Document:

Exhibit
		4.1

	 

	  

	 INDENTURE

	  

	 between

	  

	 VION
		PHARMACEUTICALS, INC.

	  

	 and

	  

	 U.S.
		BANK NATIONAL ASSOCIATION

	  

	 as
		Trustee

	  

	 7.75%
		Convertible Senior Notes due 2012

	  

	 Dated as
		of February 20, 2007

	  

	 

	 
	 

	 
	 TABLE
		OF CONTENTS

	  

	 
			 	 	
				
				  Page

				  
 
	
				ARTICLE
				  I DEFINITIONS

					
				2

				
	
				SECTION
				  1.01.
 	
				Definitions

					
				2

				
	
				SECTION
				  1.02.
 	
				Certain
				  Other Definitions
 	
				8

				
	
				SECTION
				  1.03.
 	
				Incorporation
				  by Reference of Trust Indenture Act
 	
				9

				
	
				SECTION
				  1.04.
 	
				Rules of
				  Construction
 	
				9

				
	 	 
	
				ARTICLE
				  II THE
				  CONVERTIBLE NOTES
 	
				10

				
	
				SECTION
				  2.01.
 	
				Form and
				  Dating
 	
				10

				
	
				SECTION
				  2.02.
 	
				Execution
				  and Authentication
 	
				11

				
	
				SECTION
				  2.03.
 	
				Registrar,
				  Paying Agent and Conversion Agent
 	
				11

				
	
				SECTION
				  2.04.
 	
				Paying
				  Agent To Hold Money in Trust
 	
				12

				
	
				SECTION
				  2.05.
 	
				Holder
				  Lists
 	
				12

				
	
				SECTION
				  2.06.
 	
				Transfer
				  and Exchange
 	
				12

				
	
				SECTION
				  2.07.
 	
				Replacement
				  Convertible Notes
 	
				14

				
	
				SECTION
				  2.08.
 	
				Outstanding
				  Convertible Notes
 	
				15

				
	
				SECTION
				  2.09.
 	
				When
				  Treasury Convertible Notes Disregarded
 	
				15

				
	
				SECTION
				  2.10.
 	
				Temporary
				  Convertible Notes
 	
				15

				
	
				SECTION
				  2.11.
 	
				Cancellation

					
				16

				
	
				SECTION
				  2.12.
 	
				Defaulted
				  Interest
 	
				16

				
	
				SECTION
				  2.13.
 	
				CUSIP
				  Number
 	
				17

				
	
				SECTION
				  2.14.
 	
				Regulation
				  S
 	
				17

				
	 	 
	
				ARTICLE
				  III OPTION
				  TO REDEEM BY THE COMPANY
 	
				17

				
	
				SECTION
				  3.01.
 	
				Option
				  to Redeem by the Company
 	
				17

				
	
				SECTION
				  3.02.
 	
				Notice
				  of Redemption
 	
				17

				
	
				SECTION
				  3.03.
 	
				Deposit
				  of Redemption Price
 	
				18

				
	
				SECTION
				  3.04.
 	
				Convertible
				  Notes Payable on Redemption Date
 	
				18

				
	
				SECTION
				  3.05.
 	
				Convertible
				  Notes Redeemed in Part
 	
				19

				
	 	 
	
				ARTICLE
				  IV COVENANTS

					
				19

				
	
				SECTION
				  4.01.
 	
				Payment
				  of Convertible Notes
 	
				19

				
	
				SECTION
				  4.02.
 	
				Commission
				  Reports
 	
				20

				
	
				SECTION
				  4.03.
 	
				Compliance
				  Certificate
 	
				20

				
	
				SECTION
				  4.04.
 	
				Maintenance
				  of Office or Agency
 	
				20

				
	
				SECTION
				  4.05.
 	
				Continued
				  Existence
 	
				20

				
	
				SECTION
				  4.06.
 	
				Repurchase
				  Upon Fundamental Change
 	
				21

				
	
				SECTION
				  4.07.
 	
				Appointments
				  to Fill Vacancies in Trustee’s Office
 	
				23

				
	
				SECTION
				  4.08.
 	
				Stay,
				  Extension and Usury Laws
 	
				23

				
	
				SECTION
				  4.09.
 	
				Taxes

					
				23

				
	
				SECTION
				  4.10.
 	
				Reports

					
				24

				
	
				SECTION
				  4.11.
 	
				Investment
				  Company Act
 	
				24

				
	
				SECTION
				  4.12.
 	
				Payment
				  in Registered Common Stock
 	
				24

				

 

	  

	 -i-

	  

	 

	 
	 

	 
	 TABLE OF CONTENTS

	 (continued)

	  

	 
			 	 	
				 Page

				
	
				SECTION
				  4.13.
 	
				Incurrence
				  of Indebtedness
 	
				24

				
	
				SECTION
				  4.14.
 	
				Guarantees
				  of Domestic Subsidiaries
 	
				24

				
	
				SECTION
				  4.15.
 	
				Additional
				  Interest
 	
				24

				
	
				SECTION
				  4.16.
 	
				Calculation
				  of Original Issue Discount
 	
				24

				
	 	 
	
				ARTICLE
				  V SUCCESSORS

					
				25

				
	
				SECTION
				  5.01.
 	
				When the
				  Company May Merge, Etc
 	
				25

				
	
				SECTION
				  5.02.
 	
				Successor
				  Corporation Substituted
 	
				25

				
	
				SECTION
				  5.03.
 	
				Purchase
				  Option on Fundamental Change
 	
				26

				
	 	 
	
				ARTICLE
				  VI DEFAULTS
				  AND REMEDIES
 	
				26

				
	
				SECTION
				  6.01.
 	
				Events
				  of Default
 	
				26

				
	
				SECTION
				  6.02.
 	
				Acceleration

					
				28

				
	
				SECTION
				  6.03.
 	
				Other
				  Remedies
 	
				28

				
	
				SECTION
				  6.04.
 	
				Waiver
				  of Past Defaults
 	
				29

				
	
				SECTION
				  6.05.
 	
				Control
				  by Majority
 	
				29

				
	
				SECTION
				  6.06.
 	
				Limitation
				  on Suits
 	
				29

				
	
				SECTION
				  6.07.
 	
				Rights
				  of Holders To Receive Payment
 	
				30

				
	
				SECTION
				  6.08.
 	
				Collection
				  Suit by Trustee
 	
				30

				
	
				SECTION
				  6.09.
 	
				Trustee
				  May File Proofs of Claim
 	
				30

				
	
				SECTION
				  6.10.
 	
				Priorities

					
				30

				
	
				SECTION
				  6.11.
 	
				Undertaking
				  for Costs
 	
				30

				
	 	 
	
				ARTICLE
				  VII THE
				  TRUSTEE
 	
				31

				
	
				SECTION
				  7.01.
 	
				Duties
				  of the Trustee
 	
				31

				
	
				SECTION
				  7.02.
 	
				Rights
				  of the Trustee
 	
				32

				
	
				SECTION
				  7.03.
 	
				Individual
				  Rights of the Trustee
 	
				34

				
	
				SECTION
				  7.04.
 	
				Trustee’s
				  Disclaimer
 	
				34

				
	
				SECTION
				  7.05.
 	
				Notice
				  of Defaults
 	
				34

				
	
				SECTION
				  7.06.
 	
				Reports
				  by the Trustee to Holders
 	
				34

				
	
				SECTION
				  7.07.
 	
				Compensation
				  and Indemnity
 	
				35

				
	
				SECTION
				  7.08.
 	
				Replacement
				  of the Trustee
 	
				36

				
	
				SECTION
				  7.09.
 	
				Successor
				  Trustee by Merger, etc
 	
				37

				
	
				SECTION
				  7.10.
 	
				Eligibility,
				  Disqualification
 	
				37

				
	
				SECTION
				  7.11.
 	
				Preferential
				  Collection of Claims Against Company
 	
				37

				
	 	 
	
				ARTICLE
				  VIII SATISFACTION
				  AND DISCHARGE OF INDENTURE
 	
				37

				
	
				SECTION
				  8.01.
 	
				Discharge
				  of Indenture
 	
				37

				
	
				SECTION
				  8.02.
 	
				Deposited
				  Moneys to be Held in Trust by Trustee
 	
				38

				
	
				SECTION
				  8.03.
 	
				Paying
				  Agent to Repay Moneys Held
 	
				38

				
	
				SECTION
				  8.04.
 	
				Return
				  of Unclaimed Moneys
 	
				38

				
	
				SECTION
				  8.05.
 	
				Reinstatement

					
				38

				

 

	 
		
		   

		  -ii-

		   
 

		

		
		

		

		TABLE
		  OF CONTENTS

		(continued)

		

	  

	 
			 	  Page
	
				ARTICLE
				  IX AMENDMENTS

					
				39

				
	
				SECTION
				  9.01.
 	
				Without
				  the Consent of Holders
 	
				39

				
	
				SECTION
				  9.02.
 	
				With the
				  Consent of Holders
 	
				39

				
	
				SECTION
				  9.03.
 	
				Compliance
				  with the Trust Indenture Act
 	
				40

				
	
				SECTION
				  9.04.
 	
				Revocation
				  and Effect of Consents
 	
				40

				
	
				SECTION
				  9.05.
 	
				Notation
				  on or Exchange of Convertible Notes
 	
				41

				
	
				SECTION
				  9.06.
 	
				Trustee
				  Protected
 	
				41

				
	 	 
	
				ARTICLE
				  X GENERAL
				  PROVISIONS
 	
				42

				
	
				SECTION
				  10.01.
 	
				Trust
				  Indenture Act Controls
 	
				42

				
	
				SECTION
				  10.02.
 	
				Notices

					
				42

				
	
				SECTION
				  10.03.
 	
				Communication
				  by Holders with Other Holders
 	
				42

				
	
				SECTION
				  10.04.
 	
				Certificate
				  and Opinion as to Conditions Precedent
 	
				42

				
	
				SECTION
				  10.05.
 	
				Statements
				  Required in Certificate or Opinion
 	
				43

				
	
				SECTION
				  10.06.
 	
				Rules by
				  Trustee and Agents
 	
				43

				
	
				SECTION
				  10.07.
 	
				Legal
				  Holidays
 	
				43

				
	
				SECTION
				  10.08.
 	
				No
				  Recourse Against Others
 	
				44

				
	
				SECTION
				  10.09.
 	
				Counterparts

					
				44

				
	
				SECTION
				  10.10.
 	
				Other
				  Provisions
 	
				44

				
	
				SECTION
				  10.11.
 	
				Governing
				  Law
 	
				45

				
	
				SECTION
				  10.12.
 	
				No
				  Adverse Interpretation of Other Agreements
 	
				45

				
	
				SECTION
				  10.13.
 	
				Successors

					
				45

				
	
				SECTION
				  10.14.
 	
				Severability

					
				45

				
	
				SECTION
				  10.15.
 	
				Table of
				  Contents, Headings, etc
 	
				45

				
	 	 
	
				ARTICLE
				  XI RANKING

					
				45

				
	 	 
	
				ARTICLE
				  XII CONVERSION
				  OF CONVERTIBLE NOTES
 	
				45

				
	
				SECTION
				  12.01.
 	
				Right To
				  Convert
 	
				45

				
	
				SECTION
				  12.02.
 	
				Exercise
				  of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment
				  for Interest or Dividends
 	
				48

				
	
				SECTION
				  12.03.
 	
				Cash
				  Payments in Lieu of Fractional Shares
 	
				50

				
	
				SECTION
				  12.04.
 	
				Conversion
				  Price
 	
				50

				
	
				SECTION
				  12.05.
 	
				Adjustment
				  of Conversion Rate
 	
				50

				
	
				SECTION
				  12.06.
 	
				Notice
				  of Adjustments of Conversion Rate
 	
				55

				
	
				SECTION
				  12.07.
 	
				Effect
				  of Reclassification, Consolidation, Merger or Sale
 	
				56

				
	
				SECTION
				  12.08.
 	
				Taxes on
				  Shares Issued
 	
				57

				
	
				SECTION
				  12.09.
 	
				Reservation
				  of Shares; Shares to Be Fully Paid; Listing of Common Stock
 	
				57

				
	
				SECTION
				  12.10.
 	
				Responsibility
				  of Trustee
 	
				58

				
	
				SECTION
				  12.11.
 	
				Notice
				  to Holders Prior to Certain Actions
 	
				58

				

 

	 
		
		  
			 
					
						SECTION
						  12.12.
 	
						Restriction
						  on Common Stock Issuable Upon Conversion
 	
						59

						

 
 

			 -iii-

			  
 

		  

		  
		  

		  

		  TABLE
			 OF CONTENTS

		  (continued)

		  
 

	 
			 	 	
				   Page

				
	
				SECTION
				  12.13.
 	
				Automatic
				  Conversion Rights by the Company
 	
				60

				
	
				SECTION
				  12.14.
 	
				Limit on
				  Shares of Common Stock Issuable Upon Conversion
 	
				61

				

 

	  

	 
		
		  -iv-

		   
 

		

		
		

		 

	 Cross
		–
		Reference Table*

	  

	 
			
				
				  Trust Indenture

				  Act Section
 	
				
				  Indenture

				  Section
 
	
				310(a)(1)

					
				7.10

				
	
				(a)(2)

					 
	
				(a)(3)

					
				n/a

				
	
				(a)(4)

					
				n/a

				
	
				(a)(5)

					
				n/a

				
	
				(b)

					
				7.08,
				  7.10
 
	
				(c)

					
				n/a

				
	
				311(a)

					
				7.11

				
	
				(b)

					
				7.11

				
	
				(c)

					
				n/a

				
	
				312(a)

					
				2.05

				
	
				(b)

					
				10.03

				
	
				(c)

					
				10.03

				
	
				313(a)

					
				7.06

				
	
				(b)(1)

					
				n/a

				
	
				(b)(2)

					
				7.06

				
	
				(c)

					
				7.06,
				  10.02
 
	
				(d)

					
				n/a

				
	
				314(a)

					
				4.02,
				  6.01
 
	
				(b)

					
				10.05

				
	
				(c)(1)

					
				n/a

				
	
				(c)(2)

					
				n/a

				
	
				(c)(3)

					
				n/a

				
	
				(d)

					
				n/a

				
	
				(e)

					
				n/a

				
	
				(f)

					
				n/a

				
	
				315(a)

					
				n/a

				
	
				(b)

					
				n/a

				
	
				(c)

					
				n/a

				
	
				(d)

					
				n/a

				
	
				(e)

					
				n/a

				
	
				316(a)(last
				  sentence)
 	
				n/a

				
	
				(a)(1)(A)

					
				n/a

				
	
				(a)(1)(B)

					
				n/a

				
	
				(a)(2)

					
				n/a

				
	
				(b)

					
				n/a

				
	
				(c)

					
				n/a

				
	
				317(a)(1)

					
				n/a

				
	
				(a)(2)

					
				n/a

				
	
				(b)

					
				n/a

				
	
				318(a)

					
				n/a

				
	
				(b)

					
				n/a

				
	
				(c)

					
				10.01

				

 

	  
		
		  

		  
 

	 
			
				“n/a”  
				   means
				  not applicable.
 	 
	
				*          
				   This
				  Cross-Reference Table shall not, for any purpose, be deemed to be a part of the
				  Indenture.
 

 

	  

	 
		
		  
			 i

			  
 

		  

		  
		  

		   
 

	  

	 THIS
		INDENTURE, dated as of February 20, 2007, is between VION PHARMACEUTICALS,
		INC., a Delaware corporation (the “Company”), and U.S. Bank National
		Association, a national banking association duly organized and existing under
		the laws of the United States of America, as trustee (the “Trustee”).
		The Company has duly authorized the creation of its 7.75% Convertible Senior
		Notes due 2012 (the “Convertible Notes”), and to provide therefor the
		Company and the Trustee have duly authorized the execution and delivery of this
		Indenture. Each party agrees as follows for the benefit of the other party and
		for the equal and ratable benefit of the holders from time to time of the
		Convertible Notes:

	  

	 ARTICLE
		I

	  

	 Definitions

	  

	 SECTION
		1.01.  Definitions.

	  

	 “Additional
		Interest” has the meaning set forth in the Registration Rights
		Agreement.

	  

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

	  

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

	  

	 “Agent
		Member” means any member of, or participant in, the
		Depositary.

	  

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

	  

	 “Capital
		Stock” of any Person means any and all shares, interests, rights to
		purchase, warrants, options, participations or other equivalents of or
		interests in (however designated) equity of such Person, but excluding any debt
		securities convertible into such equity; provided,
		however, that
		for purposes of the definition of “Fundamental Change”, “Capital
		Stock” of any Person means capital stock of such Person that is generally
		entitled (1) to vote in the election of directors of such Person or (2) if such
		Person is not a corporation, to vote or otherwise participate in the selection
		of the governing body, partners, managers or others that will control the
		management or policies of such Person.

	  

	 “Closing
		Price” means the last reported bid price of the Common Stock on the Nasdaq
		Capital Market or such other principal market on which the Common Stock is
		traded on the applicable date.

	  

	 “Commission”
		means the Securities and Exchange Commission.

	  

	 

	 
	 

	 
	  

	 “Common
		Stock” means the shares of Common Stock, par value $0.01 per share, of the
		Company as it exists on the date of this Indenture or any other shares of
		Capital Stock of the Company into which the Common Stock shall be reclassified
		or changed or, in the event of a merger, consolidation or other similar
		transaction involving the Company that is otherwise permitted hereunder in
		which the Company is not the surviving corporation, the common stock, common
		equity interests, ordinary shares or depositary shares or other certificates
		representing common equity interests of such surviving corporation or its
		direct or indirect parent corporation.

	  

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

	  

	 “Conversion
		Price” means the initial conversion price specified in the form of
		Convertible Note in Paragraph 13 of such form, as adjusted in accordance with
		the provisions of Article
		XII.

	  

	 “Conversion
		Rate” per $1,000 principal amount of Convertible Notes as of any day means
		the result obtained by dividing (i) $1,000 by (ii) the then applicable
		Conversion Price, rounded to the nearest thousandth.

	  

	 “Convertible
		Notes” means the 7.75% Convertible Senior Notes due 2012 issued,
		authenticated and delivered under this Indenture. 

	  

	 “Corporate
		Trust Office” means the corporate trust office of the Trustee, which at
		the date hereof is located at 100 Wall Street, Suite 1600, New York, New York
		10005, or such other address as the Trustee may designate from time to time by
		notice to the holders and the Company, or the principal corporate trust office
		of any successor Trustee (or such other address as such successor Trustee may
		designate from time to time by notice to the holders and the
		Company).

	  

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

	  

	 “Depositary”
		means, with respect to any Global Securities, a clearing agency that is
		registered as such under the Exchange Act and is designated by the Company to
		act as Depositary for such Global Securities (or any successor securities
		clearing agency so registered), which shall initially be DTC.

	  

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

	  

	 “Effective
		Price” means the price obtained by dividing (a)(i) $60,000,000 plus (ii)
		the interest (and Additional Interest, if any) paid by the Company in shares of
		Common Stock, divided by (b) the total number of shares of Registered Common
		Stock issued by the Company pursuant to this Indenture and the Convertible
		Notes.

	  

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

	  

	 -3-

	  

	 

	 
	 

	 
	  

	 “Fundamental
		Change” means the occurrence of any of the following events after the
		Issue Date:

	  

	 (1)  
		any
		sale, lease or other transfer (in one transaction or a series of transactions)
		of all or substantially all of the consolidated assets of the Company and its
		subsidiaries to any Person (other than a Subsidiary); provided,
		however, that
		(A) a transaction where the holders of all classes of the Company’s
		Capital Stock immediately prior to such transaction own, directly or
		indirectly, more than 50% of all classes of Capital Stock of such Person
		immediately after such transaction or (B) a joint venture, licensing
		arrangement or other strategic relationship involving the licensing,
		manufacturing or marketing of, or other similar arrangement with respect to,
		any of the Company’s products (even if such arrangement or relationship
		involves an investment in the Company) shall not be a Fundamental
		Change;

	  

	 (2)  
		consummation
		of any share exchange, consolidation or merger of the Company pursuant to which
		the Common Stock will be converted into cash, securities or other property or
		any sale, lease or other transfer (in one transaction or a series of
		transactions) of all or substantially all of the Company’s consolidated
		assets (considered together with the Subsidiaries) to any Person (other than
		one of the Subsidiaries) (a joint venture, licensing arrangement or other
		strategic relationship involving the licensing, manufacturing or marketing of,
		or other similar arrangement with respect to, any of the Company’s
		products (even if such arrangement or relationship involves an investment in
		the Company) shall not be deemed a transfer of all or substantially all of the
		consolidated assets of the Company and its Subsidiaries); provided,
		however, that a
		transaction where the holders of all classes of the Company’s Capital
		Stock immediately prior to such transaction own, directly or indirectly, more
		than 50% of all classes of Capital Stock of the continuing or surviving
		corporation or transferee immediately after such event shall not be a
		Fundamental Change;

	  

	 (3)  
		a
		“person” or “group” (within the meaning of Section 13(d) of
		the Exchange Act (other than the Company, its subsidiaries or its employee
		benefit plans)) files a Schedule 13D or a Schedule TO, disclosing that it has
		become the “beneficial owner” (as defined in Rule 13d-3 under the
		Exchange Act) of the Company’s Capital Stock representing more than 50% of
		the voting power of the Company’s Capital Stock; or

	  

	 (4)  
		the
		Company’s stockholders approve any plan or proposal for liquidation or
		dissolution; provided,
		however, that a
		liquidation or dissolution of the Company that is part of a transaction
		described in clause (2) above that does not constitute a Fundamental Change
		under the proviso contained in that clause shall not constitute a Fundamental
		Change;

	  

	 provided,
		a Fundamental Change will not be deemed to have occurred if 90% or more of the
		consideration for the Common Stock (excluding cash payments for

	 
		 

		-4-

		 

		

		
		

		 

	  

	 fractional
		shares and cash payments made in respect of dissenters’ or appraisal
		rights, if any) in the transaction or transactions constituting the Fundamental
		Change consists of another Person’s common stock or American Depositary
		Shares representing shares of another Person’s common stock traded on a
		U.S. national securities exchange, or which will be so traded or quoted when
		issued or exchanged in connection with the fundamental change, and as a result
		of such transaction or transactions the Convertible Notes become convertible
		solely into such common stock or American Depositary Shares.

	  

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

	  

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

	  

	 “Indebtedness”
		means, with respect to any Person, all obligations of such Person for borrowed
		money or evidenced by bonds, debentures, notes or similar instruments or
		guarantees of obligations of others (including, but not limited to, any
		indebtedness secured by a security interest, mortgage or other lien on the
		assets of such Person that is (1) given to secure all or part of the purchase
		price of property subject thereto, whether given to the vendor of such property
		or to another, or (2) existing on property at the time of acquisition thereof),
		and any and all deferrals, renewals, extensions, refinancings and refundings
		of, or amendments, modifications or supplements to, any of the foregoing. For
		the avoidance of doubt, the following do not constitute Indebtedness: (i) any
		liability for federal, state, local or other taxes owed or owing by the Company
		or (ii) trade payables and accrued expenses (including, without limitation,
		accrued compensation) of the Company, whether for goods, services or materials
		purchased or provided or otherwise.

	  

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

	  

	 “Initial
		Convertible Notes” means Convertible Notes in an aggregate principal
		amount of $60,000,000 initially issued under this Indenture.

	  

	 “Institutional
		Accredited Investors” means institutional accredited investors within the
		meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
		Act.

	  

	 “Interest”
		means, when used with reference to the Convertible Notes, any interest payable
		under the terms of the Convertible Notes, whether in the form of cash or shares
		of Registered Common Stock or a combination thereof, including Additional
		Interest, if any, payable under the terms of the Registration Rights
		Agreement.

	  

	 “Interest
		Payment Date” means February 15 and August 15 of each year, commencing
		with August 15, 2007.

	 
		 

		-5-

		 

		

		
		

		
		 
 

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

	  

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

	  

	 “Maturity
		Date” means February 15, 2012.

	  

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

	  

	 “Officer’s
		Certificate” means a certificate signed by an Officer, who may be the
		Chairman of the Board, the Chief Executive Officer, the President, the Chief
		Financial Officer, the Treasurer or the Controller of the Company.

	  

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

	  

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

	  

	 “QIB” means a
		“Qualified Institutional Buyer” as defined under Rule
		144A.

	  

	 “Registered
		Common Stock” means shares of Common Stock (i) that do not require
		registration or approval under any federal securities law or, if applicable,
		the securities laws of any state where a holder is located, before such shares
		are freely transferable by the holder thereof without being subject to transfer
		restrictions under the Securities Act or (ii) for which such registration has
		been completed pursuant to a registration statement effective under the
		Securities Act, or otherwise.

	  

	 “Registered
		Convertible Note” means a Convertible Note (or portion thereof) (i) that
		does not require registration or approval under any federal securities law or,
		if applicable, the securities laws of any state where a holder is located,
		before such Convertible Note is freely transferable by the holder thereof
		without being subject to transfer restrictions under the Securities Act or (ii)
		for which registration has been completed pursuant to a registration statement
		effective under the Securities Act, or otherwise.

	  

	 “Registration
		Rights Agreement” means the Registration Rights Agreement relating to the
		Convertible Notes and Common Stock issuable upon conversion of such Convertible
		Notes dated February 20, 2007, between the Company and the initial purchaser
		party thereto, as such agreement may be amended, modified or supplemented from
		time to time.

	 
		 

		-6-

		 

		

		
		

		 

	  

	 “Regular
		Record Date” means the February 1 or August 1 immediately preceding each
		Interest Payment Date.

	  

	 “Regulation
		S” means Rules 901 through 905 under the Securities Act.

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 “Trading
		Day” means a day during which trading in securities generally occurs on
		the Nasdaq Capital Market or, if the Common Stock is not quoted on the Nasdaq
		Capital Market, on such other principal market on which the Common Stock is
		traded on the applicable date.

	  

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

	  

	 “Trust
		Officer” means, when used with respect to the Trustee, any officer in the
		Corporate Trust Office of the Trustee, including any vice president, assistant
		vice president, assistant treasurer or any other officer of the Trustee who
		customarily performs functions similar to those performed by the persons who at
		the time shall be such officers, respectively, or to whom any corporate trust
		matter is referred because of such person’s knowledge of and familiarity
		with the particular subject and having direct responsibility for the
		administration of this Indenture.

	 
		 

		-7-

		 

		

		
		

		 

	  

	 “Volume
		Weighted Average Price” per share of Common Stock on any Trading Day means
		such price as displayed on Bloomberg (or any successor service) page “CMOS
		EQUITY VAP” in respect of the period from 9:30 a.m. to 4:00 p.m., New York
		City time, on such Trading Day; or, if such price is not available, the Volume
		Weighted Average Price means the market value per share of Common Stock on such
		day as determined by a nationally recognized independent investment banking
		firm retained for this purpose by the Company.

	  

	 SECTION
		1.02.  Certain
		Other Definitions.

	  

	 
			 	 	

				Defined
				  in Section

				
	
				“Aggregate
				  Current Market Price”
 	 	
				12.05

				
	
				“Automatic
				  Conversion”
 	 	
				12.13

				
	
				“Automatic
				  Conversion Date”
 	 	
				12.13

				
	
				“Automatic
				  Conversion Notice”
 	 	
				12.13

				
	
				“Automatic
				  Conversion Notice Date”
 	 	
				12.13

				
	
				“Automatic
				  Conversion Trigger Event”
 	 	
				12.13

				
	
				“Bankruptcy
				  Law”
 	 	
				6.01

				
	
				“Business
				  Day”
 	 	
				10.07

				
	
				“Clearstream”

					 	
				2.01

				
	
				“Combined
				  Cash and Tender Amount”
 	 	
				12.05

				
	
				“Combined
				  Tender and Cash Amount”
 	 	
				12.05

				
	
				“Completion
				  Date”
 	 	
				12.05

				
	
				“Conversion
				  Agent”
 	 	
				2.03

				
	
				“Conversion
				  Right”
 	 	
				12.13

				
	
				“Conversion
				  Shares”
 	 	
				12.05

				
	
				“Custodian”

					 	
				6.01

				
	
				“Distribution
				  Date”
 	 	
				12.05

				
	
				“Euroclear”

					 	
				2.01

				
	
				“Event
				  of Default”
 	 	
				6.01

				
	
				“Expiration
				  Time”
 	 	
				12.05

				
	
				“Fundamental
				  Change Date”
 	 	
				4.06

				
	
				“Fundamental
				  Change Make-Whole Premium”
 	 	
				12.01

				
	
				“Fundamental
				  Change Offer”
 	 	
				4.06

				
	
				“Fundamental
				  Change Offer Termination Date”
 	 	
				4.06

				
	
				“Fundamental
				  Change Payment”
 	 	
				4.06

				
	
				“Fundamental
				  Change Payment Date”
 	 	
				4.06

				
	
				“Global
				  Security”
 	 	
				2.01

				
	
				“Interest
				  Make-Whole Premium”
 	 	
				12.13

				
	
				“Investment
				  Company Act”
 	 	
				4.11

				
	
				“Legal
				  Holiday”
 	 	
				10.07

				
	
				“New
				  Rights Plan”
 	 	
				12.05

				
	
				“Paying
				  Agent”
 	 	
				2.03

				
	
				“Redemption”

					 	
				3.01

				
	
				“Redemption
				  Date”
 	 	
				3.01

				
	
				“Redemption
				  Price”
 	 	
				3.01

				
	
				“Register”

					 	
				2.03

				

 

	 
		
		   

		  -8-

		   

		  

		  
		  

		   
 

	  

	 
			
				“Registrar”

					 	
				2.03

				
	
				“Rights
				  Plan”
 	 	
				12.05

				

 

	  

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

	  

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

	  

	 “Commission”
		means the Commission;

	  

	 “indenture
		securities” means the Convertible Notes;

	  

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

	  

	 “indenture
		to be qualified” means this Indenture;

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 (3)  “or”
		is not exclusive;

	  

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

	  

	 (5)  the
		male, female and neuter genders include one another.

	  

	 ARTICLE
		II

	  

	 The
		Convertible Notes

	  

	 SECTION
		2.01.  Form
		and Dating.
		(a) Global
		Securities.

