Document:

EXHIBIT 10.2

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.  ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT AND AS REQUIRED
BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL
SATISFACTORY TO THE BORROWER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH
TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY LAWS.

DynTek, Inc.

Junior Secured Convertible Promissory Note

	
  Note No. J-3

  	
   

  	
   

  
	
  $3,000,000.00

  	
   

  	
  September 26, 2006

  

 

FOR
VALUE RECEIVED, subject to the terms and conditions of this Junior Secured
Convertible Promissory Note (the “Note”), DynTek, Inc., a Delaware corporation
with its principal offices located at 19700 Fairchild Road, Suite 230, Irvine,
California (the “Borrower”), hereby promises to pay to the order of
Trust A-4 - Lloyd I. Miller (“Trust A-4”), located at 4550 Gordon Drive,
Naples, Florida 34102 (the “Holder”), the principal sum of Three Million
Dollars ($3,000,000.00), in lawful money of the United States and in immediately
available funds on March 1, 2011 or, if such day is not a regular business day,
on the next business day thereafter, with all accrued but unpaid interest (as
provided below) to such date (the “Maturity Date”).  Subject to the terms and conditions of this
Note (including without limitation Section 7(f)), the Borrower also promises to
pay to the Holder interest accrued on the outstanding unpaid principal amount
hereof until such principal amount is paid (or converted as provided herein) at
the rate of ten percent (10%) per annum, compounding quarterly, from the date
hereof.  The said interest shall become
due quarterly in arrears and shall be payable on the last day of each fiscal
quarter (each, an “Interest Payment Date”) in respect of the immediately
preceding completed fiscal quarter.  The
first Interest Payment Date will be September 30, 2006.  At the Borrower’s sole option, all interest
payments due and payable before June 30, 2009 may be paid in kind at the
rate of fourteen percent (14%) per annum, compounding quarterly, in which case
the accrued interest will be added to the principal amount of the Note on the
applicable Interest Payment Date, and interest will accrue on the aggregate
principal amount.  All interest payments
due and payable on and after June 30, 2009 must be paid in cash.

This Note is being
issued pursuant to (1) that certain Second Amendment to Note Purchase Agreement,
dated as of September 26, 2006, by and between the Borrower, DynTek Services,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Borrower (“DSI”),
and the purchasers named therein, including the Holder (the

 

“Second
Amendment”), and (2) that certain Note Purchase Agreement, dated as of
March 8, 2006, by and between the Borrower and the purchasers named thereunder,
including the Holder, (the “Note Purchase Agreement”), as amended by
that certain First Amendment to Note Purchase Agreement, dated as of June 15,
2006, by and between the same parties (the “First Amendment”), and as
further amended by the Second Amendment (collectively, and as amended, the “Amended
Note Purchase Agreement”) and shall be entitled to all of the rights and
benefits thereof.  This Note is guaranteed
by DSI and secured by a security interest in all of the assets of Borrower and
DSI, as described more fully in that certain Security and Pledge Agreement,
dated as of March 8, 2006, executed by and between the Borrower, DSI and Trust
A-4 (as amended, supplemented or otherwise modified from time to time) (the “Security
Agreement”).

Until June 1,
2010, the Borrower may not prepay the Note in whole or in part without the
prior written consent of the Holder, which may be given or withheld in Holder’s
sole discretion.  At anytime after June
1, 2010 until the Maturity Date, the Borrower may prepay this Note in whole or
in part at any time without penalty.

1.             Definitions.  Unless the context otherwise requires, the
following terms shall have the following respective meanings:

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

“Amended
Note Purchase Agreement” shall have the meaning ascribed to such term in
the second paragraph of this Note.

“Blue
Sky Laws” means applicable state securities laws.

“Base
Share Price” shall have the meaning ascribed to such term in Section
4(f)(i) hereof.

“Board”
shall mean the Borrower’s Board of Directors.

“Borrower”
shall have the meaning ascribed to such term in the first paragraph of this
Note.

“Common
Stock” shall mean shares of the Borrower’s Common Stock, par value $0.0001
per share.

“Conversion
Date” shall be the date upon which the Holder exercises its right to
convert the outstanding amounts under this Note into shares of Borrower’s
Common Stock in accordance with Section 3(a) of this Note, or the date
such amounts are automatically converted in accordance with the terms hereof.

“Conversion
Option” shall have the meaning ascribed to such term in Section 3(a)
hereof.

 2
 

 

“Conversion
Price” shall have the meaning ascribed to such term in
Section 3(a) of this Note.

“Event
of Default” shall have the meaning ascribed to such term in Section
5(a) of this Note.

“Fair
Market Value” shall mean the fair market value of a share of the Common
Stock as mutually determined in good faith by the Holder and the Board.

“First
Amendment” shall have the meaning ascribed to such term in the second
paragraph of this Note.

“Holder”
shall have the meaning ascribed to such term in the first paragraph of this
Note.

“Interest
Payment Date” shall have the meaning ascribed to such term in the first
paragraph of this Note.

“Maturity
Date” shall have the meaning ascribed to such term in the first paragraph
of this Note.

“Newly
Issued Shares” shall have the meaning ascribed to such term in Section
4(f)(i) hereof.

“Note”
shall have the meaning ascribed to such term in the first paragraph of this
instrument.

“Note
Purchase Agreement” shall have the meaning ascribed to such term in the
second paragraph of this Note.

“Second
Amendment” shall have the meaning ascribed to such term in the second
paragraph of this Note.

“Security
Agreement” shall have the meaning ascribed to such term in the second
paragraph of this Note.

2.                                       Accounting
Terms.  All accounting terms not
specifically defined in this Note shall be construed in accordance with United
States generally accepted accounting principles and, if applicable, consistent
with those applied in the preparation of the financial statements of the
Borrower.

3.                                       Conversion.

(a)           Voluntary
Conversion.  At any time until the
Note has been paid in full, the Holder has the right, at its option, to convert
all or any part of the outstanding principal amount (including any accrued but
unpaid interest on such principal

 3
 

 

amount) (the “Conversion Principal Amount”) of
this Note into shares of Common Stock (in accordance with the procedures
described under Section 3(b) of this Note) (the “Conversion Option”).  The number of shares of Common Stock into
which the Conversion Principal Amount is convertible is equal to (i) the
Conversion Principal Amount divided by (ii) the Conversion Price (as
defined below) in effect at the time of conversion.  The “Conversion Price” shall initially
be $0.20, subject to adjustment pursuant to Sections 3 and 4.

(b)           Conversion
Mechanics.  The Holder shall exercise
its right to convert by surrender of this Note, duly endorsed, at the office of
the Borrower, accompanied by written notice of conversion.  The Borrower shall forthwith issue and
deliver to the Holder certificates for the number of shares of Common Stock to
which Holder is entitled (bearing such legends as may be required by applicable
state and federal securities laws).  If
on any conversion of this Note a fraction of a share results, then the Borrower
will pay the Holder the cash value of that fractional share (based upon the
Fair Market Value).  All Common Stock
issued upon the conversion of this Note shall be validly issued, fully paid and
non-assessable.  Any conversion shall be
deemed to have occurred as of the Conversion Date, and the Holder shall be
treated for all purposes as the record holder of such Common Stock as of that
date.  Upon conversion of this Note into
Common Stock, Holder shall surrender this Note, duly endorsed, at the principal
offices of Borrower.  Borrower will, as
soon as practicable thereafter, issue and deliver to Holder a certificate for
the number of shares of Common Stock to which Holder is entitled upon such
conversion, plus a check payable to Holder for any cash amounts payable for
fractional shares and accrued but unpaid interest.  If the Holder converts less than all of the
indebtedness evidenced by this Note upon such conversion, then the Borrower
shall also issue a convertible promissory note of like tenor for the amount of
indebtedness not so converted.

(c)           Conversion
Covenants.  Subject to the terms
herein, the Borrower covenants that it will at all times promptly do any and
all lawful things necessary (i) to effect the conversion of this Note, or
any part thereof, as provided in this Note and, including, without limitation,
by proper corporate action taking all steps necessary to have available at all
times during which this Note remains outstanding all Common Stock issuable upon
the conversion of this Note and (ii) to ensure that the shares of Common
Stock issuable upon conversion of this Note are registered under the Act and
are freely transferable in the hands of the Holder, subject to the terms and
conditions of the registration provisions contained in the Amended Note
Purchase Agreement.

4.             Dilution.  The number of shares of Common Stock issuable
under Section 3(a) of this Note shall be subject to adjustment from time
to time upon the happening of certain events as follows:

 4
 

 

(a)           Adjustment
for Stock Splits and Combinations. 
If the Borrower at any time or from time to time after the date of this
Note effects a subdivision of shares of its Common Stock, the number of shares
of Common Stock issuable to Holder immediately before that subdivision shall be
proportionately increased, and conversely, if the Borrower at any time or from
time to time after the date of this Note combines shares of Common Stock into a
smaller number of shares, the number of shares of Common Stock issuable to
Holder immediately before the combination shall be proportionately
decreased.  In either case, the
Conversion Price will be proportionately adjusted as well.  Any adjustment under this clause
(a) shall become effective at the close of business on the date the
subdivision or combination becomes effective.

(b)           Adjustment
for Certain Dividends and Distributions. 
If the Borrower at any time or from time to time after the date of this
Note makes, or fixes a record date for the determination of holders of shares
of Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event, the number of
shares of Common Stock issuable to Holder shall be increased as of the time of
such issuance, or, in the event such record date is fixed, as of the close of
business on such record date, by multiplying the maximum number of shares of
Common Stock issuable to Holder by a fraction (i) the numerator of which
shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in
payment of such dividend or distribution plus the number of shares of Common
Stock issuable upon the conversion or exercise of the Borrower’s outstanding
convertible securities, warrants and options, and (ii) the denominator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date, plus the number of shares of Common Stock issuable upon the
conversion or exercise of the Borrower’s outstanding convertible securities,
warrants and options.

(c)           Adjustments
for Other Dividends and Distributions. 
In the event the Borrower at any time or from time to time after the
date of this Note makes, or fixes a record date for the determination of
holders of shares of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Borrower other than the shares of
Common Stock, then and in each such event, provision shall be made so that the
Holder, upon conversion of this Note, shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Borrower which the Holder would have received had
Holder been a holder of Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
Conversion Date, retained such securities receivable as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section 4 with respect to the rights of the Holder.

 5
 

 

(d)           Adjustment
for Reorganization, Consolidation, Merger. 
In the event of any reorganization of the Borrower (or any other
corporation, the stock or other securities of which are at the time receivable
upon the conversion of this Note) after the date hereof, or if, after such
date, the Borrower (or any such other corporation) shall consolidate with or
merge into another corporation or convey all or substantially all its assets to
another corporation, and to the extent any such transaction does not result in
the automatic conversion of this Note in accordance with the terms hereof, then
and in each such case Holder, upon the conversion hereof as provided herein, at
any time after the consummation of such reorganization, consolidation, merger
or conveyance, shall be entitled to receive, in lieu of the stock receivable
upon the conversion of this Note prior to such consummation, the stock or other
securities or property to which such Holder would have been entitled upon such
consummation if such Holder had converted this Note immediately prior
thereto.  In the event of such a
reorganization, consolidation or merger, the corporation whose stock or other
securities or property to which Holder would be entitled shall execute and
deliver to Holder no later than the closing of such transaction an instrument
or other writing, reasonably satisfactory to Holder, acknowledging its
obligation to issue such stock or other securities or other property upon the
conversion of this Note.

(e)           Adjustment
for Reclassification, Exchange and Substitution.  In the event that at any time or from time to
time after the date of this Note, the shares of Common Stock are changed into
the same or a different number of shares of any class of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets, provided for elsewhere in this Section 4),
then and in any such event the kind and amount of stock and other securities
and property receivable upon such recapitalization, reclassification or other change
shall be used for calculation of the number of shares of Common Stock issuable
to the Holder, all subject to further adjustment as provided in this Note.

(f)            Sale
of Shares Below Conversion Price.

(i)                     In
case at any time on or after the date first written above, the Borrower shall
issue or sell shares of its Common Stock or instruments convertible into or
exercisable for Common Stock (collectively, the “Newly Issued Shares”),
at a price below the Conversion Price in effect at the time of such issuance (the
“Base Share Price”), then the Conversion Price shall be reduced to equal
the Base Share Price.  In each such case,
the Conversion Price shall be reduced as of the opening of business on the date
immediately following such issue or sale of Newly Issued Shares. In no instance
shall an adjustment be made under this Section 4(f)(i) if it would cause the
Conversion Price to be increased.

(ii)                  Notwithstanding
the foregoing, no adjustment shall be made under this Section 4(f) by reason
of:

 6
 

 

(1)           the
issuance, sale, and transfer to any person of any shares of Common Stock of the
Company in connection with (i) the Private Placement (as defined in the Amended
Note Purchase Agreement), (ii) execution and consummation of the terms of the
Conversion and Settlement Agreements (as defined in the Amended Note Purchase
Agreement), or (iii) settlement of unsecured trade debt pursuant to those
certain Settlement and Release Agreements (as defined in the Amended Note
Purchase Agreement) dated as of March 8, 2006;

(2)           the
issuance by the Borrower of the Warrants (as defined in the Amended Note
Purchase Agreement) or the issuance by the Borrower of shares of Common Stock
upon the exercise of the Warrants in accordance with the terms of the Amended Note
Purchase Agreement;

(3)           the
issuance by the Borrower of shares of Common Stock upon the exercise or
conversion of securities of the Borrower outstanding as of the date of this
Note; and

(4)           the
issuance by the Borrower of shares of Common Stock or options or other rights
to purchase Common Stock pursuant to any equity incentive plan in effect on the
date hereof.

(g)           Certificate
as to Adjustment.  In each case of an
adjustment of the Conversion Price or the number of shares of Common Stock
issuable upon conversion of the Notes, upon the request of the Holder, the
Borrower shall compute such adjustment in accordance with the provisions of
this Note and prepare a letter or certificate setting forth such adjustment,
and showing in detail the facts upon which such adjustment is based.  Notwithstanding the delivery of such letter
or certificate, Holder shall have the right to dispute the calculation of such
adjustment by written notice to Borrower setting forth Holder’s alternative
calculation of such adjustment.

5.                                       Events
of Default.

(a)           Events
Constituting An Event of Default. 
Any of the events set forth in Section 1.15 of the Amended Note Purchase
Agreement, which section is incorporated herein by reference, shall constitute
an “Event of Default” under this Note.

(b)           Consequences
of an Event of Default.  Upon the
occurrence of an Event of Default or at any time thereafter, the registered
holder of the Note may, by notice to the Borrower, declare the entire unpaid
principal amount of the Note, all interest accrued and unpaid thereon and all
other amounts payable under this Note to be forthwith due and payable,
whereupon the Note, all such accrued interest and all such amounts will become
and be forthwith due and payable (unless there will have occurred an Event of
Default under subsection 1.15(e) of the Amended Note Purchase Agreement,  in which case all such amounts will
automatically become due and payable) without offset or

 7
 

 

counterclaim of any kind and without presentment,
demand, protest or further notice of any kind, and without regard to the
running of the statute of limitations, all of which are by this Note expressly
waived by the Borrower.

6.                                       Registration.  Pursuant to the terms and conditions of the Amended
Note Purchase Agreement, the Common Stock to be issued to the Holder upon conversion
will be registered with the Securities and Exchange Commission under a
registration statement on Form S-1 or
any other form then available to the Company under applicable SEC rules and
regulations and will not be subject to any restrictions on transfer.

7.                                       General
Matters.

(a)           Applicable
Law.  This Note shall be governed by
the internal laws (and not the law of conflicts) of the State of California.

(b)           Fees
and Expenses. In the event that any suit or action is instituted to enforce
any provision under this Note, the prevailing party in such dispute shall be
entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals. 
Notwithstanding the foregoing, the Borrower agrees to pay and hold Holder
harmless against liability for the payment of the reasonable fees and expenses
of Holder (including, without limitation, attorneys’ fees and expenses and out
of pocket expenses of Holder and its representatives, including, without
limitation, fees and expenses for travel, background investigations and outside
consultants) arising in connection with any refinancing or restructuring of the
credit arrangements provided under this Note in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings.

(c)           Amendment
or Waiver.  Any term of this Note may
be amended, and the observance of any term of this Note may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only by the written consent of the Holder.

(d)           Headings.  The headings in this Note are for purposes of
convenience of reference only, and shall not be deemed to constitute a part of
this Note.

(e)           Notices.  All notices, requests, consents and other
communications required or permitted hereunder shall be in writing (including
telecopy or similar writing) and shall be sent to the address of the party set
forth in the Amended Note Purchase Agreement. 
Any notice, request, consent or other communication hereunder shall be
deemed to have been given and received on the day on which it is delivered (by
any means including personal delivery, overnight air courier, United States
mail) or telecopied (or, if such day is not a business day or if the notice,
request, consent

 8
 

 

or communication is not telecopied during business
hours of the intended recipient, at the place of receipt, on the next following
business day).  Any of the parties hereto
may, by notice given hereunder, designate any further or different address
and/or number to which subsequent notices or other communications shall be
sent.  Unless and until such written
notice is received, the addresses and numbers as provided herein shall be
deemed to continue in effect for all purposes hereunder.

(f)            Usury
Limitation.  In no event shall the
amount paid or agreed to be paid to the Holder for the use or forbearance of
money to be advanced hereunder exceed the highest lawful rate permissible under
the then applicable usury laws.  If it is
hereafter determined by a court of competent jurisdiction that the interest
payable hereunder is in excess of the amount which the Holder may legally
collect under the then applicable usury laws, such amount which would be
excessive interest shall be applied to the payment of the unpaid principal
balance due hereunder and not to the payment of interest or, if all principal
shall previously have been paid, promptly repaid by the Holder to the Borrower.

(g)           Severability.  Every provision of this Note is intended to
be severable. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid, such illegal or invalid term
or provision shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.

[Remainder of Page Intentionally Left Blank]

 9
 

 

IN
WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the day
and year first above written.

	
  

  	
   

  	
  DYNTEK, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Casper Zublin, Jr.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Casper Zublin, Jr.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
							

 

 10Exhibit 4.1

EXECUTION COPY

 

 

INCYTE CORPORATION

To

U.S. Bank National
Association,

as Trustee

INDENTURE

Dated as of

September 26, 2006

31⁄2% Convertible Senior
Notes due 2011

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 Issue,
  Description, Execution, Registration And Exchange Of Securities

  	
   

  	
  7

  
	
  Section 2.01

  	
   

  	
  Designation Amount And
  Issue Of Securities

  	
   

  	
  7

  
	
  Section 2.02

  	
   

  	
  Form of Securities

  	
   

  	
  7

  
	
  Section 2.03

  	
   

  	
  Date And Denomination Of
  Securities; Payments Of Interest

  	
   

  	
  8

  
	
  Section 2.04

  	
   

  	
  Execution of Securities

  	
   

  	
  10

  
	
  Section 2.05

  	
   

  	
  Exchange and
  Registration of Transfer of Securities; Restrictions on Transfer

  	
   

  	
  11

  
	
  Section 2.06

  	
   

  	
  Mutilated, Destroyed,
  Lost or Stolen Securities

  	
   

  	
  15

  
	
  Section 2.07

  	
   

  	
  Temporary Securities

  	
   

  	
  16

  
	
  Section 2.08

  	
   

  	
  Cancellation of
  Securities

  	
   

  	
  16

  
	
  Section 2.09

  	
   

  	
  CUSIP Numbers

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 Particular
  Covenants Of The Company

  	
   

  	
  17

  
	
  Section 3.01

  	
   

  	
  Payment of Principal,
  Premium and Interest

  	
   

  	
  17

  
	
  Section 3.02

  	
   

  	
  Maintenance of Office or
  Agency

  	
   

  	
  17

  
	
  Section 3.03

  	
   

  	
  Appointments to Fill
  Vacancies in Trustee’s Office

  	
   

  	
  17

  
	
  Section 3.04

  	
   

  	
  Provisions as to Paying
  Agent

  	
   

  	
  17

  
	
  Section 3.05

  	
   

  	
  Existence

  	
   

  	
  18

  
	
  Section 3.06

  	
   

  	
  Maintenance of
  Properties

  	
   

  	
  19

  
	
  Section 3.07

  	
   

  	
  Payment of Taxes and
  Other Claims

  	
   

  	
  19

  
	
  Section 3.08

  	
   

  	
  Rule 144A Information
  Requirement

  	
   

  	
  19

  
	
  Section 3.09

  	
   

  	
  Stay, Extension and
  Usury Laws

  	
   

  	
  20

  
	
  Section 3.10

  	
   

  	
  Compliance Certificate

  	
   

  	
  20

  
	
  Section 3.11

  	
   

  	
  Additional Interest
  Notice

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4
  Securityholders’ Lists And Reports By The Company And The Trustee

  	
   

  	
  20

  
	
  Section 4.01

  	
   

  	
  Securityholders’ Lists

  	
   

  	
  20

  
	
  Section 4.02

  	
   

  	
  Preservation And
  Disclosure Of Lists

  	
   

  	
  21

  
	
  Section 4.03

  	
   

  	
  Reports By Trustee

  	
   

  	
  21

  
	
  Section 4.04

  	
   

  	
  Reports by Company

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 Remedies Of
  The Trustee And Securityholders On An Event Of Default

  	
   

  	
  22

  

 

 

i

 

 

	
  Section 5.01

  	
   

  	
  Events Of Default

  	
   

  	
  22

  
	
  Section 5.02

  	
   

  	
  Payments of Securities
  on Default; Suit Therefor

  	
   

  	
  24

  
	
  Section 5.03

  	
   

  	
  Application of Monies
  Collected By Trustee

  	
   

  	
  25

  
	
  Section 5.04

  	
   

  	
  Proceedings by
  Securityholders

  	
   

  	
  26

  
	
  Section 5.05

  	
   

  	
  Proceedings By Trustee

  	
   

  	
  27

  
	
  Section 5.06

  	
   

  	
  Remedies Cumulative And
  Continuing

  	
   

  	
  27

  
	
  Section 5.07

  	
   

  	
  Direction of Proceedings
  and Waiver of Defaults By Majority of Securityholders

  	
   

  	
  27

  
	
  Section 5.08

  	
   

  	
  Notice of Defaults

  	
   

  	
  28

  
	
  Section 5.09

  	
   

  	
  Undertaking To Pay Costs

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 The Trustee

  	
   

  	
  28

  
	
  Section 6.01

  	
   

  	
  Duties and
  Responsibilities of Trustee

  	
   

  	
  28

  
	
  Section 6.02

  	
   

  	
  Reliance on Documents,
  Opinions, Etc

  	
   

  	
  29

  
	
  Section 6.03

  	
   

  	
  No Responsibility For
  Recitals, Etc

  	
   

  	
  31

  
	
  Section 6.04

  	
   

  	
  Trustee, Paying Agents,
  Conversion Agents or Registrar May Own Securities

  	
   

  	
  31

  
	
  Section 6.05

  	
   

  	
  Monies to Be Held in
  Trust

  	
   

  	
  31

  
	
  Section 6.06

  	
   

  	
  Compensation and
  Expenses of Trustee

  	
   

  	
  31

  
	
  Section 6.07

  	
   

  	
  Officers’ Certificate As
  Evidence

  	
   

  	
  32

  
	
  Section 6.08

  	
   

  	
  Conflicting Interests of
  Trustee

  	
   

  	
  32

  
	
  Section 6.09

  	
   

  	
  Eligibility of Trustee

  	
   

  	
  32

  
	
  Section 6.10

  	
   

  	
  Resignation or Removal
  of Trustee

  	
   

  	
  32

  
	
  Section 6.11

  	
   

  	
  Acceptance by Successor
  Trustee

  	
   

  	
  34

  
	
  Section 6.12

  	
   

  	
  Succession By Merger

  	
   

  	
  34

  
	
  Section 6.13

  	
   

  	
  Preferential Collection
  of Claims

  	
   

  	
  35

  
	
