Document:

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                                                                     Exhibit 4.1

              __________________________________________________

                      KULICKE AND SOFFA INDUSTRIES, INC.

                                      To

                        CHASE MANHATTAN TRUST COMPANY,
                             NATIONAL ASSOCIATION,
                                  as Trustee

                           ________________________

                                   INDENTURE

                                  Dated as of

                                August 15, 2001

                           ________________________

                5 1/4% Convertible Subordinated Notes due 2006

              __________________________________________________
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                               TABLE OF CONTENTS
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                                                         ARTICLE 1
                                                        Definitions

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         Section 1.01.  Definitions................................................................................       2

                                                         ARTICLE 2
                            Issue, Description, Execution, Registration and Exchange of Notes

         Section 2.01.  Designation Amount and Issue of Notes......................................................       9
         Section 2.02.  Form of Notes..............................................................................       9
         Section 2.03.  Date and Denomination of Notes, Payments of Interest.......................................      10
         Section 2.04.  Execution of Notes.........................................................................      12
         Section 2.05.  Exchange and Registration of Transfer of Notes; Restrictions on
                    Transfer, Depositary...........................................................................      12
         Section 2.06.  Mutilated, Destroyed, Lost or Stolen Notes.................................................      19
         Section 2.07.  Temporary Notes............................................................................      20
         Section 2.08.  Cancellation of Notes Paid, Etc............................................................      21
         Section 2.09.  Cusip Numbers..............................................................................      21

                                                         ARTICLE 3
                                                    Redemption of Notes

         Section 3.01.  Redemption of Notes........................................................................      21
         Section 3.02.  Notice of Redemptions, Selection of Notes..................................................      22
         Section 3.03.  Payment of Notes Called for Redemption.....................................................      24
         Section 3.04.  Conversion Arrangement on Call for Redemption..............................................      25
         Section 3.05.  Redemption at Option of Holders............................................................      26

                                                         ARTICLE 4
                                                   Subordination of Notes

         Section 4.01.  Agreement of Subordination.................................................................      29
         Section 4.02.  Payments to Noteholders....................................................................      29
         Section 4.03.  Subrogation of Notes.......................................................................      32
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         Section 4.04.  Authorization to Effect Subordination......................................................      33
         Section 4.05.  Notice to Trustee..........................................................................      34
         Section 4.06.  Trustee's Relation to Senior Indebtedness..................................................      35
         Section 4.07.  No Impairment of Subordination.............................................................      35
         Section 4.08.  Certain Conversions Not Deemed Payment.....................................................      36
         Section 4.09.  Article Applicable to Paying Agents........................................................      36
         Section 4.10.  Senior Indebtedness Entitled to Rely.......................................................      36
         Section 4.11.  Reliance on Judicial Order or Certificate of Liquidating Agent.............................      36

                                                         ARTICLE 5
                                             Particular Covenants of the Company

         Section 5.01.  Payment of Principal, Premium and Interest.................................................      37
         Section 5.02.  Maintenance of Office or Agency............................................................      37
         Section 5.03.  Appointments to Fill Vacancies in Trustee's Office.........................................      38
         Section 5.04.  Provisions as to Paying Agent..............................................................      38
         Section 5.05.  Existence..................................................................................      39
         Section 5.06.  Maintenance of Properties..................................................................      39
         Section 5.07.  Payment of Taxes and Other Claims..........................................................      40
         Section 5.08.  Rule 144A Information Requirement..........................................................      40
         Section 5.09.  Stay, Extension and Usury Laws.............................................................      41
         Section 5.10.  Compliance Certificate.....................................................................      41
         Section 5.11.  Liquidated Damages Notice..................................................................      41

                                                         ARTICLE 6
                                 Noteholders' Lists and Reports by the Company and the Trustee

         Section 6.01.  Noteholders' Lists.........................................................................      42
         Section 6.02.  Preservation and Disclosure of Lists.......................................................      42
         Section 6.03.  Reports by Trustee.........................................................................      43
         Section 6.04.  Reports by Company.........................................................................      43

                                                         ARTICLE 7
                                 Remedies of the Trustee and Noteholders on an Event of Default

         Section 7.01.  Events of Default..........................................................................      43
         Section 7.02.  Payments of Notes on Default; Suit Therefor................................................      45
         Section 7.03.  Application of Monies Collected by Trustee.................................................      47
         Section 7.04.  Proceedings by Noteholder..................................................................      48
         Section 7.05.  Proceedings by Trustee.....................................................................      49
         Section 7.06.  Remedies Cumulative and Continuing.........................................................      49
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         Section 7.07.  Direction of Proceedings and Waiver of Defaults by Majority of Noteholders.................      50
         Section 7.08.  Notice of Defaults.........................................................................      50
         Section 7.09.  Undertaking to Pay Costs...................................................................      51

                                                         ARTICLE 8
                                                        The Trustee

         Section 8.01.  Duties and Responsibilities of Trustee.....................................................      51
         Section 8.02.  Reliance on Documents, Opinions, Etc.......................................................      53
         Section 8.03.  No Responsibility for Recitals, Etc........................................................      54
         Section 8.04.  Trustee, Paying Agents, Conversion Agents or Registrar May Own Notes.......................      54
         Section 8.05.  Monies to Be Held in Trust.................................................................      54
         Section 8.06.  Compensation and Expenses of Trustee.......................................................      54
         Section 8.07.  Officers' Certificate as Evidence..........................................................      55
         Section 8.08.  Conflicting Interests of Trustee...........................................................      55
         Section 8.09.  Eligibility of Trustee.....................................................................      56
         SectioN 8.10.  Resignation or Removal of Trustee..........................................................      56
         Section 8.11.  Acceptance by Successor Trustee............................................................      57
         Section 8.12.  Succession by Merger, Etc..................................................................      58
         Section 8.13.  Preferential Collection of Claims..........................................................      59
         Section 8.14.  Trustee's Application for Instructions from the Company....................................      59

                                                         ARTICLE 9
                                                      The Noteholders

         Section 9.01.  Action by Noteholders......................................................................      59
         Section 9.02.  Proof of Execution by Noteholders..........................................................      60
         Section 9.03.  Who Are Deemed Absolute Owners.............................................................      60
         Section 9.04.  Company-owned Notes Disregarded............................................................      60
         Section 9.05.  Revocation of Consents, Future Holders Bound...............................................      61

                                                         ARTICLE 10
                                                   Meetings of Noteholders

         Section 10.01. Purpose of Meetings........................................................................      61
         Section 10.02. Call of Meetings by Trustee................................................................      62
         Section 10.03. Call of Meetings by Company or Noteholders.................................................      62
         Section 10.04. Qualifications for Voting..................................................................      62
         Section 10.05. Regulations................................................................................      62
         Section 10.06. Voting.....................................................................................      63
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         Section 10.07. No Delay of Rights by Meeting..............................................................      64

                                                         ARTICLE 11
                                                  Supplemental Indentures

         Section 11.01. Supplemental Indentures Without Consent of Noteholders.....................................      64
         Section 11.02. Supplemental Indenture with Consent of Noteholders.........................................      66
         Section 11.03. Effect of Supplemental Indenture...........................................................      66
         Section 11.04. Notation on Notes..........................................................................      67
         Section 11.05. Evidence of Compliance of Supplemental Indenture to be
               Furnished to Trustee................................................................................      67

                                                         ARTICLE 12
                                       Consolidation, Merger, SalE, Conveyance and Lease

         Section 12.01. Company May Consolidate on Certain Terms...................................................      67
         Section 12.02. Successor Corporation to Be Substituted....................................................      68
         Section 12.03. Opinion of Counsel to Be Given Trustee.....................................................      69

                                                         ARTICLE 13
                                            Satisfaction and Discharge of Indenture

         Section 13.01. Discharge of Indenture.....................................................................      69
         Section 13.02. Deposited Monies to Be Held in Trust by Trustee............................................      70
         Section 13.03. Paying Agent to Repay Monies Held..........................................................      70
         Section 13.04. Return of Unclaimed Monies.................................................................      70
         Section 13.05. Reinstatement..............................................................................      70

                                                         ARTICLE 14
                               Immunity of Incorporators, Stockholders, Officers and Directors

         Section 14.01. Indenture and Notes Solely Corporate Obligations...........................................      71

                                                         ARTICLE 15
                                                    Conversion of Notes

         Section 15.01. Right to Convert...........................................................................      71
         Section 15.02. Exercise of Conversion Privilege; Issuance of Common Stock on
               Conversion, No Adjustment for Interest or Dividends.................................................      72
         Section 15.03. Cash Payments in Lieu of Fractional Shares.................................................      74
         Section 15.04. Conversion Rate............................................................................      74
         Section 15.05. Adjustment of Conversion Rate..............................................................      74
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         Section 15.06.  Effect of Reclassification, Consolidation, Merger or Sale.................................      85
         Section 15.07.  Taxes on Shares Issued....................................................................      86
         Section 15.08.  Reservation of Shares, Shares to Be Fully Paid; Compliance with
               Governmental Requirements; Listing of Common Stock..................................................      86
         Section 15.09.  Responsibility of Trustee.................................................................      87
         Section 15.10.  Notice to Holders Prior to Certain Actions................................................      88
         Section 15.11.  Rights Issued in Respect of Common Stock Issued upon
               Conversion..........................................................................................      89

                                                         ARTICLE 16
                                                  Miscellaneous Provisions

         Section 16.01.  Provisions Binding on Company's Successors................................................      89
         Section 16.02.  Official Acts by Successor Corporation....................................................      89
         Section 16.03.  Addresses for Notices, Etc................................................................      89
         Section 16.04.  Governing Law.............................................................................      90
         Section 16.05.  Evidence of Compliance with Conditions Precedent, Certificates
               to Trustee..........................................................................................      90
         Section 16.06.  Legal Holidays............................................................................      90
         Section 16.07.  Trust Indenture Act.......................................................................      90
         Section 16.08.  No Security Interest Created..............................................................      91
         Section 16.09.  Benefits of Indenture.....................................................................      91
         Section 16.10.  Table of Contents, Headings, Etc..........................................................      91
         Section 16.11.  Authenticating Agent......................................................................      91
         Section 16.12.  Execution in Counterparts.................................................................      92
         Section 16.13.  Severability..............................................................................      92
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                                       v
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                                   INDENTURE

         INDENTURE, dated as of August 15, 2001, between Kulicke and Soffa
Industries, Inc., a Pennsylvania corporation (hereinafter called the "Company"),
having its principal office at 2101 Blair Mill Road, Willow Grove, Pennsylvania
19090, and Chase Manhattan Trust Company, National Association, a national
banking association organized under the laws of the United States, as trustee
hereunder (hereinafter called the "Trustee"), having a corporate trust office at
1650 Market Street, Suite 5210, Philadelphia, Pennsylvania 19103.

                                  WITNESSETH:

         WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 5 1/4% Convertible Subordinated Notes due 2006
(hereinafter called the "Notes"), in an aggregate principal amount not to exceed
$150,000,000 and, to provide the terms and conditions upon which the Notes are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and

         WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to elect repayment upon a
Fundamental Change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and

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

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

         That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
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                                   ARTICLE 1
                                  DEFINITIONS

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

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

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

         "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which the banking institutions in The City of New
York or the city in which the Corporate Trust Office is located are authorized
or obligated by law or executive order to close or be closed.

         "Closing Price" has the meaning specified in Section 15.05(h)(1).

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

         "Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of

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any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. Subject to the
provisions of Section 15.06, however, shares issuable on conversion of Notes
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture (namely, the Common Stock, no par value) or shares
of any class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company; provided, however, that if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

         "Company" means the corporation named as the "Company" in the first
paragraph of this Indenture, and, subject to the provisions of Article Twelve,
shall include its successors and assigns.

         "Company Notice" has the meaning specified in Section 3.05(b).

         "Conversion Price" as of any day will equal $1,000 divided by the
Conversion Rate as of such date.

         "Conversion Rate" has the meaning specified in Section 15.04.

         "Corporate Trust Office" or other similar term, means the designated
office of the Trustee at which at any particular time its corporate trust
business as it relates to this Indenture shall be administered, which office is,
at the date as of which this Indenture is dated, located at 1650 Market Street,
Suite 5210, Philadelphia, Pennsylvania 19103, Attention: Institutional Trust
Services.

         "Custodian" means Chase Manhattan Trust Company, National Association,
as custodian with respect to the Notes in global form, or any successor entity
thereto.

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

         "Defaulted Interest" has the meaning specified in Section 2.03.

         "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.05(d) as the
Depositary

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with respect to such Notes, until a successor shall have been appointed and
become such pursuant to the applicable provisions of this Indenture, and
thereafter, "Depositary" shall mean or include such successor.

         "Designated Senior Indebtedness" means the Company's obligations under
any particular Senior Indebtedness in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes
of this Indenture (provided that such instrument, agreement or other document
may place limitations and conditions on the right of the creditor to exercise
the rights of Designated Senior Indebtedness).

         "Event of Default" means any event specified in Section 7.01(a), (b),
(c), (d) or (e).

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

         "Fundamental Change" means the occurrence of any transaction or event
in connection with which all or substantially all of the Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock that is (or, upon consummation of or immediately following such
transaction or event, which will be) listed on a United States national
securities exchange or approved (or, upon consummation of or immediately
following such transaction or event, which will be approved) for quotation on
the Nasdaq National Market or any similar United States system of automated
dissemination of quotations of securities prices.

         "Global Note" has the meaning set forth in Section 2.05(b).

         "Indebtedness" means, with respect to any Person, and without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of such Person for borrowed money (including obligations of the
Company in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof), other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of

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materials or services; (b) all reimbursement obligations and other liabilities
(contingent or otherwise) of such Person with respect to letters of credit, bank
guarantees or bankers' acceptances; (c) all obligations and liabilities
(contingent or otherwise) in respect of leases of such Person required, in
conformity with generally accepted accounting principles, to be accounted for as
capitalized lease obligations on the balance sheet of such Person and all
obligations and other liabilities (contingent or otherwise) under any lease or
related document (including a purchase agreement) in connection with the lease
of real property which provides that such Person is contractually obligated to
purchase or cause a third party to purchase the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor and the
obligations of such Person under such lease or related document to purchase or
to cause a third party to purchase such leased property; (d) all obligations of
such Person (contingent or otherwise) with respect to an interest rate or other
swap, cap or collar agreement or other similar instrument or agreement or
foreign currency hedge, exchange, purchase or similar instrument or agreement;
(e) all direct or indirect guaranties or similar agreements by such Person in
respect of, and obligations or liabilities (contingent or otherwise) of such
Person to purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of, indebtedness, obligations or liabilities of another Person
of the kind described in clauses (a) through (d); (f) any indebtedness or other
obligations described in clauses (a) through (e) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or held by
such Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person; and (g) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (f).

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

         "Initial Purchaser" means Morgan Stanley & Co. Incorporated.

         "Liquidated Damages" has the meaning specified for "Liquidated Damages
Amount" in Section 2(e) of the Registration Rights Agreement.

         "Non-Payment Default" has the meaning specified in Section 4.02(ii).

         "Note" or "Notes" means any Note or Notes, as the case may be,
authenticated and delivered under this Indenture, including the Global Note.

         "Note register" has the meaning specified in Section 2.05(a).

         "Note registrar" has the meaning specified in Section 2.05(a).

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         "Noteholder" or "holder" as applied to any Note, or other similar terms
(but excluding the term "beneficial holder"), means any Person in whose name at
the time a particular Note is registered on the Note registrar's books.

         "Notice Date" has the meaning specified in Section 3.01(c).

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

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

         "Optional Redemption" has the meaning specified in Section 3.01(c).

         "outstanding", when used with reference to Notes and subject to the
provisions of Section 9.04, means, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:

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

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

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

         (d)  Notes converted into Common Stock pursuant to Article Fifteen and
Notes deemed not outstanding pursuant to Article Three.

         "Payment Blockage Notice" has the meaning specified in Section
4.02(ii).

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

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         "Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.

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

         "premium" means any premium payable under the terms of the Notes,
including Additional Payments, if any, as defined in Section 3.01(b).

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

         "Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of August 15, 2001, among the Company and the Initial
Purchaser, as amended from time to time in accordance with its terms.

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

         "Responsible Officer", when used with respect to the Trustee, means an
officer of the Trustee in the Corporate Trust Office assigned and duly
authorized by the Trustee to administer this Indenture.

         "Restricted Securities" has the meaning specified in Section 2.05(d).

         "Rule 144A" means Rule 144A as promulgated under the Securities Act.

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

         "Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest

                                       7
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is allowable as a claim in any such proceeding) and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, Indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by the Company (including all deferrals, renewals,
extensions or refundings of, or amendments, modifications or supplements to, the
foregoing), unless in the case of any particular Indebtedness the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes or expressly provides that such Indebtedness is "pari passu" or "junior"
to the Notes. Notwithstanding the foregoing, the term Senior Indebtedness shall
not include any Indebtedness of the Company to any subsidiary of the Company, a
majority of the voting stock of which is owned, directly or indirectly, by the
Company.

         "Significant Subsidiary" means, as of any date of determination, a
Subsidiary of the Company, if as of such date of determination either (a) the
assets of such subsidiary equal 10% or more of the Company's total consolidated
assets or (b) the total revenue of which represented 10% or more of the
Company's consolidated total revenue for the most recently completed fiscal
year.

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

         "Trading Day" has the meaning specified in Section 15.05(h)(5).

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

         "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as it was in force at the date of this Indenture, except as provided in
Sections 11.03 and 15.06; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after the date hereof, the term "Trust
Indenture Act" shall mean, to the extent required by such amendment, the Trust
Indenture Act of 1939 as so amended.

         "Trustee" means Chase Manhattan Trust Company, National Association and
its successors and any corporation resulting from or surviving any

                                       8
<PAGE>

consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee hereunder.

         The definitions of certain other terms are as specified in Sections
2.05 and 3.05 and Article Fifteen.

                                          ARTICLE 2
      Issue, Description, Execution, Registration and Exchange of Notes

         Section 2.01. Designation Amount and Issue of Notes. The Notes shall be
designated as "5 1/4% Convertible Subordinated Notes due 2006". Notes not to
exceed the aggregate principal amount of $150,000,000 (except pursuant to
Sections 2.05, 2.06, 3.03, 3.05 and 15.02 hereof) upon the execution of this
Indenture, or from time to time thereafter, may be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by (a) its Chairman of the Board, Chief Executive Officer, President or
any Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) its Treasurer or
any Assistant Treasurer, its Controller or any Assistant Controller or its
Secretary or any Assistant Secretary, without any further action by the Company
hereunder.

         Section 2.02. Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.

         Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.

         Any Global Note shall represent such of the outstanding Notes as shall
be specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be increased or reduced to reflect transfers or exchanges permitted hereby. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee

                                       9
<PAGE>

or the Custodian, at the direction of the Trustee, in such manner and upon
instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any, on any
Global Note shall be made to the holder of such Note.

         The terms and provisions contained in the form of Note attached as
Exhibit A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.

         Section 2.03. Date and Denomination of Notes, Payments of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication and shall bear interest from the applicable
date in each case as specified on the face of the form of Note attached as
Exhibit A hereto. Interest on the Notes shall be computed on the basis of a
360-day year comprised of twelve (12) 30-day months.

         The Person in whose name any Note (or its Predecessor Note) is
registered on the Note register at the close of business on any record date with
respect to any interest payment date shall be entitled to receive the interest
payable on such interest payment date, except (i) that the interest payable upon
redemption (unless the date of redemption is an interest payment date) will be
payable to the Person to whom principal is payable and (ii) as set forth in the
next succeeding sentence. In the case of any Note (or portion thereof) that is
converted into Common Stock during the period from (but excluding) a record date
to (but excluding) the next succeeding interest payment date either (x) if such
Note (or portion thereof) has been called for redemption on a redemption date
which occurs during such period, or is to be redeemed in connection with a
Fundamental Change on a Repurchase Date (as defined in Section 3.05) that occurs
during such period, the Company shall not be required to pay interest on such
interest payment date in respect of any such Note (or portion thereof) except to
the extent required to be paid upon redemption of such Note or portion thereof
pursuant to Section 3.03 or 3.05 hereof or (y) if such Note (or portion thereof)
has not been called for redemption on a redemption date that occurs during such
period and is not to be redeemed in connection with a Fundamental Change on a
Repurchase Date that occurs during such period, such Note (or portion thereof)
that is submitted for conversion during such period shall be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted, as provided in the penultimate paragraph of
Section 15.02 hereof. Interest shall be payable at the office of the Company
maintained by the Company for such purposes in the Borough of Manhattan, City of
New York, which shall initially be an office or agency of the Trustee and may,
as the Company shall specify to the

                                       10
<PAGE>

paying agent in writing by each record date, be paid either (i) by check mailed
to the address of the Person entitled thereto as it appears in the Note register
(provided that the holder of Notes with an aggregate principal amount in excess
of $2,000,000 shall, at the written election of such holder, be paid by wire
transfer in immediately available funds) or (ii) by transfer to an account
maintained by such Person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee. The term
"record date" with respect to any interest payment date shall mean the February
1 or August 1 preceding the relevant February 15 or August 15, respectively.

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

          (1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a special record date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
to be paid on each Note and the date of the payment (which shall be not less
than twenty-five (25) days after the receipt by the Trustee of such notice,
unless the Trustee shall consent to an earlier date), and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate
amount to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Person entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall be not more than fifteen (15) days and
not less than ten (10) days prior to the date of the proposed payment, and not
less than ten (10) days after the receipt by the Trustee of the notice of the
proposed payment, the Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first-class postage prepaid, to each Noteholder at
his address as it appears in the Note register, not less than ten (10) days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the Notes
(or their respective Predecessor Notes) were registered at the close of business
on

                                       11
<PAGE>

such special record date and shall no longer be payable pursuant to the
following clause (2) of this Section 2.03.