	  

	 The
		Convertible Notes sold to QIBs in reliance on Rule 144A, sold in offshore
		transactions in reliance on Regulation S and sold to Institutional Accredited
		Investors shall be issued in the form of one or more permanent global
		securities in definitive, fully registered form 

	  

	 -9-

	  

	 
		 

		  
		  

		   
 

	  

	 without
		interest coupons with the Global Convertible Note Legend and Restricted
		Convertible Note Legend, if applicable, set forth in Exhibit A hereto (each, a
		“Global Security”). Any Global Security shall be deposited on behalf
		of the purchasers of the Convertible Notes represented thereby with the
		Trustee, as custodian for the Depositary, and registered in the name of the
		Depositary or a nominee of the Depositary for the accounts of participants in
		the Depositary (and, in the case of Convertible Notes held in accordance with
		Regulation S, registered with the Depositary for the accounts of designated
		agents holding on behalf of the Euroclear System (“Euroclear”) or
		Clearstream Banking, societe anonyme (“Clearstream”)), duly executed
		by the Company and authenticated by the Trustee as hereinafter provided. The
		aggregate principal amount of a Global Security may from time to time be
		increased or decreased by adjustments made on the records of the Trustee and
		the Depositary or its nominee as hereinafter provided. The Convertible Notes
		sold to QIBs in reliance on Rule 144A shall be eligible for trading on the
		PORTAL Market of the National Association of Securities Dealers,
		Inc.

	  

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

	  

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

	  

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

	  

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

	  

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

	 
		
		   

		  -10-

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

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

	  

	 Upon a
		written order of the Company signed by an Officer of the Company, the Trustee
		shall authenticate Initial Convertible Notes upon the execution of this
		Indenture for original issue in an aggregate principal amount of $60,000,000.
		The aggregate principal amount of the Initial Convertible Notes outstanding at
		any time may not exceed that amount except as provided in Section
		2.07.

	  

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

	  

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

	  

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

	  

	 SECTION
		2.03.  Registrar,
		Paying Agent and Conversion Agent. The
		Company shall maintain or cause to be maintained in The City of New York, New
		York an office or agency: (i) where securities may be presented for
		registration of transfer or for exchange (“Registrar”); (ii) where
		Convertible Notes may be presented for payment (“Paying Agent”);
		(iii) where Convertible Notes may be presented for conversion (the
		“Conversion Agent”); (iv) where Convertible Notes may be presented
		for redemption; and (v) where notices and demands to or upon the Company in
		respect of Convertible Notes and this Indenture may be served by the holders of
		the Convertible Notes. The Registrar shall keep a Register
		(“Register”) of the Convertible Notes and of their transfer and
		exchange. The Company may appoint one or more co-registrars, one or more
		additional paying agents and one or more additional conversion agents. The term
		“Paying Agent” includes any additional paying agent, and the term
		“Conversion Agent” includes any additional Conversion Agent. The
		Company may change any Paying Agent, Registrar, Conversion Agent or
		co-registrar without prior notice. The Company shall promptly notify the
		Trustee in writing of the name and address of any Agent not a party to this
		Indenture and shall enter into an appropriate agency agreement with any
		Registrar, Paying Agent, Conversion Agent or co-registrar not a party to this
		Indenture. The agreement shall implement the provisions of this Indenture that
		relate to such Agent. The Company or any of its Subsidiaries may act as Paying
		Agent, Registrar, Conversion Agent or co-registrar, except that for purposes of
		Article
		VIII and
		Section
		4.06,
		neither the Company nor any of its Subsidiaries 

	 

		
		   

		  -11-

		   

		  

		  
		  

		   
 

	  

	 shall
		act as Paying Agent. If the Company fails to appoint or maintain another entity
		as Registrar, or Paying Agent or Conversion Agent, the Trustee shall act as
		such, and the Trustee shall initially act as such.

	  

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

	  

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

	  

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

	  

	 The
		Company or the Registrar shall not be required (i) to register the transfer of
		any Convertible Notes surrendered for repurchase pursuant to Section
		4.06 or (ii)
		to register the transfer of any Convertible Notes surrendered for
		conversion.

	  

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

	 
		
		   

		  -12-

		   

		  

		  
		  

		   
 

	  

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

	  

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

	  

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

	  

	 (c)  Except
		in connection with a Shelf Registration Statement contemplated by and in
		accordance with the terms of the Registration Rights Agreement, if Convertible
		Notes are issued upon the registration of transfer, exchange or replacement of
		Convertible Notes bearing a Restricted Convertible Note Legend, or if a request
		is made to remove such a Restrictive Securities Legend on Convertible Notes,
		the Convertible Notes so issued shall bear the Restricted Convertible Note
		Legend, or a Restricted Convertible Note Legend shall not be removed, as the
		case may be, unless there is delivered to the Company such satisfactory
		evidence, which, in the case of a transfer made pursuant to Rule 144 under the
		Securities Act, may include an Opinion of Counsel given in accordance with the
		laws in the State of New York, as may be reasonably required by the Company and
		the Trustee, that neither the legend nor the restrictions on transfer set forth
		therein are required to ensure that transfers thereof comply with the
		provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or
		that such Convertible Notes are not “restricted” within the meaning
		of Rule 144 under the Securities Act. Upon provision to the Company of such
		satisfactory evidence, the Trustee, at the written direction of the Company,
		shall authenticate and deliver Convertible Notes that do not bear the
		

	 

		
		   

		  -13-

		   

		  

		  
		  

		   
 

	  

	 legend.
		The Company shall not otherwise be entitled to require the delivery of a legal
		opinion in connection with any transfer or exchange of Convertible
		Notes.

	  

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

	  

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

	  

	 SECTION
		2.07.  Replacement
		Convertible Notes. If the
		holder of a Convertible Note claims that its Convertible Note has been lost,
		destroyed or wrongfully taken, the Company shall issue and the Trustee shall
		authenticate a replacement Convertible Note if the Trustee’s and the
		Company’s requirements are met. The Trustee shall require, as a condition
		of authenticating a replacement Convertible Note, that the holder of the
		Convertible Note provide a certificate of loss and an indemnity or an indemnity
		bond sufficient, in the judgment of both the Company and the Trustee, to fully
		protect the Company, the Trustee, any Agent and any authenticating agent from
		any loss, liability, cost or expense which any of them may suffer or incur if
		the Convertible Note is replaced. The Company and the Trustee may charge the
		relevant holder for their expenses in replacing any Convertible
		Note.

	  

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

	 
		
		   

		  -14-

		   

		  

		  
		  

		   
 

	  

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

	  

	 SECTION
		2.08.  Outstanding
		Convertible Notes. The
		Convertible Notes outstanding at any time are all the Convertible Notes
		properly authenticated by the Trustee except for those canceled by the Trustee,
		those delivered to it for cancellation those paid pursuant to Section
		2.07
		hereof and
		those described in this Section
		2.08 as not
		outstanding.

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 (b)  A Global
		Security deposited with the Depositary or with the Trustee as custodian for the
		Depositary pursuant to Section
		2.01 shall
		be transferred to the beneficial owners thereof in the form of certificated
		Convertible Notes in definitive form only if such transfer complies with
		Section
		2.06 and (i)
		the Depositary notifies the Company that it is unwilling or unable to continue
		as Depositary for such Global Security or if at any time such Depositary ceases
		to be a “clearing agency” registered under the Exchange Act and in
		either case a successor Depositary is not appointed by the Company within 90
		days of such notice, or (ii) an Event of Default has occurred and is
		continuing.

	  

	 (c)  Any
		Global Security or interest thereon that is transferable to the beneficial
		owners thereof in the form of certificated Convertible Notes in definitive form
		shall, if held by the Depositary, be surrendered by the Depositary to the
		Trustee, without charge, and the Trustee 

	 

		
		   

		  -15-

		   

		  

		  
		  

		   
 

	  

	 shall
		authenticate and deliver, upon such transfer of each portion of such Global
		Security, an equal aggregate principal amount of Convertible Notes of
		authorized denominations in the form of certificated Convertible Notes in
		definitive form. Any portion of a Global Security transferred pursuant to this
		Section shall be executed, authenticated and delivered only in denominations of
		$1,000 and any integral multiple thereof and registered in such names as the
		Depositary shall direct. Any Convertible Notes in the form of certificated
		Convertible Notes in definitive form delivered in exchange for an interest in
		the Global Security shall, except as otherwise provided by Section
		2.06(c), bear
		the Restricted Convertible Note Legend set forth in Exhibit A
		hereto.

	  

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

	  

	 SECTION
		2.11.  Cancellation. The
		Company at any time may deliver Convertible Notes to the Trustee for
		cancellation. The Registrar and Paying Agent shall forward to the Trustee any
		Convertible Notes surrendered to them for registration of transfer, exchange or
		payment. The Trustee and no one else may cancel Convertible Notes surrendered
		for registration of transfer, exchange, payment, replacement, conversion,
		repurchase or cancellation. Upon written instructions of the Company, the
		Trustee shall cancel and dispose of such canceled Convertible Notes in
		accordance with its procedures, in effect as of the date of such cancellation,
		for the disposition of cancelled securities. The Company may not issue new
		Convertible Notes to replace Convertible Notes that it has paid or repurchased
		or that have been delivered to the Trustee for cancellation or that any holder
		has (i) converted pursuant to Article
		XII hereof
		or (ii) submitted for repurchase pursuant to Section
		4.06 hereof
		(unless revoked).

	  

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

	  

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

	  

	 SECTION
		2.14.  Regulation
		S. The
		Company agrees that, with respect to beneficial interests in the Regulation S
		Global Security, it will refuse to register any transfer of such Convertible
		Notes or any shares of Common Stock issued upon conversion of such Convertible
		Notes that is not made in accordance with the provisions of Regulation S under
		the Securities Act, pursuant to a registration statement which has been
		declared effective under the Securities 

	 

		
		   

		  -16-

		   

		  

		  
		  

		   
 

	  

	 Act or
		pursuant to an available exemption from the registration requirements of the
		Securities Act; provided,
		however, that
		the provisions of this Section
		2.14 shall
		not be applicable to any Convertible Notes which do not bear a Restricted
		Convertible Note Legend or to any shares of Common Stock evidenced by
		certificates which do not bear a Restricted Common Stock Legend, if any
		applicable legends were removed in accordance with Section 2.06(c).

	  

	 ARTICLE
		III

	  

	 Option
		to Redeem by the Company

	  

	 SECTION
		3.01.  Option
		to Redeem by the Company. The
		Company shall have the right to redeem the Convertible Notes (a
		“Redemption”) at any time on or after February 15, 2010 (the
		“Redemption Date”), on at least 30 days and no more than 60 days
		notice, in whole or in part, in cash, at a redemption price (“Redemption
		Price”) equal to 100% of the principal amount of the Convertible Notes so
		redeemed plus accrued and unpaid interest up to, but not including, the
		Redemption Date. Prior to February 15, 2010, the Company may not redeem the
		Convertible Notes.

	  

	 If less
		than all of the outstanding Convertible Notes are to be redeemed, the Trustee
		shall select, in principal amount at maturity of $1,000 or integral multiples
		thereof, the Convertible Notes to be redeemed. In such event, the Trustee shall
		select the Convertible Notes to be redeemed by lot, pro
		rata or by
		any other method the Trustee considers fair and appropriate or in any manner
		required by the Depositary.

	  

	 SECTION
		3.02.  Notice
		of Redemption. In
		case of a Redemption by the Company, at least 30 days prior to the Redemption
		Date, notice of Redemption shall be given in the manner provided in
		Section 12.11 to all
		holders of Convertible Notes. All notices of Redemption shall identify the
		Convertible Notes to be redeemed (including CUSIP numbers) and shall
		state:

	  

	 (a)  the
		Redemption Date;

	  

	 (b)  the
		Redemption Price;

	  

	 (c)  that on
		the Redemption Date, the Redemption Price will become due and payable upon each
		such Convertible Note to be redeemed, and that interest thereon shall cease to
		accrue on and after said date;

	  

	 (d)  the
		Conversion Rate, the date on which the right to convert the Convertible Notes
		to be redeemed will terminate and the places where such Convertible Notes may
		be surrendered for conversion; and

	  

	 (e)  the
		place or places where such Convertible Notes are to be surrendered for payment
		of the Redemption Price.

	  

	 If any
		of the Convertible Notes to be redeemed is in the form of a Global Security,
		then the Company shall modify such notice to the extent necessary to accord
		with the procedures of the Depositary applicable to redemptions.

	 
		
		   

		  
			 -17-

			 

		   

		  

		  
		  

		  
		   
 
 

	 Notice
		of Redemption of Convertible Notes shall be given by the Company or, at the
		Company’s written request, delivered to the Trustee at least five (5)
		Business Days prior to the requested date of mailing by the Trustee, in the
		name of and at the expense of the Company. Notice of Redemption received by the
		Trustee shall be given by the Trustee to the Paying Agent in the name of and at
		the expense of the Company.

	  

	 SECTION
		3.03.  Deposit
		of Redemption Price. Not
		less than one (1) Business Day prior to any Redemption Date, the Company shall
		deposit with the Trustee (or, if the Company is acting as its own Paying Agent,
		segregate and hold in trust as provided in Section 2.04) an
		amount of money (which shall be in immediately available funds on such
		Redemption Date) sufficient to pay the Redemption Price of, and (except if the
		Redemption Date shall be an Interest Payment Date) accrued or unpaid interest
		and Additional Interest on, all the Convertible Notes that are to be redeemed
		on that date other than any Convertible Notes called for Redemption on that
		date that have been converted prior to the date of such deposit.

	  

	 If any
		Convertible Note called for Redemption is converted, any money deposited with
		the Trustee or so segregated and held in trust for the Redemption of such
		Convertible Note shall (subject to any right of the holder or such to receive
		interest as provided in Section
		4.01) be
		paid to the Company upon request or, if then held by the Company, shall be
		discharged from such trust.

	  

	 SECTION
		3.04.  Convertible
		Notes Payable on Redemption Date. Notice
		of Redemption having been given as aforesaid, the Convertible Notes to be so
		redeemed shall, on the applicable Redemption Date, become due and payable at
		the Redemption Price therein specified, and from and after such date (unless
		the Company shall default in the payment of the Redemption Price, including any
		applicable accrued interest) such Convertible Notes shall cease to bear
		interest. Upon surrender of any Convertible Notes for Redemption in accordance
		with said notice, such Convertible Note shall be paid by the Company at the
		Redemption Price together with any applicable accrued and unpaid interest and
		Additional Interest up to but not including the Redemption Date; provided,
		however, that
		installments of interest on Convertible Notes whose stated maturity is on or
		prior to the Redemption Date shall be payable to the holders of such
		Convertible Notes, or registered as such on the relevant Record Date according
		to their terms and the provisions.

	  

	 If any
		Convertible Note called for Redemption shall not be so paid upon surrender
		thereof for Redemption, the principal amount of, premium, if any, and, to the
		extent permitted by applicable law, accrued interest on such Convertible Note
		shall, until paid, bear interest from the Redemption Date at the rate then in
		effect, and such Convertible Note shall remain convertible until the principal
		of such Convertible Note (or portion thereof, as the case may be) shall have
		been paid or duly provided for.

	  

	 SECTION
		3.05.  Convertible
		Notes Redeemed in Part. Any
		Convertible Note that is to be redeemed only in part shall be surrendered at an
		office or agency of the Company designated for that purpose pursuant to
		Section 2.03 (with,
		if the Company or the Trustee so requires, due endorsement by, or a written
		instrument of transfer in form satisfactory to the Company and the Trustee duly
		executed by, the holder thereof or his attorney duly authorized in writing),
		and the Company shall execute, and the Trustee shall authenticate and make
		available 

	 

		
		   

		  
			 -18-

			 

		   

		  

		  
		  

		   
 

	  

	 for
		delivery to the holder of such Convertible Note without service charge, a new
		Registered Convertible Note or Convertible Notes, of any authorized
		denomination as requested by such holder, in aggregate principal amount equal
		to and in exchange for the unredeemed portion of the principal of the
		Convertible Note so surrendered.

	  

	 ARTICLE
		IV

	  

	 COVENANTS

	  

	 SECTION
		4.01.  Payment
		of Convertible Notes. The
		Company shall pay the principal of, the interest (and Additional Interest, if
		any) on and any other payments due (including, but not limited to, the
		Fundamental Change Payment, the Fundamental Change Make-Whole Premium, the
		Interest Make-Whole Premium (as defined below) and the Redemption Price, as
		applicable) under the Convertible Notes on the dates and in the manner provided
		in the Convertible Notes. Principal, interest (and Additional Interest, if any)
		and any other payments due shall be considered paid on the date due if the
		Trustee or Paying Agent (other than the Company or a Subsidiary of the Company)
		holds as of 10:00 a.m., New York City time, on that date immediately available
		funds designated for and sufficient to pay all principal, interest (and
		Additional Interest, if any) and any other payments then due. Notwithstanding
		the foregoing, if the Company pays interest (or Additional Interest, if any)
		with shares of Common Stock, such payments shall be considered paid on the date
		the Company transmits to the transfer agent, with a copy to the Trustee, an
		instruction to issue such shares to the holders of the Convertible Notes in
		accordance with the requirements of such transfer agent, and issues a press
		release announcing that the Company has instructed the transfer agent for the
		Common Stock to issue shares of Common Stock in payment of such interest, along
		with the aggregate number of such shares to be issued.

	  

	 To the
		extent lawful, the Company shall pay interest (including post-petition interest
		in any proceeding under any Bankruptcy Law) on (i) overdue principal, at the
		rate borne by Convertible Notes, compounded semiannually; (ii) overdue
		installments of interest (without regard to any applicable grace period)
		(interest (or Additional Interest, if any) paid with shares of Common Stock
		shall not be deemed overdue if the procedures set forth in the last sentence of
		the immediately preceding paragraph are followed) at the same rate, compounded
		semiannually, in accordance with Section
		2.12; and
		(iii) any other overdue payments (including, but not limited to, the
		Fundamental Change Payment, the Fundamental Change Make-Whole Premium, the
		Interest Make-Whole Premium and the Redemption Price, as applicable) at the
		same rate, compounded semiannually.

	  

	 SECTION
		4.02.  Commission
		Reports. The
		Company shall comply with Section 314(a) of the TIA. Delivery of such reports,
		information and documents and those under Section
		4.10 to the
		Trustee is for informational purposes only and the Trustee’s receipt of
		such shall not constitute constructive notice of any information contained
		therein or determinable from information contained therein, including the
		Company’s compliance with any of its covenants hereunder (as to which the
		Trustee is entitled to rely exclusively on Officer’s
		Certificates).

	  

	 SECTION
		4.03.  Compliance
		Certificate. The
		Company shall deliver to the Trustee within 120 days after the end of each
		fiscal year of the Company, an Officer’s Certificate, one of 

	 

		
		   

		  
			 -19-

			 

		   

		  

		  
		  

		   
 

	  

	 the
		signatories of which shall be the principal executive, principal financial or
		principal accounting officer of the Company, stating that a review of the
		activities of the Company and its Subsidiaries during the preceding fiscal year
		has been made under the supervision of the signing Officers with a view to
		determining whether the Company has fully performed its obligations under this
		Indenture and further stating, as to each such Officer signing such
		certificate, that to the best of his or her knowledge, no Default or Event of
		Default has occurred hereunder (or, if any Default or Event of Default shall
		have occurred, describing all such Defaults or Events of Default of which he or
		she may have knowledge) and, that to the best of his or her knowledge, no event
		has occurred and remains in existence by reason of which payments on account of
		the principal of or interest (or Additional Interest, if any) on the
		Convertible Notes are prohibited.

	  

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

	  

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

	  

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

	  

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

	  

	 SECTION
		4.06.  Repurchase
		Upon Fundamental Change.
		Following a Fundamental Change (the date of each such occurrence being the
		“Fundamental Change Date”), the Company shall notify the holders of
		Convertible Notes in writing of such occurrence and shall make an offer (the
		“Fundamental Change Offer”) to repurchase all Convertible Notes then
		outstanding at a repurchase price in cash (the “Fundamental Change
		Payment”) equal to 100% of the principal amount thereof, plus accrued and
		unpaid interest and Additional Interest, if any, to, but excluding, the
		Fundamental Change Payment Date (as defined below). In connection with a
		repurchase upon Fundamental Change, the Company shall comply with all
		applicable federal and state securities laws, including but not limited to, the
		provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the
		Exchange Act, and file Schedule TO or any other required schedule under the
		Exchange Act.

	  

	 Notice
		of a Fundamental Change shall be mailed by or at the direction of the Company
		to the holders of Convertible Notes as shown on the Register of such holders
		maintained by the Registrar not more than 20 days after the applicable
		Fundamental Change 

	 
		
		   

		  
			 -20-

			 

		   

		  

		  
		  

		   
 

	  

	 Date at
		the addresses as shown on the Register of holders maintained by the Registrar,
		with a copy to the Trustee and the Paying Agent. The Fundamental Change Offer
		shall remain open until a specified date (the “Fundamental Change Offer
		Termination Date”) until the Business Day prior to the Fundamental Change
		Payment Date or such longer period as required by Federal securities laws.
		During the period specified in such notice, holders of Convertible Notes may
		elect to tender their Convertible Notes in whole or in part in integral
		multiples of $1,000 in exchange for cash. Payment shall be made by the Company
		in respect of Convertible Notes properly tendered pursuant to this Section
		4.06 on the
		first Business Day (the “Fundamental Change Payment Date”) that is 20
		Business Days after the date of the notice of Fundamental Change or such longer
		period as required by Federal securities laws.

	  

	 The
		notice, which shall govern the terms of the Fundamental Change Offer, shall
		identify the Convertible Notes (including CUSIP numbers) and shall include such
		disclosures as are required by law and shall state:

	  

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

	  

	 (b)  the
		event, transaction or transactions that constitute the Fundamental
		Change;

	  

	 (c)  the
		Fundamental Change Payment for each Convertible Note, the Fundamental Change
		Offer Termination Date and the Fundamental Change Payment Date;

	  

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

	  

	 (e)  that,
		unless the Company defaults on making the Fundamental Change Payment, any
		Convertible Note accepted for payment pursuant to the Fundamental Change Offer
		shall cease to accrue interest and Additional Interest, if applicable, on the
		Fundamental Change Payment Date and no further interest or Additional Interest
		shall accrue on or after such date;

	  

	 (f)  that
		holders electing to have Convertible Notes repurchased pursuant to a
		Fundamental Change Offer will be required to surrender their Convertible Notes
		to the Paying Agent at the address specified in the notice prior to 5:00 p.m.,
		New York City time, on the Fundamental Change Offer Termination Date and must
		complete any form letter of transmittal proposed by the Company and acceptable
		to the Trustee and the Paying Agent (which letter of transmittal shall require
		the holder to specify (i) if certificated Convertible Notes have been issued to
		such holder, the certificate numbers of the Convertible Notes to be delivered
		for repurchase, or if the Convertible Notes issued to such holder are not in
		certificated form, such information as required to comply with appropriate
		procedures of the Depositary and (ii) the principal amount of Convertible
		Notes, in integral multiples of $1,000, to be repurchased);

	  

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

	 
		
		   

		  
			 -21-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

	 (j)  that in
		the case of a Fundamental Change Payment Date that is also an Interest Payment
		Date, the interest payment and Additional Interest, if any, due on such date
		shall be paid to the Person in whose name the Convertible Note is registered at
		the close of business on the relevant Fundamental Change Offer Termination
		Date; and

	  

	 (k)  information
		concerning the applicable Conversion Rate.

	  

	 On the
		Fundamental Change Offer Termination Date, the Company shall (i) accept for
		payment all Convertible Notes or portions thereof properly tendered pursuant to
		the Fundamental Change Offer, (ii) deposit with the Paying Agent money
		sufficient to pay the Fundamental Change Payment with respect to all
		Convertible Notes or portions thereof so tendered and accepted and (iii)
		deliver or cause to be delivered to the Trustee the Convertible Notes so
		accepted together with an Officer’s Certificate setting forth the
		aggregate principal amount of Convertible Notes or portions thereof tendered to
		and accepted for payment by the Company. On the Fundamental Change Payment
		Date, the Paying Agent shall mail or deliver the Fundamental Change Payment to
		the holders of Convertible Notes so accepted and the Trustee shall promptly
		authenticate and mail or cause to be transferred by book-entry to such holders
		a new Convertible Note equal in principal amount to any unpurchased portion of
		the Convertible Note surrendered, if any; provided,
		however, that
		such new Convertible Notes will be in a principal amount of $1,000 or an
		integral multiple thereof. Any Convertible Notes not so accepted shall be
		promptly mailed or delivered by the Company to the holder thereof.

	  

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

	 
		
		   

		  
			 -22-

			 

		   

		  

		  
		  

		   
 

	  

	 Common
		Stock of the Company (in lieu of the Company and the Common Stock of the
		Company).

	  

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

	  

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

	  

	 SECTION
		4.08.  Stay,
		Extension and Usury Laws. The
		Company covenants (to the extent that it may lawfully do so) that it shall not
		at any time insist upon, plead or in any manner whatsoever claim or take the
		benefit or advantage of, any stay, extension or usury law wherever enacted, now
		or at any time hereafter enforced, that may affect the Company’s
		obligation to pay the Convertible Notes; and the Company (to the extent that it
		may lawfully do so) hereby expressly waives all benefit or advantage of any
		such law insofar as such law applies to the Convertible Notes, and covenants
		that it shall not, by resort to any such law, hinder, delay or impede the
		execution of any power herein granted to the Trustee, but will suffer and
		permit the execution of every such power as though no such law has been
		enacted.

	  

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

	  

	 SECTION
		4.10.  Reports. If at
		any time the Company is not subject to Section 13 or 15(d) of the Exchange Act,
		upon the request of a holder of a Convertible Note, the Company will promptly
		furnish or cause to be furnished to such holder or to a prospective purchaser
		of such Convertible Note designated by such holder, as the case may be, the
		information, if any, required to be delivered by it pursuant to Rule 144A(d)(4)
		under the Securities Act to permit compliance with Rule 144A in connection with
		the resale of such Convertible Note; provided,
		however, that
		the Company shall not be required to furnish such information in connection
		with any request made on or after the date which is two years from the later of
		the date such Convertible Note was last acquired from the Company or an
		Affiliate of the Company.

	  

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

	 

		
		   

		  
			 -23-

			 

		   

		  

		  
		  

		   
 

	  

	 be an
		“investment company” and not to be required to be registered under
		the Investment Company Act, including, if necessary, redeployment of the assets
		of the Company.

	  

	 SECTION
		4.12.  Payment
		in Registered Common Stock. To the
		extent payment in Common Stock is permitted under the provisions of this
		Indenture, such payment can only be made in the form of Registered Common
		Stock. 

	  

	 SECTION
		4.13.  Incurrence
		of Indebtedness. The
		Company shall not, and shall not permit any of its Subsidiaries to, incur or
		suffer to exist (i) secured Indebtedness, (ii) senior unsecured
		Indebtedness, (iii) subordinated Indebtedness that matures on or before the
		maturity date of the Convertible Notes or (iv) Indebtedness of any of its
		Subsidiaries, in an aggregate principal amount for all of the foregoing which
		exceeds $5,000,000, unless, in the case of clause (i) only, the Convertible
		Notes are equally and ratably secured with such secured Indebtedness in excess
		of such $5,000,000 limit.

	  

	 SECTION
		4.14.  Guarantees
		of Domestic Subsidiaries. In the
		event the Company forms a domestic Subsidiary after the Issue Date, the Company
		shall cause such Subsidiary to guarantee all obligations set forth in this
		Indenture and take all such other action as required by the Trustee including
		executing a supplemental indenture.

	  

	 SECTION
		4.15.  Additional
		Interest. If
		Additional Interest is payable by the Company pursuant to Section 7 of the
		Registration Rights Agreement, the Company shall deliver to the Trustee a
		certificate to that effect stating (i) the amount of such Additional Interest
		per U.S.$1,000 principal amount of the Convertible Notes that is payable, (ii)
		the facts and calculations supporting the determination of such amount and
		(iii) the date on which such damages are payable. Unless and until a Trust
		Officer of the Trustee receives such a certificate, the Trustee may assume
		without inquiry that no Additional Interest is payable.

	  

	 SECTION
		4.16.  Calculation
		of Original Issue Discount. The
		Company shall file with the Trustee promptly at the end of each calendar year
		(i) a written notice specifying the amount of original issue discount
		(including daily rates and accrual periods) accrued on outstanding 
		Convertible Notes as of the end of such year and (ii) such other specific
		information relating to such original issue discount as may then be relevant
		under the Internal Revenue Code of 1986, as amended from time to
		time.

	  

	 ARTICLE
		V

	  

	 Successors

	  

	 SECTION
		5.01.  When
		the Company May Merge, Etc. The
		Company may not, without the consent of majority of the aggregate principal
		amount of outstanding Convertible Notes, in a single transaction or series of
		related transactions, consolidate or merge with or into or effect a share
		exchange with (whether or not the Company is the surviving corporation), or
		sell, assign, transfer, lease, convey or otherwise dispose of all or
		substantially all of its properties or assets to, any Person as an entirety or
		substantially as an entirety unless:

	  

	 (a)  The
		resulting, surviving or transferee Person (including the Company) is a
		corporation organized and existing under the laws of:

	 
		
		   

		  
			 -24-

			 

		   

		  

		  
		  

		  
		   
 
 

	 (i)  The
		United States, any state thereof or the District of Columbia; or

	  

	 (ii)  Any
		member country of the European Union, or any other country if the organization
		and existence of such Person in such country would not impair the rights of
		holders and such resulting, surviving or transferee Person has common stock, or
		American Depository Receipts representing such common stock, trading on a
		national securities exchange in the United States;

	  

	 (b)  Such
		Person assumes all of the Company’s obligations under the Convertible
		Notes and this Indenture;

	  

	 (c)  The
		Company or such successor Person shall not immediately thereafter be in default
		under this Indenture; and

	  

	 (d)  The
		other conditions described in this Indenture are met.