  Section 6.14

  	
   

  	
  Trustee’s Application
  For Instructions From The Company

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7 The
  Securityholders

  	
   

  	
  35

  
	
  Section 7.01

  	
   

  	
  Action By
  Securityholders

  	
   

  	
  35

  
	
  Section 7.02

  	
   

  	
  Proof of Execution by
  Securityholders

  	
   

  	
  35

  
	
  Section 7.03

  	
   

  	
  Who Are Deemed Absolute
  Owners

  	
   

  	
  36

  
	
  Section 7.04

  	
   

  	
  Company-owned Securities
  Disregarded

  	
   

  	
  36

  
	
  Section 7.05

  	
   

  	
  Revocation Of Consents,
  Future Holders Bound

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 Meetings Of
  Securityholders

  	
   

  	
  37

  

 

 

ii

 ii
 

 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Purpose Of Meetings

  	
   

  	
  37

  
	
  Section 8.02

  	
   

  	
  Call Of Meetings By
  Trustee

  	
   

  	
  37

  
	
  Section 8.03

  	
   

  	
  Call Of Meetings By
  Company Or Securityholders

  	
   

  	
  37

  
	
  Section 8.04

  	
   

  	
  Qualifications For
  Voting

  	
   

  	
  38

  
	
  Section 8.05

  	
   

  	
  Regulations

  	
   

  	
  38

  
	
  Section 8.06

  	
   

  	
  Voting

  	
   

  	
  38

  
	
  Section 8.07

  	
   

  	
  No Delay Of Rights By
  Meeting

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9
  Supplemental Indentures

  	
   

  	
  39

  
	
  Section 9.01

  	
   

  	
  Supplemental Indentures
  Without Consent of Securityholders

  	
   

  	
  39

  
	
  Section 9.02

  	
   

  	
  Supplemental Indenture
  With Consent Of Securityholders

  	
   

  	
  40

  
	
  Section 9.03

  	
   

  	
  Effect Of Supplemental
  Indenture

  	
   

  	
  41

  
	
  Section 9.04

  	
   

  	
  Notation On Securities

  	
   

  	
  41

  
	
  Section 9.05

  	
   

  	
  Evidence Of Compliance
  Of Supplemental Indenture To Be Furnished To Trustee

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10
  Consolidation, Merger, Sale, Conveyance And Lease

  	
   

  	
  42

  
	
  Section 10.01

  	
   

  	
  Company May Consolidate
  On Certain Terms

  	
   

  	
  42

  
	
  Section 10.02

  	
   

  	
  Successor To Be
  Substituted

  	
   

  	
  42

  
	
  Section 10.03

  	
   

  	
  Opinion Of Counsel To Be
  Given To Trustee

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11
  Satisfaction And Discharge Of Indenture

  	
   

  	
  43

  
	
  Section 11.01

  	
   

  	
  Discharge Of Indenture

  	
   

  	
  43

  
	
  Section 11.02

  	
   

  	
  Deposited Monies To Be
  Held In Trust By Trustee

  	
   

  	
  44

  
	
  Section 11.03

  	
   

  	
  Paying Agent To Repay
  Monies Held

  	
   

  	
  44

  
	
  Section 11.04

  	
   

  	
  Return Of Unclaimed
  Monies

  	
   

  	
  44

  
	
  Section 11.05

  	
   

  	
  Reinstatement

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12 Immunity
  Of Incorporators, Stockholders, Officers And Directors

  	
   

  	
  45

  
	
  Section 12.01

  	
   

  	
  Indenture And Securities
  Solely Corporate Obligations

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13 General
  Provisions

  	
   

  	
  45

  
	
  Section 13.01

  	
   

  	
  Provisions Binding On
  Company’s Successors

  	
   

  	
  45

  
	
  Section 13.02

  	
   

  	
  Official Acts By
  Successor Corporation

  	
   

  	
  45

  
	
  Section 13.03

  	
   

  	
  Addresses For Notices,
  Etc

  	
   

  	
  45

  
	
  Section 13.04

  	
   

  	
  Governing Law

  	
   

  	
  46

  
	
  Section 13.05

  	
   

  	
  Evidence Of Compliance
  With Conditions Precedent, Certificates To Trustee

  	
   

  	
  46

  

 

 

iii

 iii
 

 

 

	
  Section 13.06

  	
   

  	
  Legal Holidays

  	
   

  	
  46

  
	
  Section 13.07

  	
   

  	
  Trust Indenture Act

  	
   

  	
  46

  
	
  Section 13.08

  	
   

  	
  No Security Interest
  Created

  	
   

  	
  47

  
	
  Section 13.09

  	
   

  	
  Benefits Of Indenture

  	
   

  	
  47

  
	
  Section 13.10

  	
   

  	
  Table Of Contents,
  Headings, Etc

  	
   

  	
  47

  
	
  Section 13.11

  	
   

  	
  Authenticating Agent

  	
   

  	
  47

  
	
  Section 13.12

  	
   

  	
  Execution In Counterparts

  	
   

  	
  48

  
	
  Section 13.13

  	
   

  	
  Severability

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14 Redemption
  And Repurchase Of Securities

  	
   

  	
  48

  
	
  Section 14.01

  	
   

  	
  Redemption of Securities

  	
   

  	
  48

  
	
  Section 14.02

  	
   

  	
  Notice of Optional
  Redemption; Selection of Securities

  	
   

  	
  48

  
	
  Section 14.03

  	
   

  	
  Payment of Securities
  Called For Redemption by the Company

  	
   

  	
  50

  
	
  Section 14.04

  	
   

  	
  Conversion Arrangement
  on Call for Redemption

  	
   

  	
  51

  
	
  Section 14.05

  	
   

  	
  Repurchase at Option of
  Holders Upon a Designated Event

  	
   

  	
  51

  
	
  Section 14.06

  	
   

  	
  Securities Repurchased
  in Part

  	
   

  	
  54

  
	
  Section 14.07

  	
   

  	
  Repayment to the Company

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15 Conversion
  Of Securities

  	
   

  	
  54

  
	
  Section 15.01

  	
   

  	
  Right To Convert

  	
   

  	
  54

  
	
  Section 15.02

  	
   

  	
  Exercise Of Conversion
  Privilege; Issuance Of Common Stock On Conversion; No Adjustment For Interest
  Or Dividends

  	
   

  	
  55

  
	
  Section 15.03

  	
   

  	
  Cash Payments in Lieu of
  Fractional Shares

  	
   

  	
  56

  
	
  Section 15.04

  	
   

  	
  Conversion Rate

  	
   

  	
  57

  
	
  Section 15.05

  	
   

  	
  Adjustment Of Conversion
  Rate

  	
   

  	
  57

  
	
  Section 15.06

  	
   

  	
  Effect Of
  Reclassification, Consolidation, Merger or Sale

  	
   

  	
  64

  
	
  Section 15.07

  	
   

  	
  Taxes On Shares Issued

  	
   

  	
  65

  
	
  Section 15.08

  	
   

  	
  Reservation of Shares,
  Shares to Be Fully Paid; Compliance With Governmental Requirements; Listing
  of Common Stock

  	
   

  	
  66

  
	
  Section 15.09

  	
   

  	
  Responsibility Of
  Trustee

  	
   

  	
  66

  
	
  Section 15.10

  	
   

  	
  Notice To Holders Prior
  To Certain Actions

  	
   

  	
  67

  
	
  Section 15.11

  	
   

  	
  Shareholder Rights Plans

  	
   

  	
  68

  
	
  Section 15.12

  	
   

  	
  Transfer Restrictions

  	
   

  	
  68

  

 

 

iv

 iv
 

 

 

INDENTURE

INDENTURE dated as of
September 26, 2006 between Incyte Corporation, a Delaware corporation
(hereinafter called the “Company”),
having its principal office at Route 141 and Henry Clay Road, Building E336,
Wilmington, Delaware 19880, and U.S. Bank National Association, as trustee
hereunder (hereinafter called the “Trustee”).

WHEREAS, for its lawful
corporate purposes, the Company has duly authorized the issue of its 31⁄2%
Convertible Senior Notes due 2011 (the “Securities”) and, to provide the terms
and conditions upon which the Securities are to be authenticated, issued and
delivered, the Company has duly authorized the execution and delivery of this
Indenture; and

WHEREAS, all acts and
things necessary to make the Securities, when executed by the Company and
authenticated and delivered by the Trustee or a duly authorized authenticating
agent, as in this Indenture provided, the valid, binding and legal obligations
of the Company, and to constitute this Indenture a valid agreement according to
its terms, have been done and performed, and the execution of this Indenture
and the issue hereunder of the Securities have in all respects been duly
authorized,

NOW, THEREFORE, THIS
INDENTURE WITNESSETH:

That in order to
declare the terms and conditions upon which the Securities are, and are to be,
authenticated, issued and delivered, and in consideration of the premises and
of the purchase and acceptance of the Securities by the holders thereof, the
Company covenants and agrees with the Trustee for the equal and proportionate
benefit of the respective holders from time to time of the Securities (except
as otherwise provided below), as follows:

ARTICLE 1

DEFINITIONS

Section 1.01           Definitions.  The terms defined in this Section 1.01
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.01.  All other terms used in this Indenture that
are defined in the Trust Indenture Act or which are by reference therein
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires) shall have the meanings assigned to such
terms in the Trust Indenture Act (as defined herein) and in the Securities Act
(as defined herein) as in force at the date of the execution of this
Indenture.  The words “herein”, “hereof”,
“hereunder” and words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other Subdivision.  The terms
defined in this Article include the plural as well as the singular.

“Additional
Interest” means “Additional Interest Amount”
as defined in Section 2.05(e) of the Registration Rights Agreement.

“Adjustment
Event” has the meaning specified in Section 15.05(k).

“Agent
Members” has the meaning specified in Section 2.05(b).

 v

 

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

“Board of
Directors” means the Board of Directors of the Company or a
committee of such Board duly authorized to act for it hereunder.

“Business Day”
means any day except a Saturday, Sunday or legal holiday on which banking
institutions in The City of New York are authorized or obligated by law,
regulation or executive order to close.

“Closing Sale
Price” of the shares of Common Stock or other equity securities on
any date means the closing sale price per share (or, if no closing sale price
is reported, the average of the closing bid and ask prices or, if more than one
in either case, the average of the average closing bid and the average closing
ask prices) on such date as reported in composite transactions for the
principal United States securities exchange on which shares of Common Stock or
other equity securities are traded or, if the shares of Common Stock or other
equity securities are not listed on a United States national or regional
securities exchange, as reported by the Nasdaq or by the National Quotation
Bureau Incorporated.  In the absence of
such quotations, the Company shall be entitled to determine the Closing Sale
Price on the basis it considers appropriate. 
The Closing Sale Price shall be determined without reference to extended
or after hours trading.

“Commission”
means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.

“Common Stock”
means any stock of any class of the Company which has no preference in respect
of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and that is not subject
to redemption by the Company.  Subject to
the provisions of Section 15.06, however, shares issuable on conversion of
Securities shall include only shares of the class designated as common stock of
the Company at the date of this Indenture (namely, the Common Stock, par value
$.001) or shares of any class or classes resulting from any reclassification or
reclassifications thereof and that 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 that are not subject to redemption
by the Company; provided 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 shall be substantially in the proportion
that 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.

 2
 

 

“Company”
means the corporation named as the “Company” in the
first paragraph of this Indenture, and, subject to the provisions of Article 10
and Section 15.06, shall include its successors and assigns.

“Conversion
Notice” has the meaning specified in Section 15.02.

“Conversion
Price” as of any date shall equal $1,000 divided by the Conversion
Rate as of such date.

“Conversion
Rate” has the meaning specified in Section 15.04.

“Corporate
Trust Office” or other similar term, means the designated office of
the Trustee at which at any particular time its corporate trust business as it
relates to this Indenture shall be administered, which office is, at the date
as of which this Indenture is dated, located at U.S. Bank National Association,
633 West Fifth Street, 24th Floor, Los Angeles, CA 90071, Attn: Corporate Trust
Services (Incyte Corporation – 31⁄2% Convertible Senior Notes due 2011).

“Current
Market Price” has the meaning specified in Section 15.05(g).

“Custodian”
means U.S. Bank National Association, as custodian with respect to the
Securities in global form, or any successor entity thereto.

“Defaulted
Interest” has the meaning specified in Section 2.03.

“Depositary”
means, the clearing agency registered under the Exchange Act that is designated
to act as the Depositary for the Global Securities.  The Depository Trust Company shall be the
initial Depositary, until a successor shall have been appointed and become such
pursuant to the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such successor.

“Designated
Event” shall mean the occurrence of a Fundamental Change or a
Termination of Trading.

“Designated
Event Notice” has the meaning specified in Section 14.05(b).

“Designated
Event Repurchase Notice” has the meaning specified in Section
14.05(b).

“Designated
Event Expiration Time” has the meaning specified in Section
14.05(b).

“Designated
Event Repurchase Date” has the meaning specified in Section
14.05(a).

“Determination
Date” has the meaning specified in Section 15.05(k).

“Distributed
Property” has the meaning specified in Section 15.05(d).

“Event of
Default” means any event specified in Section 5.01 as an Event of
Default.

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

 3
 

 

“Ex-Dividend
Date” has the meaning specified in Section 15.05(d).

“Expiration
Time” has the meaning specified in Section 15.05(f).

“Fair Market
Value” has the meaning specified in Section 15.05(g).

“Fundamental
Change” means the occurrence of any transaction or event (whether by
means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise) in connection
with which more than 90% of the Common Stock shall be exchanged for, converted
into, acquired for or constitutes solely the right to receive consideration, of
which more than 10% is not common stock, depositary receipts, ordinary shares
or other certificates representing common equity interests that are listed on,
or immediately after the transaction or event will be listed on, a United
States national securities exchange, or are approved, or immediately after such
transaction or event will be approved, for quotation on the Nasdaq Global
Market or any similar United States system of automated dissemination of
quotations of securities prices.

“Global
Security” has the meaning specified in Section 2.02.

“Indebtedness”
means, with respect to any Person, and without duplication, (a) all
indebtedness, obligations and other liabilities (contingent or otherwise) of
such Person for borrowed money (including obligations of the Person in respect
of overdrafts, foreign exchange contracts, commodity contracts, currency
exchange agreements, interest rate protection agreements and any loans or
advances from banks, whether or not evidenced by notes or similar instruments)
or evidenced by bonds, debentures, notes or similar instruments (whether or not
the recourse of the lender is to the whole of the assets of such Person or to
only a portion thereof), other than any account payable or other accrued
current liability or obligation incurred in the ordinary course of business in
connection with the obtaining of materials or services; (b) all reimbursement
obligations and other liabilities (contingent or otherwise) of such Person with
respect to letters of credit, bank guarantees or bankers’ acceptances; (c) all
obligations and liabilities (contingent or otherwise) in respect of leases of
such Person required, in conformity with generally accepted accounting
principles, to be accounted for as capital lease obligations on the balance
sheet of such Person and all obligations and other liabilities (contingent or
otherwise) under any lease or related document (including a purchase agreement)
in connection with the lease of real property or personal property or assets
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the leased property or assets and thereby guarantee a
minimum residual value of the leased property or assets to the lessor and the
obligations of such Person under such lease or related document to purchase or
to cause a third party to purchase such leased property or assets; (d) all
obligations of such Person (contingent or otherwise) with respect to an
interest rate or other swap, cap or collar agreement or other similar
instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement; (e) all direct or indirect guarantees or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d); (f) any indebtedness or other obligations described in clauses
(a) through (e) secured by any mortgage, pledge, lien or other encumbrance
existing on property that is owned or held

 4
 

 

by such Person,
regardless of whether the indebtedness or other obligation secured thereby
shall have been assumed by such Person; and (g) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind or type
described in clauses (a) through (f).

“Indenture”
means this instrument as originally executed or, if amended or supplemented as
herein provided, as so amended or supplemented.

“Initial Purchaser” means Piper Jaffray & Co.

“Interest”
means, when used with reference to the Securities, any interest payable under
the terms of the Securities, including Additional Interest, if any, payable
under the terms of the Registration Rights Agreement.

“Officers’
Certificate”, when used with respect to the Company, means a
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title “Vice
President”) and the Treasurer or any Assistant Treasurer or the
Secretary or Assistant Secretary of the Company.

“Opinion of
Counsel” means an opinion in writing signed by legal counsel, who
may be an employee of or counsel to the Company, or other counsel reasonably
acceptable to the Trustee.

“Outstanding”,
when used with reference to Securities and subject to the provisions of Section
7.04, means, as of any particular time, all Securities authenticated and
delivered by the Trustee under this Indenture, except:

(a)           Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;

(b)           Securities,
or portions thereof, (i) for the redemption of which monies in the necessary
amount shall have been deposited in trust with the Trustee or with any paying
agent (other than the Company) or (ii) that shall have been otherwise defeased
in accordance with Article 11;

(c)           Securities
in lieu of which, or in substitution for which, other Securities shall have
been authenticated and delivered pursuant to the terms of Section 2.06; and

(d)           Securities
converted into Common Stock (or for which payment has been given in lieu of
fractional shares) pursuant to Article 15 and Securities deemed not outstanding
pursuant to Article 14.

“Person” means a corporation, an association, a
partnership, a limited liability company, an individual, a joint venture, a
joint stock company, a trust, an unincorporated organization or a government or
an agency or a political subdivision thereof.

 5
 

 

“PORTAL Market” means The PORTAL Market operated by the
National Association of Securities Dealers, Inc. or any successor thereto.

“Predecessor Security” of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security, and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.06 in lieu
of a lost, destroyed or stolen Security shall be deemed to evidence the same
debt as the lost, destroyed or stolen Security that it replaces.

“Purchased Shares” has the meaning specified in Section
15.05(f).

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

“Record Date” has the meaning specified in Section
15.05(g).

“Registration Rights
Agreement” means
the Registration Rights Agreement dated as of September 26, 2006 between the
Company and the Initial Purchaser, as amended from time to time in accordance
with its terms.

“Responsible Officer” shall mean, when used with respect to
the Trustee, any officer in the Corporate Trust Office of the Trustee with
direct responsibility for the administration of this Indenture and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of such person’s knowledge of and familiarity
with the particular subject.

“Restricted Securities” has the meaning specified in Section
2.05(b).

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

“Rule 144” means Rule 144 as promulgated under the
Securities Act.

“Rule 144A” means Rule 144A as promulgated under
the Securities Act.

“Securities” has the meaning specified in the
preamble to this Indenture.

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

“Security Register” has the meaning specified in Section
2.05.

“Security Registrar” has the meaning specified in Section
2.05.

“Securityholder” or “holder” as
applied to any Security, or other similar terms, means any Person in whose name
at the time a particular Security is registered on the Security Registrar’s
books.

 6
 

 

“Significant Subsidiary” means, as of any date of determination,
a Subsidiary of the Company that would constitute a “significant
subsidiary” as such term is defined under Rule 1-02(w) of Regulation
S-X of the Commission as in effect on the date of this Indenture.

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

“Termination of Trading” will be deemed to have occurred if the
Common Stock (or other common stock into which the Securities are then
convertible) is not listed for trading on a United States national or regional
securities exchange, including on the Nasdaq Global Market.

“Trading Day” has the meaning specified in Section
15.05(g).

“Trigger Event” has the meaning specified in Section
15.05(d).

“Trust Indenture Act” means the Trust Indenture Act of 1939,
as amended, as it was in force at the date of this Indenture, except as
provided in Section 9.03 and Section 15.06; provided that
if the Trust Indenture Act of 1939 is amended after the date hereof, the term “Trust Indenture Act” shall mean, to the extent required by
such amendment, the Trust Indenture Act of 1939 as so amended.

“Trustee” means U.S. Bank National Association
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.

ARTICLE 2

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION 

AND EXCHANGE OF SECURITIES

Section 2.01           Designation Amount And Issue Of Securities.  The Securities shall be designated as “31⁄2%
Convertible Senior Notes due 2011”. 
Securities not to exceed the aggregate principal amount of $151,800,000
upon the execution of this Indenture, or from time to time thereafter, may be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Securities to or upon
the written order of the Company.

Section 2.02           Form of Securities.  The Securities and the Trustee’s certificate
of authentication to be borne by such Securities shall be substantially in the
form set forth in Exhibit A.  The terms
and provisions contained in the form of Security attached as Exhibit A hereto
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent

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applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.

Any of the Securities
may have such letters, numbers or other marks of identification and such
notations, legends, endorsements or changes as the officers executing the same
may approve (execution thereof to be conclusive evidence of such approval) and
as are not inconsistent with the provisions of this Indenture, or as may be
required by the Custodian, the Depositary or by the National Association of
Securities Dealers, Inc. in order for the Securities to be tradable on The
PORTAL Market or as may be required for the Securities to be tradable on any
other market developed for trading of securities pursuant to Rule 144A or as
may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Securities may
be listed, or to conform to usage, or to indicate any special limitations or
restrictions to which any particular Securities are subject.

So long as the
Securities are eligible for book-entry settlement with the Depositary, or
unless otherwise required by law, or otherwise contemplated by Section 2.05(a),
all of the Securities will be represented by one or more Securities in global
form registered in the name of the Depositary or the nominee of the Depositary
(a “Global Security”).  The transfer and exchange of beneficial
interests in any such Global Security shall be effected through the Depositary
in accordance with this Indenture and the applicable procedures of the
Depositary.  Except as provided in
Section 2.05(a), beneficial owners of a Global Security shall not be entitled
to have certificates registered in their names, will not receive or be entitled
to receive physical delivery of certificates in definitive form and will not be
considered holders of such Global Security (other than in an enforcement by
such owner of a beneficial interest to exchange such beneficial interest for
Securities in certificated form).

Any Global Security
shall represent such of the outstanding Securities as shall be specified
therein and shall provide that it shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be increased or reduced to reflect redemptions, repurchases, conversions,
transfers or exchanges permitted hereby or to reflect the increase in the principal
amount of the Securities permitted by Section 2.01.  Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee or the Custodian, at
the direction of the Trustee, in such manner and upon instructions given by the
holder of such Global Securities in accordance with this Indenture.  Payment of principal of and Interest and
premium, if any, on any Global Security shall be made to the holder of such
Security.

Section 2.03           Date And Denomination Of Securities; Payments Of
Interest.  The Securities
shall be issuable in registered form without coupons in denominations of $1,000
principal amount and multiples thereof. 
Each Security shall be dated the date of its authentication and shall
bear Interest from the date specified on the face of the form of Security
attached as Exhibit A hereto.  Interest
on the Securities shall be computed on the basis of a 360-day year comprised of
twelve 30-day months.

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The Person in whose name any
Security (or its Predecessor Security) is registered on the Security Register
at the close of business on any record date with respect to any interest
payment date shall be entitled to receive the Interest payable on such interest
payment date, except that the Interest payable upon redemption or repurchase
will be payable to the Person to whom principal is payable pursuant to such
redemption or repurchase (unless the redemption date or the repurchase date, as
the case may be, falls after a record date and on or prior to the corresponding
interest payment date, in which case the semi-annual payment of Interest
becoming due on such interest payment date shall be payable to the holders of
such Securities registered as such on the applicable record date).