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

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

         In case any officer of the Company who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.

         Section 2.05. Exchange and Registration of Transfer of Notes;
Restrictions on Transfer, Depositary. (a) The Company shall cause to be kept at
the Corporate Trust Office a register (the register maintained in such office
and in any other office or agency of the Company designated pursuant to Section
5.02 being herein sometimes collectively referred to as the "Note register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall

                                       12
<PAGE>

provide for the registration of Notes and of transfers of Notes. The Note
register shall be in written form or in any form capable of being converted into
written form within a reasonably prompt period of time. The Trustee is hereby
appointed "Note registrar" for the purpose of registering Notes and transfers of
Notes as herein provided. The Company may appoint one or more co-registrars in
accordance with Section 5.02.

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

         Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
Section 5.02. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Noteholder making the exchange is entitled to receive bearing registration
numbers not contemporaneously outstanding.

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

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

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

         Neither the Company nor the Trustee nor any Note registrar shall be
required to exchange or register a transfer of (a) any Notes for a period of
fifteen (15) days next preceding any selection of Notes to be redeemed, (b) any
Notes or portions thereof called for redemption pursuant to Section 3.02, (c)
any Notes or

                                       13
<PAGE>

portions thereof surrendered for conversion pursuant to Article Fifteen or (d)
any Notes or portions thereof tendered for redemption (and not withdrawn)
pursuant to Section 3.05.

          (b) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all of the Notes will be
represented by one or more Notes in global form registered in the name of the
Depositary or the nominee of the Depositary (the "Global Note"), except as
otherwise specified below. The transfer and exchange of beneficial interests in
any such Global Note shall be effected through the Depositary in accordance with
this Indenture and the procedures of the Depositary therefor. The Trustee shall
make appropriate endorsements to reflect increases or decreases in the principal
amounts of any such Global Note as set forth on the face of the Note ("Principal
Amount") to reflect any such transfers. Except as provided below, beneficial
owners of a Global Note shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders of such
Global Note.

          (c) Any Global Note may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Notes to be tradeable on The Portal Market or as may be required for the Notes
to be tradeable on any other market developed for trading of securities pursuant
to Rule 144A or required to comply with any applicable law or any regulation
thereunder or with the rules and regulations of any securities exchange or
automated quotation system upon which the Notes may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Notes are subject.

          (d) Every Note that bears or is required under this Section 2.05(d) to
bear the legend set forth in this Section (together with any Common Stock issued
upon conversion of the Notes and required to bear the legend set forth in
Section 2.05(e), collectively, the "Restricted Securities") shall be subject to
the restrictions on transfer set forth in this Section 2.05(d) (including those
set forth in the legend set forth below) unless such restrictions on transfer
shall be waived by written consent of the Company, and the holder of each such
Restricted Security, by such Noteholder's acceptance thereof, agrees to be bound
by all such restrictions on transfer. As used in Sections 2.05(d) and 2.05(e),
the term "transfer" encompasses any sale, pledge, loan, transfer or other
disposition whatsoever of any Restricted Security.

         Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate

                                       14
<PAGE>

evidencing such Note (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.05(e), if
applicable) shall bear a legend in substantially the following form, unless such
Note has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer), or unless otherwise agreed by the Company in writing,
with written notice thereof to the Trustee:

         THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
         THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
         (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
         AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS
         SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
         HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
         "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
         UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT,
         PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
         SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K)
         UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
         RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY
         OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
         NOTE EXCEPT (A) TO KULICKE AND SOFFA INDUSTRIES, INC. OR
         ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
         BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
         ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
         PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
         AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT
         WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
         ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
         SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A
         TRANSFER PURSUANT TO CLAUSE (2)(D) ABOVE), IT WILL
         FURNISH TO CHASE MANHATTAN TRUST COMPANY, NATIONAL
         ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
         APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
         OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE
         TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
         AN EXEMPTION FROM, OR IN A TRANSACTION NOT

                                       15
<PAGE>

         SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
         SECURITIES ACT; AND (4) AGREES THAT IT WILL DELIVER TO
         EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
         TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
         LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE
         EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING
         PERIOD APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY
         UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
         SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
         APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
         TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
         CERTIFICATE TO CHASE MANHATTAN TRUST COMPANY, NATIONAL
         ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
         APPLICABLE). THIS LEGEND WILL BE REMOVED UPON THE
         EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY
         PURSUANT TO CLAUSE (2)(D) ABOVE OR UPON ANY TRANSFER OF
         THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
         SECURITIES ACT (OR ANY SUCCESSOR PROVISION).

         Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance with
their terms or as to conditions for removal of the foregoing legend set forth
therein have been satisfied may, upon surrender of such Note for exchange to the
Note registrar in accordance with the provisions of this Section 2.05, be
exchanged for a new Note or Notes, of like tenor and aggregate principal amount,
which shall not bear the restrictive legend required by this Section 2.05(d).

         Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.05(c) and in this
Section 2.05(d)), a Global Note may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.

         The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Notes in global form. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co.

                                       16
<PAGE>

     If at any time the Depositary for a Global Note notifies the Company that
it is unwilling or unable to continue as Depositary for such Note, the Company
may appoint a successor Depositary with respect to such Note. If a successor
Depositary is not appointed by the Company within ninety (90) days after the
Company receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for the authentication and delivery of
Notes, will authenticate and deliver, Notes in certificated form, in aggregate
principal amount equal to the principal amount of such Global Note, in exchange
for such Global Note.

     Notes in certificated form issued in exchange for a Global Note pursuant to
this Section  shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. Upon execution
and authentication, the Trustee shall deliver such Notes in certificated form to
the Persons in whose names such Notes in certificated form are so registered.

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

     (e)  Until the expiration of the holding period applicable to sales thereof
     under Rule 144(k) under the Securities Act (or any successor provision),
     any stock certificate representing Common Stock issued upon conversion of
     any Note shall bear a legend in substantially the following form, unless
     such Common Stock has been sold pursuant to a registration statement that
     has been declared effective under the Securities Act (and which continues
     to be effective at the time of such transfer) or such Common Stock has been
     issued upon conversion of Notes that have been transferred pursuant to a
     registration statement that has been declared effective under the
     Securities Act, or unless otherwise agreed by the Company in writing with
     written notice thereof to the transfer agent:

          THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
          UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
          ACT"), OR ANY STATE SECURITIES LAWS,

                                      17
<PAGE>

          AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN
          THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT, UNTIL THE
          EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE COMMON
          STOCK EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
          ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER
          THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO KULICKE AND SOFFA
          INDUSTRIES, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A "QUALIFIED
          INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
          ACT) IN COMPLIANCE WITH RULE 144A, (C) PURSUANT TO THE EXEMPTION FROM
          REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
          AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
          DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
          EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO SUCH TRANSFER
          (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (1)(D) ABOVE), IT WILL
          FURNISH TO AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS TRANSFER
          AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH
          CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRANSFER
          AGENT 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; AND (3) IT
          WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY
          IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (1)(D) ABOVE)
          A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL
          BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK
          EVIDENCED HEREBY PURSUANT TO CLAUSE (1)(C) ABOVE OR UPON ANY TRANSFER
          OF THE COMMON STOCK EVIDENCED HEREBY AFTER THE EXPIRATION OF THE
          HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
          UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
          PROVISION).

                                      18
<PAGE>

     Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.05(e).

     (f)  Any Note or Common Stock issued upon the conversion or exchange of a
Note that, prior to the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
is purchased or owned by the Company or any Affiliate thereof may not be resold
by the Company or such Affiliate unless registered under the Securities Act or
resold pursuant to an exemption from the registration requirements of the
Securities Act in a transaction which results in such Notes or Common Stock, as
the case may be, no longer being "restricted securities" (as defined under Rule
144).

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

     Following receipt by the Trustee or such authenticating agent, as the case
may be, of satisfactory security or indemnity and evidence, as described in the
preceding paragraph, the Trustee or such authenticating agent may authenticate
any such substituted Note and make available for delivery such Note. Upon the
issuance of any substituted Note, the Company may require the payment by the
holder of a sum sufficient to cover any tax, assessment or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature or has been
called for redemption or has been tendered for redemption (and not withdrawn) or
is to be converted into Common Stock shall become mutilated or be destroyed,

                                      19
<PAGE>

lost or stolen, the Company may, instead of issuing a substitute 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 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 such authenticating agent such
security or indemnity as may be required by them to save each of them harmless
for any loss, liability, cost or expense caused by or connected with such
substitution, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Company, the Trustee and, if applicable, any paying
agent or conversion agent evidence to their satisfaction of the destruction,
loss or theft of such Note and of the ownership thereof.

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

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

                                      20
<PAGE>

exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as Notes in
certificated form authenticated and delivered hereunder.

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

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

                                   ARTICLE 3
                              Redemption of Notes

     Section 3.01. Redemption of Notes. (a) Initial Prohibition on Redemption.
Except as otherwise provided in Section 3.01 (b) and Section 3.05, the Notes may
not be redeemed by the Company, in whole or in part, at any time prior to August
19, 2004.

     (b)  Provisional Redemption by the Company. The Notes may be redeemed by
the Company, in whole or in part, at any time prior to August 19, 2004 (a
"Provisional Redemption"), upon notice as set forth in Section , at a redemption
price equal to $1,000 per $1,000 aggregate principal amount of Notes to be
redeemed (the "Provisional Redemption Date") if the Closing Price of the Common
Stock shall have exceeded 150% of the Conversion Price then in effect for at
least 20 Trading Days in any consecutive 30-Trading Day period and if the
redemption would occur before August 15, 2003, the Shelf Registration

                                      21
<PAGE>

Statement (as defined in the Registration Rights Agreement) covering resales of
the Notes, and the Common Stock issuable upon conversion of the Notes, is
effective and available for use and is expected to remain effective and
available for use until the 30/th/ day immediately following the Provisional
Redemption Date.

     Upon any such Provision Redemption, the Company shall make an additional
payment (the "Additional Payment") with respect to the Notes called for
redemption to holders as of the Notice Date in an amount equal to the total
aggregate amount of interest (including Liquidated Damages, if any) otherwise
payable on the Notes from the last day through which interest was paid or duly
provided for on the Notes, or August 15, 2001 if no interest has been paid or
duly provided for, through August 19, 2004.  The Company shall make the
Additional Payment on all Notes called for Provisional Redemption, including any
Notes converted into Common Stock pursuant to the terms hereof after the Notice
Date and prior to the Provisional Redemption Date.

     (c)  Optional Redemption by the Company. At any time on or after August 19,
2004, and prior to maturity, the Notes may be redeemed at the option of the
Company, in whole or in part, upon notice as set forth in Section 3.02, at the
following redemption prices (expressed as percentages of the principal amount),
together in each case with accrued and unpaid interest, if any (including
Liquidated Damages, if any) to, but excluding, the date fixed for redemption:

                                                                     Redemption
Period                                                                  Price
--------------------------------------------------------------------------------
Beginning on August 19, 2004 and ending on August 14, 2005..........   102.100%

Beginning on August 15, 2005 and ending on August 14, 2006..........   101.050%

and 100% on August 15, 2006; provided, however, that if the date fixed for
redemption is on a February 15 or August 15, then the interest payable on such
date shall be paid to the holder of record on the preceding February 1 or August
1, respectively.

     Section 3.02.  Notice of Redemptions, Selection of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section , it shall fix a date for redemption
and it or, at its written request received by the Trustee not fewer than forty-
five (45) days prior (or such shorter period of time as may be acceptable to the
Trustee) to the date fixed for redemption, the Trustee in the name of and at the
expense of the Company, shall mail or cause to be mailed a notice of such
redemption not fewer than thirty (30) nor more than sixty (60) days prior to the
date fixed for redemption to the holders of Notes so to be redeemed as a whole
or in part at their last addresses as the same appear on the Note register;
provided,

                                      22
<PAGE>

however, that if the Company shall give such notice, it shall also give written
notice, and written notice of the Notes to be redeemed, to the Trustee. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Note designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Note. Concurrently with the mailing
of any such notice of redemption, the Company shall issue a press release
announcing such redemption, the form and content of which press release shall be
determined by the Company in its sole discretion. The failure to issue any such
press release or any defect therein shall not affect the validity of the
redemption notice or any of the proceedings for the redemption of any Note
called for redemption.

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

     On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.02, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
5.04) an amount of money in immediately available funds sufficient to redeem on
the redemption date all the Notes (or portions thereof) so called for redemption
(other than those theretofore surrendered for conversion into Common Stock) at
the appropriate redemption price and the Additional Payment, if any, together,
except in the case of a Provisional Redemption, with accrued interest to, but
excluding, the date fixed for redemption; provided, however, that if such
payment is made on the redemption date it must be received by the Trustee or
paying agent, as the case may be, by 10:00 a.m. New York City time on such date.
The Company shall be

                                      23
<PAGE>

entitled to retain any interest, yield or gain on amounts deposited with the
Trustee or any paying agent pursuant to this Section 3.02 in excess of amounts
required hereunder to pay the redemption price and the Additional Payment, if
any, together, except in the case of a Provisional Redemption, with accrued
interest to, but excluding, the date fixed for redemption. If any Note called
for redemption is converted pursuant hereto prior to such redemption, any money
deposited with the Trustee or any paying agent or so segregated and held in
trust for the redemption of such Note shall be paid to the Company upon its
written request, or, if then held by the Company, shall be discharged from such
trust. Whenever any Notes are to be redeemed, the Company will give the Trustee
written notice in the form of an Officers' Certificate not fewer than forty-five
(45) days (or such shorter period of time as may be acceptable to the Trustee)
prior to the redemption date as to the aggregate principal amount of Notes to be
redeemed.

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

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

     Section 3.03.  Payment of Notes Called for Redemption. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date fixed for
redemption and at the place or places stated in such notice at the applicable
redemption price and the Additional Payment, if any, together, except in the
case of a Provisional Redemption, with interest accrued to (but excluding) the
date fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price and the Additional
Payment,

                                      24
<PAGE>

if any, together, except in the case of a Provisional Redemption, with interest
accrued to said date) interest on the Notes or portion of Notes so called for
redemption shall cease to accrue and, after the close of business on the
Business Day next preceding the date fixed for redemption, such Notes shall
cease to be convertible into Common Stock and, except as provided in Sections
8.05 and 13.04, to be entitled to any benefit or security under this Indenture,
and the holders thereof shall have no right in respect of such Notes except the
right to receive the redemption price thereof and the Additional Payment, if
any, and, except in the case of a Provisional Redemption, unpaid interest to
(but excluding) the date fixed for redemption. On presentation and surrender of
such Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price and the Additional Payment, if any, together, except
in the case of a Provisional Redemption, with interest accrued thereon to (but
excluding) the date fixed for redemption; provided, however, that if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.

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

         Notwithstanding the foregoing, the Trustee shall not redeem any Notes
or mail any notice of redemption during the continuance of a default in payment
of interest or premium, if any, on the Notes. If any Note called for redemption
shall not be so paid upon surrender thereof for redemption, the principal and
premium, if any, shall, until paid or duly provided for, bear interest from the
date fixed for redemption at the rate borne by the Note and such Note shall
remain convertible into Common Stock until the principal and premium, if any,
and interest shall have been paid or duly provided for.

         Section 3.04. Conversion Arrangement on Call for Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more investment
bankers or other purchasers to purchase such Notes by paying to the Trustee in
trust for the Noteholders, on or before the date fixed for redemption, an amount
not less than the applicable redemption price and the Additional Payment, if
any, together, except in the case of a Provisional Redemption, with interest
accrued to (but excluding) the date fixed for redemption, of such Notes.
Notwithstanding anything to the contrary contained in this Article Three, the

                                       25
<PAGE>

obligation of the Company to pay the redemption price of such Notes and the
Additional Payment, if any, together, except in the case of a Provisional
Redemption with interest accrued to (but excluding) the date fixed for
redemption, shall be deemed to be satisfied and discharged to the extent such
amount is so paid by such purchasers. If such an agreement is entered into, a
copy of which will be filed with the Trustee prior to the date fixed for
redemption, any Notes not duly surrendered for conversion by the holders thereof
may, at the option of the Company, be deemed, to the fullest extent permitted by
law, acquired by such purchasers from such holders and (notwithstanding anything
to the contrary contained in Article Fifteen) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the date
fixed for redemption (and the right to convert any such Notes shall be extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Notes shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture.

         Section 3.05. Redemption at Option of Holders. (a) If there shall occur
a Fundamental Change at any time prior to maturity of the Notes, then each
Noteholder shall have the right, at such holder's option, to require the Company
to redeem all of such holder's Notes, or any portion thereof that is an integral
multiple of $1,000 principal amount, on the date (the "Repurchase Date") that is
thirty (30) days after the date of the Company Notice (as defined in Section
3.05(b) below) of such Fundamental Change (or, if such 30th day is not a
Business Day, the next succeeding Business Day) at a redemption price equal to
100% of the principal amount thereof, together with accrued interest to (but
excluding) the Repurchase Date; provided, however, that, if such Repurchase Date
is a February 15 or August 15, then the interest payable on such date shall be
paid to the holders of record of the Notes on the next preceding February 1 or
August 1, respectively.

         Upon presentation of any Note redeemed in part only, the Company shall
execute and, upon the Company's written direction to the Trustee, the Trustee
shall authenticate and deliver to the holder thereof, at the expense of the
Company, a new Note or Notes, of authorized denominations, in principal amount
equal to the unredeemed portion of the Notes so presented.

         (b)  On or before the tenth day after the occurrence of a Fundamental
Change, the Company or at its written request (which must be received by the
Trustee at least five (5) Business Days prior to the date the Trustee is
requested to give notice as described below, unless the Trustee shall agree in
writing to a

                                       26
<PAGE>

shorter period), the Trustee, in the name of and at the expense of the Company,
shall mail or cause to be mailed to all holders of record on the date of the
Fundamental Change a notice (the "Company Notice") of the occurrence of such
Fundamental Change and of the redemption right at the option of the holders
arising as a result thereof. Such notice shall be mailed in the manner and with
the effect set forth in the first paragraph of Section 3.02 (without regard for
the time limits set forth therein). If the Company shall give such notice, the
Company shall also deliver a copy of the Company Notice to the Trustee at such
time as it is mailed to Noteholders. Concurrently with the mailing of any
Company Notice, the Company shall issue a press release announcing such
Fundamental Change referred to in the Company Notice, the form and content of
which press release shall be determined by the Company in its sole discretion.
The failure to issue any such press release or any defect therein shall not
affect the validity of the Company Notice or any proceedings for the redemption
of any Note which any Noteholder may elect to have the Company redeem as
provided in this Section 3.05.

         Each Company Notice shall specify the circumstances constituting the
Fundamental Change, the Repurchase Date, the price at which the Company shall be
obligated to redeem Notes, that the holder must exercise the redemption right on
or prior to the close of business on the Repurchase Date (the "Fundamental
Change Expiration Time"), that the holder shall have the right to withdraw any
Notes surrendered prior to the Fundamental Change Expiration Time, a description
of the procedure which a Noteholder must follow to exercise such redemption
right and to withdraw any surrendered Notes, the place or places where the
holder is to surrender such holder's Notes, the amount of interest accrued on
each Note to the Repurchase Date and the "CUSIP" number or numbers of the Notes
(if then generally in use).

         No failure of the Company to give the foregoing notices and no defect
therein shall limit the Noteholders' redemption rights or affect the validity of
the proceedings for the redemption of the Notes pursuant to this Section 3.05.

         (c)  For a Note to be so redeemed at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time. All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Note for repayment shall be determined by the Company, whose determination shall
be final and binding absent manifest error.

                                       27
<PAGE>

         (d)  On or prior to the Repurchase Date, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.04) an amount of money sufficient to redeem on the Repurchase Date all
the Notes to be redeemed on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided,
however, that if such payment is made on the Repurchase Date it must be received
by the Trustee or paying agent, as the case may be, by 10:00 a.m. New York City
time, on such date. Payment for Notes surrendered for redemption (and not
withdrawn) prior to the Fundamental Change Expiration Time will be made promptly
(but in no event more than five (5) Business Days) following the Repurchase Date
by mailing checks for the amount payable to the holders of such Notes entitled
thereto as they shall appear on the registry books of the Company.

         (e)  In the case of a reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 15.06 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 shares of common stock of
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 or
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 which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture (accompanied
by an Opinion of Counsel that such supplemental indenture complies with the
Trust Indenture Act 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 the Notes to cause the Company to repurchase the Notes following a
Fundamental Change, including without limitation the applicable provisions of
this Section 3.05 and the definitions of Common Stock and Fundamental Change, as
appropriate, as determined in good faith by the Company (which determination
shall be conclusive and binding), to make such provisions apply to such other
Person if different from the Company and the common stock issued by such Person
(in lieu of the Company and the Common Stock of the Company).

         (f)  The Company will comply with the provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act to the extent then applicable in
connection with the redemption rights of the holders of Notes in the event of a
Fundamental Change.

                                       28
<PAGE>

                                   ARTICLE 4
                            Subordination of Notes

         Section 4.01. Agreement of Subordination. The Company covenants and
agrees, and each holder of Notes issued hereunder by its acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article Four, and each Person holding any Note, whether upon
original issue or upon registration of transfer, assignment or exchange thereof,
accepts and agrees to be bound by such provisions.

