of all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all the capital stock of any
Guarantor, in each case to a Person that is not (either before or after giving
effect to such transactions) the Company or a Subsidiary of the Company, then
such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation
or otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall automatically be
released and relieved of any obligations under its Note Guarantee; provided, however,
that such sale or other disposition (including by way of merger, consolidation
or otherwise) shall be made in compliance with the provisions of this Indenture
applicable thereto, including Article 6 hereof. Upon delivery by the Company to
the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect
that such sale or other disposition was made by the Company in accordance with
the provisions of this Indenture, the Trustee shall execute any documents
reasonably

 

109

 

required in
order to evidence the release of any Guarantor from its obligations under its
Note Guarantee.

 

Any Guarantor not released from its
obligations under its Note Guarantee shall remain liable for the full amount of
Principal of, Interest and any other amounts due on the Notes and for the other
obligations of any Guarantor under this Indenture as provided in this Article
12.

 

ARTICLE
13.

SATISFACTION AND DISCHARGE

 

Section 13.01.              Satisfaction and Discharge.

 

This Indenture will be discharged and will
cease to be of further effect (except as to any surviving rights of
registration of transfer or exchange of Notes herein expressly provided for) as
to all Notes issued hereunder, when:

 

(1)                                  either:

 

(a)                                  all
Notes that have been authenticated (except lost, stolen or destroyed Notes that
have been replaced or paid and Notes for whose payment money has theretofore
been deposited in trust and thereafter repaid to the Company) have been
delivered to the Trustee for cancellation; or

 

(b)                                 all
Notes that have not been delivered to the Trustee for cancellation have become
due and payable and the Company or any Guarantor has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest, to pay and discharge the
entire indebtedness on the Notes not delivered to the Trustee for cancellation
for Principal, premium, if any, and accrued Interest to the Stated Maturity;

 

(2)                                  the
Company or any Guarantor has paid or caused to be paid all other sums payable
by it under the Transaction Documents;

 

(3)                                  the
Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at
maturity; and

 

(4)                                  the
Company has delivered an Officers’ Certificate and an Opinion of Counsel to the
Trustee stating that all conditions precedent to satisfaction and discharge
have been satisfied.

 

Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company to the Trustee
under Section 8.07 and, if money shall have been deposited with the Trustee
pursuant to subclause (b) of clause (1) of this Section, the provisions of
Section 13.02 and Section 9.06 shall survive.

 

110

 

Section 13.02.              Application of Trust Money.

 

Subject to the provisions of Section 9.05,
all money deposited with the Trustee pursuant to Section 13.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the Principal (and premium, if
any) and Interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.

 

If the Trustee or Paying Agent is unable to
apply any money or Government Securities in accordance with Section 13.01 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s and any Guarantor’s obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 13.01; provided that if the Company has made
any payment of Principal of, premium, if any, or Interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.

 

ARTICLE
14.

MATURITY DATE, INTEREST, INTEREST RATE AND LATE CHARGES

 

Section 14.01.              Maturity

 

(a)           The
Company promises to pay an amount in cash representing the outstanding
Principal Amount of the Notes plus accrued and unpaid Interest and any other
amounts due on the Stated Maturity.

 

Section 14.02.              Interest and Interest Rate

 

(a)           The
Notes shall accrue interest at the Interest Rate per annum. Interest on the
Notes shall be payable semi-annually in arrears on each Interest Payment Date
to Holders of record on the record date immediately preceding such Interest
Payment Date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. 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 the Issue Date, until the Principal Amount or Redemption Price, if
applicable, is paid or duly made available for payment.

 

(b)           If
prior to any Interest Payment Date, any Additional Interest has accrued
pursuant to the Registration Rights Agreement or any Special Interest has
accrued pursuant to Section 7.03 hereof, and not theretofore been paid in full
or any Late Charge has accrued and not theretofore been paid in full, any such
Additional Interest, Special Interest or Late Charge shall be due and payable
on such Interest Payment Date, and shall be included in Interest payable on
such Interest Payment Date and shall be paid in the manner provided for herein
for the payment of Interest (unless otherwise specified in the applicable
Transaction Document).

 

111

 

(c)           Interest
shall be payable on each Interest Date, to each Holder on the applicable
Interest Payment Date in cash (“Cash Interest”);
provided, however,
that at any time after September 30, 2009, so long as (i) there has been no
Equity Conditions Failure (unless the applicable Holder has waived such Equity
Conditions Failure) and (ii) the Consolidated Cash Flow for the 12 calendar
months for which financial statements are publicly available immediately
preceding the applicable Interest Payment Date is not greater than $10,000,000
(the “Consolidated Cash Flow Test”), the
Company may at its option, as indicated on the Interest Election Notice, add
the Interest (other than Additional Interest, Special Interest and Late
Charges) due on such Interest Payment Date to the Principal Amount of the Notes
as Capitalized Interest. In order to exercise the Company’s right to pay the
Interest (other than Additional Interest, Special Interest and Late Charges)
due on the applicable Interest Payment Date as Capitalized Interest, the
Company shall deliver a written notice (each, an “Interest Election Notice”) to each Holder and the Trustee at
least 20 Trading Days prior to the Interest Payment Date (the date such notice is delivered to all of
the Holders, the “Interest Notice Date”) which
notice (A) elects to pay Interest as Capitalized Interest or a
combination of Cash Interest and Capitalized Interest and specifies the amount
of Interest that shall be paid as Capitalized Interest and the amount of
Interest, if any, that shall be paid as Cash Interest, (B) certifies that there
has been no Equity Conditions Failure and (C) certifies that the Consolidated
Cash Test has been satisfied. If any portion of Interest for a particular
Interest Payment Date shall be applied as Capitalized Interest, then the
Company shall treat such Capitalized Interest as Principal. In no event shall
any amounts of Additional Interest, Special Interest or Late Charges be
capitalized pursuant to the terms hereof. If the Equity Conditions are not
satisfied as of the Interest Notice Date, then the Interest Notice shall
indicate that unless such Holder waives the Equity Conditions, the Interest
shall be paid as Cash Interest. If the Equity Conditions were satisfied as of
the Interest Notice Date but the Equity Conditions are no longer satisfied at
any time prior to the Interest Payment Date, the Company shall provide each
Holder a subsequent notice to that effect indicating that unless such Holder
waives the Equity Conditions, the Interest shall be paid as Cash Interest on
the Interest Payment Date.

 

(d)           Cash
Interest on any Note that is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the Holder of such Note on
the Record Date for such Interest at the office or agency of the Company
maintained for such purpose. Each installment of Cash Interest on any Note
shall be made by check mailed to the address of the Holder specified in the
Securities Register; provided, however, that, in respect of any Holder of Notes
with an aggregate Principal Amount in excess of $1,000,000, at the request of
such Holder in writing to the Company, Interest on such Holder’s Notes shall be
paid by wire transfer in immediately available funds in accordance with the
written wire transfer instruction supplied by such Holder from time to time to
the Trustee and Paying Agent (if different from the Trustee) at least ten days
prior to the applicable Interest Date. In the case of a permanent Global Note,
Interest payable on any Interest Payment Date will be paid to the Depositary,
in respect of that portion of such permanent Global Note held for its account
by Cede & Co. for the purpose of permitting such party to credit the
Interest received by it in respect of such permanent Global Note to the
accounts of the beneficial owners thereof.

 

112

 

Section 14.03.              Late Charges.

 

Late
charges will be incurred and payable by the Company on any amount of Principal,
interest pursuant to Section 14.01(a) hereof, any amount of Additional Interest
penalties pursuant to Section 4.04(e) of the Registration Rights Agreement, any
amount of Special Interest pursuant to Section 7.03 hereof and any other amount
due in cash under any Transaction Document.