Notwithstanding the
foregoing, if any Security (or portion thereof) is converted into Common Stock
during the period after a record date for the payment of Interest to, but
excluding, the next succeeding interest payment date, holders of such Security
at the close of business on the record date shall receive Interest payable on
such Security (or portion thereof) on the corresponding interest payment date
notwithstanding the conversion.  Such
Security (or portion thereof), upon surrender for conversion, shall be
accompanied by funds equal to the amount of Interest payable on such Security
so converted; provided that no such payment
shall be made (i) if the Company has specified a redemption date that is after
a record date but on or prior to the next succeeding interest payment date,
(ii) if the Company has specified a Designated Event Repurchase Date that is
after a record date but on or prior to the next succeeding interest payment
date or (iii) to the extent of any overdue Interest at the time of conversion
with respect to such Security.  Interest
shall be payable at the office or agency of the Company maintained by the
Company for such purposes in the Borough of Manhattan, City of New York, which
shall initially be an office or agency of U.S. Bank Trust National Association,
an Affiliate of the Trustee, having an office as of the date of this Indenture
at 100 Wall Street, Suite 1600, New York, NY 10005, attention: Corporate Trust
Services (Incyte Corporation – 31⁄2% Convertible Senior Notes due 2011).  The Company shall pay Interest (i) on any
Securities in certificated form by check mailed to the address of the Person
entitled thereto as it appears in the Security Register (or upon written notice,
by wire transfer in immediately available funds, if such Person is entitled to
Interest on aggregate principal in excess of $2 million) or (ii) on any Global
Security by wire transfer of immediately available funds to the account of the
Depositary or its nominee.  The term
“record date” with respect to any interest payment date shall mean the February
1 and August 1 preceding the applicable February 15 or August 15 interest
payment date, respectively.

Notwithstanding the
foregoing, any Interest on any Security which is payable, but is not punctually
paid or duly provided for, on any February 15 or August 15 (herein called “Defaulted Interest”) shall forthwith cease to be payable to
the Securityholder on the relevant record date by virtue of his having been
such Securityholder, and such Defaulted Interest shall be paid by the Company,
at its election in each case, as provided in clause (1) or (2) below:

(1)           The Company may elect to make payment
of any Defaulted Interest to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. 
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment (which shall be not less than twenty-five (25) days after the
receipt by the

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Trustee of such notice,
unless the Trustee shall consent to an earlier date), and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment, such money when deposited to be held in trust for the benefit
of the Persons entitled to such Defaulted Interest as in this clause
provided.  Thereupon the Trustee shall
fix a special record date for the payment of such Defaulted Interest which
shall be not more than fifteen (15) days and not less than ten (10) days prior
to the date of the proposed payment, and not less than ten (10) days after the
receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company
of such special record date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and the
special record date therefor to be mailed, first-class postage prepaid, to each
holder at his address as it appears in the Security Register, not less than ten
(10) days prior to such special record date. 
Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such special
record date and shall no longer be payable pursuant to the following clause (2)
of this Section 2.03.

(2)           The Company may make payment of any
Defaulted Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated quotation system on which
the Securities may be listed or designated for issuance, and upon such notice
as may be required by such exchange or automated quotation system, if, after
notice given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the Trustee.

Section 2.04           Execution of Securities.  The Securities shall be signed in the name
and on behalf of the Company by the manual or facsimile signature of its
Chairman of the Board, Chief Executive Officer, President or any Vice President
(whether or not designated by a number or numbers or word or words added before
or after the title “Vice President”)
and attested by the manual or facsimile signature of its Secretary or any of
its Assistant Secretaries or its Treasurer or any of its Assistant Treasurers
(which may be printed, engraved or otherwise reproduced thereon, by facsimile
or otherwise).  Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
set forth on the form of Security attached as Exhibit A hereto, manually
executed by the Trustee (or an authenticating agent appointed by the Trustee as
provided by Section 13.11), shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. 
Such certificate by the Trustee (or such an authenticating agent) upon
any Security executed by the Company shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this Indenture.

In case any officer of
the Company who shall have signed any of the Securities shall cease to be such
officer before the Securities so signed shall have been authenticated and
delivered by the Trustee, or disposed of by the Company, such Securities
nevertheless may be authenticated and delivered or disposed of as though the
person who signed such Securities had not ceased to be such officer of the
Company, and any Security may be signed on behalf of the Company by such
persons as, at the actual date of the execution of such Security, shall be the

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proper officers of the
Company, although at the date of the execution of this Indenture any such
person was not such an officer.

Section 2.05           Exchange and Registration of Transfer of Securities;
Restrictions on Transfer.  (a)  The
Company shall cause to be kept at the Corporate Trust Office a register (the
register maintained in such office and in any other office or agency of the
Company designated pursuant to Section 3.02 being herein sometimes collectively
referred to as the “Security Register”)
in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers of
Securities.  The Security Register shall
be in written form or in any form capable of being converted into written form
within a reasonably prompt period of time. 
The Trustee is hereby appointed “Security
Registrar” for the purpose of registering Securities and transfers
of Securities as herein provided. The Company may appoint one or more
co-registrars in accordance with Section 3.02.

Upon surrender for
registration of transfer of any Security to the Security Registrar or any
co-registrar, and satisfaction of the requirements for such transfer set forth
in this Section 2.05, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and of
a like aggregate principal amount and bearing such restrictive legends as may
be required by this Indenture.

Securities may be
exchanged for other Securities of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
any such office or agency maintained by the Company pursuant to Section
3.02.  Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Securityholder making the
exchange is entitled to receive bearing registration numbers not
contemporaneously outstanding.

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

All Securities
presented or surrendered for registration of transfer or for exchange,
redemption, repurchase or conversion shall (if so required by the Company or the
Security Registrar) be duly endorsed, or be accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company, and the
Securities shall be duly executed by the Securityholder thereof or his attorney
duly authorized in writing.

No service charge shall
be made to any holder for any registration of transfer or exchange of
Securities, but the Company may require payment by the holder of a sum
sufficient to cover any tax, assessment or other governmental charge that may
be imposed in connection with any registration of transfer or exchange of
Securities.

Neither the Company nor
the Trustee nor any Security Registrar shall be required to exchange or
register a transfer of (a) any Securities or portions thereof for a period of
fifteen (15) days next preceding any selection of Securities to be redeemed,
(b) any Securities or portions

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thereof surrendered for
conversion pursuant to Article 15 or (c) any Securities or portions thereof
tendered for repurchase (and not withdrawn) pursuant to Section 14.05.

(b)           The
following provisions shall apply only to Global Securities:

(i)            Each Global Security authenticated
under this Indenture shall be registered in the name of the Depositary or a
nominee thereof and delivered to such Depositary or a nominee thereof or
Custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.

(ii)           Notwithstanding any other provision
in this Indenture, no Global Security may be exchanged in whole or in part for
Securities registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary or a
nominee thereof unless (A) the Depositary (i) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security and a
successor depositary has not been appointed by the Company within ninety (90)
days or (ii) has ceased to be a clearing agency registered under the Exchange
Act and no successor clearing agency has been appointed by the Company within
90 days, (B) an Event of Default has occurred and is continuing or (C) the
Company, in its sole discretion, notifies the Trustee in writing that it no
longer wishes to have all the Securities represented by Global Securities; provided that beneficial interests in a Global Security may
be exchanged for definitive certificated Securities upon request by or on
behalf of the Depositary in accordance with customary procedures.  Any Global Security exchanged pursuant to clause
(A) or (B) above shall be so exchanged in whole and not in part and any Global
Security exchanged pursuant to clause (C) above may be exchanged in whole or
from time to time in part as directed by the Company.  Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof shall
not be a Global Security.

(iii)          Securities issued in exchange for a
Global Security or any portion thereof pursuant to clause (ii) above shall be
issued in definitive, fully registered form, without interest coupons, shall
have an aggregate principal amount equal to that of such Global Security or
portion thereof to be so exchanged, shall be registered in such names and be in
such authorized denominations as the Depositary shall designate and shall bear
any legends required hereunder.  Any
Global Security to be exchanged in whole shall be surrendered by the Depositary
to the Trustee, as Security Registrar. 
With regard to any Global Security to be exchanged in part, either such
Global Security shall be so surrendered for exchange or, if the Trustee is
acting as Custodian for the Depositary or its nominee with respect to such
Global Security, the principal amount thereof shall be reduced, by an amount
equal to the portion thereof to be so exchanged, by means of an appropriate
adjustment made on the records of the Trustee. 
Upon any such surrender or adjustment, the Trustee shall authenticate
and make available for delivery the Security issuable on such exchange to or
upon the written order of the Depositary or an authorized representative
thereof.

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(iv)          In
the event of the occurrence of any of the events specified in clause (ii)
above, the Company will promptly make available to the Trustee a reasonable
supply of certificated Securities in definitive, fully registered form, without
interest coupons.

(v)           Neither
any members of, or participants in, the Depositary (“Agent Members”) nor any other Persons on whose behalf Agent
Members may act shall have any rights under this Indenture with respect to any
Global Security registered in the name of the Depositary or any nominee
thereof, and the Depositary or such nominee, as the case may be, may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner and holder of such Global Security for all purposes
whatsoever.  Notwithstanding the
foregoing, nothing 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 such nominee, as
the case may be, or impair, as between the Depositary, its Agent Members and
any other Person on whose behalf an Agent Member may act, the operation of
customary practices of such Persons governing the exercise of the rights of a
holder of any Security.

(vi)          At such time as all interests in a
Global Security have been redeemed, repurchased, converted, canceled or
exchanged for Securities in certificated form, such Global Security shall, upon
receipt thereof, be canceled by the Trustee in accordance with standing
procedures and instructions existing between the Depositary and the
Custodian.  At any time prior to such
cancellation, if any interest in a Global Security is redeemed, repurchased,
converted, canceled or exchanged for Securities in certificated form, the
principal amount of such Global Security shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced, and an endorsement shall be made on such Global
Security, by the Trustee or the Custodian, at the direction of the Trustee, to
reflect such reduction.

(c)           The
transfer restrictions set forth below shall apply to the Securities, whether in
the form of a Global Security or a Certificated Security.

Until the date that is
two years after the last original issue date of the Securities, any certificate
evidencing such Security (and all securities issued in exchange therefor or in
substitution thereof) and any stock certificate representing Common Stock
issued upon conversion of any Security shall bear the Restricted Securities
Legend, unless (1) such Security or such Common Stock has been sold pursuant to
a registration statement that has been declared effective under the Securities
Act (and which continues to be effective at the time of such transfer) or
pursuant to Rule 144 under the Securities Act or any similar provision then in
force, or such Common Stock has been issued upon conversion of Securities that
have been transferred pursuant to a registration statement that has been
declared effective under the Securities Act or pursuant to Rule 144 under the
Securities Act or any similar provision then in force, (2) such Security or
such Common Stock is eligible for resale pursuant to Rule 144(k) under the
Securities Act (or any successor provision) or (3) otherwise agreed by the
Company in writing, with written notice thereof to the Trustee.

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Every Security that
bears or is required under this Section 2.05(c) to bear the Restricted
Securities Legend (the “Restricted Securities”)
shall be subject to the restrictions on transfer set forth in this Section
2.05(c) (including those set forth in the Restricted Securities Legend) unless
such restrictions on transfer shall be waived by written consent of the
Company, and the holder of each such Restricted Security, by such
Securityholder’s acceptance thereof, agrees to be bound by all such
restrictions on transfer.  As used in
this Section 2.05(c), the term “transfer”
encompasses any sale, pledge, loan, transfer or other disposition whatsoever of
any Restricted Security or any interest therein.

Any Security (or
security issued in exchange or substitution therefor) as to which such
restrictions on transfer shall have expired in accordance with their terms or
as to conditions for removal of the Restricted Securities Legend have been
satisfied may, upon surrender of such Security for exchange to the Security
Registrar in accordance with the provisions of this Section 2.05, be exchanged
for a new Security or Securities, of like tenor and aggregate principal amount,
which shall not bear the Restricted Securities Legend.  If the Restricted Security surrendered for
exchange is represented by a Global Security bearing a Restricted Securities
Legend, the principal amount of the Global Security so legended shall be reduced
by the appropriate principal amount and the principal amount of a Global
Security without the Restricted Securities Legend shall be increased by an
equal principal amount.  If a Global
Security without the Restricted Securities Legend is not then outstanding, the
Company shall execute and the Trustee shall authenticate and deliver a Global
Security without the Restricted Securities Legend to the Depositary.

Any such Common Stock
as to which such restrictions on transfer shall have expired in accordance with
their terms or as to which the conditions for removal of the foregoing legend
set forth therein have been satisfied may, upon surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like number of shares of Common Stock, which
shall not bear the Restricted Securities Legend.

(d)           Any
Security or Common Stock issued upon the conversion of a Security that is
purchased or owned by the Company or any Subsidiary thereof may not be resold
by the Company or such Subsidiary unless registered under the Securities Act or
resold pursuant to an exemption from the registration requirements of the
Securities Act in a transaction which results in such Securities or Common
Stock, as the case may be, no longer being “restricted securities” (as defined
under Rule 144).

(e)           The
Company shall use its best efforts to prevent any Affiliate who is not a
Subsidiary from reselling any Security or Common Stock issued upon the
conversion of a Security, except for the resale of such Securities or Common
Stock pursuant to an effective registration statement or resales of such
Securities or Common Stock to the Company or a Subsidiary.

(f)            The
Trustee shall have no responsibility or obligation to any Agent Members or any
other Person with respect to 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, with respect to any ownership interest in the Securities or with
respect to the delivery to any Agent Member or other

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Person (other than the Depositary) of any notice (including any notice
of redemption or repurchase) or the payment of any amount, under or with
respect to such Securities.  All notices
and communications to be given to the Securityholders and all payments to be
made to Securityholders under the Securities shall be given or made only to or
upon the order of the registered Securityholders (which shall be the Depository
or its nominee in the case of a Global Security).  The rights of beneficial owners in any Global
Security shall be exercised only through the Depositary subject to the
customary procedures of the Depositary. 
The Trustee may rely and shall be fully protected in relying upon
information furnished by the Depositary with respect to its Agent Members.

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

Section 2.06           Mutilated, Destroyed, Lost or Stolen Securities.  In case any Security shall become mutilated
or be destroyed, lost or stolen, the Company in its discretion may execute, and
upon its written request the Trustee or an authenticating agent appointed by
the Trustee shall authenticate and make available for delivery, a new Security,
bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Security, or in lieu of and in substitution for
the Security so destroyed, lost or stolen. 
In every case, the applicant for a substituted Security shall furnish to
the Company, to the Trustee and, if applicable, to such authenticating agent
such security or indemnity as may be required by them to save each of them
harmless for any loss, liability, cost or expense caused by or connected with
such substitution, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company, to the Trustee and, if applicable,
to such authenticating agent evidence to their satisfaction of the destruction,
loss or theft of such Security and of the ownership thereof.

Following receipt by
the Trustee or such authenticating agent, as the case may be, of satisfactory
security or indemnity and evidence, as described in the preceding paragraph,
the Trustee or such authenticating agent may authenticate any such substituted
Security and make available for delivery such Security. Upon the issuance of
any substituted Security, the Company may require the payment by the holder of
a sum sufficient to cover any tax, assessment or other governmental charge that
may be imposed in relation thereto and any other expenses connected
therewith.  In case any Security which
has matured or is about to mature or has been called for redemption or has been
tendered for repurchase upon a Designated Event (and not withdrawn) or is to be
converted into Common Stock shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Security, pay or
authorize the payment of or convert or authorize the conversion of the same
(without surrender thereof except in the case of a mutilated Security), as the
case may be, if the applicant for such payment or conversion shall furnish to
the Company, to the Trustee and, if applicable, to such authenticating agent
such security or indemnity as may be required by them to save each of them
harmless for any loss, liability, cost or expense caused by or in connection
with such substitution, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company, the Trustee and, if 

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applicable, any paying
agent or conversion agent evidence to their satisfaction of the destruction,
loss or theft of such Security and of the ownership thereof.

Every substitute
Security issued pursuant to the provisions of this Section 2.06 by virtue of
the fact that any Security is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be found at any time, and shall be entitled to
all the benefits of (but shall be subject to all the limitations set forth in)
this Indenture equally and proportionately with any and all other Securities
duly issued hereunder.  To the extent
permitted by law, all Securities shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the
replacement or payment or conversion or redemption or repurchase of mutilated,
destroyed, lost or stolen Securities and shall preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment or
conversion or redemption or repurchase of negotiable instruments or other
securities without their surrender.

Section 2.07           Temporary Securities.  Pending the preparation of Securities in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Securities (printed or lithographed).  Temporary Securities shall be issuable in any
authorized denomination, and substantially in the form of the Securities in
certificated form, but with such omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be determined by the Company.  Every such temporary Security shall be
executed by the Company and authenticated by the Trustee or such authenticating
agent upon the same conditions and in substantially the same manner, and with
the same effect, as the Securities in certificated form. Without unreasonable
delay, the Company will execute and deliver to the Trustee or such
authenticating agent Securities in certificated form and thereupon any or all
temporary Securities may be surrendered in exchange therefor, at each office or
agency maintained by the Company pursuant to Section 3.02 and the Trustee or
such authenticating agent shall authenticate and make available for delivery in
exchange for such temporary Securities an equal aggregate principal amount of
Securities in certificated form.  Such
exchange shall be made by the Company at its own expense and without any charge
therefor.  Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits and
subject to the same limitations under this Indenture as Securities in
certificated form authenticated and delivered hereunder.

Section 2.08           Cancellation of Securities.  All Securities surrendered for the purpose of
payment, redemption, repurchase, conversion, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent or any
Security Registrar or any conversion agent, be surrendered to the Trustee and
promptly canceled by it, or, if surrendered to the Trustee, shall be promptly
canceled by it, and no Securities shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture.  The Trustee shall dispose of such canceled
Securities in accordance with its customary procedures.  If the Company shall acquire any of the
Securities, such acquisition shall not operate as a redemption, repurchase or
satisfaction of the indebtedness represented by such Securities unless and
until the same are delivered to the Trustee for cancellation.

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Section 2.09           CUSIP Numbers.  The Company in issuing the Securities may use
“CUSIP” numbers (if then generally
in use), and, if so, the Trustee shall use “CUSIP”
numbers in notices of redemption or repurchases as a convenience to
Securityholders; provided that
any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Securities or as contained in any
notice of a redemption or a repurchase and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption or repurchase shall not be affected by any defect in or omission of
such numbers.  The Company will promptly
notify the Trustee of any change in the “CUSIP”
numbers.

ARTICLE 3

PARTICULAR COVENANTS OF THE COMPANY

Section 3.01           Payment of Principal, Premium and Interest.  The Company will duly and punctually pay or
cause to be paid the principal of and premium, if any (including the redemption
price upon redemption or the repurchase price upon repurchase, in each case
pursuant to Article 14), and Interest, on each of the Securities at the places,
at the respective times and in the manner provided herein and in the
Securities.

Section 3.02           Maintenance of Office or Agency.  The Company will maintain an office or agency
in the Borough of Manhattan, the City of New York, where the Securities may be
surrendered for registration of transfer or exchange or for presentation for
payment or for conversion, redemption or repurchase and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served.  The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by the Trustee.  If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office.

The Company may also
from time to time designate co-registrars and one or more offices or agencies
where the Securities may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations.  The Company will give prompt written notice
of any such designation or rescission and of any change in the location of any
such other office or agency.

The Company hereby
initially designates the Trustee as paying agent, Security Registrar, Custodian
and conversion agent and the Corporate Trust Office shall be considered as an
office or agency of the Company for each of the aforesaid purposes.

Section 3.03           Appointments to Fill Vacancies in Trustee’s Office.  The Company, whenever necessary to avoid or
fill a vacancy in the office of Trustee, will appoint, in the manner provided
in Section 6.10, a Trustee, so that there shall at all times be a Trustee
hereunder.

Section 3.04           Provisions as to Paying Agent.  (a)  If the Company shall appoint a
paying agent other than the Trustee, or if the Trustee shall appoint such a
paying agent, the Company will cause such paying agent to execute and deliver
to the Trustee an instrument in which such agent shall agree with the Trustee,
subject to the provisions of this Section 3.04:

 17
 

(1)           that it will hold
all sums held by it as such agent for the payment of the principal of and
premium, if any, or Interest on the Securities (whether such sums have been
paid to it by the Company or by any other obligor on the Securities) in trust
for the benefit of the holders of the Securities;

(2)           that it will give
the Trustee notice of any failure by the Company (or by any other obligor on
the Securities) to make any payment of the principal of and premium, if any, or
Interest on the Securities when the same shall be due and payable; and

(3)           that at any time
during the continuance of an Event of Default, upon request of the Trustee, it
will forthwith pay to the Trustee all sums so held in trust.

The Company shall, on
or before each due date of the principal of, premium, if any, or Interest on
the Securities, deposit with the paying agent a sum (in funds which are
immediately available on the due date for such payment) sufficient to pay such
principal, premium, if any, or Interest, and (unless such paying agent is the
Trustee) the Company will promptly notify the Trustee of any failure to take
such action; provided that if such deposit is
made on the due date, such deposit shall be received by the paying agent by
10:00 a.m. New York City time, on such date.

(b)           If
the Company shall act as its own paying agent, it will, on or before each due
date of the principal of, premium, if any, or Interest on the Securities, set
aside, segregate and hold in trust for the benefit of the holders of the
Securities a sum sufficient to pay such principal, premium, if any, or Interest
so becoming due and will promptly notify the Trustee of any failure to take
such action and of any failure by the Company (or any other obligor under the
Securities) to make any payment of the principal of, premium, if any, or
Interest on the Securities when the same shall become due and payable.

(c)           Anything
in this Section 3.04 to the contrary notwithstanding, the Company may, at any
time, for the purpose of obtaining a satisfaction and discharge of this
Indenture, or for any other reason, pay or cause to be paid to the Trustee all
sums held in trust by the Company or any paying agent hereunder as required by
this Section 3.04, such sums to be held by the Trustee upon the trusts herein
contained and upon such payment by the Company or any paying agent to the
Trustee, the Company or such paying agent shall be released from all further
liability with respect to such sums.

(d)           Anything
in this Section 3.04 to the contrary notwithstanding, the agreement to hold
sums in trust as provided in this Section 3.04 is subject to Sections 11.03
and 11.04.

The Trustee shall not
be responsible for the actions of any other paying agents (including the
Company if acting as its own paying agent) and shall have no control of any
funds held by such other paying agents.

Section 3.05           Existence. 
Subject to Article 10, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence
and rights (charter and statutory); provided
that the Company shall not be required to preserve any such right if the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of

 18
 

the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Securityholders.

Section 3.06           Maintenance of Properties.  The Company will cause all properties used or
useful in the conduct of its business or the business of any Significant
Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as is consistent with the Company’s past practice and is in the
judgment of the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided that nothing in this Section 3.06
shall prevent the Company from discontinuing the operation or maintenance of
any of such properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the
Securityholders.

Section 3.07           Payment of Taxes and Other Claims.  The Company will pay or discharge, or cause
to be paid or discharged, before the same may become delinquent, (i) all taxes,
assessments and governmental charges levied or imposed upon the Company or any
Significant Subsidiary or upon the income, profits or property of the Company
or any Significant Subsidiary, (ii) all claims for labor, materials and
supplies which, if unpaid, might by law become a lien or charge upon the
property of the Company or any Significant Subsidiary and (iii) all stamp taxes
and other duties, if any, which may be imposed by the United States or any
political subdivision thereof or therein in connection with the issuance,
transfer, exchange, conversion, redemption or repurchase of any Securities or
with respect to this Indenture other than pursuant to Section 2.06; provided that, in the case of clauses (i)
and (ii), the Company shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim (A) if the failure
to do so will not, in the aggregate, have a material adverse impact on the
Company and its Subsidiaries, taken as a whole, or (B) if the amount,
applicability or validity is being contested in good faith by appropriate
proceedings.

Section 3.08           Rule 144A Information Requirement.  Within the period prior to the date that is
two years after the last original issue date of the Securities, the Company
shall, during any period in which it is not subject to Section 13 or 15(d)
under the Exchange Act, make available to any holder or beneficial holder of
Securities or any Common Stock issued upon conversion thereof which continue to
be Restricted Securities in connection with any sale thereof and any
prospective purchaser of Securities or such Common Stock designated by such
holder or beneficial holder, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or
beneficial holder of the Securities or such Common Stock and it will take such
further action as any holder or beneficial holder of such Securities or such
Common Stock may reasonably request, all to the extent required from time to
time to enable such holder or beneficial holder to sell its Securities or
Common Stock without registration under the Securities Act within the
limitation of the exemption provided by Rule 144A, as such Rule may be amended
from time to time.  Upon the request of
any holder or any beneficial holder of the Securities or such Common Stock, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.