         The payment of the principal of, premium, if any, and interest
(including Liquidated Damages, if any) on all Notes (including, but not limited
to, the redemption price with respect to the Notes called for redemption in
accordance with Section 3.02 or submitted for redemption in accordance with
Section 3.05, as the case may be, as provided in this Indenture) issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred.

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

         Section 4.02. Payments to Noteholders. No payment shall be made with
respect to the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on the Notes (including, but not limited to, the redemption
price with respect to the Notes to be called for redemption in accordance with
Section 3.02 or submitted for redemption in accordance with Section 3.05, as the
case may be, as provided in this Indenture), except payments and distributions
made by the Trustee as permitted by the first or second paragraph of Section
4.05, if:

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

                    (ii) a default, other than a Payment Default, on any
         Designated Senior Indebtedness occurs and is continuing that then
         permits holders of such Designated Senior Indebtedness to accelerate
         its maturity (or in the

                                       29
<PAGE>

         case of any lease, a default occurs and is continuing that permits the
         lessor to either terminate the lease or require the Company to make an
         irrevocable offer to terminate the lease following an event of default
         thereunder) and the Trustee receives a notice of the default (a
         "Payment Blockage Notice") from a holder of Designated Senior
         Indebtedness, a Representative of Designated Senior Indebtedness or the
         Company (a "Non-Payment Default").

         If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section 4.02 unless and until at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice. No Non-Payment Default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.

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

              (1) the date upon which any such Payment Default is cured or
         waived or ceases to exist, or

              (2) in the case of a Non-Payment Default, the earlier of (a) the
         date upon which such default is cured or waived or ceases to exist or
         (b) 179 days after the applicable Payment Blockage Notice is received
         by the Trustee if the maturity of such Designated Senior Indebtedness
         has not been accelerated (or in the case of any lease, 179 days after
         notice is received if the Company has not received notice that the
         lessor under such lease has exercised its right to terminate the lease
         or require the Company to make an irrevocable offer to terminate the
         lease following an event of default thereunder), unless this Article
         Four otherwise prohibits the payment or distribution at the time of
         such payment or distribution.

         Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, or payment thereof in
accordance with its terms provided for in cash or other payment satisfactory to
the holders of such Senior Indebtedness before any payment is made on account of
the principal of, premium, if any, or interest (including Liquidated Damages, if
any) on the Notes (except payments made pursuant to Article Thirteen from monies
deposited with

                                       30
<PAGE>

the Trustee pursuant thereto prior to commencement of proceedings for such
dissolution, winding up, liquidation or reorganization), and upon any such
dissolution or winding up or liquidation or reorganization of the Company or
bankruptcy, insolvency, receivership or other similar proceeding, any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Notes or
the Trustee would be entitled, except for the provisions of this Article Four,
shall (except as aforesaid) be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Notes or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, or as otherwise required by law or a
court order) or their Representative or Representatives, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full, in cash or other payment satisfactory to the holders of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness, before any payment or distribution is
made to the holders of the Notes or to the Trustee.

         For purposes of this Article Four, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Four with
respect to the Notes to the payment of all Senior Indebtedness which may at the
time be outstanding provided that (i) the Senior Indebtedness is assumed by the
new corporation, if any, resulting from any reorganization or readjustment, and
(ii) the rights of the holders of Senior Indebtedness (other than leases which
are not assumed by the Company or the new corporation, as the case may be) are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another Person upon the terms and conditions
provided for in Article Twelve shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 4.02 if such
other Person shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Twelve.

         In the event of the acceleration of the Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on the Notes (including, but not limited to, the

                                       31
<PAGE>

redemption price with respect to the Notes called for redemption in accordance
with Section 3.02 or submitted for redemption in accordance with Section 3.05,
as the case may be, as provided in this Indenture), except payments and
distributions made by the Trustee as permitted by the first or second paragraph
of Section 4.05, until all Senior Indebtedness has been paid in full in cash or
other payment satisfactory to the holders of Senior Indebtedness or such
acceleration is rescinded in accordance with the terms of this Indenture. If
payment of the Notes is accelerated because of an Event of Default, the Company
or the Trustee shall promptly notify holders of Senior Indebtedness of the
acceleration.

         In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing provisions in this Section
4.02, shall be received by the Trustee or the holders of the Notes before all
Senior Indebtedness is paid in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness, or provision is made for such payment
thereof in accordance with its terms in cash or other payment satisfactory to
the holders of such Senior Indebtedness, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness or their Representative or Representatives, as
their respective interests may appear, as calculated by the Company, for
application to the payment of any Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.

         Nothing in this Section 4.02 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 8.06. This Section 4.02 shall be
subject to the further provisions of Section 4.05.

         Section 4.03. Subrogation of Notes. Subject to the payment in full of
all Senior Indebtedness, the rights of the holders of the Notes shall be
subrogated to the extent of the payments or distributions made to the holders of
such Senior Indebtedness pursuant to the provisions of this Article Four
(equally and ratably with the holders of all indebtedness of the Company which
by its express terms is subordinated to other indebtedness of the Company to
substantially the same extent as the Notes are subordinated and is entitled to
like rights of subrogation) to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the principal, premium, if
any, and interest (including Liquidated Damages, if any) on the Notes shall be
paid in full, and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the holders of the

                                       32
<PAGE>

Notes or the Trustee would be entitled except for the provisions of this Article
Four, and no payment pursuant to the provisions of this Article Four, to or for
the benefit of the holders of Senior Indebtedness by holders of the Notes or the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the holders of the Notes, be deemed to be a payment by the
Company to or on account of the Senior Indebtedness, and no payments or
distributions of cash, property or securities to or for the benefit of the
holders of the Notes pursuant to the subrogation provisions of this Article
Four, which would otherwise have been paid to the holders of Senior
Indebtedness, shall be deemed to be a payment by the Company to or for the
account of the Notes. It is understood that the provisions of this Article Four
are intended solely for the purposes of defining the relative rights of the
holders of the Notes, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.

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

         Upon any payment or distribution of assets of the Company referred to
in this Article Four, the Trustee, subject to the provisions of Section 8.01,
and the holders of the Notes shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the holders of the Notes, for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article Four.

         Section 4.04. Authorization to Effect Subordination. Each holder of a
Note by the holder's acceptance thereof authorizes and directs the Trustee on
the holder's behalf to take such action as may be necessary or appropriate to

                                       33
<PAGE>

effectuate the subordination as provided in this Article Four and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.02 hereof at least thirty (30) days before the expiration of the time to file
such claim, the holders of any Senior Indebtedness or their Representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Notes.

         Section 4.05. Notice to Trustee. The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article Four.
Notwithstanding the provisions of this Article Four or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Notes pursuant to the provisions of this Article
Four, unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a holder or holders of
Senior Indebtedness, and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 8.01, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if on a
date not less than one Business Day prior to the date upon which by the terms
hereof any such monies may become payable for any purpose (including, without
limitation, the payment of the principal of, or premium, if any, or interest
(including Liquidated Damages, if any) on any Note) the Trustee shall not have
received, with respect to such monies, the notice provided for in this Section
4.05, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to apply monies received to the
purpose for which they were received, and shall not be affected by any notice to
the contrary that may be received by it on or after such prior date.

         Notwithstanding anything in this Article Four to the contrary, nothing
shall prevent any payment by the Trustee to the Noteholders of monies deposited
with it pursuant to Section 13.01, if a Responsible Officer of the Trustee shall
not have received written notice at the Corporate Trust Office on or before one
Business Day prior to the date such payment is due that such payment is not
permitted under Section 4.01 or 4.02.

         The Trustee, subject to the provisions of Section 8.01, shall be
entitled to rely on the delivery to it of a written notice by a Representative
or a person representing himself to be a holder of Senior Indebtedness (or a
trustee on behalf of such holder) to establish that such notice has been given
by a Representative or

                                       34
<PAGE>

a holder of Senior Indebtedness or a trustee on behalf of any such holder or
holders. The Trustee shall not be required to make any payment or distribution
to or on behalf of a holder of Senior Indebtedness pursuant to this Article Four
unless it has received satisfactory evidence as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Four.

         Section 4.06. Trustee's Relation to Senior Indebtedness. The Trustee,
in its individual capacity, shall be entitled to all the rights set forth in
this Article Four in respect of any Senior Indebtedness at any time held by it,
to the same extent as any other holder of Senior Indebtedness, and nothing in
Section 8.13 or elsewhere in this Indenture shall deprive the Trustee of any of
its rights as such holder.

         With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Four, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.01, the Trustee shall not be liable to any holder of
Senior Indebtedness (i) for any failure to make any payments or distributions to
such holder or (ii) if it shall pay over or deliver to holders of Notes, the
Company or any other Person money in compliance with this Article Four.

         Section 4.07. No Impairment of Subordination. No right of any present
or future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with. Senior
Indebtedness may be created, renewed or extended and holders of Senior
Indebtedness may exercise any rights under any instrument creating or evidencing
such Senior Indebtedness, including, without limitation, any waiver of default
thereunder, without any notice to or consent from the holders of the Notes or
the Trustee. No compromise, alteration, amendment, modification, extension,
renewal or other change of, or waiver, consent or other action in respect of,
any liability or obligation under or in respect of the Senior Indebtedness or
any terms or conditions of any instrument creating or evidencing such Senior
Indebtedness shall in any way alter or affect any of the provisions of this
Article Four or the subordination of the Notes provided thereby.

                                       35
<PAGE>

         Section 4.08. Certain Conversions Not Deemed Payment. For the purposes
of this Article Four only, (1) the issuance and delivery of junior securities
upon conversion of Notes in accordance with Article Fifteen shall not be deemed
to constitute a payment or distribution on account of the principal of, premium,
if any, or interest (including Liquidated Damages, if any) on Notes or on
account of the purchase or other acquisition of Notes, and (2) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 15.03), property or securities (other than junior
securities) upon conversion of a Note shall be deemed to constitute payment on
account of the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on such Note. For the purposes of this Section 4.08, the term
"junior securities" means (a) shares of any stock of any class of the Company or
(b) securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article Four. Nothing
contained in this Article Four or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company, its creditors (other than
holders of Senior Indebtedness) and the Noteholders, the right, which is
absolute and unconditional, of the Holder of any Note to convert such Note in
accordance with Article Fifteen.

         Section 4.09. Article Applicable to Paying Agents. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article Four shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article Four in addition to
or in place of the Trustee; provided, however, that the first paragraph of
Section 4.05 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as paying agent.

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

         Section 4.10. Senior Indebtedness Entitled to Rely. The holders of
Senior Indebtedness shall have the right to rely upon this Article Four, and no
amendment or modification of the provisions contained herein shall diminish the
rights of such holders unless such holders shall have agreed in writing thereto.

         Section 4.11. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article Four, the Trustee and the Noteholders shall be entitled to rely
upon any order or decree entered by any court of competent jurisdiction in which
such

                                       36
<PAGE>

insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Noteholders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Four.

                                   ARTICLE 5
                      Particular Covenants of the Company

         Section 5.01. Payment of Principal, Premium and Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article Three), and interest (including Liquidated
Damages, if any), on each of the Notes at the places, at the respective times
and in the manner provided herein and in the Notes.

         Section 5.02. Maintenance of Office or Agency. The Company will
maintain an office or agency in the Borough of Manhattan, the City of New York,
where the Notes may be surrendered for registration of transfer or exchange or
for presentation for payment or for conversion or redemption and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency not
designated or appointed by the Trustee. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office or the office of agency of
the Trustee in The Borough of Manhattan, c/o The Chase Manhattan Bank, 55 Water
Street, 2/nd/ Floor, New York, New York 10041, Attention: Securities Window.

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

         The Company hereby initially designates the Trustee as paying agent,
Note registrar, Custodian and conversion agent and each of the Corporate Trust
Office

                                       37
<PAGE>

and the office of agency of the Trustee in The Borough of Manhattan, c/o The
Chase Manhattan Bank, 55 Water Street, 2/nd/ Floor, New York, New York 10041,
Attention: Securities Window, shall be considered as one such office or agency
of the Company for each of the aforesaid purposes.

         So long as the Trustee is the Note registrar, the Trustee agrees to
mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11. If co-registrars have been appointed in
accordance with this Section, the Trustee shall mail such notices only to the
Company and the holders of Notes it can identify from its records.

         Section 5.03. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.

         Section 5.04. Provisions as to Paying Agent. (a) If the Company shall
appoint a paying agent other than the Trustee, or if the Trustee shall appoint
such a paying agent, the Company will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 5.04:

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

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

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

         The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a sum
(in funds which are immediately available on the due date for such payment)
sufficient to pay such principal, premium, if any, or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action; provided, however, that if such deposit is made on
the

                                       38
<PAGE>

due date, such deposit shall be received by the paying agent by 10:00 a.m. New
York City time, on such date.

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

          (c) Anything in this Section 5.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 5.04, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.

          (d) Anything in this Section 5.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.04 is subject to
Sections 13.03 and 13.04.

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

          Section 5.05. Existence. Subject to Article Twelve, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its existence and rights (charter and statutory); provided, however,
that the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Noteholders.

          Section 5.06. Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so

                                       39
<PAGE>

that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
subsidiary and not disadvantageous in any material respect to the Noteholders.

         Section 5.07. Payment of Taxes and Other Claims. The Company will pay
or discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Significant Subsidiary
and (iii) all stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection with
the issuance, transfer, exchange or conversion of any Notes or with respect to
this Indenture; provided, however, that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(B) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.

         Section 5.08. Rule 144A Information Requirement. Within the period
prior to the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof
which continue to be Restricted Securities in connection with any sale thereof
and any prospective purchaser of Notes or such Common Stock designated by such
holder or beneficial holder, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any holder or beneficial
holder of the Notes or such Common Stock and it will take such further action as
any holder or beneficial holder of such Notes or such Common Stock may
reasonably request, all to the extent required from time to time to enable such
holder or beneficial holder to sell its Notes or Common Stock without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144A, as such Rule may be amended from time to time. Upon the
request of any holder or any beneficial holder of the Notes or such Common
Stock, the Company will deliver to such holder a written statement as to whether
it has complied with such requirements.

                                       40
<PAGE>

         Section 5.09. Stay, Extension and Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of, premium,
if any, or interest (including Liquidated Damages, if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.

         Section 5.10. Compliance Certificate. The Company shall deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.

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

         Any notice required to be given under this Section 5.10 or Section 4.05
shall be delivered to a Responsible Officer of the Trustee at its Corporate
Trust Office. In the event that the payment of the Notes is accelerated because
of an Event of Default, the Company shall promptly provide written notice to the
Trustee specifying the names and addresses of the holders of Senior Indebtedness
if the Trustee (and not the Company) is to provide holders of Senior
Indebtedness notice of such acceleration under Section 4.05 of the Indenture.

         Section 5.11. Liquidated Damages Notice. In the event that the Company
is required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Agreement, the Company will provide written notice
("Liquidated Damages Notice") to the Trustee of its obligation to pay Liquidated

                                       41
<PAGE>

     Damages no later than fifteen days prior to the proposed payment date for
     the Liquidated Damages, and the Liquidated Damages Notice shall set forth
     the amount of Liquidated Damages to be paid by the Company on such payment
     date. The Trustee shall not at any time be under any duty to responsibility
     to any holder of Notes to determine the Liquidated Damages, or with respect
     to the nature, extent or calculation of the amount of Liquidated Damages
     when made, or with respect to the method employed in such calculation of
     the Liquidated Damages.

                                   ARTICLE 6
         Noteholders' Lists and Reports by the Company and the Trustee

          Section 6.01.  Noteholders' Lists. The Company covenants and agrees
     that it will furnish or cause to be furnished to the Trustee, semiannually,
     not more than fifteen (15) days after each February 1 and August 1 in each
     year beginning with February 1, 2002, and at such other times as the
     Trustee may request in writing, within thirty (30) days after receipt by
     the Company of any such request (or such lesser time as the Trustee may
     reasonably request in order to enable it to timely provide any notice to be
     provided by it hereunder), a list in such form as the Trustee may
     reasonably require of the names and addresses of the holders of Notes as of
     a date not more than fifteen (15) days (or such other date as the Trustee
     may reasonably request in order to so provide any such notices) prior to
     the time such information is furnished, except that no such list need be
     furnished by the Company to the Trustee so long as the Trustee is acting as
     the sole Note registrar.

          Section 6.02.  Preservation and Disclosure of Lists. (a) The Trustee
     shall preserve, in as current a form as is reasonably practicable, all
     information as to the names and addresses of the holders of Notes contained
     in the most recent list furnished to it as provided in Section 6.01 or
     maintained by the Trustee in its capacity as Note registrar or co-registrar
     in respect of the Notes, if so acting. The Trustee may destroy any list
     furnished to it as provided in Section 6.01 upon receipt of a new list so
     furnished.

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

          (c)  Every Noteholder, by receiving and holding the same, agrees with
     the Company and the Trustee that neither the Company nor the Trustee nor
     any agent of either of them shall be held accountable by reason of any
     disclosure of

                                       42
<PAGE>

     information as to names and addresses of holders of Notes made pursuant to
     the Trust Indenture Act.

          Section 6.03.  Reports by Trustee. (a) Within sixty (60) days after
     June 1 of each year commencing with the year 2002, the Trustee shall
     transmit to holders of Notes such reports dated as of June 1 of the year in
     which such reports are made concerning the Trustee and its actions under
     this Indenture as may be required pursuant to the Trust Indenture Act at
     the times and in the manner provided pursuant thereto.

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

          Section 6.04.  Reports by Company. The Company shall file with the
     Trustee (and the Commission if at any time after the Indenture becomes
     qualified under the Trust Indenture Act), and transmit to holders of Notes,
     such information, documents and other reports and such summaries thereof,
     as may be required pursuant to the Trust Indenture Act at the times and in
     the manner provided pursuant to such Act, whether or not the Notes are
     governed by such Act; provided, however, that any such information,
     documents or reports required to be filed with the Commission pursuant to
     Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee
     within fifteen (15) days after the same is so required to be filed with the
     Commission. Delivery of such reports, information and documents to the
     Trustee is for informational purposes only and the Trustee's receipt of
     such shall not constitute constructive notice of any information contained
     therein or determinable from information contained therein, including the
     Company's compliance with any of its covenants hereunder (as to which the
     Trustee is entitled to rely exclusively on Officers' Certificates).

                                   ARTICLE 7
        Remedies of the Trustee and Noteholders on an Event of Default

          Section 7.01.  Events of Default. In case one or more of the following
     Events of Default (whatever the reason for such Event of Default and
     whether it shall be voluntary or involuntary or be effected by operation of
     law or pursuant to any judgment, decree or order of any court or any order,
     rule or regulation of any administrative or governmental body) shall have
     occurred and be continuing:

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<PAGE>

          (a)  default in the payment of any installment of interest (including
     Liquidated Damages, if any) upon any of the Notes as and when the same
     shall become due and payable, and continuance of such default for a period
     of thirty (30) days, whether or not such payment is permitted under Article
     Four hereof; or

          (b)  default in the payment of the principal of or premium, if any, on
     any of the Notes as and when the same shall become due and payable either
     at maturity or in connection with any redemption pursuant to Article Three,
     by acceleration or otherwise, whether or not such payment is permitted
     under Article Four hereof; or

          (c)  failure on the part of the Company duly to observe or perform any
     other of the covenants or agreements on the part of the Company in the
     Notes or in this Indenture (other than a covenant or agreement a default in
     whose performance or whose breach is elsewhere in this Section 7.01
     specifically dealt with) continued for a period of sixty (60) days after
     the date on which written notice of such failure, requiring the Company to
     remedy the same, shall have been given to the Company by the Trustee, or
     the Company and a Responsible Officer of the Trustee by the holders of at
     least twenty-five percent (25%) in aggregate principal amount of the Notes
     at the time outstanding determined in accordance with Section 9.04; or

          (d)  the Company shall commence a voluntary case or other proceeding
     seeking liquidation, reorganization or other relief with respect to the
     Company or its debts under any bankruptcy, insolvency or other similar law
     now or hereafter in effect or seeking the appointment of a trustee,
     receiver, liquidator, custodian or other similar official of the Company or
     any substantial part of the property of the Company, or shall consent to
     any such relief or to the appointment of or taking possession by any such
     official in an involuntary case or other proceeding commenced against the
     Company, or shall make a general assignment for the benefit of creditors,
     or shall fail generally to pay its debts as they become due; or

          (e)  an involuntary case or other proceeding shall be commenced
     against the Company seeking liquidation, reorganization or other relief
     with respect to the Company or its debts under any bankruptcy, insolvency
     or other similar law now or hereafter in effect or seeking the appointment
     of a trustee, receiver, liquidator, custodian or other similar official of
     the Company or any substantial part of the property of the Company, and
     such involuntary case or other proceeding shall remain undismissed and
     unstayed for a period of ninety (90) consecutive days;

     then, and in each and every such case (other than an Event of Default
     specified in Section 7.01(d) or 7.01(e)), unless the principal of all of
     the Notes shall have already become due and payable, either the Trustee or
     the holders of not less than twenty-five percent (25%) in aggregate
     principal amount of the Notes then

                                       44
<PAGE>

     outstanding hereunder determined in accordance with Section 9.04, by notice
     in writing to the Company (and to the Trustee if given by Noteholders), may
     declare the principal of and premium, if any, on all the Notes and the
     interest accrued thereon (including Liquidated Damages, if any) to be due
     and payable immediately, and upon any such declaration the same shall
     become and shall be immediately due and payable, anything in this Indenture
     or in the Notes contained to the contrary notwithstanding. If an Event of
     Default specified in Section 7.01(d) or (e) occurs, the principal of all
     the Notes and the interest accrued thereon (including Liquidated Damages,
     if any) shall be immediately and automatically due and payable without
     necessity of further action. This provision, however, is subject to the
     conditions that if, at any time after the principal of the Notes shall have
     been so declared due and payable, and before any judgment or decree for the
     payment of the monies due shall have been obtained or entered as
     hereinafter provided, the Company shall pay or shall deposit with the
     Trustee a sum sufficient to pay all matured installments of interest
     (including Liquidated Damages, if any) upon all Notes and the principal of
     and premium, if any, on any and all Notes which shall have become due
     otherwise than by acceleration (with interest on overdue installments of
     interest (including Liquidated Damages, if any) (to the extent that payment
     of such interest is enforceable under applicable law) and on such principal
     and premium, if any, at the rate borne by the Notes, to the date of such
     payment or deposit) and amounts due to the Trustee pursuant to Section
     8.06, and if any and all defaults under this Indenture, other than the
     nonpayment of principal of and premium, if any, and accrued interest on
     (including Liquidated Damages, if any) Notes which shall have become due by
     acceleration, shall have been cured or waived pursuant to Section 7.07,
     then and in every such case the holders of a majority in aggregate
     principal amount of the Notes then outstanding, by written notice to the
     Company and to the Trustee, may waive all defaults or Events of Default and
     rescind and annul such declaration and its consequences; but no such waiver
     or rescission and annulment shall extend to or shall affect any subsequent
     default or Event of Default, or shall impair any right consequent thereon.
     The Company shall notify in writing a Responsible Officer of the Trustee,
     promptly upon becoming aware thereof, of any Event of Default.