 

ARTICLE
15.

MISCELLANEOUS

 

Section 15.01.              Trust Indenture Act Controls.

 

If any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by TIA §318(c), the imposed
duties shall control.

 

Section 15.02.              Notices.

 

Any notice or communication by the Company,
any Guarantor or the Trustee to the others is duly given if in writing and
delivered in Person or mailed by first class mail (registered or certified,
return receipt requested), telex, telecopier or overnight air courier guaranteeing
next day delivery, to the others’ address:

 

If to the Company and/or any Guarantor:

 

Nova Biosource Fuels, Inc.

363 North Sam Houston Parkway East

Suite 630

Houston, Texas 77060

Tel:   (713) 869-6682

Fax:  (713)583-8478

Attention:  President

 

With a copy (which shall not constitute
notice) to:

 

Baker & McKenzie LLP

2300 Trammell Crow Center

2001 Ross Avenue

Dallas, Texas 75201

Tel: (214) 978-3095

Fax:(214)978-3099

Attention: Roger W. Bivans, Esq.

 

If to the Trustee:

 

The Bank of New York Trust Company, N.A.

601 Travis Street, 18th Floor

Houston, Texas 77002 

Attention: Corporate Trust Services

 

113

 

The Company, any Guarantor or the Trustee, by
notice to the others may designate additional or different addresses for
subsequent notices or communications.

 

All notices and communications (other than
those sent to Holders) shall be deemed to have been duly given:  at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

 

Any notice or communication to a Holder shall
be mailed by first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA § 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.

 

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

 

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

 

Section 15.03.              Communication by Holders of Notes
with Other Holders of Notes.

 

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

 

Section 15.04.              Certificate and Opinion as to
Conditions Precedent.

 

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

 

(a)           an Officers’ Certificate in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 15.05 hereof) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been satisfied; and

 

(b)           an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 15.05 hereof) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been satisfied.

 

Section 15.05.              Statements Required in Certificate
or Opinion.

 

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

 

114

 

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

 

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

 

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

 

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

 

Section 15.06.              Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for
action by or at a meeting of Holders. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its functions.

 

Section 15.07.              Indenture,
Note Guarantees and Notes Solely Corporate Obligations.

 

No recourse for the payment of the principal
of, or accrued and unpaid interest on, any Note or any Note Guarantee, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company or any Guarantor
in this Indenture or in any Note Guarantee or in any Note, or because of the
creation of any Indebtedness represented thereby, shall be had against any
past, present or future incorporator, stockholder, employee, agent, officer or
director of the Company or Guarantor as such or of any successor Person, either
directly or through the Company or any successor Person, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture, the Note Guarantees and the
issue of the Notes.

 

Section 15.08.              Governing Law.

 

THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE
GUARANTEES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THAT WOULD APPLY
ANY OTHER LAW.

 

Section 15.09.              No Adverse Interpretation of Other
Agreements.

 

This Indenture may not be used to interpret
any other indenture, loan or debt agreement of the Company or its Subsidiaries
or of any other Person. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.

 

115

 

Section 15.10.              Successors.

 

All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors. All agreements of each
Guarantor in this Indenture shall bind its successors, except as otherwise
provided by Section 12.04.

 

Section 15.11.              Severability.

 

In case any provision in this Indenture, the
Notes or a Note Guarantee 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 15.12.              Counterpart Originals.

 

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

 

Section 15.13.              Table of Contents, Headings, etc.

 

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

 

ARTICLE
16.

LETTER OF CREDIT

 

Section 16.01.              Letter of Credit.

 

(a)           On or prior to the Issue Date, the
Company shall obtain the Letter of Credit. On each of the first four Interest
Payment Dates, the LC Agent shall withdraw from the Letter of Credit an amount
equal to the aggregate interest amount due on such Interest Payment Date to the
Holders on a pro rata basis based on the Principal Amount of the Notes held by
the Holders. Notwithstanding the foregoing, if any Holder shall convert all or
any portion of its Notes on or prior to September 30, 2009, the LC Agent shall
(and the Company shall give the LC Agent written instructions to) withdraw an
amount equal to the Interest Make-Whole with respect to the Principal Amount so
converted and shall, within one (1) Business Day, deliver such amount to the
applicable Holder(s). The Interest Make-Whole shall be paid to the Holders as their
interests may appear in accordance with the written instructions of the Company.
In addition, upon the occurrence and during the continuance of an Event of
Default of which the Trustee has notice and the Notes have been accelerated in
accordance with Section 7.02 hereof and such acceleration has not been
rescinded as provided therein, then the Trustee, as the LC Agent, shall draw
under the Letter of Credit, including any renewals, extensions or replacements
referred to below, for the full Letter of Credit Amount then available
thereunder, and apply the proceeds from such draw in accordance with Section
7.10 hereof. The Company shall obtain such renewals, extensions or replacements
of the Letter of Credit as necessary to ensure that the Letter of Credit shall
not expire prior to the LC Expiration Date (unless the Letter of Credit shall
have been reduced to zero in accordance with the terms contained in this
Section 16.01 prior to such

 

116

 

date). If, at any time, the
Company cannot obtain a renewal, extension or replacement of the Letter of
Credit such that the Letter of Credit will expire prior to the LC Expiration
Date (a “Withdrawal Event”),
the Company and the LC Bank shall each give the LC Agent written notice of the
occurrence of a Withdrawal Event at least forty-five (45) days prior to the
then current expiration date of the Letter of Credit. Following a Withdrawal
Event, the LC Agent shall draw down the LC Amount in its entirety and apply the
proceeds thereof in accordance with Section 7.10 hereof. The LC Agent shall,
upon the written instructions of the Majority Holders, engage a replacement LC
Bank designated by such Majority Holders if the LC Bank is unable or unwilling
to issue the Letter of Credit or any renewal thereof.. After 91 days following September 30,
2009, any remaining LC Amount shall be returned to the Company so long as there
is no Default or Event of Default.

 

(b)           The Trustee is hereby appointed as the LC Agent for
the Holders hereunder, and each Holder by acceptance of the Notes hereunder
hereby authorizes the LC Agent (and its officers, directors, employees and
agents) to take any and all such actions on behalf of such Holder with respect
to the LC in accordance with the terms of this Indenture. At any time, upon 10
Business Days advance notice to the Company, the Letter of Credit Bank and the
Trustee, the LC Agent may resign as LC Agent, and the Majority Holders shall
appoint a new LC Agent. If a successor LC Agent shall not have been so
appointed within said 10 Business Day period, the retiring LC Agent shall then
appoint a successor LC Agent who shall serve until such time, if any, as the
Majority Holders appoint a successor LC Agent as provided above. The rights and
immunities given to the Trustee in Article 8 hereof shall inure to the benefit
of the LC Agent.