 19
 

Section 3.09           Stay, Extension and Usury Laws.  The Company (to the extent that it may
lawfully do so) shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of, premium, if any, or Interest on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this Indenture and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

Section 3.10           Compliance Certificate.  The Company shall deliver to the Trustee,
within one hundred twenty (120) days after the end of each fiscal year of the
Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.

The Company will
deliver to the Trustee, forthwith upon becoming aware of (i) any default in the
performance or observance of any covenant, agreement or condition contained in
this Indenture, or (ii) any Event of Default, an Officers’ Certificate
specifying with particularity such default or Event of Default and further
stating what action the Company has taken, is taking or proposes to take with
respect thereto.

Any notice required to
be given under this Section 3.10 shall be delivered to a Responsible Officer of
the Trustee at its Corporate Trust Office.

Section 3.11           Additional Interest Notice.  If the Company is required to pay Additional
Interest to holders of Securities pursuant to the Registration Rights
Agreement, the Company shall deliver to the Trustee an Officers’ Certificate to
that effect stating (i) the amount of such Additional Interest that is payable,
(ii) the reason why such Additional Interest is payable and (iii) the date on
which such Additional Interest is payable. 
Unless and until a Responsible Officer of the Trustee receives such an
Officers’ Certificate, the Trustee may assume without inquiry that no
Additional Interest is payable.  If the
Company has paid Additional Interest to the persons entitled to such amounts,
the Company shall deliver to the Trustee an Officers’ Certificate setting forth
the particulars of such payment.

ARTICLE 4

SECURITYHOLDERS’ LISTS AND REPORTS 

BY THE COMPANY AND THE TRUSTEE

Section 4.01           Securityholders’ Lists.  The Company will furnish or cause to be
furnished to the Trustee, semiannually, not more than fifteen (15) days after
each February 1 or August 1 in each year beginning with February 1, 2007, and
at such other times as the Trustee may request in writing, within thirty (30)
days after receipt by the Company of any such request (or such

 20
 

lesser time as the Trustee may reasonably request in order to enable it
to timely provide any notice to be provided by it hereunder), a list in such
form as the Trustee may reasonably require of the names and addresses of the
holders of Securities as of a date not more than fifteen (15) days (or such
other date as the Trustee may reasonably request in order to so provide any
such notices) prior to the time such information is furnished, except that no
such list need be furnished by the Company to the Trustee so long as the
Trustee is acting as the sole Security Registrar.

Section 4.02           Preservation And Disclosure Of Lists.  (a)  The Trustee shall preserve, in
as current a form as is reasonably practicable, all information as to the names
and addresses of the holders of Securities contained in the most recent list
furnished to it as provided in Section 4.01 or maintained by the Trustee in its
capacity as Security Registrar or co-registrar in respect of the Securities, if
so acting.  The Trustee may destroy any
list furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.

(b)           The
rights of Securityholders to communicate with other holders of Securities with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.

(c)           Every
Securityholder, by receiving and holding the same, agrees with the Company and
the Trustee that neither the Company nor the Trustee nor any agent of either of
them shall be held accountable by reason of any disclosure of information as to
names and addresses of holders of Securities made pursuant to the Trust
Indenture Act.

Section 4.03           Reports By Trustee.  (a)  Within sixty (60) days after
August 1 of each year commencing with the year 2007, the Trustee shall transmit
to holders of Securities such reports dated as of August 1 of the year in which
such reports are made concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto. 
In the event that no events have occurred under the applicable sections
of the Trust Indenture Act the Trustee shall be under no duty or obligation to
provide such reports.

(b)           A
copy of such report shall, at the time of such transmission to holders of
Securities, be filed by the Trustee with each stock exchange and automated
quotation system upon which the Securities are listed and with the
Commission.  The Company will promptly
notify the Trustee in writing when the Securities are listed on any stock
exchange or automated quotation system or delisted therefrom.

Section 4.04           Reports by Company.  The Company shall file with the Trustee (and
the Commission if at any time after the Indenture becomes qualified under the
Trust Indenture Act), and transmit to holders of Securities, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto, whether or not the Securities are governed by the Trust Indenture
Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within fifteen (15) days after the same is so required to be filed with
the Commission.  Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee’s receipt of such shall not constitute constructive notice
of any information

 21
 

contained therein or determinable from information contained therein,
including the Company’s compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on an Officers’
Certificates).

ARTICLE 5

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS 

ON AN EVENT OF DEFAULT

Section 5.01           Events Of Default.  If one or more of the following Events of
Default (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:

(a)           default
in the payment of any installment of Interest upon any of the Securities as and
when the same shall become due and payable, and continuance of such default for
a period of thirty (30) days; or

(b)           default
in the payment of the principal of or premium, if any, on any of the Securities
as and when the same shall become due and payable either at maturity or in
connection with any redemption or repurchase, by acceleration or otherwise; or

(c)           default
in the Company’s obligation to provide a Designated Event Notice upon a
Designated Event as provided in Section 14.05; or

(d)           failure
on the part of the Company duly to observe or perform any other of the
covenants or agreements on the part of the Company in the Securities or in this
Indenture (other than a covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section 5.01 specifically dealt with)
continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible Officer
of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Securities at the time outstanding determined
in accordance with Section 7.04; or

(e)           default
in payments or default in other obligations causing acceleration of
Indebtedness prior to maturity, where the aggregate amount of principal,
premium, if any, and accrued Interest subject to such default is $10 million or
more, unless such Indebtedness is discharged or such acceleration is withdrawn,
cancelled or annulled within 10 days of such acceleration; or

(f)            failure
by the Company to deliver shares of Common Stock upon conversion of the
Securities within the time period specified in Section 15.02, and such failure
continues for a period of five (5) days; or

(g)           the
Company shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to the Company or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of the Company or any

 22
 

substantial part of the property of the Company, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against the
Company, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due; or

(h)           an
involuntary case or other proceeding shall be commenced against the Company
seeking liquidation, reorganization or other relief with respect to the Company
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of sixty
(60) consecutive days;

then, and in each and
every such case (other than an Event of Default specified in
Section 5.01(g) or 5.01(h)), unless the principal of all of the Securities
shall have already become due and payable, either the Trustee or the holders of
not less than twenty-five percent (25%) in aggregate principal amount of the
Securities then outstanding hereunder determined in accordance with Section
7.04, by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the principal of and premium, if any, on all the
Securities and the Interest accrued thereon to be due and payable immediately,
and upon any such declaration the same shall become and shall be immediately
due and payable, anything in this Indenture or in the Securities contained to
the contrary notwithstanding.  If an
Event of Default specified in Section 5.01(g) or 5.01(h) occurs, the
principal of all the Securities and the Interest accrued thereon shall be
immediately and automatically due and payable without necessity of further
action.  This provision, however, is
subject to the conditions that if, at any time after the principal of the
Securities shall have been so declared due and payable, and before any judgment
or decree for the payment of the monies due shall have been obtained or entered
as hereinafter provided, the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of Interest upon all
Securities and the principal of and premium, if any, on any and all Securities
which shall have become due otherwise than by acceleration (with interest on
overdue installments of Interest (to the extent that payment of such interest
is enforceable under applicable law) and on such principal and premium, if any,
at the rate borne by the Securities, to the date of such payment or deposit)
and amounts due to the Trustee pursuant to Section 6.06, and if any and all
defaults under this Indenture, other than the nonpayment of principal of and
premium, if any, and accrued Interest on Securities which shall have become due
by acceleration, shall have been cured or waived pursuant to Section 5.07, then
and in every such case the holders of a majority in aggregate principal amount
of the Securities then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults or Events of Default and rescind and annul such
declaration and its consequences; but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or Event of
Default, or shall impair any right consequent thereon.  The Company shall notify in writing a
Responsible Officer of the Trustee, promptly upon becoming aware thereof, of
any Event of Default.

In case the Trustee
shall have proceeded to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned because of such waiver or
rescission and annulment or for any other reason or shall have been determined
adversely to the Trustee, then and in every such case the Company, the holders of
Securities, and the Trustee

 23
 

shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Securities, and the Trustee
shall continue as though no such proceeding had been taken.

Section 5.02           Payments of Securities on Default; Suit Therefor.  The Company covenants that in case default
shall be made in the payment of (a) any installment of Interest upon any of the
Securities as and when the same shall become due and payable, and such default
shall have continued for a period of thirty (30) days, or (b) the payment of
the principal of or premium, if any, on any of the Securities as and when the
same shall have become due and payable, whether at maturity of the Securities
or in connection with any redemption or repurchase, by or under this Indenture,
by declaration (subject to Section 5.01) or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the holders of
the Securities, the whole amount that then shall have become due and payable on
all such Securities for principal and premium, if any, or Interest, as the case
may be, with interest upon the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law)
upon the overdue installments of Interest at the rate set forth in the
Securities for overdue payments of principal and Interest and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee, its
agents, attorneys and counsel, and all other amounts due the Trustee under
Section 6.06.  Until such demand by the
Trustee, the Company may pay the principal of and premium, if any, and Interest
on the Securities to the registered holders, whether or not the Securities are
overdue.

If the Company shall
fail forthwith to pay such amounts upon such demand, the Trustee, in its own
name and as trustee of an express trust, shall be entitled and empowered to
institute any actions or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company or any other obligor on the Securities and collect in the
manner provided by law out of the property of the Company or any other obligor
on the Securities wherever situated the monies adjudged or decreed to be
payable.

If there shall be
pending proceedings for the bankruptcy or for the reorganization of the Company
or any other obligor on the Securities under Title 11 of the United States
Code, or any other applicable law, or in case a receiver, assignee or trustee
in bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Company or such other
obligor, the property of the Company or such other obligor, or in the case of
any other judicial proceedings relative to the Company or such other obligor
upon the Securities, or to the creditors or property of the Company or such
other obligor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove
a claim or claims for the whole amount of principal, premium, if any, and
Interest owing and unpaid in respect of the Securities, and, in case of any
judicial proceedings, 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 and of the Securityholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Securities, its or their
creditors, or its or their property, and to collect and receive

 24
 

any monies or other
property payable or deliverable on any such claims, and to distribute the same
after the deduction of any amounts due the Trustee under Section 6.06, and to
take any other action with respect to such claims, including participating as a
member of any official committee of creditors, as it reasonably deems necessary
or advisable, and, unless prohibited by law or applicable regulations, any
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
custodian or similar official is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, if the Trustee shall
consent to the making of such payments directly to the Securityholders, to pay
to the Trustee any amount due it for reasonable compensation, expenses,
advances and disbursements, including counsel fees and expenses incurred by it
up to the date of such distribution.  To
the extent that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, monies, securities and other
property which the holders of the Securities may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.

All rights of action
and of asserting claims under this Indenture, or under any of the Securities,
may be enforced by the Trustee without the possession of any of the Securities,
or the production thereof at any trial or other proceeding relative thereto,
and any such suit or proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the holders of the Securities.

In any proceedings
brought by the Trustee (and in any proceedings involving the interpretation of
any provision of this Indenture to which the Trustee shall be a party) the
Trustee shall be held to represent all the holders of the Securities, and it
shall not be necessary to make any holders of the Securities parties to any
such proceedings.

Section 5.03           Application of Monies Collected By Trustee.  Any monies collected by the
Trustee pursuant to this Article 5 shall be applied in the order following, at
the date or dates fixed by the Trustee for the distribution of such monies,
upon presentation of the several Securities, and stamping thereon the payment,
if only partially paid, and upon surrender thereof, if fully paid:

FIRST: To the payment
of all amounts due the Trustee under Section 6.06;

SECOND: In case the
principal of the outstanding Securities shall not have become due and be
unpaid, to the payment of Interest on the Securities in default in the order of
the maturity of the installments of such Interest, with interest (to the extent
that such interest has been collected by the Trustee) upon the overdue
installments of Interest at the rate borne by the Securities, such payments to
be made ratably to the Persons entitled thereto;

THIRD: In case the
principal of the outstanding Securities shall have become due, by declaration
or otherwise, and be unpaid to the payment of the whole amount then owing and
unpaid upon the Securities for principal and premium, if any, and Interest,
with interest on the overdue principal and premium, if any, and (to the extent
that such interest has been collected by

 25
 

the Trustee) upon
overdue installments of interest at the rate borne by the Securities, and in
case such monies shall be insufficient to pay in full the whole amounts so due
and unpaid upon the Securities, then to the payment of such principal and
premium, if any, and interest without preference or priority of principal and
premium, if any, over interest, or of interest over principal and premium, if
any, or of any installment of interest over any other installment of Interest,
or of any Security over any other Security, ratably to the aggregate of such
principal and premium, if any, and accrued and unpaid Interest; and

FOURTH: To the payment
of the remainder, if any, to the Company or any other Person lawfully entitled
thereto.

Section 5.04           Proceedings by Securityholders.  No holder of any Security shall have any right
by virtue of or by reference to any provision of this Indenture to institute
any suit, action or proceeding in equity or at law upon or under or with
respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless also the holders of not less than twenty-five
percent (25%) in aggregate principal amount of the Securities then outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable security or indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the Trustee
for sixty (60) days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding and no direction inconsistent with such written request shall
have been given to the Trustee pursuant to Section 5.07; it being understood
and intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatever by virtue of
or by reference to any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities (except as
otherwise provided herein).  For the
protection and enforcement of this Section 5.04, each and every Securityholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

Notwithstanding any
other provision of this Indenture and any provision of any Security, the right
of any holder of any Security to receive payment of the principal of and
premium, if any (including the redemption price upon redemption pursuant to
Article 14), and accrued Interest on such Security, on or after the respective
due dates expressed in such Security or in the event of redemption, or to
institute suit for the enforcement of any such payment on or after such
respective dates against the Company shall not be impaired or affected without
the consent of such holder.

Anything in this
Indenture or the Securities to the contrary notwithstanding, the holder of any
Security, without the consent of either the Trustee or the holder of any other
Security, in its own behalf and for its own benefit, may enforce, and may
institute and maintain any proceeding suitable to enforce, its rights of conversion
as provided herein.

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Section 5.05           Proceedings By Trustee. 
If an Event of Default has occurred and is continuing, the Trustee may,
in its discretion, proceed to protect and enforce the rights vested in it by
this Indenture by such appropriate judicial proceedings as are necessary to
protect and enforce any of such rights, either by suit in equity or by action
at law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.

Section 5.06           Remedies Cumulative And Continuing.  Except as provided in Section 2.06, all
powers and remedies given by this Article 5 to the Trustee or to the
Securityholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any thereof or of any other powers and remedies available to
the Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Securities to exercise any right or power
accruing upon any default or Event of Default occurring and continuing as
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein, and, subject to the
provisions of Section 5.04, every power and remedy given by this Article 5 or
by law to the Trustee or to the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.

Section 5.07           Direction of Proceedings and Waiver of Defaults By
Majority of Securityholders. 
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding determined in accordance with Section 7.04
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 or with
this Indenture, (b) the Trustee may take any other action which is not
inconsistent with such direction, (c) the Trustee may decline to take any
action that would benefit some Securityholder to the detriment of other
Securityholders and (d) the Trustee may decline to take any action that would
involve the Trustee in personal liability. 
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding determined in accordance with Section 7.04
may, on behalf of the holders of all of the Securities, waive any past default
or Event of Default hereunder and its consequences except (i) a default in the
payment of Interest or premium, if any, on, or the principal of, the
Securities, (ii) a failure by the Company to convert any Securities into Common
Stock, (iii) a default in the payment of the redemption price pursuant to
Article 14, (iv) a default in the payment of the repurchase price pursuant to
Article 14 or (v) a default in respect of a covenant or provisions hereof which
under Article 9 cannot be modified or amended without the consent of the
holders of each or all Securities then outstanding or affected thereby.  Upon any such waiver, the Company, the
Trustee and the holders of the Securities shall be restored to their former
positions and rights hereunder; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.  Whenever any default or Event
of Default hereunder shall have been waived as permitted by this Section 5.07,
said default or Event of Default shall for all purposes of the Securities and
this Indenture be deemed to have been cured and to be not continuing; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.

 27
 

Section 5.08           Notice of Defaults.  The Trustee shall, within ninety (90) days
after a Responsible Officer of the Trustee has knowledge of the occurrence of a
default, mail to all Securityholders, as the names and addresses of such
holders appear upon the Security Register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived
before the giving of such notice; provided
that except in the case of default in the payment of the principal of, or premium,
if any, or Interest on any of the Securities, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders.

Section 5.09           Undertaking To Pay Costs.  All parties to this Indenture agree, and each
holder of any Security by his acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require, 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, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys’ fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided
that the provisions of this Section 5.09 (to the extent permitted by law) shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
ten percent in principal amount of the Securities at the time outstanding
determined in accordance with Section 7.04, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
premium, if any, or Interest on any Security on or after the due date expressed
in such Security or to any suit for the enforcement of the right to convert any
Security in accordance with the provisions of Article 15.

ARTICLE 6

THE TRUSTEE

Section 6.01           Duties and Responsibilities of Trustee.  The Trustee, prior to the occurrence of an
Event of Default and after the curing of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. 
In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs.

No provision of this
Indenture shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

(a)           prior
to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred:

(i)            the duties and obligations of the
Trustee shall be determined solely by the express provisions of this Indenture
and the Trust Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are

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specifically
set forth in this Indenture and no implied covenants or obligations shall be
read into this Indenture and the Trust Indenture Act against the Trustee; and

(ii)           in the absence of bad faith and
willful misconduct on the part of the Trustee, the Trustee may conclusively
rely as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but, in the case of any
such certificates or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Indenture;

(b)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Officers of the Trustee, unless the Trustee was
negligent in ascertaining the pertinent facts;

(c)           the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the written direction of the
holders of not less than a majority in principal amount of the Securities at
the time outstanding determined as provided in Section 7.04 relating to the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture;

(d)           whether
or not therein provided, every provision of this Indenture relating to the
conduct or affecting the liability of, or affording protection to, the Trustee
shall be subject to the provisions of this Section;

(e)           the
Trustee shall not be liable in respect of any payment (as to the correctness of
amount, entitlement to receive or any other matters relating to payment) or
notice effected by the Company or any paying agent or any records maintained by
any co-registrar with respect to the Securities;

(f)            if
any party fails to deliver a notice relating to an event the fact of which,
pursuant to this Indenture, requires notice to be sent to the Trustee, the
Trustee may conclusively rely on its failure to receive such notice as reason
to act as if no such event occurred; and

(g)           the
Trustee shall not be deemed to have knowledge of any Event of Default hereunder
unless it shall have been notified in writing of such Event of Default by the
Company or the holders of at least 10% in aggregate principal amount of the
Securities.

None of the provisions
contained in this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.

Section 6.02           Reliance on Documents, Opinions, Etc.  Except as otherwise provided in Section 6.01:

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

(b)           any
request, direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by an Officers’ Certificate (unless other evidence in
respect thereof be herein specifically prescribed); and any resolution of the
Board of Directors may be evidenced to the Trustee by a copy thereof certified
by the Secretary or an Assistant Secretary of the Company;

(c)           the
Trustee may consult with counsel of its own selection and any advice or Opinion
of Counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;

(d)           the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request, order or direction of any of the
Securityholders pursuant to the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity satisfactory to it against the costs, expenses and liabilities which
may be incurred therein or thereby;

(e)           the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, Security or other paper or document,
but the Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;

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

(g)           the
Trustee shall not be liable for any action taken, suffered or omitted to be
taken by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;

(h)           the
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and
shall be enforceable by, the Trustee in each of its capacities hereunder, and
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 this Indenture, which Officers’
Certificate may be signed by any person

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authorized to sign an Officers’ Certificate, including any person
specified as so authorized in any such certificate previously delivered and not
superseded; and

(j)            Any
permissive right or authority granted to the Trustee shall not be construed as
a mandatory duty.

Section 6.03           No Responsibility For Recitals, Etc.  The recitals contained herein and in the
Securities (except in the Trustee’s certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. 
The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Securities. 
The Trustee shall not be accountable for the use or application by the
Company of any Securities or the proceeds of any Securities authenticated and
delivered by the Trustee in conformity with the provisions of this Indenture.

Section 6.04           Trustee, Paying Agents, Conversion Agents or
Registrar May Own Securities. 
The Trustee, any paying agent, any conversion agent or Security
Registrar, in its individual or any other capacity, may become the owner or
pledgee of Securities with the same rights it would have if it were not
Trustee, paying agent, conversion agent or Security Registrar.

Section 6.05           Monies to Be Held in Trust.  Subject to the provisions of Section 11.04,
all monies received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received.  Money held by the Trustee in trust hereunder
need not be segregated from other funds except to the extent required by
law.  The Trustee shall be under no
liability for interest on any money received by it hereunder except as may be
agreed in writing from time to time by the Company and the Trustee.

Section 6.06           Compensation and Expenses of Trustee.  The Company covenants and agrees to pay to
the Trustee from time to time, and the Trustee shall be entitled to, such
compensation for all services rendered by it hereunder in any capacity (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) as mutually agreed to from time to time in writing
between the Company and the Trustee, and the Company will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances reasonably incurred or made by the Trustee in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all Persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence, willful misconduct, recklessness or bad faith.  The Company also covenants to indemnify the
Trustee and any predecessor Trustee (or any officer, director or employee of
the Trustee), in any capacity under this Indenture and its agents and any
authenticating agent for, and to hold them harmless against, any and all loss,
liability, damage, claim or expense including taxes (other than taxes based on
the income of the Trustee) incurred without negligence, willful misconduct, recklessness
or bad faith on the part of the Trustee or such officers, directors, employees
and agent or authenticating agent, as the case may be, and arising out of or in
connection with the acceptance or administration of this trust or in any other
capacity hereunder, including the costs and expenses of defending themselves
against any claim (whether asserted by the Company, any holder or any other
Person) of liability in connection with the exercise or performance of any of
its or their powers or duties.  The
obligations of the Company under this Section 6.06 to compensate or

 31
 

indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the holders of particular
Securities.  The obligation of the
Company under this Section shall survive the satisfaction and discharge of this
Indenture.

When the Trustee and
its agents and any authenticating agent incur expenses or render services after
an Event of Default specified in Section 5.01(g) or (h) with respect to
the Company occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.

Section 6.07           Officers’ Certificate As Evidence.  Except as otherwise provided in Section 6.01,
whenever in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of bad faith or willful misconduct on the part of the Trustee, be
deemed to be conclusively proved and established by an Officers’ Certificate
delivered to the Trustee.

Section 6.08           Conflicting Interests of Trustee.  If the Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture Act, the Trustee
shall (i) eliminate such interest within 90 days after ascertaining that it has
such conflicting interest, (ii) apply to the Commission for permission to
continue as trustee or (iii) resign, in each case to the extent and in the
manner provided by, and subject to the provisions of, the Trust Indenture Act
and this Indenture.

Section 6.09           Eligibility of Trustee.  There shall at all times be a Trustee
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of a bank holding company system,
its bank holding company shall have a combined capital and surplus of at least $50,000,000).  If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of any supervising or
examining authority, then for the purposes of this Section the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.

Section 6.10           Resignation or Removal of Trustee.

(a)           The
Trustee may at any time resign by giving written notice of such resignation to
the Company and to the holders of Securities. 
Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee.  If no successor trustee shall have been so
appointed and have accepted appointment sixty (60) days after the mailing of
such notice of resignation to the Securityholders, the resigning Trustee may,
upon ten (10) Business Days’ notice to the Company and the Securityholders,
appoint a successor identified in such notice or

 32
 

may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor trustee, or, if any
Securityholder who has been a bona fide holder of a Security or Securities for
at least six (6) months may, subject to the provisions of Section 5.09, on
behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. 
Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.