	  

	 For
		purposes of this Section
		5.01, the
		transfer (by lease, assignment, sale or otherwise, in a single transaction or
		series of transactions) of all or substantially all of the properties or assets
		of one or more Subsidiaries of the Company, the capital stock of which
		individually or in the aggregate constitutes all or substantially all of the
		properties and assets of the Company, shall be deemed to be the transfer of all
		or substantially all of the properties and assets of the Company, and
		(b) a joint venture, licensing arrangement or other strategic relationship
		involving the licensing, manufacturing or marketing of, or other similar
		arrangements with respect to, any of the Company’s products, even if such
		arrangement involves an investment in the Company, shall not be deemed a
		transfer of all or substantially all of the consolidated assets of the Company
		and its Subsidiaries.

	  

	 SECTION
		5.02.  Successor
		Corporation Substituted. Upon
		any such consolidation, merger, share exchange, sale, assignment, conveyance,
		lease, transfer or other disposition in accordance with Section
		5.01, the
		successor Person formed by such consolidation or share exchange or into which
		the Company is merged or to which such sale, assignment, conveyance, lease,
		transfer or other disposition is made will succeed to, and be substituted for,
		and may exercise every right and power of, the Company under this Indenture
		with the same effect as if such successor had been named as the Company herein,
		and thereafter (except in the case of a lease) the predecessor corporation will
		be relieved of all further obligations and covenants under this Indenture and
		the Convertible Notes.

	  

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

	  

	 ARTICLE
		VI

	  

	 Defaults
		and Remedies

	  

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

	 
		
		   

		  
			 -25-

			 

		   

		  

		  
		  

		  
		   
 
 

	 (a)  the
		Company defaults in the payment of principal of the Convertible Notes when due
		and payable at maturity, upon repurchase, upon acceleration or otherwise;
		or

	  

	 (b)  the
		Company defaults in the payment of any installment of interest or Additional
		Interest on the Convertible Notes when due (including any interest or
		Additional Interest payable in connection with a repurchase pursuant to
		Section
		4.06) and
		continuance of such default for 30 days or more (for purposes of clarity, no
		“Default” or “Event of Default” will occur hereunder until
		such 30 day period has elapsed without the payment of interest or Additional
		Interest); or

	  

	 (c)  the
		Company defaults in the payment of the Redemption Price, the Interest
		Make-Whole Premium, the Fundamental Change Payment or the Fundamental Change
		Make-Whole Premium, as applicable, in respect of the Convertible Notes, when
		due and payable; or

	  

	 (d)  the
		Company fails to deliver the required number of shares of Registered Common
		Stock together with any cash in lieu of fractional shares when such shares of
		Registered Common Stock and cash are required to be delivered upon conversion
		of a Convertible Note or upon a Fundamental Change, and such default continues
		for a period of five Business Days or more; or

	  

	 (e)  the
		Company fails to provide timely notice of any Fundamental Change in accordance
		with Section
		4.06;
		or

	  

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

	  

	 (g)  (i)
		failure by the Company or any Subsidiary to make any payment by the end of any
		applicable grace period of Indebtedness (to the extent such Indebtedness
		exceeds $5,000,000) and continuance of such failure for thirty days, or (ii)
		the acceleration of such Indebtedness (to the extent such Indebtedness exceeds
		$5,000,000) because of a default with respect to such Indebtedness and such
		Indebtedness is not discharged or such acceleration is not cured, waived,
		rescinded or annulled within 30 days after written notice to the Company by the
		Trustee or to the Company and the Trustee by the holders of not less than 25%
		in aggregate principal amount of the Convertible Notes then outstanding;
		provided,
		however, that if
		any such failure or acceleration referred to in clause (i) or (ii) shall cease
		or be cured, waived, rescinded or annulled, then the Event of Default by reason
		thereof shall be deemed not to have occurred; or

	  

	 (h)  failure
		to pay a final, nonappealable judgment or final, nonappealable judgments (other
		than any judgment as to which a reputable insurance company has accepted full
		liability) for the payment of money entered by a court or courts of competent
		jurisdiction against the Company or any Material Subsidiaries of the Company,
		which judgments remain unstayed, unbonded or undischarged for a period of 60
		days, provided that the aggregate amount of all such judgments exceeds
		$10,000,000; or

	 
		
		   

		  
			 -26-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

	 (i)  commences
		a voluntary case,

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 The sole
		remedy for an Event of Default specified in clause (f) above arising out of any
		breach of the Company’s obligation under this Indenture to file periodic
		or other reports (including pursuant to Section 314(a)(1) of the TIA) shall
		consist exclusively of the right to receive additional interest on the
		Convertible Notes in the amount of 0.50% per annum during the first 120 days
		after occurrence and during the continuance of such Event of Default. This
		additional interest will be payable in the same manner as Additional Interest
		accruing under the Registration Rights Agreement; provided that the aggregate
		of all such additional interest (including Additional Interest accruing under
		the Registration Rights Agreement) shall not exceed 0.50% per annum. Once the
		event giving rise to the additional interest has been cured, the interest
		payable on the Convertible Notes will return to the initial interest rate
		specified (excluding any Additional Interest payable under the Registration
		Rights Agreement). If such Event of Default has not been cured or waived prior
		to such 120th day, then either the Trustee or the holders of not less than 25%
		in aggregate principal amount of the Convertible Notes then outstanding may
		declare the principal amount of the Convertible Notes outstanding plus accrued
		and unpaid interest through, but excluding, the date of such declaration to be
		immediately due and payable.

	 
		
		   

		  
			 -27-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

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

	  

	 SECTION
		6.04.  Waiver
		of Past Defaults. The
		holders of a majority in aggregate principal amount of the Convertible Notes
		then outstanding may, on behalf of the holders of all the Convertible Notes,
		waive an existing Default or Event of Default and its consequences, except a
		Default or Event of Default in the payment of the principal of, or interest or
		Additional Interest, if applicable, on the Convertible Notes (other than the
		non-payment of principal of, and interest and Additional Interest, if any, on
		the Convertible Notes which has become due solely by virtue of an acceleration
		which has been duly rescinded as provided above), or in respect of a covenant
		or provision of this Indenture which cannot be modified or amended without the
		consent of all holders of Convertible Notes; provided,
		however, that in
		order to waive any provisions of Article
		XI,
		holders of at least 75% in aggregate principal amount of Convertible Notes then
		outstanding must consent to such waiver if such waiver would adversely affect
		the rights of holders of Convertible Notes. When a Default or Event of Default
		is waived, it is cured and stops continuing. No waiver shall extend to any
		subsequent or other Default or Event of Default or impair any right consequent
		thereon.

	 
		 

		
		  -28-

		  

		 

		

		
		

		 

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 (e)  during
		such 60-day period the holders of a majority in aggregate principal amount of
		the then outstanding Convertible Notes do not give the Trustee a direction
		inconsistent with the request.

	  

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

	  

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

	  

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

	 
		
		   

		  
			 -29-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

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

	  

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

	  

	 Third:
		to the Company.

	  

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

	  

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

	  

	 ARTICLE
		VII

	  

	 The
		Trustee

	  

	 The
		Trustee hereby accepts the trust imposed upon it by this Indenture and
		covenants and agrees to perform the same, as herein expressed. Whether or not
		herein expressly so provided, every provision of this Indenture relating to the
		conduct or affecting the liability of or affording protection to the Trustee
		shall be subject to the provisions of this Article
		VII and the
		provisions of the TIA.

	  

	 SECTION
		7.01.  Duties
		of the Trustee.
		(a) If an
		Event of Default known to a Trust Officer of the Trustee has occurred and is
		continuing, the Trustee shall exercise such of the rights 

	 

		
		   

		  
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	 and
		powers vested in it by this Indenture and use the same degree of care and skill
		in their exercise as a prudent person would exercise or use under the
		circumstances in the conduct of his or her own affairs.

	  

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

	  

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

	  

	 (2)  in the
		absence of bad faith on its part, the Trustee may conclusively rely, as to the
		truth of the statements and the correctness of the opinions expressed therein,
		upon any statements, certificates or opinions furnished to the Trustee and
		conforming to the requirements of this Indenture. However, the Trustee shall
		examine the certificates and opinions to determine whether or not they conform
		to the form required by this Indenture (but need not confirm or investigate the
		accuracy of mathematical calculations or other facts stated
		therein).

	  

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

	  

	 (1)  this
		paragraph does not limit the effect of paragraph (b) of this Section
		7.01;

	  

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

	  

	 (3)  the
		Trustee shall not be liable with respect to any action it takes or omits to
		take in good faith in accordance with a written direction received by it
		pursuant to Section
		6.05.

	  

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

	  

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

	  

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

	 
		
		   

		  
			 -31-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 (g)  The
		Trustee shall be under no obligation to exercise any of the rights or powers
		vested in it by this Indenture at the request, order or discretion of any of
		the holders of Convertible Notes pursuant to the provisions of this Indenture,
		unless such holders have offered to the Trustee security or indemnity
		satisfactory to it against the costs, expenses and liabilities which might be
		incurred therein or thereby.

	  

	 (h)  The
		Trustee shall not be bound to make any investigation into the facts or matters
		stated in any resolution, certificate, statement, instrument, opinion, report,
		notice, request, consent, order, security or other document unless requested in
		writing to do so by the holders of not less than a majority in aggregate
		principal amount of the Convertible Notes then outstanding, provided that if
		the Trustee determines in its discretion to make any such investigation, then
		it shall be entitled, upon reasonable prior notice and during normal business
		hours, to examine the books and records and the premises of the Company,
		personally or by agent or attorney, and the reasonable expenses of every such
		examination shall be paid by the Company or, if paid by the Trustee or any
		predecessor Trustee, shall be reimbursed by the Company upon
		demand.

	 
		
		  
			  

			 -32-

			  
 

		  

		  
		  

		  
		   
 
 

	 (i)  The
		permissive rights of the Trustee to do things enumerated in this Indenture
		shall not be construed as a duty.

	  

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

	  

	 (k)  Subject
		to the limitations of TIA § 315(d) and Section
		7.01(c), in no
		event shall the Trustee be responsible or liable for special, indirect, or
		consequential loss or damage of any kind whatsoever (including, but not limited
		to, loss of profit) irrespective of whether the Trustee has been advised of the
		likelihood of such loss or damage and regardless of the form of
		action.

	  

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

	  

	 (m)  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 Persons employed to act
		hereunder.

	  

	 (n)  The
		Trustee may request that the Company deliver an Officer’s 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
		Officer’s Certificate may be signed by any Officer authorized to sign an
		Officer’s Certificate, including any Officer specified as so authorized in
		any such certificate previously delivered and not superseded.

	  

	 (o)  In no
		event shall the Trustee be responsible or liable for any failure or delay in
		the performance of its obligations hereunder arising out of or caused by,
		directly or indirectly, forces beyond its control, including, without
		limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil
		or military disturbances, nuclear or natural catastrophes or acts of God, and
		interruptions, loss or malfunctions of utilities, communications or computer
		(software or hardware) services; it being understood that the Trustee shall use
		reasonable efforts which are consistent with accepted practices in the banking
		industry to resume performance as soon as practicable under the
		circumstances.

	  

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

	  

	 SECTION
		7.04.  Trustee’s
		Disclaimer. The
		Trustee shall not be responsible for and makes no representation as to the
		validity or adequacy of this Indenture or the Convertible Notes. 

	 

		
		   

		  
			 -33-

			 

		   

		  

		  
		  

		   
 

	  

	 It shall
		not be accountable for the Company’s use of the proceeds from the
		Convertible Notes or any money paid to the Company or upon the Company’s
		direction under any provision of this Indenture. It shall not be responsible
		for the use or application of any money received by any Paying Agent other than
		the Trustee, and it shall not be responsible for any statement or recital
		herein or any statement in the Convertible Notes or any other document in
		connection with the sale of the Convertible Notes or pursuant to this Indenture
		other than its certificate of authentication.

	  

	 SECTION
		7.05.  Notice
		of Defaults. If a
		Default or Event of Default occurs and is continuing and if it is known to a
		Trust Officer of the Trustee, the Trustee shall mail to each holder of a
		Convertible Note a notice of the Default or Event of Default within 90 days
		after it occurs. A Default or an Event of Default shall not be considered known
		to a Trust Officer of the Trustee unless it is a Default or Event of Default in
		the payment of principal, or interest or Additional Interest, if any, when due
		under Section
		6.01(a),
		(b) or
		(c) or a
		Trust Officer of the Trustee shall have received notice thereof, in accordance
		with this Indenture, from the Company or from the holders of a majority in
		principal amount of the outstanding Convertible Notes. Except in the case of a
		Default or Event of Default in payment of principal of, or interest or
		Additional Interest, if any, on any Convertible Note, the Trustee may withhold
		the notice if and so long as a committee of its Trust Officers in good faith
		determines that withholding the notice is in the interest of the holders of the
		Convertible Notes.

	  

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

	  

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

	  

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

	  

	 The
		Company shall indemnify the Trustee or any predecessor Trustee and their
		agents, against, and defend and hold them harmless from, any and all loss,
		liability, damage, claim or expense, including taxes (other than taxes based
		upon, measured by or determined by 

	 
		
		   

		  
			 -34-

			 

		   

		  

		  
		  

		   
 

	  

	 the
		income of the Trustee), arising out of or in connection with the acceptance or
		administration of its duties under this Indenture and the trusts hereunder,
		including the costs and expenses of defending itself against or investigating
		any claim (whether asserted by the Company, or any holder of Convertible Notes
		or any other Person) or liability in connection with the exercise or
		performance of any of its powers or duties hereunder, or in connection with
		enforcing the provisions of this Section
		7.07, except
		as set forth in the next paragraph. The Trustee shall notify the Company
		promptly of any claim for which it may seek indemnity. Failure by the Trustee
		to so notify the Company shall not relieve the Company of its obligations
		hereunder. The Company shall defend the claim with counsel designated by the
		Company, who may be outside counsel to the Company but shall in all events be
		reasonably satisfactory to the Trustee, and the Trustee shall cooperate in the
		defense. In addition, the Trustee may retain one separate counsel and, if
		deemed advisable by such counsel, local counsel, and the Company shall pay the
		reasonable fees and expenses of such separate counsel and local counsel. The
		indemnification herein extends to any settlement; provided,
		however, that
		the Company will not be liable for any settlement made without its consent;
		provided
		further,
		however, that such consent will not be unreasonably withheld.

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	 
		
		   

		  
			 -35-

			 

		   

		  

		  
		  

		  
		   
 
 

	 (d)  the
		Trustee becomes incapable of acting.

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 SECTION
		7.11.  Preferential
		Collection of Claims Against Company. The
		Trustee shall comply with TIA § 311(a), excluding any creditor
		relationship set forth in TIA § 311(b). A 

	 

		
		   

		  
			 -36-

			 

		   

		  

		  
		  

		   
 

	  

	 Trustee
		who has resigned or been removed shall be subject to TIA § 311(a) to the
		extent indicated therein.

	  

	 ARTICLE
		VIII

	  

	 Satisfaction
		and Discharge of Indenture

	  

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

	  

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

	  

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

	  

	 SECTION
		8.04.  Return
		of Unclaimed Moneys.
		Subject to the requirements of applicable law, any moneys deposited with or
		paid to the Trustee for payment of the principal of, 

	 

		
		   

		  
			 -37-

			 

		   

		  

		  
		  

		   
 

	  

	 or
		interest or Additional Interest, if any, on Convertible Notes and not applied
		but remaining unclaimed by the holders thereof for two years after the date
		upon which the principal of, or interest, or Additional Interest, if any, on
		such Convertible Notes, as the case may be, have become due and payable, shall
		be repaid to the Company by the Trustee on written demand; provided,
		however, that
		the Company, or the Trustee at the written request and expense of the Company,
		shall have first caused notice of such payment to the Company to be mailed to
		each holder of a Convertible Note entitled thereto no less than 30 days prior
		to such payment and all liability of the Trustee shall thereupon cease with
		respect to such moneys; and the holder of any of the Convertible Notes shall
		thereafter look only to the Company for any payment which such holder may be
		entitled to collect unless an applicable abandoned property law designates
		another Person.

	  

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

	  

	 ARTICLE
		IX

	  

	 Amendments

	  

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

	  

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

	  

	 (b)  providing
		for uncertificated Convertible Notes in addition to or in place of certificated
		Convertible Notes (so long as any uncertificated Convertible Notes are in
		registered form for purposes of the Internal Revenue Code of 1986, as
		amended);

	  

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

	 
		
		   

		  
			 -38-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

	 (e)  subject
		to Nasdaq shareholder approval rules, reducing the Conversion Price, provided
		that the reduction will not adversely affect the interests of the holders of
		the Convertible Notes;

	  

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

	  

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

	  

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

	  

	 (i)  adding
		to the Company covenants or obligations under this Indenture or surrendering
		any Company right, power or option conferred by this Indenture.

	  

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

	  

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

	  

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

	  

	 (a)  reduce
		the principal amount of Convertible Notes, reduce the rate or change the time
		of payment of (i) interest on any Convertible Note, (ii) the Redemption Price,
		(iii) the Interest Make-Whole Premium, (iv) the Fundamental Change Payment, or
		(v) the Fundamental Change Make-Whole Premium with respect to any Convertible
		Note, or extend the stated maturity of any Convertible Note or make any
		Convertible Note payable in money or securities other than that stated in the
		Convertible Notes;

	  

	 (b)  make any
		change that adversely affects the right to convert any Convertible Note or the
		right to require the Company to repurchase or redeem a Convertible
		Note;

	  

	 (c)  reduce
		the percentage of holders whose consent is needed to modify, amend or waive any
		provision in this Indenture;

	 
		
		   

		  
			 -39-

			 

		   

		  

		  
		  

		  
		   
 
 

	 (d)  modify
		the provisions dealing with modification and waiver of this Indenture, except
		to increase any required percentage or to provide that certain other provisions
		of this Indenture cannot be modified or waived without the consent of the
		holder of each outstanding Convertible Note affected thereby;

	  

	 (e)  impair
		the right to institute suit for the enforcement of any payment with respect to,
		or conversion of, the Convertible Notes; or

	  

	 (f)  make any
		amounts payable with respect to the Convertible Notes payable in currency other
		than that stated in the Convertible Notes.

	  

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

	  

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

	  

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

	  

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

	  

	 The
		Company may, but shall not be obligated to, fix a record date for the purpose
		of determining the holders of Convertible Notes entitled to consent to any
		amendment or waiver. If a record date is fixed, then notwithstanding the
		provisions of the immediately preceding paragraph, those Persons who were
		holders of Convertible Notes at such record date (or their duly designated
		proxies), and only those Persons, shall be entitled to consent to such
		amendment or waiver or to revoke any consent previously given, whether or not
		such Persons continue to be holders after such record date.

	  

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

	 
		
		   

		  
			 -40-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

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

	  

	 ARTICLE
		X

	  

	 General
		Provisions

	  

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

	  

	 SECTION
		10.02.  Notices. Any
		notice or communication by the Company or the Trustee to the other is duly
		given if in writing (which may be by facsimile), delivered in person or mailed
		by first-class mail, with postage prepaid (registered or certified, return
		receipt requested), or sent by facsimile or overnight air couriers guaranteeing
		next day delivery, to the other’s address as stated in Section
		10.10. The
		Company or the Trustee by notice to the other may designate additional or
		different addresses for subsequent notices or communications.

	  

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

	 
		
		   

		  
			 -41-

			 

		   

		  

		  
		  

		  
		   
 
 

	 Any
		notice or communication to a holder of a Convertible Note shall be mailed by
		first-class mail, with postage prepaid, to his or her address shown on the
		Register kept by the Registrar. Failure to mail a notice or communication to a
		holder or any defect in it shall not affect its sufficiency with respect to
		other holders.

	  

	 If a
		notice or communication to a holder of a Convertible Note is sent in the manner
		provided above within the time prescribed, it is duly given, whether or not the
		addressee receives it.

	  

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

	  

	 All
		notices or communications shall be in writing.

	  

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

	  

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

	  

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

	  

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

	  

	 SECTION
		10.05.  Statements
		Required in Certificate or Opinion. Each
		certificate or opinion with respect to compliance with a condition or covenant
		provided for in this Indenture (other than a certificate provided pursuant to
		TIA § 314(a)(4)) shall include:

	  

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

	  

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

	  

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

	  

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

	 
		
		   

		  
			 -42-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

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

	  

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

	  

	 SECTION
		10.07.  Legal
		Holidays. A
		“Legal Holiday” is a Saturday, a Sunday or a day on which banking
		institutions in The City of New York are authorized or obligated to close, and
		a “Business Day” is any day that is not a Legal Holiday. If a payment
		date is a Legal Holiday at a place of payment, payment may be made at that
		place on the next succeeding day that is not a Legal Holiday, and no interest
		shall accrue for the intervening period. If any date specified in this
		Indenture is a Legal Holiday, then such date shall be the next succeeding
		Business Day.

	  

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

	  

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

	  

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

	  

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

	 
		
		   

		  
			 -43-

			 

		   

		  

		  
		  

		  
		   
 
 

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

	  

	 The
		Company’s address is:

	 

	 Vion
		Pharmaceuticals, Inc.

	 4
		Science Park

	 New
		Haven, Connecticut 06511

	 Attention:
		Corporate Secretary

	 Facsimile:
		(203) 498-4211

	 

	 The
		Trustee’s address is:

	 

	 U.S.
		Bank National Association

	 100 Wall
		Street, Suite 1600

	 New
		York, NY 10005

	 Attention:
		Corporate Trust Services

	 Facsimile:
		(212) 361-6153

	 

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

	  

	 SECTION
		10.12.  No
		Adverse Interpretation of Other Agreements. This
		Indenture may not be used to interpret another indenture, loan or debt
		agreement of the Company or a Subsidiary. Any such other indenture, loan or
		debt agreement may not be used to interpret this Indenture.

	  

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

	  

	 SECTION
		10.14.  Severability. In
		case any provision in this Indenture or in the Convertible Notes shall be
		invalid, illegal or unenforceable, the validity, legality and enforceability of
		the remaining provisions shall not in any way be affected or impaired
		thereby.

	  

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

	  

	 ARTICLE
		XI

	  

	 Ranking

	  

	 Subject
		to Section
		4.13 herein,
		the Convertible Notes will rank:

	 
		
		   

		  
			 -44-

			 

		   

		  

		  
		  

		  
		   
 
 

	 (a)  junior
		in right of payment to the Company’s future secured Indebtedness to the
		extent of the value of the collateral securing such Indebtedness;

	  

	 (b)  equal in
		right of payment to the Company’s future senior unsecured
		Indebtedness;

	  

	 (c)  senior
		in right of payment to the Company’s existing and future subordinated
		Indebtedness; and

	  

	 (d)  structurally
		subordinated to any Indebtedness or other liabilities of the Company’s
		Subsidiaries.

	  

	 ARTICLE
		XII

	  

	 Conversion
		of Convertible Notes

	  

	 SECTION
		12.01.  Right
		To Convert.
		(a) Upon
		compliance with the provisions of this Indenture, each holder of Convertible
		Notes shall have the right, at his or her option, at any time on or after the
		earlier of (i) the date the Shelf Registration Statement with respect to the
		resale of shares of Common Stock issuable upon conversion of the Convertible
		Notes becomes effective and (ii) 180 days after the Issue Date and before the
		close of business on the Maturity Date (except that, with respect to any
		Convertible Note or portion thereof subject to a duly completed election for
		repurchase by a holder or subject to a Redemption by the Company, such right
		shall terminate at the close of business on the date immediately preceding the
		Fundamental Change Offer Termination Date or the Redemption Date, as the case
		may be (unless the Company defaults in the payment due upon repurchase or
		Redemption or such holder elects to withdraw the submission of such election to
		repurchase in accordance with Section
		4.06)), to
		convert the principal amount of any Convertible Note held by such holder, or
		any portion of such principal amount which is $1,000 or an integral multiple
		thereof, into that number of fully paid and non-assessable shares of Common
		Stock (as such shares shall then be constituted) obtained by dividing the
		principal amount of the Convertible Note or portion thereof to be converted by
		the Conversion Price in effect at the time of conversion (in each case, subject
		to any applicable procedures with respect to a Global Security).

	  

	 Notwithstanding
		the foregoing:

	  

	 (a) Provisions
		of this Indenture that apply to conversion of all of a Convertible Note also
		apply to conversion of a portion of a Convertible Note.

	  

	 (b)  A holder
		of Convertible Notes is not entitled to any rights of a holder of Common Stock
		until such holder has converted its Convertible Notes into Common Stock, and
		only to the extent such Convertible Notes are deemed to have been converted
		into Common Stock pursuant to this Article
		XII.

	  

	 (c)  If there
		shall have occurred a Fundamental Change prior to February
		15, 2010, then subject to applicable Nasdaq shareholder approval rules, the
		Company shall pay, in shares of Registered Common Stock, a make-whole premium
		(the “Fundamental Change Make-Whole Premium”) to every holder of
		Convertible Notes that converts his or her Convertible Notes in connection with
		a Fundamental Change, by issuing additional shares to such holder upon the
		

	 

		
		   

		  
			 -45-

			 

		   

		  

		  
		  

		   
 

	  

	 conversion.
		For purposes hereof, a conversion shall be deemed to be in connection with a
		Fundamental Change if a conversion notice is received by the Conversion Agent
		on or subsequent to the date 10 Trading Days before the date announced by the
		Company as the anticipated Fundamental Change Date and before the close of
		business on the Trading Day immediately preceding the Fundamental Change
		Payment Date. Any Fundamental Change Make-Whole Premium shall be determined by
		reference to the table below, based on the Fundamental Change Date and the
		price paid, or deemed to be paid, per share of Common Stock in the transaction
		constituting the Fundamental Change (as described below); provided: (i) if the
		actual stock price on the Fundamental Change Date is between two stock prices
		on the table or the actual Fundamental Change Date is between two Fundamental
		Change Dates on the table, then the Fundamental Change Make-Whole Premium will
		be determined by a straight-line interpolation between the Fundamental Change
		Make-Whole Premiums set forth for the two stock prices and the two Fundamental
		Change Dates on the table based on a 365-day year, as applicable, (ii) if the
		stock price on the Fundamental Change Date exceeds $3.60 per share, subject to
		adjustment as set forth herein, no Fundamental Change Make-Whole Premium will
		be paid, and (iii) if the stock price on the Fundamental Change Date is less
		than $1.60 per share, subject to adjustment as set forth herein, no Fundamental
		Change Make-Whole Premium will be paid. If holders of the Common Stock receive
		only cash in the Fundamental Change, the stock price shall be the cash amount
		paid per share of the Common Stock in connection with the Fundamental Change.
		Otherwise, the stock price shall be equal to the average Closing Price of the
		Company’s Common Stock for each of the 10 Trading Days immediately
		preceding, but not including, the applicable Fundamental Change
		Date.

	  

	 The
		following table shows the amount, if any, by which the applicable Conversion
		Rate will increase for each stock price and Fundamental Change Effective Date
		set forth below:

	  

	 Number
		of Additional Shares per $1,000 Amount of Notes

	  

	 Stock
		Price

	  

	 
			
				Effective
				  Date of Fundamental Change
 	 	
				$1.60

					 	
				$1.80

					 	
				$2.00

					 	
				$2.20

					 	
				$2.40

				
	
				2/20/07

					 	
				145.3

					
				 
 	
				129.2

					
				 
 	
				116.3

					
				 
 	
				105.7

					
				 
 	
				96.9

				
	
				2/15/08

					
				 
 	
				119.3

					
				 
 	
				101.0

					
				 
 	
				87.4

					
				 
 	
				76.5

					
				 
 	
				68.0

				
	
				2/15/09

					
				 
 	
				104.2

					
				 
 	
				78.7

					
				 
 	
				61.2

					
				 
 	
				48.9

					
				 
 	
				40.5

				
	
				2/15/10

					
				 
 	
				104.2

					
				 
 	
				66.8

					
				 
 	
				43.0

					
				 
 	
				26.7

					
				 
 	
				15.2

				

 

	  

	 
			
				Effective
				  Date of Fundamental Change
 	 	
				$2.60

					 	
				$2.80

					 	
				$3.00

					 	
				$3.20

					 	
				$3.40

				
	
				2/20/07

					 	
				89.4

					
				 
 	
				83.0

					
				 
 	
				77.5

					
				 
 	
				72.7

					
				 
 	
				68.4

				
	
				2/15/08

					
				 
 	
				61.2

					
				 
 	
				55.9

					
				 
 	
				51.7

					
				 
 	
				48.4

					
				 
 	
				45.6

				
	
				2/15/09

					
				 
 	
				34.4

					
				 
 	
				29.7

					
				 
 	
				25.8

					
				 
 	
				24.2

					
				 
 	
				22.8

				
	
				2/15/10

					
				 
 	
				7.1

					
				 
 	
				2.8

					
				 
 	
				0.0

					
				 
 	
				0.0

					
				 
 	
				0.0

				

		
		   
 
 

	 
		
		  
			 -46-

			 

		   

		  

		  
		  

		   

	 
			
				Effective
				  Date of Fundamental Change
 	 	
				$3.60

					 
	
				2/20/07

					 	
				64.6

					 
	
				2/15/08

					
				 
 	
				43.1

					 
	
				2/15/09

					
				 
 	
				21.5

					 
	
				2/15/10

					
				 
 	
				0.0

					 

 

	 

	 The
		stock prices set forth in the heading rows (i.e., $1.60 through $3.60) of the
		table above will be adjusted as of any date on which the Conversion Price of
		the Convertible Notes is adjusted. The adjusted stock prices will equal the
		stock prices applicable immediately prior to such adjustment multiplied by a
		fraction, the numerator of which is the Conversion Rate immediately prior to
		the adjustment giving rise to the stock price adjustment and the denominator of
		which is the Conversion Rate as so adjusted. The number of shares of Registered
		Common Stock set forth in the table above will be adjusted in the same manner
		as the Conversion Rate as set forth in Section
		12.05 hereof,
		other than as a result of an adjustment of the Conversion Rate pursuant to this
		Section 12.01(c).

	  

	 Notwithstanding
		the foregoing, in no event will the Company be obligated to issue additional
		shares of Common Stock as the Fundamental Change Make-Whole Premium which, when
		taken together with any shares of the Company’s Common Stock issued in
		payment of interest on the Convertible Notes and issued or issuable upon
		conversion of the Convertible Notes, will result in an Effective Price per
		share of Common Stock to holders below $1.60, subject to adjustment in the same
		manner as the Conversion Price.