          In case the Trustee shall have proceeded to enforce any right under
     this Indenture and such proceedings shall have been discontinued or
     abandoned because of such waiver or rescission and annulment or for any
     other reason or shall have been determined adversely to the Trustee, then
     and in every such case the Company, the holders of Notes, and the Trustee
     shall be restored respectively to their several positions and rights
     hereunder, and all rights, remedies and powers of the Company, the holders
     of Notes, and the Trustee shall continue as though no such proceeding had
     been taken.

          Section 7.02.  Payments of Notes on Default; Suit Therefor. The
     Company covenants that (a) in case default shall be made in the payment of
     any

                                       45
<PAGE>

     installment of interest (including Liquidated Damages, if any) upon any of
     the Notes as and when the same shall become due and payable, and such
     default shall have continued for a period of thirty (30) days, or (b) in
     case default shall be made in the payment of the principal of or premium,
     if any, on any of the Notes as and when the same shall have become due and
     payable, whether at maturity of the Notes or in connection with any
     redemption, by or under this Indenture declaration or otherwise, then, upon
     demand of the Trustee, the Company will pay to the Trustee, for the benefit
     of the holders of the Notes, the whole amount that then shall have become
     due and payable on all such Notes for principal and premium, if any, or
     interest (including Liquidated Damages, if any), as the case may be, with
     interest upon the overdue principal and premium, if any, and (to the extent
     that payment of such interest is enforceable under applicable law) upon the
     overdue installments of interest (including Liquidated Damages, if any) at
     the rate borne by the Notes, and, in addition thereto, such further amount
     as shall be sufficient to cover the costs and expenses of collection,
     including reasonable compensation to the Trustee, its agents, attorneys and
     counsel, and all other amounts due the Trustee under Section 8.06. Until
     such demand by the Trustee, the Company may pay the principal of and
     premium, if any, and interest on (including Liquidated Damages, if any) the
     Notes to the registered holders, whether or not the Notes are overdue.

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

          In case there shall be pending proceedings for the bankruptcy or for
     the reorganization of the Company or any other obligor on the Notes under
     Title 11 of the United States Code, or any other applicable law, or in case
     a receiver, assignee or trustee in bankruptcy or reorganization,
     liquidator, sequestrator or similar official shall have been appointed for
     or taken possession of the Company or such other obligor, the property of
     the Company or such other obligor, or in the case of any other judicial
     proceedings relative to the Company or such other obligor upon the Notes,
     or to the creditors or property of the Company or such other obligor, the
     Trustee, irrespective of whether the principal of the Notes shall then be
     due and payable as therein expressed or by declaration or otherwise and
     irrespective of whether the Trustee shall have made any demand pursuant to
     the provisions of this Section 7.02, shall be entitled and empowered, by
     intervention in such proceedings or otherwise, to file and prove a claim or
     claims for the whole

                                       46
<PAGE>

     amount of principal, premium, if any, and interest (including Liquidated
     Damages, if any) owing and unpaid in respect of the Notes, and, in case of
     any judicial proceedings, to file such proofs of claim and other papers or
     documents as may be necessary or advisable in order to have the claims of
     the Trustee and of the Noteholders allowed in such judicial proceedings
     relative to the Company or any other obligor on the Notes, its or their
     creditors, or its or their property, and to collect and receive any monies
     or other property payable or deliverable on any such claims, and to
     distribute the same after the deduction of any amounts due the Trustee
     under Section 8.06, and any receiver, assignee or trustee in bankruptcy or
     reorganization, liquidator, custodian or similar official is hereby
     authorized by each of the Noteholders to make such payments to the Trustee,
     and, in the event that the Trustee shall consent to the making of such
     payments directly to the Noteholders, to pay to the Trustee any amount due
     it for reasonable compensation, expenses, advances and disbursements,
     including counsel fees incurred by it up to the date of such distribution.
     To the extent that such payment of reasonable compensation, expenses,
     advances and disbursements out of the estate in any such proceedings shall
     be denied for any reason, payment of the same shall be secured by a lien
     on, and shall be paid out of, any and all distributions, dividends, monies,
     securities and other property which the holders of the Notes may be
     entitled to receive in such proceedings, whether in liquidation or under
     any plan of reorganization or arrangement or otherwise.

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

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

          Section 7.03.  Application of Monies Collected by Trustee. Any monies
     collected by the Trustee pursuant to this Article Seven shall be applied in
     the order following, at the date or dates fixed by the Trustee for the
     distribution of such monies, upon presentation of the several Notes, and
     stamping thereon the payment, if only partially paid, and upon surrender
     thereof, if fully paid:

                                       47
<PAGE>

               FIRST: To the payment of all amounts due the Trustee under
          Section 8.06;

               SECOND: Subject to the provisions of Article Four, in case the
          principal of the outstanding Notes shall not have become due and be
          unpaid, to the payment of interest on (including Liquidated Damages,
          if any) the Notes in default in the order of the maturity of the
          installments of such interest, with interest (to the extent that such
          interest has been collected by the Trustee) upon the overdue
          installments of interest (including Liquidated Damages, if any) at the
          rate borne by the Notes, such payments to be made ratably to the
          Persons entitled thereto;

               THIRD: Subject to the provisions of Article Four, in case the
          principal of the outstanding Notes shall have become due, by
          declaration or otherwise, and be unpaid to the payment of the whole
          amount then owing and unpaid upon the Notes for principal and premium,
          if any, and interest (including Liquidated Damages, if any), with
          interest on the overdue principal and premium, if any, and (to the
          extent that such interest has been collected by the Trustee) upon
          overdue installments of interest (including Liquidated Damages, if
          any) at the rate borne by the Notes, and in case such monies shall be
          insufficient to pay in full the whole amounts so due and unpaid upon
          the Notes, then to the payment of such principal and premium, if any,
          and interest (including Liquidated Damages, if any) without preference
          or priority of principal and premium, if any, over interest (including
          Liquidated Damages, if any), or of interest (including Liquidated
          Damages, if any) over principal and premium, if any, or of any
          installment of interest over any other installment of interest, or of
          any Note over any other Note, ratably to the aggregate of such
          principal and premium, if any, and accrued and unpaid interest; and

               FOURTH: Subject to the provisions of Article Four, to the payment
          of the remainder, if any, to the Company or any other Person lawfully
          entitled thereto.

          Section 7.04. Proceedings by Noteholder. No holder of any Note shall
     have any right by virtue of or by reference to any provision of this
     Indenture to institute any suit, action or proceeding in equity or at law
     upon or under or with respect to this Indenture, or for the appointment of
     a receiver, trustee, liquidator, custodian or other similar official, or
     for any other remedy hereunder, unless such holder previously shall have
     given to the Trustee written notice of an Event of Default and of the
     continuance thereof, as hereinbefore provided, and unless also the holders
     of not less than twenty-five percent (25%) in aggregate principal amount of
     the Notes then outstanding shall have made written request upon the Trustee
     to institute such action, suit or proceeding in its own name as Trustee

                                       48
<PAGE>

     hereunder and shall have offered to the Trustee such reasonable indemnity
     as it may require against the costs, expenses and liabilities to be
     incurred therein or thereby, and the Trustee for sixty (60) days after its
     receipt of such notice, request and offer of indemnity, shall have
     neglected or refused to institute any such action, suit or proceeding and
     no direction inconsistent with such written request shall have been given
     to the Trustee pursuant to Section 7.07; it being understood and intended,
     and being expressly covenanted by the taker and holder of every Note with
     every other taker and holder and the Trustee, that no one or more holders
     of Notes shall have any right in any manner whatever by virtue of or by
     reference to any provision of this Indenture to affect, disturb or
     prejudice the rights of any other holder of Notes, or to obtain or seek to
     obtain priority over or preference to any other such holder, or to enforce
     any right under this Indenture, except in the manner herein provided and
     for the equal, ratable and common benefit of all holders of Notes (except
     as otherwise provided herein). For the protection and enforcement of this
     Section 7.04, each and every Noteholder and the Trustee shall be entitled
     to such relief as can be given either at law or in equity.

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

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

          Section 7.05.  Proceedings by Trustee. In case of an Event of Default,
     the Trustee may, in its discretion, proceed to protect and enforce the
     rights vested in it by this Indenture by such appropriate judicial
     proceedings as are necessary to protect and enforce any of such rights,
     either by suit in equity or by action at law or by proceeding in bankruptcy
     or otherwise, whether for the specific enforcement of any covenant or
     agreement contained in this Indenture or in aid of the exercise of any
     power granted in this Indenture, or to enforce any other legal or equitable
     right vested in the Trustee by this Indenture or by law.

          Section 7.06.  Remedies Cumulative and Continuing. Except as provided
     in Section 2.06, all powers and remedies given by this Article Seven to the

                                       49
<PAGE>

     Trustee or to the Noteholders shall, to the extent permitted by law, be
     deemed cumulative and not exclusive of any thereof or of any other powers
     and remedies available to the Trustee or the holders of the Notes, by
     judicial proceedings or otherwise, to enforce the performance or observance
     of the covenants and agreements contained in this Indenture, and no delay
     or omission of the Trustee or of any holder of any of the Notes to exercise
     any right or power accruing upon any default or Event of Default occurring
     and continuing as aforesaid shall impair any such right or power, or shall
     be construed to be a waiver of any such default or any acquiescence
     therein, and, subject to the provisions of Section 7.04, every power and
     remedy given by this Article Seven or by law to the Trustee or to the
     Noteholders may be exercised from time to time, and as often as shall be
     deemed expedient, by the Trustee or by the Noteholders.

          Section 7.07.  Direction of Proceedings and Waiver of Defaults by
     Majority of Noteholders. The holders of a majority in aggregate principal
     amount of the Notes at the time outstanding determined in accordance with
     Section 9.04 shall have the right to direct the time, method and place of
     conducting any proceeding for any remedy available to the Trustee or
     exercising any trust or power conferred on the Trustee; provided, however,
     that (a) such direction shall not be in conflict with any rule of law or
     with this Indenture, (b) the Trustee may take any other action which is not
     inconsistent with such direction and (c) the Trustee may decline to take
     any action that would benefit some Noteholder to the detriment of other
     Noteholders. The holders of a majority in aggregate principal amount of the
     Notes at the time outstanding determined in accordance with Section 9.04
     may, on behalf of the holders of all of the Notes, waive any past default
     or Event of Default hereunder and its consequences except (i) a default in
     the payment of interest (including Liquidated Damages, if any) or premium,
     if any, on, or the principal of, the Notes, (ii) a failure by the Company
     to convert any Notes into Common Stock, (iii) a default in the payment of
     redemption price pursuant to Article Three or (iv) a default in respect of
     a covenant or provisions hereof which under Article Eleven cannot be
     modified or amended without the consent of the holders of each or all Notes
     then outstanding or affected thereby. Upon any such waiver, the Company,
     the Trustee and the holders of the Notes shall be restored to their former
     positions and rights hereunder; but no such waiver shall extend to any
     subsequent or other default or Event of Default or impair any right
     consequent thereon. Whenever any default or Event of Default hereunder
     shall have been waived as permitted by this Section 7.07, said default or
     Event of Default shall for all purposes of the Notes and this Indenture be
     deemed to have been cured and to be not continuing; but no such waiver
     shall extend to any subsequent or other default or Event of Default or
     impair any right consequent thereon.

          Section 7.08.  Notice of Defaults. The Trustee shall, within ninety
     (90) days after a Responsible Officer of the Trustee has knowledge of the
     occurrence

                                       50
<PAGE>

     of a default, mail to all Noteholders, as the names and addresses of such
     holders appear upon the Note register, notice of all defaults known to a
     Responsible Officer, unless such defaults shall have been cured or waived
     before the giving of such notice; provided, however, that except in the
     case of default in the payment of the principal of, or premium, if any, or
     interest (including Liquidated Damages, if any) on any of the Notes, the
     Trustee shall be protected in withholding such notice if and so long as a
     trust committee of directors and/or Responsible Officers of the Trustee in
     good faith determines that the withholding of such notice is in the
     interests of the Noteholders.

          Section 7.09.  Undertaking to Pay Costs. All parties to this Indenture
     agree, and each holder of any Note by his acceptance thereof shall be
     deemed to have agreed, that any court may, in its discretion, require, in
     any suit for the enforcement of any right or remedy under this Indenture,
     or in any suit against the Trustee for any action taken or omitted by it as
     Trustee, the filing by any party litigant in such suit of an undertaking to
     pay the costs of such suit and that such court may in its discretion assess
     reasonable costs, including reasonable attorneys' fees and expenses,
     against any party litigant in such suit, having due regard to the merits
     and good faith of the claims or defenses made by such party litigant;
     provided, however, that the provisions of this Section 7.09 (to the extent
     permitted by law) shall not apply to any suit instituted by the Trustee, to
     any suit instituted by any Noteholder, or group of Noteholders, holding in
     the aggregate more than ten percent in principal amount of the Notes at the
     time outstanding determined in accordance with Section 9.04, or to any suit
     instituted by any Noteholder for the enforcement of the payment of the
     principal of or premium, if any, or interest on any Note on or after the
     due date expressed in such Note or to any suit for the enforcement of the
     right to convert any Note in accordance with the provisions of Article
     Fifteen.

                                   ARTICLE 8
                                  The Trustee

          Section 8.01.  Duties and Responsibilities of Trustee. The Trustee,
     prior to the occurrence of an Event of Default and after the curing of all
     Events of Default which may have occurred, undertakes to perform such
     duties and only such duties as are specifically set forth in this
     Indenture. In case an Event of Default has occurred (which has not been
     cured or waived), the Trustee shall exercise such of the rights and powers
     vested in it by this Indenture, and use the same degree of care and skill
     in their exercise, as a prudent person would exercise or use under the
     circumstances in the conduct of his own affairs.

                                       51
<PAGE>

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

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

               (i)  the duties and obligations of the Trustee shall be
          determined solely by the express provisions of this Indenture and the
          Trust Indenture Act, and the Trustee shall not be liable except for
          the performance of such duties and obligations as are specifically set
          forth in this Indenture and no implied covenants or obligations shall
          be read into this Indenture and the Trust Indenture Act against the
          Trustee; and

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

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

          (c)  the Trustee shall not be liable with respect to any action taken
     or omitted to be taken by it in good faith in accordance with the written
     direction of the holders of not less than a majority in principal amount of
     the Notes at the time outstanding determined as provided in Section 9.04
     relating to the time, method and place of conducting any proceeding for any
     remedy available to the Trustee, or exercising any trust or power conferred
     upon the Trustee, under this Indenture;

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

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

                                       52
<PAGE>

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

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

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

          Section 8.02.  Reliance on Documents, Opinions, Etc. Except as
     otherwise provided in Section 8.01:

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

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

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

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

                                       53
<PAGE>

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

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

          Section 8.03.  No Responsibility for Recitals, Etc. The recitals
     contained herein and in the Notes (except in the Trustee's certificate of
     authentication) shall be taken as the statements of the Company, and the
     Trustee assumes no responsibility for the correctness of the same. The
     Trustee makes no representations as to the validity or sufficiency of this
     Indenture or of the Notes. The Trustee shall not be accountable for the use
     or application by the Company of any Notes or the proceeds of any Notes
     authenticated and delivered by the Trustee in conformity with the
     provisions of this Indenture.

          Section 8.04.  Trustee, Paying Agents, Conversion Agents or Registrar
     May Own Notes. The Trustee, any paying agent, any conversion agent or Note
     registrar, in its individual or any other capacity, may become the owner or
     pledgee of Notes with the same rights it would have if it were not Trustee,
     paying agent, conversion agent or Note registrar.

          Section 8.05.  Monies to Be Held in Trust. Subject to the provisions
     of Section 13.04 and Section 4.02, all monies received by the Trustee
     shall, until used or applied as herein provided, be held in trust for the
     purposes for which they were received. Money held by the Trustee in trust
     hereunder need not be segregated from other funds except to the extent
     required by law. The Trustee shall be under no liability for interest on
     any money received by it hereunder except as may be agreed in writing from
     time to time by the Company and the Trustee.

          Section 8.06.  Compensation and Expenses of Trustee. The Company
     covenants and agrees to pay to the Trustee from time to time, and the
     Trustee shall be entitled to, reasonable compensation for all services
     rendered by it hereunder in any capacity (which shall not be limited by any
     provision of law in regard to the compensation of a trustee of an express
     trust) as mutually agreed to from time to time in writing between the
     Company and the Trustee, and the Company will pay

                                       54
<PAGE>

     or reimburse the Trustee upon its request for all reasonable expenses,
     disbursements and advances reasonably incurred or made by the Trustee in
     accordance with any of the provisions of this Indenture (including the
     reasonable compensation and the expenses and disbursements of its counsel
     and of all Persons not regularly in its employ) except any such expense,
     disbursement or advance as may arise from its negligence, willful
     misconduct, recklessness or bad faith. The Company also covenants to
     indemnify the Trustee (or any officer, director or employee of the
     Trustee), in any capacity under this Indenture and its agents and any
     authenticating agent for, and to hold them harmless against, any and all
     loss, liability, claim or expense incurred without negligence, willful
     misconduct, recklessness or bad faith on the part of the Trustee or such
     officers, directors, employees and agent or authenticating agent, as the
     case may be, and arising out of or in connection with the acceptance or
     administration of this trust or in any other capacity hereunder, including
     the costs and expenses of defending themselves against any claim of
     liability in the premises. The obligations of the Company under this
     Section 8.06 to compensate or indemnify the Trustee and to pay or reimburse
     the Trustee for expenses, disbursements and advances shall be secured by a
     lien prior to that of the Notes upon all property and funds held or
     collected by the Trustee as such, except funds held in trust for the
     benefit of the holders of particular Notes. The obligation of the Company
     under this Section shall survive the satisfaction and discharge of this
     Indenture.

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

          Section 8.07.  Officers' Certificate as Evidence. Except as otherwise
     provided in Section 8.01, whenever in the administration of the provisions
     of this Indenture the Trustee shall deem it necessary or desirable that a
     matter be proved or established prior to taking or omitting any action
     hereunder, such matter (unless other evidence in respect thereof be herein
     specifically prescribed) may, in the absence of bad faith or willful
     misconduct on the part of the Trustee, be deemed to be conclusively proved
     and established by an Officers' Certificate delivered to the Trustee.

          Section 8.08.  Conflicting Interests of Trustee. If the Trustee has or
     shall acquire a conflicting interest within the meaning of the Trust
     Indenture Act, the Trustee shall either eliminate such interest or resign,
     to the extent and in the manner provided by, and subject to the provisions
     of, the Trust Indenture Act and this Indenture.

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<PAGE>

          Section 8.09.  Eligibility of Trustee. There shall at all times be a
     Trustee hereunder which shall be a Person that is eligible pursuant to the
     Trust Indenture Act to act as such and has a combined capital and surplus
     of at least $50,000,000 (or if such Person is a member of a bank holding
     company system, its bank holding company shall have a combined capital and
     surplus of at least $50,000,000). If such Person publishes reports of
     condition at least annually, pursuant to law or to the requirements of any
     supervising or examining authority, then for the purposes of this Section
     the combined capital and surplus of such Person shall be deemed to be its
     combined capital and surplus as set forth in its most recent report of
     condition so published. If at any time the Trustee shall cease to be
     eligible in accordance with the provisions of this Section 8.09, it shall
     resign immediately in the manner and with the effect hereinafter specified
     in this Article.

          Section 8.10.  Resignation or Removal of Trustee.

          (a)  The Trustee may at any time resign by giving written notice of
     such resignation to the Company and to the holders of Notes. Upon receiving
     such notice of resignation, the Company shall promptly appoint a successor
     trustee by written instrument, in duplicate, executed by order of the Board
     of Directors, one copy of which instrument shall be delivered to the
     resigning Trustee and one copy to the successor trustee. If no successor
     trustee shall have been so appointed and have accepted appointment sixty
     (60) days after the mailing of such notice of resignation to the
     Noteholders, the resigning Trustee may, upon ten (10) business days' notice
     to the Company and the Noteholders, appoint a successor identified in such
     notice or may petition, at the expense of the Company, any court of
     competent jurisdiction for the appointment of a successor trustee, or, if
     any Noteholder who has been a bona fide holder of a Note or Notes for at
     least six (6) months may, subject to the provisions of Section 7.09, on
     behalf of himself and all others similarly situated, petition any such
     court for the appointment of a successor trustee. Such court may thereupon,
     after such notice, if any, as it may deem proper and prescribe, appoint a
     successor trustee.