(b)           In
case at any time any of the following shall occur:

(i)            the Trustee shall fail to comply
with Section 6.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Security or Securities for
at least six (6) months; or

(ii)           the Trustee shall cease to be
eligible in accordance with the provisions of Section 6.09 and shall fail to
resign after written request therefor by the Company or by any such
Securityholder; or

(iii)          the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation;

then, in any such case,
the Company may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, executed by order of the Board of Directors, one copy
of which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 5.09, any
Securityholder who has been a bona fide holder of a Security or Securities for
at least six (6) months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee; provided
that if no successor Trustee shall have been appointed and have accepted
appointment sixty (60) days after either the Company or the Securityholders has
removed the Trustee, or the Trustee resigns, the Trustee so removed may
petition, at the expense of the Company, any court of competent jurisdiction
for an appointment of a successor trustee. 
Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor trustee.

(c)           The
holders of a majority in aggregate principal amount of the Securities at the
time outstanding may at any time remove the Trustee and nominate a successor
trustee which shall be deemed appointed as successor trustee unless, within ten
(10) days after notice to the Company of such nomination, the Company objects
thereto, in which case the Trustee so removed or any Securityholder, or if such
Trustee so removed or any Securityholder fails to act, the Company, upon the
terms and conditions and otherwise as provided in Section 6.10(a), may petition
any court of competent jurisdiction for an appointment of a successor trustee.

(d)           Any
resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.

 33

(e)           Notwithstanding
the replacement of the Trustee pursuant to this Section, the Company’s
obligations under Section 6.06 shall continue for the benefit of the retiring
Trustee.

Section 6.11           Acceptance by Successor Trustee.  Any successor trustee appointed as provided
in Section 6.10 shall execute, acknowledge and deliver to the Company and to
its predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as trustee herein; but, nevertheless, on the written request of the
Company or of the successor trustee, the trustee ceasing to act shall, upon
payment of any amount then due it pursuant to the provisions of Section 6.06,
execute and deliver an instrument transferring to such successor trustee all
the rights and powers of the trustee so ceasing to act.  Upon request of any such successor trustee,
the Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers.  Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property and funds held or
collected by such trustee as such, except for funds held in trust for the
benefit of holders of particular Securities, to secure any amounts then due it
pursuant to the provisions of Section 6.06.

No successor trustee
shall accept appointment as provided in this Section 6.11 unless, at the time
of such acceptance, such successor trustee shall be qualified under the
provisions of Section 6.08 and be eligible under the provisions of Section
6.09.

Upon acceptance of
appointment by a successor trustee as provided in this Section 6.11, the
Company (or the former trustee, at the written direction of the Company) shall
mail or cause to be mailed notice of the succession of such trustee hereunder
to the holders of Securities at their addresses as they shall appear on the
Security Register.  If the Company fails
to mail such notice within ten (10) days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed
at the expense of the Company.

Section 6.12           Succession By Merger.  Any corporation into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including any trust created by this
Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in
the case of any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, such corporation shall be qualified
under the provisions of Section 6.08 and eligible under the provisions of
Section 6.09.

In case at the time
such successor to the Trustee shall succeed to the trusts created by this
Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee or authenticating agent appointed by
such predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee or any authenticating agent appointed by such
successor trustee may

 34
 

authenticate such
Securities in the name of the successor trustee; and in all such cases such
certificates shall have the full force that is provided in the Securities or in
this Indenture; provided that the right to adopt
the certificate of authentication of any predecessor Trustee or authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.

Section 6.13           Preferential Collection of Claims.  If and when the Trustee shall be or become a
creditor of the Company (or any other obligor upon the Securities), the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of the claims against the Company (or any such other obligor).

Section 6.14           Trustee’s Application For Instructions From The
Company.  Any application by
the Trustee for written instructions from the Company (other than with regard
to any action proposed to be taken or omitted to be taken by the Trustee that
affects the rights of the holders of the Securities under this Indenture) may,
at the option of the Trustee, set forth in writing any action proposed to be
taken or omitted by the Trustee under this Indenture and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Trustee shall not be liable for any action taken by, or omission of, the
Trustee in accordance with a proposal included in such application on or after
the date specified in such application (which date shall not be less than three
(3) Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to
any earlier date) unless prior to taking any such action (or the effective date
in the case of an omission), the Trustee shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

ARTICLE 7

THE SECURITYHOLDERS

Section 7.01           Action By Securityholders.  Whenever in this Indenture it is provided that the holders of a specified
percentage in aggregate principal amount of the Securities may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action, the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by Securityholders in person or by agent or proxy
appointed in writing, or (b) by the record of the holders of Securities voting
in favor thereof at any meeting of Securityholders duly called and held in
accordance with the provisions of Article 8, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of Securityholders.  Whenever the Company or the Trustee solicits
the taking of any action by the holders of the Securities, the Company or the
Trustee may fix in advance of such solicitation, a date as the record date for
determining holders entitled to take such action.  The record date shall be not more than
fifteen (15) days prior to the date of commencement of solicitation of such
action.

Section 7.02           Proof of Execution by Securityholders.  Subject to the provisions of
Sections 6.01, 6.02 and 8.05, proof of the execution of any instrument by
a Securityholder or its agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the

 35
 

Trustee.  The holding of
Securities shall be proved by the registry of such Securities or by a
certificate of the Security Registrar.

The record of any
Securityholders’ meeting shall be proved in the manner provided in Section
8.06.

Section 7.03           Who Are Deemed Absolute Owners.  The Company, the Trustee, any paying agent,
any conversion agent and any Security Registrar may deem the Person in whose
name such Security shall be registered upon the Security Register to be, and
may treat it as, the absolute owner of such Security (whether or not such
Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon made by any Person other than the Company or any Security
Registrar) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and Interest on such Security, for conversion of
such Security and for all other purposes; and neither the Company nor the
Trustee nor any paying agent nor any conversion agent nor any Security
Registrar shall be affected by any notice to the contrary.  All such payments so made to any holder for
the time being, or upon his order, shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for monies
payable upon any such Security.

Section 7.04           Company-owned Securities Disregarded.  In determining whether the holders of the
requisite aggregate principal amount of Securities have concurred in any
direction, consent, waiver or other action under this Indenture, Securities
which are owned by the Company or any other obligor on the Securities or any
Affiliate of the Company or any other obligor on the Securities shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided that for
the purposes of determining whether the Trustee shall be protected in relying
on any such direction, consent, waiver or other action, only Securities which a
Responsible Officer knows are so owned shall be so disregarded.  Securities so owned which have been pledged
in good faith may be regarded as outstanding for the purposes of this Section
7.04 if the pledgee shall establish to the satisfaction of the Trustee the
pledgee’s right to vote such Securities and that the pledgee is not the
Company, any other obligor on the Securities or any Affiliate of the Company or
any such other obligor.  In the case of a
dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee.  Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers’ Certificate listing and
identifying all Securities, if any, known by the Company to be owned or held by
or for the account of any of the above described Persons, and, subject to
Section 6.01, the Trustee shall be entitled to accept such Officers’
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are outstanding for the purpose of
any such determination.

Section 7.05           Revocation Of Consents, Future Holders Bound.  At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 7.01, of the taking of any
action by the holders of the percentage in aggregate principal amount of the
Securities specified in this Indenture in connection with such action, any
holder of a Security which is shown by the evidence to be included in the
Securities the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 7.02, revoke such action so far as concerns such
Security.  Except as aforesaid, any such
action taken by the holder of any Security shall be conclusive and binding

 36
 

upon such holder and upon all future holders and owners of such
Security and of any Securities issued in exchange or substitution therefor,
irrespective of whether any notation in regard thereto is made upon such
Security or any Security issued in exchange or substitution therefor.

ARTICLE 8

MEETINGS OF SECURITYHOLDERS

Section 8.01           Purpose Of Meetings.  A meeting of Securityholders may be called at
any time and from time to time pursuant to the provisions of this Article 8 for
any of the following purposes:

(1)           to give any notice to the Company or to
the Trustee or to give any directions to the Trustee permitted under this
Indenture, or to consent to the waiving of any default or Event of Default
hereunder and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article 5;

(2)           to remove the Trustee and nominate a
successor trustee pursuant to the provisions of Article 6;

(3)           to consent to the execution of an
indenture or indentures supplemental hereto pursuant to the provisions of
Section 9.02; or

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

Section 8.02           Call Of Meetings By Trustee.  The Trustee may at any time call a meeting of
Securityholders to take any action specified in Section 8.01, to be held at
such time and at such place as the Trustee shall determine.  Notice of every meeting of the
Securityholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting and the
establishment of any record date pursuant to Section 7.01, shall be mailed to
holders of Securities at their addresses as they shall appear on the Security
Register.  Such notice shall also be
mailed to the Company.  Such notices
shall be mailed not less than twenty (20) nor more than ninety (90) days prior
to the date fixed for the meeting.

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

Section 8.03           Call Of Meetings By Company Or Securityholders.  In case at any time the Company, pursuant to
a resolution of its Board of Directors, or the holders of at least ten percent
(10%) in aggregate principal amount of the Securities then outstanding, shall
have requested the Trustee to call a meeting of Securityholders, by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have mailed the notice of such meeting
within twenty (20) days after receipt of such request, then the Company or such
Securityholders may determine the time and the place for such meeting and may
call such

 37
 

meeting to take any action authorized in Section 8.01, by mailing
notice thereof as provided in Section 8.02.

Section 8.04           Qualifications For Voting.  To be entitled to vote at any meeting of
Securityholders a person shall (a) be a holder of one or more Securities on the
record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Securities on the
record date pertaining to such meeting. 
The only persons who shall be entitled to be present or to speak at any
meeting of Securityholders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.

Section 8.05           Regulations.  Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination
of proxies, certificates and other evidence of the right to vote, and such
other matters concerning the conduct of the meeting as it shall think fit.

The Trustee shall, by
an instrument in writing, appoint a temporary chairman of the meeting, unless
the meeting shall have been called by the Company or by Securityholders as
provided in Section 8.03, in which case the Company or the Securityholders
calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman.  A permanent chairman
and a permanent secretary of the meeting shall be elected by vote of the
holders of a majority in principal amount of the Securities represented at the
meeting and entitled to vote at the meeting.

Subject to the
provisions of Section 7.04, at any meeting each Securityholder or proxyholder
shall be entitled to one vote for each $1,000 principal amount of Securities
held or represented by him; provided that
no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be
not outstanding.  The chairman of the
meeting shall have no right to vote other than by virtue of Securities held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Securityholders. 
Any meeting of Securityholders duly called pursuant to the provisions of
Section 8.02 or 8.03 may be adjourned from time to time by the holders of a
majority of the aggregate principal amount of Securities represented at the
meeting, whether or not constituting a quorum, and the meeting may be held as
so adjourned without further notice.

Section 8.06           Voting. 
The vote upon any resolution submitted to any meeting of Securityholders
shall be by written ballot on which shall be subscribed the signatures of the
holders of Securities or of their representatives by proxy and the outstanding
principal amount of the Securities held or represented by them.  The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at
the meeting.  A record in duplicate of
the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02.

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The record shall show the principal amount of the Securities voting in
favor of or against any resolution.  The
record shall be signed and verified by the affidavits of the permanent chairman
and secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.

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

Section 8.07           No Delay Of Rights By Meeting.  Nothing contained in this Article 8 shall be
deemed or construed to authorize or permit, by reason of any call of a meeting
of Securityholders or any rights expressly or impliedly conferred hereunder to
make such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Securityholders under any
of the provisions of this Indenture or of the Securities.

ARTICLE 9

SUPPLEMENTAL INDENTURES

Section 9.01           Supplemental Indentures Without Consent of
Securityholders.  The Company,
when authorized by the resolutions of the Board of Directors, and the Trustee
may, from time to time, and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:

(a)           make
provision with respect to the conversion rights of the holders of Securities
pursuant to the requirements of Section 15.06 and the repurchase obligations of
the Company pursuant to the requirements of Section 14.05;

(b)           to
convey, transfer, assign, mortgage or pledge to the Trustee as security for the
Securities, any property or assets;

(c)           to
evidence the succession of another Person to the Company, or successive
successions, and the assumption by the successor Person of the covenants,
agreements and obligations of the Company pursuant to Article 10;

(d)           to
add to the covenants of the Company such further covenants, restrictions or
conditions as the Board of Directors and the Trustee shall consider to be for
the benefit of the holders of Securities, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture as
herein set forth; provided that in respect of any
such additional covenant, restriction or condition, such supplemental indenture
may provide for a particular period of grace after default (which period may be
shorter or longer than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such default or may limit the
remedies available to the Trustee upon such default;

(e)           to
provide for the issuance under this Indenture of Securities in coupon form
(including Securities registrable as to principal only) and to provide for
exchangeability of such

 39
 

Securities with the Securities issued hereunder in fully registered
form and to make all appropriate changes for such purpose;

(f)            to
cure any ambiguity or to correct or supplement any provision contained herein
or in any supplemental indenture that may be defective or inconsistent with any
other provision contained herein or in any supplemental indenture, or to make
such other provisions in regard to matters or questions arising under this
Indenture that shall not materially adversely affect the interests of the
holders of the Securities;

(g)           to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities;

(h)           to
modify, eliminate or add to the provisions of this Indenture to such extent as
shall be necessary to effect the qualifications of this Indenture under the
Trust Indenture Act, or under any similar federal statute hereafter enacted; or

(i)            to
increase the Conversion Rate.

Upon the written
request of the Company, accompanied by a copy of the resolutions of the Board
of Directors certified by its Secretary or Assistant Secretary authorizing the
execution of any supplemental indenture, the Trustee is hereby authorized to
join with the Company in the execution of any such supplemental indenture, to
make any further appropriate agreements and stipulations that may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Trustee shall not be obligated to, but may in its
discretion, enter into any supplemental indenture that affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise.

Any supplemental
indenture authorized by the provisions of this Section 9.01 may be executed by
the Company and the Trustee without the consent of the holders of any of the
Securities at the time outstanding, notwithstanding any of the provisions of
Section 9.02.

Notwithstanding any
other provision of the Indenture or the Securities, the Registration Rights
Agreement and the obligation to pay Additional Interest thereunder may be
amended, modified or waived only in accordance with the provisions of the
Registration Rights Agreement.

Section 9.02           Supplemental Indenture With Consent Of
Securityholders.  With the
consent (evidenced as provided in Article 7) of the holders of at least a
majority in aggregate principal amount of the Securities at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Securities; provided
that no such supplemental indenture shall (i) extend the fixed maturity of any
Security, or reduce the rate or extend the time of payment of Interest thereon,
or reduce the principal amount thereof or premium, if any, thereon, or reduce
any amount payable on redemption or repurchase thereof, or change the
obligation of the Company to repurchase any Security upon the happening of a Designated
Event in a manner adverse to the holders of

 40
 

Securities, or impair the right of any Securityholder to institute suit
for the payment thereof, or make the principal thereof or Interest or premium,
if any, thereon payable in any coin or currency other than that provided in the
Securities, or impair the right to convert the Securities into Common Stock or
reduce the number of shares of Common Stock or any other property receivable by
a Securityholder upon conversion subject to the terms set forth herein,
including Section 15.05 and Section 15.06, in each case, without the consent of
the holder of each Security so affected, or (ii) modify any of the provisions
of this Section 9.02 or Section 5.07, except to increase any such percentage or
to provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the holder of each Security so affected, or
change any obligation of the Company to maintain an office or agency in the
places and for the purposes set forth in Section 3.02, or reduce the quorum or
voting requirements set forth in Article 8 or reduce the aforesaid percentage
of Securities, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Securities
then outstanding.

Upon the written
request of the Company, accompanied by a copy of the resolutions of the Board
of Directors certified by its Secretary or Assistant Secretary authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Securityholders as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture 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 supplemental
indenture.

It shall not be
necessary for the consent of the Securityholders under this Section 9.02 to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such consent shall approve the substance thereof.

Section 9.03           Effect Of Supplemental Indenture.  Any supplemental indenture executed pursuant
to the provisions of this Article 9 shall comply with the Trust Indenture Act,
as then in effect, provided that
this Section 9.03 shall not require such supplemental indenture or the Trustee
to be qualified under the Trust Indenture Act prior to the time such qualification
is in fact required under the terms of the Trust Indenture Act or the Indenture
has been qualified under the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party to such supplemental indenture that
any such qualification is required prior to the time such qualification is in
fact required under the terms of the Trust Indenture Act or the Indenture has
been qualified under the Trust Indenture Act. 
Upon the execution of any supplemental indenture pursuant to the provisions
of this Article 9, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitation of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Securities shall thereafter be determined,
exercised and enforced hereunder, subject in all respects to such modifications
and amendments and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

Section 9.04           Notation On Securities.  Securities authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article 9 may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental

 41
 

indenture.  If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may, at the Company’s
expense, be prepared and executed by the Company, authenticated by the Trustee
(or an authenticating agent duly appointed by the Trustee pursuant to Section 13.11)
and delivered in exchange for the Securities then outstanding, upon surrender
of such Securities then outstanding.

Section 9.05           Evidence Of Compliance Of Supplemental Indenture To
Be Furnished To Trustee. 
Prior to entering into any supplemental indenture, the Trustee shall be
provided with an Officers’ Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto complies with
the requirements of this Article 9 and is otherwise authorized or permitted by
this Indenture.

ARTICLE 10

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

Section 10.01         Company May Consolidate On Certain Terms.  Subject to the provisions of Section 10.02,
the Company shall not consolidate with or merge into any other Person or
Persons (whether or not affiliated with the Company), nor shall the Company or
its successor or successors be a party or parties to successive consolidations
or mergers, nor shall the Company sell, convey, transfer or lease all or
substantially all of the property and assets of the Company to any other Person
(whether or not affiliated with the Company), unless: (i) the Company is the
surviving Person, or the resulting, surviving or transferee Person is a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia; (ii) upon any such
consolidation, merger, sale, conveyance, transfer or lease, the due and
punctual payment of the principal of and premium, if any, and Interest on all of
the Securities, according to their tenor and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form and substance to the Trustee, executed and delivered to
the Trustee by the Person (if other than the Company and other than a Person
who is a successor to the Company’s obligations hereunder and under the
Security by operation of law) formed by such consolidation, or into which the
Company shall have been merged, or by the Person that shall have acquired or
leased such property, and such supplemental indenture shall provide for the
applicable conversion rights set forth in Section 15.06; and (iii) immediately
after giving effect to the transaction described above, no Event of Default,
and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing.

Section 10.02         Successor To Be Substituted.  In case of any such consolidation, merger,
sale, conveyance, transfer or lease and upon the assumption by the successor
Person, by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the due and punctual payment of the
principal of and premium, if any, and Interest on all of the Securities and the
due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor Person shall succeed
to and be substituted for the Company, with the same effect as if it had been
named herein as the party of this first part. 
Such successor Person thereupon may cause to be signed, and may issue
either in its own name or in the name of the Company any or all of the
Securities, issuable hereunder that

 42
 

theretofore shall not have been signed by the Company and delivered to
the Trustee; and, upon the order of such successor Person instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver, or
cause to be authenticated and delivered, any Securities that previously shall
have been signed and delivered by the officers of the Company to the Trustee
for authentication, and any Securities that such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose.  All the Securities so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Securities had been issued at the date of
the execution hereof.  In the event of
any such consolidation, merger, sale, conveyance, transfer or lease, the Person
named as the “Company” in the
first paragraph of this Indenture or any successor that shall thereafter have
become such in the manner prescribed in this Article 10 may be dissolved, wound
up and liquidated at any time thereafter and such Person shall be released from
its liabilities as obligor and maker of the Securities and from its obligations
under this Indenture.

In case of any such
consolidation, merger, sale, conveyance, transfer or lease, such changes in
phraseology and form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.

Section 10.03         Opinion Of Counsel To Be Given To Trustee.  The Trustee shall receive an Officers’
Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation,
merger, sale, conveyance, transfer or lease and any such assumption complies
with the provisions of this Article 10.

ARTICLE 11

SATISFACTION AND DISCHARGE OF INDENTURE

Section 11.01         Discharge Of Indenture. When (a) the
Company shall deliver to the Trustee for cancellation all Securities
theretofore authenticated (other than any Securities that have been destroyed,
lost or stolen and in lieu of or in substitution for which other Securities
shall have been authenticated and delivered in each case pursuant to Section
2.06) and not theretofore canceled, or (b) all the Securities not theretofore
canceled or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee, in trust, cash sufficient to pay at maturity or upon
redemption of all of the Securities (other than any Securities that shall have
been mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Securities shall have been authenticated and delivered) not
theretofore canceled or delivered to the Trustee for cancellation, including
principal and premium, if any, and Interest due or to become due to such date
of maturity or redemption date, as the case may be, accompanied by a
verification report, as to the sufficiency of the deposited amount, from a nationally
recognized firm of independent certified accountants or other financial
professional satisfactory to the Trustee, and if the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect (except as to (i) remaining
rights of registration of transfer, substitution and exchange and conversion of
Securities, (ii) rights hereunder of Securityholders

 43
 

to receive payments of principal of and premium, if any, and Interest on,
the Securities and the other rights, duties and obligations of Securityholders,
as beneficiaries hereof with respect to the amounts, if any, so deposited with
the Trustee and (iii) the rights, obligations and immunities of the Trustee
hereunder), and the Trustee, on written demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel as required by Section 13.05
and at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Company,
however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate
the Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities.

Section 11.02         Deposited Monies To Be Held In Trust By Trustee.  Subject to Section 11.04, all monies
deposited with the Trustee pursuant to Section 11.01, shall be held in trust
for the sole benefit of the Securityholders, and such monies shall be applied
by the Trustee to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of
the particular Securities for the payment or redemption of which such monies
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and Interest and premium, if any.

Section 11.03         Paying Agent To Repay Monies Held.  Upon the satisfaction and discharge of this
Indenture, all monies then held by any paying agent of the Securities (other
than the Trustee) shall, upon written request of the Company, be repaid to it
or paid to the Trustee, and thereupon such paying agent shall be released from
all further liability with respect to such monies.

Section 11.04         Return Of Unclaimed Monies.  Subject to the requirements of applicable
law, any monies deposited with or paid to the Trustee for payment of the
principal of, premium, if any, or Interest on Securities and not applied but
remaining unclaimed by the holders of Securities for two years after the date
upon which the principal of, premium, if any, or Interest on such Securities,
as the case may be, shall have become due and payable, shall be repaid to the Company
by the Trustee on demand and all liability of the Trustee shall thereupon cease
with respect to such monies; and the holder of any of the Securities shall
thereafter look only to the Company for any payment that such holder may be
entitled to collect unless an applicable abandoned property law designates
another Person.

Section 11.05         Reinstatement.  If the Trustee or the paying agent is unable
to apply any money in accordance with Section 11.02 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 11.01 until such time as the Trustee
or the paying agent is permitted to apply all such money in accordance with
Section 11.02; provided that if
the Company makes any payment of Interest on or principal of any Security
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Securities to receive such payment from
the money held by the Trustee or paying agent.

 44
 

ARTICLE 12

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, 

OFFICERS AND DIRECTORS

Section 12.01         Indenture And Securities Solely Corporate Obligations.  No recourse for the payment of the principal
of or premium, if any, or Interest on any Security, 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 in this Indenture or in any
supplemental indenture or in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer, director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, 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 and the issue of the
Securities.

ARTICLE 13

GENERAL PROVISIONS

Section 13.01         Provisions Binding On Company’s Successors.  All the covenants, stipulations, promises and
agreements by the Company contained in this Indenture shall bind its successors
and assigns whether so expressed or not.

Section 13.02         Official Acts By Successor Corporation.  Any act or proceeding by any provision of
this Indenture authorized or required to be done or performed by any board,
committee or officer of the Company shall and may be done and performed with
like force and effect by the like board, committee or officer of any Person
that shall at the time be the lawful sole successor of the Company.