	  

	 The
		Company shall deliver the Fundamental Change Make-Whole Premium to holders that
		convert their Convertible Notes upon the later of (i) the settlement date for
		the conversion and (ii) promptly following the Fundamental Change
		Date.

	  

	 If a
		holder has delivered a Notice that it wishes to have its Convertible Notes
		repurchased in accordance with Section
		4.06, the
		holder may not surrender such Convertible Note for conversion until the holder
		has withdrawn such notice in accordance with Section
		4.06.

	  

	 SECTION
		12.02.  Exercise
		of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment
		for Interest or Dividends. To
		exercise, in whole or in part, the conversion privilege with respect to any
		Convertible Note, the holder of such Convertible Note shall surrender such
		Convertible Note, duly endorsed, at an office or agency maintained by the
		Company pursuant to Section
		4.04,
		accompanied by the funds, if any, required by the fourth paragraph of this
		Section
		12.02, and
		shall give written notice of conversion in the form provided on the Convertible
		Notes (or such other notice which is acceptable to the Company) to the office
		or agency that the holder of Convertible Notes elects to convert such
		Convertible Note or such portion thereof specified in said notice. Such notice
		shall also state the name or names (with address or addresses) in which the
		certificate or certificates for shares of Common Stock which are issuable on
		such conversion shall be issued, and shall be accompanied by transfer taxes, if
		required pursuant to Section
		12.08. Each
		such Convertible Note surrendered for conversion shall, unless the shares
		issuable on conversion are to be issued in the same name as the registration of
		such Convertible Note, be duly endorsed by, or be accompanied by instruments of
		transfer in form satisfactory to the Company duly executed by, the holder of
		Convertible Notes 

	 

		
		   

		  
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	 or his
		or her duly authorized attorney. The holder of such Convertible Notes will not
		be required to pay any tax or duty which may be payable in respect of the issue
		or delivery of Common Stock on conversion, but will be required to pay any tax
		or duty which may be payable in respect of any transfer involved in the issue
		or delivery of Common Stock in a name other than the same name as the
		registration of such Convertible Note.

	  

	 As
		promptly as practicable after the later of the satisfaction of the requirements
		for conversion set forth above and the date all calculations necessary to make
		such payment and delivery have been made, but in no event later than five (5)
		Trading Days after the later of such dates, the Company shall (i) pay cash to
		the holders (in lieu of any fractional interest in respect of a share of Common
		Stock arising upon such conversion) and (ii) issue and shall deliver to such
		holder at the office or agency maintained by the Company for such purpose
		pursuant to Section
		4.04, a
		certificate or certificates for the number of full shares of Common Stock
		issuable upon the conversion of such Convertible Note or portion thereof in
		accordance with the provisions of this Article
		XII.
		Certificates representing shares of Common Stock will not be issued or
		delivered unless all taxes and duties, if any, payable by the holder have been
		paid. In case any Convertible Note of a denomination of an integral multiple
		greater than $1,000 is surrendered for partial conversion, and subject to
		Section
		2.02, the
		Company shall execute, and the Trustee shall authenticate and deliver to the
		holder of the Convertible Note so surrendered, without charge to him or her, a
		new Convertible Note or Convertible Notes in authorized denominations in an
		aggregate principal amount equal to the unconverted portion of the surrendered
		Convertible Note.

	  

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

	  

	 Any
		Convertible Note or portion thereof surrendered for conversion during the
		period from the close of business on the record date for any interest payment
		through the close of business on the last Trading Day immediately preceding
		such Interest Payment Date shall be accompanied by payment, in 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, unless such
		Convertible Notes have been surrendered for conversion following the Regular
		Record Date immediately preceding the Maturity Date; provided,
		however, that
		such payment may be reduced by the amount of any existing payment default in
		respect of such Convertible Notes. An amount equal to such payment shall be
		paid by the Company on such Interest Payment Date to the holder of such
		Convertible Note at the close of business on such record date. Except as
		provided above in this Section
		12.02, no
		adjustment shall be made for interest and Additional Interest, if any, accrued
		on any Convertible Note converted or for dividends on any shares issued upon
		the conversion of such Convertible Note as provided in this 

	 
		
		   

		  
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	 Article
		XII. If any
		Convertible Note is converted after a record date for the payment of interest
		and prior to the next succeeding Interest Payment Date, interest payable on
		such Interest Payment Date shall be payable notwithstanding such conversion,
		and such interest shall be paid to the holder of such Convertible Note on the
		applicable record date. Notwithstanding the foregoing, a holder of Convertible
		Notes shall not be required to make payment if he or she is converting a
		Convertible Note, or portion thereof, pursuant to a Redemption, or pursuant to
		a repurchase in connection with a Fundamental Change, if such holder’s
		conversion right would terminate because of the Redemption or repurchase
		between the Regular Record Date and the close of business on the next Interest
		Payment Date.

	  

	 Upon the
		Company’s determination that a holder is or will be entitled to convert
		its Convertible Notes into shares of Registered Common Stock, and if
		applicable, cash pursuant to this Article
		XII, the
		Company will promptly after making such determination provide the Trustee and
		the Conversion Agent with written notice to that effect and issue a press
		release and use its reasonable efforts to post such information on the
		Company’s website or otherwise publicly disclose such
		information.

	  

	 All
		shares of Common Stock delivered upon such conversion of the Convertible Notes
		shall bear Restrictive Common Stock Legends substantially in the form set forth
		on Exhibit
		B hereto
		and shall be subject to the restrictions on transfer provided in such
		legends.

	  

	 SECTION
		12.03.  Cash
		Payments in Lieu of Fractional Shares. No
		fractional shares of Common Stock or scrip representing fractional shares shall
		be issued upon conversion of Convertible Notes. If more than one Convertible
		Note shall be surrendered for conversion at one time by the same holder, the
		number of full shares which shall be issuable upon conversion shall be computed
		on the basis of the aggregate principal amount of the Convertible Notes (or
		specified portions thereof to the extent permitted hereby) so surrendered for
		conversion. If any fractional share of stock otherwise would be issuable upon
		the conversion of any Convertible Note or Convertible Notes, the Company shall
		make an adjustment therefor in cash based upon the Closing Price of the Common
		Stock on the last Trading Day prior to the date of conversion.

	  

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

	  

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

	  

	 (a)  In case
		the Company shall pay or make a dividend or other distribution on any class of
		capital stock of the Company payable in shares of Common Stock, the Conversion
		Rate in effect at the opening of business on the day following the date fixed
		for the determination of stockholders entitled to receive such dividend or
		other distribution shall be increased by dividing such Conversion Rate by a
		fraction of which the numerator shall be the number of shares of Common Stock
		outstanding at the close of business on the date fixed for such determination
		and the denominator shall be the sum of such number of shares and the total
		number of shares constituting such dividend or other distribution, such
		increase to become effective (subject to paragraph (l) of this Section 12.05)
		immediately after the opening of business on the day 

	 

		
		   

		  
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	 following
		the date fixed for such determination. For the purposes of this paragraph (a),
		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.

	  

	 (b)  In case
		the Company shall issue rights, options or warrants to all holders of its
		Common Stock entitling them (for a period expiring within forty-five (45) days
		after the date fixed for determination of stockholders entitled to receive such
		rights, options or warrants) to subscribe for or purchase shares of Common
		Stock at a price per share less than the current market price per share
		(determined as provided in paragraph (h) of this Section 12.05) of the
		Common Stock on the date fixed for the determination of stockholders entitled
		to receive such rights, options or warrants (other than any rights, options or
		warrants (1) that by their terms will also be issued to any holder upon
		conversion of a Convertible Note into shares of Common Stock without any action
		required by the Company or any other Person or (2) that are only exercisable
		upon the occurrence of a specified triggering event and such triggering event
		has not occurred), the Conversion Rate in effect at the opening of business on
		the day following the date fixed for such determination shall be increased by
		dividing such Conversion Rate by a fraction of which the numerator shall be the
		number of shares of Common Stock outstanding at the close of business on the
		date fixed for such determination plus the number of shares of Common Stock
		which the aggregate of the offering price of the total number of shares of
		Common Stock so offered for subscription or purchase would purchase at such
		current market price and the denominator shall be the number of shares of
		Common Stock outstanding at the close of business on the date fixed for such
		determination plus the number of shares of Common Stock so offered for
		subscription or purchase, such increase to become effective (subject to
		paragraph (l) of this Section 12.05)
		immediately after the opening of business on the day following the date fixed
		for such determination. For the purposes of this paragraph (b), 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 issue any rights, options or warrants in respect of shares of
		Common Stock held in the treasury of the Company. 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. In determining whether any rights or warrants
		entitle the holders to subscribe for or purchase shares of Common Stock at a
		price less than such current market price, and in determining the aggregate
		offering price of such shares of Common Stock, there shall be taken into
		account any consideration received 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 each 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 

	 

		
		   

		  
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	 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 evidences of its Indebtedness, shares of any class of capital
		stock, or other property (including cash or assets or securities, or rights,
		options and warrants referred to in Section
		12.05(b) that
		expire more than forty-five (45) days after the date fixed for determination of
		stockholders entitled to receive such rights,options or warrants), but
		excluding (1) any rights, options or warrants referred to in paragraph (b) of
		this Section 12.05 and the
		distribution of rights to all holders of Common Stock pursuant to the adoption
		of a stockholders’ rights plan or the detachment of such rights under the
		terms of such stockholders’ rights plan, (2) any dividend or distribution
		paid in cash, except as set forth in paragraphs (e) and (f) of this
		Section 12.05, (3)
		any dividend or distribution referred to in paragraph (a) of this Section 12.05 and (4)
		any merger or consolidation paid in cash to which Section 12.06
		applies), the Conversion Rate shall be adjusted so that the same shall equal
		the rate determined by dividing the Conversion Rate in effect immediately prior
		to the close of business on the date fixed for the determination of
		stockholders entitled to receive such distribution by a fraction of which the
		numerator shall be the current market price per share (determined as provided
		in paragraph (h) of this Section 12.05) of the
		Common Stock on the date fixed for such determination less the then fair market
		value (as determined by the Board of Directors, whose determination shall be
		conclusive and described in a resolution Board of Directors) of the portion of
		the assets, shares or evidences of Indebtedness so distributed applicable to
		one share of Common Stock and the denominator shall be such current market
		price per share of the Common Stock, such adjustment to become effective
		(subject to paragraph (l) of this Section 12.05
		immediately prior to the opening of business on the day following the date
		fixed for the determination of stockholders entitled to receive 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.

	  

	 Under
		the provisions of the Company’s Rights
		Agreement, dated as of October 26, 1998, between Vion and American Stock
		Transfer & Trust Company, as amended (the
		“Rights Plan”), upon conversion of the Convertible Notes into Common
		Stock, to the extent that the Rights Plan is still in effect upon such
		conversion, the holders of Convertible Notes will receive, in addition to the
		Common Stock, the rights described therein (whether or not the rights have
		separated from the Common Stock at the time of conversion), subject to the
		limitations set forth in the Rights Plan (including termination of the Rights
		Plan). In addition, if the Company implements a new rights plan (“New
		Rights Plan”), the Company will provide under such New Rights Plan that
		the holders of the Convertible Notes will receive, in addition to the Common
		Stock, the rights under the New Rights Plan (whether or not the rights under
		the New Rights Plan have separated from the Common Stock at the time of
		conversion), subject to any limitations set forth in the New Rights Plan. A
		distribution of rights pursuant to the Rights Plan or the New Rights Plan will
		not trigger a Conversion Rate adjustment pursuant to Section
		12.05(b) and
		Section
		12.05(d)
		above.

	  

	 (e)  In case
		the Company shall, by dividend or otherwise, distribute to all holders of its
		Common Stock cash (excluding cash portions of a distribution referred to in
		Section 12.05(d) and any
		cash that is distributed upon a merger or consolidation to which Section 12.06
		applies) 

	 

		
		   

		  
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	 in an
		aggregate amount that, combined together with (1) the aggregate amount of any
		other cash distributions to all holders of its Common Stock made exclusively in
		cash within the 365-day period preceding the date of payment of such
		distribution and in respect of which no adjustment pursuant to this paragraph
		(e) has been made and (2) the aggregate of any cash plus the fair market value
		(as determined by the Board of Directors, whose determination shall be
		conclusive and described in a resolution by the Board of Directors) of
		consideration payable in respect of any tender offer by the Company or any
		Subsidiary for all or any portion of the Common Stock concluded within the
		365-day period preceding the date of payment of such distribution and in
		respect of which no adjustment pursuant to paragraph (f) of this Section 12.05 has
		been made (the “Combined Cash and Tender Amount”) exceeds ten percent
		(10%) of the product of the current market price per share (determined as
		provided in paragraph (h) of this Section 12.05) of the
		Common Stock on the date for the determination of holders of shares of Common
		Stock entitled to receive such distribution times the number of shares of
		Common Stock outstanding on such date (the “Aggregate Current Market
		Price”), then, and in each such case, immediately after the close of
		business on such date for determination, subject to paragraph (l) of
		Section 12.05, the
		Conversion Rate shall be adjusted so that the same shall equal the rate
		determined by dividing the Conversion Rate in effect immediately prior to the
		close of business on the date fixed for determination of the stockholders
		entitled to receive such distribution by a fraction (A) the numerator of which
		shall be equal to the current market price per share (determined as provided in
		paragraph (h) of this Section 12.05) of the
		Common Stock on the date fixed for such determination less an amount equal to
		the quotient of (i) the excess of such Combined Cash and Tender Amount over ten
		percent (10%) of such Aggregate Current Market Price divided by (ii) the number
		of shares of Common Stock outstanding on such date fixed for determination and
		(B) the denominator of which shall be equal to the current market price per
		share (determined as provided in paragraph (h) of this Section 12.05) of the
		Common Stock on such date fixed for determination. 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.

	  

	 (f)  In case
		a tender offer made by the Company or any Subsidiary for all or any portion of
		the Common Stock shall be completed for an aggregate consideration consisting
		of cash and/or property having a fair market value (as determined by the Board
		of Directors, whose determination shall be conclusive and described in a
		resolution by the Board of Directors) that combined together with (1) the
		aggregate of the cash plus the fair market value (as determined by the Board of
		Directors, whose determination shall be conclusive and described in a
		resolution by the Board of Directors), of consideration payable in respect of
		any other tender offer by the Company or any Subsidiary for all or any portion
		of the Common Stock concluded within the 365-day period preceding the
		completion of such tender offer and in respect of which no adjustment pursuant
		to this paragraph (f) has been made and (2) the aggregate amount of any
		distributions to all holders of the Company’s Common Stock made
		exclusively in cash within the 365-day period preceding the completion of such
		tender offer and in respect of which no adjustment pursuant to paragraph (e) of
		this Section 12.05 has
		been made (the “Combined Tender and Cash Amount”) exceeds ten percent
		(10%) of the product of the current market price per share of the Common Stock
		(determined as provided in paragraph (h) of this Section 12.05) as of
		the completion of such tender offer (the “Completion Date”) times the
		number of shares of Common Stock outstanding (including any tendered shares) as
		of the Completion Date, then, and in each such case, immediately prior to the
		opening of business on the day after the date of the 

	 

		
		   

		  
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	 Completion
		Date, the Conversion Rate shall be adjusted so that the same shall equal the
		rate determined by dividing the Conversion Rate immediately prior to close of
		business on the Completion Date by a fraction (A) the numerator of which shall
		be equal to (i) the product of (x) the current market price per share of the
		Common Stock (determined as provided in paragraph (h) of this Section 12.05) on the
		Completion Date multiplied by (y) the number of shares of Common Stock
		outstanding (including any tendered shares) on the Completion Date less (ii)
		the Combined Tender and Cash Amount, and (B) the denominator of which shall be
		equal to the product of (x) the current market price per share of the Common
		Stock (determined as provided in paragraph (h) of this Section 12.05) as of
		the Completion Date multiplied by (y) the number of shares of Common Stock
		outstanding (including any tendered shares) as of the Completion Date less the
		number of all shares validly tendered and not withdrawn as of the Completion
		Date. 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)  The
		reclassification of Common Stock into securities including other than Common
		Stock (other than any reclassification upon a consolidation or merger to which
		Section 12.06
		applies) shall be deemed to involve (1) a distribution of such securities other
		than Common Stock to all holders of Common Stock (and the effective date of
		such reclassification shall be deemed to be “the date fixed for the
		determination of stockholders entitled to receive such distribution” and
		“the date fixed for such determination” within the meaning of
		paragraph (d) of this Section 12.05), and
		(2) a subdivision or combination, as the case may be, of the number of shares
		of Common Stock outstanding immediately prior to such reclassification into the
		number of shares of Common Stock outstanding immediately thereafter (and the
		effective date of such reclassification shall be deemed to be “the day
		upon which such subdivision becomes effective” or “the day upon which
		such combination becomes effective”, as the case may be, and “the day
		upon which such subdivision or combination becomes effective” within the
		meaning of paragraph (c) of this Section 12.05).

	  

	 (h)  For the
		purpose of any computation under paragraphs (b), (d), (e) or (f) of this
		Section 12.05, the
		current market price per share of Common Stock on any date shall be calculated
		by the Company and be deemed to be the Closing Price for the Trading Day before
		the “ex date” with respect to the issuance or distribution requiring
		such computation. For purposes of this paragraph, the term “ex date,”
		when used with respect to any issuance or distribution, means the first date on
		which the Common Stock trades regular way in the applicable securities market
		or on the applicable securities exchange without the right to receive such
		issuance or distribution.

	  

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

	 
		
		   

		  
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	 (j)  Subject
		to Nasdaq shareholder approval rules, the Company may make such increases in
		the Conversion Rate, for the remaining term of the Convertible Notes or any
		shorter term, in addition to those required by paragraphs (a), (b), (c), (d),
		(e) and (f) of this Section 12.05, as it
		considers to be advisable in order to avoid or diminish any income tax
		liability to any holders of shares of Common Stock resulting from any dividend
		or distribution of Common Stock or issuance of rights or warrants to purchase
		or subscribe for Common Stock or from any event treated as such for income tax
		purposes or for any other reason.

	  

	 To the
		extent permitted by applicable law and subject to Nasdaq shareholder approval
		rules, the Company from time to time may increase the Conversion Rate by any
		amount for any period of time if the period is at least twenty (20) days and
		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 give notice of the increase to the holders of
		Convertible Notes in the manner provided in Section 10.02 at
		least fifteen (15) days prior to the date the increased Conversion Rate takes
		effect, and such notice shall state the increased Conversion Rate and the
		period during which it will be in effect.

	  

	 (k)  Notwithstanding
		the foregoing provisions of this Section 12.05, no
		adjustment of the Conversion Rate shall be required to be made (1) upon the
		issuance of shares of Common Stock pursuant to any present or future plan for
		the reinvestment of dividends, (2) because of a tender or exchange offer of the
		character described in Rule 13e-4(h) (5) under the Exchange Act or any
		successor rule thereto or (3) as a result of a rights plan or poison pill
		implemented by the Company.

	  

	 (l)  In any
		case in which this Section 12.05 shall
		require that an adjustment be made immediately following a record date, the
		Company may elect to defer the effectiveness of such adjustment (but in no
		event until a date later than the effective time of the event giving rise to
		such adjustment), in which case the Company shall, with respect to any
		Convertible Note converted after such record date and on and before such
		adjustment shall have become effective (1) defer paying any cash payment
		pursuant to Section 12.03 hereof
		or issuing to the holder of such Convertible Note the number of shares of
		Common Stock issuable upon such conversion in excess of the number of shares of
		Common Stock issuable thereupon only on the basis of the Conversion Rate prior
		to adjustment, and (2) not later than five (5) Business Days after such
		adjustment shall have become effective, pay to such Holder the appropriate cash
		payment pursuant to Section 12.03 hereof
		and issue to such holder the additional shares of Common Stock issuable on such
		conversion. Notwithstanding the foregoing, no adjustment of the Conversion Rate
		shall be made if the event giving rise to such adjustment does not
		occur.

	  

	 (m)  In the
		event that the Company distributes rights or warrants (other than those
		referred to in paragraph (b) above) pro
		rata to
		holders of Common Stock, so long as any such rights or warrants have not
		expired, the Company shall make proper provision so that the holder of any
		Convertible Note surrendered for conversion will be entitled to receive upon
		such conversion, in addition to the Common Stock issuable upon conversion of
		the Convertible Notes (the “Conversion Shares”), a number of rights
		and warrants to be determined as follows: (i) if such conversion occurs on or
		prior to the date for the distribution to the holders of rights or warrants of
		separate certificates evidencing such rights or warrants (the
		“Distribution Date”), the 

	 

		
		   

		  
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	 same
		number of rights or warrants to which a holder of a number of shares of Common
		Stock equal to the number of Conversion Shares is entitled at the time of such
		conversion in accordance with the terms and provisions of and applicable to the
		rights or warrants, and (ii) if such conversion occurs after such Distribution
		Date, the same number of rights or warrants to which a holder of the number of
		shares of Common Stock into which the principal amount of such Security so
		converted was convertible immediately prior to such Distribution Date would
		have been entitled on such Distribution Date in accordance with the terms and
		provisions of and applicable to the rights or warrants.

	  

	 SECTION
		12.06.  Notice
		of Adjustments of Conversion Rate.

	  

	 Whenever
		the Conversion Rate is adjusted as herein provided:

	  

	 (a)  the
		Company shall compute the adjusted Conversion Rate in accordance with
		Section 12.05 and
		shall prepare a certificate signed by the Chief Financial Officer of the
		Company setting forth the adjusted Conversion Rate and showing in reasonable
		detail the facts upon which such adjustment is based, and such certificate
		shall promptly be filed with the Trustee and with the Conversion Agent;
		and

	  

	 (b)  upon
		each such adjustment, a notice stating that the Conversion Rate has been
		adjusted and setting forth the adjusted Conversion Rate shall be required, and
		as soon as practicable after it is required, such notice shall be provided by
		the Company to all holders of Convertible Notes in accordance with Section 10.02.

	  

	 Neither
		the Trustee nor the Conversion Agent shall be under any duty or responsibility
		with respect to any such certificate, including, without limitation, with
		respect to when an adjustment should be made, or the information and
		calculations contained therein, except to exhibit the same to any holder of
		Convertible Notes desiring inspection thereof at its office during normal
		business hours. Unless and until a Trust Officer of the Trustee and Conversion
		Agent receive notice of an adjusted Conversion Rate, the Trustee and the
		Conversion Agent may conclusively rely without inquiry on the Conversion Rate
		most recently in effect.

	  

	 SECTION
		12.07.  Effect
		of Reclassification, Consolidation, Merger or Sale. If any
		of the following events occur: (i) any reclassification or change of the
		outstanding shares of Common Stock (other than a change in par value, or from
		par value to no par value, or from no par value to par value, or as a result of
		a subdivision or combination), (ii) any consolidation, merger, share exchange
		or combination of the Company with another Person, or (iii) any sale or
		conveyance of the properties and assets of the Company as an entirety or
		substantially as an entirety (which shall not include any joint venture,
		licensing arrangement or other strategic relationship involving the licensing,
		manufacturing or marketing of, or other similar arrangement with respect to any
		of the Company’s products (even if such arrangement or relationship
		involves an investment in the Company)), in each case as a result of which
		holders of Common Stock shall receive stock, securities or other property or
		assets (including cash) with respect to or in exchange for such Common Stock,
		then the Company or the successor or purchasing Person, as the case may be,
		shall execute with the Trustee a supplemental indenture (which shall comply
		with the TIA as in force at the date of execution of such supplemental
		indenture if such supplemental indenture is then required to so comply)
		providing that the Convertible Notes shall 

	 

		
		   

		  
			 -55-

			 

		   
 

		
		   

			 
			 

			  
 
 

	  

	 be
		convertible into the kind and amount of shares of stock and other securities or
		property or assets (including cash) receivable upon such reclassification,
		change, consolidation, merger, share exchange, combination, sale or conveyance
		by a holder of a number of shares of Common Stock issuable upon conversion of
		the Convertible Notes (assuming, for such purposes, a sufficient number of
		authorized shares of Common Stock available to convert all such Convertible
		Notes) immediately prior to such reclassification, change, consolidation,
		merger, share exchange, combination, sale or conveyance. In the event holders
		of Common Stock have the opportunity to elect the form of consideration to be
		received in such reclassification, change, consolidation, merger, share
		exchange, combination, sale or conveyance, the Company will make adequate
		provision whereby holders of the Convertible Notes shall have the opportunity,
		on a timely basis, to determine the form of consideration into which all of the
		Convertible Notes, treated as a single class, shall be convertible. Such
		determination shall be based on the blended, weighted average of elections made
		by holders of the Convertible Notes who participate in such determination and
		shall be subject to any limitations to which all of the holders of Common Stock
		are subject to, such as pro
		rata
		reductions applicable to any portion of the consideration payable. Such
		supplemental indenture shall provide for adjustments which shall be as nearly
		equivalent as may be practicable to the adjustments provided for in this
		Article
		XII. If, in
		the case of any such reclassification, change, consolidation, merger, share
		exchange, combination, sale or conveyance, the stock or other securities and
		assets receivable thereupon by a holder of shares of Common Stock includes
		shares of stock or other securities and assets of a Person other than the
		successor or purchasing Person, as the case may be, in such reclassification,
		change, consolidation, merger, share exchange, combination, sale or conveyance,
		then such supplemental indenture shall also be executed by such other Person
		and shall contain such additional provisions to protect the interests of the
		holders of the Convertible Notes as the Board of Directors shall reasonably
		consider necessary by reason of the foregoing. Appropriate provisions will be
		made, as determined in good faith by the Company’s Board of Directors, to
		preserve the settlement provisions of Section
		12.13
		following such reclassification, change, consolidation, merger, share exchange,
		combination, sale or conveyance to the extent feasible. The Company may not
		become a party to any such transaction unless its terms are consistent with
		this Section
		12.07.

	  

	 The
		Company shall cause notice of the execution of such supplemental indenture to
		be mailed to each holder of Convertible Notes at his or her address appearing
		on the Register of holders for that purpose within 20 days after execution
		thereof. Failure to deliver such notice shall not affect the legality or
		validity of such supplemental indenture.

	  

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

	  

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

	  

	 SECTION
		12.08.  Taxes
		on Shares Issued. The
		issue of stock certificates on conversions of Convertible Notes shall be made
		without charge to the converting holder for any documentary, transfer, stamp or
		other similar 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 

	 

		
		   

		  
			 -56-

			 

		   
 

		
		   

			 
			 

			  
 
 

	  

	 any
		Convertible Note converted, and the Company shall not be required to issue or
		deliver any such stock certificate unless and until the Person or Persons
		requesting the issue thereof shall have paid to the Company the amount of such
		tax or shall have established to the satisfaction of the Company that such tax
		has been paid.

	  

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

	  

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

	  

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

	  

	 SECTION
		12.10.  Responsibility
		of Trustee. The
		Trustee shall not at any time be under any duty of responsibility to any
		holders of Convertible Notes to determine whether any facts exist which may
		require any adjustment of the Conversion Price, or with respect to the nature
		or extent or calculation of any such adjustment when made, or with respect to
		the method employed, or herein or in any supplemental indenture provided to be
		employed, in making the same. The Trustee shall not be accountable with respect
		to the validity or value (or the kind or amount) of any shares of Common Stock,
		or of any securities or property, which may at any time be issued or delivered
		upon the conversion of any Convertible Note; and the Trustee makes no
		representations with respect thereto. Subject to the provisions of Section
		7.01, the
		Trustee shall not be responsible for any failure of the Company to issue,
		transfer or deliver any shares of Common Stock or stock certificates or other
		securities or property or cash upon the surrender of any Convertible Note for
		the purpose of conversion or to comply with any of the duties, responsibilities
		or covenants of the Company contained in this Article
		XII.
		Without limiting the generality of the foregoing, the Trustee shall not have
		any responsibility to determine the correctness of any provisions contained in
		any supplemental indenture entered into pursuant to Section
		12.06
		relating either to the kind or amount of shares of stock or securities or
		property (including cash) receivable by holders of Convertible Notes upon the
		conversion of their Convertible Notes after any event referred to in such
		Section
		12.06 or to
		any adjustment to be made with respect thereto, but, subject to the provisions
		of Section
		7.01, may
		accept as conclusive evidence of the correctness of any such provisions, and
		shall be protected in 

	 
		
		   

		  
			 -57-

			 

		   
 

		
		   

			 
			 

			  
 
 

	  

	 conclusively
		relying upon, the Officer’s Certificate and Opinion of Counsel (which the
		Company shall be obligated to file with the Trustee prior to the execution of
		any such supplemental indenture) with respect thereto.

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 (e)  a notice
		to the Trustee and the holders of the Convertible Notes is otherwise necessary
		or appropriate pursuant to this Indenture;

	  

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

	  

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

	 
		 

		
		  -58-

		  

		 
 

	 
		 

		  
		  

		   
 

	  

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

	  

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

	  

	 SECTION
		12.13.  Automatic
		Conversion Rights by the Company.
		(a) The
		Company shall, subject to the last sentence of this paragraph, terminate the
		right of the holders to convert their Convertible Notes into Common Stock (the
		“Conversion Right”) if the Closing Price of the Common Stock has
		exceeded 150% of the Conversion Price for at least 20 Trading Days within a
		period of any 30-consecutive Trading Days (an “Automatic Conversion
		Trigger Event”). Upon an Automatic Conversion Trigger Event, the Company
		will be required to deliver an irrevocable notice to holders of Convertible
		Notes within five Trading Days of the date of the Automatic Conversion Trigger
		Event (the “Automatic Conversion Notice,” and the date of such
		Automatic Conversion Notice, the “Automatic Conversion Notice Date”).
		Holders may convert their Convertible Notes at any time on or prior to the
		twentieth (20th) day following the Automatic Conversion Notice Date (the
		“Automatic Conversion Date”). The Conversion Rights of holders shall
		terminate after the Automatic Conversion Date (an “Automatic
		Conversion”), and thereafter the holders shall have no rights to convert
		and receive shares of Common Stock under the Convertible Notes or this
		Indenture. The Company may terminate the Conversion Right upon an Automatic
		Conversion Trigger Event any time after the Issue Date of the Convertible
		Notes, provided that only the Convertible Notes (or portions thereof) as to
		which the Company is then able to make the Interest Make-Whole Premium under
		Nasdaq shareholder approval rules may be subject to Automatic Conversion; and
		further provided that only Convertible Notes (or portions thereof) for which
		(i) a Shelf Registration Statement relating to the resale of the shares
		

	 

		
		   

		  
			 -59-

			 

		   
 

		
		   

			 
			 

			  
 
 

	  

	 of
		Common Stock issuable upon conversion of such Convertible Notes has been filed
		by the Company and been declared effective by the Commission and is available
		for use, and the Company expects such Shelf Registration Statement to remain
		effective and available for use from the Automatic Conversion Notice Date until
		thirty (30) days following the Automatic Conversion Date, or (ii) the
		shares issuable upon Automatic Conversion may be freely transferable pursuant
		to Rule 144(k) under the Securities Act, may be subject to Automatic
		Conversion.