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

                 (i)   the Trustee shall fail to comply with Section 8.08 after
          written request therefor by the Company or by any Noteholder who has
          been a bona fide holder of a Note or Notes for at least six (6)
          months; or

                 (ii)  the Trustee shall cease to be eligible in accordance with
          the provisions of Section 8.09 and shall fail to resign after written
          request therefor by the Company or by any such Noteholder; or

                 (iii) the Trustee shall become incapable of acting, or shall be
          adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
          its

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<PAGE>

          property shall be appointed, or any public officer shall take charge
          or control of the Trustee or of its property or affairs for the
          purpose of rehabilitation, conservation or liquidation;

     then, in any such case, the Company may remove the Trustee and appoint a
     successor trustee by written instrument, in duplicate, executed by order of
     the Board of Directors, one copy of which instrument shall be delivered to
     the Trustee so removed and one copy to the successor trustee, or, subject
     to the provisions of Section 7.09, any Noteholder who has been a bona fide
     holder of a Note or Notes for at least six (6) months may, on behalf of
     himself and all others similarly situated, petition any court of competent
     jurisdiction for the removal of the Trustee and the appointment of a
     successor trustee; provided, however, that if no successor Trustee shall
     have been appointed and have accepted appointment sixty (60) days after
     either the Company or the Noteholders has removed the Trustee, the Trustee
     so removed may petition, at the expense of the Company, any court of
     competent jurisdiction for an appointment of a successor trustee. Such
     court may thereupon, after such notice, if any, as it may deem proper and
     prescribe, remove the Trustee and appoint a successor trustee.

          (c)  The holders of a majority in aggregate principal amount of the
     Notes at the time outstanding may at any time remove the Trustee and
     nominate a successor trustee which shall be deemed appointed as successor
     trustee unless, within ten (10) days after notice to the Company of such
     nomination, the Company objects thereto, in which case the Trustee so
     removed or any Noteholder, or if such Trustee so removed or any Noteholder
     fails to act, the Company, upon the terms and conditions and otherwise as
     in Section 8.10(a) provided, may petition any court of competent
     jurisdiction for an appointment of a successor trustee.

          (d)  Any resignation or removal of the Trustee and appointment of a
     successor trustee pursuant to any of the provisions of this Section 8.10
     shall become effective upon acceptance of appointment by the successor
     trustee as provided in Section 8.11.

          Section 8.11.  Acceptance by Successor Trustee. Any successor trustee
     appointed as provided in Section 8.10 shall execute, acknowledge and
     deliver to the Company and to its predecessor trustee an instrument
     accepting such appointment hereunder, and thereupon the resignation or
     removal of the predecessor trustee shall become effective and such
     successor trustee, without any further act, deed or conveyance, shall
     become vested with all the rights, powers, duties and obligations of its
     predecessor hereunder, with like effect as if originally named as trustee
     herein; but, nevertheless, on the written request of the Company or of the
     successor trustee, the trustee ceasing to act shall, upon payment of any
     amount then due it pursuant to the provisions of Section 8.06, execute and
     deliver

                                       57
<PAGE>

     an instrument transferring to such successor trustee all the rights and
     powers of the trustee so ceasing to act. Upon request of any such successor
     trustee, the Company shall execute any and all instruments in writing for
     more fully and certainly vesting in and confirming to such successor
     trustee all such rights and powers. Any trustee ceasing to act shall,
     nevertheless, retain a lien upon all property and funds held or collected
     by such trustee as such, except for funds held in trust for the benefit of
     holders of particular Notes, to secure any amounts then due it pursuant to
     the provisions of Section 8.06.

          No successor trustee shall accept appointment as provided in this
     Section 8.11 unless, at the time of such acceptance, such successor trustee
     shall be qualified under the provisions of Section 8.08 and be eligible
     under the provisions of Section 8.09.

          Upon acceptance of appointment by a successor trustee as provided in
     this Section 8.11, the Company (or the former trustee, at the written
     direction of the Company) shall mail or cause to be mailed notice of the
     succession of such trustee hereunder to the holders of Notes at their
     addresses as they shall appear on the Note register. If the Company fails
     to mail such notice within ten (10) days after acceptance of appointment by
     the successor trustee, the successor trustee shall cause such notice to be
     mailed at the expense of the Company.

          Section 8.12.  Succession by Merger, Etc. Any corporation into which
     the Trustee may be merged or converted or with which it may be
     consolidated, or any corporation resulting from any merger, conversion or
     consolidation to which the Trustee shall be a party, or any corporation
     succeeding to all or substantially all of the corporate trust business of
     the Trustee (including any trust created by this Indenture), shall be the
     successor to the Trustee hereunder without the execution or filing of any
     paper or any further act on the part of any of the parties hereto, provided
     that in the case of any corporation succeeding to all or substantially all
     of the corporate trust business of the Trustee, such corporation shall be
     qualified under the provisions of Section 8.08 and eligible under the
     provisions of Section 8.09.

          In case at the time such successor to the Trustee shall succeed to the
     trusts created by this Indenture, any of the Notes shall have been
     authenticated but not delivered, any such successor to the Trustee may
     adopt the certificate of authentication of any predecessor trustee or
     authenticating agent appointed by such predecessor trustee, and deliver
     such Notes so authenticated; and in case at that time any of the Notes
     shall not have been authenticated, any successor to the Trustee or any
     authenticating agent appointed by such successor trustee may authenticate
     such Notes in the name of the successor trustee; and in all such cases such
     certificates shall have the full force that is provided in the Notes or in
     this Indenture; provided, however, that the right to adopt the certificate
     of

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<PAGE>

     authentication of any predecessor Trustee or authenticate Notes in the name
     of any predecessor Trustee shall apply only to its successor or successors
     by merger, conversion or consolidation.

          Section 8.13.  Preferential Collection of Claims. If and when the
     Trustee shall be or become a creditor of the Company (or any other obligor
     upon the Notes), the Trustee shall be subject to the provisions of the
     Trust Indenture Act regarding the collection of the claims against the
     Company (or any such other obligor).

          Section 8.14.  Trustee's Application for Instructions from the
     Company. Any application by the Trustee for written instructions from the
     Company (other than with regard to any action proposed to be taken or
     omitted to be taken by the Trustee that affects the rights of the holders
     of the Notes or holders of Senior Indebtedness under this Indenture,
     including, without limitation, under Article Four hereof) may, at the
     option of the Trustee, set forth in writing any action proposed to be taken
     or omitted by the Trustee under this Indenture and the date on and/or after
     which such action shall be taken or such omission shall be effective. The
     Trustee shall not be liable for any action taken by, or omission of, the
     Trustee in accordance with a proposal included in such application on or
     after the date specified in such application (which date shall not be less
     than three (3) Business Days after the date any officer of the Company
     actually receives such application, unless any such officer shall have
     consented in writing to any earlier date) unless prior to taking any such
     action (or the effective date in the case of an omission), the Trustee
     shall have received written instructions in response to such application
     specifying the action to be taken or omitted.

                                   ARTICLE 9
                                The Noteholders

          Section 9.01.  Action by Noteholders. Whenever in this Indenture it is
     provided that the holders of a specified percentage in aggregate principal
     amount of the Notes may take any action (including the making of any demand
     or request, the giving of any notice, consent or waiver or the taking of
     any other action), the fact that at the time of taking any such action, the
     holders of such specified percentage have joined therein may be evidenced
     (a) by any instrument or any number of instruments of similar tenor
     executed by Noteholders in person or by agent or proxy appointed in
     writing, or (b) by the record of the holders of Notes voting in favor
     thereof at any meeting of Noteholders duly called and held in accordance
     with the provisions of Article Ten, or (c) by a combination of such
     instrument or instruments and any such record of such a meeting of
     Noteholders. Whenever the Company or the Trustee solicits the taking of any
     action by the

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<PAGE>

holders of the Notes, the Company or the Trustee may fix in advance of such
solicitation, a date as the record date for determining holders entitled to take
such action. The record date shall be not more than fifteen (15) days prior to
the date of commencement of solicitation of such action.

         Section 9.02. Proof of Execution by Noteholders. Subject to the
provisions of Sections 8.01, 8.02 and 10.05, proof of the execution of any
instrument by a Noteholder or its agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the registry of such Notes or by a
certificate of the Note registrar.

         The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.06.

         Section 9.03. Who Are Deemed Absolute Owners. The Company, the Trustee,
any paying agent, any conversion agent and any Note registrar may deem the
Person in whose name such Note shall be registered upon the Note register to be,
and may treat it as, the absolute owner of such Note (whether or not such Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by any Person other than the Company or any Note registrar) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.

         Section 9.04. Company-owned Notes Disregarded. In determining whether
the holders of the requisite aggregate principal amount of Notes have concurred
in any direction, consent, waiver or other action under this Indenture, Notes
which are owned by the Company or any other obligor on the Notes or any
Affiliate of the Company or any other obligor on the Notes shall be disregarded
and deemed not to be outstanding for the purpose of any such determination;
provided, however, that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action, only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.04 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or any Affiliate of the Company or any such other obligor. In the case of
a dispute as to such right, any

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<PAGE>

decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and identifying
all Notes, if any, known by the Company to be owned or held by or for the
account of any of the above described Persons, and, subject to Section 8.01, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Notes not
listed therein are outstanding for the purpose of any such determination.

         Section 9.05. Revocation of Consents, Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.02, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.

                                  ARTICLE 10
                            Meetings of Noteholders

         Section 10.01. Purpose of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article Ten for any of the following purposes:

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

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

               (3) to consent to the execution of an indenture or indentures
         supplemental hereto pursuant to the provisions of Section 11.02; or

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<PAGE>

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

         Section 10.02. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.01, to
be held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 9.01, shall be mailed
to holders of Notes at their addresses as they shall appear on the Note
register. Such notice shall also be mailed to the Company. Such notices shall be
mailed not less than twenty (20) nor more than ninety (90) days prior to the
date fixed for the meeting.

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

         Section 10.03. Call of Meetings by Company or Noteholders. In case at
any time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the Notes
then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
10.01, by mailing notice thereof as provided in Section 10.02.

         Section 10.04. Qualifications for Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes on the record
date pertaining to such meeting. The only persons who shall be entitled to be
present or to speak at any meeting of Noteholders shall be the persons entitled
to vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.

         Section 10.05. Regulations. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of

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<PAGE>

Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.

         The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.03, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to vote
at the meeting.

         Subject to the provisions of Section 9.04, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.02 or 10.03
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.

         Section 10.06. Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the outstanding principal amount of the Notes held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Noteholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 10.02. The record shall show the principal amount of the
Notes voting in favor of or against any resolution. The record shall be signed
and verified by the affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall

                                       63
<PAGE>

be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.

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

         Section 10.07. No Delay of Rights by Meeting. Nothing contained in this
Article Ten shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.

                                         ARTICLE 11
                                Supplemental Indentures

         Section 11.01. Supplemental Indentures Without Consent of
Noteholders. The Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time, and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:

         (a)  make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.06 and the
redemption obligations of the Company pursuant to the requirements of Section
3.05(e);

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

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

         (d)  to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however, that in
respect of any such additional covenant, restriction or condition, such
supplemental indenture may provide for a

                                       64
<PAGE>

particular period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the Trustee
upon such default;

         (e)  to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;

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

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

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

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

         Any supplemental indenture authorized by the provisions of this Section
11.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.02.

         Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Agreement.

                                       65
<PAGE>

         Section 11.02. Supplemental Indenture with Consent of Noteholders. With
the consent (evidenced as provided in Article Nine) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, or impair the right of any Noteholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Notes, or modify
the provisions of this Indenture with respect to the subordination of the Notes
in a manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to redeem any Note upon the happening of a Fundamental
Change in a manner adverse to the holder of Notes, or impair the right to
convert the Notes into Common Stock subject to the terms set forth herein,
including Section 15.06, in each case, without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.

         Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.

         It shall not be necessary for the consent of the Noteholders under this
Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

         Section 11.03. Effect of Supplemental Indenture. Any supplemental
indenture executed pursuant to the provisions of this Article Eleven shall
comply with the Trust Indenture Act, as then in effect, provided that this
Section 11.03 shall not require such supplemental indenture or the Trustee to be
qualified under

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<PAGE>

the Trust Indenture Act prior to the time such qualification is in fact required
under the terms of the Trust Indenture Act or the Indenture has been qualified
under the Trust Indenture Act, nor shall it constitute any admission or
acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article Eleven, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder, subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

         Section 11.04. Notation on Notes. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article Eleven may bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.10)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.

         Section 11.05. Evidence of Compliance of Supplemental Indenture to be
Furnished to Trustee. Prior to entering into any supplemental indenture, the
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Eleven.

                                         ARTICLE 12
               Consolidation, Merger, Sale, Conveyance and Lease

         Section 12.01. Company May Consolidate on Certain Terms. Subject to the
provisions of Section 12.02, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other Person or Persons (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or

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successors shall be a party or parties, or shall prevent any sale, conveyance or
tease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same and that shall be
organized under the laws of the United States of America, any state thereof or
the District of Columbia; provided, however, that upon any such consolidation,
merger, sale, conveyance or lease, the due and punctual payment of the principal
of and premium, if any, and interest (including Liquidated Damages, if any) on
all of the Notes, according to their tenor and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the Person (if other than the Company) formed by such consolidation, or into
which the Company shall have been merged, or by the Person that shall have
acquired or leased such property, and such supplemental indenture shall provide
for the applicable conversion rights set forth in Section 15.06.

         Section 12.02. Successor Corporation to Be Substituted. In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor Person shall succeed to
and be substituted for the Company, with the same effect as if it had been named
herein as the party of this first part. Such successor Person thereupon may
cause to be signed, and may issue either in its own name or in the name of
Kulicke and Soffa Industries, Inc. any or all of the Notes, issuable hereunder
that theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor Person instead of the Company and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver, or cause to be
authenticated and delivered, any Notes that previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication,
and any Notes that such successor Person thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Notes so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Notes
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Notes had been issued at the date of the execution hereof.
In the event of any such consolidation, merger, sale, conveyance or lease, the
Person named as the "Company" in the first paragraph of this Indenture or any
successor that shall thereafter have become such in the manner prescribed in
this Article Twelve may be dissolved, wound up and liquidated at any time
thereafter and such Person shall

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<PAGE>

be released from its liabilities as obligor and maker of the Notes and from its
obligations under this Indenture.

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

         Section 12.03. Opinion of Counsel to Be Given Trustee. The Trustee
shall receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article Twelve.

                                  ARTICLE 13
                    Satisfaction and Discharge of Indenture

         Section 13.01. Discharge of Indenture. When (a) the Company shall
deliver to the Trustee for cancellation all Notes theretofore authenticated
(other than any Notes that have been destroyed, lost or stolen and in lieu of or
in substitution for which other Notes shall have been authenticated and
delivered) and not theretofore canceled, or (b) all the Notes not theretofore
canceled or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee, in trust, funds sufficient to pay at maturity or upon
redemption of all of the Notes (other than any Notes that shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, accompanied by a verification report, as to
the sufficiency of the deposited amount, from an independent certified
accountant or other financial professional satisfactory to the Trustee, and if
the Company shall also pay or cause to be paid all other sums payable hereunder
by the Company, then this Indenture shall cease to be of further effect (except
as to (i) remaining rights of registration of transfer, substitution and
exchange and conversion of Notes, (ii) rights hereunder of Noteholders to
receive payments of principal of and premium, if any, and interest on, the Notes
and the other rights, duties and obligations of Noteholders, as beneficiaries
hereof with respect to the amounts, if any, so deposited with the Trustee and
(iii) the rights, obligations and immunities of the Trustee hereunder), and the
Trustee, on written demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel as required by Section 16.04 and at the
cost

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<PAGE>

and expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture; the Company, however, hereby
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred by the Trustee and to compensate the Trustee for any
services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Notes.

         Section 13.02. Deposited Monies to Be Held in Trust by Trustee. Subject
to Section 13.04, all monies deposited with the Trustee pursuant to Section
13.01, provided such deposit was not in violation of Article Four, shall be held
in trust for the sole benefit of the Noteholders and not to be subject to the
subordination provisions of Article Four, and such monies shall be applied by
the Trustee to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest and premium, if any.

         Section 13.03. Paying Agent to Repay Monies Held. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.

         Section 13.04. Return of Unclaimed Monies. Subject to the requirements
of applicable law, any monies deposited with or paid to the Trustee for payment
of the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment that such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.

         Section 13.05. Reinstatement. If the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.02 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 Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.01 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.02;
provided, however, that if the Company makes any payment of interest on or

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<PAGE>

principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.

                                  ARTICLE 14
        Immunity of Incorporators, Stockholders, Officers and Directors

         Section 14.01. Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director or subsidiary, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.

                                  ARTICLE 15
                              Conversion of Notes

         Section 15.01. Right to Convert. Subject to and upon compliance with
the provisions of this Indenture, including, without limitation, Article Four,
the holder of any Note shall have the right, at its option, at any time after
the original issuance of the Notes hereunder through the close of business on
the final maturity date of the Notes (except that, with respect to any Note or
portion of a Note that shall be called for redemption, such right shall
terminate, except as provided in Section 15.02, Section 3.02 or Section 3.04, at
the close of business on the Business Day next preceding the date fixed for
redemption of such Note or portion of a Note unless the Company shall default in
payment due upon redemption thereof) to convert each $1,000 principal amount of
the Notes into a number of fully paid and non-assessable shares of Common Stock
(as such shares shall then be constituted) equal to the Conversion Rate in
effect at such time, by surrender of the Note so to be converted in whole or in
part in the manner provided, together with any required funds, in Section 15.02.
A Note in respect of which a holder is exercising its option to require
redemption upon a Fundamental

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<PAGE>

Change pursuant to Section 3.05(a) may be converted only if such holder
withdraws its election to exercise in accordance with Section 3.05(b). A holder
of Notes is not entitled to any rights of a holder of Common Stock until such
holder has converted his Notes to Common Stock, and only to the extent such
Notes are deemed to have been converted to Common Stock under this Article
Fifteen.

         Section 15.02. Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion, No Adjustment for Interest or Dividends. In order to
exercise the conversion privilege with respect to any Note in certificated form,
the holder of any such Note to be converted in whole or in part shall surrender
such Note, duly endorsed, at an office or agency maintained by the Company
pursuant to Section 5.02, accompanied by the funds, if any, required by the
penultimate paragraph of this Section 15.02, and shall give written notice of
conversion in the form provided on the Notes (or such other notice which is
acceptable to the Company) to the office or agency that the holder elects to
convert such Note or the 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 shall be issuable
on such conversion shall be issued, and shall be accompanied by transfer taxes,
if required pursuant to Section 15.07. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.

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

         As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such Noteholder at the office or agency maintained by the Company for such
purpose pursuant to Section 5.02, a certificate or certificates for the number
of full shares of Common Stock issuable upon the conversion of such Note or
portion thereof as determined by the Company in accordance with the provisions
of this Article Fifteen and a check or cash in respect of any fractional
interest in respect of a

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<PAGE>

share of Common Stock arising upon such conversion, calculated by the Company as
provided in Section 15.03. In case any Note of a denomination greater than
$1,000 shall be surrendered for partial conversion, and subject to Section 2.03,
the Company shall execute and the Trustee shall authenticate and deliver to the
holder of the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.

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

         No adjustment in respect of interest on any Note converted or dividends
on any shares issued upon conversion of such Note will be made upon any
conversion except as set forth in the next sentence. If this Note (or portion
hereof) is surrendered for conversion during the period from the close of
business on any record date for the payment of interest to the close of business
on the Business Day preceding the following interest payment date and either (x)
has not been called for redemption on a redemption date that occurs during such
period or (y) is not to be redeemed in connection with a Fundamental Change on a
Repurchase Date that occurs during such period, this Note (or portion hereof
being converted) must be accompanied by an amount, in New York Clearing House
funds or other funds acceptable to the Company, equal to the interest payable on
such interest payment date on the principal amount being converted; provided,
however, that no such payment shall be required if there shall exist at the time
of conversion a default in the payment of interest on the Notes.

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

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<PAGE>

         Section 15.03. Cash Payments in Lieu of Fractional Shares. No
fractional shares of Common Stock or scrip representing fractional shares shall
be issued upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same holder, the number of full shares that
shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof to the
extent permitted hereby) so surrendered. If any fractional share of stock would
be issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market price thereof to
the holder of Notes. The current market price of a share of Common Stock shall
be the Closing Price on the last Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.

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

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

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

               (i)   the numerator of which shall be the number of shares of
         the Common Stock outstanding at the close of business on the date fixed
         for such determination; and

               (ii)  the denominator of which shall be the sum of such number
         of shares and the total number of shares constituting such dividend or
         other distribution,

such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purpose 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. The Company will
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company. If any dividend or distribution of the type
described in this Section 15.05(a) is declared but not so paid or made, the
Conversion Rate

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<PAGE>

shall again be adjusted to the Conversion Rate that would then be in effect if
such dividend or distribution had not been declared.