Section 13.03         Addresses For Notices, Etc.  Any notice or demand which by any provision
of this Indenture is required or permitted to be given or served by the Trustee
or by the holders of Securities on the Company shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office letter
box, or sent by express overnight air courier for next day delivery or sent by
telecopier transmission addressed as follows: to Incyte Corporation, Route 141
and Henry Clay Road, Building 336, Wilmington, Delaware 19880, Telecopier No.:
(302) 425-2707, Attention: General Counsel. 
Any notice, direction, request or demand hereunder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or served by being deposited, postage prepaid, by registered
or certified mail in a post office letter box or sent by telecopier
transmission addressed as follows: U.S. Bank National Association, 633 West
Fifth Street, 24th Floor, Los Angeles, CA 90071, Telecopier No.: (213)
615-6197, Attention: Corporate Trust Services (Incyte Corporation – 31⁄2%
Convertible Senior Notes due 2011).

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

 45
 

Any notice or
communication mailed to a Securityholder shall be mailed to him by first class
mail, postage prepaid, or sent by express overnight air courier for next day
delivery at his address as it appears on the Security Register and shall be
sufficiently given to him if so mailed within the time prescribed.

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

Section 13.04         Governing Law.  This Indenture and each Security 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 the laws of the State of New
York, without regard to conflicts of laws principles thereof.

Section 13.05         Evidence Of Compliance With Conditions Precedent,
Certificates To Trustee.  Upon
any application or demand by the Company to the Trustee to take any action
under any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.

Each certificate or
opinion provided for in this Indenture and delivered to the Trustee with
respect to compliance with a condition or covenant provided for in this Indenture
shall comply with the provisions of the Section 314(e) of the Trust Indenture
Act and shall include: (1) a statement that the person making such certificate
or opinion has read such covenant or condition; (2) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are based; (3) a statement
that, in the opinion of such person, he 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 complied with; and (4) a
statement as to whether or not, in the opinion of such person, such condition
or covenant has been complied with.

Section 13.06         Legal Holidays.  In any case in which the date of maturity of
Interest on or principal of the Securities or the redemption date of any
Security will not be a Business Day, then payment of such Interest on or
principal of the Securities need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the redemption date, and no Interest shall accrue for
the period from and after such date.

Section 13.07         Trust Indenture Act.  This Indenture is hereby made subject to, and
shall be governed by, the provisions of the Trust Indenture Act required to be
part of and to govern indentures qualified under the Trust Indenture Act; provided that this Section 13.07 shall not
require this Indenture or the Trustee to be qualified under the Trust Indenture
Act prior to the time such qualification is in fact required under the terms of
the Trust Indenture Act, nor shall it constitute any admission or
acknowledgment by any party to the Indenture that any such qualification is
required prior to the time such qualification is in fact required under the
terms of the Trust Indenture Act.  If any
provision hereof limits, qualifies or conflicts with another

 46
 

provision hereof which is required to be included in an indenture
qualified under the Trust Indenture Act, such required provision shall control.

Section 13.08         No Security Interest Created.  Nothing in this Indenture or in the
Securities, expressed or implied, shall be construed to constitute a security interest
under the Uniform Commercial Code or similar legislation, as now or hereafter
enacted and in effect, in any jurisdiction in which property of the Company or
its subsidiaries is located.

Section 13.09         Benefits Of Indenture.  Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the
parties hereto, any paying agent, any authenticating agent, any Security
Registrar and their successors hereunder and the holders of Securities any
benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 13.10         Table Of Contents, Headings, Etc.  The table of contents and the titles and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.

Section 13.11         Authenticating Agent.  The Trustee may appoint an authenticating
agent that shall be authorized to act on its behalf, and subject to its
direction, in the authentication and delivery of Securities in connection with
the original issuance thereof and transfers and exchanges of Securities
hereunder, including under Sections 2.04, 2.05, 2.06, 2.07, 14.03 and
14.05, as fully to all intents and purposes as though the authenticating agent
had been expressly authorized by this Indenture and those Sections to
authenticate and deliver Securities.  For
all purposes of this Indenture, the authentication and delivery of Securities
by the authenticating agent shall be deemed to be authentication and delivery
of such Securities “by the Trustee” and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Securities for the Trustee’s
certificate of authentication.  Such
authenticating agent shall at all times be a Person eligible to serve as
trustee hereunder pursuant to Section 6.09.

Any corporation into
which any authenticating agent may be merged or converted or with which it may
be consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any authenticating agent shall be a party, or any
corporation succeeding to the corporate trust business of any authenticating
agent, shall be the successor of the authenticating agent hereunder, if such
successor corporation is otherwise eligible under this Section 13.11, without
the execution or filing of any paper or any further act on the part of the
parties hereto or the authenticating agent or such successor corporation.

Any authenticating
agent may at any time resign by giving written notice of resignation to the
Trustee and to the Company.  The Trustee
may at any time terminate the agency of any authenticating agent by giving
written notice of termination to such authenticating agent and to the
Company.  Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall either promptly appoint a successor authenticating agent or itself assume
the duties and obligations of the former authenticating agent under this
Indenture and, upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a

 47
 

successor
authenticating agent to the Company and shall mail notice of such appointment
of a successor authenticating agent to all holders of Securities as the names
and addresses of such holders appear on the Security Register.

The Company agrees to
pay to the authenticating agent from time to time such reasonable compensation
for its services as shall be agreed upon in writing between the Company and the
authenticating agent.

The provisions of
Sections 6.02, 6.03, 6.04 and 7.03 and this Section 13.11 shall be
applicable to any authenticating agent.

Section 13.12         Execution In Counterparts.  This Indenture may be executed in any number
of counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.

Section 13.13         Severability.  In case any provision in this Indenture or in
the Securities shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

U.S. Bank National
Association hereby accepts the trusts in this Indenture declared and provided,
upon the terms and conditions herein above set forth.

ARTICLE 14

REDEMPTION AND REPURCHASE OF SECURITIES

Section 14.01         Redemption of Securities.  The Company may not redeem any Securities
prior to February 20, 2007.  At any time
on or after February 20, 2007 and prior to maturity, the Securities may be
redeemed at the option of the Company, in whole or in part, at any time and
from time to time, upon notice as set forth in Section 14.02, at the redemption
prices set forth in the form of Security attached as Exhibit A hereto, together
with accrued and unpaid Interest, if any, to, but excluding, the date fixed for
redemption; provided that if the
redemption date falls after a record date and on or prior the corresponding
interest payment date, then the full amount of Interest payable on such
interest payment date shall be paid to the holders of record of such Securities
on the applicable record date instead of the holders surrendering such
Securities for redemption on such date.

Section 14.02         Notice of Optional Redemption; Selection of
Securities.  In case the
Company shall desire to exercise the right to redeem all or, as the case may
be, any part of the Securities pursuant to Section 14.01, it shall fix a date
for redemption and it or, at its written request received by the Trustee not
fewer than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption not fewer than twenty (20) nor more than sixty (60)
days prior to the redemption date to each holder of Securities so to be
redeemed as a whole or in part at its last address as the same appears on the
Security Register; provided that
if the Company shall give such notice, it shall also give written notice of the
redemption date to the Trustee.  Such
mailing shall be by first class mail. 
The notice, if mailed in the manner herein provided, shall be conclusively
presumed

 48
 

to have been duly given, whether or not the holder receives such
notice.  In any case, failure to give
such notice by mail or any defect in the notice to the holder of any Security
designated for redemption as a whole or in part shall not affect the validity
of the proceedings for the redemption of any other Security.  Concurrently with the mailing of any such
notice of redemption, the Company shall issue a press release announcing such
redemption, the form and content of which press release shall be determined by
the Company in its sole discretion.  The
failure to issue any such press release or any defect therein shall not affect
the validity of the redemption notice or any of the proceedings for the
redemption of any Security called for redemption.

Each such notice of
redemption shall specify the aggregate principal amount of Securities to be
redeemed, the CUSIP number or numbers of the Securities being redeemed, the
date fixed for redemption (which shall be a Business Day), the redemption price
at which Securities are to be redeemed, the place or places of payment, that
payment will be made upon presentation and surrender of such Securities, that
Interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date Interest thereon or on the portion
thereof to be redeemed will cease to accrue. 
Such notice shall also state the current Conversion Rate and the date on
which the right to convert such Securities or portions thereof into Common
Stock will expire.  If fewer than all the
Securities are to be redeemed, the notice of redemption shall identify the
Securities to be redeemed (including CUSIP numbers, if any).  In case any Security is to be redeemed in
part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that, on and after the redemption
date, upon surrender of such Security, a new Security or Securities in
principal amount equal to the unredeemed portion thereof will be issued.

On or prior to the
redemption date specified in the notice of redemption given as provided in this
Section 14.02, the Company will deposit with the Trustee or with one or more
paying agents (or, if the Company is acting as its own paying agent, set aside,
segregate and hold in trust as provided in Section 3.04) an amount of money in
immediately available funds sufficient to redeem on the redemption date all the
Securities (or portions thereof) so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued Interest to, but excluding, the
redemption date; provided that if such payment is
made on the redemption date it must be received by the Trustee or paying agent,
as the case may be, by 10:00 a.m. New York City time on such date.  The Company shall be entitled to retain any
interest, yield or gain on amounts deposited with the Trustee or any paying
agent pursuant to this Section 14.02 in excess of amounts required hereunder to
pay the redemption price and accrued interest to, but excluding, the redemption
date.  If any Security called for
redemption is converted pursuant hereto prior to such redemption date, any
money deposited with the Trustee or any paying agent or so segregated and held in
trust for the redemption of such Security shall be paid to the Company upon its
written request, or, if then held by the Company, shall be discharged from such
trust.  Whenever any Securities are to be
redeemed, the Company will give the Trustee written notice in the form of an
Officers’ Certificate not fewer than forty-five (45) days (or such shorter
period of time as may be acceptable to the Trustee) prior to the redemption
date as to the aggregate principal amount of Securities to be redeemed.

 49
 

If less than all of the
outstanding Securities are to be redeemed, the Trustee shall select the
Securities or portions thereof of the Global Security or the Securities in
certificated form to be redeemed (in principal amounts of $1,000 or multiples
thereof) by lot, on a pro rata basis or by another method the Trustee deems
fair and appropriate.  If any Security
selected for partial redemption is submitted for conversion in part after such
selection, the portion of such Security submitted for conversion shall be deemed
(so far as may be possible) to be the portion to be selected for
redemption.  The Securities (or portions
thereof) so selected shall be deemed duly selected for redemption for all
purposes hereof, notwithstanding that any such Security is submitted for
conversion in part before the mailing of the notice of redemption.

Upon any redemption of
less than all of the outstanding Securities, the Company and the Trustee may
(but need not), solely for purposes of determining the pro rata allocation
among such Securities as are unconverted and outstanding at the time of
redemption, treat as outstanding any Securities surrendered for conversion
during the period of fifteen (15) days next preceding the mailing of a notice
of redemption and may (but need not) treat as outstanding any Security
authenticated and delivered during such period in exchange for the unconverted
portion of any Security converted in part during such period.

Section 14.03         Payment of Securities Called For Redemption by the
Company.  If notice of
redemption has been given as provided in Section 14.02, the Securities or
portion of Securities with respect to which such notice has been given shall,
unless converted into Common Stock pursuant to the terms hereof, become due and
payable on the date fixed for redemption and at the place or places stated in
such notice at the applicable redemption price, together with Interest accrued
to (but excluding) the redemption date, and on and after said date (unless the
Company shall default in the payment of such Securities at the redemption
price, together with Interest accrued to said date) Interest on the Securities
or portion of Securities so called for redemption shall cease to accrue and,
after the close of business on the Business Day immediately preceding the
redemption date (unless the Company shall default in the payment of such
Securities at the redemption price, together with Interest accrued to said
date) such Securities shall cease to be convertible into Common Stock and,
except as provided in Section 6.05 and Section 11.04, to be entitled to any
benefit or security under this Indenture, and the holders thereof shall have no
right in respect of such Securities except the right to receive the redemption
price thereof and unpaid Interest to (but excluding) the redemption date. On
presentation and surrender of such Securities at a place of payment in said
notice specified, the said Securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable redemption price,
together with Interest accrued thereon to, but excluding, the redemption date; provided that if the redemption date falls
after a record date and on or prior the corresponding interest payment date,
then the Interest payable on such interest payment date shall be paid to the
holders of record of such Securities on the applicable record date instead of
the holders surrendering such Securities for redemption on such date.

Upon presentation of
any Security redeemed in part only, the Company shall execute and the Trustee
shall authenticate and make available for delivery to the holder thereof, at
the expense of the Company, a new Security or Securities, of authorized
denominations, in principal amount equal to the unredeemed portion of the
Securities so presented.

 50
 

Notwithstanding the
foregoing, the Trustee shall not redeem any Securities or mail any notice of
redemption (i) during the continuance of a default in payment of Interest or
premium, if any, on the Securities and (ii) if the principal amount of the
Securities has been accelerated.

Section 14.04         Conversion Arrangement on Call for Redemption.  In connection with any redemption of
Securities, the Company may arrange for the purchase and conversion of any
Securities by an agreement with one or more investment banks or other
purchasers to purchase such Securities by paying to the Trustee in trust for
the Securityholders, on or before the date fixed for redemption, an amount not
less than the applicable redemption price, together with Interest accrued to,
but excluding, the date fixed for redemption, of such Securities.  Notwithstanding anything to the contrary
contained in this Article 14, the obligation of the Company to pay the
redemption price of such Securities, together with Interest accrued to, but
excluding, the date fixed for redemption, shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers.  If such an agreement is entered into, a copy
of which will be filed with the Trustee prior to the date fixed for redemption,
any Securities not duly surrendered for conversion by the holders thereof may,
at the option of the Company, be deemed, to the fullest extent permitted by
law, acquired by such purchasers from such holders and (notwithstanding
anything to the contrary contained in Article 15) surrendered by such
purchasers for conversion, all as of immediately prior to the close of business
on the date fixed for redemption (and the right to convert any such Securities
shall be extended through such time), subject to payment of the above amount as
aforesaid.  At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in
the same manner as it would monies deposited with it by the Company for the
redemption of Securities.  Without the
Trustee’s prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Securities shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture.

Section 14.05         Repurchase at Option of Holders Upon a Designated
Event.  (a)  If
there shall occur a Designated Event at any time prior to maturity of the
Securities, then each Securityholder shall have the right, at such holder’s
option, to require the Company to repurchase all of such holder’s Securities,
or any portion thereof that is a multiple of $1,000 principal amount, on the
date (the “Designated Event Repurchase Date”)
specified by the Company that is not less than twenty (20) Business Days and
not more than thirty-five (35) Business Days after the date of the Designated
Event Notice (as defined in Section 14.05(b)) of such Designated Event at a
repurchase price equal to 100% of the principal amount thereof, together with
accrued Interest to, but excluding, the Designated Event Repurchase Date; provided that if such Designated Event
Repurchase Date falls after a record date and on or prior to the corresponding
interest payment date, then the full amount of Interest payable on such
interest payment date shall be paid to the holders of record of the Securities
on the applicable record date instead of the holders surrendering the
Securities for repurchase on such Designated Event Repurchase Date.  Repurchases of Securities under this Section
14.05 shall be made, at the option of the holder thereof, upon:

(i)            delivery to the Trustee (or other
paying agent appointed by the Company) by a holder of a duly completed notice
(the “Designated Event Repurchase Notice”)
in the form set forth on the reverse of the Security prior to the close of
business on the Designated Event Repurchase Date; and

 51
 

(ii)           delivery or book-entry transfer of
the Securities to the Trustee (or other paying agent appointed by the Company)
at any time after delivery of the Designated Event Repurchase Notice (together
with all necessary endorsements) at the Corporate Trust Office of the Trustee
(or other paying agent appointed by the Company) in the Borough of Manhattan as
provided in Section 3.02 or at any other office of the paying agent, such
delivery being a condition to receipt by the holder of the repurchase price
therefor; provided that such repurchase price
shall be so paid pursuant to this Section 14.05 only if the Security so
delivered to the Trustee (or other paying agent appointed by the Company) shall
conform in all respects to the description thereof in the related Designated
Event Repurchase Notice.

The Company shall
purchase from the holder thereof, pursuant to this Section 14.05, a portion of
a Security, if the principal amount of such portion is $1,000 or a whole
multiple of $1,000.  Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.

Any purchase by the
Company contemplated pursuant to the provisions of this Section 14.05 shall be
consummated by the delivery of the consideration to be received by the holder
promptly following the later of the Designated Event Repurchase Date and the
time of the book-entry transfer or delivery of the Security.

Notwithstanding
anything herein to the contrary, any holder delivering to the Trustee (or other
paying agent appointed by the Company) the Designated Event Repurchase Notice
contemplated by this Section 14.05 shall have the right to withdraw such
Designated Event Repurchase Notice at any time prior to the close of business
on the Designated Event Repurchase Date by delivery of a written notice of
withdrawal to the Trustee (or other paying agent appointed by the Company) in
accordance with Section 14.05(c) below.

The Trustee (or other
paying agent appointed by the Company) shall promptly notify the Company of the
receipt by it of any Designated Event Repurchase Notice or written notice of
withdrawal thereof.

(b)           On
or before the tenth day after the occurrence of a Designated Event, the Company
or at its written request (which must be received by the Trustee at least five
(5) Business Days prior to the date the Trustee is requested to give notice as
described below, unless the Trustee shall agree in writing to a shorter period),
the Trustee, in the name of and at the expense of the Company, shall mail or
cause to be mailed to all holders of record on the date of the Designated Event
a notice (the “Designated Event Notice”)
of the occurrence of such Designated Event and of the repurchase right at the
option of the holders arising as a result thereof.  Such mailing shall be by first class
mail.  If the Company shall give such
notice, the Company shall also deliver a copy of the Designated Event Company
Notice to the Trustee at such time as it is mailed to Securityholders.  Concurrently with the mailing of any
Designated Event Notice, the Company shall issue a press release announcing
such Designated Event referred to in the Designated Event Notice, the form and
content of which press release shall be determined by the Company in its sole
discretion.  The failure to issue any
such press release or any defect therein shall not affect the validity of the
Designated Event Notice or any proceedings

 52

for the repurchase of any Security which any Securityholder may elect
to have the Company repurchase as provided in this Section 14.05.

Each Designated Event
Notice shall specify the circumstances constituting the Designated Event, the
Designated Event Repurchase Date, the price at which the Company shall be
obligated to repurchase Securities, that the holder must exercise the
repurchase right on or prior to the close of business on the Designated Event
Repurchase Date (the “Designated Event
Expiration Time”), that the holder shall have the right to withdraw
any Securities surrendered prior to the Designated Event Expiration Time, a
description of the procedure which a Securityholder must follow to exercise
such repurchase right and to withdraw any surrendered Securities, the place or
places where the holder is to surrender such holder’s Securities, the amount of
Interest accrued on each Security to the Designated Event Repurchase Date and
the CUSIP number or numbers of the Securities (if then generally in use) and
include a form of Designated Event Repurchase Notice.

No failure of the
Company to give the foregoing notices and no defect therein shall limit the
Securityholders’ repurchase rights or affect the validity of the proceedings
for the repurchase of the Securities pursuant to this Section 14.05.

(c)           A
Designated Event Repurchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Trustee (or other paying
agent appointed by the Company) in accordance with the Designated Event
Repurchase Notice at any time prior to the close of business on the Designated
Event Repurchase Date, specifying:

(i)            the certificate number, if any, of
the Security in respect of which such notice of withdrawal is being submitted,
or the appropriate Depositary information if the Security in respect of which
such notice of withdrawal is being submitted is represented by a Global
Security,

(ii)           the principal amount of the Security
with respect to which such notice of withdrawal is being submitted, and

(iii)          the principal amount, if any, of such
Security that remains subject to the original Designated Event Repurchase
Notice and that has been or will be delivered for purchase by the Company.

A written notice of
withdrawal of a Designated Event Repurchase Notice may be in the form set forth
in the preceding paragraph or may be in the form of a conditional withdrawal
contained in a Designated Event Repurchase Notice pursuant to the terms of
Section 14.05(a).

(d)           On
or prior to the Designated Event Repurchase Date, the Company will deposit with
the Trustee (or other paying agent appointed by the Company or if the Company
is acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.04) an amount of money sufficient to repurchase on the
Designated Event Repurchase Date all the Securities to be repurchased on such
date at the appropriate repurchase price, together with accrued Interest to,
but excluding, the Designated Event Repurchase Date; provided
that if such payment is made on the Designated Event Repurchase Date it must be
received by the Trustee or paying agent, as the case may be, by 10:00 a.m. New
York City time, on such date. Subject to

 53
 

receipt of funds and/or Securities by the Trustee (or other paying agent
appointed by the Company), payment for Securities surrendered for repurchase
(and not withdrawn) prior to the Designated Event Expiration Time will be made
promptly (but in no event more than five (5) Business Days) following the later
of (x) the Designated Event Repurchase Date with respect to such Security (provided the holder has satisfied the conditions in this
Section 14.05) and (y) the time of delivery of such Security to the Trustee (or
other paying agent appointed by the Company) by the holder thereof in the
manner required by this Section 14.05) by mailing checks for the amount payable
to the holders of such Securities entitled thereto as they shall appear in the
Security Register.

If the Trustee (or
other paying agent appointed by the Company) holds money sufficient to
repurchase on the Designated Event Repurchase Date all the Securities or
portions thereof that are to be purchased as of the Designated Event Repurchase
Date, then on or after the Designated Event Repurchase Date (i) the Securities
will cease to be outstanding, (ii) Interest on the Securities will cease to
accrue, and (iii) all other rights of the holders of such Securities will
terminate, whether or not book-entry transfer of the Securities has been made
or the Securities have been delivered to the Trustee or paying agent, other
than the right to receive the repurchase price upon delivery of the Securities.

(e)           The
Company will comply with the provisions of Rule 13e-4 and any other tender
offer rules under the Exchange Act to the extent then applicable in connection
with the repurchase rights of the holders of Securities in the event of a
Designated Event.

Section 14.06         Securities Repurchased in Part.  Upon presentation of any Security repurchased
pursuant to Section 14.05, only in part, the Company shall execute and the
Trustee shall authenticate and make available for delivery to the holder
thereof, at the expense of the Company, a new Security or Securities, of any
authorized denomination, in aggregate principal amount equal to the
unrepurchased portion of the Securities presented.

Section 14.07         Repayment to the Company.  To the extent that the aggregate amount of
cash or money deposited by the Company pursuant to Section 14.05(d) exceeds the
aggregate repurchase price of the Securities or portions thereof which the
Company is obligated to purchase as of the Designated Event Repurchase Date,
then, unless otherwise agreed in writing with the Company, promptly after the
Business Day following the Designated Event Repurchase Date, the Trustee shall
return any such excess to the Company together with interest, if any, thereon.

ARTICLE 15

CONVERSION OF SECURITIES

Section 15.01         Right To Convert.  (a) Subject to and upon compliance with the
provisions of this Indenture, prior to February 15, 2011, the holder of any
Security shall have the right, at such holder’s option, to convert the
principal amount of the Security, or any portion of such principal amount which
is a multiple of $1,000, into fully paid and non-assessable shares of Common Stock
(as such shares shall then be constituted) at the Conversion Rate in effect at
such time, by surrender of the Security to be so converted in whole or in part,
together with any required funds, in the manner provided in Section 15.02.

 54
 

If any Securities have been
called for redemption pursuant to Section 14.02, such Securities may be
converted, at any time until the close of business on the Business Day
immediately preceding the redemption date, unless the Company fails to pay the
redemption price of such Securities.

A Security in respect
of which a holder is electing to exercise its option to require the Company to
repurchase such holder’s Securities upon a Designated Event pursuant to Section
14.05 may be converted only if such holder withdraws its election in accordance
with Section 14.05.  A holder of
Securities is not entitled to any rights of a holder of Common Stock until such
holder has converted its Securities into Common Stock, and only to the extent
such Securities are deemed to have been converted into Common Stock under this
Article 15.