 

[Signatures on
following page]

 

117

 

Dated as of
September 28, 2007

 

	
   

  	
  NOVA BIOSOURCE FUELS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth T. Hern

  	
   

  
	
   

  	
   

  	
  Name: Kenneth T. Hern

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  NOVA HOLDING CLINTON COUNTY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth T. Hern

  	
   

  
	
   

  	
   

  	
  Name: Kenneth T. Hern

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  NOVA BIOFUELS CLINTON COUNTY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth T. Hern

  	
   

  
	
   

  	
   

  	
  Name: Kenneth T. Hern

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
  NOVA HOLDING SENECA, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth T. Hern

  	
   

  
	
   

  	
   

  	
  Name: Kenneth T. Hern

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK TRUST

  COMPANY, N.A., as Trustee and as Collateral

  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mauri J. Cowen

  	
   

  
	
   

  	
   

  	
  Name: Mauri J. Cowen

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT A –FORM OF NOTE

[FACE OF NOTE]

 

[INCLUDE IF NOTE IS A RESTRICTED NOTE — THIS
NOTE, THE NOTE GUARANTEE AND THE SHARES OF COMMON STOCK OF NOVA BIOSOURCE
FUELS, INC. ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS.  NEITHER THIS
NOTE, THE NOTE GUARANTEE, THE SHARES OF COMMON STOCK OR OTHER SECURITIES
ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.  EACH PURCHASER OF THIS NOTE IS HEREBY
NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THE HOLDER OF THIS NOTE, BY
ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE,
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THIS NOTE
UNDER RULE 144(K) UNDER THE SECURITIES ACT (THE “RESALE RESTRICTION TERMINATION
DATE”) ONLY (A) TO NOVA BIOSOURCE FUELS, INC. OR ANY PARENT OR SUBSIDIARY
THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVNE THAT THE TRANSFER IS BEING MADE UNDER RULE 144A,
(C) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE U.S. WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (D) TO A PERSON IT REASONABLY
BELIEVES IS AN INSTITUTIONAL “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a)(l), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL “ACCREDITED INVESTOR” TO WHICH
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 501 (a)(l),
(2), (3) OR (7), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO NOVA BIOSOURCE FUELS, INC.’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
DULY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.  THIS LEGEND WILL BE REMOVED UPON THE EARLIER
OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE (C) ABOVE OR UPON ANY
TRANSFER OF THIS SECURITY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION).]

 

[INCLUDE IF NOTE
IS A GLOBAL NOTE — THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE

 

A-1

 

EXCHANGED IN WHOLE OR IN
PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN
PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR
A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.

 

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

 

ADDITIONAL TRANSFER
RESTRICTIONS ARE SET FORTH IN THE INDENTURE.

 

THE HOLDER OF THIS NOTE IS
ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT, A LETTER OF
CREDIT, A SECURITY AGREEMENT AND A PLEDGE AGREEMENT (AS EACH 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 AGREEMENTS.

 

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE
UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), THIS NOTE
IS ISSUED WITH ORIGINAL ISSUE DISCOUNT. 
THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE HOLDER OF THIS NOTE, UPON
WRITTEN REQUEST, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE PRICE, THE
ISSUE DATE AND THE YIELD TO MATURITY. 
ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO CHIEF FINANCIAL
OFFICER, NOVA BIOSOURCE FUELS, INC., AT THE FOLLOWING ADDRESS:  363 NORTH SAM HOUSTON PARKWAY EAST, SUITE
630, HOUSTON, TEXAS 77060.

 

ANY TRANSFER OF ALL OR PART OF A NOTE MAY BE
EFFECTED ONLY BY REGISTRATION OF SUCH TRANSFER ON THE REGISTER KEPT BY THE
SECURITY REGISTRAR.

 

A-2

 

NOVA BIOSOURCE FUELS, INC.

 

10% Convertible Senior
Secured Notes Due 2012

 

	
  No.         

  	
   

  	
  U.S. $                     

  
	
   

  	
   

  	
   

  
	
  CUSIP
  No.:

  	
   

  	
   

  

 

Nova Biosource Fuels, Inc.,
a corporation duly organized and validly existing under the laws of the State
of Nevada (herein called the “Company”),
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received hereby promises to pay to [    ], or registered assigns, the principal sum
of [                             ] United
States Dollars ($        ) [INCLUDE IF NOTE IS A GLOBAL NOTE — (which amount may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, in accordance with the rules and
procedures of the Depositary)] on September
30, 2012 and to pay interest on said principal sum semiannually on March 31 and
September 30 of each year commencing March 31, 2008 at the rate of 10% per
annum (to Holders of record on the immediately preceding March 15 and September
15) which interest has been paid, or if no interest has been paid, from September
28, 2007 until the Principal Amount is paid or duly made available for
payment.  Except as otherwise provided in
the Indenture, the interest payable on this Note pursuant to the Indenture on
any March 31 and September 30 will be paid to the Person in whose name this
Note (or one or more predecessor Note) is registered at the close of business
on the Record Date, which shall be March 15 and September 15 (whether or not a
Business Day) next preceding such March 31 and September 30 respectively.  Payment of the principal of and interest
accrued on this Note shall be made by check mailed to the address of the Holder
of this Note specified in the register of Note, or, upon written application by
a Holder of an aggregate Principal Amount of greater than U.S. $2 million to
the Registrar setting forth wire instructions not later than ten (10) days
prior to the relevant payment date, such Holder may receive payment by wire
transfer in immediately available funds, in such lawful money of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.

 

The Issue Date of this Note
is September 28, 2007.

 

Reference is made to the
further provisions of this Note set forth on the reverse hereof, including,
without limitation, provisions giving Holder of the Note the right to convert
this Note into Common Stock of the Company and the right of the Holder of this
Note to require the Company to repurchase this Note and upon certain events, in
each case, on the terms and subject to the limitations referred to on the
reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
Capitalized terms used but not defined herein shall have such meanings as are
ascribed to such terms in the Indenture.

 

This Note shall be deemed to
be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with and governed by the laws of said
State.

 

This Note shall not be valid
or become obligatory for any purpose until the certificate of authentication
hereon shall have been manually signed by the Trustee or a duly authorized
authenticating agent under the Indenture.

 

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

 

A-3

 

Dated:   September 28, 2007

 

 

	
   

  	
  NOVA BIOSOURCE FUELS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

This is one of the Notes
referred to

in the within-mentioned Indenture:

 

The Bank of New York Trust
Company, N.A.,
   as Trustee:

 

	
  By:

  	
   

  	
   

  
	
  Authorized Signatory

  	
   

  

 

A-4

 

[Back of Note]

 

This Note is one of a duly
authorized issue of Notes of the Company, designated as its 10% Convertible
Senior Secured Notes Due 2012 (the “Note”), all
issued or to be issued under and pursuant to an Indenture, dated as of
September 28, 2007 (the “Indenture”),
among the Company, the Guarantors named therein and The Bank of New York Trust
Company, N.A., as Trustee and Collateral Agent (the “Trustee”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Securities.

 

Capitalized terms used
herein shall have the meanings assigned to them in the Indenture referred to
above unless otherwise indicated.

 

The indebtedness evidenced by the Notes ranks
equally with all of the Company’s other existing and future unsubordinated
indebtedness and will be effectively senior to the extent of the value of the
Collateral.

 

1.             INTEREST; MATURITY.   Interest on the Notes shall be paid
semi-annually in arrears on each Interest Payment Date to Holders of record on
the Record Date immediately preceding such Interest Payment Date.  Interest on the Notes (and any interest added
to the Principal Amount as Capitalized Interest) will accrue at a rate equal to
10% per annum, subject to increase as set forth in the following paragraphs
below, from September [•],
2007 until maturity on September 30, 2012, subject to increase as set forth in
the following paragraphs of this Section 1 of this Note and the Indenture.  The Company will pay interest semi-annually
in arrears on March 31 and September 30 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each, an “Interest Payment
Date”).  Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.  Interest on the Notes (and any interest added
to the Principal Amount as Capitalized Interest)  shall accrue from the most recent date to
which interest has been paid, or if no interest has been paid, from September
28, 2007, until the Principal Amount is paid or duly made available for
payment; provided that the first
Interest Payment Date shall be March 31, 2008.

 

The interest rate to be borne by this Note shall be
subject to increase based on the following;

 

(i)            Pursuant to, and as set forth in, the Registration Rights
Agreement and the Indenture, the Company may be required to pay Additional
Interests.

 

(ii)           Pursuant to, and as set forth in, the Indenture, the
Company may be required to pay Special Interest.