          (b)  In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them (for a period expiring
within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, 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 date fixed for
determination of stockholders entitled to receive such rights or warrants by a
fraction,

               (i)   the numerator of which shall be the number of shares of
         Common Stock outstanding at the close of business on the date fixed for
         determination of stockholders entitled to receive such rights or
         warrants plus the number of shares that the aggregate offering price of
         the total number of shares so offered would purchase at such Current
         Market Price, and

               (ii)  the denominator of which shall be the number of shares
         of Common Stock outstanding on the date fixed for determination of
         stockholders entitled to receive such rights or warrants plus the total
         number of additional shares of Common Stock offered for subscription or
         purchase.

         Such adjustment shall be successively made whenever any such rights or
warrants are issued, and shall become effective immediately after the opening of
business on the day following the date fixed for determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of Common
Stock are not delivered after the expiration of such rights or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate that would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights or warrants are not so issued,
the Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at 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

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<PAGE>

warrants and any amount payable on exercise or conversion thereof, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.

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

          (d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 15.05(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 15.05(a) (any of the foregoing hereinafter in this Section 15.05(d)
called the "Securities")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Noteholders upon the conversion
of the Notes so that any such holder converting Notes will receive upon such
conversion, in addition to the shares of Common Stock to which such holder is
entitled, the amount and kind of such Securities which such holder would have
received if such holder had converted its Notes into Common Stock immediately
prior to the Record Date (as defined in Section 15.05(h)(4) for such
distribution of the Securities)), the Conversion Rate shall be adjusted so that
the same shall be equal to the rate determined by dividing the Conversion Rate
in effect on the Record Date with respect to such distribution by a fraction,

              (i)  the numerator of which shall be the Current Market Price
         per share of the Common Stock on such Record Date less the fair market
         value (as determined by the Board of Directors, whose determination
         shall be conclusive, and described in a resolution of the Board of
         Directors) on the Record Date of the portion of the Securities so
         distributed applicable to one share of Common Stock; and

              (ii) the denominator of which shall be the Current Market Price
per share of the Common Stock,

such adjustment to become effective immediately prior to the opening of business
on the day following such Record Date; provided, however, that in the event the
then fair market value (as so determined) of the portion of the Securities so

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<PAGE>

distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of Securities such
holder would have received had such holder converted each Note on the Record
Date. In the event that such dividend or distribution is not so paid or made,
the Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been declared. If the
Board of Directors determines the fair market value of any distribution for
purposes of this Section 15.05(d) by reference to the actual or when issued
trading market for any securities, it must in doing so consider the prices in
such market over the same period used in computing the Current Market Price of
the Common Stock.

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

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of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants that shall have expired or been terminated
without exercise by any holders thereof, the Conversion Rate shall be readjusted
as if such rights and warrants had not been issued.

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

         For purposes of this Section 15.05(d) and Sections 15.05(a) and (b),
any dividend or distribution to which this Section 15.05(d) is applicable that
also includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Rate adjustment required by this Section 15.05(d) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Rate adjustment required by Sections
15.05(a) and (b) with respect to such dividend or distribution shall then be
made), except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution", "the date fixed for the
determination of stockholders entitled to receive such rights or warrants" and
"the date fixed for such determination" within the meaning of Sections 15.05(a)
and (b), and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of Section 15.05(a).

         (e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash dividend
on the Common Stock to the extent the aggregate cash dividend per share of
Common Stock in any fiscal quarter does not exceed the greater of (A) the amount
per share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Rate pursuant to this Section 15.05(e)
(as adjusted to reflect subdivisions, or combinations of the Common Stock), and
(B) 3.75% of the arithmetic average of the Closing Price (determined as set
forth in Section 15.05(h)) during the ten Trading Days (as defined in Section
15.05(h)) immediately prior to the date of declaration of such dividend, and (y)
any dividend or distribution in connection with the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary), then, in such
case, the Conversion

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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 such record date by a fraction,

              (i)  the numerator of which shall be the Current Market Price of
         the Common Stock on the record date less the amount of cash so
         distributed (and not excluded as provided above) applicable to one
         share of Common Stock, and

              (ii) the denominator of which shall be such Current Market Price
         of the Common Stock,

such adjustment to be effective immediately prior to the opening of business on
the day following the record date; provided, however, that in the event the
portion of the cash so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock on the
record date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Noteholder shall have the right to receive upon conversion the
amount of cash such holder would have received had such holder converted each
Note on the record date. In the event that such dividend or distribution is not
so paid or made, the Conversion Rate shall again be adjusted to be the
Conversion Rate that would then be in effect if such dividend or distribution
had not been declared. If any adjustment is required to be made as set forth in
this Section 15.05(e) as a result of a distribution that is a quarterly
dividend, such adjustment shall be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant hereto. If an adjustment is required to be made as set forth
in this Section 15.05(e) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.

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

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<PAGE>

              (i)  the numerator of which shall be the sum of (x) the fair
         market value (determined as aforesaid) of the aggregate consideration
         payable to stockholders based on the acceptance (up to any maximum
         specified in the terms of the tender or exchange offer) of all shares
         validly tendered or exchanged and not withdrawn as of the Expiration
         Time (the shares deemed so accepted up to any such maximum, being
         referred to as the "Purchased Shares") and (y) the product of the
         number of shares of Common Stock outstanding (less any Purchased
         Shares) at the Expiration Time and the last reported sale price of the
         Common Stock (determined as provided in the definition of Current
         Market Price) on the Trading Day next succeeding the Expiration Time,
         and

              (ii) the denominator of which shall be the number of shares of
         Common Stock outstanding (including any tendered or exchanged shares)
         at the Expiration Time multiplied by last reported sale price of the
         Common Stock (determined as provided in the definition of the Current
         Market Price) on the Trading Day next succeeding the Expiration Time

such adjustment to become effective immediately prior to the opening of business
on the day following the Expiration Time. In the event that 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)  In case of a tender or exchange offer made by a Person other than
the Company or any Subsidiary for an amount that increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such Person of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) that as of the last time (the "Offer
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the last reported
sale price of the Common Stock (determined as provided in the definition of the
Current Market Price) on the Trading Day next succeeding the Offer Expiration
Time, and in which, as of the Offer Expiration Time the Board of Directors is
not recommending rejection of the offer, the Conversion Rate shall be adjusted
so that the same shall equal the rate determined by multiplying the Conversion
Rate in effect immediately prior to the Offer Expiration Time by a fraction

              (i) the numerator of which shall be the sum of (x) the fair
         market value (determined as aforesaid) of the aggregate consideration

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<PAGE>

         payable to stockholders based on the acceptance (up to any maximum
         specified in the terms of the tender or exchange offer) of all shares
         validly tendered or exchanged and not withdrawn as of the Offer
         Expiration Time (the shares deemed so accepted, up to any such maximum,
         being referred to as the "Accepted Purchased Shares") and (y) the
         product of the number of shares of Common Stock outstanding (less any
         Accepted Purchased Shares) at the Offer Expiration Time and the last
         reported sale price of the Common Stock (determined as provided in the
         definition of the Current Market Price) on the Trading Day next
         succeeding the Offer Expiration Time, and

              (ii) the denominator of which shall be the number of shares of
         Common Stock outstanding (including any tendered or exchanged shares)
         at the Offer Expiration Time multiplied by the last reported sale price
         of the Common Stock (determined as provided in the definition of the
         Current Market Price) on the Trading Day next succeeding the Offer
         Expiration Time,

such adjustment to become effective immediately prior to the opening of business
on the day following the Offer Expiration Time. In the event that such Person is
obligated to purchase shares pursuant to any such tender or exchange offer, but
such Person 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. Notwithstanding the foregoing, the
adjustment described in this Section 15.05(g) shall not be made if, as of the
Offer Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause the Company to engage in any transaction
described in Article Twelve.

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

              (1)  "Closing Price" with respect to any security on any day shall
         mean the closing sale price, regular way, on such day or, in case no
         such sale takes place on such day, the average of the reported closing
         bid and asked prices, regular way, in each case as quoted on the Nasdaq
         National Market or, if such security is not quoted or listed or
         admitted to trading on such Nasdaq National Market, on the principal
         national securities exchange or quotation system on which such security
         is quoted or listed or admitted to trading or, if not quoted or listed
         or admitted to trading on any national securities exchange or quotation
         system, the average of the closing bid and asked prices of such
         security on the over-the-counter market on the day in question as
         reported by the National Quotation

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<PAGE>

         Bureau Incorporated, or a similar generally accepted reporting service,
         or if not so available, in such manner as furnished by any New York
         Stock Exchange member firm selected from time to time by the Board of
         Directors for that purpose, or a price determined in good faith by the
         Board of Directors or, to the extent permitted by applicable law, a
         duly authorized committee thereof, whose determination shall be
         conclusive.

                   (2) "Current Market Price" shall mean the average of the
         daily Closing Prices per share of Common Stock for the ten consecutive
         Trading Days selected by the Company commencing no more than 30 Trading
         Days before and ending not later than the earlier of such date of
         determination and the day before the "ex" date with respect to the
         issuance, distribution, subdivision or combination requiring such
         computation immediately prior to the date in question. For purpose of
         this paragraph, the term "ex" date, (1) when used with respect to any
         issuance or distribution, means the first date on which the Common
         Stock trades, regular way, on the relevant exchange or in the relevant
         market from which the Closing Price was obtained without the right to
         receive such issuance or distribution, and (2) when used with respect
         to any subdivision or combination of shares of Common Stock, means the
         first date on which the Common Stock trades, regular way, on such
         exchange or in such market after the time at which such subdivision or
         combination becomes effective.

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

                   (3) "fair market value" shall mean the amount which a willing
         buyer would pay a willing seller in an arm's-length transaction.

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

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<PAGE>

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

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

         To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty (20) days, the increase is irrevocable during the
period 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 mail to holders of record of the Notes a
notice of the increase 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.

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

         (k)   Whenever the Conversion Rate is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other than

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<PAGE>

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

         (l) In any case in which this Section 15.05 provides that an adjustment
shall become effective immediately after (1) a record date or Record Date for an
event, (2) the date fixed for the determination of stockholders entitled to
receive a dividend or distribution pursuant to Section 15.05(a), (3) a date
fixed for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 15.05(b), (4) the Expiration Time for any tender or
exchange offer pursuant to Section 15.05(f), or (5) the Offer Expiration Time
for a tender or exchange offer pursuant to Section 15.05(g) (each a
"Determination Date"), the Company may elect to defer until the occurrence of
the relevant Adjustment Event (as hereinafter defined) (x) issuing to the holder
of any Note converted after such Determination Date and before the occurrence of
such Adjustment Event, the additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment required by such
Adjustment Event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder any amount
in cash in lieu of any fraction pursuant to Section 15.03. For purposes of this
Section 15.05(l), the term "Adjustment Event" shall mean:

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

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

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

             (iv)  in any case referred to in clause (4) or clause (5) hereof,
         the date a sale or exchange of Common Stock pursuant to such tender or
         exchange offer is consummated and becomes irrevocable.

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<PAGE>

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

         Section 15.06. Effect of Reclassification, Consolidation, Merger or
Sale. If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.05(c) applies), (ii) any consolidation, merger
or combination of the Company with another Person as a result of which holders
of Common Stock shall be entitled to receive stock, other securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, or (iii) any sale or conveyance of all or substantially all of the
properties and assets of the Company to any other Person as a result of which
holders of Common Stock shall be entitled to receive stock, other securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, then the Company or the successor or purchasing Person, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that each Note shall be convertible
into the kind and amount of shares of stock, other securities or other property
or assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("nonelecting share "),
then for the purposes of this Section 15.06 the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
Fifteen.

                                       85
<PAGE>

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

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

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

         Section 15.07. Taxes on Shares Issued. The issue of stock certificates
on conversions of Notes shall be made without charge to the converting
Noteholder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any 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 15.08. Reservation of Shares, Shares to Be Fully Paid;
Compliance with Governmental Requirements; Listing of Common Stock. The Company
shall provide, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide
for the conversion of the Notes from time to time as such Notes are presented
for conversion.

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

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

                                       86
<PAGE>

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

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

         Section 15.09. Responsibility of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Rate or whether any facts exist
which may require any adjustment of the Conversion Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other conversion agent make no representations
with respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Note for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article Fifteen. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.06 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.06 or to any adjustment

                                       87
<PAGE>

to be made with respect thereto, but, subject to the provisions of Section 8.01,
may accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.

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

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

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

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

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

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

                                       88
<PAGE>

         Section 15.11. Rights Issued in Respect of Common Stock Issued upon
Conversion. Each share of Common Stock issued upon conversion of Notes pursuant
to this Article 15 shall be entitled to receive the appropriate number of
rights, if any, and the certificates representing the Common Stock issued upon
such conversion shall bear such legends, if any, in each case as may be provided
by the terms of any shareholder rights agreement adopted by the Company, as the
same may be amended from time to time (in each case, a "Rights Agreement").

                                  ARTICLE 16
                           Miscellaneous Provisions

         Section 16.01. Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.

         Section 16.02. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any Person that shall at the time be the lawful sole successor of the
Company.

         Section 16.03. Addresses for Notices, Etc. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes, if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Kulicke and Soffa Industries, Inc., 2101 Blair Mill Road, Willow
Grove, Pennsylvania 19090, Attention: Treasurer. Any notice, direction, request
or demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited, postage prepaid, by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office, which office is, at the date
as of which this Indenture is dated, located at 1650 Market Street, Suite 5210,
Philadelphia, Pennsylvania, 19103, Attention: Institutional Trust Services.

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

         Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.

                                       89
<PAGE>

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

         Section 16.04. Governing Law. This Indenture and each Note shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of the State of New
York.

         Section 16.05. Evidence of Compliance with Conditions Precedent,
Certificates to Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.

         Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

         Section 16.06. Legal Holidays. In any case in which the date of
maturity of interest on or principal of the Notes or the date fixed for
redemption of any Note will not be a Business Day, then payment of such interest
on or principal of the Notes need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date of maturity or the date fixed for redemption, and no interest shall
accrue for the period from and after such date.

         Section 16.07. Trust Indenture Act. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern indentures qualified under the Trust
Indenture Act; provided, however, that, unless otherwise required by law,
notwithstanding the foregoing, this Indenture and the Notes issued hereunder
shall not be subject to the provisions of subsections (a)(1), (a)(2), and (a)(3)
of Section 314 of the Trust Indenture Act as now in effect or as hereafter
amended or modified;

                                       90
<PAGE>

provided further that this Section 16.07 shall not require this Indenture or the
Trustee to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act,
nor shall it constitute any admission or acknowledgment by any party to the
Indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act. If
any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in an indenture qualified under the
Trust Indenture Act, such required provision shall control.

         Section 16.08. No Security Interest Created. Nothing in this Indenture
or in the Notes, expressed or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, as
now or hereafter enacted and in effect, in any jurisdiction in which property of
the Company or its subsidiaries is located.

         Section 16.09. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto, any paying agent, any authenticating agent, any Note registrar and their
successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.

         Section 16.10. Table of Contents, Headings, Etc. The table of contents
and the titles and headings of the articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.

         Section 16.11. Authenticating Agent. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf, and subject
to its direction, in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.04, 2.05, 2.06, 2.07, 3.03 and 3.05, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a Person
eligible to serve as trustee hereunder pursuant to Section 8.09.

         Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from

                                       91
<PAGE>

any merger, consolidation or conversion to which any authenticating agent shall
be a party, or any corporation succeeding to the corporate trust business of any
authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.

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

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

         The provisions of Sections 8.02, 8.03, 8.04, 9.03 and this Section
16.11 shall be applicable to any authenticating agent.

         Section 16.12. Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

         Section 16.13. Severability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

         CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION hereby accepts the
trusts in this Indenture declared and provided, upon the terms and conditions
herein above set forth.

                                       92
<PAGE>

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

                                    KULICKE AND SOFFA INDUSTRIES, INC.

                                    By: /s/ Robert F. Amweg
                                        _______________________________
                                        Name:  Robert F. Amweg
                                        Title: Vice President and Treasurer

                                    CHASE MANHATTAN TRUST COMPANY,
                                    NATIONAL ASSOCIATION, as Trustee

                                    By: /s/ Karen Vera
                                        _______________________________
                                        Name:  Karen Vera
                                        Title: Vice President

                                       93
<PAGE>

                                          EXHIBIT A

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

     THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF SUCH NOTE EXCEPT (A) TO KULICKE AND SOFFA INDUSTRIES, INC. OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
(2)(D) ABOVE), IT WILL FURNISH TO CHASE MANHATTAN TRUST COMPANY, NATIONAL
ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS

                                       94
<PAGE>

BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO CHASE MANHATTAN TRUST COMPANY, NATIONAL
ASSOCIATION, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). THIS LEGEND
WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY
PURSUANT TO CLAUSE (2)(D) ABOVE OR UPON ANY TRANSFER OF THE NOTE EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION).

                                      A-2
<PAGE>

                      KULICKE AND SOFFA INDUSTRIES, INC.

              5 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2006

                                                              CUSIP: 501242 AH 4

No. 1                                                               $125,000,000

         Kulicke and Soffa Industries, Inc., a corporation duly organized and
validly existing under the laws of the Commonwealth of Pennsylvania (herein
called the "Company", which term includes any successor corporation under the
Indenture referred to on the reverse hereof), for value received hereby promises
to pay to CEDE & CO. or its registered assigns, the principal sum of ONE HUNDRED
TWENTY-FIVE MILLION DOLLARS on August 15, 2006 at the office or agency of the
Company maintained for that purpose in accordance with the terms of the
Indenture, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semiannually on February 15 and August 15 of each
year, commencing February 15, 2002, on said principal sum at said office or
agency, in like coin or currency, at the rate per annum of 5 1/4%, from February
15 or August 15, as the case may be, next preceding the date of this Note to
which interest has been paid or duly provided for, unless the date hereof is a
date to which interest has been paid or duly provided for, in which case from
the date of this Note, or unless no interest has been paid or duly provided for
on the Notes, in which case from August 15, 2001, until payment of said
principal sum has been made or duly provided for. Notwithstanding the foregoing,
if the date hereof is after any February 1 or August 1, as the case may be, and
before the following February 15 or August 15, this Note shall bear interest
from such February 15 or August 15; provided however, that if the Company shall
default in the payment of interest due on such February 15 or August 15, then
this Note shall bear interest from the next preceding February 15 or August 15
to which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for on such Note, from August 15, 2001. Except as
otherwise provided in the Indenture, the interest payable on the Note pursuant
to the Indenture on any February 15 or August 15 will be paid to the Person
entitled thereto as it appears in the Note register at the close of business on
the record date, which shall be the February 1 or August 1 (whether or not a
Business Day) next preceding such February 15 or August 15, as provided in the
Indenture; provided, however, that any such interest not punctually paid or duly
provided for shall be payable as provided in the Indenture. Interest may, at the
option of the Company, be paid either (i) by check mailed to the registered
address of such Person (provided that the holder of Notes with an aggregate
principal amount in excess of $2,000,000 shall, at the written election of such
holder, be paid by wire transfer of immediately available funds) or (ii) by
transfer to an account maintained by such Person located in the United

                                      A-3
<PAGE>

States; provided, however, that payments to the Depositary will be made by wire
transfer of immediately available funds to the account of the Depositary or its
nominee.

         Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.

         This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of the State of New York.

         This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.

                                      A-4
<PAGE>

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

                                    KULICKE AND SOFFA INDUSTRIES, INC.

                                    By:______________________________________
                                       Name:
                                       Title:

Attest:__________________________________________
Name: ___________________________________________
Dated:___________________________________________

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee

By:______________________________________________
Name:____________________________________________
Title:___________________________________________

                                            ,or

By:______________________________________________
   As Authenticating Agent
   (if different from Trustee)

                                      A-5
<PAGE>

                            FORM OF REVERSE OF NOTE

                      KULICKE AND SOFFA INDUSTRIES, INC.

                 5 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2006

         This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5 1/4% Convertible Subordinated Notes due 2006 (herein called
the "Notes"), limited to the aggregate principal amount of $150,000,000 all
issued or to be issued under and pursuant to an Indenture dated as of August 15,
2001 (herein called the "Indenture"), between the Company and Chase Manhattan
Trust Company, National Association, as trustee (herein called the "Trustee"),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations, duties
and immunities thereunder of the Trustee, the Company and the holders of the
Notes.

         In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages (as defined in the Registration Rights
Agreement), if any) on all Notes may be declared by either the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding, and upon said declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.

         The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Notes;
provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of any Note, or reduce the rate or extend the time of payment of
interest thereon, or reduce the principal amount thereof or premium, if any,
thereon, or reduce any amount payable upon redemption thereof, or impair the
right of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, or modify the provisions of the
Indenture with respect to the subordination of the Notes in a manner adverse to
the Noteholders in any material respect, or change the obligation of the Company
to redeem any Note upon the happening of a Fundamental Change (as defined in the
Indenture) in a manner adverse to the holder of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture, including Section 15.06 thereof, without the consent of the holder of
each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any

                                      A-6
<PAGE>

such supplemental indenture, without the consent of the holders of all Notes
then outstanding. Subject to the provisions of the Indenture, the holders of a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the Notes waive any past default or Event of
Default under the Indenture and its consequences except a default in the payment
of interest (including Liquidated Damages, if any) or any premium on, or the
principal of, any of the Notes, or a failure by the Company to convert any Notes
into Common Stock of the Company, or a default in the payment of the redemption
price (including the Additional Payment, if any) pursuant to Article Three of
the Indenture, or a default in respect of a covenant or provisions of the
Indenture which under Article Eleven of the Indenture cannot be modified without
the consent of the holders of each or all Notes then outstanding or affected
thereby. Any such consent or waiver by the holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders and owners of this Note and any Notes which may be
issued in exchange or substitution hereof, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.