	  

	 If the
		Automatic Conversion Date occurs, the Company shall make an additional payment
		(the “Interest Make-Whole Premium”) in cash, shares of Registered
		Common Stock, or some combination of cash and shares of Registered Common
		Stock, with respect to the Convertible Notes converted by holders on or after
		the Automatic Conversion Notice Date in an amount equal to $232.50 per 1,000
		principal amount of the Convertible Notes so converted, less the amount of any
		interest paid on the Convertible Notes prior to the Automatic Conversion Date.
		For the purposes of this provision, the “fair market value” of the
		Company’s Common Stock shall be equal to 95% of the Volume Weighted
		Average Price of the Common Stock for the five consecutive Trading Days ending
		on the Trading Day immediately preceding the conversion date, subject to
		compliance with Nasdaq shareholder approval rules. Because of applicable Nasdaq
		rules, under no circumstances will any issuance of additional shares of Common
		Stock as an Interest Make-Whole Premium, taken together with any shares of
		Common Stock issued in payment of interest on the Convertible Notes and issued
		or issuable upon conversion of the Convertible Notes, result in an Effective
		Price per share to holders below $1.60, subject to adjustment in the same
		manner as the Conversion Price. The Company will not be required to make any
		interest payment to any holder that converts Convertible Notes after the
		Automatic Conversion Notice Date and prior to the Automatic Conversion Date on
		a Conversion Date that is between a record date for the payment of interest to
		the next succeeding Interest Payment Date, as such holder will instead receive
		such funds that would otherwise be payable on such Interest Payment Date as
		part of the Interest Make-Whole Premium.

	  

	 (b)  The
		Company shall mail the Automatic Conversion Notice to the Trustee and to each
		holder (and to beneficial owners as required by applicable law). The Automatic
		Conversion Notice shall identify the Convertible Notes (including CUSIP
		numbers) and shall include the form of the conversion notice to be completed by
		the holder and shall state:

	  

	 (i)  the
		Automatic Conversion Date;

	  

	 (ii)  briefly,
		the conversion rights of the Convertible Notes;

	  

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

	  

	 (iv)  the
		Interest Make-Whole Premium; and

	  

	 (v)  the
		Conversion Price and Conversion Rate and any adjustments thereto.

	  

	 Whenever
		in the Convertible Notes or in this Indenture there is a reference, in any
		context, to any conversion obligation of the Company, such reference shall be
		qualified by the Automatic Conversion provisions of this Section
		12.13, and
		the Company will not be required to comply with any of the conversion
		provisions of the Convertible Notes and this Indenture 

	 
		
		   

		  
			 -60-

			 

		   
 

		
		   

			 
			 

			  
 
 

	  

	 (including,
		without limitation, Article
		XII (other
		than this Section
		12.13)) after
		an Automatic Conversion has occurred pursuant to the provisions of Section
		12.13 of this
		Indenture, and any express mention of the Automatic Conversion provisions of
		this Section
		12.13 in any
		provision of this Indenture shall not be construed as excluding the Automatic
		Conversion provisions of this Section
		12.13 in
		those provisions of this Indenture when such express mention is not
		made.

	  

	 SECTION
		12.14.  Limit
		on Shares of Common Stock Issuable Upon Conversion.
		Notwithstanding any provision hereof to the contrary, under no circumstances
		will the Convertible Notes be convertible into more than that number of shares
		of Common Stock (which taken together with the issuance of additional shares of
		Common Stock in payment of interest, any Fundamental Change Make-Whole Premium
		or any Interest Make-Whole Premium), would result in an Effective Price per
		share to holders of less than $1.60, subject to adjustment in the same manner
		as the Conversion Price.

	  

	 [Remainder
		of Page Intentionally Left Blank]

	  

	 
		-61-

		

	  

	 
		
		   

			 
			 

			  
 
 

	  

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

	  

	 
			 	 	 
	 	
				VION
				  PHARMACEUTICALS, INC.
 
	 
 	 
 	 
 
	 	By:  	 /s/ Howard B.
				Johnson
	 	
				
Name: Howard B. Johnson
	 	Title: President &
				Chief Financial Officer

 

	  

	 
			 	 	 
	 	
				
				  U.S.
					 BANK NATIONAL ASSOCIATION,

				  as
					 Trustee
 
 
	 
 	 
 	 
 
	 	By:  	 /s/ Barbara A.
				Nastro
	 	
				
Name: Barbara A. Nastro
	 	Title: Vice
				President

 

	 
		 

		-1-

		 

		
		  
			  

				
				

				 
 
 
 

	  

	 EXHIBIT
		A

	  

	 (Face of
		Security)

	  

	 [OID
		Legend]

	  

	 THIS
		CONVERTIBLE NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT. THE ISSUE PRICE IS
		$949.50 PER $1,000 PRINCIPAL AMOUNT AT MATURITY. THE ORIGINAL ISSUE DISCOUNT IS
		$50.60 PER $1,000 PRINCIPAL AMOUNT AT MATURITY. THE ISSUE DATE IS FEBRUARY 20,
		2007. THE YIELD TO MATURITY IS 7.75% PER ANNUM, COMPOUNDED
		SEMI-ANNUALLY.

	  

	 [Global
		Convertible Note Legend]

	  

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

	  

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

	  

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

	  

	 UNLESS
		AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED CONVERTIBLE NOTES
		IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE
		INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
		DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
		THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
		SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
		DEPOSITARY.]

	  

	 [Restricted
		Convertible Note Legend]

	  

	 A-1

	  

	 

	 
	 

	 
	 

	 THIS
		SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
		OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
		PARTICIPATION HEREIN 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 (1) REPRESENTS THAT (A) IT IS
		A “QUALIFIED
		INSTITUTIONAL BUYER” (AS DEFINED
		IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS A NON-U.S. PURCHASER AND IS
		ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF
		REGULATION S UNDER THE SECURITIES ACT, OR (C) IT IS AN INSTITUTIONAL
		“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2),
		(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL
		OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER
		THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
		COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
		PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS
		SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
		EFFECTIVE UNDER THE SECURITIES ACT, (C) 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 ACCOUNT OF A
		QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
		BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
		NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
		REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED
		INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF
		RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
		ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
		INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
		WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO
		ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
		SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR
		TRANSFER AGENT’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
		TRANSFER PURSUANT TO CLAUSES (D), (E), OR (F) TO REQUIRE THE DELIVERY OF AN
		OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
		OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
		FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY
		THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT.

	  

	 A-2

	  

	 

	 
	 

	 

	 No.:

	  

	 Issue
		Date:

	  

	 CUSIP
		No.:

	  

	 $_______

	  

	 VION
		PHARMACEUTICALS, INC.

	 7.75%
		CONVERTIBLE SENIOR NOTES DUE 2012

	  

	 Vion
		Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
		promises to pay to ________, or registered assigns, the principal sum of
		_________ ($_______) on or before February 15, 2010.

	  

	 This
		Convertible Note shall bear interest as specified below and on the other side
		of this Convertible Note:

	  

	 
			
				 Interest
				  Payment Dates: 
 	February
				15 and August 15, commencing August 15, 2007
	 	 
	 Regular
				Record Dates: 	February
				1 and August 1

 

	  

	 This
		Convertible Note is convertible as specified on the other side of this
		Convertible Note.

	  

	 Additional
		provisions of this Convertible Note are set forth on the other side of this
		Convertible Note.

	  

	 [SIGNATURE
		PAGE FOLLOWS]

	 
		 

		A-3

		 

		

		
		

		
		 
 

	 IN
		WITNESS WHEREOF, the Company has caused this Convertible Note to be signed
		manually or by facsimile by one of its duly authorized officers.

	  

	 
			 	 	 
	 	
				VION
				  PHARMACEUTICALS, INC.
 
	 
 	 
 	 
 
	 	By:  	 
	 	
				

				Name:
				  

				
				  Title:
					 
 
 

  

	 Certificate
		of Authentication

	  

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

	  

	 
			
				U.S.
				  BANK NATIONAL ASSOCIATION

				As
				  Trustee
 	 	 	 
	 	 	 	 	 
	
				By:
 	 	 	 	 
	 	
				
				  

				  

				Authorized
				  Signatory

				Dated:

					 	 	 

 

	 
		 

		A-4

		 

		

		
		

		 

	 [FORM
		OF BACK OF CONVERTIBLE NOTE]

	  

	 VION
		PHARMACEUTICALS, INC.

	 7.75%
		CONVERTIBLE SENIOR NOTES DUE 2012

	  

	 Capitalized
		terms used herein but not defined shall have the meanings assigned to them in
		the Indenture (the “Indenture”), dated February 20, 2007, between
		Vion Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
		and U.S. Bank National Association, as trustee (together with any successor
		trustee under the Indenture, the “Trustee”), unless otherwise
		indicated.

	  

	 
			1.	
				INTEREST.
				  The Company promises to pay interest on the principal amount of this
				  Convertible Note at the rate per annum shown above. The Company will pay
				  interest semi-annually in arrears on February 15 and August 15 of each year,
				  beginning August 15, 2007. Interest on the Convertible Notes will accrue from
				  the most recent Interest Payment Date to which interest has been paid or, if no
				  interest has been paid, from February 20, 2007. Interest (and Additional
				  Interest, if any) will be computed on the basis of a 360-day year composed of
				  twelve 30-day months.
 

 

	  

	 
			2.	
				METHOD
				  OF PAYMENT. The Company will pay interest (and Additional Interest, if any) on
				  the Convertible Notes in cash, shares of Registered Common Stock, or some
				  combination of cash and shares of Registered Common Stock, to the Person in
				  whose name each Convertible Note is registered at the close of business on the
				  February 1 or August 1 immediately preceding the relevant Interest Payment Date
				  (each a “Regular Record Date”) (other than with respect to a
				  Convertible Note redeemed by the Company on the Redemption Date or repurchased
				  in connection with a Fundamental Change on a repurchase date, during the period
				  from the close of business on a Regular Record Date to (but excluding) the next
				  succeeding Interest Payment Date, in which case accrued interest (and
				  Additional Interest, if any) shall be payable (unless such Convertible Note or
				  portion thereof is converted) to the holder of the Convertible Note or portion
				  thereof repurchased in accordance with the applicable repurchase provisions of
				  the Indenture). The holder must surrender Convertible Notes to a Paying Agent
				  to collect principal payments. The Company will pay the principal of, and
				  interest and Additional Interest, if any, on the Convertible Notes at the
				  office or agency of the Company maintained for such purpose, in money of the
				  United States that at the time of payment is legal tender for payment of public
				  and private debts. Until otherwise designated by the Company, the
				  Company’s office or agency maintained for such purpose will be the
				  principal Corporate Trust Office of the Trustee. However, the Company may pay
				  principal and interest and Additional Interest, if any, by check payable in
				  such money, and may mail such check to the holders of the Convertible Notes at
				  their respective addresses as set forth in the Register of holders of
				  Convertible Notes. In addition, the Company may pay interest and Additional
				  Interest, if any, in shares of Registered Common Stock having a “fair
				  market value” equal to the interest payment due. For purposes hereof, the
				  “fair market value” of the Company’s Common Stock shall be equal
				  to the closing bid price of the Common Stock on the Interest Payment
				  Date.
 

 

	  

	 
			3.	
				PAYING
				  AGENT AND REGISTRAR. The Trustee will act as Paying Agent and Registrar. The
				  Company may change the Paying Agent, Registrar or co-registrar without
				  
 

 

	 
		
		   

		  A-5

		   

		  

		  
		  

		   
 

	  

	 prior
		notice. Subject to certain limitations in the Indenture, the Company or any of
		its Subsidiaries may act in any such capacity.

	  

	 
			4.	
				INDENTURE.
				  The Company issued the Convertible Notes under an Indenture dated as of
				  February 20, 2007 (the “Indenture”) between the Company and the
				  Trustee. The terms of the Convertible Notes include those stated in the
				  Indenture and those made part of the Indenture by reference to the Trust
				  Indenture Act of 1939 (the “TIA”) as in effect on the date of the
				  Indenture. The Convertible Notes are subject to, and qualified by, all such
				  terms, certain of which are summarized hereon, and holders are referred to the
				  Indenture and the TIA for a statement of such terms. The Convertible Notes are
				  (a) junior in right of payment to the Company’s future secured
				  Indebtedness to the extent of the value of the collateral securing such
				  Indebtedness; (b) equal in right of payment to the Company’s future senior
				  unsecured Indebtedness; (c) senior in right of payment to the Company’s
				  existing and future subordinated Indebtedness; and (d) structurally
				  subordinated to any Indebtedness or other liabilities of the Company’s
				  Subsidiaries. The aggregate principal amount of initial Convertible Notes
				  outstanding at any time may not exceed $60,000,000 in aggregate principal
				  amount. Capitalized terms not defined below have the same meaning as is given
				  to them in the Indenture.
 

 

	  

	 
			5.	
				FUNDAMENTAL
				  CHANGE. Upon the occurrence of a Fundamental Change, the Company shall make a
				  Fundamental Change Offer to repurchase all outstanding Convertible Notes at a
				  price equal to 100% of the aggregate principal amount of the Convertible Notes,
				  plus accrued and unpaid interest (and Additional Interest, if any) to, but
				  excluding, the date of repurchase, such offer to be made as provided in the
				  Indenture. To accept the Fundamental Change Offer, the holder hereof must
				  comply with the terms thereof, including surrendering this Convertible Note,
				  with the “Option of Holder to Elect Repurchase” portion hereof
				  completed (along with any required letter of transmittal), to the Company, a
				  depositary, if appointed by the Company, or a Paying Agent, at the address
				  specified in the notice of the Fundamental Change Offer mailed to holders as
				  provided in the Indenture, prior to the Fundamental Change Offer Termination
				  Date.
 

 

	  

	 
			6.	
				DENOMINATIONS,
				  TRANSFER, EXCHANGE. The Convertible Notes are in registered form without
				  coupons in denominations of $1,000 and integral multiples of $1,000. The
				  transfer of Convertible Notes may be registered and Convertible Notes may be
				  exchanged as provided in the Indenture. As a condition of transfer, the
				  Registrar and the Trustee may require a holder, among other things, to furnish
				  appropriate endorsements and transfer documents, and the Company and the
				  Registrar may require a holder to pay any taxes and fees required by law or
				  permitted by the Indenture. The Company or the Registrar need not exchange or
				  register the transfer of any Convertible Note or portion of a Convertible Note
				  submitted for repurchase or surrendered for conversion.
 

 

	  

	 
			7.	
				PERSONS
				  DEEMED OWNERS. The registered holder of a Convertible Note shall be treated as
				  its owner for all purposes.
 

 

	  

	 
			8.	
				AMENDMENTS
				  AND WAIVERS. Subject to certain exceptions, the Indenture or the Convertible
				  Notes may be amended or supplemented with the consent of the holders of at
				  
 

 

	 
		
		  
			  

			 A-6

			  

			 

			 
			 

			 
			  
 
 
 

	 least a
		majority in principal amount of the then outstanding Convertible Notes, and any
		existing default may be waived with the consent of the holders of a majority in
		principal amount of the then outstanding Convertible Notes, except a default in
		payment of the principal amount, accrued and unpaid interest or Fundamental
		Change Payment or in respect of any provision which under the Indenture cannot
		be modified or amended without the consent of the holder of each outstanding
		Convertible Note affected, as further described below.

	  

	 Without
		the consent of any holder, the Company and the Trustee may amend the Indenture
		or the Convertible Notes to: (a) cure any ambiguity or omission or correct or
		supplement any defective or inconsistent provision contained in the Indenture,
		or make any other changes in the provisions of the Indenture which the Company
		and the Trustee may deem necessary or desirable provided such amendment does
		not materially and adversely affect the legal rights under the Indenture of the
		holders of Convertible Notes; (b) provide for uncertificated Convertible Notes
		in addition to or in place of certificated Convertible Notes (so long as any
		uncertificated Convertible Notes are in registered form for purposes of the
		Internal Revenue Code of 1986, as amended); (c) evidence the succession of
		another Person to the Company and provide for the assumption by such successor
		of the covenants and obligations of the Company thereunder and in the
		Convertible Notes as permitted by Section 5.01 of the Indenture; (d) provide
		for conversion rights or repurchase rights of holders of Convertible Notes in
		the event of consolidation, merger, share exchange or sale of all or
		substantially all of the assets of the Company as required to comply with
		Sections 5.01 or 12.06 of the Indenture; (e) subject to Nasdaq shareholder
		approval rules, reduce the Conversion Price, provided the reduction will not
		adversely affect the interests of the holders of Convertible Notes;
		(f) evidence and provide for the acceptance of the appointment under the
		Indenture of a successor Trustee; (g) make any change that would provide
		any additional rights or benefits to the holders of Convertible Notes or that
		does not adversely affect the legal rights under the Indenture of any such
		holder; or (h) comply with the requirements of the Commission in order to
		effect or maintain the qualification of the Indenture under the
		TIA.

	  

	 Without
		the consent of each holder affected, an amendment or waiver may not (with
		respect to any Convertible Notes held by a nonconsenting holder): (a) reduce
		the principal amount of Convertible Notes, reduce the rate or change the time
		of payment of (i) interest on any Convertible Note, (ii) the Redemption Price,
		(iii) the Interest Make-Whole Premium, (iv) the Fundamental Change Payment, or
		the Fundamental Change Make-Whole Premium with respect to any Convertible Note,
		or extend the stated maturity of any Convertible Note or make any Convertible
		Note payable in money or securities other than that stated in the Convertible
		Notes; (b) make any change that adversely affects the right to convert any
		Convertible Note or the right to require the Company to repurchase a
		Convertible Note; (c) reduce the percentage of holders whose consent is needed
		to modify, amend or waive any provision in this Indenture; (d) modify the
		provisions dealing with modification and waiver of the Indenture, except to
		increase any required percentage or to provide that certain other provisions of
		the Indenture cannot be modified or waived without the consent of the holder of
		each outstanding Convertible Note affected thereby; (e) impair the right to
		institute suit for the 

	  

	 
		
		  A-7

		   

		  

		  
		  

		  
		   

		  enforcement
			 of any payment with respect to, or conversion of, the Convertible Notes; or (f)
			 make any amounts payable with respect to the Convertible Notes payable in
			 currency other than that stated in the Convertible Notes.

		   
 
 

	 
			8.1.1.	
				DEFAULTS
				  AND REMEDIES. An Event of Default is: (a) default in payment of the principal
				  of the Convertible Notes, when due and payable at maturity, upon repurchase,
				  upon acceleration or otherwise; (b) continuance of default for 30 days or more
				  in payment of any installment of interest or Additional Interest on the
				  Convertible Notes (interest or Additional Interest payable in connection with a
				  Fundamental Change Payment (or Additional Interest, if any) paid with shares of
				  Common Stock shall not be deemed overdue if the procedures set forth in the
				  last sentence of the first paragraph of Section 4.01 are followed)); (c)
				  default in the payment of the Redemption Price, the Interest Make-Whole
				  Premium, the Fundamental Change Payment or the Fundamental Change Make-Whole
				  Premium, as applicable, in respect of the Convertible Notes, when due and
				  payable; (d) failure to deliver the required number of shares of Registered
				  Common Stock together with cash in lieu of fractional shares when such shares
				  of Registered Common Stock and cash are required to be delivered upon
				  conversion of a Convertible Note or upon a Fundamental Change, and such default
				  continues for a period of five Business Days or more; (e) failure to provide
				  timely notice of a Fundamental Change; (f) default by the Company or any
				  Subsidiary in the performance of or breach of any covenants in the Indenture
				  (other than a default set forth in clauses (a), (b), (c), (d) or (e) above) and
				  the failure to cure such default or breach within 60 days after receipt by the
				  Company of written notice from the Trustee or the receipt by the Company and
				  the Trustee of written notice from the holders of at least 25% in aggregate
				  principal amount of the then outstanding Convertible Notes; (g) (i) failure by
				  the Company or any Subsidiary to make any payment by the end of any applicable
				  grace period of Indebtedness (to the extent such Indebtedness exceeds
				  $5,000,000) and continuance of such failure for thirty days, or (ii) the
				  acceleration of such Indebtedness (to the extent such Indebtedness exceeds
				  $5,000,000) because of a default with respect to such Indebtedness and such
				  Indebtedness is not discharged or such acceleration is not cured, waived,
				  rescinded or annulled within 30 days after written notice to the Company by the
				  Trustee or to the Company and the Trustee by the holders of not less than 25%
				  in aggregate principal amount of the Convertible Notes then outstanding;
				  provided,
				  however, that if
				  any such failure or acceleration referred to in clause (i) or (ii) shall cease
				  or be cured, waived, rescinded or annulled, then the Event of Default by reason
				  thereof shall be deemed not to have occurred; (h) failure to pay a final,
				  nonappealable judgment (other than any judgment as to which a reputable
				  insurance company has accepted full liability) for the payment of money entered
				  by a court of competent jurisdiction against the Company or a Material
				  Subsidiary, which remains unstayed, unbonded or undischarged for 60 days,
				  provided that the aggregate amount of all such judgments exceeds $10,000,000;
				  (i) certain events involving bankruptcy, insolvency or reorganization of the
				  Company or any Material Subsidiary; or (j) a court of competent jurisdiction
				  enters a judgment, order or decree under Bankruptcy Law that is for relief
				  against the Company or any Material Subsidiary in an involuntary case, appoints
				  a Custodian of the Company or any Material Subsidiary or orders the liquidation
				  of the Company or any Material Subsidiary, and in each case, such order or
				  decree remains unstayed and in effect for 90 days. 
 

 

	 
		 

		A-8

		 

		

		
		

		 

	  

	 
			8.1.2.	
				If an
				  Event of Default occurs and is continuing, the Trustee or the holders of at
				  least 25% in principal amount of the then outstanding Convertible Notes may
				  declare the unpaid principal of, and accrued and unpaid interest and Additional
				  Interest, if any, on all Convertible Notes then outstanding to be due and
				  payable immediately, except that in the case of an Event of Default arising
				  from certain events of bankruptcy, insolvency, or reorganization with respect
				  to the Company, all outstanding Convertible Notes become due and payable
				  without further action or notice. Holders of Convertible Notes may not enforce
				  the Indenture or the Convertible Notes except as provided in the Indenture. The
				  Trustee may require an indemnity satisfactory to it before it enforces the
				  Indenture or the Convertible Notes. Subject to certain limitations, holders of
				  a majority in principal amount of the then outstanding Convertible Notes may
				  direct the Trustee in its exercise of any trust or power. The Trustee may
				  withhold from holders notice of any continuing default (except a default in
				  payment of principal, or interest or Additional Interest, if applicable) if it
				  determines that withholding notice is in their interests. The Company must
				  furnish annual compliance certificates to the Trustee.
 

 

	  

	 
			9.	
				TRUSTEE
				  DEALINGS WITH THE COMPANY. The Trustee or any of its Affiliates, in their
				  individual or any other capacities, may make or continue loans to or guaranteed
				  by, accept deposits from and perform services for the Company or its Affiliates
				  and may otherwise deal with the Company or its Affiliates as if it were not
				  Trustee.
 

 

	  

	 
			10.	
				NO
				  RECOURSE AGAINST OTHERS. No director, officer, employee, shareholder or
				  Affiliate, as such, of the Company shall have any liability for any obligations
				  of the Company under the Convertible Notes or the Indenture or for any claim
				  based on, in respect of or by reason of such obligations or their creation.
				  Each holder by accepting a Convertible Note waives and releases all such
				  liability. The waiver and release are part of the consideration for the
				  Convertible Notes.
 

 

	  

	 
			11.	
				AUTHENTICATION.
				  This Convertible Note shall not be valid until authenticated by the manual
				  signature of the Trustee or an authenticating agent.
 

 

	  

	 
			12.	
				ABBREVIATIONS.
				  Customary abbreviations may be used in the name of a holder or an assignee,
				  such as: TEN CO = tenants in common, TEN ENT = tenants by the entireties, JT
				  TEN = joint tenants with right of survivorship and not as tenants in common,
				  CUST = Custodian and U/G/M/A = Uniform Gifts to Minors Act.
 

 

	  

	 
			13.	
				CONVERSION.
				  Upon compliance with the provisions of the Indenture, each holder of
				  Convertible Notes shall have the right, at his or her option, at any time on or
				  after the earlier of (i) the date the Shelf Registration Statement with respect
				  to the resale of shares of Common Stock issuable upon conversion of the
				  Convertible Notes becomes effective and (ii) 180 days after the Issue Date, and
				  before the close of business on the maturity date (except that, with respect to
				  any Convertible Note or portion thereof subject to a duly completed election
				  for repurchase by a holder or a Redemption by the Company, such right shall
				  terminate at the close of business on the date immediately preceding the
				  Fundamental Change Offer Termination Date or the Redemption Date, as the case
				  may be (unless the Company defaults in the payment due upon repurchase or
				  Redemption or such holder elects to withdraw the submission of such election to
				  repurchase in 
 

 

	 
		 

		A-9

		 

		

		
		

		 

	  

	 
		accordance
		  with Section 4.06 of the Indenture)), to convert the principal amount of any
		  Convertible Note held by such holder, or any portion of such principal amount
		  which is $1,000 or an integral multiple thereof, into that number of fully paid
		  and non-assessable shares of Common Stock (as such shares shall then be
		  constituted) obtained by dividing the principal amount of the Convertible Note
		  or portion thereof to be converted by the Conversion Price in effect at the
		  time of conversion (in each case, subject to any applicable procedures with
		  respect to a Global Security). The conversion shall be effected upon surrender
		  of this Convertible Note to the Company at the office or agency maintained for
		  such purpose (and at such other offices or agencies designated for such purpose
		  by the Company), accompanied by written notice of conversion duly executed (and
		  if the shares of Common Stock to be issued on conversion are to be issued in
		  any name other than that of the registered holder of this Convertible Note by
		  instruments of transfer, in form satisfactory to the Company, duly executed by
		  the registered holder or its duly authorized attorney) and, in case such
		  surrender shall be made during the period from the close of business on the
		  Regular Record Date immediately preceding any Interest Payment Date through the
		  close of business on the last Trading Day immediately preceding such Interest
		  Payment Date, also accompanied by payment, in funds acceptable to the Company,
		  of an amount equal to the interest otherwise payable on such Interest Payment
		  Date on the principal amount of this Convertible Note then being converted,
		  unless such Convertible Notes have been surrendered in conversion following the
		  Regular Record Date immediately preceding the Maturity Date; provided,
		  however, that
		  any such payment may be reduced by the amount of any existing payment default
		  with respect to this Convertible Note. Subject to the aforesaid requirement for
		  a payment in the event of conversion after the close of business on a Regular
		  Record Date immediately preceding an Interest Payment Date, no adjustment shall
		  be made on conversion for interest or Additional Interest accrued hereon or for
		  dividends on Common Stock delivered on conversion. The right to convert this
		  Convertible Note is subject to the provisions of the Indenture relating to
		  conversion rights in the case of certain consolidations, mergers, share
		  exchanges or sales or transfers of substantially all the Company’s assets.
		  The initial Conversion Price shall be $1.92, and may be adjusted from time to
		  time in accordance with Section 12.05 of the Indenture.
 

	  

	 A holder
		of Convertible Notes surrendered in connection with a Fundamental Change may
		receive a Fundamental Change Make-Whole Premium in accordance with Section
		12.01(c) of the Indenture.

	  

	 Subject
		to the provisions of the Indenture, the Convertible Notes shall automatically
		convert at any time prior to the Maturity Date if the Closing Price of the
		Common Stock has exceeded 150% of the Conversion Price then in effect for at
		least 20 Trading Days within any 30-consecutive Trading Day period ending
		within five Trading Days prior to the delivery to the holders of the Automatic
		Conversion Notice.

	  

	 Upon an
		Automatic Conversion, the Company will be required to pay the Interest
		Make-Whole Premium in cash or shares of Registered Common Stock as provided in
		and, subject to the limitations set forth in, the Indenture.

	  

	 
		
		  A-10

		   

		  

		  
		  

		  
		   
 
 

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

	  

	 
			14.	
				OPTIONAL
				  REDEMPTION. Pursuant to Article III of the Indenture, the Company shall have
				  the right to redeem the Convertible Notes at any time on or after February 15,
				  2010, on at least 30 days and no more than 60 days notice, in whole or part, in
				  cash, at a Redemption Price equal to 100% of the principal amount of the
				  Convertible Notes plus accrued and unpaid interest up to, but not including,
				  the Redemption Date. Prior to February 15, 2010, the Company may not redeem the
				  Convertible Notes. If less than all of the outstanding Convertible Notes are to
				  be redeemed, the Trustee shall select, in principal amount at maturity of
				  $1,000 or integral multiples thereof, the Convertible Notes to be redeemed. In
				  such event, the Trustee shall select the Convertible Notes to be redeemed by
				  lot, pro
				  rata or by
				  any other method the Trustee considers fair and appropriate or in any manner
				  required by the Depositary.
 

 

	  

	 
			15.	
				REGISTRATION
				  RIGHTS AGREEMENT. In addition to the rights provided to the holders of
				  Convertible Notes under the Indenture, holders of Convertible Notes will have
				  all the rights set forth in the Registration Rights Agreement, dated as of
				  February 20, 2007, between the Company and the Initial Purchaser (the
				  “Registration Rights Agreement”).
 

 

	  

	 The
		Company will furnish to any holder upon written request and without charge a
		copy of the Indenture and the Registration Rights Agreement. Requests may be
		made to Vion Pharmaceuticals, Inc., 4 Science Park, New Haven, Connecticut
		06511, Attention: Corporate Secretary.