 

(iii)          On any Interest Payment Date after September 30, 2009, if
the Company’s consolidated cash flow, calculated on a trailing twelve month
basis preceding the relevant Interest Payment Date, is equal or less than $10
million and the Equity Conditions has been satisfied (unless the applicable
Holder has waived the satisfaction of such Equity Conditions), the Company may
elect to add the Interest (other than Additional Interest, Special Interest and
Late Charges) due on such Interest Payment Date to the Principal Amount of the
Notes as Capitalized Interest at an interest rate per annum equal to 12% for
such portion of the Interest that is paid as Capitalized Interest.

 

(iv)          The Company shall pay interest (including post petition
interest in any proceeding under the Bankruptcy Law) on overdue principal,
installments of interest or any other amounts due at the rate of 2% above the
interest rate in effect to the extent lawful.

 

A-5

 

2.             PAYING AGENT, CONVERSION AGENT, AND REGISTRAR.  Initially, The Bank of New York Trust
Company, N.A., as the Trustee under the Indenture, will act as Paying Agent,
Conversion Agent and Registrar.  The
Company may change any Paying Agent, Conversion Agent or Registrar without
notice to any Holder.  The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.

 

3.             INDENTURE AND COLLATERAL DOCUMENTS, LETTER OF CREDIT
AND REGISTRATION RIGHTS AGREEMENT.  The
Company issued this Note under the Indenture. 
The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code §§ 77aaa-77bbbb) (the “Trust
Indenture Act”).  The Notes
are subject to all such terms and Holders are referred to the Indenture and to
the Trust Indenture Act for a statement of such terms.  To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. 
The Notes are secured obligations of the Company limited to $55 million
in aggregate principal amount (subject to increase if any Interest is
capitalized).  The Notes are secured as
provided in the Collateral Documents referred to in the Indenture.

 

4.             OPTIONAL REDEMPTION BY THE COMPANY.

 

(a)           The
Notes may not be redeemed at the option of the Company at any time prior to
September 30, 2009.

 

(b)          If,
at any time and from time to time on or after September 30, 2009, if the Equity
Conditions are satisfied, the Company may, pursuant to Article 3 of the
Indenture, redeem all or a portion of the Notes at a redemption price equal to
(i) 100% of the principal amount to be redeemed plus accrued and unpaid
interest and Interest Make-Whole, if any, on the Notes if the Optional
Redemption Date is prior to September 30, 2010 and the Closing Sale Price of
the Company’s Common Stock exceeds $6.00 for 20 of any 30 consecutive Trading
Days preceding the Optional Redemption Notice, (ii) 105% of the principal amount
to be redeemed plus accrued and unpaid interest if the Option Redemption Date
is on or after September 30, 2010 and prior to September 30, 2011, (iii) 102.5%
of the principal amount to be redeemed plus accrued and unpaid interest if the
Optional Redemption Date is on or after September 30, 2011 and prior to
September 30, 2012 and (iv) 100% of the principal amount to be redeemed plus
accrued and unpaid interest if the Optional Redemption Date is on or after
September 30, 2012, to the applicable Redemption Date (subject to the right of
Holders of record on the relevant regular record date to receive interest due
on an Interest Payment Date that is on or prior to the Optional Redemption
Date).

 

(c)           On
September 30, 2010, the Holder may, pursuant to Section 3.09 of the Indenture,
elect to require the Company to redeem all or a portion of the Notes at a
purchase price in cash equal to 100% of the Principal Amount to be repurchased
plus accrued and unpaid Interest and Late Charges, if any, to but excluding the
Holder Optional Redemption Date.

 

5.             MANDATORY REDEMPTION.

 

Except as set forth in paragraphs 6 and 7 below, the
Company shall not be required to make mandatory redemption payments with
respect to the Notes.

 

6.             REPURCHASE AT OPTION OF HOLDER.

 

(a)           If
there is a Change of Control, the Company shall be required to make, pursuant
to Section 5.15 of the Indenture, an offer (a “Change of
Control Offer”) to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of each Holder’s Notes at a purchase price equal to
102% of the

 

A-6

 

aggregate Principal Amount
thereof plus a pro rata portion of the LC Amount to the extent applicable, and
accrued and unpaid Interest and Late Charges thereon, if any, to the date of
purchase (the “Change of Control Redemption Price”),
subject to the right of Holders on the relevant record date to receive interest
due on the relevant interest payment date. 
Within 15 days after the Company knows or reasonably should know of the
occurrence of a Change of Control, pursuant to Section 5.15 of the
Indenture, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and setting
forth the procedures governing the Change of Control Offer as required by the
Indenture.

 

(b)           If
the Company or a Subsidiary consummates any Asset Sales, or in an Event of
Loss, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall pursuant to Section 5.10
of the Indenture, commence an offer to all Holders of Notes (as “Excess Proceeds Offer”) pursuant to Section 3.08 of the
Indenture to purchase the maximum principal amount of Notes (including any
interest added to the Principal Amount as Capitalized Interest), that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the Principal Amount thereof plus accrued and unpaid Interest
and Late Charges thereon, if any, to the date fixed for the closing of such
offer in accordance with the procedures set forth in the Indenture.  To the extent that the aggregate amount of
Notes (including any interest added to the Principal Amount as Capitalized
Interest) tendered pursuant to an Excess Proceeds Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may pursuant to Section 5.10 of
the Indenture, use remaining Excess Proceeds for any purpose not otherwise
prohibited by the Indenture.  If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall pursuant to Section 5.10 of
the Indenture, select the Notes to be purchased on a pro rata basis. 
Holders of Notes that are the subject of an offer to purchase will
receive an Excess Proceeds Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
“Option of Holder to Elect Purchase” on the reverse of the Notes.

 

7.             NOTICE OF REPURCHASE.  Notice of repurchase will be mailed at least
30 days but not more than 60 days before the repurchase date, to each Holder
whose Notes are to be repurchased at its registered address.  Notes in denominations larger than $1,000 may
be repurchased in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be repurchased. 
On and after the repurchase date interest ceases to accrue on Notes or
portions thereof called for repurchase.

 

8.             CONVERSION.  A Holder of a Note may convert such Note (or
any portion thereof equal to $1,000 or any integral multiple of $1,000 in
excess thereof).  The initial Conversion
Price is $[•](1) per share
of the Company’s Common Stock and is subject to adjustment as provided in the
Indenture.

 

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 and the
Conversion Agent shall have received such notice, on or prior to 5:00 p.m., New
York City time, on such date, (b) surrender the Notes to be converted to the
Conversion Agent as soon as practicable on or following such date (or an
indemnification undertaking with respect to any such Notes in the case of its
loss, theft or destruction, (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.  A
Holder may convert a portion of a Note equal to $1,000 or any integral multiple
thereof.

 

(1)                                  Insert
amount equal to 135% of the arithmetic average of the Weighted Average Price of
the Common Stock for the five (5) consecutive Trading Days immediately
preceding the execution of the Securities Purchase Agreement.

 

A-7

 

For any Interest Payment Date occurring after the
fourth semi-annual Interest Payment Date due on September 30, 2009, if a Note
is converted on or after a Record Date for an interest payment but prior to the
corresponding Interest Payment Date, the Holder will be required to pay the
Company, at the time it surrenders such Note for conversion, the amount of
Interest on such Notes it will receive on the Interest Payment Date
corresponding to the period commencing on such conversion date and ending on such
Interest Payment Date.  Notwithstanding
the foregoing, if a Note is converted prior to payment of the fourth
semi-annual interest payment due on September 30, 2009, and (i) if the Holder
indicates that the applicable Conversion Amount shall not include any Interest
Make-Whole, then such Holder shall receive, in addition to the Company’s Common
Stock (or other securities or assets as provided in the Indenture) issuable
upon such conversion, in cash the LC Amount applicable to such Note or portion
of such Note, and (ii) if the Holder indicates that the applicable Conversion
Amount shall include the Interest Make-Whole, then the Letter of Credit shall
be deduced by the LC Amount applicable to such Note or portion of such Note.