         The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
whether outstanding at the date of the Indenture or thereafter incurred, and
this Note is issued subject to the provisions of the Indenture with respect to
such subordination. Each holder of this Note, by accepting the same, agrees to
and shall be bound by such provisions and authorizes the Trustee on its behalf
to take such action as may be necessary or appropriate to effectuate the
subordination so provided and appoints the Trustee his attorney-in-fact for such
purpose.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
(including Liquidated Damages, if any) on this Note at the place, at the
respective times, at the rate and in the coin or currency herein prescribed.

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

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

                                      A-7
<PAGE>

any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of any other authorized denominations.

         The Notes may be redeemed by the Company, in whole or in part, at any
time prior to August 19, 2004 (a "Provisional Redemption"), upon notice as set
forth in the Indenture, at a redemption price equal to $1,000 per $1,000
aggregate principal amount of Notes to be redeemed (the "Provisional Redemption
Date") if (i) the Closing Price of the Common Stock shall have exceeded 150% of
the Conversion Price then in effect for at least 20 Trading Days in any
consecutive 30-Trading Day period and (ii) if the redemption would occur before
August 15, 2003, the Shelf Registration Statement (as defined in the
Registration Rights Agreement) covering resales of the Notes, and the Common
Stock issuable upon conversion of the Notes, is effective and available for use
and is expected to remain effective and available for use until the 30th day
immediately following the Provisional Redemption Date.

         Upon any such Provisional Redemption, the Company shall make an
additional payment (the "Additional Payment") with respect to the Notes called
for redemption to holders as of the Notice Date in an amount equal to the total
aggregate amount of interest (including Liquidated Damages, if any) otherwise
payable on the Notes from the last day through which interest was paid or duly
provided for on the Notes, or August 15, 2001 if no interest has been paid or
duly provided for, through August 19, 2004. The Company shall make the
Additional Payment on all Notes called for Provisional Redemption, including any
Notes converted into Common Stock pursuant to the terms hereof after the Notice
Date and prior to the Provisional Redemption Date.

         At any time on or after August 19, 2004, and prior to maturity, the
Notes may be redeemed at the option of the Company, in whole or in part, upon
mailing a notice of such redemption not less than 30 days but not more than 60
days before the date fixed for redemption to the holders of Notes at their last
registered addresses, all as provided in the Indenture, at the following
optional redemption prices (expressed as percentages of the principal amount),
together in each case with accrued and unpaid interest (including Liquidated
Damages, if any) to, but excluding, the date fixed for redemption:

<TABLE>
<CAPTION>
   Period                                                                        Redemption Price
   ------                                                                        ----------------
   <S>                                                                           <C>
   Beginning on August 19, 2004 and ending on August 14, 2005...................      102.100%

   Beginning on August 15, 2005 and ending on August 14, 2006...................      101.050%
</TABLE>

and 100% on August 15, 2006; provided, however, that if the date fixed for
redemption is on a February 15 or August 15, then the interest payable on such

                                      A-8
<PAGE>

date shall be paid to the holder of record on the preceding February 1 or August
1, respectively.

         The Company may not give notice of any redemption of the Notes if a
default in the payment of interest or premium, if any, on the Notes has occurred
and is continuing.

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

         If a Fundamental Change occurs at any time prior to maturity of the
Notes, the Notes will be redeemable on the 30th day after notice thereof (the
"Repurchase Date") at the option of the holder of the Notes at a redemption
price equal to 100% of the principal amount thereof, together with accrued
interest to (but excluding) the date of redemption; provided, however, that, if
such Repurchase Date is a February 15 or August 15, the interest payable on such
date shall be paid to the holder of record of the Notes on the preceding
February 1 or August 1, respectively. The Notes will be redeemable in multiples
of $1,000 principal amount. The Company shall mail to all holders of record of
the Notes a notice of the occurrence of a Fundamental Change and of the
redemption right arising as a result thereof on or before the 10th day after the
occurrence of such Fundamental Change. For a Note to be so redeemed at the
option of the holder, the Company must receive at the office or agency of the
Company maintained for that purpose in accordance with the terms of the
Indenture, such Note with the form entitled "Option to Elect Repayment Upon a
Fundamental Change" on the reverse thereof duly completed, together with such
Note, duly endorsed for transfer, on or before the 30th day after the date of
such notice of a Fundamental Change (or if such 30th day is not a Business Day,
the immediately succeeding Business Day).

         Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after the original issuance of any Notes
through the close of business on the final maturity date of the Notes, or, as to
all or any portion hereof called for redemption, prior to the close of business
on the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
each $1,000 principal amount of the Notes into 50.6401 shares of the Company's
Common Stock (the "Conversion Rate"), as such shares shall be constituted at the
date of conversion and subject to adjustment from time to time as provided in
the Indenture, upon surrender of this Note, together with a conversion notice as
provided in the Indenture (the form entitled "Conversion Notice" on the reverse
hereof), to the Company at the office or agency of the Company maintained for
that purpose in accordance with the terms of the Indenture, or at the option of
such holder, the Corporate Trust Office, and, unless the shares issuable on
conversion are to be

                                      A-9
<PAGE>

issued in the same name as this Note, duly endorsed by, or accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or by his duly authorized attorney. No adjustment in respect of
interest on any Note converted or dividends on any shares issued upon conversion
of such Note will be made upon any conversion except as set forth in the next
sentence. If this Note (or portion hereof) is surrendered for conversion during
the period from the close of business on any record date for the payment of
interest to the close of business on the Business Day preceding the following
interest payment date and either (x) has not been called for redemption on a
redemption date that occurs during such period or (y) is not to be redeemed in
connection with a Fundamental Change on a Repurchase Date that occurs during
such period, this Note (or portion hereof being converted) must be accompanied
by an amount, in New York Clearing House funds or other funds acceptable to the
Company, equal to the interest payable on such interest payment date on the
principal amount being converted; provided, however, that no such payment shall
be required if there shall exist at the time of conversion a default in the
payment of interest on the Notes. No fractional shares will be issued upon any
conversion, but an adjustment and payment in cash will be made, as provided in
the Indenture, in respect of any fraction of a share which would otherwise be
issuable upon the surrender of any Note or Notes for conversion. A Note in
respect of which a holder is exercising its right to require redemption upon a
Fundamental Change may be converted only if such holder withdraws its election
to exercise such right in accordance with the terms of the Indenture. Any Notes
called for redemption, unless surrendered for conversion by the holders thereof
on or before the close of business on the Business Day preceding the date fixed
for redemption, may be deemed to be redeemed from the holders of such Notes for
an amount equal to the applicable redemption price plus the Additional Payment,
if any, together, except in the case of a Provisional Redemption, with accrued
but unpaid interest (including Liquidated Damages, if any) to (but excluding)
the date fixed for redemption, by one or more investment banks or other
purchasers who may agree with the Company (i) to purchase such Notes from the
holders thereof and convert them into shares of the Company's Common Stock and
(ii) to make payment for such Notes as aforesaid to the Trustee in trust for the
holders.

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

         The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder

                                     A-10
<PAGE>

hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar) for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.

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

         This Note shall be deemed to be a contract made under the laws of New
York, and for all purposes shall be construed in accordance with the laws of New
York.

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

                                     A-11
<PAGE>

                                 ABBREVIATIONS

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

TEN COM - as tenants in common          UNIF GIFT MIN ACT -___ Custodian ___
TEN ENT - as tenant by the entireties   (Cust)             (Minor)
JT TEN  - as joint tenants with right
          of survivorship and not as    under Uniform Gifts to Minors Act
          tenants in common
                                        _________________________________
                                                    (State)

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

                                     A-12
<PAGE>

                               CONVERSION NOTICE

TO:   KULICKE AND SOFFA INDUSTRIES, INC.
      CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION

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

Dated:___________________________

                                         ___________________________

                                         ___________________________
                                         Signature(s)

                                         Signature(s) must be guaranteed
                                         by an "eligible guarantor
                                         institution" meeting the
                                         requirements of the Note
                                         registrar, which requirements
                                         include membership or
                                         participation in the Security
                                         Transfer Agent Medallion
                                         Program ("STAMP") or such other
                                         "signature guarantee program"
                                         as may be determined by the
                                         Note registrar in addition to,
                                         or in substitution for, STAMP,
                                         all in accordance with the
                                         Securities Exchange Act of
                                         1934, as amended.

                                         ___________________________
                                         Signature Guarantee

                                     A-13
<PAGE>

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

___________________________
(Name)

___________________________
(Street Address)

___________________________
(City, State and Zip Code)

                                     A-14
<PAGE>

_________________________________
Please print name and address

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

$________________________________

Social Security or Other Taxpayer
Identification Number:

_________________________________

                                     A-15
<PAGE>

                           OPTION TO ELECT REPAYMENT

                           UPON A FUNDAMENTAL CHANGE

TO:  KULICKE AND SOFFA INDUSTRIES, INC.
     CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION

     The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Kulicke and Soffa Industries, Inc. (the
"Company") as to the occurrence of a Fundamental Change with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the price of 100% of such entire principal
amount or portion thereof, together with accrued interest to, but excluding,
such repayment date, to the registered holder hereof.

Dated: ____________________

                                     _________________________________

                                     _________________________________
                                     Signature(s)

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

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

                                       $______________________________

                                       _______________________________
                                       Social Security or Other Taxpayer
                                       Identification Number

                                     A-16
<PAGE>

                                  ASSIGNMENT

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

     In connection with any transfer of the Note prior to the expiration of the
holding period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision) (other than any transfer pursuant to
a registration statement that has been declared effective under the Securities
Act), the undersigned confirms that such Note is being transferred:

     [_]  To Kulicke and Soffa Industries, Inc. or a subsidiary thereof; or

     [_]  Inside the United States pursuant to and in compliance with Rule 144A
          under the Securities Act of 1933, as amended; or

     [_]  Pursuant to and in compliance with Rule 144 under the Securities Act
          of 1933, as amended;

and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").

     [_]  The transferee is an Affiliate of the Company.

Dated:_________________

                                       _______________________________

                                       _______________________________
                                       Signature(s)

                                       Signature(s) must be
                                       guaranteed by an "eligible
                                       guarantor institution"
                                       meeting the requirements of
                                       the Note registrar, which
                                       requirements include
                                       membership or participation
                                       in the Security Transfer
                                       Agent Medallion Program
                                       ("STAMP") or such other
                                       "signature guarantee program"
                                       as may

                                     A-17
<PAGE>

                                       be determined by the
                                       Note registrar in addition
                                       to, or in substitution for,
                                       STAMP, all in accordance with
                                       the Securities Exchange Act
                                       of 1934, as amended.

                                       _________________________________
                                       Signature Guarantee

NOTICE: The signature of the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.

                                     A-18<PAGE>
                                                                     Exhibit 4.2

                          REGISTRATION RIGHTS AGREEMENT

                                  by and among

                       KULICKE AND SOFFA INDUSTRIES, INC.

                                   as Issuer,

                                       and

                       MORGAN STANLEY & CO. INCORPORATED,

                              as Initial Purchaser

                           Dated as of August 15, 2001
<PAGE>

         THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of
August __, 2001 by and among Kulicke and Soffa Industries, Inc., a Pennsylvania
corporation (the "Company"), and Morgan Stanley & Co. Incorporated (the "Initial
Purchaser") pursuant to the Purchase Agreement, dated August 15, 2001 (the
"Purchase Agreement"), among the Company and the Initial Purchaser. In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.

         The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Notes (as defined herein) and
the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Notes (each of the foregoing a
"Holder" and together the "Holders"), as follows:

         SECTION 1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

         "Affiliate" means with respect to any specified person, an "affiliate,"
as defined in Rule 144, of such person.

         "Amendment Effectiveness Deadline Date" has the meaning set forth in
Section 2(d) hereof.

         "Applicable Conversion Price" as of any date of determination means the
Conversion Price in effect as of such date of determination or, if no Notes are
then outstanding, the Conversion Price that would be in effect were Notes then
outstanding.

         "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
are authorized or obligated by law or executive order to close.

         "Common Stock" means the shares of common stock, without par value, of
the Company and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture, including the Underlying Common Stock.

         "Conversion Price" has the meaning assigned such term in the Indenture.

         "Damages Accrual Period" has the meaning set forth in Section 2(e)
hereof.

                                        2
<PAGE>

         "Damages Payment Date" means each interest payment date under the
Indenture in the case of Notes, and each February 15 and August 15 in the case
of the Underlying Common Stock.

         "Deferral Notice" has the meaning set forth in Section 3(i) hereof.

         "Deferral Period" has the meaning set forth in Section 3(i) hereof.

         "Effectiveness Deadline Date" has the meaning set forth in Section 2(a)
hereof.

         "Effectiveness Period" means the period commencing on the date hereof
and ending on the date that all Registrable Securities have ceased to be
Registrable Securities.

         "Event" has the meaning set forth in Section 2(e) hereof.

         "Event Date" has the meaning set forth in Section 2(e) hereof.

         "Event Termination Date" has the meaning set forth in Section 2(e)
hereof.

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

         "Filing Deadline Date" has the meaning set forth in Section 2(a)
hereof.

         "Holder" has the meaning set forth in the second paragraph of this
Agreement.

         "Indenture" means the Indenture, dated as of August 15, 2001, between
the Company and Chase Manhattan Trust Company, National Association, as trustee,
pursuant to which the Notes are being issued.

         "Initial Purchaser" means Morgan Stanley & Co. Incorporated.

         "Initial Shelf Registration Statement" has the meaning set forth in
Section 2(a) hereof.

         "Issue Date" means the first date of original issuance of the Notes.

         "Liquidated Damages Amount" has the meaning set forth in Section 2(e)
hereof.

         "Losses" has the meaning set forth in Section 6 hereof.

         "Material Event" has the meaning set forth in Section 3(i) hereof.

                                        3
<PAGE>

         "Notes" means the 5 1/4% Convertible Subordinated Notes due 2006 of the
Company to be purchased pursuant to the Purchase Agreement.

         "Notice and Questionnaire" means a written notice delivered to the
Company containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex B to the Offering
Memorandum of the Company issued August 9, 2001 relating to the Notes.

         "Notice Holder" means, on any date, any Holder that has delivered a
Notice and Questionnaire to the Company on or prior to such date.

         "Purchase Agreement" has the meaning set forth in the preamble hereof.

         "Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.

         "Record Holder" means (i) with respect to any Damages Payment Date
relating to any Notes as to which any such Liquidated Damages Amount has
accrued, the holder of record of such Note on the record date with respect to
the interest payment date under the Indenture on which such Damages Payment Date
shall occur and (ii) with respect to any Damages Payment Date relating to the
Underlying Common Stock as to which any such Liquidated Damages Amount has
accrued, the registered holder of such Underlying Common Stock fifteen (15) days
prior to such Damages Payment Date.

         "Registrable Securities" means the Notes until such Notes have been
converted into or exchanged for the Underlying Common Stock and, at all times
subsequent to any such conversion or exchange the Underlying Common Stock and
any securities into or for which such Underlying Common Stock has been converted
or exchanged, and any security issued with respect thereto upon any stock
dividend, split or similar event until, in the case of any such security, (A)
the earliest of (i) its effective registration under the Securities Act and
resale in accordance with the Registration Statement covering it, (ii)
expiration of the holding period that would be applicable thereto, under Rule
144(k) or (iii) its sale to the public pursuant to Rule 144 (or any similar
provision then in force, but not Rule 144A) under the Securities Act, and (B) as
a result of the event or circumstance described in any of the foregoing clauses
(i) through (iii), the legend with respect to transfer restrictions required
under the Indenture are removed or removable in accordance with the terms of the
Indenture or such legend, as the case may be.

         "Registration Expenses" has the meaning set forth in Section 5 hereof.

                                        4
<PAGE>

         "Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.

         "Restricted Securities" means "Restricted Securities" as defined in
Rule 144.

         "Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

         "Rule 144A" means Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

         "SEC" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.

         "Shelf Registration Statement" has the meaning set forth in Section
2(a) hereof.

         "Special Counsel" means Davis Polk & Wardwell or one such other
successor counsel as shall be specified by the Holders of a majority of the
Registrable Securities, but which may, with 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, the reasonable fees and expenses of which will be paid by the Company
pursuant to Section 5 hereof.

         "Subsequent Shelf Registration Statement" has the meaning set forth in
Section 2(b) hereof.

         "TIA" means the Trust Indenture Act of 1939, as amended.

         "Trustee" means Chase Manhattan Trust Company, National Association,
the Trustee under the Indenture.

         "Underlying Common Stock" means the Common Stock into which the Notes
are convertible or issued upon any such conversion.

                                        5
<PAGE>

         SECTION 2. Shelf Registration. (a) The Company shall prepare and file
or cause to be prepared and filed with the SEC, as soon as practicable but in
any event by the date (the "Filing Deadline Date") ninety (90) days after the
Issue Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use its reasonable best efforts to cause the
Initial Shelf Registration Statement to be declared effective under the
Securities Act as promptly as is practicable but in any event by the date (the
"Effectiveness Deadline Date") that is one hundred eighty (180) days after the
Issue Date, and to keep the Initial Shelf Registration Statement (or any
Subsequent Shelf Registration Statement) continuously effective under the
Securities Act until the expiration of the Effectiveness Period. At the time the
Initial Shelf Registration Statement is declared effective, each Holder that
became a Notice Holder on or prior to the date ten (10) Business Days prior to
such time of effectiveness shall be named as a selling securityholder in the
Initial Shelf Registration Statement and the related Prospectus in such a manner
as to permit such Holder to deliver such Prospectus to purchasers of Registrable
Securities in accordance with applicable law. None of the Company's security
holders (other than the Holders of Registrable Securities) shall have the right
to include any of the Company's securities in the Shelf Registration Statement.

          (b) If the Initial Shelf Registration Statement or any Subsequent
Shelf Registration Statement ceases to be effective for any reason at any time
during the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
otherwise ceased to be Registrable Securities), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within thirty (30) days of
such cessation of effectiveness amend the Shelf Registration Statement in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use its
reasonable best efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.

          (c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or as

                                        6
<PAGE>

reasonably requested by the Initial Purchaser or by the Trustee on behalf of the
Holders of the Registrable Securities covered by such Shelf Registration
Statement.

          (d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i). Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
three (3) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as practicable after the date a Notice and Questionnaire is
delivered, and in any event upon the later of (x) five (5) Business Days after
such date or (y) five (5) Business Days after the expiration of any Deferral
Period in effect when the Notice and Questionnaire is delivered or put into
effect within five (5) Business Days of such delivery date, (i) if required by
applicable law, file with the SEC a post-effective amendment to the Shelf
Registration Statement or prepare and, if required by applicable law, file a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use its reasonable best efforts to cause such
post-effective amendment to be declared effective under the Securities Act as
promptly as is practicable, but in any event by the date (the "Amendment
Effectiveness Deadline Date") that is forty-five (45) days after the date such
post-effective amendment is required by this clause to be filed; (ii) provide
such Holder copies of any documents filed pursuant to Section 2(d)(i); and (iii)
notify such Holder as promptly as practicable after the effectiveness under the
Securities Act of any post-effective amendment filed pursuant to Section
2(d)(i); provided, that if such Notice and Questionnaire is delivered during a
Deferral Period, the Company shall so inform the Holder delivering such Notice
and Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Deferral Period in accordance with Section
3(i). Notwithstanding anything contained herein to the contrary, (i) the Company
shall be under no obligation to name any Holder that is not a Notice Holder as a
selling securityholder in any Registration Statement or related Prospectus and
(ii) the Amendment Effectiveness Deadline Date shall be extended by up to ten
(10) Business Days from the expiration of a Deferral Period (and the Company
shall incur no obligation to pay Liquidated Damages during such extension) if
such Deferral Period shall be in effect on the Amendment Effectiveness Deadline
Date.

          (e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
Statement has not been filed on or prior to the Filing Deadline

                                        7
<PAGE>

Date, (ii) the Initial Shelf Registration Statement has not been declared
effective under the Securities Act on or prior to the Effectiveness Deadline
Date, (iii) the Company has failed to perform its obligations set forth in
Section 2(d) within the time period required therein, (iv) the aggregate
duration of Deferral Periods in any period exceeds the number of days permitted
in respect of such period pursuant to Section 3(i) hereof or (v) the number of
Deferral Periods in any period exceeds the number permitted in respect of such
period pursuant to Section 3(i) hereof (each of the events of a type described
in any of the foregoing clauses (i) through (v) are individually referred to
herein as an "Event," and the Filing Deadline Date in the case of clause (i),
the Effectiveness Deadline Date in the case of clause (ii), the date by which
the Company is required to perform its obligations set forth in Section 2(d) in
the case of clause (iii) (including the filing of any post-effective amendment
prior to the Amendment Effectiveness Deadline Date), the date on which the
aggregate duration of Deferral Periods in any period exceeds the number of days
permitted by Section 3(i) hereof in the case of clause (iv), and the date of the
commencement of a Deferral Period that causes the limit on the number of
Deferral Periods in any period under Section 3(i) hereof to be exceeded in the
case of clause (v), being referred to herein as an "Event Date"). Events shall
be deemed to continue until the "Event Termination Date," which shall be the
following dates with respect to the respective types of Events: the date the
Initial Shelf Registration Statement is filed in the case of an Event of the
type described in clause (i), the date the Initial Shelf Registration Statement
is declared effective under the Securities Act in the case of an Event of the
type described in clause (ii), the date the Company performs its obligations set
forth in Section 2(d) in the case of an Event of the type described in clause
(iii) (including, without limitation, the date the relevant post-effective
amendment to the Shelf Registration Statement is declared effective under the
Securities Act), termination of the Deferral Period that caused the limit on the
aggregate duration of Deferral Periods in a period set forth in Section 3(i) to
be exceeded in the case of the commencement of an Event of the type described in
clause (iv), and termination of the Deferral Period the commencement of which
caused the number of Deferral Periods in a period permitted by Section 3(i) to
be exceeded in the case of an Event of the type described in clause (v).

         Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of Notes that
are Registrable Securities and of shares of Underlying Common Stock issued upon
conversion of Notes that are Registrable Securities, as the case may be,
accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Liquidated Damages Amount is to be paid to Holders on a Damages Payment Date as
a result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to one-half of one percent (0.5 %) of the aggregate principal amount of
such Notes or, in the case of Notes that have been converted into or exchanged
for Underlying Common Stock, the

                                        8
<PAGE>

Applicable Conversion Price of such shares of Underlying Common Stock, as the
case may be, in each case determined as of the Business Day immediately
preceding the next Damages Payment Date; provided, that in the case of a Damages
Accrual Period that is in effect solely as a result of an Event of the type
described in clause (iii) of the immediately preceding paragraph, such
Liquidated Damages Amount shall be paid only to the Holders that have delivered
Notice and Questionnaires that caused the Company to incur the obligations set
forth in Section 2(d) the non-performance of which is the basis of such Event,
provided further, that any Liquidated Damages Amount accrued with respect to any
Note or portion thereof called for redemption on a redemption date or converted
into Underlying Common Stock on a conversion date prior to the Damages Payment
Date, shall, in any such event, be paid instead to the Holder who submitted such
Note or portion thereof for redemption or conversion on the applicable
redemption date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion).
Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to
any Registrable Security from and after the earlier of (x) the date such
security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events. Following the cure
of all Events requiring the payment by the Company of Liquidated Damages Amounts
to the Holders of Registrable Securities pursuant to this Section, the accrual
of Liquidated Damages Amounts will cease (without in any way limiting the effect
of any subsequent Event requiring the payment of Liquidated Damages Amount by
the Company).

         The Trustee shall be entitled, on behalf of Holders of Notes or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.

         All of the Company's obligations set forth in this Section 2(e) that
are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).

         The parties hereto agree that the liquidated damages provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.

                                        9
<PAGE>

         SECTION 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:

         (a) Prepare and file with the SEC a Registration Statement or
         Registration Statements on any appropriate form under the Securities
         Act available for the sale of the Registrable Securities by the Holders
         thereof in accordance with the intended method or methods of
         distribution thereof, and use its reasonable best efforts to cause each
         such Registration Statement to become effective and remain effective as
         provided herein; provided, that before filing any Registration
         Statement or Prospectus or any amendments or supplements thereto with
         the SEC, furnish to the Initial Purchaser and the Special Counsel of
         such offering, if any, copies of all such documents proposed to be
         filed and use its reasonable best efforts to reflect in each such
         document when so filed with the SEC such comments as the Special
         Counsel reasonably shall propose within five (5) Business Days of the
         delivery of such copies to the Initial Purchaser and the Special
         Counsel.

          (b) Prepare and file with the SEC such amendments and post-effective
         amendments to each Registration Statement as may be necessary to keep
         such Registration Statement continuously effective for the applicable
         period specified in Section 2(a); cause the related Prospectus to be
         supplemented by any required Prospectus supplement, and as so
         supplemented to be filed pursuant to Rule 424 (or any similar
         provisions then in force) under the Securities Act; and use its
         reasonable best efforts to comply with the provisions of the Securities
         Act applicable to it with respect to the disposition of all securities
         covered by such Registration Statement during the Effectiveness Period
         in accordance with the intended methods of disposition by the sellers
         thereof set forth in such Registration Statement as so amended or such
         Prospectus as so supplemented.

          (c) As promptly as practicable give notice to the Notice Holders, the
         Initial Purchaser and the Special Counsel, (i) when any Prospectus,
         Prospectus supplement, Registration Statement or post-effective
         amendment to a Registration Statement has been filed with the SEC and,
         with respect to a Registration Statement or any post-effective
         amendment, when the same has been declared effective, (ii) of any
         request, following the effectiveness of the Initial Shelf Registration
         Statement under the Securities Act, by the SEC or any other federal or
         state governmental authority for amendments or supplements to any
         Registration Statement or related Prospectus or for additional
         information, (iii) of the issuance by the SEC or any other federal or
         state governmental authority of any stop order suspending the
         effectiveness of any Registration Statement or the initiation or
         threatening of any proceedings for that purpose, (iv) of the receipt by
         the Company of any notification with respect to the suspension of the
         qualification or exemption from qualification of any of the Registrable
         Securities for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose, (v) of the occurrence
         of a

                                       10
<PAGE>

         Material Event (but not the nature of or details concerning) and (vi)
         of the determination by the Company that a post-effective amendment to
         a Registration Statement will be filed with the SEC, which notice may,
         at the discretion of the Company (or as required pursuant to Section 3
         (i)), state that it constitutes a Deferral Notice, in which event the
         provisions of Section 3(i) shall apply.

          (d) Use its reasonable best efforts to obtain the withdrawal of any
         order suspending the effectiveness of a Registration Statement or the
         lifting of any suspension of the qualification (or exemption from
         qualification) of any of the Registrable Securities for sale in any
         jurisdiction in which they have been qualified for sale, in either case
         at the earliest possible moment, and provide immediate notice to each
         Notice Holder and the Initial Purchaser of the withdrawal of any such
         order.

          (e) If reasonably requested by the Initial Purchaser or any Notice
         Holder, as promptly as practicable incorporate in a Prospectus
         supplement or post-effective amendment to a Registration Statement such
         information as the Initial Purchaser and the Special Counsel, or such
         Notice Holder shall on the basis of an opinion of nationally-
         recognized counsel experienced in such matters, determine to be
         required to be included therein by applicable law and make any required
         filings of such Prospectus supplement or post-effective amendment.

          (f) As promptly as practicable furnish to each Notice Holder, the
         Special Counsel and the Initial Purchaser, without charge, at least one
         (1) conformed copy of the Registration Statement and any amendment
         thereto, including financial statements but excluding schedules, all
         documents incorporated or deemed to be incorporated therein by
         reference and all exhibits (unless requested by such Notice Holder,
         Special Counsel, counsel, Initial Purchaser or underwriter).

          (g) During the Effectiveness Period, deliver to each Notice Holder,
         the Special Counsel and the Initial Purchaser, in connection with any
         sale of Registrable Securities pursuant to a Registration Statement,
         without charge, as many copies of the Prospectus or Prospectuses
         relating to such Registrable Securities (including each preliminary
         prospectus) and any amendment or supplement thereto as such Notice
         Holder may reasonably request; and the Company hereby consents (except
         during such periods that a Deferral Notice is outstanding and has not
         been revoked) to the use of such Prospectus or each amendment or
         supplement thereto by each Notice Holder in connection with any
         offering and sale of the Registrable Securities covered by such
         Prospectus or any amendment or supplement thereto in the manner set
         forth therein.

          (h) Prior to any public offering of the Registrable Securities
         pursuant to the Shelf Registration Statement, use its reasonable best
         efforts to register or qualify or cooperate with the Notice Holders and
         the Special Counsel in connection with the

                                       11
<PAGE>

         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 reasonably requests in writing (which
         request may be included in the Notice and Questionnaire); prior to any
         public offering of the Registrable Securities pursuant to the Shelf
         Registration Statement, use its reasonable best efforts to keep each
         such registration or qualification (or exemption therefrom) effective
         during the Effectiveness Period in connection with such Notice Holder's
         offer and sale of Registrable Securities pursuant to such registration
         or qualification (or exemption therefrom) and do any and all other acts
         or things reasonably necessary or advisable to enable the disposition
         in such jurisdictions of such Registrable Securities in the manner set
         forth in the relevant Registration Statement and the related
         Prospectus; provided, that the Company will not be required to (i)
         qualify as a foreign corporation or as a dealer in securities in any
         jurisdiction where it would not otherwise be required to qualify but
         for this Agreement or (ii) take any action that would subject it to
         general service of process in suits or to taxation in any such
         jurisdiction where it is not then so subject.

          (i) Upon (A) the issuance by the SEC of a stop order suspending the
         effectiveness of the Shelf Registration Statement or the initiation of
         proceedings with respect to the Shelf Registration Statement under
         Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any
         event or the existence of any fact (a "Material Event") as a result of
         which any Registration Statement shall contain any untrue statement of
         a material fact or omit to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading, or any Prospectus shall contain any untrue statement of a
         material fact or omit to state any material fact required to be stated
         therein or necessary to make the statements therein, in the light of
         the circumstances under which they were made, not misleading, or (C)
         the occurrence or existence of any pending corporate development that,
         in the reasonable discretion of the Company, makes it appropriate to
         suspend the availability of the Shelf Registration Statement and the
         related Prospectus for a discrete period of time, (i) in the case of
         clause (B) above, subject to the next sentence, as promptly as
         practicable prepare and file, if necessary pursuant to applicable law,
         a post-effective amendment to such Registration Statement or a
         supplement to the related Prospectus or any document incorporated
         therein by reference or file any other required document that would be
         incorporated by reference into such Registration Statement and
         Prospectus so that such Registration Statement does not contain any
         untrue statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein not misleading, and such Prospectus does not contain any untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading, as thereafter delivered to the purchasers of the
         Registrable Securities being sold thereunder, and, in the case of a
         post-effective amendment to a Registration Statement, subject to the
         next

                                       12
<PAGE>

         sentence, use its reasonable best efforts to cause it to be declared
         effective as promptly as is practicable, and (ii) give notice to the
         Notice Holders, the Special Counsel and the Managing Underwriters, if
         any, that the availability of the Shelf Registration Statement is
         suspended (a "Deferral Notice") and, upon receipt of any Deferral
         Notice, each Notice Holder agrees not to sell any Registrable
         Securities pursuant to the Registration Statement until such Notice
         Holder's receipt of copies of the supplemented or amended Prospectus
         provided for in clause (i) above, or until it is advised in writing by
         the Company that the Prospectus may be used, and has received copies of
         any additional or supplemental filings that are incorporated or deemed
         incorporated by reference in such Prospectus. The Company will use its
         reasonable best efforts to ensure that the use of the Prospectus may be
         resumed (x) in the case of clause (A) above, as promptly as is
         practicable, (y) in the case of clause (B) above, as soon as, in the
         sole judgment of the Company, public disclosure of such Material Event
         would not be prejudicial to or contrary to the interests of the Company
         or, if necessary to avoid unreasonable burden or expense, as soon as
         practicable thereafter and (z) in the case of clause (C) above, as soon
         as in the reasonable discretion of the Company, such suspension is no
         longer appropriate. The Company shall be entitled to exercise its right
         under this Section 3(i) to suspend the availability of the Shelf
         Registration Statement or any Prospectus, without incurring or accruing
         any obligation to pay liquidated damages pursuant to Section 2(e), no
         more than one (1) time in any three month period or three (3) times in
         any twelve month period, and any such period during which the
         availability of the Registration Statement and any Prospectus is
         suspended (the "Deferral Period") shall, without incurring any
         obligation to pay liquidated damages pursuant to Section 2(e), not
         exceed 45 days; provided, that the aggregate duration of any Deferral
         Periods shall not exceed 45 days in any three month period (or 60 days
         in any three month period in the event of a Material Event pursuant to
         which the Company has delivered a second notice as required below) or
         90 days in any twelve (12) month period; provided, that in the case of
         a Material Event relating to an acquisition or a probable acquisition
         or financing, recapitalization, business combination or other similar
         transaction, the Company may, without incurring any obligation to pay
         liquidated damages pursuant to Section 2(e), deliver to Notice Holders
         a second notice to the effect set forth above, which shall have the
         effect of extending the Deferral Period by up to an additional 15 days,
         or such shorter period of time as is specified in such second notice.

          (j) If requested in writing in connection with a disposition of
         Registrable Securities pursuant to a Registration Statement, make
         reasonably available for inspection during normal business hours by a
         representative for the Notice Holders of such Registrable Securities,
         and any broker-dealers, attorneys and accountants retained by such
         Notice Holders or underwriter, all relevant financial and other records
         and pertinent corporate documents and properties of the Company and its
         subsidiaries, and cause the appropriate officers, directors and
         employees of the Company and its subsidiaries to make reasonably
         available for inspection during normal business hours on reasonable
         notice all

                                       13
<PAGE>

         relevant information reasonably requested by such representative for
         the Notice Holders, or any such broker-dealers, attorneys or
         accountants in connection with such disposition, in each case as is
         customary for similar "due diligence" examinations; provided, that such
         persons shall 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 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 (i) disclosure of such information is required by court or
         administrative order or is necessary to respond to inquiries of
         regulatory authorities, (ii) disclosure of such information is required
         by law (including any disclosure requirements pursuant to federal
         securities laws in connection with the filing of any Registration
         Statement or the use of any prospectus referred to in this Agreement),
         (iii) such information becomes generally available to the public other
         than as a result of a disclosure or failure to safeguard by any such
         person or (iv) such information becomes available to any such person
         from a source other than the Company and such source is not bound by a
         confidentiality agreement, and provided, that the foregoing inspection
         and information gathering shall, to the greatest extent possible, be
         coordinated on behalf of all the Notice Holders and the other parties
         entitled thereto by the counsel referred to in Section 5.

          (k) Comply with all applicable rules and regulations of the SEC and
         make generally available to its securityholders earning 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 45 days after the
         end of any 3-month period (or 90 days after the end of any 12-month
         period if such period is a fiscal year) commencing on the first day of
         the first fiscal quarter of the Company commencing after the effective
         date of a Registration Statement, which statements shall cover said
         periods.

          (l) Cooperate with each Notice Holder to facilitate the timely
         preparation and delivery of certificates representing Registrable
         Securities sold or to be sold pursuant to a Registration Statement,
         which certificates shall not bear any restrictive legends, and cause
         such Registrable Securities to be in such denominations as are
         permitted by the Indenture and registered in such names as such Notice
         Holder may request in writing at least one (1) Business Day prior to
         any sale of such Registrable Securities.

          (m) Provide a CUSIP number for all Registrable Securities covered by
         each Registration Statement not later than the effective date of such
         Registration Statement and provide the Trustee and the transfer agent
         for the Common Stock with printed certificates for the Registrable
         Securities that are in a form eligible for deposit with The Depository
         Trust Company.

                                       14
<PAGE>

          (n) Cooperate and assist in any filings required to be made with the
         National Association of Securities Dealers, Inc.

          (o) Upon (i) the filing of the Initial Registration Statement and (ii)
         the effectiveness of the Initial Registration Statement, announce the
         same, in each case by release to Reuters Economic Services and
         Bloomberg Business News.

         SECTION 4. 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 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 2(d) 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 promptly to 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 the Company may from time to time reasonably request. Any sale of any
Registrable Securities by any Holder shall constitute a representation and
warranty by such Holder that the information relating to such Holder and its
plan of distribution is as set forth in the Prospectus delivered by such 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 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 Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.

         SECTION 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the Special Counsel in
connection with Blue Sky qualifications of the Registrable Securities under the
laws of such jurisdictions as Notice Holders of a majority of the Registrable
Securities being sold pursuant to a 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
Registration Statement or Prospectus delivered to any Holders hereunder, (iv)
fees and disbursements of counsel for the Company and the Special Counsel in
connection with the Shelf Registration Statement (provided that the Company
shall not be liable for the fees and expenses of more than one separate firm for
all parties participating in any

                                       15
<PAGE>

transaction hereunder), (v) reasonable fees and disbursements of the Trustee and
its counsel and of the registrar and transfer agent for the Common Stock and
(vi) Securities Act liability insurance obtained by the Company in its sole
discretion. In addition, the Company shall pay the internal expenses of the
Company (including, without limitation, all 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 by the
Company 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. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay selling expenses and all registration expenses to the extent required by
applicable law.

         SECTION 6. Indemnification.

         (a) Indemnification by the Company. The Company shall indemnify and
hold harmless each Notice Holder and each person, if any, who controls any
Notice Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) from and against any losses, liabilities,
claims, damages and expenses (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, "Losses"), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement contained in or omission or alleged omission from any
of such documents in reliance upon and conformity with any of the information
relating to the Holders furnished to the Company in writing by a Holder
expressly for use therein; provided further, that the indemnification contained
in this paragraph shall not inure to the benefit of any Holder of Registrable
Securities (or to the benefit of any person controlling such Holder) on account
of any such Losses arising out of or based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
prospectus provided in each case the Company has performed its obligations under
Section 3(a) hereof if either (A) (i) such Holder failed to send or deliver a
copy of the Prospectus with or prior to the delivery of written confirmation of
the sale by such Holder to the person asserting the claim from which such Losses
arise and (ii) the Prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (B) (x) such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, with or prior to the
delivery of written confirmation of the sale of a Registrable Security to the
person asserting the claim from which such Losses arise.

                                       16
<PAGE>

          (b) Indemnification by Holders of Registrable Securities. Each Holder
agrees severally and not jointly to indemnify and hold harmless the Company and
its respective directors and officers, and each person, if any, who controls the
Company (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any other Holder, from and against all Losses
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with information furnished to the Company by
such Holder expressly for use in such Registration Statement or Prospectus or
amendment or supplement thereto. In no event shall the liability of any selling
Holder of Registrable Securities hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such
indemnification obligation.

          (c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
as they are incurred. Such separate firm shall be designated in writing by, in
the case of parties indemnified pursuant to Section 6(a), the Holders of a
majority (with Holders of Notes deemed to be the Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such Notes are or would be convertible or exchangeable as of the date
on which such designation is made) of the Registrable Securities covered by the
Registration Statement held by Holders that are indemnified parties

                                       17
<PAGE>

pursuant to Section 6(a) and, in the case of parties indemnified pursuant to
Section 6(b), the Company. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.

          (d) Contribution. To the extent that the indemnification provided for
in this Section 6 is unavailable to an indemnified party under Section 6(a) or
6(b) hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses (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 or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement pursuant to the Purchase Agreement (before
deducting expenses) of the Registrable Securities to which such Losses relate.
Benefits received by any Holder shall be deemed to be equal to the value of
receiving Registrable Securities that are registered under the Securities Act.
The relative fault of the Holders on the one hand and the Company on the other
hand 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 Holders
or by the Company, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this paragraph are
several in proportion to the respective number of Registrable Securities they
have sold pursuant to a Registration Statement, and not joint.

                                       18
<PAGE>

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party 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.

          (e) The indemnity, contribution and expense reimbursement obligations
of the parties hereunder shall be in addition to any liability any indemnified
party may otherwise have hereunder, under the Purchase Agreement or otherwise.

          (f) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.

         SECTION 7. Information Requirements. The Company covenants that, if at
any time before the end of the Effectiveness Period the Company is not subject
to the reporting requirements of the Exchange Act, it will cooperate with any
Holder of Registrable Securities and take such further reasonable action as any
Holder of Registrable Securities may reasonably request in writing (including,
without limitation, making such reasonable representations as any such Holder
may reasonably request), all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 and
Rule 144A under the Securities Act and customarily taken in connection with
sales pursuant to such exemptions. Upon the written request of any Holder of
Registrable Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such filing requirements, unless
such a statement has been included in the Company's most recent report filed
pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities (other than the Common Stock) under any section
of the Exchange Act.

                                       19
<PAGE>

         SECTION 8. Miscellaneous.

         (a) No Conflicting Agreements. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.

          (b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Notes are or would be convertible or exchangeable
as of the date on which such consent is requested). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement; provided, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence. Each Holder of Registrable Securities
outstanding at the time of any such amendment, modification, supplement, waiver
or consent or thereafter shall be bound by any such amendment, modification,
supplement, waiver or consent effected pursuant to this Section 8(b), whether or
not any notice, writing or marking indicating such amendment, modification,
supplement, waiver or consent appears on the Registrable Securities or is
delivered to such Holder.

          (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing 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, (iii) one (1) 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:

              (w) 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;

              (x) if to the Company, to:

                                       20
<PAGE>

                           Kulicke and Soffa Industries, Inc.
                           2101 Blair Mill Road
                           Willow Grove, PA 19090
                           Attention: General Counsel
                           Telecopy No.: (215) 784-6000

                           and

                           Drinker Biddle & Reath LLP
                           One Logan Square
                           Philadelphia, PA 19103
                           Attention: H. John Michel, Jr.
                           Telecopy No.: (215) 988-2757

              (y) if to the Initial Purchaser, to:

                           Morgan Stanley & Co. Incorporated
                           1585 Broadway
                           New York, New York
                           Attention: Equity Capital Markets
                           Telecopy No.: (212) 761-0538

                           and

                           Davis Polk & Wardwell
                           450 Lexington Avenue
                           New York, New York 10017
                           Attention: Deanna Kirkpatrick, Esq.
                           Telecopy No. (212) 450-4000

or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.

         (d) Approval of Holders. Whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchaser
or subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.

                                       21
<PAGE>

         (e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.

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

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

         (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         (i) Severability. If any term provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.

         (j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. No
party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement. In no event will such methods of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.

         (k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.

                                       22
<PAGE>

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

                                     KULICKE AND SOFFA INDUSTRIES, INC.

                                     By /s/ Robert F. Amweg
                                        -------------------------------

                                        Name:  Robert F. Amweg
                                        Title: Vice President and Treasurer

Confirmed and accepted as of
the date first above written:

MORGAN STANLEY & CO. INCORPORATED

By /s/ Mark Tashkovich
   ------------------------------

Name:  Mark Tashkovich
Title: Vice President

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