Section 15.02         Exercise Of Conversion Privilege; Issuance Of Common
Stock On Conversion; No Adjustment For Interest Or Dividends.  In order to exercise the conversion privilege
with respect to any Security in certificated form, the Company must receive at
the office or agency of the Company maintained for that purpose or, at the
option of such holder, the Corporate Trust Office, such Security with the
original or facsimile of the form entitled “Conversion
Notice” on the reverse thereof, duly completed and manually signed,
together with such Securities duly endorsed for transfer, accompanied by the
funds, if any, required by this Section 15.02. 
Such notice shall also state the name or names (with address or addresses)
in which the certificate or certificates for shares of Common Stock which shall
be issuable on such conversion shall be issued, and shall be accompanied by
transfer or similar taxes, if required pursuant to Section 15.07.

In order to exercise
the conversion privilege with respect to any interest in a Global Security, the
beneficial holder must complete, or cause to be completed, the appropriate
instruction form for conversion pursuant to the Depositary’s book-entry
conversion program, deliver, or cause to be delivered, by book-entry delivery
an interest in such Global Security, furnish appropriate endorsements and
transfer documents if required by the Company or the Trustee or conversion
agent, and pay the funds, if any, required by this Section 15.02 and any
transfer taxes if required pursuant to Section 15.07.

As promptly as
practicable after satisfaction of the requirements for conversion set forth
above, subject to compliance with any restrictions on transfer if shares
issuable on conversion are to be issued in a name other than that of the
Securityholder (as if such transfer were a transfer of the Security or
Securities (or portion thereof) so converted), the Company shall issue and
shall deliver to such Securityholder at the office or agency maintained by the
Company for such purpose pursuant to Section 3.02, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
conversion of such Security or portion thereof as determined by the Company in
accordance with the provisions of this Article 15 and a check or cash in
respect of any fractional interest in respect of a share of Common Stock
arising upon such conversion, calculated by the Company as provided in Section
15.03.  In case any Security of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.03, the Company shall execute and the Trustee shall
authenticate and deliver to the holder of the Security so surrendered, without
charge to him, a new Security or Securities in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Security.

 55
 

Each conversion shall
be deemed to have been effected as to any such Security (or portion thereof) on
the date on which the requirements set forth above in this Section 15.02 have
been satisfied as to such Security (or portion thereof), and the Person in
whose name any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become on said date the
holder of record of the shares represented thereby; provided
that any such surrender on any date when the stock transfer books of the
Company shall be closed shall constitute the Person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Rate in effect on the date upon which
such Security shall be surrendered.

Any Security or portion
thereof surrendered for conversion during the period from the close of business
on the record date for any interest payment date to the close of business on
the Business Day preceding the following interest payment date shall be
accompanied by payment, in immediately available funds or other funds
acceptable to the Company, of an amount equal to the Interest otherwise payable
on such interest payment date on the principal amount being converted; provided that no such payment need be made (1) if the
Company has specified a redemption date that is after a record date and on or
prior to the next interest payment date, (2) if the Company has specified a
Designated Event Repurchase Date following a Designated Event that is after a
record date and on or prior to the next interest payment date or (3) to the
extent of any overdue Interest, if any overdue Interest exists at the time of
conversion with respect to such Security. 
Except as provided above in this Section 15.02, no payment or other
adjustment shall be made for Interest accrued on any Security converted or for
dividends on any shares issued upon the conversion of such Security as provided
in this Article 15.

Upon the conversion of
an interest in a Global Security, the Trustee (or other conversion agent
appointed by the Company), or the Custodian at the direction of the Trustee (or
other conversion agent appointed by the Company), shall make a notation on such
Global Security as to the reduction in the principal amount represented
thereby.  The Company shall notify the
Trustee in writing of any conversions of Securities effected through any
conversion agent other than the Trustee.

Upon the conversion of
a Security, any accrued but unpaid Interest to the conversion date with respect
to the converted Security shall not be cancelled, extinguished or forfeited,
but rather shall be deemed to be paid in full to the holder thereof through
delivery of the Common Stock (together with the cash payment, if any in lieu of
fractional shares) in exchange for the Security being converted pursuant to the
provisions hereof; and the fair market value of such shares of Common Stock
(together with any such cash payment in lieu of fractional shares) shall be
treated as issued, to the extent thereof, first in exchange for and in
satisfaction of the Company’s obligation to pay the principal amount of the
converted Security, the accrued but unpaid Interest through the conversion
date, and the balance, if any, of such fair market value of such Common Stock
(and any such cash payment) shall be treated as issued in exchange for and in
satisfaction of the right to convert the Security being converted pursuant to
the provisions hereof.

Section 15.03         Cash Payments in Lieu of Fractional Shares.  No fractional shares of Common Stock or scrip
certificates representing fractional shares shall be issued upon conversion of
Securities.   If more than one Security
shall be surrendered for conversion at one

 56
 

time by the same holder, the number of full shares that shall be
issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the extent
permitted hereby) so surrendered.   If
any fractional share of stock would be issuable upon the conversion of any
Security or Securities, the Company shall make an adjustment and payment
therefor in cash at the current market price thereof to the holder of
Securities.  For purposes of this Section
15.03 only, the current market price of a share of Common Stock shall be the Closing
Sale Price on the last Trading Day immediately preceding the day on which the
Securities (or specified portions thereof) are deemed to have been converted.

Section 15.04         Conversion Rate.  Each $1,000 principal amount of the
Securities shall be convertible into the number of shares of Common Stock
specified in the form of Security (herein called the “Conversion Rate”) attached as Exhibit A hereto, subject to
adjustment as provided in this Article 15.

Section 15.05         Adjustment Of Conversion Rate.  The Conversion Rate shall be adjusted from
time to time by the Company as follows:

(a)           In
case the Company shall hereafter pay a dividend or make a distribution to all
holders of the outstanding shares of Common Stock in shares of Common Stock,
the Conversion Rate shall be increased so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect at the opening of
business on the date following the Record Date for such dividend or
distribution by a fraction,

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

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

such increase to become
effective immediately after the opening of business on the day following such
Record Date.  If any dividend or
distribution of the type described in this Section 15.05(a) is declared but not
so paid or made, the Conversion Rate shall again be adjusted to the Conversion
Rate that would then be in effect if such dividend or distribution had not been
declared.

(b)           In
case the Company shall issue rights or warrants to all holders of its
outstanding shares of Common Stock entitling them (for a period expiring within
forty-five (45) days after the Record Date for the issuance of such rights and
warrants to subscribe for or purchase shares of Common Stock at a price per
share less than the average of the Closing Sale Prices of the Common Stock for
the 10 Trading Days immediately preceding the date such distribution is first
publicly announced by the Company, the Conversion Rate shall be increased so
that the same shall equal the rate determined by multiplying the Conversion
Rate in effect immediately prior to such Record Date by a fraction,

 57
 

(i)        the numerator of which shall be the
number of shares of Common Stock outstanding on such Record Date plus the total
number of additional shares of Common Stock offered for subscription or
purchase, and

(ii)           the denominator of which shall be the
sum of the number of shares of Common Stock outstanding at the close of
business on such Record Date plus the number of shares that the aggregate
offering price of the total number of shares so offered would purchase at a
price equal to the average of the Closing Sale Prices of the Common Stock for
the 10 Trading Days immediately preceding the date such distribution is first
publicly announced by the Company.

Such adjustment shall
be successively made whenever any such rights or warrants are issued, and shall
become effective immediately after the opening of business on the day following
the Record Date for the issuance of such rights or warrants.  To the extent that shares of Common Stock are
not delivered after the expiration of such rights or warrants, the Conversion
Rate shall be readjusted to the Conversion Rate that would then be in effect
had the adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Common Stock actually
delivered.  If such rights or warrants
are not so issued, the Conversion Rate shall again be adjusted to be the
Conversion Rate that would then be in effect if such Record Date had not been
fixed.  In determining whether any rights
or warrants entitle the holders to subscribe for or purchase shares of Common
Stock at a price less than the average of the Closing Sale Prices of the Common
Stock for the 10 Trading Days immediately preceding the date such distribution
is first publicly announced by the Company, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into
account any consideration received by the Company for such rights or warrants
and any amount payable on exercise or conversion thereof, the value of such
consideration, if other than cash, to be determined by the Board of Directors.

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

(d)           In
case the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock shares of any class of capital stock of the Company or
evidences of its indebtedness or assets (including cash or securities, but
excluding any rights or warrants referred to in Section 15.05(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 15.05(a) (any of the foregoing hereinafter in this Section 15.05(d)
called the “Distributed Property”),
then, in each such case (unless the Company elects to reserve such Distributed
Property for distribution to the Securityholders upon the conversion of the
Securities so that any such holder converting Securities will receive upon such
conversion, in addition to the shares of Common Stock to which such holder is
entitled, the amount and kind of

 58
 

such Distributed Property which such holder would have received if such
holder had converted its Securities into Common Stock immediately prior to the
Record Date for such distribution of the Distributed Property) the Conversion
Rate shall be increased so that the same shall be equal to the rate determined
by multiplying the Conversion Rate in effect on the Record Date with respect to
such distribution by a fraction,

(i)            the numerator of which shall be the
Current Market Price on such Record Date; and

(ii)           the denominator of which shall be the
Current Market Price on such Record Date less the Fair Market Value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a resolution of the Board of Directors) on such Record Date of
the portion of the Distributed Property so distributed applicable to one share
of Common Stock,

such adjustment to
become effective immediately prior to the opening of business on the day following
such Record Date; provided that if the then Fair
Market Value (as so determined) of the portion of the Distributed Property so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price on such Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Securityholder shall
have the right to receive upon conversion the amount of Distributed Property
such holder would have received had such holder converted each Security on the
Record Date for such distribution.  If
such dividend or distribution is not so paid or made, the Conversion Rate shall
again be adjusted to be the Conversion Rate that 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 15.05(d) 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 on the applicable Record Date for such
distribution.  Notwithstanding the
foregoing, if the Distributed Property distributed by the Company to all
holders of its Common Stock consist of capital stock of, or similar equity
interests in, a Subsidiary or other business unit of the Company or a
Subsidiary, the Conversion Rate shall be increased so that the same shall be
equal to the rate determined by multiplying the Conversion Rate in effect on
the Record Date with respect to such distribution by a fraction,

(i)            the numerator of which shall be the
sum of (A) the average of the Closing Sale Prices of the Common Stock for the
ten (10) Trading Days commencing on and including the fifth Trading Day after the
date on which “ex-dividend trading” commences for such dividend or distribution
on The Nasdaq Stock Market or such other national or regional exchange or
market on which such securities are then listed or quoted (the “Ex-Dividend Date”) plus (B) the Fair
Market Value of the securities distributed in respect of each share of Common
Stock for which this Section 15.05(d) applies, which shall equal the number of
securities distributed in respect of each share of Common Stock multiplied by
the average of the Closing Sale Prices of those securities distributed for the
ten (10) Trading Days commencing on and including the fifth Trading Day after
the Ex-Dividend Date; and

 59
 

(ii)           the denominator of which shall be the
average of the Closing Sale Prices of the Common Stock for the ten (10) Trading
Days commencing on and including the fifth Trading Day after the Ex-Dividend
Date,

such adjustment to become effective immediately prior to the opening of
business on the day following such Record Date; provided
that the Company may in lieu of the foregoing adjustment make adequate
provision so that each Securityholder shall have the right to receive upon
conversion the amount of Distributed Property such holder would have received
had such holder converted each Security on the Record Date with respect to such
distribution.

Rights or warrants
distributed by the Company to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase shares of the Company’s capital stock
(either initially or under certain circumstances), which rights or warrants,
until the occurrence of a specified event or events (“Trigger
Event”): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 15.05 (and no adjustment to the Conversion Rate under
this Section 15.05 will be required) until the occurrence of the earliest
Trigger Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the
Conversion Rate shall be made under this Section 15.05(d).  If any such right or warrant, including any
such existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights 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 or warrants without exercise by any of the
holders thereof).  In addition, in the
event of any distribution (or deemed distribution) of rights or warrants, or
any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Rate under this Section 15.05
was made, (1) in the case of any such rights or warrants that shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as
though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect
to such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such
redemption or repurchase, and (2) in the case of such rights or warrants that
shall have expired or been terminated without exercise by any holders thereof,
the Conversion Rate shall be readjusted as if such rights and warrants had not
been issued.

No adjustment of the
Conversion Rate shall be made pursuant to this Section 15.05(d) in respect of
rights or warrants distributed or deemed distributed on any Trigger Event to
the extent that such rights or warrants are actually distributed or reserved by
the Company for distribution to holders of Securities upon conversion by such holders
of Securities into Common Stock.

For purposes of this
Section 15.05(d) and Section 15.05(a) and (b), any dividend or
distribution to which this Section 15.05(d) is applicable that also includes
shares of Common

 60
 

Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock (or both), shall
be deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets or shares of capital stock other than such shares of
Common Stock or rights or warrants (and any Conversion Rate adjustment required
by this Section 15.05(d) with respect to such dividend or distribution shall
then be made) immediately followed by (2) a dividend or distribution of such
shares of Common Stock or such rights or warrants (and any further Conversion
Rate adjustment required by Sections 15.05(a) and 15.05(b) with respect to
such dividend or distribution shall then be made), except any shares of Common
Stock included in such dividend or distribution shall not be deemed
“outstanding at the close of business on such Record Date” within the meaning
of Section 15.05(a).

(e)           In
case the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock cash (excluding any dividend or distribution in connection
with the liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary), then, in such case, the Conversion Rate shall be
increased so that the same shall equal the rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on the
Record Date for such dividend or distribution by a fraction,

(i)            the numerator of which shall be the
Current Market Price on such Record Date; and

(ii)           the denominator of which shall be the
Current Market Price on such Record Date less the amount of cash so distributed
applicable to one share of Common Stock,

such adjustment to be
effective immediately prior to the opening of business on the day following
such Record Date; provided that if the portion of
the cash so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price on such Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Securityholder shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted each Security on
the Record Date.  If such dividend or
distribution is not so paid or made, such Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if such
dividend or distribution had not been declared.

(f)            In
case a tender or exchange offer made by the Company or any Subsidiary for all
or any portion of the Common Stock shall expire and such tender or exchange
offer (as amended upon the expiration thereof) shall require the payment to
stockholders of consideration per share of Common Stock having a Fair Market
Value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) that as of
the last time (the “Expiration Time”)
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it may be amended) exceeds the Closing Sale Price of a share of Common Stock on
the Trading Day next succeeding the Expiration Time, the Conversion Rate shall
be increased so that the same shall equal the rate determined by multiplying
the Conversion Rate in effect immediately prior to the Expiration Time by a
fraction,

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(i)            the numerator of which shall be the
sum of (x) the Fair Market Value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged 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) at
the Expiration Time and the Closing Sale Price of a share of Common Stock on
the Trading Day next succeeding the Expiration Time, and

(ii)           the denominator of which shall be the
number of shares of Common Stock outstanding (including any Purchased Shares)
at the Expiration Time multiplied by the Closing Sale Price of a share of
Common Stock on the Trading Day next succeeding the Expiration Time.

such adjustment to
become effective immediately prior to the opening of business on the day
following the Expiration Time.  If the
Company is obligated to purchase shares pursuant to any such tender or exchange
offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such tender or exchange offer had not been made.

(g)           For
purposes of this Section 15.05, the following terms shall have the meaning
indicated:

(i)            “Current
Market Price” shall mean the average of the daily Closing Sale
Prices per share of Common Stock for the ten consecutive Trading Days ending
not later than the earlier of such date of determination and the day before the
“ex” date with respect to the
issuance, distribution, subdivision or combination requiring such computation
immediately prior to the date in question. 
For purposes of this paragraph, the term “ex” date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades, regular
way, on the relevant exchange or in the relevant market from which the Closing
Sale Price was obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any subdivision or combination
of shares of Common Stock, means the first date on which the Common Stock
trades, regular way, on such exchange or in such market after the time at which
such subdivision or combination becomes effective.

If another issuance,
distribution, subdivision or combination to which Section 15.05 applies occurs
during the period applicable for calculating “Current
Market Price” pursuant to the definition in the preceding paragraph,
“Current Market Price” shall be
calculated for such period in a manner determined by the Board of Directors to
reflect the impact of such issuance, distribution, subdivision or combination
on the Closing Sale Price of the Common Stock during such period.

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

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

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

(h)           The Company may make such increases
in the Conversion Rate, in addition to those required by Section 15.05(a),
(b), (c), (d), (e), or (f) as the Board of Directors considers to be advisable
to avoid or diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes.

To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if the
Board of Directors shall have made a determination that such increase would be
in the best interests of the Company, which determination shall be
conclusive.  Whenever the Conversion Rate
is increased pursuant to the preceding sentence, the Company shall notify the
holders of record of the Securities of such increase, and such notice shall
state the increased Conversion Rate and the period during which it will be in
effect.

(i)            No adjustment in the Conversion Rate
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in such rate; provided that
any adjustments that by reason of this Section 15.05(i) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Article 15 shall be made by the Company and shall be made to the nearest cent
or to the nearest one-ten thousandth (1/10,000) of a share, as the case may be.  No adjustment need be made for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest or for any issuance of Common Stock or convertible or exchangeable
securities or rights to purchase Common Stock or convertible or exchangeable
securities.  To the extent the Securities
become convertible into cash, assets, property or securities (other than
capital stock of the Company), no adjustment need be made thereafter as to the
cash, assets, property or such securities. 
Interest will not accrue on any cash into which the Securities are
convertible.

(j)            Whenever the Conversion Rate is
adjusted as herein provided, the Company shall promptly file with the Trustee
and any conversion agent other than the Trustee an Officers’ Certificate
setting forth the Conversion Rate after such adjustment and setting forth a
brief

 63
 

statement of the facts
requiring such adjustment.  Unless and
until a Responsible Officer of the Trustee shall have received such Officers’
Certificate, the Trustee shall not be deemed to have knowledge of any adjustment
of the Conversion Rate and may assume that the last Conversion Rate of which it
has knowledge is still in effect. 
Promptly after delivery of such certificate, the Company shall prepare a
notice of such adjustment of the Conversion Rate setting forth the adjusted
Conversion Rate and the date on which each adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Rate to the holder
of each Security at his last address appearing on the Security Register
provided for in Section 2.05 of this Indenture, within twenty (20) days after
execution thereof.  Failure to deliver
such notice shall not affect the legality or validity of any such adjustment.

(k)           In any case in which this Section
15.05 provides that an adjustment shall become effective immediately after (1)
a Record Date for an event, (2) the Record Date for a dividend or distribution
described in Section 15.05(a), (3) the Record Date for the issuance of rights
or warrants as described in Section 15.05(b) or (4) the Expiration Time for any
tender or exchange offer pursuant to Section 15.05(f) (each a “Determination Date”), the Company may
elect to defer until the occurrence of the applicable Adjustment Event (as
hereinafter defined) (x) issuing to the holder of any Security converted after
such Determination Date and before the occurrence of such Adjustment Event, the
additional shares of Common Stock or other securities issuable upon such
conversion by reason of the adjustment required by such Adjustment Event over
and above the Common Stock issuable upon such conversion before giving effect
to such adjustment and (y) paying to such holder any amount in cash in lieu of
any fraction pursuant to Section 15.03. 
For purposes of this Section 15.05(k), the term “Adjustment Event” shall mean:

(i)            in
any case referred to in clause (1) hereof, the occurrence of such event,

(ii)           in
any case referred to in clause (2) hereof, the date any such dividend or
distribution is paid or made,

(iii)          in
any case referred to in clause (3) hereof, the date of expiration of such
rights or warrants, and

(iv)          in
any case referred to in clause (4) hereof, the date a sale or exchange of
Common Stock pursuant to such tender or exchange offer is consummated and
becomes irrevocable.

(l)            For purposes of this Section 15.05,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock.  The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

Section 15.06         Effect
Of Reclassification, Consolidation, Merger or Sale.  If any of the following events occur, namely
(i) any reclassification or change of the outstanding shares of Common Stock
(other than a subdivision or combination to which Section 15.05(c) applies),
(ii) any consolidation, merger or combination of the Company with another
Person as a result of which holders of Common Stock shall be entitled to
receive stock, other securities or other

 64
 

property or assets (including
cash) with respect to or in exchange for such Common Stock, or (iii) any sale
or conveyance of all or substantially all of the properties and assets of the
Company to any other Person as a result of which holders of Common Stock shall
be entitled to receive stock, other securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then the
Company or the successor or purchasing Person, as the case may be, shall
execute with the Trustee a supplemental indenture (which shall comply with the
Trust Indenture Act as in force at the date of execution of such supplemental
indenture) providing that each Security shall be convertible into the kind and
amount of shares of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance by a holder of a number of shares of
Common Stock issuable upon conversion of such Securities (assuming, for such
purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Securities) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance assuming such holder of Common Stock did not exercise his rights of
election, if any, as to the kind or amount of stock, other securities or other
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance (provided that, if the kind or amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised (“non-electing share”),
then for the purposes of this Section 15.06 the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance for each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).  Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 15.

The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Securities, at its address appearing
on the Security Register provided for in Section 2.05 of this Indenture, within
twenty (20) days after execution thereof. 
Failure to deliver such notice shall not affect the legality or validity
of such supplemental indenture.

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

If this Section 15.06 applies to any event or occurrence, Section 15.05
shall not apply.

Section 15.07         Taxes
On Shares Issued.  The
issuance of stock certificates on conversions of Securities shall be made
without charge to the converting Securityholder for any documentary, stamp or
similar issue or transfer tax in respect of the issue thereof.  The Company shall not, however, be required
to pay any such tax which may be payable in respect of any transfer involved in
the issue and delivery of stock in any name other than that of the holder of
any Security converted, and the Company shall not be required to issue or
deliver any such stock certificate unless and until the Person or Persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.

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Section 15.08         Reservation
of Shares, Shares to Be Fully Paid; Compliance With Governmental Requirements;
Listing of Common Stock.  The
Company shall provide, free from preemptive rights, out of its authorized but
unissued shares or shares held in treasury, sufficient shares of Common Stock
to provide for the conversion of the Securities from time to time as such
Securities are presented for conversion.

Before taking any action which would cause an adjustment increasing the
Conversion Rate to an amount that would cause the Conversion Price to be
reduced below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Securities, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Rate.

The Company covenants that all shares of Common Stock which may be
issued upon conversion of Securities will upon issue be fully paid and
non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.

The Company covenants that, if any shares of Common Stock to be provided
for the purpose of conversion of Securities hereunder require registration with
or approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as possible, to the extent then permitted by the
rules and interpretations of the Commission (or any successor thereto),
endeavor to secure such registration or approval, as the case may be.

The Company covenants that, if at any time the Common Stock shall be
listed on the Nasdaq Global Market or any other national securities exchange or
automated quotation system, the Company will, if permitted by the rules of such
exchange or automated quotation system, list and keep listed, so long as the Common
Stock shall be so listed on such exchange or automated quotation system, all
Common Stock issuable upon conversion of the Security; provided
that if the rules of such exchange or automated quotation system permit the
Company to defer the listing of such Common Stock until the first conversion of
the Securities into Common Stock in accordance with the provisions of this
Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Securities in accordance with the requirements of such
exchange or automated quotation system at such time.

Section 15.09         Responsibility
Of Trustee.  The Trustee and
any other conversion agent shall not at any time be under any duty or
responsibility to any holder of Securities to determine the Conversion Rate or
whether any facts exist which may require any adjustment of the Conversion
Rate, or with respect to the nature or extent or calculation of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making the same.  The Trustee and any other conversion agent
shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which
may at any time be issued or delivered upon the conversion of any Security; and
the Trustee and any other conversion agent make no representations with respect
thereto.  Neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
register the transfer of or deliver any shares of Common Stock or stock
certificates or other securities or property or cash upon the surrender

 66
 

of any Security for the purpose
of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article 15.  Without limiting the generality of the
foregoing, neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 15.06 relating either
to the kind or amount of shares of stock or securities or property (including
cash) receivable by Securityholders upon the conversion of their Securities
after any event referred to in such Section 15.06 or to any adjustment to be
made with respect thereto, but, subject to the provisions of Section 6.01, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers’ Certificate (which the
Company shall be obligated to file with the Trustee prior to the execution of
any such supplemental indenture) with respect thereto.