 

A Note in respect of which a Holder had delivered an
“Option of Holder to Elect Purchase” form
exercising the option of such Holder to require the Company to purchase such
Note pursuant to an Excess Proceeds Offer or a Change of Control Offer may be
converted only if such form is withdrawn in accordance with the terms of the
Indenture.

 

9.             DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in registered form without
coupons in denominations of $1,000 and integral multiples of $1,000.  The transfer of Notes may be registered and
Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. 
The Company need not exchange or register the transfer of any Note or
portion of a Note selected for repurchase, except for the unpurchased portion
of any Note being repurchased in part. 
Also, the Company need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be repurchased.

 

10.           PERSONS DEEMED OWNERS.  The Holder of a Note may be treated as its
owner for all purposes.

 

11.           AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain exceptions, the Indenture,
the Notes and the Collateral Documents may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class. 
Without the consent of any Holder of a Note, the Indenture, the Notes
and the Collateral Documents may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes or to alter the provisions of
Article 2 of the Indenture in a manner that does not adversely affect any
Holder, to provide for the assumption of the Company’s or a Guarantor’s
obligations to Holders of the Notes in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture, the Notes, the Note Guarantees, the Pledge Agreement and the
Collateral Documents of any such Holder, to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act or to allow any Guarantor to execute a supplemental
indenture and/or a Note Guarantee with respect to a Note.

 

12.           DEFAULTS AND REMEDIES.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all

 

A-8

 

the Notes and any remaining
Escrowed Interest to be due and payable. 
Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
plus any remaining LC Amount will become due and payable without further action
or notice.  Holders may not enforce the
Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. 
The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. 
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes.  The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.

 

13.           UNCLAIMED MONEY.  If money for the payment of principal or
interest, if any, remains unclaimed for two years, the Trustee or Paying Agent
shall pay the money back to the Company at its written request, subject to
applicable unclaimed property laws. 
After that, Holders entitled to money must look to the Company for
payment as general creditors unless applicable abandoned property law
designates another person.

 

14.           TRUSTEE DEALINGS WITH COMPANY.  The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.

 

15.           AUTHENTICATION.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

16.           CUSIP NUMBERS.  Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption or repurchase as a convenience to Holders.  No representation is made as to the accuracy
of such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.

 

17.           GOVERNING LAW.  THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS NOTE AND THE INDENTURE.

 

The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture, the Registration Rights
Agreement, the Escrow Agreement, the Pledge Agreement and any Collateral
Document.  Requests may be made to:

 

Nova Biosource Fuels, Inc.

The Riviana Building

2777 Allen Parkway, Suite 860

Houston, Texas  77019
 Attention:  President

 

A-9

 

GUARANTEE

 

The Guarantors listed below and its
successors under the Indenture, jointly and severally with any other
Guarantors, hereby irrevocably and unconditionally guarantees, on a senior
secured senior basis (i) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal of an interest, if any, on the Notes, to the extent lawful,
and the due and punctual performance of all other obligations of the Guarantors
listed below to the Holders or the Trustee all in accordance with the terms set
forth in Article 12 of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Notes or any such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.  Capitalized terms used
herein have the meanings assigned to them in the Indenture and the Note unless
otherwise indicated.

 

This Guarantee shall be binding upon the
Guarantors listed below and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof.

 

This Guarantee shall not be valid or
obligatory for any purposes until the certificate of authentication on the Note
upon which this Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.

 

This Guarantee is subject to release upon the
terms set forth in the Indenture.

 

The obligations of the undersigned to Holders
and to the Trustee pursuant to this guarantee and the Indenture are expressly
set forth in Article 12 of the Indenture and reference is hereby made to the
Indenture for the precise terms of the guarantee and all other provisions of
the Indenture to which this Guarantee relates.

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-10

 

ASSIGNMENT FORM

 

	
  To assign this Note, fill in the form
  below:

  
	
   

  
	
   

  	
   

  
	
  (Insert Assignees Name)

  	
   

  
	
   

  
	
  (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                                                                                                                                                                         

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

  
	
   

  
	
  Date

  	
   

  	
  :

  
	
   

  
					

	
   

  	
  Your Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the face of

  this Note)

  
				

 

	
  Signature

  
	
  Guarantee*:

  	
   

  	
   

  

 

*              Participant in a
recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

 

A-11

 

CONVERSION NOTICE

 

If you want to convert this
Note into Common Stock of the Company, check the box:  o

 

To convert only part of this
Note, state the Principal Amount to be converted (which must be $1,000 or an
integral multiple of $1,000):    $                                                          

 

If  you
are converting this Note prior to September 30, 2009 and want to receive the
Interest Make-Whole applicable to the Note or portion of Note in shares of
Common Stock, check the box:  o

 

Your total Conversion Amount
shall consist of the following:

 

•                  Principal
Amount $                                                          

 

•                  Interest $                                                          

 

•                  Late Charges $                                                          

 

•                  Interest
Make-Whole (if applicable and above box checked) $                                                          

 

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

 

                                                                                                                  

 

(Insert other person’s
social security or tax ID no.)

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  

 

 

	
  Date:

  	
   

  	
        Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  this Security)

  

 

	
  Signature
  Guarantee:

  	
   

  	
   

  

 

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

 

A-12

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

If you want to elect to have this Note
purchased by the Company pursuant to Section 5.10 or 5.15 of the Indenture,
check the appropriate box below:

	
   ̈ 
  Section 3.09

  	
   ̈ 
  Section 5.10

  	
   ̈  Section 5.15

  

 

If you want to elect to have only part of the
Note purchased by the Company pursuant to Section 3.09, Section 5.10 or
Section 5.15 of the Indenture, state the amount you elect to have purchased:

 

$                                                           

 

	
  Date:

  	
   

  	
   

  

 

	
   

  	
  Your Signature:

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the face

  of this Note)

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax Identification No.:

  	
   

  
					

 

	
  Signature

  
	
  Guarantee*:

  	
   

  	
   

  

 

*                                         Participant in
a recognized Signature Guarantee Medallion Program (or other signature
guarantor acceptable to the Trustee).

 

A-13Exhibit 4.3

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”), dated
September 27, 2007, is entered by and among Nova Biosource Fuels, Inc., a
Nevada corporation (the “Company”),
and the purchasers identified on the signature pages attached
hereto (each, a “Purchaser”
and collectively, the “Purchasers”).

 

This Agreement
is made pursuant to the Securities Purchase Agreements, dated as of the date
hereof between the Company and each of the Purchasers (the “Purchase
Agreements”).

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

 

1.             Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the
Purchase Agreements shall have the meanings given such terms in the Purchase
Agreements. References to filing a document with the Securities and Exchange
Commission (the “Commission”) shall mean to file such document with the
Commission via the Commission’s Electronic Data Gathering, Analysis and
Reporting, or EDGAR, system. As used in this Agreement, the following terms
shall have the respective meanings set forth in this Section 1:

 

“Additional Effectiveness Deadline”  shall have the meaning
specified in Section 2(b).

 

“Common Stock” means the common stock of
the Company, $0.001 par value per share.

 

“Conversion Shares” means the shares of Common Stock issuable
upon conversion of the Securities pursuant to the terms of the Indenture and
the Securities.

 

“Effective Date”
means the date that a Registration Statement filed pursuant to Section 2(a) or
Section 2(b), as applicable, is first declared effective by the Commission.