	  

	 The
		internal laws of the State of New York shall govern the Convertible Notes,
		without regard to the conflict of laws provisions thereof.

	 
		
		   

		  A-11

		   

		  

		  
		  

		  
		   
 
 

	 FORM
		OF CONVERSION NOTICE

	  

	 To: VION
		PHARMACEUTICALS, INC.

	  

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

	  

	 Dated:

	  

	 Fill in
		for registration of shares if to be delivered, and Convertible Notes if to be
		issued, other than to and in the name of the owner

	  

	 (Please
		Print)

	  

	 
			 	
				Signature

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

					 
	 	 
	 	
				                    $_______,000

				
	 	 
	
				(Street
				  Address)
 	
				Social
				  Security or other Taxpayer Identification Number
 
	 	 
	
				(City,
				  State and Zip Code)
 	 
	 	 
	
				DTC
				  Participant No.:
 	 ___________________
	 	 
	
				Signature
				  Guarantee:
 	 

 

	  

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

	 
		
		   

		  A-12

		   

		  

		  
		  

		   
 

	  

	 ASSIGNMENT
		FORM

	  

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

	  

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

	  

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

	  

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

	  

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

	  

	 Your
		Signature:

	  

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

	  

	 Date:
		__________

	  

	 Medallion
		Signature Guarantee:

	  

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

	  

	 CHECK
		ONE BOX BELOW

	  

	 
			
				(1)

					
				 
 	
				to the
				  Company; or
 
	 	 	
	
				(2)

					
				 
 	
				pursuant
				  to and in compliance with Rule 144A under the Securities Act of 1933;
				  or
 
	 	 	 
	
				(3)

					
				 
 	
				pursuant
				  to and in compliance with Regulation S under the Securities Act of 1933;
				  or
 
	 	 	 
	
				(4)

					
				 
 	
				pursuant
				  to an exemption from registration under the Securities Act of 1933 provided
				  by
				  Rule 144 thereunder.
 

 

	 
		
		   

		  A-13

		   

		  

		  
		  

		  
		   
 
 

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

	  

	 Your
		Signature:

	  

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

	  

	 DTC
		Participant No.: ____________   

	  

	 Date:
		__________

	  

	 Medallion
		Signature Guarantee:

	 
		
		   

		  A-14

		   

		  

		  
		  

		   
 

	  

	 OPTION
		OF HOLDER TO ELECT REPURCHASE

	  

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

	  

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

	  

	 DTC
		Participant No.:

	  

	 
			
				Date:________

				
	
				Your
				  Signature:
 
	
				(Sign
				  exactly as your name appears on the other side of this Convertible
				  Note)
 
	 
	
				Medallion
				  Signature Guarantee:
 

 

	 
		
		   

		  A-15

		   

		  

		  
		  

		   
 

	 EXHIBIT
		B

	  

	 FORM OF
		RESTRICTED COMMON STOCK LEGEND

	  

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

	 
		
		   

		  B-1

		   

		  

		  
		  

		   
 

	 EXHIBIT
		C

	  

	 FORM OF
		TRANSFER CERTIFICATE FOR TRANSFER OF RESTRICTED COMMON STOCK

	  

	 (Transfers
		pursuant to Section 12.12(c) of the Indenture) 

	  

	 [NAME
		AND ADDRESS OF COMMON STOCK TRANSFER AGENT]

	  

	 
			
				Re:

					
				Vion
				  Pharmaceuticals, Inc. 7.75% Convertible Notes due 2012 (the “Convertible
				  Notes”)
 

 

	  

	 Reference
		is hereby made to the Indenture dated as of February 20, 2007 (the
		“Indenture”) between Vion Pharmaceuticals, Inc. and U.S. Bank
		National Association, as Trustee. Capitalized terms used but not defined herein
		shall have the meanings given them in the Indenture.

	  

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

	  

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

	  

	 CHECK
		ONE BOX BELOW

	  

	 
		
		  	
				  (1)

				  	
				   
 	
				  
					 to the
						Company; or
 
 
	 	 	 
	
				  (2)

				  	
				   
 	
				  
					 pursuant
						to and in compliance with Rule 144A under the Securities Act of 1933;
						or
 
 
	 	 	 
	
				  (3)

				  	
				   
 	
				  
					 pursuant
						to and in compliance with Regulation S under the Securities Act of 1933;
						or
 
 
	 	 	 
	
				  (4)

				  	
				   
 	
				  
					 pursuant
						to an exemption from registration under the Securities Act of 1933 provided by
						Rule 144 thereunder.
 
 

 

		 
 

	 Unless
		one of the boxes is checked, the transfer agent will refuse to register any of
		the Common Stock evidenced by this certificate in the name of any Person other
		than the registered holder thereof; provided , however , that if box (3) or (4)
		is checked, the transfer agent may require, prior to registering any such
		transfer of the Common Stock such certifications and other information, and if
		box (4) is checked such legal opinions, as the Company may reasonably require
		to confirm that such transfer is being made pursuant to an exemption from, or
		in a transaction not subject to, the registration requirements of the
		Securities Act of 1933.

	  

	 
			 	
				(Name of
				  Transferor],
 
	 	
				By
				  
 
	 	
				Name:

				
	 	
				Title:

				
	
				Dated:

					 

 

	  

	 
		
		  C-2Exhibit 4.2
	 

	 
		EXECUTION COPY
	 

	 
		VION PHARMACEUTICALS, INC.
	 

	 
		7.75% CONVERTIBLE SENIOR NOTES DUE 2012
	 

	 
		REGISTRATION RIGHTS AGREEMENT
	 

	 
		February 20, 2007
	 

	 
		CRT Capital Group LLC
	 

	 
		262 Harbor Drive
	 

	 
		Stamford, CT  06902
	 

	 
		

	 

	 
		Vion Pharmaceuticals, Inc., a corporation organized under the laws of the
		State of Delaware (the “Company”), proposes to issue
		and sell to the Initial Purchaser (the “Initial
		Purchaser”) named in the Purchase Agreement, dated February 13,
		2007, by and between the Initial Purchaser and the Company (the
		“Purchase Agreement”), its 7.75% Convertible Senior
		Notes due 2012 (the “Notes”) and warrants (the
		“Warrants”) to purchase an aggregate of 7,800,000
		shares of the Company’s common stock, par value $0.01 per share (the
		“Common Stock”) upon the terms and subject to the
		conditions set forth in such Purchase Agreement.  As an inducement to the
		Initial Purchaser to enter into the Purchase Agreement and in satisfaction of a
		condition to the obligations of the Initial Purchaser thereunder, the Company
		agrees with the Initial Purchaser for the benefit of Holders (as defined
		herein) from time to time of the Registrable Securities (as defined herein) as
		follows:
	 

	 
		1.
	 

	 
		Definitions.
	 

	 
		Capitalized terms used herein without definition shall have the meanings
		ascribed to them in the Purchase Agreement.  As used in this Registration
		Rights Agreement (this “Agreement”), the following
		defined terms shall have the following meanings:
	 

	 
		“Additional Interest” has the meaning assigned thereto
		in Section 7(a) hereof.  
	 

	 
		“Affiliate” of any specified person means any other
		person which, directly or indirectly, is in control of, is controlled by, or is
		under common control with such specified person.  For purposes of this
		definition, control of a person means the power, direct or indirect, to direct
		or cause the direction of the management and policies of such person whether by
		contract or otherwise; and the terms “controlling” and
		“controlled” have meanings correlative to the foregoing.  
	 

	 
		“Applicable Amount” means, at the time of computation of
		any Additional Interest, the aggregate principal amount of the Notes, other
		than Notes for which, at the time of computation of any Additional Interest
		there is no Registration Default, including Notes for which there would be a
		Registration Default but for a Rule 415 Limitation or a Subsequent Shelf
		Limitation.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		“Business Day” means each Monday, Tuesday, Wednesday,
		Thursday and Friday that is not a day on which banking institutions in the City
		of New York, State of New York are authorized or obligated by law or executive
		order to close.  
	 

	 
		“Commission” means the United States Securities and
		Exchange Commission, or any other federal agency at the time administering the
		Exchange Act or the Securities Act, whichever is the relevant statute for the
		particular purpose.
	 

	 
		“DTC” means The Depository Trust Company.  
	 

	 
		“Effectiveness Period” has the meaning assigned thereto
		in Section 2(b)(i) hereof.  
	 

	 
		“Effective Time” means the time at which the Commission
		declares any Shelf Registration Statement effective or at which time any Shelf
		Registration Statement otherwise becomes effective.  
	 

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

	 
		“Holder” means any person that is the record owner of
		Registrable Securities (and includes any person that has a beneficial interest
		in any Registrable Security in book-entry form).  
	 

	 
		“Indenture” means the Indenture, dated as of February
		20, 2007, between the Company and U.S. Bank National Association, pursuant to
		which the Notes are to be issued, and as amended and supplemented from time to
		time in accordance with its terms.  
	 

	 
		“Issue Date” means the first date of original issuance
		of the Notes and Warrants.  
	 

	 
		“Issuer Filing” has the meaning assigned thereto in
		Section 2(s) hereof.
	 

	 
		“Majority of Holders” means Holders holding over 50% of
		the aggregate amount of Registrable Securities outstanding.  
	 

	 
		“NASD” means the National Association of Securities
		Dealers, Inc.
	 

	 
		“Notice and Questionnaire” means a Selling
		Securityholder Notice and Questionnaire substantially in the form of Appendix A
		hereto.  
	 

	 
		“Notice Holder” has the meaning assigned thereto in
		Section 3(a)(i) hereof.  
	 

	 
		The term “person” means an individual, partnership,
		limited liability company, corporation, trust or unincorporated organization,
		or a government or agency or political subdivision thereof.  
	 

	 
		“Prospectus” means the prospectus included in any Shelf
		Registration Statement, as amended or supplemented by any prospectus supplement
		with respect to the terms of the offering of any portion of the Registrable
		Securities covered by any Shelf Registration Statement and by all other
		amendments and supplements to such prospectus, including all material
		incorporated by
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		reference in such prospectus and all documents filed after the date of
		such prospectus by the Company under the Securities Act or the Exchange Act and
		incorporated by reference therein.  
	 

	 
		“Registration Cap” has the meaning assigned thereto in
		Section 2(a).
	 

	 
		“Registrable Securities” means all or any portion of the
		Notes issued from time to time under the Indenture, the shares of Common Stock
		issuable upon conversion of the Notes and exercise of the Warrants and the
		shares of common stock issued pursuant to Section 12.01 and 12.13 of the
		Indenture.
	 

	 
		“Restricted Security” means any Note or share of Common
		Stock issuable upon conversion of a Note or exercise of a Warrant except any
		such Note or share of Common Stock that (i) has been registered pursuant to an
		effective registration statement under the Securities Act and sold in a manner
		contemplated by the Shelf Registration Statement, (ii) has been transferred in
		compliance with Rule 144 under the Securities Act (or any successor provision
		thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any
		successor provision thereto) or (iii) has otherwise been transferred and a new
		Note or share of Common Stock not subject to transfer restrictions under the
		Securities Act has been delivered by or on behalf of the Company in accordance
		with Section 2.06 of the Indenture.  
	 

	 
		“Registration Default” has the meaning assigned thereto
		in Section 7(a) hereof.  
	 

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

	 
		“Shelf Registration” means a registration effected
		pursuant to Section 2 hereof.  
	 

	 
		“Shelf Registration Statement” means a “shelf”
		registration statement filed under the Securities Act providing for the
		registration of, and the sale on a continuous or delayed basis by the Holders
		of, any or all of the Registrable Securities pursuant to Rule 415 under the
		Securities Act and/or any similar rule that may be adopted by the Commission,
		filed by the Company pursuant to the provisions of Section 2 of this
		Agreement, including the Prospectus contained therein, any amendments and
		supplements to such registration statement and Prospectus, including
		post-effective amendments, and all exhibits and all material incorporated by
		reference in such registration statement and Prospectus, and any additional
		“shelf” registration statements filed under the Securities Act to
		permit the registration and sale of Registrable Securities pursuant to
		Section 3(a)(ii) hereof.  
	 

	 
		“Suspension Period” has the meaning assigned thereto in
		Section 2(c) hereof.  
	 

	 
		“Trading Day” means a day on which the Common Stock is
		traded on a Trading Market.
	 

	 
		“Trading Market” means the following markets or
		exchanges on which the Common Stock is listed or quoted for trading on the date
		in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq
		Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or
		the OTC Bulletin Board.
	 

	 
		 “Trustee” means U.S. Bank National Association.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		“Trust Indenture Act” means the Trust Indenture Act of
		1939, or any successor thereto, and the rules, regulations and forms
		promulgated thereunder, as the same shall be amended from time to time.  
	 

	 
		The term “underwriter” means any underwriter, or any
		person deemed to be an underwriter pursuant to the Securities Act and Exchange
		Act and the respective rules and regulations thereunder, as in effect at any
		relevant time, of Registrable Securities in connection with an offering thereof
		under a Shelf Registration Statement.  
	 

	 
		Wherever there is a reference in this Agreement to a percentage of
		Registrable Securities, each share of Common Stock issued upon conversion of
		the Notes or exercise of the Warrants which is a Registrable Security shall
		represent a percentage of Registrable Securities determined based on the
		aggregate principal amount of Notes that were converted into shares of Common
		Stock or Warrants exercised for shares of Common Stock (as adjusted for any
		stock splits, stock dividends, recapitalizations, combinations, reorganizations
		and like events) as of the date of determination.  
	 

	 
		2.
	 

	 
		Shelf Registration.  
	 

	 
		(a)
	 

	 
		The Company shall, as soon as practicable, but no later than ninety (90)
		calendar days following the Issue Date, file with the Commission a Shelf
		Registration Statement to provide for the offer and sale of the Registrable
		Securities by the Holders from time to time in accordance with the methods of
		distribution elected by such Holders and, thereafter, shall use its best
		efforts to cause such initial Shelf Registration Statement to be declared
		effective under the Securities Act no later than 180 calendar days following
		the Issue Date; provided, however, that only Holders who are
		Notice Holders shall be entitled to be named as a selling securityholder in any
		Shelf Registration Statement as of the date it is declared effective or to use
		the Prospectus forming a part thereof for offers and resales of Registrable
		Securities.  None of the Company’s securityholders (other than
		Holders of Registrable Securities) shall have the right to include any of the
		Company’s other securities in the Shelf Registration Statement.
		 Notwithstanding anything to the contrary contained herein, neither the
		Company nor any of its subsidiaries or Affiliates shall disclose the name of
		any investors in any filing, announcement, release or otherwise, other than in
		the Shelf Registration Statement or as otherwise required by law, without the
		prior written consent of the applicable investor.  The receipt of a Notice
		and Questionnaire shall be considered a valid consent for the purposes of this
		Section 2 for use of the information contained in such Notice and
		Questionnaire.  
	 

	 
		Notwithstanding the foregoing, if the Commission prevents the Company
		from including any or all of the Registrable Securities on the initial Shelf
		Registration Statement due to limitations on the use of Rule 415 of the
		Securities Act for the resale of the Registrable Securities by the Holders (a
		“Rule 415 Limitation”), the initial Shelf Registration
		Statement may exclude the Notes and shall register the resale of a number of
		shares of Common Stock which is equal to the maximum number of shares as is
		permitted by the Commission (the “Registration Cap”), and,
		subject to this Section 2(a), the Company shall continue to use reasonable best
		efforts to register all remaining Registrable Securities as set forth below.
		 In such event, the number of shares of Common Stock to be registered for
		each Holder in the initial Registration Statement shall be reduced pro
		rata among all Holders and the Company shall register as many shares of
		Common Stock issuable upon exercise of the Warrants as it is permitted to
		register
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		prior to including any shares of Common Stock issuable upon conversion of
		the Notes. The Company shall continue to use reasonable best efforts to
		register all remaining Registrable Securities as promptly as possible, but in
		no event will the Company file a Shelf Registration Statement with respect to
		the registration of the resale of the remaining Registrable Securities by the
		Holders earlier than 180 calendar days following the Effective Time of the
		initial Shelf Registration Statement and later than 270 calendar days following
		the Effective Time of the initial Shelf Registration Statement (subject to the
		following matters and limitations).  Notwithstanding anything herein to
		the contrary, if the Commission, by written or oral comment or otherwise,
		limits the Company’s ability to file, or prohibits or delays the filing
		of, a Shelf Registration Statement with respect to any or all the Registrable
		Securities which were not included in the initial Shelf Registration Statement
		(a “Subsequent Shelf Limitation”), it shall not be a breach or
		default (including a Registration Default under Section 7(a) hereof) by the
		Company under this Agreement (including Section 3(a)(ii) hereof), shall not be
		deemed a failure by the Company to use “reasonable best efforts” or
		“best efforts” as set forth above or elsewhere in this Agreement and
		shall not give rise to any obligation to pay Additional Interest under Section
		7 hereof.  The Company shall promptly notify the Holders via facsimile or
		email of the effectiveness of a Shelf Registration Statement within three (3)
		Trading Days from the Trading Day that the Company telephonically confirms
		effectiveness with the Commission.  
	 

	 
		(b)
	 

	 
		Subject to Sections 2(a) and 2(c) hereof, the Company shall use its best
		efforts:
	 

	 
		(i)
	 

	 
		to keep any Shelf Registration Statement continuously effective,
		supplemented and amended as required by the provisions of Section 3(j)
		hereof, in order to permit the Prospectus forming a part thereof to be usable
		by Holders until the earlier of:  (x) all of the Holders of Registrable
		Securities registered under such Shelf Registration Statement (as may be
		supplemented or amended pursuant to Section 3(a)(ii)) are able to sell all such
		Registrable Securities immediately without restriction pursuant to Rule 144(k)
		under the Securities Act or any successor rule thereto, (y) all Registrable
		Securities registered under such Shelf Registration Statement (as may be
		supplemented or amended pursuant to Section 3(a)(ii)) have been sold, or (z)
		all Registrable Securities included in such Shelf Registration Statement (as
		may be supplemented or amended pursuant to Section 3(a)(ii)) have ceased to be
		outstanding (such period being referred to herein as the
		“Effectiveness Period”);
	 

	 
		(ii)
	 

	 
		after the Effective Time of the initial Shelf Registration Statement, to
		take the actions provided for in Section 3(a)(ii) hereof after the receipt
		of a completed and signed Notice and Questionnaire from any Holder of
		Registrable Securities that is not then a Notice Holder; provided,
		however, that nothing in this subparagraph shall relieve such
		holder of the obligation to return a completed and signed Notice and
		Questionnaire to the Company in accordance with Section 2(a) hereof; and
	 

	 
		(iii)
	 

	 
		if at any time the Notes or Warrants are convertible or exercisable into
		securities other than Common Stock, the Company shall, or shall cause any
		successor under the Indenture to, cause such securities to be included in the
		Shelf Registration Statement which included such shares of Common Stock no
		later than the date on which the securities may then be convertible into such
		securities.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(c)
	 

	 
		After the Effective Time of the initial Shelf Registration Statement, the
		Company may suspend the use of any Prospectus by written notice to the Notice
		Holders for a period not to exceed an aggregate of 90 calendar days in any
		12-month calendar period and not in excess of 45 consecutive calendar days in
		any such 12-month calendar period (each such period, a “Suspension
		Period”) if:
	 

	 
		(i)
	 

	 
		the Company is in possession of material non-public information; and
	 

	 
		(ii)
	 

	 
		the Company determines in good faith that the disclosure of such
		information at such time would have a material adverse effect on the Company
		and its subsidiaries taken as a whole.
	 

	 
		3.
	 

	 
		Registration Procedures.  
	 

	 
		In connection with the Shelf Registration Statements, the following
		provisions shall apply:
	 

	 
		(a)
	 

	 
		(i)
	 

	 
		not less than thirty (30) calendar days prior to the time the Company in
		good faith intends to have the initial Shelf Registration Statement declared
		effective, the Company shall distribute the Notice and Questionnaire to the
		Holders of Registrable Securities.  The Company shall take action to name
		as a selling securityholder in the initial Shelf Registration Statement at the
		Effective Time each Holder that completes, executes and delivers a Notice and
		Questionnaire to the Company (a “Notice Holder”) prior
		to or on the 20th calendar day after such Holder’s receipt thereof so that
		such Holder is permitted to deliver the Prospectus forming a part thereof to
		purchasers of such Holder’s Registrable Securities in accordance with
		applicable law.  The Company shall not be required to take any action to
		name any Holder as a selling securityholder in the initial Shelf Registration
		Statement at the time of its effectiveness or to enable any Holder to use the
		Prospectus forming a part thereof for resales of Registrable Securities unless
		such Holder has returned a completed and signed Notice and Questionnaire to the
		Company in a timely manner.  
	 

	 
		(ii)
	 

	 
		After the Effective Time of the initial Shelf Registration Statement, the
		Company shall, upon the request of any Holder of Registrable Securities that is
		not then a Notice Holder, promptly send a Notice and Questionnaire to such
		Holder.  After the Effective Time of the initial Shelf Registration
		Statement, the Company shall (A) as promptly as practicable, after the date a
		completed and signed Notice and Questionnaire is delivered to the Company, and
		in any event within five (5) Business Days or, if the Company is required to
		file with the Commission a new Shelf Registration Statement, thirty (30)
		calendar days, after such date, prepare and file with the Commission (1) a
		supplement to the Prospectus or, if required by applicable law, a
		post-effective amendment to the Shelf Registration Statement or, subject to a
		Subsequent Shelf Limitation, an additional Shelf Registration Statement, and
		(2) any other document required by applicable law, so that the Holder
		delivering such Notice and Questionnaire is named as a selling securityholder
		in a Shelf Registration Statement and is permitted to deliver the Prospectus to
		purchasers of such Holder’s Registrable Securities in accordance with
		applicable law, and (B) use its best efforts to cause any post-effective
		amendment or, subject to a Subsequent Shelf Limitation, such additional Shelf
		Registration Statement to become effective under the Securities Act as promptly
		as is
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		practicable; but in any event by the date that is (i) ten (10) Business
		Days after the date of such post-effective amendment, or (ii) forty-five (45)
		calendar days after the date such additional Shelf Registration Statement is
		required to be filed; provided, however, that if a Notice and
		Questionnaire is delivered to the Company during a Suspension Period, the
		Company shall not be obligated to take the actions set forth in this clause
		(ii) until the termination of such Suspension Period.  
	 

	 
		(b)
	 

	 
		The Company shall furnish to each Notice Holder, no fewer than five (5)
		Business Days prior to the initial filing of the Shelf Registration Statement,
		a copy of such Shelf Registration Statement, shall furnish to such holders,
		counsel to the Initial Purchaser, and Initial Purchaser, if any, no fewer than
		two (2) Business Days prior to the filing of any amendment to the Shelf
		Registration Statement, and shall furnish to counsel to the Initial Purchaser
		concurrently with the filing of supplements to the Prospectus, a copy of such
		amendment or supplement, as the case may be, and shall use its best efforts to
		reflect in each such document when so filed with the Commission such comments
		as such holders and their respective counsel reasonably may propose;
		provided, however, that the Company shall make the final decision
		as to the form and content of each such document.  If any such Shelf
		Registration Statement refers to any Notice Holder by name or otherwise as the
		holder of any securities of the Company, then such Notice Holder shall have the
		right to require (i) the insertion therein of language, in form and substance
		reasonably satisfactory to such Notice Holder, to the effect that the holding
		by such Notice Holder of such securities is not to be construed as a
		recommendation by such Notice Holder of the investment quality of the Company's
		securities covered thereby and that such holding does not imply that such
		Notice Holder will assist, in meeting any future financial requirements of the
		Company or (ii) in the event that such reference to such Notice Holder by name
		or otherwise is not required by the Securities Act or any similar Federal
		statute then in force, the deletion of the reference to such Notice Holder' in
		any amendment or supplement to the Registration Statement filed or prepared
		subsequent to the time that such reference ceases to be required.
	 

	 
		

	 

	 
		(c)
	 

	 
		The Company shall promptly take such action as may be necessary so that
		(i) each of the Shelf Registration Statements and any amendment or supplement
		thereto and the Prospectus forming a part thereof and any amendment or
		supplement thereto (and each report or other document incorporated therein by
		reference in each case) complies in all material respects with the Securities
		Act and the Exchange Act and the respective rules and regulations thereunder,
		as in effect at any relevant time, (ii) each of the Shelf Registration
		Statements and any amendment or supplement thereto does not, when it becomes
		effective, contain an untrue statement of a material fact or omit to state a
		material fact required to be stated therein or necessary to make the statements
		therein, not misleading, and (iii) each Prospectus forming a part of any Shelf
		Registration Statement, and any amendment or supplement to such Prospectus, in
		the form delivered to purchasers of the Registrable Securities during the
		Effectiveness Period, does not include an untrue statement of a material fact
		or omit to state a material fact necessary in order to make the statements
		therein, in light of circumstances in which they were made, not misleading.
		 
	 

	 
		(d)
	 

	 
		The Company shall promptly give notice to each Notice Holder, and shall
		confirm such notice in writing if so requested by any such Notice Holder:
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(i)
	 

	 
		when the initial Shelf Registration Statement has been filed with the
		Commission and when the initial Shelf Registration Statement has become
		effective;
	 

	 
		(ii)
	 

	 
		when any supplement to the Prospectus, Shelf Registration Statement or
		post-effective amendment to a Shelf Registration has been filed with the
		Commission and, with respect to a Shelf Registration Statement or any
		post-effective amendment, when the same has been declared effective by the
		Commission;
	 

	 
		(iii)
	 

	 
		of any request by the Commission for amendments or supplements to any
		Shelf Registration Statement or the Prospectus included therein or for
		additional information;
	 

	 
		(iv)
	 

	 
		of the issuance by the Commission of any stop order suspending the
		effectiveness of any Shelf Registration Statement or the initiation of any
		proceedings for such purpose;
	 

	 
		(v)
	 

	 
		of the receipt by the Company of any notification with respect to the
		suspension of the qualification of the securities included in any Shelf
		Registration Statement for sale in any jurisdiction or the initiation of any
		proceeding for such purpose; and
	 

	 
		(vi)
	 

	 
		of the happening of any event or the existence of any state of facts that
		requires the making of any changes in any Shelf Registration Statement or the
		Prospectus included therein so that, as of such date, such Shelf Registration
		Statement and Prospectus do not contain an untrue statement of a material fact
		and do not omit to state a material fact required to be stated therein or
		necessary to make the statements therein, in light of the circumstances under
		which they were made, in the case of the Prospectus, not misleading (which
		advice shall be accompanied by an instruction to such Holders to suspend the
		use of the Prospectus until the requisite changes have been made).  
	 

	 
		(e)
	 

	 
		The Company shall use its best efforts to prevent the issuance, and if
		issued to obtain the withdrawal at the earliest possible time, of any order
		suspending the effectiveness of any Shelf Registration Statement.  
	 

	 
		(f)
	 

	 
		The Company shall, as promptly as reasonably practicable, furnish to each
		Notice Holder, upon their request and without charge, at least one conformed
		copy of the Shelf Registration Statement and any amendment or supplement
		thereto, including financial statements but excluding schedules, all documents
		incorporated or deemed to be incorporated therein by reference and all exhibits
		(unless requested in writing to the Company by such Notice Holder).  
	 

	 
		(g)
	 

	 
		The Company shall, during the Effectiveness Period, deliver to each
		Notice Holder, without charge, as many copies of each Prospectus in which the
		Notice Holder is listed as a selling securityholder included in the applicable
		Shelf Registration Statement and any amendment or supplement thereto as such
		Notice Holder may reasonably request; and the Company consents (except during a
		Suspension Period or during the continuance of any event described in
		Section 3(d) (iii)-(vi) above, limited, in the case of Section 3(d)(v), to
		the jurisdiction in question thereunder) to the use of the Prospectus and any
		amendment or supplement thereto by each of the Notice Holders in connection
		with the offering and sale of the
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Registrable Securities covered by the Prospectus and any amendment or
		supplement thereto during the Effectiveness Period.  
	 

	 
		(h)
	 

	 
		Prior to any offering of Registrable Securities pursuant to a Shelf
		Registration Statement, the Company shall (i) register or qualify or cooperate
		with the Notice Holders and their respective counsel in connection with the
		registration or qualification (or exemption from such registration or
		qualification) of such Registrable Securities for offer and sale under the
		securities or “blue sky” laws of such jurisdictions within the United
		States as any Notice Holder may reasonably request in writing, (ii) keep such
		registrations or qualifications or exemptions therefrom in effect and comply
		with such laws so as to permit the continuance of offers and sales in such
		jurisdictions for so long as may be necessary to enable any Notice Holder or
		underwriter, if any, to complete its distribution of Registrable Securities
		pursuant to such Shelf Registration Statement, and (iii) take any and all other
		actions necessary or advisable to enable the disposition in such jurisdictions
		of such Registrable Securities; provided, however, that in no
		event shall the Company be obligated to (A) qualify as a foreign corporation or
		as a dealer in securities in any jurisdiction where it would not otherwise be
		required to so qualify but for this Section 3(h), or (B) subject itself to
		general or unlimited service of process in any such jurisdiction if it is not
		otherwise so subject.  
	 

	 
		(i)
	 

	 
		Unless any Registrable Securities shall be in book-entry only form, the
		Company shall cooperate with the Notice Holders to facilitate the timely
		preparation and delivery of certificates representing Registrable Securities to
		be sold pursuant to any Shelf Registration Statement, which certificates, if so
		required by any securities market or exchange upon which any Registrable
		Securities are quoted or listed, shall be penned, lithographed or engraved, or
		produced by any combination of such methods, on steel engraved borders, and
		which certificates shall be free of any restrictive legends and in such
		permitted denominations and registered in such names as Notice Holders may
		reasonably request in connection with the sale of Registrable Securities
		pursuant to such Shelf Registration Statement.  
	 