Section 15.10         Notice
To Holders Prior To Certain Actions. 
In case:

(a)           the Company shall
declare a dividend (or any other distribution) on its Common Stock that would
require an adjustment in the Conversion Rate pursuant to Section 15.05; or

(b)           the Company shall
authorize the granting to the holders of all or substantially all of its Common
Stock of rights or warrants to subscribe for or purchase any share of any class
or any other rights or warrants; or

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

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

the Company shall cause to be filed with the Trustee and to be mailed
to each holder of Securities at his address appearing on the Security Register
provided for in Section 2.05 of this Indenture, as promptly as possible but in
any event at least ten (10) days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up.  Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.

 67
 

 

Section 15.11         Shareholder
Rights Plans.  Each share of
Common Stock issued upon conversion of Securities pursuant to this Article 15
shall be entitled to receive the appropriate number of rights, if any, and the
certificates representing the Common Stock issued upon such conversion shall
bear such legends, if any, in each case as may be provided by the terms of any
shareholder rights plan adopted by the Company, as the same may be amended from
time to time. If at the time of conversion, however, the rights have separated
from the shares of Common Stock in accordance with the provisions of the
applicable shareholder rights agreement so that the holders of the Securities
would not be entitled to receive any rights in respect of Common Stock issuable
upon conversion of the Securities, the Conversion Rate will be adjusted as if the
Company distributed to all holders of Common Stock shares of the Company’s
capital stock, evidences of indebtedness or assets (including securities but
excluding rights or warrants to purchase Common Stock issued to all holders of
Common Stock, Common Stock issued as a dividend or distribution on Common Stock
and cash distributions), subject to readjustment in the event of the
expiration, termination or redemption of the rights.

Section 15.12         Transfer
Restrictions. (a)  Shares of Common Stock issued upon
conversion of Restricted Securities (all shares of Common Stock issued in
exchange therefor or substitution thereof) shall be represented by certificates
bearing the Restricted Securities Legend and shall be subject to the
restrictions or transfer set forth in the Restricted Securities Legend.

(b)           Any Common Stock as to which such
restrictions on transfer as to which the conditions for removal of the
Restricted Securities Legend have been satisfied may, upon surrender of the
certificates representing such shares of Common Stock for exchange in
accordance with the procedures of the transfer agent for the Common Stock, be
exchanged for a new certificate or certificates for a like number of shares of
Common Stock, which shall not bear the Restricted Securities Legend.

 68

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed.

	
   

  	
  INCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul A. Friedman

  
	
   

  	
   

  	
  Name: Paul A. Friedman, M.D.

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bradley E. Scarbrough

  
	
   

  	
   

  	
  Name:   Bradley E. Scarbrough

  
	
   

  	
   

  	
  Title:     Vice President

  

 

EXHIBIT A

THE FOLLOWING LEGEND
SHALL APPEAR ON THE FACE OF EACH SECURITY:

THIS SECURITY BEARS
ORIGINAL ISSUE DISCOUNT. INFORMATION INCLUDING THE ISSUE PRICE, AMOUNT OF
ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY WILL BE MADE
AVAILABLE TO HOLDERS UPON REQUEST TO BRAD SCARBROUGH OF U.S. BANK NATIONAL
ASSOCIATION (THE TRUSTEE UNDER THE INDENTURE REFERRED TO ON THE REVERSE HEREOF), AT (213) 615-6047.

[GLOBAL SECURITIES
LEGEND]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE “DEPOSITARY”, WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY)
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 REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(AND ANY PAYMENT HEREIN IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

[RESTRICTED SECURITIES
LEGEND]

THIS SECURITY AND THE SHARES OF INCYTE CORPORATION (THE ‘‘COMPANY’’)
COMMON STOCK (‘‘COMMON STOCK’’) ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
‘‘SECURITIES ACT’’), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY 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.

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE ‘‘RESALE
RESTRICTION TERMINATION DATE’’) THAT IS TWO YEARS AFTER THE LAST ORIGINAL ISSUE
DATE HEREOF ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, 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

 A-1
 

ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHTS OF THE COMPANY AND
THE TRUSTEE PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) 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
WHERE REGISTRATION OR TRANSFER OF THIS SECURITY IS REQUIRED, A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER
THE RESALE RESTRICTION TERMINATION DATE.

 A-2
 

 

INCYTE CORPORATION

31⁄2% CONVERTIBLE SENIOR
NOTES DUE 2011

CUSIP:

	
  No.

  	
  $

  

 

Incyte Corporation, a corporation duly organized and validly existing
under the laws of the State of Delaware (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 its registered assigns, [the principal sum of                     
Dollars] [the principal sum of $151,800,000 (which principal amount may from
time to time be increased or decreased to such other principal amounts (which,
taken together with the principal amount of all other Outstanding Securities,
shall not exceed $151,800,000) as then set forth on Schedule I hereto)](1) on
February 15, 2011 at the office or agency of the Company maintained for that
purpose in accordance with the terms of the Indenture, in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay Interest, semiannually
on February 15 or August 15 of each year, commencing February 15, 2007, on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum of 31⁄2%, from the February 15 or August 15, as the case may be, next
preceding the date of this Security to which Interest has been paid or duly
provided for, or unless no Interest has been paid or duly provided for on the
Securities, in which case from September 26, 2006 until payment of said
principal sum has been made or duly provided for.  Except as otherwise provided in the
Indenture, the Interest payable on the Security pursuant to the Indenture on
any February 15 or August 15 will be paid to the Person entitled thereto as it
appears in the Security Register at the close of business on the record date,
which shall be the February 1 or August 1 (whether or not a Business Day) next
preceding such February 15 or August 15, as provided in the Indenture; provided that any such Interest not punctually paid or duly
provided for shall be payable as provided in the Indenture.  The Company shall pay Interest (i) on any
Securities in certificated form by check mailed to the address of the Person
entitled thereto as it appears in the Security Register (provided
that the holder of Securities with an aggregate principal amount in excess of
$2,000,000 shall, at the written election of such holder, be paid by wire
transfer of immediately available funds) or (ii) on any Global Security by wire
transfer of immediately available funds to the account of the Depositary or its
nominee.

The Company promises to pay Interest on overdue principal, premium, if
any, and (to the extent that payment of such Interest is enforceable under
applicable law) interest at the rate of 41⁄2% per annum.

Reference is made to the further provisions of this Security set forth
on the reverse hereof, including, without limitation, provisions giving the
holder of this Security the right to convert this Security into Common Stock of
the Company on the terms and subject to the limitations referred to on the
reverse hereof and as more fully specified in the Indenture.  Such

(1)           Include in Global Security.

 A-3
 

further provisions shall for all purposes have the same effect as
though fully set forth at this place.

This Security 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 the State of New York, without regard to
conflicts of laws principles thereof.

This Security 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.

 A-4
 

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

	
   

  	
  INCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Paul A. Friedman, M.D.

  
	
   

  	
   

  	
  Title:  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:  Patricia A. Schreck

  	
   

  
	
   

  	
  Title:  Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE’S CERTIFICATE OF AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  This is one of the Securities described in the within-named
  Indenture.

  
	
   

  
	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  
							

 

 A-5
 

FORM OF REVERSE OF
SECURITY

INCYTE CORPORATION

31⁄2% CONVERTIBLE SENIOR
NOTES DUE 2011

This Security is one of a duly authorized issue of Securities of the
Company, designated as its “31⁄2% Convertible Senior Notes due 2011” (herein
called the “Securities”), issued and to be
issued under and pursuant to an Indenture dated as of September 26, 2006
(herein called the “Indenture”),
between the Company and U.S. Bank National Association, as trustee (herein
called 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.

In case an Event of Default shall have occurred and be continuing, the principal
of, premium, if any, and accrued and unpaid Interest on all Securities may be
declared by either the Trustee or the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding, and upon said declaration
shall become, due and payable, in the manner, with the effect and subject to
the conditions provided in the Indenture.

The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of at least a majority in aggregate
principal amount of the Securities at the time outstanding, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the
Securities; provided that no such supplemental
indenture shall, without the consent of the holders of all Securities then
outstanding, (i) extend the fixed maturity of any Security, or reduce the rate
or extend the time of payment of Interest thereon, or reduce the principal
amount thereof or premium, if any, thereon, or reduce any amount payable on
redemption or repurchase thereof, or change the obligation of the Company to
repurchase any Security upon the happening of a Designated Event in a manner
adverse to the holders of Securities, or impair the right of any Securityholder
to institute suit for the payment thereof, or make the principal thereof or
Interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Securities, or impair the right to convert the Securities
into Common Stock or reduce the number of shares of Common Stock or any other
property receivable by a Securityholder upon conversion subject to the terms
set forth herein, including Section 15.05 and Section 15.06, in each case,
without the consent of the holder of each Security so affected, or (ii) modify
any of the provisions of this Section 9.02 or Section 5.07, except to increase
any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the holder of
each Security so affected, or change any obligation of the Company to maintain
an office or agency in the places and for the purposes set forth in Section
3.02, or reduce the quorum or voting requirements set forth in Article 8 or
reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture.

Subject to the provisions of the Indenture, the holders of a majority
in aggregate principal amount of the Securities at the time outstanding may on
behalf of the holders of all of the Securities waive any past default or Event
of Default under the Indenture and its consequences

 A-6
 

except (A) a default in the payment of Interest, or any premium on, or
the principal of, any of the Securities, (B) a failure by the Company to
convert any Securities into Common Stock of the Company, (C) a default in the
payment of the redemption price pursuant to Article 14 of the Indenture, (D) a
default in the payment of the repurchase price pursuant to Article 14 of the
Indenture, or (E) a default in respect of a covenant or provisions of the
Indenture which under Article 9 of the Indenture cannot be modified or amended
without the consent of the holders of each or all Securities then outstanding
or affected thereby.  Upon any such
waiver, the Company, the Trustee and the holders of the Securities shall be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.  Whenever
any default or Event of Default hereunder shall have been waived as permitted
by Section 5.07 of the Indenture, said default or Event of Default shall for
all purposes of the Securities and the Indenture be deemed to have been cured
and to be not continuing; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.

No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
Interest on this Security at the place, at the respective times, at the rate
and in the coin or currency herein prescribed.

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

The Securities are issuable in fully registered form, without coupons,
in denominations of $1,000 principal amount and any multiple of $1,000.  At the office or agency of the Company
referred to on the face hereof, and in the manner and subject to the
limitations provided in the Indenture, without payment of any service charge
but may be with payment of a sum sufficient to cover any tax, assessment or
other governmental charge that may be imposed in connection with any
registration or exchange of Securities, Securities may be exchanged for a like
aggregate principal amount of Securities of any other authorized denominations.

Beginning February 20, 2007, the Company may redeem the notes in whole
or in part at the following prices expressed as a percentage of the principal
amount:

	
  Redemption Period

  	
   

  	
  Price (%)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Beginning on February 20, 2007 and ending on February 14, 2008

  	
   

  	
  102.0

  	
  %

  
	
  Beginning on February 15, 2008 and ending on February 14, 2009

  	
   

  	
  101.5

  	
  %

  
	
  Beginning on February 15, 2009 and ending on February 14, 2010

  	
   

  	
  101.0

  	
  %

  
	
  Beginning on February 15, 2010 and ending on February 14, 2011

  	
   

  	
  100.5

  	
  %

  

 

and 100% if redeemed on February 15, 2011. In each case, the Company
will pay accrued and unpaid Interest, if any, to, but excluding, the redemption
date, provided that if the redemption date
falls after a record date but on or prior to the corresponding interest payment
date, then the full amount of Interest payable on such interest payment date
shall be paid to the holders of record of such Securities on the close of
business on the applicable record date. 
We are required

 A-7
 

to give notice of redemption by mail to holders not more than 60 but
not less than 20 days prior to the redemption date.

The Company may not give notice of any redemption of the Securities if
a default in the payment of Interest, or premium, if any, on the Securities has
occurred and is continuing or if the principal amount of the Securities has
been accelerated.

The Securities are not subject to redemption through the operation of
any sinking fund.

If a Designated Event occurs at any time prior to maturity of the
Securities, the Company shall become obligated to purchase, at the option of
the holder, all or any portion of the Securities held by such holder, on a date
specified by the Company not less than twenty (20) and not more than
thirty-five (35) Business Days after notice thereof at a repurchase price of
100% of the principal amount, plus any accrued and unpaid Interest, on such
Security up to, but excluding, the Designated Event Repurchase Date; provided that if the repurchase date falls after a record
date and on or prior the corresponding interest payment date, then the full
amount of Interest payable on such interest payment date shall be paid to the
holders of record of such Securities on the applicable record date instead of
the holders surrendering such Securities for repurchase on such date. The
Securities will be redeemable in multiples of $1,000 principal amount.  The Company shall mail to all holders of
record of the Securities a notice of the occurrence of a Designated Event and
of the repurchase right arising as a result thereof on or before the 10th day
after the occurrence of such Designated Event. 
To exercise such right, a holder shall deliver to the Company such
Security with the form entitled “Designated Event
Repurchase Notice” on the reverse thereof duly completed, together
with the Security, duly endorsed for transfer, at any time prior to the close
of business on the Designated Event Repurchase Date, and shall deliver the
Securities to the Trustee (or other paying agent appointed by the Company) as
set forth in the Indenture.

Holders have the right to withdraw any Designated Event Repurchase
Notice by delivering to the Trustee (or other paying agent appointed by the
Company) a written notice of withdrawal up to the close of business on the
Designated Event Repurchase Date all as provided in the Indenture.

If sufficient money to pay the repurchase price of all Securities or
portions thereof to be purchased as of the Designated Event Repurchase Date is
deposited with the Trustee (or other paying agent appointed by the Company), on
the Business Day following the Designated Event Repurchase Date, the Securities
will cease to be outstanding, Interest will cease to accrue on such Securities
(or portions thereof) immediately after the Designated Event Repurchase Date,
and the holder thereof shall have no other rights as such other than the right
to receive the repurchase price upon surrender of such Security.

Subject to the provisions of the Indenture, at any time prior to the
final maturity date of the Securities, the holder hereof has the right, at its
option, to convert each $1,000 principal amount of the Securities into 89.1385
shares of the Company’s Common Stock (a conversion price of approximately
$11.22 per share), as such shares shall be constituted at the date of
conversion and subject to adjustment from time to time as provided in the
Indenture, upon surrender of this Security with the form entitled “Conversion Notice” on the reverse thereof

 A-8
 

duly completed, to the Company at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, or
at the option of such holder, the Corporate Trust Office, and, unless the
shares issuable on conversion are to be issued in the same name as this
Security, duly endorsed by, or accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney.

No adjustment in respect of Interest on any Security converted or
dividends on any shares issued upon conversion of such Security will be made
upon any conversion except as set forth in the next sentence.  If this Security (or portion hereof) is
surrendered for conversion during the period from the close of business on any
record date for the payment of Interest to the close of business on the
Business Day preceding the following interest payment date, this Security (or
portion hereof being converted) must be accompanied by payment, in immediately
available funds or other funds acceptable to the Company, of an amount equal to
the Interest otherwise payable on such interest payment date on the principal
amount being converted; provided that
no such payment shall be required (1) if the Company has specified a redemption
date that is after a record date and on or prior to the next interest payment
date, (2) if the Company has specified a repurchase date following a Designated
Event that is during such period or (3) to the extent of any overdue Interest,
if any overdue Interest exists at the time of conversion with respect to such
Security.

No fractional shares will be issued upon any conversion, but an
adjustment and payment in cash will be made, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Security or Securities for conversion.

A Security in respect of which a holder is exercising its right to
require repurchase upon a Designated Event may be converted only if such holder
withdraws its election to exercise either such right in accordance with the
terms of the Indenture.

Any Securities called for redemption, unless surrendered for conversion
by the holders thereof on or before the close of business on the Business Day
preceding the redemption date, may be deemed to be redeemed from the holders of
such Securities for an amount equal to the applicable redemption price,
together with accrued but unpaid Interest to, but excluding, the date fixed for
redemption, by one or more investment banks or other purchasers who may agree
with the Company (i) to purchase such Securities from the holders thereof and
convert them into shares of the Company’s Common Stock and (ii) to make payment
for such Securities as aforesaid to the Trustee in trust for the holders.

Upon due presentment for registration of transfer of this Security at
the office or agency of the Company maintained for that purpose in accordance
with the terms of the Indenture, a new Security or Securities of authorized
denominations for an equal aggregate principal amount will be issued to the
transferee in exchange thereof, subject to the limitations provided in the
Indenture, without charge except for any tax, assessment or other governmental
charge may be imposed in connection therewith.

The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Security Registrar may deem and treat the
registered holder hereof as the absolute owner of this Security (whether or not
this Security shall be overdue and notwithstanding any

 A-9
 

notation of ownership or other writing hereon made by anyone other than
the Company or any Security Registrar) for the purpose of receiving payment
hereof, or on account hereof, for the conversion hereof and for all other
purposes, and neither the Company nor the Trustee nor any other authenticating
agent nor any paying agent nor other conversion agent nor any Security
Registrar shall be affected by any notice to the contrary.  All payments made to or upon the order of
such registered holder shall be valid, and, to the extent of the sum or sums
paid, satisfy and discharge liability for monies payable on this Security.

No recourse for the payment of the principal of or any premium or
Interest on this Security, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any supplemental indenture or in
any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, employee, agent,
officer or director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or otherwise,
all such liability being, by acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.

This Security shall be deemed to be a contract made under the laws of
New York, and for all purposes shall be construed in accordance with the laws
of New York, without regard to conflicts of laws principles thereof.

Terms used in this Security and defined in the Indenture are used
herein as therein defined.

 A-10

ABBREVIATIONS

The following abbreviations, when used in the inscription of the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations.

	
  TEN COM -

  	
  as tenants in common

  	
  UNIF GIFT MIN ACT -     
  Custodian       

  	
   

  
	
  TEN ENT -

  	
  as tenant by the
  entireties

  	
  (Cust)      (Minor)

  	
   

  
	
  JT TEN -

  	
  as joint tenants with
  right of survivorship under Uniform Gifts to Minors Act

  	
   

  
	
   

  	
  and not as tenants in
  common

  	
   

  	
   

  
	
   

  	
   

  	
  (State)

  	
   

  

 

Additional abbreviations may also be used though not in the above list.

CONVERSION NOTICE

TO:                            INCYTE CORPORATION

U.S. BANK NATIONAL ASSOCIATION

The undersigned registered owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion thereof (which is
$1,000 or a multiple thereof) below designated, into shares of Common Stock of
Incyte Corporation in accordance with the terms of the Indenture referred to in
this Security, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below.  Capitalized terms used
herein but not defined shall have the meanings ascribed to such terms in the
Indenture.  If shares or any portion of
this Security not converted are to be issued in the name of a person other than
the undersigned, the undersigned will provide the appropriate information below
and pay all transfer taxes payable with respect thereto.  Any amount required to be paid by the
undersigned on account of Interest accompanies this Security.

	
  Dated: 

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature(s)

  
	
   

  	
   

  
	
   

  	
  Signature(s) must be guaranteed by an “eligible
  guarantor institution” meeting the requirements of the Security 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.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature Guarantee

  
					

Fill in the registration of shares of Common Stock if to be issued, and
Securities if to be delivered, other than to and in the name of the registered
holder:

	
  

  	
   

  
	
  (Name)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (City, State and Zip Code)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Please print name and address

  	
   

  
	
   

  	
   

  
	
  Principal amount to be converted

  	
   

  
	
   (if less than all):

  	
   

  
	
   

  	
   

  
	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Social Security or Other Taxpayer

  	
   

  
	
   Identification Number:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
								

DESIGNATED EVENT
REPURCHASE NOTICE

TO:                            INCYTE CORPORATION

U.S. BANK NATIONAL ASSOCIATION

The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Incyte Corporation (the “Company”) regarding the right of holders to elect to
require the Company to repurchase the Securities upon the occurrence of a
Designated Event with respect to the Company and requests and instructs the
Company to repay the entire principal amount of this Security, or the portion
thereof (which is $1,000 or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture at the price of 100% of such entire
principal amount or portion thereof, together with accrued Interest to, but
excluding, the Designated Event Repurchase Date, to the registered holder
hereof, provided that if such Designated Event
Repurchase Date falls after a record date and on or prior to the corresponding
interest payment date, then the full amount of Interest payable on such
interest payment date shall be paid to the holders of record of the Securities
on the applicable record date instead of the holders surrendering the
Securities for repurchase on such Designated Event Repurchase Date.  Capitalized terms used herein but not defined
shall have the meanings ascribed to such terms in the Indenture.  The Securities shall be repurchased by the
Company as of the portion thereof, together with accrued Interest to, by
excluding, the Designated Event Repurchase Date pursuant to the terms and
conditions specified in the Indenture, provided that
if such Designated Event Repurchase Date falls after a record date and on or
prior to the corresponding interest payment date, then the full amount of
Interest payable on such interest payment date shall be paid to the holders of
record of the Securities on the applicable record date instead of the holders
surrendering the Securities for repurchase on such Designated Event Repurchase
Date.  The undersigned registered owner
elects:

[  ]           to withdraw this Designated Event Repurchase Notice as to
$[   ] principal amount of the Securities
to which this Designated Event Repurchase Notice relates (Certificate
Numbers:          ), or

[  ]           to receive cash in respect of $[   ] principal amount of the Securities to
which this Designated Event Repurchase Notice relates.

Dated:

Signature(s):

NOTICE:  The above signatures of
the holder(s) hereof must correspond with the name as written upon the face of
the Security in every particular without alteration or enlargement or any
change whatever.

Security Certificate Number (if applicable):

Principal amount to be repurchased (if less than all):

Social Security or Other Taxpayer Identification Number:

ASSIGNMENT

For value received                                                                    hereby
sell(s) assign(s) and transfer(s) unto                                                    
(Please insert social security or other Taxpayer Identification Number of
assignee) the within Security, and hereby irrevocably constitutes and appoints                                                                  
attorney to transfer said Security on the books of the Company, with full power
of substitution in the premises.

In connection with any transfer of the Security prior to the date that
is two years after the last original issue date of the Securities (other than
any transfer pursuant to a registration statement that has been declared
effective under the Securities Act), the undersigned confirms that such
Security is being transferred:

£                                    To Incyte Corporation or a subsidiary
thereof; or

£                                    To a “qualified
institutional buyer” in compliance with Rule 144A under the
Securities Act of 1933, as amended; or

£                                    Pursuant to and in compliance with Rule
144 under the Securities Act of 1933, as amended; or

£                                    Pursuant to a Registration Statement
which has been declared effective under the Securities Act of 1933, as amended,
and which continues to be effective at the time of transfer;

and unless the Security has been transferred to Incyte Corporation or a
subsidiary thereof, the undersigned confirms that such Security is not being
transferred to an “affiliate” of
the Company as defined in Rule 144 under the Securities Act of 1933, as
amended.

Unless
one of the boxes is checked, the Trustee will refuse to register any of the
Securities evidenced by this certificate in the name of any person other than
the registered holder thereof.

	
  Dated: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Signature(s) must be guaranteed by an “eligible
  guarantor institution” meeting the requirements of the Security
  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.

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature Guarantee

  

 

NOTICE: The signature on the Conversion Notice, the Designated Event
Repurchase Notice or the Assignment must correspond with the name as written
upon the face of the Security in every particular without alteration or
enlargement or any change whatever.

Schedule I*

INCYTE CORPORATION

31⁄2% CONVERTIBLE SENIOR
NOTES DUE 2011

No.                        

	
  Date

  	
   

  	
  Principal Amount

  	
   

  	
  Notation Explaining Principal

  Amount Recorded

  	
   

  	
  Authorized Signature of

  Trustee or Custodian

  	
   

  
	
           

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
           

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
           

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*       To
be included only for a Global Security.

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