 

“Effectiveness Deadline”
means the Initial Effectiveness Deadline and the Additional Effectiveness
Deadline, as applicable.

 

“Effectiveness Period”
shall have the meaning set forth in Section 2(a).

 

“Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

“Filing Deadline”
means: (a) with respect to the initial Registration Statement to be filed
pursuant to Section 2(a), the 30th day following the first Closing Date under
the Purchase Agreements, and (b) with respect to any additional Registration
Statement filed pursuant to Section 2(b), the earlier of (i) the 30th day
following the date on which the Commission shall indicate as being the first
date or time that such filing may be made and (ii) six (6) months following the
Effective Date.

 

 

“Holder” or
“Holders”
means the holder or holders, as the case may be, from time to time of
Registrable Securities.

 

“Indemnified Party”
shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party”
shall have the meaning set forth in Section 5(c).

 

“Initial Effectiveness Deadline”
means the earlier of: (i) one-hundred and twenty (120) calendar days after the
Closing Date, and (ii) the fifth Trading Day following the date on which the
Company is notified by the Commission that the Registration Statement filed
pursuant to Section 2(a) will not be reviewed or is no longer subject to
further review and comments.

 

“Losses”
shall have the meaning set forth in Section 5(a).

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A or 430B promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities”
means the Securities issued pursuant to the Purchase Agreements and the
Conversion Shares, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event,
or any conversion price adjustment with respect thereto.

 

“Registration Statement”
means: (i) the initial registration statement which is required to register the
resale of the Registrable Securities pursuant to Section 2(a), and (ii) each
additional registration statement, if any, contemplated by Section 2(b), and
including, in each case, the Prospectus, amendments and supplements to each
such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.

 

“Required Holders”
means the holders of at least two-thirds of the Registrable Securities.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

2

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“Securities” means the Securities issued to the
Purchasers pursuant to the Purchase Agreements to be unconditionally
guaranteed, jointly and severally, on a senior basis by Nova Holding Clinton
County, LLC and Nova Biofuels Clinton County, LLC, each a subsidiary of the
Company.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

2.             Registration.

 

(a)           On or prior to each Filing Deadline,
the Company shall prepare and file with the Commission a Registration Statement
covering the resale of all Registrable Securities not already covered by an
existing and effective Registration Statement for an offering to be made on a
continuous or delayed basis pursuant to Rule 415. The Company shall use its
best efforts to cause the Registration Statement to be declared effective under
the Securities Act as soon as possible but, in any event, no later than the
Effectiveness Deadline, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until the earliest of
(i) the date when all Registrable Securities covered by the Registration
Statement have been sold, or (ii) the date when all Registrable Securities have
been sold pursuant to Rule 144, or (iiii) the date when all Registrable
Securities covered by the Registration Statement may be sold without
restriction pursuant to Rule 144(k), as determined by counsel to the Company
pursuant to a written opinion letter to such effect, upon actual receipt by the
Holders of a notice from the Company stating that the Company will deliver
certificates without restrictive legends upon surrender by the Holders of the
existing certificates along with appropriate seller’s and broker’s
representation letters, or (iv) with respect to subsequent Holders only, the
date two years after the date that the Registration Statement is declared
effective by the Commission, or (v) the date when all Registrable Securities
cease to be outstanding (the “Effectiveness Period”).

 

(b)           If for any reason the Commission does
not permit all of the Registrable Securities to be included in the Registration
Statement initially filed pursuant to Section 2(a), then the Company shall
prepare and file as soon as possible after the date on which the Commission shall
indicate as being the first date or time that such filing may be made, but in
any event by the 30th day following such date, or, in the event the Commission
does not so indicate, no later than six (6) months after the Effective Date of
the Registration Statement filed pursuant to Section 2(a), an additional
Registration Statement covering the resale of all Registrable Securities not
already covered by an existing and effective Registration Statement for an
offering to be made on a continuous or delayed basis pursuant to Rule 415. The
Company shall use its best efforts to cause each such Registration Statement to
be declared effective under the Securities Act as soon as possible but, in any
event, no later than 120 days following the date on which the Company becomes
aware that such Registration Statement is required to be filed under this
Agreement (the “Additional Effectiveness Deadline” for
such Registration Statement), and shall use its best efforts to keep
such Registration Statement continuously effective under the Securities Act
during the Effectiveness Period. To the extent the staff of the Commission does
not permit all of the Registrable Securities that have not yet been covered on
an effective

 

3

 

Registration Statement
(the “Unregistered
Registrable Securities”) to
be registered on such additional Registration Statement, the Company shall file
additional Registration Statements successively trying to register on each such
Registration Statement the maximum number of Unregistered Registrable
Securities until all of the Registrable Securities have been registered with
the Commission.

 

(c)           If: (i) a Registration Statement is
not filed on or prior to its Filing Deadline, or (ii) a Registration Statement
is not declared effective by the Commission on or prior to its required
Effectiveness Deadline, or (iii) after its Effective Date, such Registration
Statement ceases for any reason to be effective and available to the Holders as
to all Registrable Securities to which it is required to cover at any time
prior to the expiration of its Effectiveness Period for an aggregate of more
than 15 consecutive days or more than 45 days in any 365 consecutive day period
or the Company’s Common Stock is not listed or included for quotation on a
Trading Market (as defined in the Purchase Agreements) for any period of more
than five consecutive Trading Days, (any such failure or breach being referred
to as an “Event”  and
for purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 15th consecutive day (or 45th day
in the aggregate) is exceeded, being referred to as “Event Date”), then, in addition to any other
rights available to the Holders: (x) on such Event Date additional interest (“Additional Interest”) and not as a penalty, will accrue at a
rate per annum of 0.50% of the principal amount of such Registrable Securities
included (or to be included) in such Registration Statement for the first
90-day period following such Event Date; and (y) thereafter at a rate per annum
of 1.00% of the principal amount of such Registrable Securities, provided, that all periods shall be
tolled, with respect to a Holder, by the number of days in excess of five (5)
during which such Holder fails to provide the Company with information
regarding such Holder which was requested by the Company in writing in order to
effect the registration of such Holder’s Registrable Securities other than with
respect to an Event covered by clause (iii) of this paragraph unrelated to such
Holder’s information. It shall be a condition precedent to the obligations of
the Company to pay any Additional Interest pursuant to this Section 2 with
respect to the Registrable Securities of any Holder that such Holder shall
furnish to the Company such information regarding itself and the Registrable
Securities held by it as contemplated by the preceding sentence. In the event
the Company fails to pay Additional Interest in a timely manner, such
Additional Interest shall bear interest at the rate of one percent (1.0%) per
month (prorated for partial months)
until paid in full.

 

(d)           The initial number of Registrable
Securities included in any Registration Statement and any increase in the
number of Registrable Securities included therein shall be allocated pro rata
among the Purchasers based on the number of Registrable Securities held by each
Purchaser at the time the Registration Statement covering such initial number
of Registrable Securities or increase thereof is filed with the Commission. In
the event that a Purchaser sells or otherwise transfers any of such Purchaser’s
Registrable Securities, each transferee shall be allocated a pro rata portion
of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any Registrable Securities included
in a Registration Statement which remain allocated to any Person which ceases
to hold any Registrable Securities covered by such Registration Statement shall
be allocated to the remaining Purchasers, pro rata based on the number of
Registrable Securities then held by such Purchasers which are covered by such
Registration Statement. In no event shall the Company include any

 

4

 

securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders.

 

(e)           Each Holder shall comply with the
prospectus delivery requirements of the Securities Act, or an exemption therefrom,
in connection with the offer or sale of any Registrable Securities pursuant to
the Registration Statement.