	 
		(j)
	 

	 
		Upon the occurrence of any event or the existence of any fact
		contemplated by paragraph 3(d)(vi) above, subject to Section 2(c) hereof,
		the Company shall promptly, but in any event within ten (10) Business Days
		following such occurrence or existence, prepare and file (and have declared
		effective) a post-effective amendment to any Shelf Registration Statement or an
		amendment or supplement to the related Prospectus included therein or file any
		other document with the Commission so that, as thereafter delivered to
		purchasers of the Registrable Securities, the Prospectus will not include an
		untrue statement of a material fact or omit to state any material fact
		necessary to make the statements therein, in light of the circumstances under
		which they were made, in the case of the Prospectus, not misleading.  If
		the Company notifies the Notice Holders of the occurrence of any event or the
		existence of any fact contemplated by paragraph 3(d)(vi) above, the Notice
		Holder shall suspend the use of the Prospectus and keep the notification
		provided pursuant to paragraph 3(d)(vi) above confidential until (i) such
		Notice Holder has received copies of the supplemented or amended Prospectus
		contemplated by the preceding sentence or (ii) such Notice Holder is advised in
		writing by the Company that the use of the Prospectus may be resumed and has
		received copies of any additional or supplemental filings that are incorporated
		by reference in the Prospectus.  Notwithstanding the foregoing, but
		subject to Section 8 hereof, the Company shall not be required to amend or
		supplement the Shelf
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Registration Statement, any related Prospectus or any document
		incorporated by reference as provided in Section 2(c) with respect to
		Suspension Periods.
	 

	 
		(k)
	 

	 
		Not later than the Effective Time of a Shelf Registration Statement, the
		Company shall provide a CUSIP number for the debt securities to be sold
		pursuant to a Shelf Registration Statement.  
	 

	 
		(l)
	 

	 
		The Company shall comply with the Securities Act and the Exchange Act and
		the respective rules and regulations thereunder, as in effect at any relevant
		time, and make generally available to its securityholders earnings statements
		(which need not be audited) satisfying the provisions of Section 11(a) of
		the Securities Act and Rule 158 thereunder (or any similar rule promulgated
		under the Securities Act) no later than ninety (90) days after the end of any
		12-month period (or ninety (90) days after the end of any 12-month period if
		such period is a fiscal year), or such shorter period as required by the
		Securities Act and the Exchange Act and the respective rules and regulations
		thereunder, as in effect at any relevant time.
	 

	 
		(m)
	 

	 
		Not later than the Effective Time of the initial Shelf Registration
		Statement, the Company shall use its reasonable best efforts to cause the
		Indenture to be qualified under the Trust Indenture Act; in connection with
		such qualification, the Company shall cooperate with the Trustee under the
		Indenture to effect such changes to the Indenture as may be required for such
		Indenture to be so qualified in accordance with the terms of the Trust
		Indenture Act; and the Company shall execute, and shall use reasonable best
		efforts to cause the Trustee to execute, all documents that may be required to
		effect such changes and all other forms and documents required to be filed with
		the Commission to enable such Indenture to be so qualified in a timely manner.
		 In the event that any such amendment or modification referred to in this
		Section 3(m) involves the appointment of a new trustee under the
		Indenture, the Company shall appoint a new trustee thereunder pursuant to the
		applicable provisions of the Indenture.
	 

	 
		(n)
	 

	 
		The Company shall make reasonably available for inspection by one or more
		representatives of the Notice Holders, designated in writing by a Majority of
		Holders whose Registrable Securities are included in a Shelf Registration
		Statement, any underwriter participating in any disposition pursuant to any
		Shelf Registration Statement, and any attorney, accountant or other agent
		retained by such Notice Holders or any such underwriter (i) all relevant
		financial and other records, pertinent corporate documents and properties of
		the Company and its subsidiaries (other than records and documents that the
		Company agreed contractually not to disclose), and (ii) cause the
		Company’s officers, directors and employees to make available for
		inspection all information (other than records and documents that the Company
		agreed contractually not to disclose) reasonably requested by such Notice
		Holders or any such underwriter, attorney, accountant or agent in connection
		with such Shelf Registration Statement, in each case, as is customary for
		similar due diligence examinations; provided, however,
		that such persons shall, at the Company’s request, first agree in writing
		with the Company that any information that is reasonably and in good faith
		designated by the Company in writing as confidential at the time of delivery or
		inspection, as the case may be, of such information shall be kept confidential
		by such persons and shall be used solely for the purposes of exercising rights
		under this Agreement, unless such disclosure is made in connection with a court
		proceeding or required by law, or such records, information or documents become
		available to the public generally or through a third party without an
		accompanying obligation of confidentiality or the
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		content of such disclosure was already known and independently developed
		by the relevant Notice Holder; and provided, further that, if the
		foregoing inspection and information gathering would otherwise disrupt the
		Company’s conduct of its business, such inspection and information
		gathering shall, to the greatest extent possible, be coordinated on behalf of
		the Notice Holders and the other parties entitled thereto by one counsel
		designated by and on behalf of the Notice Holders and other parties.
	 

	 
		(o)
	 

	 
		The Company will use its reasonable best efforts to cause the Common
		Stock issuable upon conversion of the Notes or exercise of the Warrants to be
		quoted or listed on the Nasdaq Capital Market or other market or stock exchange
		on which the Common Stock primarily trades on or prior to the Effective Time of
		each Shelf Registration Statement hereunder.  
	 

	 
		(p)
	 

	 
		The Company will cooperate and assist in any filings required to be made
		with National Association of Securities Dealers, Inc or other market or stock
		exchange on which the Common Stock may trade.  
	 

	 
		(q)
	 

	 
		Subject to Section 2(c) hereof, the Company shall use its reasonable best
		efforts to take all other steps necessary to effect the registration, offering
		and sale of the Registrable Securities covered by each Shelf Registration
		Statement contemplated hereby, including, without limitation, entering into an
		underwriting agreement in customary form (if the distribution of Registrable
		Securities is to be made pursuant to an underwritten public offering) and such
		other customary agreements as may be necessary, desirable or appropriate, and
		taking all such other necessary actions in connection therewith.
	 

	 
		(r)
	 

	 
		The Company shall:
	 

	 
		(i)
	 

	 
		in connection with any underwritten offering conducted pursuant to
		Section 8 hereof, make such representations and warranties to the Notice
		Holders participating in such underwritten offering and to the managing
		underwriters, in form, substance and scope as are customarily made by the
		Company to underwriters in primary underwritten offerings of equity and
		convertible debt securities;
	 

	 
		(ii)
	 

	 
		in connection with any underwritten offering conducted pursuant to
		Section 8 hereof, obtain opinions of counsel to the Company (which counsel and
		opinions (in form, scope and substance) shall be reasonably satisfactory to the
		managing underwriters) addressed to each requesting Notice Holder, covering
		such matters as are customarily covered in opinions requested in primary
		underwritten offerings of equity and convertible debt securities and such other
		matters as may be reasonably requested by such Notice Holders and underwriters
		(it being agreed that the matters to be covered by such opinions shall include,
		without limitation, as of the date of the opinion and as of the Effective Time
		or the date of the most recent post-effective amendment thereto, as the case
		may be, the absence from the Shelf Registration Statement and the Prospectus,
		including the documents incorporated by reference therein, negative assurance
		in customary form as to the existence of an untrue statement of a material fact
		or the omission of a material fact required to be stated therein or necessary
		to make the statements therein (in the case of the Prospectus, in light of the
		circumstances under which they were made) not misleading);
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(iii)
	 

	 
		in connection with any underwritten offering conducted pursuant to
		Section 8 hereof, obtain "cold comfort" letters and updates thereof from the
		independent public accountants of the Company (and, if necessary, from the
		independent public accountants of any subsidiary of the Company or of any
		business acquired by the Company for which financial statements and financial
		data are, or are required to be, included in the Shelf Registration Statement),
		addressed to each requesting Notice Holder (if such Notice Holder has provided
		such letter, representations or documentation, if any, required for such cold
		comfort letter to be so addressed) and the underwriters, in customary form and
		covering matters of the type customarily covered in "cold comfort" letters in
		connection with primary underwritten offerings;
	 

	 
		(iv)
	 

	 
		in connection with any underwritten offering conducted pursuant to
		Section 8 hereof, deliver such documents and certificates as may be reasonably
		requested by any Notice Holders and the managing underwriters, if any,
		including without limitation certificates to evidence compliance with Section
		3(j) hereof and with any conditions contained in the underwriting agreement or
		other agreements entered into by the Company.
	 

	 
		(s)
	 

	 
		NASD Rule 2710 Filing; Broker Compensation.  The Company
		shall effect a filing (an “Issuer Filing”) with the National
		Association of Securities Dealers, Inc. (“NASD”) Corporate
		Financing Department pursuant to NASD Rule 2710(b)(10)(A)(i) within one Trading
		Day of the date that the Shelf Registration Statement is first filed with the
		Commission and pay the filing fee required by such Issuer Filing.  The
		Company shall use reasonable efforts to pursue the Issuer Filing until the NASD
		issues a letter confirming that it does not object to the terms contemplated by
		the Shelf Registration Statement.  A copy of the Issuer Filing and all
		related correspondence with respect thereto shall be provided to the Initial
		Purchaser.
	 

	 
		4.
	 

	 
		Registration Expenses.
	 

	 
		The Company shall bear all fees, costs and expenses incurred in
		connection with the performance by the Company of all of its obligations under
		Sections 2 and 3 of this Agreement whether or not any of the Shelf Registration
		Statements are declared effective.  Such fees, costs and expenses shall
		include, without limitation, (i) all registration and filing fees (including,
		without limitation, fees and expenses (A) with respect to filings required to
		be made with the National Association of Securities Dealers, Inc., and (B) of
		compliance with United States federal and state securities or “blue
		sky” laws (including, without limitation, reasonable fees and
		disbursements of the counsel specified in the next sentence in connection with
		“blue sky” qualifications of the Registrable Securities under the
		laws of such jurisdictions as a Majority of the Holders whose Registrable
		Securities are included in a Shelf Registration Statement may designate)), (ii)
		printing expenses (including, without limitation, expenses of printing
		certificates for Registrable Securities in a form eligible for deposit with The
		Depository Trust Company), (iii) duplication expenses relating to copies of any
		Shelf Registration Statement, Prospectus and other documents delivered to any
		Holder hereunder, (iv) fees and disbursements of counsel and independent
		accountants for the Company in connection with the Shelf Registration
		Statement, and (v) reasonable fees and disbursements of the Trustee and its
		counsel and of the registrar and transfer agent for the Common Stock.  In
		addition, the Company shall bear or reimburse the Notice Holders for the
		reasonable fees and disbursements of one firm of legal counsel for the Holders,
		which shall initially be counsel to the Initial Purchaser, but which may, upon
		the written consent of the Initial Purchaser (which shall not be unreasonably
		withheld), be another nationally
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		recognized law firm experienced in securities law matters designated by
		the Company.  In addition, the Company shall pay the internal expenses of
		the Company (including, without limitation, all 100
	 

	 
		salaries and expenses of officers and employees performing legal or
		accounting duties), the expense of any annual audit, the fees and expenses
		incurred in connection with the listing of the Registrable Securities on any
		securities exchange on which similar securities of the Company are then listed
		and the fees and expenses of any person, including special experts, retained by
		the Company.  
	 

	 
		5.
	 

	 
		Indemnification and Contribution.
	 

	 
		(a)
	 

	 
		Indemnification by the Company.  The Company shall indemnify
		and hold harmless each Holder, the Initial Purchaser, any underwriter, each
		person, if any, who controls any such Holder, the Initial Purchaser or any
		underwriter within the meaning of Section 15 of the Securities Act or
		Section 20 of the Exchange Act and the respective officers, directors,
		partners, employees, representatives and agents of any such Holder, the Initial
		Purchaser, any underwriter or any controlling person, from and against any
		loss, claim, damage, liability, cost or expense whatsoever as incurred
		(including, but not limited to, reasonable attorneys’ fees and any and all
		expenses whatsoever incurred in investigating, preparing or defending against
		any litigation, commenced or threatened, or any claim whatsoever, and any and
		all amounts paid in settlement of any claim or litigation), joint or several,
		to which they or any of them may become subject under the Securities Act, the
		Exchange Act or otherwise, insofar as any such loss, claim, damage, liability,
		cost or expense (or action in respect thereof) arises out of, or is based upon,
		any untrue statement or alleged untrue statement of a material fact contained
		in the Shelf Registration Statement or any amendment thereto or supplement
		thereof or any related preliminary prospectus or the Prospectus or any
		amendment thereto or supplement thereof, or arises out of, or is based upon,
		the omission or alleged omission to state therein any material fact required to
		be stated therein or necessary to make the statements therein, in light of the
		circumstance in which they were made, not misleading; provided,
		however, that the Company shall not be liable to any such indemnified
		party in any such case to the extent that any such loss, claim, damage,
		liability, cost or expense arises out of, or is based upon, any such untrue
		statement or alleged untrue statement or omission or alleged omission made
		therein in reliance upon and in conformity with written information furnished
		to the Company by or on behalf of such indemnified party specifically for use
		therein; and provided further, however, that the Company shall
		not be liable to any such indemnified party in any such case to the extent that
		such loss, claim, damage, liability, cost or expense arises from an offer or
		sale by a Notice Holder of Registrable Securities during a Suspension Period,
		if such indemnified party is a Notice Holder that received from the Company a
		notice of the commencement of such Suspension Period prior to the making of
		such offer or sale.  The foregoing indemnity agreement is in addition to
		any liability that the Company may otherwise have to any indemnified party, and
		the Company hereby confirms that it will indemnify the indemnified party with
		respect to any breach by the Company of its indemnity obligations hereunder.
		 The Company shall not be liable under this Section 5(a) for any
		settlement of any action effected without its written consent, which shall not
		be unreasonably withheld.
		  
	 

	 
		(b)
	 

	 
		Indemnification by the Notice Holders.  Each Notice Holder,
		severally and not jointly, shall indemnify and hold harmless the Company, the
		Initial Purchaser, each underwriter,
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		each other Holder, each person, if any, who controls the Company, the
		Initial Purchaser, any underwriter or another Holder within the meaning of
		Section 15 of the Securities Act or Section 20 of the Exchange Act
		and the respective officers, directors, partners, employees, representatives
		and agents of the Company, the Initial Purchaser, any underwriter, any other
		Holder or any controlling person, from and against any loss, claim, damage,
		liability, cost or expense whatsoever as incurred (including, but not limited
		to, reasonable attorneys’ fees and any and all expenses whatsoever
		incurred in investigating, preparing or defending against any litigation,
		commenced or threatened, or any claim whatsoever, and any and all amounts paid
		in settlement of any claim or litigation), joint or several, to which they or
		any of them may become subject under the Securities Act, the Exchange Act or
		otherwise, insofar as any such loss, claim, damage, liability, cost or expense
		(or action in respect thereof) arises out of, or is based upon, any untrue
		statement or alleged untrue statement of a material fact contained in the Shelf
		Registration Statement or any amendment thereto or any related preliminary
		prospectus or the Prospectus or any amendment thereto or supplement thereof, or
		arises out of, or is based upon, the omission or alleged omission to state
		therein, in light of the circumstances in which they were made, any material
		fact required to be stated therein or necessary to make the statements therein
		not misleading, in each case to the extent, but only to the extent, that such
		untrue statement or alleged untrue statement or omission or alleged omission
		made therein was made in reliance upon and in conformity with written
		information furnished to the Company by or on behalf of such Notice Holder
		specifically for use therein.  In no event shall the liability of any
		selling Notice Holder hereunder be greater in amount than the dollar amount of
		the proceeds received by such Notice Holder upon the sale of the Registrable
		Securities pursuant to the Shelf Registration Statement giving rise to such
		indemnification obligation.  The foregoing indemnity agreement is in
		addition to any liability that any Notice Holder may otherwise have to the
		Company, the Initial Purchaser and any such other person.  
	 

	 
		(c)
	 

	 
		Notices of Claims, Etc.  Promptly after receipt by an
		indemnified party under this Section 5 of notice of any claim or the
		commencement of any action, the indemnified party shall, if a claim in respect
		thereof is to be made against the indemnifying party under this Section 5,
		notify the indemnifying party in writing of the claim or the commencement of
		that action; provided, however, that the failure to notify the
		indemnifying party shall not relieve it from any liability that it may have
		under this Section 5, except (and only) to the extent that such failure
		shall have materially prejudiced the indemnifying party.  If any such
		claim or action shall be brought against an indemnified party, and it shall
		notify the indemnifying party thereof, the indemnifying party shall be entitled
		to participate therein and, to the extent that it wishes, jointly with any
		other similarly notified indemnifying party, to assume the defense thereof with
		counsel reasonably satisfactory to the indemnified party.  After notice
		from the indemnifying party to the indemnified party of its election to assume
		the defense of such claim or action, the indemnifying party shall not be liable
		to the indemnified party under this Section 5 for any legal or other
		expenses subsequently incurred by the indemnified party in connection with the
		defense thereof other than reasonable costs of investigation; provided,
		however, that the indemnified party shall have the right to employ
		counsel to represent jointly the indemnified party and its respective officers,
		directors, partners, employees, representatives, agents and controlling persons
		who may be subject to liability arising out of any claim in respect of which
		indemnity may be sought by the indemnified party against the indemnifying party
		under this Section 5 if (i) employment of such counsel has been authorized
		in writing by the indemnifying party, or (ii) such indemnifying party shall not
		have employed counsel reasonably satisfactory to the indemnified party to have
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		charge of the defense of such proceeding within thirty (30) days of the
		receipt of notice thereof, or (iii) such indemnified party shall have
		reasonably concluded that the representation of such indemnified party and
		those officers, directors, partners, employees, representatives, agents and
		controlling persons by the same counsel representing the indemnifying party
		would be inappropriate under applicable standards of professional conduct due
		to actual or potential differing interests between them or where there may be
		one or more defenses available to them that are different from, additional to
		or in conflict with those available to the indemnifying party, and in any such
		event ((i), (ii) or (iii)) the reasonable fees and expenses of such separate
		counsel shall be paid by the indemnifying party as incurred.  It is
		understood that the indemnifying party shall not be liable for the fees and
		expenses of more than one separate firm (in addition to local counsel in each
		jurisdiction) for all indemnified parties in connection with any proceeding or
		related proceedings.  No indemnifying party shall, without the prior
		written consent of the indemnified parties, effect any settlement or compromise
		of, or consent to the entry of judgment with respect to, any pending or
		threatened claim, investigation, action, suit or proceeding in respect of which
		indemnity or contribution may be or could have been sought hereunder (whether
		or not the indemnified party or parties are actual or potential parties
		thereto) unless (A) such settlement, compromise or judgment (1) includes an
		unconditional release of such indemnified party from all liability arising out
		of such claim, investigation, action, suit or proceeding, and (2) does not
		include a statement as to or an admission of fault, culpability or failure to
		act by or on behalf of any indemnified party, and (B) the indemnifying party
		confirms in writing its indemnification obligations hereunder with respect to
		such settlement, compromise or judgment.  
	 

	 
		(d)
	 

	 
		Contribution.  If the indemnification provided for in this
		Section 5 is unavailable or insufficient to hold harmless an indemnified
		party under subsections (a) or (b) above, then each party shall contribute to
		the amount paid or payable by such indemnified party as a result of the losses,
		claims, damages, costs, expenses or liabilities (or actions in respect thereof)
		referred to in subsection (a) or (b) above (i) in such proportion as is
		appropriate to reflect the relative benefits received by the indemnifying party
		or parties on the one hand and the indemnified party on the other from the
		registration of the Registrable Securities pursuant to the Shelf Registration,
		or (ii) if the allocation provided by the foregoing clause (i) is not permitted
		by applicable law, in such proportion as is appropriate to reflect not only the
		relative benefits referred to in clause (i) above but also the relative fault
		of the indemnifying party or parties on the one hand and the indemnified party
		on the other in connection with the statements or omissions that resulted in
		such losses, claims, damages, costs, expenses or liabilities (or actions in
		respect thereof) as well as any other relevant equitable considerations.
		 The relative fault of the parties shall be determined by reference to,
		among other things, whether the untrue or alleged untrue statement of a
		material fact or the omission or alleged omission to state a material fact
		relates to information supplied by the Company on the one hand or such Holder
		or such other indemnified party, as the case may be, on the other, and the
		parties’ relative intent, knowledge, access to information and opportunity
		to correct or prevent such statement or omission.  The amount paid by an
		indemnified party as a result of the losses, claims, damages or liabilities
		referred to in the first sentence of this Section 5(d) shall be deemed to
		include any legal or other expenses reasonably incurred by such indemnified
		party in connection with investigating or defending any action or claim which
		is the subject of this Section 5(d).  The Company and the Holders
		agree that it would not be just and equitable if contribution pursuant to this
		Section 5(d) were determined by pro rata allocation or by any other method
		of allocation which does not take
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		account of the equitable considerations referred to herein.
		 Notwithstanding any other provision of this Section 5(d), no Holder
		of the Registrable Securities shall be required to contribute any amount in
		excess of the amount by which the gross proceeds received by such Holder from
		the sale of its Registrable Securities pursuant to the Shelf Registration
		Statement exceeds the amount of damages which such Holder has otherwise been
		required to pay by reason of such untrue or alleged untrue statement or
		omission or alleged omission.  No person guilty of fraudulent
		misrepresentation (within the meaning of Section 11(f) of the Securities
		Act) shall be entitled to contribution from any person who was not guilty of
		such fraudulent misrepresentation.  For purposes of this
		Section 5(d), each officer, director, partner, employee, representative or
		agent of an indemnified party, and each person, if any, who controls such
		indemnified party within the meaning of the Securities Act or the Exchange Act,
		shall have the same rights to contribution as such indemnified party and each
		officer, director, partner, employee, representative and agent of the Company,
		and each person, if any, who controls the Company within the meaning of the
		Securities Act or the Exchange Act, shall have the same rights to contribution
		as the Company.  The Holders’ respective obligations to contribute
		pursuant to this Section 5(d) are several in proportion to the respective
		amount of Registrable Securities they have sold pursuant to a Shelf
		Registration Statement and not joint.  The remedies provided for in this
		Section 5(d) are not exclusive and shall not limit any rights or remedies
		which may otherwise be available to any indemnified party at law or in equity.
		 
	 

	 
		(e)
	 

	 
		Survival.  The indemnity and contribution provisions
		contained in this Section 5 shall remain operative and in full force and
		effect regardless of (i) any termination of this Agreement, (ii) any
		investigation made by or on behalf of the Initial Purchaser, any underwriter,
		any Holder, any officer, director, partner, employee, representative or agent
		of the Initial Purchaser, any underwriter, or any Holder, or any person
		controlling the Initial Purchaser, any underwriter or any Holder, or by or on
		behalf of the Company, its officers, directors, partners, employees,
		representatives or agents or any person controlling the Company, and (iii) any
		sale of Registrable Securities pursuant to a Shelf Registration Statement.
		 
	 

	 
		6.
	 

	 
		Holder’s Obligations.
	 

	 
		Each Holder agrees, by acquisition of the Registrable Securities, that no
		Holder of Registrable Securities shall be entitled to sell any of such
		Registrable Securities pursuant to a Shelf Registration Statement or to receive
		a Prospectus relating thereto, unless such Holder has furnished the Company
		with a Notice and Questionnaire as required pursuant to Section 3(a)
		hereof (including the information required to be included in such Notice and
		Questionnaire) and the information set forth in the next sentence.  Each
		Notice Holder agrees to promptly furnish to the Company all information
		required to be disclosed in order to make the information previously furnished
		to the Company by such Notice Holder not misleading and any other information
		regarding such Notice Holder and the distribution of such Registrable
		Securities as may be required to be disclosed in the Shelf Registration
		Statement under applicable law, pursuant to comments from the Commission or as
		the Company may from time to time reasonably request.  Any sale of any
		Registrable Securities by any Notice Holder shall constitute a representation
		and warranty by such Notice Holder that the information relating to such Notice
		Holder and its plan of distribution is as set forth in the Prospectus delivered
		by such Notice Holder in connection with such disposition, that such Prospectus
		does not, as of the time of such sale, contain any untrue statement of a
		material fact relating to or provided by such Notice
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Holder or its plan of distribution and that such Prospectus does not, as
		of the time of such sale, omit to state any material fact relating to or
		provided by such Notice Holder or its plan of distribution necessary in order
		to make the statements in such Prospectus, in the light of the circumstances
		under which they were made, not misleading.  
	 

	 
		7.
	 

	 
		Additional Interest.  
	 

	 
		(a)
	 

	 
		If:
	 

	 
		(i)
	 

	 
		on or prior to the 180th calendar day following the Issue Date, the
		initial Shelf Registration Statement is not declared effective by the
		Commission, or
	 

	 
		(ii)
	 

	 
		after the effectiveness date of any Shelf Registration Statement, (A)
		such Shelf Registration Statement ceases to be effective or usable for the
		offer and sale of Registrable Securities (other than due to a Suspension
		Period), and the Company fails to file (and have declared effective), within
		five (5) Business Days, a post-effective amendment to such Shelf Registration
		Statement or amendment or supplement to the Prospectus contained therein or
		such other document with the Commission to make such Shelf Registration
		Statement effective or such Prospectus usable, or (B) the Suspension Periods
		exceed ninety (90) calendar days, whether or not consecutive, in any 12-month
		calendar period, or
	 

	 
		(iii)
	 

	 
		the Company shall have failed to timely comply with any of its
		obligations set forth in Section 3(a)(ii) hereof, provided that such
		failure is not solely due to the failure of a Holder of Registrable Securities
		to perform its obligations set forth in Section 3(a)(ii) hereof (each of (i)
		through (iii) a “Registration Default”),
	 

	 
		the Company shall be required to pay additional interest
		(“Additional Interest”), from and including the day
		following such Registration Default to but excluding the day on which such
		Registration Default is cured, at a rate per annum equal to an additional
		one-quarter of one percent (0.25%) of the Applicable Amount during the first
		ninety (90) calendar days following the Registration Default and increasing at
		the end of such ninety (90) day period by an additional one-quarter of one
		percent (0.25%) of the Applicable Amount, subject to a maximum additional
		one-half of one percent (0.50%) per annum for the duration of any or all
		Registration Defaults, or a maximum rate of eight and one-quarter percent
		(8.25%) per annum.  The Company shall notify the Trustee as promptly as
		possible, but in no event later than three (3) Business Days after each and any
		date on which a Registration Default occurs.  Notwithstanding the
		foregoing, a Registration Default shall not be deemed to have occurred under
		Section 7(a)(i) hereof if the Commission prevents the Company from including
		all of the Registrable Securities in the initial Shelf Registration Statement
		due to Rule 415 of the Securities Act and the Company causes an initial Shelf
		Registration Statement covering such number of shares of Common Stock equal to
		the Registration Cap to be declared effective under the Securities Act no later
		than 180 calendar days following the Issue Date, provided the Company complies
		with all of the its other obligations under Section 2(a) of this Agreement.
	 

	 
		(b)
	 

	 
		In the case of a Registration Default described in Sections 7(a)(i) and
		(ii) above, Additional Interest, if any, shall be payable only to Notice
		Holders of the Registrable Securities and, in respect of a Registration Default
		described in Section 7(a)(iii) above, Additional Interest,
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		if any, shall be payable only to Notice Holders of the Registrable
		Securities to whom such Registration Default relates.
	 

	 
		(c)
	 

	 
		Any amounts to be paid as Additional Interest pursuant to paragraph (a)
		of this Section 7 shall be paid on the first interest payment date in
		respect of the Registrable Securities following the date on which such
		Additional Interest begins to accrue.  The Additional Interest shall be
		payable by the Company in registered shares of Common Stock, cash or some
		combination of both, subject to Nasdaq shareholder approval rules, in the same
		manner as interest is payable under Section 4.14 of the Indenture.
	 

	 
		(d)
	 

	 
		A Registration Default pursuant to paragraph (a)(i) above shall not occur
		during any Suspension Period, and any Registration Default pursuant to
		paragraph (a)(i) above in existence at the commencement of any Suspension
		Period shall be tolled and the Additional Interest rate shall not be increased
		because of such Registration Default during such Suspension Period.
		Notwithstanding anything herein to the contrary, during the occurrence of any
		Registration Defaults, offers and sales of Registrable Securities pursuant to
		the Shelf Registration Statement shall be prohibited.
	 

	 
		(e)
	 

	 
		In no event shall Holders who have converted Notes into Common Stock be
		entitled to receive any Additional Interest with respect to such Common Stock
		or the issue price of the Notes converted.
	 

	 
		(f)
	 

	 
		Except as provided in Section 7(a) hereof, the Additional Interest
		as set forth in this Section 7 shall be the exclusive remedy available to
		the Holders of Registrable Securities for such Registration Default.  In
		no event shall the Company be required to pay Additional Interest in excess of
		the applicable maximum amount of one-half of one percent (0.50%) per annum as
		set forth above, or eight and one-quarter percent (8.25%) per annum when added
		to the stated interest on the Notes set forth above, regardless of whether one
		or multiple Registration Defaults exist.  
	 

	 
		8.
	 

	 
		Underwritten Offering.  
	 

	 
		Any Holder of Registrable Securities who desires to do so may sell
		Registrable Securities (in whole or in part) in an underwritten offering;
		provided, however, the Company shall not be required to
		facilitate an underwritten offering pursuant to the Shelf Registration
		Statement by any Holders unless the offering relates to at least $10,000,000
		principal amount of Notes or the equivalent number of shares of Common
		Stock in which such Notes are convertible.  In any such underwritten
		offering, the investment banker or investment bankers and manager or managers
		that will administer the offering will be selected by, and the underwriting
		arrangements with respect thereto (including the size of the offering) will be
		approved by, the holders of a majority of the Registrable Securities to be
		included in such offering; provided, however, that such
		investment bankers and managers and underwriting arrangements must be
		reasonably satisfactory to the Company.  No Holder may participate in any
		underwritten offering contemplated hereby unless (a) such Holder agrees to sell
		such Holder's Registrable Securities to be included in the underwritten
		offering in accordance with any approved underwriting arrangements, (b) such
		Holder completes and executes all reasonable questionnaires, powers of
		attorney, indemnities, underwriting agreements, lock-up letters and other
		documents required
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		under the terms of such approved underwriting arrangements and (c) if
		such Holder is not then a Notice Holder, such Holder returns a completed and
		signed Notice and Questionnaire to the Company in accordance with Section
		3(a)(ii) hereof within a reasonable amount of time before such underwritten
		offering.  The Holders participating in any underwritten offering shall be
		responsible for any underwriting discounts and commissions and fees and,
		subject to Section 4 hereof, expenses of their own counsel.  The Company
		shall pay all expenses customarily borne by issuers, including but not limited
		to filing fees, the fees and disbursements of its counsel and independent
		public accountants and any printing expenses incurred in connection with such
		underwritten offering.  Notwithstanding the foregoing or the provisions of
		Section 3(n) hereof, upon receipt of a request from the managing underwriter or
		a representative of holders of a majority of the Registrable Securities to be
		included in an underwritten offering to prepare and file an amendment or
		supplement to the Shelf Registration Statement and Prospectus in connection
		with an underwritten offering, the Company may delay the filing of any such
		amendment or supplement for up to ninety (90) days if the Company is in
		possession of material non-public information the disclosure of which would
		have a material adverse effect on the business, operations, prospects,
		condition (financial or otherwise) of the Company and its subsidiaries, taken
		as a whole.  Further, the Company’s obligation under this Section 8
		shall be subject to any Rule 415 Limitation and Subsequent Shelf Limitation.
	 