 

(f)            Each Purchaser, by such Purchaser’s
acceptance of the Registrable Securities, agrees to cooperate with the Company
as reasonably requested by the Company in connection with the preparation and
filing of any Registration Statement hereunder, unless such Purchaser has
notified the Company in writing of such Purchaser’s election to exclude all of
such Purchaser’s Registrable Securities from such Registration Statement.

 

(g)           In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to a majority of
the Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the Commission.

 

(h)           By 9:30 am, New York City time, on
the Business Day following the Effective Date, the Company shall file with the
Commission in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement.

 

3.             Registration
Procedures.

 

In connection
with the Company’s registration obligations hereunder, the Company shall:

 

(a)           Not less than four Trading Days prior
to the filing of a Registration Statement or any related Prospectus or any
amendment or supplement thereto, the Company shall furnish to the Holders
copies of all such documents proposed to be filed which documents (other than
those incorporated by reference) will be subject to the review of such Holders.
The Company shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably object in good faith. Each Registration
Statement, as of its filing and effective dates and each day thereafter
(including all amendments or supplements thereto, as of their respective filing
and effective dates and each day thereafter), shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading, and
the prospectus contained in such Registration Statement, as of its filing date
and each day thereafter (including all amendments and supplements thereto, as
of their respective filing dates and each day thereafter), shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

 

(b)           (i) Prepare and file with the
Commission such amendments, including post- effective amendments, to each
Registration Statement and the Prospectus used in connection

 

5

 

therewith as may be
necessary to keep such Registration Statement continuously effective as to the
applicable Registrable Securities for its Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement or “issuer free writing prospectus” (as defined by Rule
405 promulgated by the Commission pursuant to the Securities Act) so that such
Prospectus does not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect
to each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that pertains to the Holders as Selling Stockholders but not any
comments that would result in the disclosure to the Holders of material and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statements and the disposition of all Registrable
Securities covered by each Registration Statement.

 

(c)           Notify the Holders as promptly as
reasonably possible, but in no event later than 5:30 p.m. Eastern time, of the following
Trading Day, (i)(A) when a Registration Statement, Prospectus, any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a “review” of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the
Holders that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information that pertains to the
Holders as Selling Stockholders or the Plan of Distribution; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose, including pursuant to Section
8A of the Securities Act; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose; and (v) of
the occurrence of any event or passage of time that makes the financial
statements included in a Registration Statement ineligible for inclusion
therein or any statement made in such Registration Statement or Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Notwithstanding anything to the contrary herein, at any time after the
Effective Date of the initial Registration Statement, the Company may delay the
disclosure of material, non-public

 

6

 

information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the board of directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace Period”); provided, that the Company shall promptly (i)
notify the Purchasers in writing of the existence of material, non-public
information giving rise to a Grace Period (provided that in each notice the
Company will not disclose the content of such material, non-public information
to the Purchasers) and the date on which the Grace Period will begin, and (ii)
notify the Purchasers in writing of the date on which the Grace Period ends;
and, provided further, that such Grace Periods shall not exceed an aggregate of
forty-five (45) days in any 12 month period, (ii) each such Grace Period shall
not exceed fifteen (15) consecutive days and (iii) that the first day of any
Grace Period must be at least five (5) Trading Days after the last day of any
prior Grace Period. For purposes of determining the length of a Grace Period
above, the Grace Period shall begin on and include the date the Purchasers
receive the notice referred to in clause (i) and shall end on and include the
later of the date the Purchasers receive the notice referred to in clause (ii)
and the date referred to in such notice.

 

(d)           Use its best efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(e)           Furnish to each Holder, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference) promptly
after the filing of such documents with the Commission; provided, that the
Company shall have no obligation to provide any document pursuant to this
clause that is available on the EDGAR system.

 

(f)            Promptly deliver to each Holder,
without charge, as many copies of each Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.

 

(g)           Prior to any public offering of
Registrable Securities, use its best efforts to register or qualify or
cooperate with the selling Holders in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities, Blue Sky or
other laws of all applicable jurisdictions or governmental authorities or
agencies within the United States and to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statements; provided,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or subject the Company to
any material tax in any such jurisdiction where it is not then so subject. The
Company shall promptly notify each Purchaser who holds Registrable Securities
of the receipt by the Company of any notification

 

7

 

with respect to the
suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of notice of the initiation or threatening
of any proceeding for such purpose.

 

(h)           Cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statements, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holders may request.

 

(i)            Upon the occurrence of any event
contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a
supplement or amendment, including a post-effective amendment, to the affected
Registration Statements or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, no
Registration Statement nor any Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

(j)            The Company may require each selling
Holder to furnish to the Company a certified statement as to the number of
Securities and shares of Common Stock beneficially owned by such Holder and any
Affiliate thereof.

 

(k)           As long as any Holder owns
Registrable Securities, the Company shall timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13 (a) or 15(d) of the Exchange Act. As long as any Holder owns Registrable
Securities, if the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
and make publicly available in accordance with Rule 144(c) promulgated under
the Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
similar to those that would otherwise be required to be included in reports
required by Section 13 (a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company will take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Person to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act.

 

(l)            The Company shall promptly secure the
listing of all of the Registrable Securities upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock is
then listed (subject to official notice of issuance) and shall maintain, in
accordance with the Securities, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents. The Company
shall maintain the Common Stocks’ authorization for quotation on one or more
Trading Markets. Neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on each applicable Trading Market.

 

8

 

The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 3(l).

 

(m)          If requested by a Purchaser, the
Company shall (i) as soon as practicable, incorporate in a prospectus
supplement or post-effective amendment such information as a Purchaser
reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as
soon as practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by a Purchaser holding any Registrable Securities.

 

(n)           The Company shall otherwise use its
best efforts to comply with all applicable rules and regulations of the
Commission in connection with any registration hereunder.

 

(o)           Within two (2) Business Days after a
Registration Statement which covers Registrable Securities is declared
effective by the Commission, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities confirmation that such Registration Statement has been declared
effective by the Commission in the form attached hereto as Exhibit A.

 

(p)           If
any Purchaser is deemed to be or reasonably believes it may be deemed or
alleged to be, an underwriter or is required under applicable securities laws to
be described in the Registration Statement as an underwriter, at the reasonable
request of any Purchaser, the Company shall use its reasonable best efforts to
furnish to such Purchaser, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as any Purchaser may
reasonably request (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the Purchasers, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Purchasers.

 

(q)           Upon
the written request of any Purchaser in connection with such Purchaser’s due
diligence requirements, if any, the Company shall make available for inspection
by (i) any Purchaser, (ii) such Purchaser’s legal counsel and (iii) one firm of
accountants or other agents retained by the Purchasers (collectively, the “Inspectors”), all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree to
hold in strict confidence and shall not make any disclosure (except to an
Purchaser) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which

 

9

 

determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
Agreement or any other Transaction Document. Each Purchaser agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and any Purchaser) shall be
deemed to limit the Purchasers’ ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.

 

(r)            Neither
the Company nor any Subsidiary or affiliate thereof shall identify any
Purchaser as an underwriter in any public disclosure or filing with the
Commission or any Trading Market (as defined in the Securities Purchase
Agreement) without the prior written consent of such Purchaser. If the Company
is required by law to identify a Purchaser as an underwriter in any public
disclosure or filing with the Commission or any Trading Market, it must notify
such Purchaser in advance and such Purchaser shall have the option, in its sole
discretion, to consent to such identification as an underwriter within 5
Business Days or such Purchaser shall be deemed to have consented to have its
Registrable Securities removed from the applicable Registration Statement.

 

(s)         The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities in the United
States.

 

(t)         The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the Securities Act)
covering a twelve-month period beginning not later than the first day of the
Company’s fiscal quarter next following the effective date of a Registration
Statement.

 

4.             Registration
Expenses. All fees and expenses incident to the Company’s performance of
its obligations under this Agreement (excluding any underwriting discounts and
selling commissions) shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the Trading Market on which the Common Stock is then listed for trading,
and (B) in compliance with applicable state securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority
of the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery

 

10

 

expenses,
(iv) fees and disbursements of counsel for the Company, and (v) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. The Company shall
also reimburse the Holder with the greatest number of Registrable Securities
being registered on the Registration Statement for the fees and disbursements
of legal counsel, up to $10,000, in connection with the registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement for each such
registration, filing or qualification.

 

5.             Indemnification.

 

(a)           Indemnification by the Company.
The Company shall, notwithstanding any termination of this Agreement, indemnify
and hold harmless each Holder, the officers, directors, agents, investment
advisors, partners, members, shareholders, trustees and employees of each of
them, each Person who controls any such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents, trustees and employees of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”),
as incurred, arising out of or relating to (i) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement or any
other certificate, instrument or document contemplated hereby, (ii) any breach
of any covenant, agreement or obligation of the Company contained in this
Agreement or any other certificate, instrument or document contemplated hereby,
or (iii) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or any issuer
free writing prospectus or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto or any issuer free writing prospectus, in
light of the circumstances under which they were made) not misleading, except
to the extent, but only to the extent, that (1) such untrue statements or
omissions are based solely upon information regarding such Holder or its
intended method of distribution furnished in writing to the Company by such
Holder expressly for use therein, or (2) in the case of an occurrence of an
event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of
an outdated or defective Prospectus after such Holder has received actual
notice in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented Prospectus.
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the transactions contemplated by this Agreement.

 

(b)           Indemnification by Holders.
Each Holder shall, notwithstanding any termination of this Agreement, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses, as incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement

 

11

 

thereto, or arising
solely out of or based solely upon any omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading to
the extent, but only to the extent that, (1) such untrue statements or
omissions are based solely upon information regarding such Holder or its
intended method of distribution furnished in writing to the Company by such
Holder expressly for use therein, or (2) in the case of an occurrence of an
event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of
an outdated or defective Prospectus after such Holder has received actual
notice in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented Prospectus.
In no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Company and shall survive the
transfer of the Registrable Securities by the Purchasers pursuant to Section
6(e).

 

(c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only)
to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced
the Indemnifying Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless:
(1) the Indemnifying Party has agreed in writing to pay such fees and expenses;
(2) the Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the
Indemnifying Party), provided,
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties (in addition to any local counsel). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject

 

12

 

matter of such Proceeding and does not contain any admission of
wrongdoing by such Indemnified Party.

 

All fees and
expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within fifteen Trading Days of written
notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

 

(d)           Contribution. If a claim for
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and Indemnified Party on the other hand in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in accordance with its
terms.

 

The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

 

The indemnity
and contribution agreements contained in this Section are in addition to any
other liability that the Indemnifying Parties may have to the Indemnified
Parties.

 

6.             Miscellaneous.

 

(a)           Remedies. In the event of a
breach by the Company or by a Holder, of any of their obligations under this
Agreement, each Holder or the Company, as the case may be, in

 

13

 

addition to being
entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that monetary
damages would not provide adequate compensation for any losses incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would
be adequate.

 

(b)           Compliance. Each Holder
covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

 

(c)           Discontinued Disposition. Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c), such Holder will forthwith discontinue disposition
of such Registrable Securities under the Registration Statement until such
Holder’s receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the
provisions of this paragraph. Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended shares of Common
Stock or Securities to a transferee of a Purchaser in accordance with the terms
of the Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which a Purchaser has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the applicable
Registration Statement (unless an exemption from such prospectus delivery
requirement exists), prior to the Purchaser’s receipt of the notice of a Grace
Period and for which the Purchaser has not yet settled.

 

(d)           Notices. Any and all notices
or other communications or deliveries required or permitted to be provided
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section prior
to 5:00 p.m. (Central time) on a Business Day, (ii) the Business Day after the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Agreement later
than 5:00 p.m. (Central time) on any date and earlier than 11:59 p.m. (Central
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:

 

	
  If to the Company:

  	
  Nova Biosource Fuels, Inc.

  363 North Sam Houston Parkway East

  Suite 630

  Houston, Texas 77060

  Tel:   (713) 869-6682

  Fax:  (713)583-8478

  

 

14

 

	
   

  	
  Attention:  President

  
	
   

  	
   

  
	
  with a copy to:

  	
  Baker & McKenzie LLP

  2300 Trammell Crow Center

  2001 Ross Avenue

  Dallas, Texas 75201

  Tel: (214) 978-3095

  Fax:(214)978-3099

  Attention: Roger W. Bivans, Esq.

   

  
	
  If to a Purchaser

  	
  To the address set forth under such Purchaser’s name on the signature
  pages hereof;

   

  
	
  If to a registered Holder:

  	
  To the address of such Holder as it appears in the stock transfer
  books of the Company;

  

 

or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.

 

(e)           Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreements.

 

(f)            Execution and Counterparts.
This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

 

(g)           Governing Law.    ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAW THAT WOULD APPLY TO ANY OTHER LAW. Each party agrees
that all Proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Agreement and any other Transaction
Documents (whether brought against a party hereto or its respective Affiliates,
employees or agents) may be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York

 

15

 

Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

(h)           Cumulative Remedies. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

 

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

 

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

 

(k)           Amendment of Registration Rights.
Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required
Holders; provided, however, any amendment to this Agreement that
adversely or disproportionately affects any Holder shall require the prior
written consent of such Holder. Any amendment or waiver effected in accordance
with this Section 6(k) shall be binding upon each Purchaser and the Company. No
such amendment shall be effective to the extent that it applies to less than
all of the holders of the Registrable Securities.

 

(l)            (1) Consents. All consents
and other determinations required to be made by the Purchasers pursuant to this
Agreement shall be made, unless otherwise specified in this Agreement, by the
Required Holders.

 

(m)          Limitation on Obligations. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of any other Purchaser, and no provision of this Agreement is
intended to confer any obligations on any Purchaser vis-a-vis any other
Purchaser. Nothing contained herein, and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of

 

16

 

entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.

 

[SIGNATURE PAGES ON NEXT PAGE]

 

17

 

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

 

	
   

  	
  NOVA
  BIOSOURCE FUELS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth
  T. Hern

  
	
   

  	
   

  	
  Kenneth T.
  Hern

  
	
   

  	
   

  	
  CEO

  

 

 

[SIGNATURE
PAGES FOR PURCHASERS ON NEXT PAGE]

 

 

Company Signature Page to 

Nova Biosource Fuels, Inc. 

Registration Rights Agreement

 

 

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above. The Purchaser, intending to be legally bound, hereby
executes and delivers to the Company this signature page to the Registration
Rights Agreement and authorizes the Company to attach it to the counterpart of
the Registration Rights Agreement executed or to be executed by the Company,
which when so attached shall be considered effective and one and the same
agreement.

 

	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [

  	
   

  	
  ]

  
	
   

  	
  (Insert full legal name
  that the Purchaser desires to appear on the Securities. If the registered
  holder is a nominee, state “as nominee for” and insert the full legal name of
  the Purchaser.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile
  No:

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  With a copy
  to:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile
  No:

  	
   

  
	
   

  	
  Attention:

  	
   

  
							

 

Purchaser Signature Page to 

Nova Biosource Fuels, Inc. 

Registration Rights Agreement

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