	 
		9.
	 

	 
		Rule 144 and 144A.
	 

	 
		The Company covenants to the Holders of the Registrable Securities that
		the Company shall use its reasonable best efforts to make available, upon
		request of any holder of Registrable Securities, to such holder or beneficial
		owner of Registrable Securities in connection with any sale thereof and any
		prospective purchasers of such Registrable Securities designated by such Holder
		or beneficial owner, the information required by Rule 144A(d)(4) under the
		Securities Act in order to permit resales or such Registrable Securities
		pursuant to Rule 144A of the Securities Act timely file the reports required to
		be filed by it under the Exchange Act or the Securities Act (including the
		reports under Section 13 and 15(d) of the Exchange Act referred to in
		subparagraph (c)(1) of Rule 144 of the Securities Act) and the rules and
		regulations adopted by the Commission thereunder, all to the extent required
		from time to time to enable such Holder to sell Registrable Securities without
		registration under the Securities Act within the limitations of the exemption
		provided by Rule 144 under the Securities Act, as such may be amended from time
		to time, or any similar or successor rule or regulation hereafter adopted by
		the Commission.  Upon the request of any Holder of Registrable Securities
		in connection with that Holder’s sale pursuant to Rule 144, the Company
		shall deliver to such Holder a written statement as to whether it had complied
		with such requirements.
	 

	 
		10.
	 

	 
		Miscellaneous.
	 

	 
		(a)
	 

	 
		Specific Performance.  The parties hereto acknowledge that
		there would be no adequate remedy at law if the Company fails to perform any of
		its obligations hereunder and that the Initial Purchaser and the Holders from
		time to time may be irreparably harmed by any such failure, and accordingly
		agree that the Initial Purchaser and such Holders, in addition to any other
		remedy to which they may be entitled at law or in equity and without limiting
		the remedies available to the Notice Holders under Section 7 hereof, shall
		be entitled to compel specific performance of the obligations of the Company
		under this Agreement in accordance with the
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		terms and conditions of this Agreement, in any court of the United States
		or any State thereof having jurisdiction.  
	 

	 
		(b)
	 

	 
		Amendments and Waivers.  This Agreement, including this
		Section 10(b), may be amended, and waivers or consents to departures from
		the provisions hereof may be given, only by a written instrument duly executed
		by the Company and a Majority of Holders.  Each Holder of Registrable
		Securities outstanding at the time of any such amendment, waiver or consent or
		thereafter shall be bound by any amendment, waiver or consent effected pursuant
		to this Section 9(b), whether or not any notice, writing or marking
		indicating such amendment, waiver or consent appears on the Registrable
		Securities or is delivered to such Holder.  
	 

	 
		(c)
	 

	 
		Other Registration Rights.  The Company will not, on or after
		the date of this Agreement, enter into any agreement with respect to its
		securities that is inconsistent with the rights granted to the holders of
		Registrable Securities in this Agreement or otherwise conflicts with the
		provisions hereof.  The Company shall not permit any securities other than
		the Registrable Securities to be included in any Shelf Registration Statement
		without consent of Initial Purchaser.  The rights granted to the holders
		of Registrable Securities hereunder do not in any way conflict with and are not
		inconsistent with the rights granted to the holders of the Company's securities
		under any agreement in effect on the date hereof.
	 

	 
		(d)
	 

	 
		Third Party Beneficiary.  The holders of Registrable
		Securities shall be third party beneficiaries to the agreements made hereunder
		between the Company, on the one hand, and the Purchasers, on the other hand,
		and shall have the right to enforce such agreements directly to the extent they
		may deem such enforcement necessary or advisable to protect its rights or the
		rights of holders of Registrable Securities hereunder.
	 

	 
		(e)
	 

	 
		Notices.  All notices and other communications provided for
		or permitted hereunder shall be made in writing, shall be delivered by hand
		delivery, by telecopier, by courier guaranteeing overnight delivery or by
		first-class mail, return receipt requested, and shall be deemed given (i) when
		made, if made by hand delivery, (ii) upon confirmation, if made by telecopier
		(provided notice is also given by some other means permitted by this Section
		9(c)), (iii) one Business Day after being deposited with such courier, if made
		by overnight courier, or (iv) on the date indicated on the notice of receipt,
		if made by first-class mail, to the parties as follows:
	 

	 
		(x)
	 

	 
		if to a Holder of Registrable Securities, at the most current address
		given by such Holder to the Company in a Notice and Questionnaire or any
		amendment thereto;
	 

	 
		a.
	 

	 
		if to the Company, to:
	 

	 
		Vion Pharmaceuticals, Inc.
	 

	 
		4 Science Park
	 

	 
		New Haven, Connecticut 06511
	 

	 
		Attention: Corporate Secretary
	 

	 
		Telephone: (203) 498-4210
	 

	 
		Facsimile: (203) 498- 4211
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		with a copy to:
	 

	 
		Fulbright & Jaworski L.L.P.
	 

	 
		666 Fifth Avenue
	 

	 
		New York, New York 10103
	 

	 
		Attention: Lawrence A. Spector, Esq.
	 

	 
		Telephone: (212) 318-3279
	 

	 
		Facsimile: (212) 318-3400
	 

	 
		(y)
	 

	 
		if to the Initial Purchaser, to:
	 

	 
		CRT Capital Group LLC
	 

	 
		262 Harbor Drive
	 

	 
		Stamford, CT  06902
	 

	 
		Attention: Eric Seal
	 

	 
		Facsimile: (203) 569-6980
	 

	 
		with a copy to:
	 

	 
		DLA Piper US LLP
	 

	 
		1251 Avenue of the Americas
	 

	 
		New York, NY  10020
	 

	 
		Attention: Jonathan Klein, Esq.
	 

	 
		Telephone: (212) 335-4902
	 

	 
		Facsimile: (212) 335-4501
	 

	 
		or to such other address as such person may have furnished to the other
		persons identified in this Section 10(c) in writing in accordance
		herewith.
	 

	 
		(f)
	 

	 
		Parties in Interest.  The parties to this Agreement intend
		that all Holders of Registrable Securities shall be entitled to receive the
		benefits of this Agreement and that any Notice Holder shall be bound by the
		terms and provisions of this Agreement by reason of such election with respect
		to the Registrable Securities which are included in a Shelf Registration
		Statement.  All of the terms and provisions of this Agreement shall be
		binding upon, shall inure to the benefit of and shall be enforceable by the
		respective successors and assigns of the parties hereto and any Holder from
		time to time of the Registrable Securities to the aforesaid extent.  In
		the event that any transferee of any Holder of Registrable Securities shall
		acquire Registrable Securities, in any manner, whether by gift, bequest,
		purchase, operation of law or otherwise, such transferee shall, without any
		further writing or action of any kind, be entitled to receive the benefits of
		and, if a Notice Holder, be conclusively deemed to have agreed to be bound by
		and to perform all of the terms and provisions of this Agreement to the
		aforesaid extent.  
	 

	 
		(g)
	 

	 
		Counterparts; Facsimile Signatures.  This Agreement may be
		executed in any number of counterparts and by the parties hereto in separate
		counterparts, each of which when so executed shall be deemed to be an original
		and all of which taken together shall constitute one and the same agreement.
		 Facsimile signatures shall constitute original signatures for all
		purposes of this Agreement.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(h)
	 

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

	 
		(i)
	 

	 
		Governing Law.  This Agreement shall be governed by and
		construed in accordance with the laws of the State of New York, without giving
		effect to any provisions relating to conflicts of law.  
	 

	 
		(j)
	 

	 
		Severability.  In the event that any one or more of the
		provisions contained herein, or the application thereof in any circumstances,
		is held invalid, illegal or unenforceable in any respect for any reason, the
		validity, legality and enforceability of any such provision in every other
		respect and of the remaining provisions hereof shall not be in any way impaired
		or affected thereby, it being intended that all of the rights and privileges of
		the parties hereto shall be enforceable to the fullest extent permitted by law.
		 
	 

	 
		(k)
	 

	 
		Survival.  The respective indemnities, agreements, covenants,
		representations, warranties and other provisions set forth in this Agreement or
		made pursuant hereto shall remain in full force and effect, regardless of any
		investigation (or any statement as to the results thereof) made by or on behalf
		of the Initial Purchaser, any Holder, or any officer, director, partner,
		employee, representative or agent of the Initial Purchaser or such Holder, any
		agent or underwriter, any officer, director, partner, employee, representative
		or agent of such agent or underwriter, or any controlling person of any of the
		foregoing, and shall survive the transfer and registration of the Registrable
		Securities of such Holder.
	 

	 
		11.
	 

	 
		Submission to Jurisdiction.
	 

	 
		The Company agrees that any suit, action or proceeding against the
		Company arising out of or based upon this Agreement or the transactions
		contemplated hereby may be instituted in any state or federal court in The City
		of New York, New York, and waives any objection which it may now or hereafter
		have to the laying of venue of any such proceeding, and irrevocably submits to
		the non-exclusive jurisdiction of such courts in any suit, action or
		proceeding.  The Company expressly accepts the non-exclusive jurisdiction
		of any such court in respect of any such suit, action or proceeding.  The
		Company agrees that a final judgment in any such proceeding brought in any such
		court shall be conclusive and binding thereupon and may be enforced in any
		other court in the jurisdiction to which the Company is or may be subject by
		suit upon such judgment.
	 

	 
		[Remainder of Page Intentionally Left Blank]
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Please confirm that the foregoing correctly sets forth the agreement
		between the Company and you.
	 

	 
		Very truly yours,
	 

	 
		

	 

	 
		Vion Pharmaceuticals, Inc.
	 

	 
		By:    /s/ Howard
		Johnson      
	 

	 
		Name:
	 

	 
		Howard Johnson
	 

	 
		Title:
	 

	 
		President and Chief Financial Officer
	 

	 
		Accepted as of the date hereof:
	 

	 
		CRT Capital Group LLC
	 

	 
		By:    /s/ Eric
		Seal                    
	 

	 
		Name:  Eric Seal
 Title:  Vice President
	 

	 
		

	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		APPENDIX A 
	 

	 
		
 7.75% CONVERTIBLE SENIOR NOTES DUE 2012
  WARRANTS TO
		PURCHASE COMMON STOCK 
	 

	 
		SELLING SECURITY HOLDER
 NOTICE AND QUESTIONNAIRE
	 

	 
		The undersigned beneficial holder (the "Selling Security Holder") of
		7.75% Convertible Senior Notes due 2012 (the "Notes") and warrants (the
		"Warrants") to purchase shares of common stock, par value $0.01 (the "Common
		Stock") of Vion Pharmaceuticals, Inc. (the "Company") or, Common Stock of the
		Company issuable upon conversion of the Notes or exercise of the Warrants (such
		shares of Common Stock, together with the Notes, the "Registrable Securities"),
		understands that the Company has filed or intends to file with the Securities
		and Exchange Commission (the "SEC") a registration statement on Form S-3 (the
		"Shelf Registration Statement") for the registration and resale under Rule 415
		of the Securities Act of 1933, as amended (the "Securities Act"), of the
		Registrable Securities in accordance with the terms of the Registration Rights
		Agreement (the "Registration Agreement"), dated as of February 20, 2007 between
		the Company and the Initial Purchaser named therein. A copy of the Registration
		Agreement is available from the Company upon request at the address set forth
		below. All capitalized terms not otherwise defined herein shall have the
		meaning ascribed thereto in the Registration Agreement.
	 

	 
		In order to sell or otherwise dispose of any Registrable Securities
		pursuant to the Shelf Registration Statement, a beneficial owner of Registrable
		Securities will be required to be named as a selling security holder in the
		related prospectus, deliver the prospectus to purchasers of Registrable
		Securities and be bound by those provisions of the Registration Agreement
		applicable to such beneficial owner (including certain indemnification
		provisions thereof). In order to have Registrable Securities included in the
		Shelf Registration Statement, this Notice and Questionnaire must be completed,
		executed and delivered to the Company at the address specified below ON OR
		BEFORE      
		         2007. Beneficial owners of Registrable
		Securities who do not complete, execute and return this Notice and
		Questionnaire (i) will not be named as selling security holders in the Shelf
		Registration Statement and (ii) may not use the related prospectus for resales
		of Registrable Securities. Beneficial owners are encouraged to complete and
		deliver this Notice and Questionnaire prior to the effectiveness of the Shelf
		Registration Statement.
	 

	 
		Certain legal consequences arise from being named as selling security
		holders in the Shelf Registration Statement and the related prospectus.
		Accordingly, holders and beneficial owners of Registrable Securities are
		advised to consult their own securities law counsel regarding the consequences
		of being named or not being named as a selling security holder in the Shelf
		Registration Statement and the related prospectus.
	 

	 
		By signing below, the undersigned acknowledges his, her or its
		understanding and agreement that despite the terms of the Registration
		Agreement, the Company may not be able to register the resale of all the
		Registrable Securities. The SEC has recently taken the position that offerings
		of excessive amounts of common stock by selling security holders pursuant to
		resale registration statements by issuers may be considered primary offerings
		by such issuers. The result of such treatment is that the selling security
		holders could be considered "underwriters" within the meaning of the Securities
		Act. Under the Registration Agreement, we have agreed that, subject to current
		SEC policies as described below, if the initial Shelf Registration Statement
		declared effective by the SEC registers the resale of less than all of the
		Registrable Securities, the Company will file an additional Shelf Registration
		Statement to register the resale of the remaining Registrable Securities, no
		earlier than 180 days nor later than 270 days after the effective date of the
		initial Shelf Registration Statement. Under current SEC policies, our filing of
		the additional Shelf Registration Statement may be prohibited, the amount of
		Registrable Securities we may include in the additional Shelf Registration
		Statement may be limited, or the SEC may refuse to declare the additional Shelf
		Registration Statement effective. We will not be in breach or default of the
		Registration Agreement or become obligated to pay additional interest if any of
		these events occurs.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		ELECTION
	 

	 
		The undersigned Selling Security Holder of Registrable Securities hereby
		elects to include in the Shelf Registration Statement the Registrable
		Securities beneficially owned by it and listed below in Item (3) (unless
		otherwise specified under Item (3)). The undersigned, by signing and returning
		this Notice and Questionnaire, agrees to be bound by the terms and conditions
		of this Notice and Questionnaire and the Registration Agreement, including
		without limitation, Section 5 of the Registration Agreement, as if the
		undersigned were an original party thereto.
	 

	 
		Upon any sale of Registrable Securities pursuant to the Shelf
		Registration Statement, the undersigned agrees to deliver to the Company and
		the Trustee the Notice of Transfer (completed and signed) set forth on Exhibit
		1 to this Notice and Questionnaire.
	 

	 
		The undersigned hereby provides the following information to the Company
		and represents and warrants that such information is accurate and complete:
	 

	 
		Questionnaire
	 

	 
		1.
	 

	 
		(a) Full legal name of Selling
		Security Holder:

	 

	 
		

	 

	 
		(b) Full legal name of
		registered holder (if not the same as (a) above) through which Registrable
		Securities listed in Item (3) below are held (if the Registrable Securities are
		held through a broker-dealer or other third party and, as a result, you do not
		know the legal name of the registered holder, please complete Item (1)(c)
		below):
	 

	 
		

	 

	 
		(c) Full legal name of
		broker-dealer or other third party through which Registrable Securities listed
		in Item (3) below are held:
	 

	 
		

	 

	 
		(d) Full legal name of DTC
		Participant (if applicable and if not the same as (b) or (c) above) through
		which Registrable Securities listed in Item (3) below are held:
	 

	 
		________________________________________________________________________
	 

	 
		(e) State whether the Selling
		Security Holder is a publicly-held entity or a subsidiary of a publicly-held
		entity (i.e., an entity that has a class of securities registered under the
		Securities Exchange Act of 1934, as amended):
	 

	 
		Yes  No
		
	 

	 
		If a subsidiary of a publicly-held entity, please identify the
		publicly-held parent entity:
	 

	 
		

	 

	 
		(f) State whether the Selling
		Security Holder is an investment company or a subsidiary of an investment
		company registered under the Investment Company Act of 1940:
	 

	 
		Yes   No
		
	 

	 
		If a subsidiary of an investment company, please identify the investment
		company parent entity:
	 

	 
		

	 

	 
		(g) If you
		answered "No" to questions (e) and (f), state the number of natural
		persons, publicly-held entities or investment companies who have or share
		voting or investment control over the Registrable Securities:
	 

	 
		If your answer is 5 or fewer, please identify those natural persons,
		publicly-held entities or investment companies:
	 

	 
		

	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		

	 

	 
		

	 

	 
		Please note that the SEC requires that these persons or entities be
		named in the prospectus.
	 

	 
		2.
	 

	 
		Address for Notices to Selling Security Holder:
	 

	 
		

	 

	 
		

	 

	 
		Telephone:
		________________________________________________________  
	 

	 
		Fax:
		____________________________________________________________   
	 

	 
		Contact Person:  
	 

	 
		3.
	 

	 
		Beneficial Ownership of Registrable Securities:
	 

	 
		Except as set forth below in this Item (3), the undersigned does not own
		any Notes, Warrants or shares of Common Stock issued upon conversion,
		repurchase or redemption of any Notes or exercise of any Warrants.
	 

	 
		Amount (or number of shares) of Registrable Securities beneficially
		owned:
	 

	 
		

	 

	 
		CUSIP No(s). of such Registrable Securities beneficially owned:
	 

	 
		

	 

	 
		Number of shares of Common Stock (if any) issued upon conversion,
		repurchase or redemption of Registrable Securities or exercise of the Warrants:

	 

	 
		

	 

	 
		Unless otherwise indicated in the space provided below, subject to
		certain limitations set forth in the Registration Agreement, all Notes,
		Warrants and all shares of Common Stock listed in response to Item (3)(a)
		above, and all shares of Common Stock issuable upon conversion, repurchase of
		redemption of the Notes or exercise of the Warrants listed in response to Item
		(3)(a) above, will be included in the Shelf Registration Statement. If the
		undersigned does not wish all such Notes, Warrants or shares of Common Stock to
		be so included, please indicate below the amount or the number of shares to be
		included:
	 

	 
		

	 

	 
		

	 

	 
		4.
	 

	 
		Beneficial ownership of other securities of the Company owned by the
		Selling Security Holder:
	 

	 
		Except as set forth below in this Item (4), the undersigned is not the
		beneficial or registered owner of any securities of the Company other than the
		Registrable Securities listed above in Item (3).
	 

	 
		(a) Type and amount of other
		securities of the Company beneficially owned by the Selling Security Holder:
	 

	 
		

	 

	 
		

	 

	 
		(b) CUSIP No(s). of such other
		securities of the Company beneficially owned:
	 

	 
		

	 

	 
		

	 

	 
		5.
	 

	 
		Relationship with the Company:
	 

	 
		Except as set forth below, neither the undersigned nor any of its
		affiliates, directors or principal equity holders (5% or more) has held any
		position or office or has had any other material relationship with the Company
		(or its predecessors or affiliates) during the past three years.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		State any exceptions here:
	 

	 
		

	 

	 
		

	 

	 
		6.
	 

	 
		Transactions with the Company:
	 

	 
		Except as set forth below, neither the undersigned nor any of its
		affiliates, directors or principal equity holders (5% or more) has engaged in
		any transactions with the Company (or its predecessors or affiliates),
		including any purchase of securities from the Company.
	 

	 
		State any exceptions here:
	 

	 
		

	 

	 
		

	 

	 
		7.
	 

	 
		Relationship with other Selling Security Holders:
	 

	 
		Attached hereto as Exhibit ___ is a list of all Selling Security
		Holders. Except as set forth below, neither the undersigned nor any of its
		affiliates, directors or principal equity holders (5% or more) has held any
		position or office or has had any other material relationship with any of the
		other Selling Security Holders (or their respectives predecessors or
		affiliates).
	 

	 
		State any exceptions here:
	 

	 
		

	 

	 
		

	 

	 
		8.
	 

	 
		Plan of Distribution
	 

	 
		Except as set forth below, the undersigned (including its donees or
		pledgees) intends to distribute the Registrable Securities listed above in Item
		(3) pursuant to the Shelf Registration Statement only as follows (if at all):
		Such Registrable Securities may be sold from time to time directly by the
		undersigned or alternatively through underwriters or broker-dealers or agents.
		If the Registrable Securities are sold through underwriters or broker-dealers,
		the Selling Security Holder will be responsible for underwriting discounts or
		commissions. Such Registrable Securities may be sold in one or more
		transactions at fixed prices, at prevailing market prices at the time of sale,
		at varying prices determined at the time of sale, or at negotiated prices. Such
		sales may be effected in transactions (which may involve crosses or block
		transactions) (i) on any national securities exchange or quotation service on
		which the Registrable Securities may be listed or quoted at the time of sale,
		(ii) in the over-the-counter market, (iii) in transactions otherwise than on
		such exchanges or services or in the over-the-counter market, or (iv) through
		the writing of options. In connection with sales of the Registrable Securities
		or otherwise, the undersigned may enter into hedging transactions with
		broker-dealers, which may in turn engage in short sales of the Registrable
		Securities in the course of hedging positions they assume. The Selling Security
		holders may also sell Registrable Securities short and deliver Registrable
		Securities to close out such short positions, or loan or pledge Registrable
		Securities to broker-dealers that in turn may sell such securities. The Selling
		Security Holder may pledge or grant security interest in some or all of the
		Registrable Securities owned by it and, if it defaults in the performance of
		its secured obligations, the pledgees or secured parties may offer and sell the
		Registrable Securities from time to time pursuant to the prospectus. The
		Selling Security Holder also may transfer and donate shares in other
		circumstances in which case the transferees, donees, pledgees or other
		successors in interest will be the selling security holder for purposes of the
		prospectus.
	 

	 
		State any exceptions here:
	 

	 
		

	 

	 
		

	 

	 
		Note: In no event will such method(s) of distribution take the form of an
		underwritten offering of the Registrable Securities without the prior agreement
		of the Company.
	 

	 
		9.
	 

	 
		(a) State whether the Selling
		Security Holder has entered into or will enter into "hedging transactions."
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Yes  No
		
	 

	 
		If yes, you must provide a complete description of the hedging
		transactions into which the Selling Security Holder has entered or will enter
		and the purpose of such hedging transactions, including the dates of any
		transaction already effected.
	 

	 
		

	 

	 
		

	 

	 
		

	 

	 
		

	 

	 
		Please note that the SEC may deem short sales of securities covered by
		a registration statement prior to the effectiveness of such registration
		statement as a violation of Section 5 of the Securities Act.
	 

	 
		10.
	 

	 
		(a) State whether the Selling
		Security Holder is a registered broker-dealer.
	 

	 
		Yes  No
		
	 

	 
		(b) State whether the Selling
		Security Holder received the Registrable Securities as compensation for
		underwriting activities and, if so, provide a brief description of the
		transaction(s) involved.
	 

	 
		Yes  No
		
	 

	 
		

	 

	 
		

	 

	 
		The SEC requires that all Selling Security Holders that are
		broker-dealers and that did not receive the Registrable Securities as
		compensation for underwriting activities must be named as underwriters in the
		prospectus for the Registrable Securities. Selling Security Holders, including
		those named as underwriters, must deliver copies of the prospectus to
		purchasers at or prior to the time of any sale of the Registrable
		Securities.
	 

	 
		(c) State whether the Selling
		Security Holder is an affiliate of a registered broker-dealer and if so, list
		the name(s) of the broker-dealer affiliate(s).
	 

	 
		Yes  No
		
	 

	 
		

	 

	 
		

	 

	 
		If the answer is "Yes," you must answer question (d) below.
	 

	 
		(d) If the Selling Security
		Holder is an affiliate of a registered broker-dealer:
	 

	 
		(i)
	 

	 
		Did the Selling Security Holder purchase the Registrable Securities in
		the ordinary course of business?
	 

	 
		Yes  No
		
	 

	 
		If the answer is "No," to question (i) state any exceptions below:
	 

	 
		

	 

	 
		

	 

	 
		(ii)
	 

	 
		At the time of the purchase of the Registrable Securities, did the
		Selling Security Holder have any agreements or understandings, directly or
		indirectly, with any person to distribute the Registrable Securities?
	 

	 
		Yes  No
		
	 

	 
		If the answer is "Yes" to question (ii), state any exceptions below:
	 

	 
		

	 

	 
		

	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		If the answer is "No" to question (i) or "Yes" to question (ii), you will
		be named as an underwriter in the prospectus relating to the Registrable
		Securities.
	 

	 
	 

	 
		By signing below, the undersigned acknowledges that it understands its
		obligation to comply with the provisions of the Securities Exchange Act of
		1934, as amended, and the rules and regulations thereunder relating to stock
		manipulation, particularly Regulation M thereunder (or any successor rules or
		regulations) and the provisions of the Securities Act, including without
		limitation those relating to prospectus delivery, in connection with any
		offering of Registrable Securities pursuant to the Shelf Registration
		Statement. The undersigned agrees that neither it nor any person acting on its
		behalf will engage in any transaction in violation of such provisions.
	 

	 
		In the event that the Selling Security Holder transfers all or any
		portion of the Registrable Securities listed in Item (3) above after the date
		on which such information is provided to the Company, the Selling Security
		Holder agrees to notify the transferee(s) at the time of the transfer of its
		rights and obligations under this Notice and Questionnaire and the Registration
		Agreement.
	 

	 
		In accordance with the undersigned's obligation under the Registration
		Agreement to provide such information as may be required by law for inclusion
		in the Shelf Registration Statement, the undersigned agrees to promptly notify
		the Company of any inaccuracies or changes in the information provided herein
		that may occur subsequent to the date hereof at any time while the Shelf
		Registration Statement is required to remain effective. All notices hereunder
		and pursuant to the Registration Agreement shall be made in writing at the
		address set forth below.
	 

	 
		By signing below, the undersigned consents to the disclosure of the
		information contained herein in its answers to Items (1) through (8) above and
		the inclusion of such information in the Shelf Registration Statement and the
		related prospectus. The undersigned understands that such information will be
		relied upon by the Company in connection with the preparation or amendment of
		the Shelf Registration Statement and the related prospectus.
	 

	 
		Once this Notice and Questionnaire is executed by the Selling Security
		Holder and received by the Company, the terms of this Notice and Questionnaire,
		and the representations and warranties contained herein, shall be binding on,
		shall inure to the benefit of and shall be enforceable by the respective
		successors, heirs, personal representatives and assigns of the Company and the
		Selling Security Holder (with respect to Registrable Securities beneficially
		owned by such Selling Security Holder and listed in Item (3) above). This
		agreement shall be governed in all respects by the laws of the State of New
		York.
	 

	 
		IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
		this Notice and Questionnaire to be executed and delivered either in person or
		by its duly authorized agent.
	 

	 
		Beneficial Owner
	 

	 
		By:  
	 

	 
		Name:                                                   

	 

	 
		Title:                                                     

	 

	 
		Dated:                                                   

	 

	 
		PLEASE RETURN THE COMPLETED AND
		EXECUTED
 NOTICE AND QUESTIONNAIRE TO:
	 

	 
		Vion Pharmaceuticals, Inc.
 4 Science Park
 New Haven, Connecticut
		06511
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Phone: (203) 498-4210
 Facsimile: (203) 498- 4211

		Attention: Corporate Secretary
	 

	 
		WITH A COPY TO:
	 

	 
		Fulbright & Jaworski LLP
 666 Fifth Avenue
 New York, New York
		10103
	 

	 
		Phone: (212) 318-3015
 Facsimile: (212) 318-3400
 Attention:
		Erik Mengwall, Esq.
	 

	 
		
 

	 

	 
		

	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Exhibit 1
	 

	 
		NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
	 

	 
		Vion Pharmaceuticals, Inc.
 4 Science Park
 New Haven, Connecticut
		06511
	 

	 
		Attention: Corporate Secretary
	 

	 
		U.S. Bank National Association
 100 Wall Street, Suite 1600
 New
		York, New York 10005
	 

	 
		Attention: Corporate Trust Services
	 

	 
		Re:
	 

	 
		Vion Pharmaceuticals Inc. (the ‘‘Company’’)
 7.75
		% Convertible Senior Notes due 2012 (the ‘‘Notes’’)

		Warrants to
		Purchase                    
		Shares of Common Stock (the ‘‘Warrants’’)
	 

	 
		Dear Sirs:
	 

	 
		Please be advised that
		                     has
		transferred
		$                    aggregate
		principal amount of the above-referenced Notes, or
		  shares of the Company’s common
		stock, issued upon exercise of the Warrants, or conversion, repurchase or
		redemption of Notes, pursuant to an effective Registration Statement on Form
		S-3 (File
		No. 333-                     ) filed by the Company.
	 

	 
		We hereby certify that the prospectus delivery requirements, if any, of
		the Securities Act of 1933, as amended, have been satisfied with respect to the
		transfer described above and that the above-named beneficial owner of the Notes
		or common stock is named as a selling securityholder in the prospectus dated
		[date], or in amendments or supplements thereto, and that the aggregate
		principal amount of the Notes or number of shares of common stock transferred
		are [a portion of the Notes or shares
		of common stock listed in such prospectus as amended or supplemented opposite
		such owner’s name.
	 

	 
		Dated:
	 

	 
		Very truly yours,
	 

	 
		
 (Name)
	 

	 
		By: _______________________ 
	 

	 
		(Authorized Signature)

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